How to Read Your Electric Bill for Solar
Understanding your electric bill is the first step to going solar. Learn what each charge means and how to use your bill to size a solar system.
Why Your Electric Bill Matters for Solar
Your electric bill is the starting point for any solar evaluation. It tells you how much electricity you use, what you pay per kilowatt-hour, and how your usage varies throughout the year. This information is essential for sizing a solar system and calculating your potential savings.
Yet most homeowners have never closely examined their electric bill. The good news is that once you understand the key components, it is straightforward to determine whether solar makes financial sense for your home.
Key Components of Your Electric Bill
Account Information
The top section of your bill includes your account number, service address, meter number, and billing period dates. Keep your account number handy when requesting solar quotes, as installers may need it to access your usage history.
Electricity Usage (kWh)
This is the most important number on your bill for solar planning purposes. Your usage is measured in kilowatt-hours (kWh). One kWh is the amount of energy used by a 1,000-watt appliance running for one hour.
The average American home uses approximately 900 kWh per month, or about 10,800 kWh per year. However, usage varies widely based on home size, climate, and habits. Homes in hot southern states with central air conditioning may use 1,200 to 1,800 kWh per month in summer, while energy-efficient homes in mild climates may use as little as 400 to 600 kWh.
Supply Charges
In deregulated electricity markets, your bill may separate supply charges (the cost of generating electricity) from delivery charges (the cost of transmitting it to your home). The supply charge is the portion that solar most directly offsets.
Delivery Charges
Delivery charges cover the cost of maintaining power lines, transformers, and other infrastructure that delivers electricity to your home. These charges are typically $15 to $40 per month and usually remain on your bill even with solar, as you remain connected to the grid.
Demand Charges
Some utilities include demand charges based on your peak usage during the billing period, not just your total consumption. These are more common on commercial accounts but occasionally appear on residential bills. If you have demand charges, battery storage can help reduce them.
Taxes, Fees, and Surcharges
Your bill includes various taxes, regulatory fees, and surcharges. Common items include state and local taxes, renewable energy surcharges, and public benefit charges. These typically add 5 to 15 percent to your total bill.
Rate Structure
Your bill should indicate what rate plan you are on. Common residential rate structures include:
How to Calculate Your Annual Usage
To properly size a solar system, you need your full 12-month usage history. Here is how to find it:
Add up all 12 months to get your annual kWh consumption. This number is what your solar installer will use to design your system.
What Your Bill Tells You About Solar Savings
Calculating Your Effective Rate
Divide your total bill amount by your total kWh usage to get your effective electricity rate. For example, if your bill is $150 and you used 900 kWh, your effective rate is $0.167 per kWh.
This effective rate is what solar replaces. The higher your rate, the more valuable each kWh of solar electricity is to you. Homeowners with effective rates above $0.14 per kWh are generally strong candidates for solar.
Estimating Monthly Savings
A solar system designed to cover 100 percent of your usage will eliminate most of your supply charges. Your remaining bill will typically be just the minimum delivery charge ($10 to $30 per month) plus any applicable fees.
If your current bill averages $150 per month and your post-solar bill drops to $20 per month, you save $130 per month, or $1,560 per year.
Understanding Seasonal Variations
Your bill reveals important seasonal patterns. If you use much more electricity in summer due to air conditioning, your solar system needs to be sized to handle those peak months. Conversely, if your usage is relatively flat year-round, system sizing is more straightforward.
Using Your Bill to Get Accurate Solar Quotes
When you request quotes through SmartEnergyUSA, having your electric bill information ready allows installers to provide more accurate proposals. Share the following details:
This information ensures your solar system is properly sized and your savings projections are realistic. Get started with a free quote today and put your electric bill to work for you.
