How Do Solar Panels Work With Your Electric Bill

That’s a $96 before-and-after difference, all from partial offset.

Of course, the ideal situation would be to have a system that fully offsets your usage, but that’s not always possible.

Some homeowners have limits on roof space or yard space, which affects how many panels we can install. Others, meanwhile, start with a smaller setup intentionally to avoid maxing out their budget. 

Solar Panels Can Fully Eliminate Your Electric Bill

A zero or negative electric bill is an outcome resulting from a sufficiently sized or slightly oversized solar panel system. This is also often the case in homes where:

• Energy usage is low, or the home uses energy-efficient appliances
• Battery storage is installed, allowing the home to store excess solar energy for use during nighttime or high-rate periods instead of pulling from the grid

A zero bill happens when your solar system produces enough energy over the billing period to fully offset what you used from the grid. In other words, your grid import matches your solar export one-to-one, resulting in a zero net usage. Your utility may then issue a bill showing $0 due (though some fixed charges may still apply but more on that later).

This is possible, but very rare. What can happen more often is a negative bill, which means you exported or sent more electricity to the grid than you used. That extra energy turns into a credit, which can come in a few forms:

• kWh credits that roll over to future months (used to offset usage later)
• Dollar credits that also roll over, or in some cases, the utility may issue a payout once the credit reaches a certain threshold ($50 in the case of Xcel Energy in New Mexico) 

Let’s look at an example.

Say your monthly electricity use averages 800 kWh, and your system is designed to produce 950 kWh in that same period. 

If you use 500 kWh during the day (when your solar is producing) and export the other 450 kWh to the grid, but only import 350 kWh at night, you end up with a net export of 100 kWh – or an equivalent of $16 in bill credit (if utility rates are at $0.16/kWh).

Solar Panels May Not Always Lower Your Electric Bill

As confusing as it sounds, yes, it can happen, and it often has less to do with your solar system’s size and more with how your utility handles solar:

Your utility doesn’t support net metering

Some municipal utilities or electric co-ops don’t offer any form of net metering. In these cases, even if your system exports excess energy to the grid, it doesn’t get credited toward your bill.

Since there’s no mechanism to turn those exports into solar savings, your electric bill ends up looking unchanged.

Your utility follows a non-traditional solar billing model

Some utilities run under different billing structures that don’t visibly reduce your monthly usage charges. Take Austin Energy’s “buy-all, sell-all”, under their Value of Solar (VoS) program.

Under this model, you buy all your electricity from the grid at full retail rates and sell your solar generation back to the utility at a separate fixed rate. So, even if you’re producing a lot of solar power, your utility bill still reflects full usage, and that’s because the credits come separately.

Your solar panels are not performing as expected

Sometimes your system isn’t generating as much power as projected due to unseen issues like shading from growing trees, unexpected panel degradation, or dirt buildup.

If this happens, you won’t offset as much of your usage as intended, and that can quietly prevent your bill from going down. This is why periodic solar panel cleaning is important, especially if you live in dusty or pollen-heavy areas. 

Factors That Affect Your Electric Bill Savings After Going Solar

Below is a full breakdown of key factors that affect your bill savings. As you read through the list, you may realize we’ve already touched on a few of these earlier.

Solar System Size

Your system’s size sets the ceiling for how much you can save (or earn) from solar. The larger your solar panel system’s output capacity, the less energy you’ll need to pull from the grid. And by simple logic, that can naturally drive utility costs down.

That said, it follows that a smaller or undersized system produces less energy. Yes, it can offset a portion of a household’s consumption and lower your electric bill, just not as much as a properly sized solar system would.

Net Metering

Net metering is one of the biggest reasons many homeowners choose to go solar. It rewards excess generation with bill credits that can help you offset your utility costs, and thus, lower your electric bill over time.

However, there’s a catch: Not all utilities handle these credits the same way, and that can significantly affect your savings.

Here are the three most common types of net metering policies and how each one influences your electric bill:

• True Net Metering: This is the most favorable setup for solar customers. Any excess electricity you send to the grid is credited at the same retail rate you pay for grid electricity. So, 1 kWh exported offsets 1 kWh imported, dollar for dollar. This gives you the most straightforward savings and is what many people think of when they hear “net metering.”
• Net Billing: In this model, the utility tracks your energy exports and imports separately. You still earn bill credits, but they may be worth less than what you pay per kWh. These credits often roll over month to month, but in many cases, any remaining credits are wiped clean at the end of your true-up or annual billing cycle. With that said, this structure subtly discourages overproduction. 
• Instantaneous Netting: Here, every kilowatt-hour you export is compensated immediately, but usually at a lower, fixed rate that changes throughout the day. This means your exports may be worth significantly less than your imports, which reduces how much you can offset.

You can check out the guides I’ve written on how net metering works in Utah and Nevada if that applies to you.

