How Much Money Can Solar Panels Save You On Your Electricity Bill?

How Much Money Can Solar Panels Save You On Your Electricity Bill

Do Solar Panels Really Save You Money?

Yes, is the simple and direct answer to the question. The number of direct hours of daily sunshine, as well as the size and angle of your roof, are all crucial factors in deciding how much solar may save you.

Solar panels aren't only beneficial for the environment; they can also save you a lot of money throughout the life of your solar panel system. Basically, solar panels are expensive up front, but they will save you money on energy costs in the long run. Over the life of a solar panel installation with the efficient help of solar software, the typical house may save between $10,000 and $30,000.

With so many innovative investing options available today, it's easy to be wary of new products that claim to "save you heaps of money." Saving money by lowering your power bill is one of the key draws and selling factors for solar as a product and house renovation.

How Much Do Solar Panels Help You Save On Your Electric Bills?

The first step in determining how much solar power may save you is to determine how much money you currently spend on energy each year. With the installation of a 5 kW rooftop solar system in their houses, homeowners may save roughly 600 units of power each month, which can cut their electricity costs by over 5,000 rupees ($75.2), stated Arshi Chadha, Chief Operating Officer of Sunson Energy.

This is a breakdown of the figures for a 5 kW rooftop solar installation. Assuming a 1 kW system generates 4 units (kWh) per day on average, a 5 kW system generates around 20 kWh/day or 600 units per month. With a tariff per unit of 75.50/kWh, the solar system will be able to produce roughly 73,300 rupees ($44.37) of electricity each month. This figure may be higher if the tariff in that location is higher than 75.50 rupees ($0.0739)/kWh.

If your monthly energy expenditure is roughly 3,000 rupees ($40.33), building a 5 kW rooftop solar system would reduce your bill to zero. And if your monthly payment is approximately 77,000 rupees ($94.12) per month, then with the system implemented, your expenses would be lowered to about 4,000 rupees ($53.78) per month. And, if your monthly payment is roughly 1,500 rupees, after installing a rooftop solar system with net metering, instead of paying 1,500 rupees ($20.16) per month, you may collect 1,800 rupees ($24.20) per month from the distribution licensee (DISCOM).

Then, given the fluctuating nature of power pricing, you must project what utility company rates will be in the coming years. When comparing the cost of utility power against residential solar, bear in mind that electricity costs are expected to rise yearly. Utility rate inflation is another reason to go solar: when you produce your own electricity with a rooftop photovoltaic (PV) system, you lock in energy expenses at a consistent rate, eliminating the need to factor in volatile utility company prices.

Because solar energy is an initial investment, the only costs associated with a solar system are installation and any additional power expenditures if your panels do not completely balance your electricity demand.The accuracy with which you design your PV system determines whether or not your system can totally offset your power demands; you can calculate how many solar panels you'll need to achieve that percentage.

What is Net Metering?

Net metering is a technique in which the power company keeps track of the energy spent and produced by a solar-powered home. When users have excess solar power, they may feed it into the state's power system and obtain a credit on their energy bill.

If you reside in a state that has adopted the net metering policy, for example, you will be credited for the power you provide back to the grid at the same retail price that you pay for the electricity you receive from the grid.

A common misconception about solar panels is that they will completely eliminate your utility bill.Even if you install enough solar to totally offset your power use, you will continue to get an electric bill from your utility as long as your property is grid-connected. This does not, however, imply that you will constantly be paying money on your bill — here's why:

Renewable energy produced by your solar panels that you do not need immediately is remitted to the grid in exchange for credits on your electric bill, according to a program known as net metering, which is available in most jurisdictions. This enables you to take electricity from the grid at night (when the sun isn't shining and powering your solar panels) without paying any additional money, as long as you pull back the same amount or less than you gave to the system. All net metering credits you used that month will be displayed on your monthly energy statement, and you will not be charged for that electricity. The leftover power you drew from the grid that wasn't offset by net metering credits and that wasn't generated and consumed immediately at your residence is where you could notice tiny electricity costs.

What is Net Metering

In short, even if you install solar panels, you will still get an energy bill. Importantly, the statement may not require you to pay anything and may just display how your consumption for the month was offset by net metering credits. If you provide more power to the grid than you use, your utility will normally carry over any unused bill credits to the next month for you to spend. In any event, adding solar panels will almost surely result in a decreased average monthly power bill payment, and in certain circumstances, your monthly electricity bill will be eliminated.

What Are The Benefits of Net Metering?

Requires Less Resources:

Because net metering solar systems are erected on the rooftops of homes and businesses, they do not need enormous tracts of land like their larger solar park relatives.

Furthermore, since they utilize the state-owned power system as a large battery, they don't need costly battery backups to balance out power usage throughout the day. This lowers the cost of installation.

Reduced Electricity Bill:

You only pay for the shortfall electricity utilized with net metering systems, which is the difference between the power consumed by the home from the grid and the solar power produced by the panels. This dramatically cuts your power expenditure while also providing you with a chance to earn money.

