With utility rates rising and household electricity usage increasing, many homeowners are looking for a way to lower their electricity bills (without turning their house into a sweat lodge in the summer).

Home solar is touted as a way to reduce your electricity costs and carbon footprint, but how exactly do solar panels reduce electricity bills?

In this article, we’ll explore what an electric bill looks like for a home with solar panels and how much you can expect to save per month. Let’s start with a baseline based on national averages.

What is the average monthly electric bill with solar panels?

The average US electricity bill in the first half of 2023 was $146.92, based on monthly consumption of 881 kWh and the average utility rate of 16.7 cents per kWh per the EIA. A 7.5 kWh solar system with 5 peak hours of sun per day could more than offset the average homeowner’s electricity charges and save the full $146.92 in electricity charges.

Of course, every home in the US has a different mix of sunshine, electricity consumption, utility rates, and net metering policies. But in general, a properly sized solar system with 1:1 net metering can fully offset your monthly electricity bills (aside from certain fixed fees).

The map below shows the average electricity bill for each state in the US in 2023. Click or tap your state to get a better sense of how much you could save per month.

Now that we have a baseline, let’s take a look at what affects your average electric bill with solar panels.

How much can I save a month with solar panels?

You can calculate your monthly solar savings by subtracting the payments for your solar system from your average electricity bill. For example, if you have an average bill of $150 per month and your solar loan payments are $120 per month, then your savings would be $30 a month… to begin with.

However, it’s important to note that while your solar payments stay flat for the life of your loan, your electricity bill continues to rise as rates increase. So what starts out as $30 a month eventually becomes $50, $75, and eventually over $100 per month. 

Due to the constantly rising cost of electricity, your solar savings add up and accelerate over time, as shown in the chart below.

You can increase your cumulative solar savings by paying cash for the system and avoiding the interest charges on a loan, as we’ll explore below.

How long does it take solar panels to pay for themselves?

With a cash purchase, solar panels typically take 7-10 years to pay for themselves – known as a payback period. With a properly sized system, your monthly utility electricity charges will be zero (aside from fixed fees), but it takes time to recoup the upfront investment in your solar system.

The chart below shows the payback period and cumulative savings of buying a 7.5 kW solar system with cash versus buying grid electricity at the national average price.

With a cash purchase, it takes around 9 years to recoup the cost of the system, but the lifetime savings are much greater than financing the same system with a loan.

Do you still have an electric bill with solar panels?

Yes, you will still receive an electric bill if you have solar panels. However, your solar panels will offset some or all of the charges on the bill. 

How do solar panels work with your electric bill?

With that in mind, it’s important to have a good understanding of how your electricity bill looks with solar panels. Most utilities offer net metering, in which solar owners earn credit for the excess electricity they push onto the grid. This credit is used to offset the cost of the grid electricity they use when their panels aren’t producing, and shows up as a negative charge on the bill.

In many cases, you can accumulate negative charges during the spring and summer to offset fall and winter electricity bills when your panels aren’t producing as much electricity as you use.

The example bill below shows how net metering credits (yellow rectangle) are applied to an electricity bill to offset even basic fixed charges (orange rectangle) and, in this case, provide a negative bill for the month (yellow circle).

Of course, every utility has unique billing and net metering structures, so it’s best to ask a utility representative to walk you through a monthly electric bill with solar panels.

The bottom line

With a properly sized system and 1:1 net metering, solar panels will wipe out your entire monthly electric bill, aside from certain fixed fees.

If you finance your system with a loan, your monthly savings is the difference between your avoided electricity bill and the payments on your panels. If you pay cash for the system, you won’t have any monthly electricity payments, but it typically takes 7-10 years to recoup your upfront investment.

Electricity bills are rising nationwide and solar panels provide an effective solution for reducing your energy costs. Connect with an Energy Advisor to easily compare binding quotes from local installers.

Between rising electricity prices and increasing consumption, Americans are facing some of the highest electricity bills of their lives in 2023. When those high bills arrive, it’s only natural to wonder what is using up so much electricity.

