How much will solar panels save on my electric bill?

At the defaults, $1,727.61 in year one on a $180 monthly bill, rising to $3,113.81 by year 25 as rates rise. Over 25 years the saving totals $58,897 before the system and inverter costs, for $34,809 net ahead.

Does solar eliminate the electric bill?

No. Fixed monthly charges remain, exported power is usually credited below the retail rate, and solar makes power at midday while the house also uses power morning and evening. At the defaults $432.39 of the $2,160 first-year bill remains.

Is it better to use solar power or export it?

Use it. A kilowatt-hour used at home displaces one at the full retail rate of 18.2 cents; exported, it earns the export credit, 9.1 cents at the 50 percent default. Raising self-use from 30 to 100 percent cuts the payback from 14.47 to 9.04 years.

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The solar ledger · Table No. 40

How Much Can Solar Panels Save on Your Electric Bill?

Year one saves $1,727.61 on a $180 bill. Over 25 years, $78,752 of bills become $19,855 in remaining bills plus the system, for $34,809 ahead.

Filed October 28, 2026 · figures checked against 2026 sources

What a $180 bill becomes

A household paying $180 a month for electricity, at 18.2 cents a kilowatt-hour, uses 11,868 kilowatt-hours a year. The default system in this calculator, 8.4 kilowatts at 4.5 sun hours, makes 11,865 kilowatt-hours in year one, essentially the whole year's use. It does not erase the whole bill, because the timing is wrong: the panels make power at midday, and the house uses power in the morning and the evening too. What the household actually saves depends on how much of the solar power it uses directly, and what the utility pays for the rest. At the defaults, 60 percent used at home at the full rate and 40 percent exported at half the rate, the year-one saving is $1,727.61, against $2,160 of bills. The remaining $432.39 is the part of the bill solar does not reach in year one: exported power sold at half price, plus whatever fixed charges the bill carries that no amount of generation erases.

That $1,727.61 is the first year only, and the first year is the smallest saving in the system's life, because rates rise. At 3 percent annual escalation, the rate reaches 18.7 cents in 2027 on the EIA outlook, and keeps rising from there. By year five the annual saving is $1,905.84. By year ten it is $2,154.70. By year twenty it is $2,754.17, and by year twenty-five, $3,113.81, even though production has fallen 11 percent with degradation. Rising rates do more work than falling production takes away. Over 25 years, the bills without solar total $78,752 at these inputs. With solar, the household pays $19,855 in remaining bills plus the $21,588 system and the $2,500 inverter replacement, and finishes $34,809 ahead. The saving is not a discount on one bill. It is the difference between a bill that rises every year and a cost that was fixed on installation day.

The national context makes the same point at larger scale. The average residential electricity price was 18.16 cents a kilowatt-hour in August 2026, up 3.4 percent on a year earlier, and rates rose 30.5 percent nationally in the five years to that month. The EIA expects an average of 18.2 cents for 2026 as a whole, up 5.2 percent on 2025, and 18.7 cents in 2027. A household deciding on solar in 2026 is not deciding against today's rate. It is deciding against 25 years of rates, and the recent direction of those rates is the strongest argument the solar case has, stronger than any equipment claim. The calculator's 3 percent escalation default is below the recent 5-year pace. A household that uses 5 percent instead sees the payback fall to 10.14 years and the 25-year net rise to $52,641. A household that assumes flat rates forever sees 14.42 years and $16,607. The assumption about the future is doing more work than the assumption about the panels.

Self-use is the saving, export is the remainder

Every solar kilowatt-hour is worth one of two prices: the retail rate, if the house uses it, or the export credit, if it goes to the grid. At the defaults the two prices are 18.2 cents and 9.1 cents, and the mix between them is the self-use share. Use 30 percent at home and the year-one saving is $1,403.68, with a 14.47-year payback. Use 60 percent and it is $1,727.61, with a 12.12-year payback. Use all of it at home and it is $2,159.51, with a 9.04-year payback. The panels do not change. The sun does not change. The clock does: running the dishwasher, the laundry, the water heater, and the electric car charger in sunshine hours converts exported kilowatt-hours into self-used ones, and each converted kilowatt-hour is worth an extra 9.1 cents. Over 25 years, the difference between 30 percent and 100 percent self-use is $25,767 in net savings, $23,766 against $49,533, which is more than the cost of the system itself.

