Quick Answer
Utility rates change with solar energy use by reducing the amount of electricity drawn from the grid, often resulting in lower overall electricity bills. However, some utility companies may charge customers for the excess energy produced by their solar panels and fed back into the grid.
Understanding Net Metering
Net metering is a policy that allows homeowners with solar grid tie systems to offset their electricity consumption by generating their own power. The excess energy produced is fed back into the grid, and the utility company provides a credit for the energy produced. For example, if a homeowner produces 1,000 kilowatt-hours (kWh) of energy and consumes 800 kWh, the utility company will subtract the excess 200 kWh from the homeowner’s total energy bill.
Utility Rate Structures
Utility companies often have tiered rate structures to encourage energy efficiency. For instance, a utility company might charge $0.15 per kWh for the first 500 kWh consumed, $0.20 per kWh for the next 500 kWh, and $0.30 per kWh for any excess consumption. By generating their own energy, solar homeowners can move up the tiers and save on their utility bills. A homeowner who consumes 1,000 kWh might save $20 by generating 200 kWh of their own energy.
Case Study: Solar Panel Installation
Consider a homeowner who installs a 5 kW solar panel system, generating an average of 6,500 kWh per year. If their utility rate is $0.15 per kWh, they would save $975 per year by generating their own energy. However, if the utility company charges a $50 monthly minimum fee, the homeowner might need to consume around 500 kWh from the grid to avoid this extra charge. By carefully considering their energy needs and utility rate structure, homeowners can maximize the benefits of their solar grid tie system.
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