In this article, we’ll explore the power consumption of household appliances so you can make a battle plan for lowering your electricity bill.

However, if you find that lowering your usage isn’t effective, realistic, or desirable, connect with an Energy Advisor to see how solar panels can effectively reduce your energy costs!

What uses the most electricity in a home?

Air conditioning uses the most electricity in a home in every region of the US and accounts for 15-23% of the average household consumption. At around 12.5%, space heating has the second largest share of consumption in every region except the South.

Overall, the Big Four home appliances with the highest electricity usage are:

• Air conditioning – 19.5%
• Space heating – 12.4%
• Water heating – 12.0%
• Refrigerators – 7.9%

It’s worth noting that charging an electric vehicle (EV) at home uses roughly as much electricity as running an air conditioner, and can be the biggest consumer of electricity in households that have multiple EV’s charging in the garage. 

Exactly what appliance uses the most electricity in a home depends on a few things, including where it’s located and the type of home it is. For example, air conditioning is the top consuming appliance in urban households while space heating is the top consuming appliance in rural households. 

As for housing types, AC represents the biggest share in single-family homes and apartments, while water heating takes the cake in mobile homes. This is likely due to there being less space to heat and cool in mobile homes.

Your AC usage is the first thing to examine if your electric bill is high in summer, as it provides the greatest opportunity to reduce usage and, by extension, lower your electricity bill.

What small appliances use the most electricity?

After the Big Four major appliances, lights, clothes dryers, TVs, and computers make up the next largest portion of residential electricity usage. However, this will vary based on the type of appliances you have and how much you use them.

The chart below shows the average share of power consumption of 13 common household appliances in 2022. 

What uses more electricity, TV or light?

Based on national averages, lighting uses more electricity per household than televisions by a slim margin. For the average household using 880 kWh per month, lighting accounts for around 38 kWh while TVs account for around 30 kWh.

At the average utility rate of 17 cents per kWh, that amounts to $6.46 per month for lighting and $5.10 per month for TVs. 

Of course, this breakdown varies for each household based on the type of energy efficiency and usage of each item. For example, a household with LED bulbs that watches a lot of TV on multiple screens will likely have higher TV consumption than a household with incandescent lights that hardly watches TV.

What uses electricity at night?

There are two groups of appliances using electricity at night: Appliances you are using intentionally and appliances that are sucking energy while they are “off” but still plugged in.  

Appliances that you run intentionally at night can include:

• Air conditioning and fans 
• Heaters
• EV charging
• Refrigerators
• Dishwashers
• Device chargers
• Night lights/porch lights

Powering these systems at night isn’t necessarily a bad thing, especially if you have time-of-use rates where your rate is much lower during off-peak periods. In fact, it’s actually quite economical to run your dishwasher or laundry machines overnight while electricity is cheap instead to avoid running them during peak hours.

The second group includes systems that are “off” but still sucking power in standby mode (aka vampire appliances). And it isn’t very economical to have vampire appliances leeching electricity when you aren’t using them.

What appliances use the most electricity when turned off?

Systems that leech the most electricity when you are not using them can account for 5-10% of your annual household consumption, or nearly $180 per year for the average household. These appliances include:

• TVs and video game systems (especially older models)
• Device chargers (even if they’re not charging!)
• Computers, printers, and office equipment
• Stereos and set-top boxes, such as DVRs and cable boxes
• Microwaves
• Coffee makers
• Plug-in lamps

Again, these systems will vary from household to household. You can reduce the impact of vampire appliances by unplugging them when not in use, using a power strip to turn them off, or upgrading to energy efficient appliances that use less power in standby mode.

Get to know your electricity usage so you can pay less for it!

Now that you have an understanding of what appliances use the most electricity in your home, you can make a battle plan for lowering your consumption and, by extension, your electric bill.

However, if you find it’s inefficient or unrealistic to make meaningful cuts to your electricity consumption, connect with an Energy Advisor to see how solar panels can reduce the price you pay for electricity.