How to Cut Your Energy Bills With a Home Solar Power System

How to Cut Your Energy Bills With a Home Solar Power System

The popularity of solar energy as an alternative energy source has soared in recent years. There are over 3 million installations between home solar panels and commercial systems in the US.

Of course, for many people, the decision to install a home solar power system or a commercial system stemmed from principle. For example, they wanted to reduce their environmental impact or commit to sustainable energy.

There is a more practical reason for homeowners to switch to solar as a primary source of electricity. It can help you cut your electric bills.

If your energy bills run higher than you'd like, keep reading to learn how solar can cut those bills down.

Solar Essentials

The technical elements of solar panel technology can get pretty dense, but some essentials are helpful to know. First, most residential systems are solar panel systems. Each panel in the system consists of a group of connected cells.

The cells are made from semiconductor materials, most often silicon. While a bit of an oversimplification, the silicon in the cells absorbs energy from sunlight. This energy essentially converts into electrons which, when channeled in a flow, is electricity.

The electrons flowing from each cell make up the electricity the panel produces. So when you string those panels together, you get a system that can produce enough electricity to do things like power lights and appliances.

Panel Efficiency

Of course, solar panels operate on a spectrum of quality. Panel efficiency is the primary measure of solar panel quality. You can divide solar panels into three general levels of quality/efficiency:

  • Low-efficiency panels convert around at around 15 percent
  • Medium-efficiency panels convert at about 10-20 percent
  • High-efficiency panels convert at close to 23 percent

Most people opt for medium-efficiency panels because the extra electricity you get from high-efficiency panels typically does not offset the higher cost of those panels.

Grid-Connected vs. Off-Grid

Solar panel systems come in more than one type. There are two common types of systems and one less common system. Let's look at each.


The more common system these days is grid-connected. With these systems, your solar panels feed power directly into the local electrical grid. That lets the local utility company track how much electricity you produce, which we'll cover in more detail below.

These systems offer one critical benefit. The key benefit is retaining access to ready electricity whether your solar panels produce electricity. So, if you're a night owl, you can run all of your electronics without concern.

The pitfall of these systems is that you lose power if the electricity goes out in your area.


The other standard system design is an off-grid system. These systems don't connect with the local grid. Instead, they feed electricity directly into your home.

If your system produces more electricity than you need at any given time, the excess goes into on-site batteries that you can draw on at night.

The main benefit of these systems is that you no longer rely on the local grid to provide power. The main pitfall of these systems is that you can only work with the electricity your system produces.

Hybrid Systems

The least common system is a grid-connected hybrid system and includes battery storage. Your panels charge the batteries with these systems as an electrical backup system. Any excess beyond that goes into the local electrical grid.

While these systems may make the most sense from a logistical standpoint, they are substantially more expensive. That extra expense largely accounts for their lack of popularity.

Trimming Your Bill

After you install solar panels for your home, there are two main ways that you trim your bill. You can either go fully solar or sell your excess electricity to a local utility company.

Full Solar

The whole solar option is the off-grid system option. With an off-grid system, you eliminate your electrical bill. Your only electricity bill is the payment on any financing you secured to buy the system.

This option is not without its challenges. You need a very accurate accounting of your electrical needs for this to work.

You need that accounting to ensure that your system generates enough electricity year-round to meet your needs. That accounting also helps you determine the battery capacity you need to keep your home running at night if you get a low sunlight period.

Selling the Electricity

Selling your solar-panel-generated electricity back to your local utility company is the standard method of trimming your bill. There are a few ways this can happen, which often depend on your location.

In general, utility companies will pay for the electricity you pump into the grid. In most cases, you see this as a credit deducted from your total electricity bill. Most homeowners aim for a big enough system to offset most or all of their electricity bills.

Most utility companies pay a flat rate for the electricity from your system. Less commonly, your utility company will pay you a rate based on peak and non-peak hours.

If you produce more than you use, you typically get a credit that the utility company will apply to future charges. Much more rarely, utility companies will issue you an actual payment for the electricity you generate.

A Home Solar Power System and You

A home solar power system can help you cut energy bills in several ways. First, with off-grid systems, you do away with your energy bill entirely and rely on the solar panel system for your electricity needs. That approach can work, but you're at the mercy of the weather to some extent.

The other way is by selling the electricity your system produces to your local utility company. This typically gets you a credit on your bill that can reduce your energy bill.

Are you looking for more electrical tips? Check out our sections related to home living.