In this article, we’ll cover:
- What is Solar Savings?
- What is Solar Offset?
- What is the Average Solar Panel Cost?
- What Factors Contribute to Solar Savings?
- Long Term v. Short Term Savings
- Estimating Your Own Savings
- How Does Solar Financing Help Me Save Money?
- The Bottom Line
What is Solar Savings?
Solar savings measures how much money you save each month with solar panels. It is the number of kilowatt-hours (kWh) your system produces multiplied by how much your utility company charges per kWh. Most of the time, it is expressed as a dollar amount.
For example, if your system produces 1,600 kilowatt-hours per month, and your utility company charges $0.16 per kWh, your monthly savings would be $256 per month, or $3,072 per year.
What is Solar Offset?
Solar offset measures the efficiency of your home solar energy system. It is the amount of energy your home solar energy system generates in a year divided by how much electricity your home actually used during that same period. Most of the time, savings or offset is expressed as a percentage.
For example, if your system produced 19,400 kilowatt-hours of electricity, and your home used 21,300 kilowatt-hours of electricity, your solar offset would be 91%.
Solar offset is important in determining the design of your home solar energy system. We’ll talk more about that below.
What is the Average Solar Panel Cost?
Solar panel cost is determined by the type and efficiency of panels being used and is priced according to energy output. According to MarketWatch, in 2023 monocrystalline panels range from $0.75-$1.50 per watt (W), polycrystalline panels range from $0.40-$0.80 per watt, and thin-film panels range from $0.30-$0.60 per watt.
That said, homeowners who are determining the cost of a home solar energy system should look beyond panel cost.
EnergySage notes that in 2023, the average solar installation cost $2.95 per watt before tax incentives. (Keep in mind that this number represents a national average, calculated before any federal solar tax credits or local incentives are applied.) PV materials such as solar panels, inverters, and hardware make up about half of the total installation cost. The other half is made up of “soft” costs, such as taxes, fees, and permits; grid connection requests; and installation and labor.
Factors that Contribute to Savings
Optimize Your Solar Energy System to Lower Your Electric Bill
How does solar save you money? Your exact savings will depend on several factors, such as your energy consumption, the size of your solar energy system, how many hours of direct sunlight your panels see, the size and tilt of your rooftop, local energy rates, and whether you purchase or lease your system.
Design Your Home Solar Energy System with Solar Offset in Mind
Designing your rooftop solar energy system with solar offset in mind can help you save more in the long run. Ideally, your residential solar energy system would offset 100% of the electricity needed to power your home—but in reality, factors outside our control can affect how much money you save with solar.
Proactively designing your home solar energy system with an intentionally high offset can help you save more money with solar.
Maximize Your Solar Panel Output to Maximize Your Solar Savings
Homeowners who buy or lease more efficient solar panels, regularly monitor their system, and keep their rooftop installations free of dirt and debris will see higher outputs that help lower their electric bills and save more money in the long run.
Save Money with Federal, State, and Local Incentives
Homeowners who opt to purchase their home solar energy system can often take advantage of federal, state, and local incentives to go solar. For example, the federal solar tax credit is worth 30% of the total cost of solar systems installed by December 31, 2032—saving thousands of dollars for those who qualify.
In some states, homeowners can also save money on solar panel installations through solar rebates and community solar programs.
Long Term v. Short Term Savings
What are the short-term and long-term savings of solar?
In the short term, homeowners can expect to save money on their monthly electric bills about three months after their solar panels are installed. Solar energy installations will likely also increase the market value of your home in the short term.
In the long term—once homeowners break even on the cost of their home solar energy system—savings increase exponentially. According to recent estimates, homeowners can reasonably expect to save tens of thousands of dollars in energy costs over the lifetime of their solar panel system.
Estimating Your Own Savings
Knowing how much sunlight hits your rooftop can help you estimate how much you’ll save with solar. Find the sunlight values in your area using World Bank Global Atlas and follow these steps to calculate your system’s estimated output in kilowatt hours (kWh). Next, multiply that result by the rate your utility company charges per kWh to see how much you’ll save.
How Does Solar Financing Help Me Save Money?
Homeowners who choose to finance their residential solar energy system through Lumifi benefit from fixed monthly payments and no upfront costs (for solar loans and solar leases). That means you can start saving sooner—giving you a head start on future-proofing your future against rising energy costs.
Homeowners who opt for a solar loan and purchase their equipment can also take advantage of federal, state, and local tax incentives before they expire.
The Bottom Line
Solar savings, solar offset, and solar panel and installation costs are all affected by various factors, and how much you’ll save can be different in the short and long terms. That means learning how you can plan for your future and save the most money with your home solar energy system can be a complex process—but it doesn’t have to be a difficult one. Your friends at Lumifi are ready to help.
Ready to learn more about how solar financing can help you save more money with solar? Contact Lumifi today.
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