Path-Q Solar

How should I translate my solar system's expected first-year production into estimated bill savings?

Answer

Estimate savings by matching expected solar production to the electricity charges it can offset, rather than multiplying all production by a single retail rate. Account separately for energy charges, fixed charges, export compensation, time-of-use rates, and any limits on credits.

Key points

  • Start with modeled first-year production in kilowatt-hours and the portion used directly in the home.
  • Value self-consumed energy at the applicable avoided purchase rate.
  • Value exported energy using the applicable credit or compensation rate, which may differ from the purchase rate.
  • Subtract any continuing fixed charges, minimum bills, demand charges, or other charges solar does not avoid.
  • Compare the estimate with historical bills and include expected production degradation when projecting later years.

What it depends on

  • Your utility tariff and export-credit rules
  • Hourly or monthly household consumption
  • System orientation, shading, and expected production
  • Whether batteries change self-consumption
  • Fixed, demand, or minimum bill charges

Risks and trade-offs

  • Using the full retail electricity rate for every kilowatt-hour can overstate savings when exports receive lower compensation.
  • Actual savings vary with weather, household usage, utility rate changes, and system downtime.
  • A bill reduction is not the same as total financial savings after financing, maintenance, insurance, and taxes.

Information you may need

  • First-year production estimate and monthly production profile
  • At least one year of interval or monthly electricity use
  • Current tariff, export rules, and fixed charges
  • Financing, maintenance, and other system costs

Your next step

What to do next

Build a month-by-month comparison using your production model, historical consumption, and current utility tariff, then verify tariff assumptions with the utility before relying on the savings estimate.

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Some details may depend on your location, installer, utility, incentives, regulations, or specific property.

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