Weather & Seasonal Changes

The sun is the driving force behind solar power, so naturally, anything that blocks or reduces sunlight affects how well your system performs. In that sense, it affects how much you save on your electric bill as well.

Let’s talk about weather first. On rainy or cloudy days, solar panels still work (I previously wrote about this in more detail), but they capture less light, which means lower energy production. Your home will then have to pull more electricity from the grid during extended periods of overcast skies.

The same principle applies to seasonal changes. Winter, for instance, brings shorter days and a lower sun angle, both of which reduce solar output (not to mention snow buildup can temporarily block your panels as well). If your system can’t meet your household demand during this time, your grid usage increases, and so does your bill.

Summer, meanwhile, brings longer daylight hours and more direct sunlight – conditions that allow your panels to reach peak production. You can expect to generate the most energy credits during this season. Any surplus production often helps offset your winter deficits, especially with net metering or net billing in place.

Changes in Electric Consumption Behavior

Even if your solar panels produce a lot of energy, your savings will shrink if your household starts using significantly more electricity than before.

Solar systems are typically sized based on your past energy habits. If those habits change, perhaps you start running your air conditioner more often or forget to turn off appliances, you may find yourself pulling more electricity from the grid.

The same goes should you add any high-consumption upgrades later on, such as an electric vehicle, a hot tub or a heated pool. Unless your system was designed with those upgrades in mind, your solar production won’t be able to cover the additional load.

Utility Charges

Utility charges are the fixed fees that your power company adds to your bill each month, no matter how much electricity you use. These typically include:

• grid connection fees
• meter maintenance charges
• transmission fees
• other service-related costs

Depending on where you live, these fees usually range from $10 to $35 per month. That might not sound like much at first, but over the course of a year, it adds up to $120 to $420. 

And even if your panels completely offset your energy usage, you can’t eliminate or bypass these utility charges unless your home is entirely off-grid, which most homeowners are not.

Solar Panel Performance Issues

When solar panels don’t perform as expected, your system produces less energy, and that diminishes your potential savings. Performance issues can be caused by one or more of these.

• manufacturing defects
• damage from hail or falling debris
• unforeseen obstructions that cause shading (e.g. nearby construction, growing trees, bird droppings, pollen, etc.)

Fortunately, these are things you can track using a solar monitoring app, which is something I often recommend to solar customers. It helps homeowners catch unusual drops in production early, so they can contact the Avail Solar team right away if something looks off.

Will I Still Get an Electric Bill After Installing Solar?

Yes, in most cases, you will still get an electric bill after installing solar. Even if your system is capable of offsetting your entire electric consumption, you’ll still have to pay your utility’s fixed minimum fees, such as meter charges, grid access fees, and taxes, among many others. These fees vary depending on your utility provider, but they usually range from $10 to $35 per month.

Why is My Electric Bill Still High After Installing Solar Panels?

If your electric bill remains high even after going solar, the most likely reasons are:

• A spike in your energy use. Typical examples include using your AC more during the hotter months, charging an electric vehicle that wasn’t part of your original energy plan, or upgrading to high-wattage devices (e.g. water heaters, ovens, etc.)
• Underperformance from your solar system. This can be caused by product defects, storm damage, or unexpected shading. Not to worry, though – some of these issues may be covered by your solar panel warranty or even your home insurance, depending on the situation.

These two areas account for nearly every case where a homeowner feels like their solar savings don’t match what was promised by their solar installers.

How Will My Electric Bill Change If I Add Battery Storage to Solar Panels?

Adding battery storage to your solar system can lower your electric bill by reducing how much electricity you pull from the grid. This becomes even more valuable if you’re on a time-of-use plan, where electricity is more expensive during peak hours (typically from late afternoon to evening).

During the day, your panels power your home and store any extra energy in the battery. At night, when rates are higher, your home draws from the battery instead of the grid.

Does Budget Billing Work with Solar Panels?

Yes, budget billing can still work after going solar, but it may not always be the best choice, especially if you want to see the impact of solar savings immediately. Here’s why. 

If you stay on budget billing after going solar, your monthly payment stays the same, even if your actual usage drops. In reality, your solar credits are offsetting your charges in the background, but that won’t show up in your payment amount until your utility recalculates your budget plan (usually once a year).

That delay can make it harder to see how much your solar setup is actually saving you month to month.

Maximize Electric Bill Savings With the Right Solar Design

There’s one last factor I haven’t mentioned yet, and it’s often the reason why some systems save more than others: Getting your system designed and installed the right way from the very start.

Avail Solar has installed hundreds of home solar systems across Utah, Colorado, and Nevada, and we’ve always believed this: Real solar savings don’t happen by accident but from building systems that analyze past usage, account for local weather patterns and regulations, and are tailored to your actual energy needs and goals.

Request a quote today and see what the right solar design can do for your electric bill.