How much will solar panels save you in 2021 is a great question. Unfortunately, there’s no simple answer to it. There are numerous variables to consider, including local utility costs, solar system installation costs, various tax incentives, credits, and rebates, the amount of sun your area receives, and so on.
The overall national average electricity consumption for a US residential utility customer is 10,972 kilowatt-hours (kWh) per year, giving an average of 914 kWh per month. Multiply that number times the national average electricity rate (as of October, 2020) of $0.136 per kWh, the average annual bill is $1,492 per year. What this means is that if enough solar panels were installed across the country to cover the average annual electricity usage, the average solar panel system would save, for any home in the US in 2021, $1,492 per year. Obviously, that’s only an average and wouldn’t be accurate for each individual home.
That’s Nice, But What Would My Savings Be?
The two main questions you should ask are:
- How much would my solar savings per month be?
- How much do these savings add up to over a 25-year period?
When discussing solar savings, you’re talking about “Avoided Energy Costs”, which is the amount you would have spent on electricity if you hadn’t installed a solar energy system.
And these savings are quite real. Because you’ll still be using electricity in your home, solar energy savings are considered a bankable money saving scheme and a good investment return. The initial step to figuring out how much solar can save you, is to figure out your current electricity usage, how much it costs, and how much you’re likely to use in the future.
A Savings Example
As an example, for Northern California, here’s what the average would be for a system installed in San Francisco in 2021:
- Utility Cost /kWh – 0.19
- Annual Production of a kW System – 8,922
- Average Monthly Savings for Year 1 – $141.27
- Savings on Utility Bills Over 25 Years – $61,850
These numbers are based on the following assumptions:
- The “Cost of Utility Power” is based on the average of existing rate plans from the largest utility.
- Forecast solar production of a 6kW system assumes installation at the optimal azimuth and tilt, with typical insolation conditions based on data from the National Renewable Energy Laboratory, and no external shading.
- The 25-year savings forecast includes an expected increase in utility costs of 3% per year.
- The solar system is purchased and owned, so the full value of the avoided energy payments is held by the homeowner, rather than a leaseholder, in the case of a leased system.
While an initial investment upfront, solar panels will generate big savings for homeowners in all aspects of finances or carbon emissions. Ultimately, they are a win/win for you and the environment!