Let's be honest. While customers are delighted to reduce their carbon footprint by replacing fossil fuel power with clean energy, they generally install solar panels to reduce something else: their power bills.
So when your prospects consider a solar power system, they're pretty focused on its potential to lower costs and increase their nest egg. Which means that they have one question above all: How much will solar panels save me?
Since solar energy savings can vary among customers, each deserves a clear, accurate, thorough financial estimate. Here, we'll look through national and state averages before detailing which factors will affect your customers' individual solar panel savings.
How To Estimate Solar Energy Savings
Of course, national and state averages don’t give you or your customers an exact answer for how much their individual system will cost, or whether going solar is worth it for them in the long run. And that's exactly what they want to know!
To satisfy them with a clear and trustworthy estimate how how much solar panels save, take these factors into account in your solar proposals. They are paramount for accurately estimating solar panel savings from electricity bills.
Local Average Solar Energy Prices
Both grid and solar energy prices affect how much your customers will save. Some areas have cheaper grid electricity, while some utilities in other locations charge twice as much.
In general, higher grid rates mean greater solar energy savings. However, this also depends on how solar installation costs compare to that state’s electric rates. On average, across the US in 2023, the average home consumes 10,500 kWh of electricity annually.
Grid power and solar energy costs vary not only by state but also within each state. So double-check utility rates in your customer’s particular jurisdiction before estimating their solar energy savings.
Roof Space for Solar Panels And Roofing Material
This is relatively straightforward: the more roof space your customer has, the more solar panels you can install and the more potential solar energy savings.
But make sure to carefully calculate the amount of solar-available roof. A roof may have space limits due to chimneys, air conditioners, generators, skylights, or other mechanical systems. A good designer will use solar design software to plan each solar system's size according to these variables.
Roof material should also come into consideration, as different materials and shapes can change the equipment needed to mount and connect panels.
Solar Panel Location Impact Solar Energy Savings
Solar panels have become so efficient that even notoriously cloudy Oregon and Washington, are experiencing a solar boom. And the cold certainly doesn't bother solar panels; this is a common and debunked solar myth. In fact, PV panels are more efficient in cold weather, boosting solar energy savings!
But location still makes a difference in how much solar panels will save; while customers in all climates can now enjoy solar panel savings, comparable solar energy systems still receive more daylight in sunny southern locations than in northern or cloudy ones.
In addition to latitude and weather, an individual roof’s solar energy potential also depends on its particular location. Nearby trees and tall buildings often shade part of a roof during part of the day, limiting solar production in those areas. So when calculating each customer’s possible solar energy savings, take both their general location and their particular surroundings into account.
Home Energy Usage Impact How Much Solar Panels Save
A family of five, one of whom owns a Tesla and all of whom love a toasty house in winter, will have different energy needs than a Toyota-owning couple who prefer to bundle up rather than turn the heat up. The family of five may see more savings from a larger solar system that can charge their Tesla, while the couple might find better value in a smaller, less expensive system. Every household and business has unique energy requirements, which is why solar installers must review customers’ electric bills for the past year before giving them a proposal.
As a general rule, a home with greater electricity consumption can save more with solar panels. However, such homes will need to invest more in solar panels because they will need a larger system to cover the majority of their home energy use.
Solar Incentives And Tax Breaks
This is the fun part. In addition to the previously mentioned federal tax credit, many states and utilities boost solar customers’ return on investment and shorten the solar payback period with renewable energy policies. These incentives can include state tax credits, solar rebates, solar credits on electric bills, and even tax exemptions.
Net Metering
Most solar systems produce excess solar energy and automatically feed it into the grid. With net metering policies, many states and utilities credit ratepayers for this energy. The utility lowers solar customers’ monthly electricity bills according to how much energy their solar system gives the grid and the associated solar credits.
However, net metering programs vary by state and sometimes even by utilities within the state. Some states’ net metering policies require utilities to credit customers at retail rates, with a kilowatt hour of grid energy for each kilowatt hour their solar system provides to the grid. Other states, like California, under NEM 3.0, only require utilities to credit solar customers with lower wholesale energy prices. Still, any net metering policy lowers your customers’ remaining utility bill.
Solar Energy Rebates
Several utility companies and state programs essentially pay customers to go solar. For example, the State of Oregon offers solar rebates of up to $5,000 for installing a home solar system. In addition, Energy Trust of Oregon offers rebates of up to $3,000 for installing solar batteries.
