Do solar panels eliminate your electric bill?

A big reason that people go solar is to reduce or even eliminate their cost of electricity, but that doesn’t mean your monthly bill goes away.

One of the big reasons that people go solar is to reduce or get rid of their monthly electricity costs.

If you use The Solar Nerd calculator, you can estimate how many solar panels you’ll need to generate 100% of your electricity needs. If your roof is large enough to fit all of those panels, you can reduce your annual electricity supply costs to zero.

However, even if your solar panels supply 100% of your annual electricity needs, you will still receive a monthly bill from your electric company. Most utility companies charge a minimum monthly fee, which means that you will have to pay a small amount every month, even if your usage that month is zero or even negative.

What part of your electric bill do solar panels eliminate?

Your solar panels will reduce or eliminate the electricity delivery part of your bill. Every utility bill will look different, so you’ll need to pull up your copy to see how your company itemizes the individual charges.

On my bill, the part of the monthly statement that lists my electricity usage for the month is titled Delivery Services. Your bill may label this a little differently. Some utilities will have separate charges for delivery and generation. If that’s the case, you’ll see sub-charges for each, but also a total charge for your electricity usage.

Whatever the case, your bill should list your total electricity usage in kilowatt-hours (kWh). It’s this part of your monthly bill that your solar panels will apply to.

How net metering looks on your electric bill

If you have net metering, your utility company will give you a credit for electricity that you send into the grid. This means that on some months you might even have a negative electricity usage on your bill.

On my bill below, you can see that I have negative usage listed beside net metering. This is because during this billing period, I generated 67 kWh more electricity than my house used. For me, this is common in the spring, when the weather is sunny but my air conditioner isn’t running.

Sample electric bill with basic charge highlighted
Sample electric bill with basic charge highlighted

In this month, because I’ve generated more electricity that I’ve used, I get a credit on my electricity usage (listed as New Cumulative Credit). This credit will be carried forward to my next bill.

Why you still get a bill even if you use zero grid electricity

You’ll notice that on my bill, I still have a bill of $18.29, even though my electricity usage for the month is negative 67 kWh. This is because my utility company has a basic service charge of $17 per month, plus taxes. National Grid describes the basic service charge as:

A charge to cover costs for meter reading, billing, equipment and maintenance. This charge is the same regardless of how much energy is used during the billing period.

Most utility companies will have a similar charge, and the cost will vary. But because nearly every company has this charge, don’t assume that your electricity bill will be zero, even if you’ve sized your solar energy system to generate 100% of usage. Sales people from solar installer companies may gloss over this and tell you that your monthly electricity bill will “go away”, but the minimum charge can add up to be a substantial charge over a year.

You might get billed just for having solar

In addition to the common basic service charge, some utilities and states have policies that are actively hostile toward solar. For example, Alabama Power has a “Capacity Reservation Charge” that charges customers $5 per month for every kilowatt of a solar photovoltaic system that is connected to the grid. If you have a typical 6 kilowatt system, you would end up paying a substantial $30 a month to Alabama Power, regardless of how much grid electricity you use or how much solar electricity you send into the grid.

Utilities companies claim that this charge is necessary to ensure that solar customers pay their fair share of grid maintenance. However, the reality is that the electric grid requires modernization for the 21st century, and distributed solar can play an important role in improving the resilience of the grid.

In reality, many utility companies use this charge as a way of discouraging people from going solar. When households go solar, utilities lose profits, so many companies in the US have been trying to enact similar anti-solar policies.

Bottom line: you’ll still get a bill, but it’ll be a lot lower

If you go solar, expect to still get an electric bill, but it should be a lot smaller than what you’re used to. My minimum monthly bill is just $18.29. This is a lot better than the average bill in New York state of $103.

That’s just the average, and a lot of people in the United States regularly have electricity bills that are hundreds of dollars a month. If you’re one of those people, adding solar panels to your house and seeing your net electricity usage drop to zero (or even negative) on your utility bill is a pretty great thing.

Save 30% or more on home solar with current incentives

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Use our calculator to get a financial payback and solar performance estimate customized to your home, including federal, state, and local incentives.

When you’re ready, fill out our form to get up to three estimates from qualified solar installers.

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