How to Read an Electric Bill with Solar | Solar Energy Bill Breakdown
Your electric bill arrives in the mail, you open it, and none of it makes sense. If you recently switched to solar, that first bill can feel even more confusing because of how net metering works.
The good news is that it is easier to understand than it looks.
Some of the power your system produces gets used immediately in your home, so it never shows up on the bill. The rest comes down to simple addition and subtraction.
In this guide, we will walk through your solar bill step by step, explain how net metering factors in, and share examples that make the math clear. By the end, you will see how your production, usage, and savings all fit together, and you will feel confident knowing your system is working the way it should.
First: What Does Your Electricity Bill Look Like Before Going Solar
Before you can understand the nuances of a solar electricity bill, you need to understand how it looked before. The exact details of a bill can vary, but there are some key terms you need to know.
Fixed Charges
These charges are a minimum requirement for being connected to the grid and will remain the same regardless of how much electricity you use. Here are some that you’ll typically see:
- Customer Service Fees: A fee your utility company charges for maintaining your account and billing services.
- Metering Charges: A fee for installing, reading, and maintaining your utility meter.
- Grid Connection Fees: The cost of keeping your home tied to your local power network.
These fees will remain on your bill even after solar is installed because the utility will still maintain your connection to the grid.
Usage Charges (kWh Consumption)
This part of the bill is based on how much electricity you use during the billing cycle and can fluctuate the most. It measures your consumption in kilowatt-hours (kWh). Usage charges are typically calculated as follows:
- Base rate per kWh: A fixed price multiplied by your total usage.
- Tiered Pricing: Higher rates apply once you pass certain usage thresholds, such as 500 or 1,000 kWh.
- Time-of-use Pricing: Electricity costs more during peak periods (afternoons and evenings) and less during off-peak times (overnight or midday).
Before going solar, this is the most significant part of your bill. We’ll explore how solar changes this below.
Supply vs. Distribution Charges
Utility companies often break down your bill into two categories:
- Supply (Generation): The cost of producing the electricity you use. This typically comes from the utility’s generation sources.
- Distribution (Delivery): This is the cost of transporting electricity from the generation source to your home, including the operation of power lines, transformers, substations, and customer service infrastructure.
This is important to note as going solar impacts supply costs, but does not eliminate distribution or fixed costs.
Second: The Basics of Net Metering
One of the major factors impact your electricity bill once you do solar is net metering. Let’s dive into what this is and how it can affect your electricity bill with solar panels.
What is Net Metering?
Net metering allows individuals with solar panels to send excess electricity that they produce back to the grid and get a credit on their utility bill, further reducing the overall cost.
How is Net Metering Calculated?
Net metering is calculated by subtracting the energy delivered to you from the energy received from you. If you produce more than you use, the excess amount is credited back to you.
Think of it like this: the grid is like a big battery, and your meter keeps track of the storage (in debits or credits) and you can buy or sell these debits and credits at the going rate (which can vary depending on your utility company).
Third: How Your Electricity Bill Looks After Going Solar
Now that we have an understanding of net metering and how it can impact your bill, let’s break down what your electricity bill will look like with solar panels.
What Shows Up on Your Bill
- Distribution (Delivery) Charges: The same distribution/delivery charges will still be in place, as supplying energy still requires the same power lines, metering equipment, and facilities in place to serve you.
- Electricity Supplied to You (Purchases): This is the energy supplied to you from the grid when your solar panels are not producing enough electricity, such as at night or during cloudy periods.
- Electricity Recieved From You (Sellback): This is the excess amount of energy your panels produced that were sent back to the grid.
- Net Usage: This subtracts the electricity supplied to you from the electricity received from you. The total amount is your net energy for the billing period.
- Banked Credits: If you produce more than you use, these excess credits will be stored on your account for future billing periods.
What Doesn’t Show Up on Your Bill
- Total Solar Production: The utility meter doesn’t measure how much electricity your solar panels or other systems produce, only what is passed between you and the grid. To see the total production, you have to check your system’s monitoring app.
- Instant Daytime Usage: Some power gets used directly during the day and will not show on the bill or even on the utility meter.
- Breakdown of Supply vs. Usage: The bill will not show you how much of your consumption came directly from solar and how much came from the grid, it only shows the net effect.
Fourth: How is a Solar Bill Calculated
Once solar panels are installed, your bill is calculated with three simple metrics:
- What you purchased from the grid (purchase)
- What you sent back to the grid (sellback)
- The net difference between the two
Everything else is fixed charges and fees that can vary depending on your utility company. Let’s take a look at how to calculate some of these variable charges.
Real-Life Examples
Example 1: Using More Than You Produce
- Total household usage: 1,400 kWh
- Solar Production: 400 kWh (all used instantly in the home)
- From the grid: 1,000 kWh
- Sent to the grid: 0 kWh
Bill Outcome: You will pay 1,000 kWh plus delivery and fixed fees.
Example 2: Producing More than You Use
- Total household usage: 800 kWh
- Solar Production: 960 kWh
- From the grid: 0 kWh
- Sent to the grid: 160 kWh
Bill Outcome: Your usage charge is 0 and the extra 160 kWh will be credited to you. Distribution and service fees may still apply.
Example 3: Balanced Across the Year
- Summer months: Your panels produce more electricity than you use, so you send credits to the grid.
- Winter months: Your solar produces less than you use, so you draw from the grid and use up those credits.
- At the end of the year: The hope would be that your summer surplus cancels out your winter shortfall, leaving you with only fixed charges. If you still have leftover credits, some utility companies (like PPL) pay them out in May, usually at a lower wholesale rate.
Bill Outcome: Your total annual energy costs shrink to a fraction of what they were, or disappear altogether. Details vary slightly for different utilities.
Simple Formulas You Can Use
If you want to calculate information that your utility bill does not provide, here are some simple formulas you can use:
- When usage is unknown: Production + Purchase – Sellback = Usage
- When production is unknown: Usage + Purchase – Sellback = Production
Finally: How Much Does Going Solar & Net Metering Save You?
Many people believe that going solar will completely eliminate their electricity bill or that net metering will make them money, but that’s not actually the case. What going solar and net metering can do for you is eliminate the variable usage charges you’re used to on your electricity bill. This leaves you with fixed charges that are easier to plan for and more affordable than the combined total.
Secure Your Solar Electricity Bill Savings Today
At Belmont Solar, we’re committed to helping you discover how much solar can save you on your electricity bill. That’s why when you set up a free consultation with us, you can bring your current electricity bill and tell us just how much you want to reduce it by. We’ll then work with you to design a custom solar system that helps you reduce your electricity bill by just that.
Secure your electricity bill savings today by setting up a free consultation with our solar experts!