Export rules set the floor under that choice. Under traditional one-to-one net metering, exported power is worth the full retail rate, and the self-use share does not matter at all: the year-one saving is $2,159.51 at any mix, because the meter runs backward at full value. Under California's net billing, exported power is worth about 8 cents against a 33.61-cent rate, and self-use matters enormously, which is why batteries and load shifting are worth more in California than anywhere else. At the default 50 percent export credit, the truth sits in the middle, and the household should find out which regime it actually lives under before it sizes anything. The export credit is the second biggest lever in the whole calculation, after the retail rate, and it is the one most often missing from a salesperson's saving figure, which commonly values every kilowatt-hour at the retail rate whether it is used at home or not.

Fixed charges are the part of the bill solar cannot touch, and they are growing. Many bills carry a fixed monthly customer charge, plus delivery and transmission charges that are billed per kilowatt-hour or as fixed amounts, and the EIA average rate includes all of it. The calculator values solar power at the all-in average rate, which is the right simplification for a planning estimate, but a household whose bill is half fixed charges will save less than the calculator shows, because only the variable part shrinks. The check is on the bill itself: divide the total bill by the kilowatt-hours used, and compare that all-in rate with the supply rate alone. The gap between them is the fixed part, and the saving should be calculated on the variable part, with the export credit applied to the rest. A household with an unusually high fixed charge should run the calculator at a lower effective rate and see whether the payback still holds.

When the saving disappoints

Savings disappoint for four predictable reasons, and all four are visible before installation. The first is oversizing: a system that makes far more than the house uses sells the surplus at the export rate, which may be half the retail rate or less, so the extra panels pay back slowly or not at all. The second is a low export credit combined with low self-use: a household that is out all day, with no load shifting and no battery, exports most of its power at the lowest price, and the saving collapses toward the export value alone. The third is a low retail rate: at 14 cents and 3.5 sun hours, the default system saves only $1,033.61 in year one and takes 18.61 years to pay back, which is a long time to wait for a return that depends on staying in the house. The fourth is financing: a loan with interest and dealer fees adds thousands to the real cost, and the monthly payment can exceed the monthly saving for years, even when the cash payback looks sound. None of these is a surprise to a calculator that is given the right inputs. All of them are surprises to a household that was shown a saving calculated at the retail rate for every kilowatt-hour, on a flat rate, with no financing cost.

The check that catches all four is to run the calculator three times: once at the salesperson's numbers, once at the household's own bill and rate, and once pessimistically, with the export credit halved, the escalation at zero, and the price per watt at the top of the quoted range. If the system still pays back inside the household's time in the house under the pessimistic run, it is a robust decision. If it only works under the salesperson's run, it is a bet on the salesperson's assumptions, and the household should know that it is making a bet, and on whose numbers.

The new insight

The most valuable solar kilowatt-hour is the one you use yourself, and the clock is the tool that finds it. Moving self-use from 30 percent to 60 percent cuts the payback from 14.47 years to 12.12, and moving it to 100 percent cuts it to 9.04, with no change to the panels, the sun, or the price. A timer on the water heater, a dishwasher run at noon, and a car charged in daylight are worth more, in payback terms, than a larger system, because they convert 9.1-cent exported power into 18.2-cent displaced power, one load at a time.

The bill, 25 years out

Step back from the first year and the picture is a household buying 25 years of electricity in advance, at a fixed price, with a maintenance bill in year 12. The advance purchase costs $21,588 plus $2,500. The electricity it buys would have cost $78,752 at the meter, at 3 percent escalation. The difference, $34,809 after the inverter, is the return, and it arrives as smaller bills rather than as a check, which is why it feels less real than it is. It is real in the same way a prepaid expense is real: the money not spent on bills is money available for everything else, every month, for 25 years, and it grows as rates grow, because the prepaid price does not.

That framing also sets the right comparison. The alternative to solar is not free electricity. It is 25 years of bills at whatever rates the utility charges, rising at whatever pace the next 25 years bring. The last five years brought 30.5 percent. The next 25 may bring more or less, and no calculator can know. What a calculator can do is show the break-even clearly: at the defaults, the system needs 12.12 years of rising rates to repay itself, and every year after that is profit, in the form of bills not paid. A household that expects to stay, that can pay cash or finance cheaply, and that can use much of its power while the sun shines, is buying that break-even at a good price. A household that cannot meet those three conditions is not. The bill is the same either way. The only question is who it is paid to, and at what price, for the next 25 years.