What Is the Average Electric Bill With Solar Panels?

Why your bill rarely drops to zero

Many homeowners expect their power costs to vanish completely once they install a rooftop system. The reality is that the average electric bill with solar panels rarely drops to exactly zero.

Even when your solar panels generate more power than your home consumes, you will still receive a monthly utility bill. This happens because electric bills are split into variable energy charges and fixed connection fees. Variable charges are based on the kilowatt-hours of electricity you actually use. Fixed fees are the cost of keeping your home physically connected to the wider power grid.

Most utilities charge a basic customer fee just to maintain your meter and manage your account. This fee applies whether you use a thousand kilowatt-hours or absolutely none. Depending on your location and utility provider, this fixed cost usually ranges from ten to thirty dollars a month.

Some states also allow utilities to add specific non-bypassable charges to solar customer bills. These fees fund public purpose programs, energy efficiency initiatives, or grid infrastructure upgrades. Solar generation cannot offset these specific line items.

The anatomy of a standard utility bill

Before you can calculate your future costs, you need to understand how your current bill is built. A standard utility bill is divided into supply charges and delivery charges. Supply charges cover the actual cost of generating the electricity at a power plant. Delivery charges cover the cost of transmitting that power across high-voltage lines and distributing it through local wires to your neighborhood.

Both supply and delivery are usually billed per kilowatt-hour. When you install solar panels, you generate your own supply. This directly wipes out the variable supply charges for the energy you offset.

It also wipes out the variable delivery charges for that same energy, because you are not using the utility company’s wires to move it. However, utility bills also include taxes and local municipal fees. These line items appear every single month. Your solar panels cannot erase them.

How net metering determines your savings

The single biggest factor in calculating your average electric bill with solar panels is your state’s net metering policy. Net metering is the billing mechanism that credits you for the excess electricity your panels send back to the grid. When the sun shines brightly at noon, your home likely produces more power than it needs.

That extra power flows outward, spinning your meter backward and building up credits on your account. In states with one-to-one retail net metering, the math is straightforward. The utility credits you for your excess power at the exact same rate they charge you to buy power.

If you pay fifteen cents per kilowatt-hour, you get fifteen cents for every kilowatt-hour you export. Other states use a net billing or avoided-cost model. Under these rules, the utility pays you a lower wholesale rate for your exported power, but still charges you the full retail rate when you pull power from the grid at night.

This setup significantly changes your monthly math. You will need to export much more solar energy just to offset a small amount of grid usage.

The impact of time-of-use rates

Many utility companies now require solar customers to switch to a time-of-use rate plan. A time-of-use plan means the price of electricity changes depending on the time of day. Power is cheapest during the morning and late at night, and most expensive during the late afternoon and early evening.

This pricing structure complicates the financial return of a solar installation. Your panels generate their maximum output during the middle of the day when electricity prices are generally low. When the sun goes down and your family starts cooking, watching television, and running appliances, you have to buy power from the grid at peak evening prices.

Because you are exporting cheap power and importing expensive power, your monthly bill will be higher than a simple energy offset suggests. The credits you earn at noon are simply not valuable enough to cover the premium costs of evening electricity.

Adding a solar battery to the equation

Homeowners facing strict time-of-use rates often install a home battery system alongside their solar panels. A battery fundamentally changes how you interact with the grid. Instead of exporting your excess midday power for a low credit, you store that energy directly in your home.

When peak evening rates kick in, your home draws on the stored battery power rather than buying expensive electricity from the utility. This mechanism helps you maximize the financial value of every kilowatt-hour your roof generates. By keeping your grid imports to a minimum during the most expensive hours, you can push your utility bill much closer to that baseline connection fee.

Batteries also provide backup power during grid outages. Adding storage increases the upfront cost of your solar project considerably. You have to weigh the monthly utility savings against the higher cost of financing the battery hardware.

System size and your energy offset

Your new utility bill depends heavily on how much of your historical energy usage your solar system is designed to replace. This percentage is known as your energy offset. A system designed for a one hundred percent offset aims to produce exactly as much electricity as your home uses over the course of a full year.

Achieving a full offset is not always physically possible. A north-facing roof with heavy tree cover simply will not catch enough sunlight to power a large home. If your roof space limits you to an eighty percent offset, you will always have to purchase the remaining twenty percent of your power from the utility.

Your energy consumption habits also play a major role in this calculation. If you install an electric vehicle charger or switch to an electric heat pump after your panels are installed, your consumption will spike. Your previously perfect offset will drop, and your monthly utility bill will climb accordingly.

Solar panels also lose a tiny fraction of their efficiency each year, a process known as degradation. A system that offsets one hundred percent of your usage in year one might only offset ninety percent in year fifteen. Some homeowners choose to slightly oversize their initial installation to account for this gradual loss in production.

Factoring in your financing costs

When evaluating your new monthly expenses, you must look at the entire financial picture. The utility bill is only one part of the equation. Unless you purchase your solar system outright with cash, you will have a new monthly payment for the hardware itself.

If you take out a solar loan, you will pay a fixed monthly installment to a lender. The size of this payment depends on the total cost of the system, your down payment, and the interest rate of the loan. High interest rates will significantly increase your monthly financing cost.

Your total energy cost becomes your loan payment plus your remaining utility bill. The goal is for these two numbers combined to be lower than your old utility bill. Solar leases and power purchase agreements work differently.

With a lease, you pay a fixed monthly fee to use the equipment, while a power purchase agreement requires you to buy the power the panels generate at a set per-kilowatt-hour rate. In both cases, a third-party company owns the hardware. You will still receive a bill from your utility for fixed grid charges and any extra power you consume.

State and seasonal variations

Solar production naturally fluctuates with the seasons. Your panels will generate significantly more electricity during the long, sunny days of summer than they will in the dead of winter. Your electric bill will rise and fall along with these seasonal changes.

Most utilities manage this fluctuation through an annual billing cycle for solar customers. During the summer, you might generate a surplus of credits that roll over from month to month. When winter arrives and your solar production drops, you can draw on those banked credits to offset your heating costs.

The financial mechanics vary sharply from state to state. Some regions mandate that utility companies cash out your remaining credits at the end of the year, often at a low wholesale rate. Other states allow credits to roll over indefinitely.

Understanding your local utility tariff is essential for mapping out your long-term costs. A favorable net metering policy in one state can make a small solar array highly profitable. Strict rules in a neighboring state might require a much larger system and a battery to achieve the same financial return.

Frequently asked questions

Can I disconnect from the grid entirely?

Going completely off-grid requires a massive solar array and multiple large batteries to survive consecutive cloudy days. For most homes, staying connected to the grid is far more reliable and cost-effective.

Do solar panels eliminate delivery charges?

Solar panels reduce the delivery charges associated with the variable power you consume. They do not eliminate the fixed daily or monthly customer charges that utilities assess to maintain the physical power lines.

What happens if I use more power than I generate?

Your home will seamlessly pull the extra electricity it needs from the public grid. Your utility will bill you for that excess usage at their standard retail rate.

Compare your options before moving forward

Understanding the mechanics of solar billing helps you set realistic expectations for your future energy costs. The exact numbers will depend entirely on your local utility rules, your roof, and your daily habits. It pays to look at all your energy choices side by side.

To see how different rates and structures line up in your area, you can compare electricity plans and find the best fit for your home.