Skip to main content

How much money can you save with solar panels?

Solar panels can be a big investment if you need to renewably power your whole home. Of course, since you’re generating your own power, you stand to cut down on your electrical bill. Figuring out whether one cancels out the other is a bit of a challenge, so we’re going to run through the factors you need to consider when doing the math. The complicated part of all of this is that the specific numbers will vary depending on where you live, and what the prices are like at any given time.

Upfront cost

Calculating the cost of your solar panels will vary by installer, but you’re looking at an average of $20,000 for a 10kW system. Be sure to get quotes from multiple local companies before taking the plunge. It’s worth exploring the financing options available for solar panels if the upfront cost is too steep. If you need to take out a loan for your solar panel install, it’s possible to find them at subsidized interest rates.

The Wyze Solar Panel generates enough energy to power the camera.
Image used with permission by copyright holder

There are some installers that will even put the solar panels on your roof for free, provided you buy all of the power generated from them. Under this power-purchasing agreement you might just be swapping out one electrical utility provider for another, but at least you won’t have to worry about maintenance since the panels are owned by the installer. Odds are you’ll get better rates, too.

Alternatively, there are solar leases, where you effectively just rent your solar panels, but you get to keep all the power they generate. Again, you won’t own the panels, which means that the installer will get to claim the tax rebates.

Tax rebates

In addition to reducing the cost of the panels themselves, it’s possible to earn a reduction in your payable taxes by installing solar panels. At the federal level, cngress is providing a tax break of 26% of the cost of any solar array installed in 2022. That tax credit is going down to 22% in 2023. You aren’t just writing off the cost of the panels, either. This can include installation labor fees, mounting equipment, wiring updates, and solar batteries. Make sure to save your receipts in order to benefit from this, and check out your state tax incentives as well. These can often make your solar panels tax-exempt when calculating sales tax or property value.

Rebates, SRECs, PBIs

Though the aforementioned federal investment tax credit is the biggest rebate you’ll get for a solar installation, there are a handful of other incidental repayments that can sweeten the deal. Straight-up cash rebates and grants can knock down the price of an install, but they can be hard to come by since they’re specific to certain regions and utility providers.

Some states offer solar renewable energy certificates to those putting solar power into the grid. These SRECs are, in turn, worth cash to utilities that need to go net-zero due to legislation, but have to make up a carbon deficit. They can do that by investing in your clean energy.

Performance-based incentives, or PBIs, are similar, but solar producers are paid directly for the energy itself. Agreements like this ensure that solar panels aren’t only getting installed, but that they’re being maintained for optimum efficiency. If you’re building out a particularly large solar array, PBIs can be quite lucrative.

LG Solar Panels installed on roof can power a home.

Net metering

One way of speeding up the payback on your solar panels is by selling excess energy back to the grid via net metering. This doesn’t create an actual cash payout unless you’re somewhere with a feed-in tariff scheme, but rather applies a credit to your electrical bills. This way, if you don’t use a lot of your power over the summer and generate a significant surplus, you can earn a billing credit that carries over into the fall or winter, provided the utility allows rollover of your credit. This would reduce your electrical costs during the cloudier months when your solar panels aren’t able to capture as much power. Net metering is quite popular across the U.S., so odds are good that you’ll be able to tap into this resource.

Utility fees for solar hookups

Unfortunately, you may still get dinged for demand charges from a utility. These are fees imposed just to keep you connected to the grid, regardless of whether you use power from it at all. Many building codes require a backup in case a solar system fails. Other utilities argue that having fewer people on the grid increases rates across the board since they can’t sell at high enough of a scale. Additional fees help the make up that difference so electrical rates for all customers can stay lower, in theory.

The legitimacy of those arguments is open to debate, but many solar power evangelists see these as cynical means of pushing back on the solar trend that’s threatening the bottom line of entrenched energy utilities shackled to dirty power.

Existing costs

Now that you’ve got a sense of the incentives available to take the sting out of the up-ront cost and how ongoing operation can be kind to your wallet, it’s just a matter of looking at your existing energy usage and seeing how it all stacks up.

Overall, solar panels can save you enough to negate your entire electrical bill, given you have enough panels. Over time, these savings mean your solar panels can basically pay for themselves. That might take five or 10 years, but in general, solar panels are a safe and smart investment. Check out this solar calculator to figure out how much money you can save at your address with all of the latest rebates and incentives applied.

Editors' Recommendations

Simon Sage
Simon has been publishing in tech since before the first iPhone was released. When he's not busy lighting a candle for the…
How much toilet paper do bidets actually save?
A bidet on a toilet seat.

While bidets present a superior option for a squeaky clean butt, you may have heard that they're also an environmentally friendly option.

After all, a high-powered stream is doing the cursed work of cleaning your nether regions. Why would you need toilet paper for anything other than a light dry-off? Let's dive into it.

Read more
Are solar panels recyclable?
Solar panels sit hillside.

One of the great debates when it comes to solar panels is what happens at the end of their life cycle. While many solar panels will last over 20 years, there are still considerations to be made for what happens to them when they are no longer viable. Building up renewable energy resources is absolutely necessary to combat climate change, but we also have to be wary of counteracting that good with excessive e-waste.
What are solar panels made of?

Let's start at the beginning of a solar panel's life. Solar panels are made primarily of glass, a metal frame, silicon cells, and wiring made of silver and copper. The silicon cells can be arrayed in monocrystalline or polycrystalline formats. Monocrystalline silicon is more efficient, as molecules are arranged in a single unified mesh. This results in an even, dark color. Polycrystalline silicon is cheaper since it's amalgamating several crystals. These panels typically appear blue. The downside here is that polycrystalline solar panels are less efficient. Monocrystalline panels are 15% to 20% efficient, while polycrystalline panels are 13% to 16% efficient. This article digs into the chemical and component breakdown of solar panels.
How bad are solar panel materials for the environment?
If we're on a quest to minimize e-waste, we need to know the environmental cost of leaving these materials in landfills, and the cost of producing them from virgin materials.

Read more
Airbnb offering a year in Italy rent-free, and you can apply
The interior of Airbnb's Euro House in Italy.

Airbnb is offering the unique chance for someone to live in a recently restored heritage home in Sicily, Italy -- and the rent will cost absolutely nothing.

If you’re lucky enough to get selected, you can stay at the gorgeous three-story property for up to a year -- so long as you agree to manage the place for visiting guests. You'll be rewarded for your efforts, too, as Airbnb will let you keep all of the earnings generated by the home during your stay.

Read more