To find solar energy rebates in your area, check out the Database of State Incentives for Renewables & Efficiency.
Federal Solar Tax Credit
Yes, we mentioned this before, but it deserves its own section. Solar customers may be eligible for a tax credit of 30% off their solar system if it’s installed before the end of 2032. If the solar panel system costs $16,000, the homeowner could qualify for nearly $6,000 in federal solar tax credits.
Solar Property Tax Exemptions Boost Solar Savings
Solar property tax exemptions exclude the added value of solar energy systems from the property tax assessment. Homeowners or businesses installing solar panels may be eligible for this exemption, which is designed to encourage the adoption of renewable energy.
The exemption varies by location, with some jurisdictions offering a full exemption for a set period. Some of the states that currently offer this exemption are California, Oregon, Texas, Illinois, Michigan, New Mexico, Arizona, South Carolina, North Carolina, Virginia, Massachusetts, Connecticut, Rhode Island, and Florida.
Solar System Sales Tax Exemption
A solar sales tax exemption is a financial incentive that exempts the purchase of solar energy equipment and installations from state sales taxes. This can include the sales tax applied to solar panels, inverters, racking systems, solar batteries, and labor.
A solar sales tax exemption encourages the adoption of solar technology by reducing upfront costs. Some of the states with such an exemption include Washington, Colorado, Arizona, Wisconsin, Minnesota, Indiana, New York, Massachusetts, New Hampshire, Maryland, and Florida.
Do Solar Energy Savings Justify the Upfront Investment?
With the current federal tax credit and other incentives, most Americans’ solar panels now pay for themselves in only 8 years. Under most solar panels’ 25-year warranty, this payback period leaves at least 18 more years for solar customers to rack up savings.
For example, a customer might pay $12,600 after the 30% tax credit is applied (assuming an $18,000 initial installation price) for installation. Let’s say their average monthly electric bill is comparable to the national average of $121. This means a payback period of a little over 8 years. For the rest of the panels’ 17-year lifespan, customers can bank a solar energy savings of nearly $1,500 a year or nearly $25,000 over the 17 years.
Moreover, owners in areas with lots of sunshine, high electric rates, and solar incentives will see far more savings. California homeowners, for instance, may save up to $90,000 in those 25 years.
Also, solar systems don’t turn into pumpkins once the clock strikes 25 years. Most panels still produce at 80% or more. Even if a homeowner sells their house, they can still benefit from the increase in property value that solar panels provide – a national median of over $9,000.
So assuming a reasonably sunny roof, yes – solar is more than worth it due to solar energy savings and incentives.
Will Panels Pay For Themselves From the Solar Savings?
Installing a solar system is one of the few home improvement projects that actually pays for itself. The payback period of an average solar system is 6 to 10 years, but it varies depending on the solar resource of the property, electricity rates, and available solar energy incentives.
How Do I Maximize Solar Energy Savings?
To save the most with solar energy, properly size the system, help clients take advantage of solar incentives like tax credits, and connect to the power grid for renewable energy credits on power bills. Likewise, it is critical to use solar system monitoring to ensure the solar panels are working properly and to repair the system if needed right away. Many solar installation companies monitor solar system output for their customers to prevent long downtimes.
How Much Do Solar Panels Save On Electric Bills?
On average, U.S. customers save about $1,500 a year by going solar – $37,500 over the course of 25 years. But for individual solar energy systems, these savings can vary from $10,000 – $90,000 depending on roof size, sunlight exposure, local energy rates, and solar incentives.
The many factors that influence solar panel savings require solar companies to meticulously calculate each prospect's estimate. But if you and your team are swamped with the needs of current installations and new leads, figuring out exactly how every detail of every roof affects its financial potential takes time you don't have.
How Does Solar Save Money?
Solar energy panels save money by generating electricity from sunlight, reducing reliance on grid power and lowering monthly energy bills. Many solar homeowners can benefit from net metering, earning credits for surplus energy fed back into the grid. Government incentives and tax credits further reduce upfront costs, boosting the return on investment. Increased property value and long-term energy independence contribute to significant financial savings. Low maintenance costs make solar an economical and sustainable choice for reducing overall energy expenses.
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