How much can you save with solar?
Last updated 3/24/2023
While many people are first drawn to solar because of the environmental benefits of powering your home or business with the sun, the reason that people ultimately invest in solar is due to the significant financial savings. In other words: come to protect the environment, stay for the financial savings. But how does solar actually help you save money?
How does solar save you money?
Solar panel systems help you save money by reducing your monthly electricity bills. Although a $50 or $100 electricity bill might not seem like much when you pay it each month, those bills add up quickly over ten, twenty or even thirty years: if you pay $100 per month in electricity now, you’ll pay over $60,000 on electricity over the next thirty years!
|Existing electricity bill||10-year electricity cost||20-year electricity cost||30-year electricity cost|
Assuming a 3.4% annual increase based on inflation and average annual rate increases.
Installing solar allows you to reduce or even eliminate your electricity bill: when you pay upfront for solar panels, you are effectively paying today for the electricity you’ll use over the next 25 or even 30 years. Calculating your savings from investing in solar is as simple as subtracting the amount you pay for solar from what you would have paid for electricity otherwise.
What factors influence how much you can save with solar?
There are three key factors that influence how much you can save with solar: how much you pay for electricity, how much you’ll pay for solar, and how you pay for your solar panel system (i.e., upfront, with a loan or with a lease or PPA).
Factor 1: How much you pay for electricity
Since the primary way that solar saves you money is by reducing or eliminating your monthly electricity bill, the amount you pay for electricity today heavily influences the level of savings you can obtain by going solar. One thing to think about: if you live somewhere with higher electricity rates compared to elsewhere in the country, your solar energy savings will be higher.
Factor 2: How much you pay for solar
The second part of the savings calculation is how much you’ll pay for solar. Importantly, federal, state and local incentives can all contribute to lowering the cost you pay for solar. From the Investment Tax Credit to solar renewable energy credit (SREC) programs, incentive and rebate plans can reduce the amount you pay for solar significantly.
There are many other factors that influence the price you pay, but no matter your scenario it’s important to compare multiple quotes for solar so you know you’re getting the right system at a fair price.
Factor 3: How you pay for solar
There are three primary ways to pay for your solar panel system: a cash (upfront) purchase, a solar loan, and a solar lease or PPA. Each of these options provides different pros and cons. Generally speaking, you’ll save more on your electricity if you pay for your system upfront than if you pay for it over time with a loan or lease/PPA.
It’s time to think about solar as an investment
If you’re considering solar, it’s worth starting to think about installing solar as an investment. Solar shoppers on EnergySage see tens of thousands of dollars in savings from investing in solar over the 25+ year lifespan of solar panel systems. Many solar panel systems pay for themselves in eight years or less, while home and business owners who install solar see a return on their investment in the double digits - where else can you experience that type of return on investment?
Should you consider community solar?
Community Solar provides many of the benefits of rooftop solar, but there are no upfront costs and less commitment required. Go solar by subscribing to a local community solar farm: you'll still reduce your electric bill and your climate impact without installing a single solar panel! Visit our Community Solar Marketplace to find a farm near you.
EnergySage is the nation's online solar marketplace: when you sign up for a free account, we connect you with solar companies in your area, who compete for your business with custom solar quotes tailored to fit your needs. Over 10 million people come to EnergySage each year to learn about, shop for and invest in solar. Sign up today to see how much solar can save you.