An electricity bill savings estimate is a helpful way to determine how much you can save with rooftop solar. Here are some reasons why you might be able to save even more than what you may estimate:
Electricity bill savings estimates are calculated on several uncertain factors, such as your future energy use. For instance, if you decide to buy an electric vehicle or decide to use more air conditioning in the summer, your electricity bill could increase.
Electricity prices and rates can change over time. Your electricity provider may require you to switch to a different rate in the future, which could change how much you save.
If you sell your home, you could incur additional costs. For example, if a buyer doesn’t want to take on a Lease or Power Purchase Agreement, you might have to buy out the contract, which could add up to thousands of dollars.
Before you sign a contract, ask yourself: if the savings end up being lower than the estimated monthly or yearly savings, does getting rooftop solar still make sense to me?
How Electricity Bill Savings Work
There is a special arrangement with your electricity provider that is called Net Energy Metering (NEM)> NEM allows you to get a financial credit on your electricity bill when your solar system sends electricity back to the grid after first powering the electricity needs at your house. Usually this credit is approximately equal to the retail rate of energy. This means that you are credited on your bill about the same amount that your electricity provider would have charged you for electricity during that time.
NEM and Your Electricity Bill
Since the sun isn’t always shining, solar customers also rely on electricity from their electricity provider. After your solar system is interconnected to the grid, your monthly electricity bill will summarize how much electricity you took in or “consumed,” from your electricity provider, and how much electricity your solar system sent to the grid or “exported.”
If you took in more than you sent out to the grid in any given month, you will see an overall charge on your bill. If you sent out more than you took in, you will see an overall credit. Typically, you will be able to carry forward credits to the next month’s bill, and electricity usage charges will not be due until the end of a 12-month period. Note that many electricity providers require solar customers to pay a monthly minimum bill each month just like other customers. This minimum bill may change over time.
PG&E, SCE, and SDG&E solar customers are required to go on a time-of-use (TOU) rate. A TOU rate will charge different prices for electricity depending up on the time of day. Prices are typically higher between 4 p.m. and 9 p.m., called “peak” hours, and lower the rest of the day and at night during “off peak” hours.
12 Month Settlement Bill
Typically, at the end of a 12-month period, you will receive a Settlement bill, also called a “True Up” bill, that settles all the credits and charges. Even though going solar can reduce your electricity costs, most customers still owe some money to their electricity provider at the end of the 12 months. See graphic below that shows an example of an electricity bill over a 12-month cycle for a solar customer.
Some electricity providers give you the option to pay your bills monthly instead of annually. If you choose the monthly option, your payments will be more evenly distributed over the course of the 12 months, and you will not have to worry about paying a potentially large bill once a year. Be clear with your Solar Provider if you want the monthly option, and double-check with your electricity provider that the correct option was chosen.
Though it's rare, if you sent out more electricity than you took in over the course of the 12-month period, you are typically eligible to be paid "net surplus compensation," which is around 2 to 3 cents per kilowatt-hour. Because this rate is lower than the retail rate, it is generally not in your financial interest to install a solar system that produces more energy than you would use over the course of a year.
Currently, PG&E, SCE, and SDG&E customers are guaranteed NEM for 20 years from the time their solar system starts operating. Your electricity rate, however, is subject to change. Go to www.cpuc.ca.gov/electricrates for more details on how electricity rates work.
Getting Environmental Credit for Going Green
When a residential solar system produces electricity, the system is eligible to receive Renewable Energy Certificates, or “RECs,” which are certificates that represent the renewable energy that is generated. If you purchase a solar system, you own the rights to these RECs and can make the claim that you’re producing clean energy and avoiding emissions of greenhouse gases by going solar. However, if you enter a Lease or PPA, the contract may state that the Solar Provider or someone else owns the RECs. If you do not own the RECs, they can be sold without your knowledge to other customers who use them to make environmental claims or comply with clean energy requirements. And with PACE financing, a local jurisdiction may own the RECs. If owning the RECs is important to you, ask your solar provider who will own the RECs, and check the contract fine print.
Combining Solar with Storage
When you install battery storage with your solar system, you can store excess solar electricity produced by your panels for use in the evening when the sun goes down. The software that comes with battery storage automatically determines whether to store the extra energy or export it to the grid to maximize cost savings. Battery storage can also provide limited back-up power.
The state-funded Self-Generation Incentive Program (SGIP) provides financial incentives to install storage. See www.cpuc.ca.gov/sgip for details on the SGIP program.
Source: www.cpuc.ca.gov/solarguide