Low Maintenance:

Solar panels, inverters, and mounting frames for net metering systems need little to no maintenance. Because these solutions do not need generators or batteries, they save money on maintenance. This saves you not only money but also time.

Improved Energy Utilization:

Significant transmission and distribution losses occur when power travels from the grid to your house, squandering energy produced by the combustion of fossil fuels. Because energy is produced and consumed at the same site, these losses are essentially non-existent with net metering systems. Not only does this minimize energy congestion and stress on overall grid infrastructure, but it also provides financial relief to distribution companies (DISCOMs) and increased grid voltage to customers.

Lower Per Capita Energy Footprint:

The installation of net metering systems also encourages the use of localized power production using renewable technologies. This contributes to a reduction in the country's per capita energy footprint.

How Does The Net Metering System Work?

In a rooftop net metering system, the DC power produced by the solar panels is converted to AC electricity and delivered into the grid through a power conditioning unit (the phase lines are selected depending on the capacity of the installed system and the regulatory framework specified by respective states).

During the day, these systems produce electricity, which is completely used to power captive loads and feed surplus power to the grid. In the event that solar power is inadequate due to cloud cover or rain, the captive loads are powered by the grid.

To implement this net-metering method, state electricity boards replace the present service connection meter with a bidirectional meter that shows import and export energy separately. In terms of capacity, rooftop solar systems ranging from 1 kW to 500 kW may be installed on residential rooftops, with around 12 sq.m of shadow-free surface necessary to install a 1 kW grid at home. This includes allowances for clearances between rows of solar panel arrays.

The solar panels themselves must be mounted on the roof with a south-facing tilt (at an angle determined by the site's latitude), while the grid inverter must be located inside in a dry, safe, and conveniently accessible area.

How Does The Net Metering System Work?

Net Metering System in India:

Following the publication of the Delhi solar policy in 2016, the electricity regulator formed a committee to build this framework and produced draft recommendations under the DERC (Net Metering for Renewable Energy) Regulations, 2014 last year. After receiving objections and comments from the general public by January 2019, the framework was eventually announced.

"The decision will aid in the development and deployment of renewable energy projects in the residential and agricultural sectors, benefiting tens of thousands of inhabitants and farmers." We now have roughly 630 net metering connections, and this figure will skyrocket once the order is implemented. "We are now making adjustments to the billing system in order to implement it," stated a Tata Power-DDL official.

According to BSES, clients may apply for net metering on their website. "Previously, we created the Solar City Initiative to bridge the gap between the customer and the seller." After installation, BSES will conduct an assessment to evaluate the quality and ensure that it was completed in accordance with the minimal technical criteria, stated a BSES official.

Tata Power now has around 630 net-metered connections with a capacity of 25 MW, whereas BSES has 1,600 with a capacity of 60 MW. According to BSES, a 100kW plant may save up to 1,27,750 units per year, for a total savings of Rs 9.26 lakh per annum. A 5 KW plant may save Rs 46,300 per year. The discoms said that to apply for the initiative, individuals should simply contact them, following which a feasibility test would be performed and bills would be reviewed to determine the needs of a home or colony. "We will be able to decide on the solar panel capacity based on use and bill amount." Various CGHS societies are prospering with solar panel capabilities ranging from 50kW to 200kW, a BSES official said.

According to vendors, the cost of a solar panel can be repaid in savings in as little as 5–6 years. "This is a conservative estimate, and the real investment is returned in less than four years." Going solar has several advantages since the product is a long-term investment, said Abhishek Dabas, co-founder of Zolt Energy, a private solar-panel supplier.

According to Sanjeev Aggarwal, MD and CEO of Amplus Solar, the risk of investment is normally minimal, and savings may be as high as 90% of the overall bill, depending on plant size and consumption pattern. "A 5 kWp basic rooftop installation would cost Rs 3-4 lakh on average. He said if a person chooses to get a subsidy, MNRE will pay 30 percent of the plant's cost via the state nodal agency. However, Pujarini Sen, a Greenpeace India campaigner, claims that the notification process has lasted much too long, preventing individuals from receiving subsidies for solar projects. "The main thing now is to make customers aware of it and to make it easier for them, particularly at the home level." When it becomes popular, the load on the grid and power prices will fall, benefiting both the customer and the discoms, she noted.

Solar Panels Can Create Big Savings:

Solar Panels Can Create Big Savings

Finally, whether you're looking at economics or carbon emissions, a solar panel system will save households a lot of money. As the first data table shows, 20-year power savings from solar may be considerable, ranging from $10,000 to over $30,000. The primary determining element will be the cost of power, which varies greatly depending on where you reside. Nonetheless, if you reside in a state with middle-to upper-tier electricity prices, solar energy will be a risk-free investment with significant returns. On the emissions front, as the size of the panel system rises, so do the CO2 reductions in the surrounding area, making solar an environmentally aware investment.