How to Save on Your Monthly Electric Bill By Installing a Grid-Tied Solar System

Installing a grid-tied solar system can significantly reduce your monthly electric bill. Here is a comprehensive guide on how to save money by going solar.

What is a Grid-Tied Solar System?

A grid-tied solar system, also known as net metering, allows you to generate your own electricity from solar panels and send any excess power back to the grid. The key components are:

Solar panels - Convert sunlight into electricity. More panels means more power generation.
Inverter - Converts the DC power from panels into usable AC power. Required to connect to the grid.
Net meter - Measures how much electricity you use vs export. You get credit for excess power sent to the grid.
Utility company - You remain connected to the grid. At night or when your panels underproduce, you draw power from the grid per your net consumption.

This setup allows you to offset your electricity purchases from the utility company. When your system produces more than you use, the excess power goes back into the grid for credit. Your meter spins backwards during those times.

How Much Can You Save by Going Solar?

Savings depend on several factors:

System size - More solar panels means more power generated. Size your system to your needs.
Electricity rates - The higher your utility rates, the greater the savings from solar.
Net metering policy - Most states have net metering which gives you full retail credit.
Electricity usage - Higher usage equals more savings potential. Track your monthly usage.
Sun exposure - More sun equals greater power production. Roof angle and shading also matter.
Incentives/rebates - Federal, state, and local incentives can offset system costs.

Under the right conditions, you can zero out your electric bill or even produce a net profit each month.

How Does Billing Work with a Grid-Tied System?

Grid-tied solar uses net metering for billing:

The net meter tracks your power inflow vs outflow. It spins forwards when drawing from the grid, and backwards when exporting solar power.
At the end of each billing cycle, your utility company calculates the net electricity consumption. If you produced more than you used from the grid, you get a credit.
If your solar system offsets your entire usage for the month, your bill is zeroed out. With a large enough system, you can even achieve a negative net consumption and get paid by the utility.
Excess credits can be rolled over month-to-month, depending on your state's net metering laws. At the end of a 12 month cycle, some utilities will clear out unused credits.
When the grid goes down, your solar system will shut off automatically for safety unless you have batteries. Grid failures won't disrupt your billing.

What Size Solar System Do You Need?

Your solar panel system size should be based on your home's electricity usage, also called your load profile. Follow these steps:

Review 12 months of electric bills to get your average monthly usage in kWh.
Determine if your usage is expected to increase soon due to an EV, pool, etc. Factor any increases into the average.
Multiply your average monthly usage by 1.2 to size your system. This provides a 20% buffer.
Use an online calculator to determine how many solar panels are needed. Allow for at least 3-4 hours of full sun exposure daily.
Choose a reputable installer who can assess your site and properly design the system.

Oversizing your system won't provide additional savings, so use your actual usage and needs to right-size it.

Should You Buy or Lease Your Solar Panels?

You have two options for going solar - buying or leasing:

Buying has higher upfront costs but greater long-term savings. You own the system so get all incentives, credits and electricity generated.
Leasing has zero or low upfront cost but you only get a portion of the savings. The leasing company owns the system. You buy the power produced at a discounted rate.
Buying results in the best return on investment over a 20-30 year period, but leasing can be attractive for those who lack the upfront capital.
Run the numbers for both buying vs. leasing to determine the better option based on your financial situation.
Be sure to read the fine print of any lease agreement. Check all fees, billing terms, rate escalators, and end of lease details.

5 Tips for Maximizing Savings with Solar

Follow these tips to maximize your energy bill savings with solar:

Add battery backup to use more of the power you generate directly instead of sending it to the grid. Batteries increase energy independence.
Adjust your thermostat a few degrees higher in summer and lower in winter to reduce HVAC usage.
Run major appliances like the dishwasher and laundry during peak solar production hours.
Swap out any remaining incandescent bulbs for LEDs which use 75% less energy.
Charge your electric vehicle midday to take advantage of peak solar production. An EV becomes almost free transportation when powered by the sun!

With the right solar design and some power optimizing habits, you can drastically shrink your electric bill. Go solar and start saving!