How Much Do Solar Panels Actually Save on Electricity Bills?

Worker Installing Solar Panels on Roof

Solar power has been available since 1956, and its usage has grown dramatically since then. The use of solar power in the U.S. grew from 1.2 gigawatts to almost 30 gigawatts currently. The question for the average homeowner is how much do solar panels save on electricity bills?

Do Solar Panels Save Electricity?

Solar panels can indeed save on your electricity bills, but the amount you save will vary widely based on several factors. On average, homeowners can expect to save about $150 to $200 a month, but this is dependent on location and the suitability of your house for solar panels. The North Carolina Clean Energy Technology Center, a division of North Carolina State University, prepared a study that found two compelling statistics:

  • The average homeowner in the largest cities in the U.S. saved between $44 and $187 per month in the first year they had their solar panel system.
  • Homeowners in one-fifth of the largest cities who paid in full for a solar system would lead to a "better investment than the stock market over the 25-year life of a typical PV system."


The effectiveness of solar panels is hampered by the state you live in as well as whether your home's roof gets easy access to the sun during the day. The size and angle of your roof is also a factor. Finally, your local utility rates will affect the amount of savings you get.

Best and Worst States for Solar

The best states for solar energy savings for residential homes are those where the electricity costs are high enough, combined with solar tax credits, to make the savings significant. As of 2018, the top states were New Jersey, Massachusetts, Rhode Island, Maryland, the District of Columbia, New York, Oregon, and Connecticut.

On the other hands, states with lower electricity rates and little or no tax credits or rebates make solar energy savings less appealing. These states are South Dakota, Idaho, Arkansas, North Dakota, Alabama, Kentucky, Oklahoma, Mississippi, and Louisiana. This does not mean getting solar panels in these states will not save you money. It only means the savings will be less in comparison to the best states.

Local Utilities

The average electricity bill in the U.S. is $1,430 per year, and different states and counties have higher or lower rates. Rates for electricity typically rise over time, so this number will continue to go up. The benefit of a solar system is that your cost will remain locked in. You may expect to continue receiving an electricity bill if your solar system does not provide entirely for your needs, so this can affect savings as well.

Number of Panels

If you do not provide enough solar panels on your roof to power your entire electrical needs, this will reduce your amount of savings. According to EnergySage, a company that facilitates solar panel installations for residences, the average homeowner uses between 28 and 34 panels to power their home.

Solar panels on roof in Delaware

Types of Panels

Panels range in quality and size. The type of panel you use is determined by the size and angle of your roof, and more efficient, larger panels may not be an option. When shopping for panels, you should do your homework and get quotes from many manufacturers to get the best deal.

Calculating Your Panel Needs

The formula for determining how many panels you will need is to take the number of kilowatt hours (kWh) you use annually. The average U.S. home uses about 11,000 kWh each year. You then need to find the average production ratio for your state. This is the ratio of how much power a panel can typically produce will be higher in states with more sunlight.

For example, Arizona has a lower ratio because it receives more light than other states with less tree cover and obstructions. A ratio of 1.31 divided into 11,000 kWh is 14,410. This number is then divided by 250, the average wattage of a panel. The final number, 57.64, would be the number of panels needed. Of course, this calculation will vary based on the wattage produced by your panels, the number of daylight hours, and your annual kWh use.

Cost of Panels and Installation

Another important factor to consider when purchasing solar panels is the benefit of the energy bill savings compared to the cost of the purchase and installation. The Center for Sustainable Energy reports the average system costs $15,000 to $25,000. However, this cost can be reduced by federal tax credits and local incentive programs from your state and county. CSE estimates it takes about six to nine years for a homeowner to cover the cost of the system and begin reaping the full benefits of the savings.

One bit of good news for homeowners is that the cost of solar panels has dropped by as much as half and is expected to continue to fall. Installation prices will vary, and the North American Board of Certified Energy Practitioners has an installer locator you can use to shop for the best price.

How Much Will You Save?

To get an idea of what a solar system will cost you and the potential savings, there are several handy calculators that you can use online based on your zip code.

  • Google Project Sunroof provides free savings estimates based on your home address. The site also tells you the number of usable sunlight hours per year in your location.
  • has calculators which can determine how much solar panels will cost you by zip code. The site will also provide three quotes for installation, the size and number of panels you will need, your roof space needs, and local incentives and savings. You will be required to enter your name, email, and phone number to use the calculators and receive quotes from local installers.
  • EnergySage also has a calculator based on your address that does not require you to enter contact information. Using their calculator, a homeowner in an average house in Sioux Falls, SD could save up to $8,300 over 12 years. One hundred percent of a home's electricity would be covered by the panels, and federal incentives of up to 30 percent are available, as well as an estimated 3 percent or more increase in a home's value.
  • To get an idea of average rates in your area, Solar Reviews provides a chart with average monthly and lifetime solar savings for major cities in the U.S. based on 2018 figures. A homeowner in New York City could expect to save $73.41 per month whereas one in Los Angeles could save $128.44 a month.

Are Solar Panels Worth It?

Energy Saver suggests before shopping for a solar panel system, you should look at your local energy costs, whether state incentives exist, and the type of roof and sunlight you get. If all this data combined provides you with an estimate savings, then solar panels are a worthy investment.

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How Much Do Solar Panels Actually Save on Electricity Bills?