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Oct 21, 2020

How Does Solar Billing Work?

If you’re here, chances are you’ve decided to take the plunge and switch to solar energy. Give yourself a pat on the back! You’re contributing towards an environmental movement that’s working to take better care of the planet. Solar energy is a popular choice for many homeowners, building owners, and even renters looking to lower their electricity costs. After making the switch, those first solar bills will make the corners of your mouth turn up...hello savings! But solar bills can also be a little confusing, which is why you should take time to understand how solar billing actually works. Let’s get started.

Solar financing options; Solar loans vs. leasing and, PPAs

First things first, understanding your solar financing options. Many homeowners choose to own their solar system and pay for their system with cash upfront or finance through a solar loan. Solar loans are similar to a home improvement loan, in that you borrow money from a lender, and pay the monthly installments, plus interest, back over the loan period.

While some individuals have the means to own their system, others are turning to leasing or Power Purchase Agreements (PPAs).

If you decide to lease your solar panels or sign a PPA, a third party will own the system installed on your roof or property and you’ll pay a monthly amount to the third party. Payment structures can vary depending on the type of lease or PPA you choose. Solar leasing is designed to make your solar bills consistent. You pay the solar company a fixed monthly rate. This rate is calculated by the estimated amount of power your panels will generate over its lifetime. With solar PPAs, your solar bills are based on the actual electricity generated by your solar system, so your solar bill can vary month to month.

Net energy metering

Once you have installed a system, you’ll use the power that is generated. What happens in a particularly sunny month when your system generates more power than you use? Net energy metering allows you to offset your future utility bills based on the energy generated from your solar panel system that exports to the grid. For owners and lessors of residential solar systems, energy produced, but not used on-site, is sent to the electric grid in exchange for credits that can be applied to future utility bills. It’s important to note that net metering policies vary by state and by utility, so be sure to confirm how it works where you live.

For those who don’t have the right roof for solar panels, find the installation prices too high, don’t own a home, or just don’t like the look of solar on their property, there are options to subscribe to renewable energy projects, like community solar farms, to receive virtual net metering credits. Virtual net metering allows customers to reduce or offset their electricity bills using the energy generated from a renewable energy project.

Do you still have an electric bill with solar panels?

Unfortunately, yes. Most solar panel systems and renewable energy projects are connected to a local utility grid. Even if you have a solar system on your home, you’ll still receive a utility bill since your solar panels may not cover 100% of your energy needs. If you lease or have a PPA, you’ll pay a separate bill to the company that owns your system.

The good news? You’re STILL saving on your electricity costs. Your utility bill will help you see how much energy you produced verses how much energy you used for a month. Generally, there are three pieces that make up the cost of your utility bill:

  1. Service fee/charge – Your service fee is basically what your utility company is charging you just by being connected to its grid. This is usually a flat rate.
  2. Taxes – taxes and surges are enforced by the state and local level you are in and are collected from everyone.
  3. Kilowatt hour usage (kWh) – Your kilowatt hour usage is the amount of your electricity usage plus the cost of the electricity used. If you have solar, your utility bill will only charge you for the kWhs you’ve used from the utility grid.

Utility companies measure the total energy you use in kilowatt hours, so your total usage will determine how much you are billed each month by your utility. With solar panels installed on your property, it will help reduce the number of kWh you require from the grid. For those who don’t physically have panels installed on their roof but are participating in a renewable energy projects like community solar, credits will be applied to their utility bill, helping offset the charges above. For example, at Nexamp, we bill our subscribers for the credits generated by their share of a solar farm. We discount the credits up to 12.5% so our subscribers can save while also supporting solar energy.

Now that you understand how solar billing works, you’re ready for the environmental benefits and cost savings that come with it. Interested in learning more about our community solar program? Visit our community solar page or call 800-965-5124 to learn more.

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