Solar Panel Savings Calculator
How Solar Panels Save You Money
Solar panels convert sunlight into electricity through photovoltaic (PV) cells. When installed on your rooftop, they generate clean, renewable energy that powers your home directly. Instead of buying all your electricity from your utility provider, you offset part (or all) of your usage with self-generated solar energy.
Key financial benefits of installing solar panels include:
- Lower monthly electricity bills
- Protection from future electricity rate increases
- Potential incentives or tax credits (varies by region)
- Increased home value
By using a solar panel for your home, especially on your rooftop, you can maximize sun exposure and space efficiency—making it one of the most effective ways to reduce household energy costs.
How Solar Savings Are Calculated
To estimate solar panel energy savings, our calculator uses several key inputs:
- Your average monthly electricity bill
- Electricity cost per kilowatt-hour (kWh)
- Average sunlight hours per day in your location
- Installation cost per watt (which varies by provider)
Here are the steps our calculator takes:
1. Estimate Monthly Electricity Usage (kWh)
Monthly Usage = Monthly Bill / Electricity Cost per kWh
2. Estimate Required System Size (kW)
System Size = Monthly Usage / (Sunlight Hours × 30)
3. Estimate Monthly Solar Production (kWh)
Monthly Solar Output = System Size × Sunlight Hours × 30
4. Estimate Monthly Savings ($)
Monthly Savings = Monthly Solar Output × Electricity Cost per kWh
5. Estimate Installation Cost ($)
Installation Cost = System Size × 1000 × Cost per Watt
6. Estimate Payback Period (Years)
Payback Period = Installation Cost / (Monthly Savings × 12)
7. Estimate Lifetime Savings (25 years)
Lifetime Savings = Monthly Savings × 12 × 25
These formulas allow homeowners to make informed decisions based on real data, helping them decide if going solar is financially worthwhile.
Example: Suburban Homeowner in California
Let’s say Maria lives in a sunny suburb of Los Angeles. Here are her numbers:
- Monthly electricity bill: $180
- Cost per kWh: $0.30
- Daily sunlight hours: 5
- Installation cost: $2.75 per watt
Step 1:
Monthly Usage = $180 / $0.30 = 600 kWh
Step 2:
System Size = 600 / (5 × 30) = 4 kW
Step 3:
Monthly Solar Output = 4 × 5 × 30 = 600 kWh
Step 4:
Monthly Savings = 600 × $0.30 = $180
Step 5:
Installation Cost = 4 × 1000 × $2.75 = $11,000
Step 6:
Payback Period = $11,000 / ($180 × 12) ≈ 5.1 years
Step 7:
Lifetime Savings = $180 × 12 × 25 = $54,000
In Maria's case, her rooftop solar panels would pay for themselves in just over 5 years, and she could save more than $50,000 over 25 years.
FAQs About Solar Panel Savings
How much money can I save using a solar panel savings calculator?
It depends on your electricity usage, local energy rates, and how much sunlight your area gets. Many homeowners save tens of thousands of dollars over 20–25 years.
What affects how much energy my solar panels produce?
Key factors include roof angle, panel orientation, shading, weather, and your location's solar irradiance.
Do solar panels still work in cloudy or rainy weather?
Yes, but they generate less power. On cloudy days, panels may still produce 10–25% of their normal output.
How long does it take to break even with solar?
Payback periods vary but are typically between 5 to 10 years, depending on your system size and electricity cost.
What’s the average cost of installing solar panels in the US?
As of now, it averages $2.50–$3.50 per watt before incentives. A typical 6 kW system costs $15,000–20,000.
Can solar panels completely eliminate my electricity bill?
Yes, if your system is sized properly and you use most of your energy during the day. Some people even earn credits with net metering.