How much can you save with solar panels?

• Solar panels could save you the full amount of your electricity bill once your system is paid for.

• How much you can save depends on several key factors, such as the energy capacity of your system, local energy rates, your energy usage, your location, and more.

• Government policies like renewable energy incentives and net metering regulations can have a substantial impact on your solar savings potential.

There are many good reasons to consider a solar energy system for your home, but saving money is at the top of the list for many homeowners. While solar panels come with a hefty price tag, the cash you save by not having to pay for power can add up quickly.

In this article, our experts provide information about how much those savings might be, so you can decide if buying solar panels is worth the investment. We also explore some of the key factors that impact the savings potential of solar energy.

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How much can you save with solar panels?

Solar panels could save you everything you spend on electricity for your home if you size it right. This means the panels cover 100% or perhaps a little more of your energy needs. For the average American home, that was $136.84 per month, or $1642.08 per year in 2023, according to the U.S. Energy Information Administration (EIA). Our own data shows that the average solar energy savings over a 20-year period in the U.S. is $16,587 after the system pays for itself.

Even if you can’t completely eliminate the need for outside electricity, the savings can still be substantial. Essentially, any energy you generate with your solar panel system is energy you don’t have to buy.

Electricity bill savings depend on usage and utility rates

The amount that home solar panels can save you comes down to two main factors: how much energy you use and how much you pay for that energy.

Your utility bill should tell you how much energy you use each month in terms of kilowatt hours (kWh). It should also tell you the rate you pay per kWh for that energy in addition to the total cost.

These figures can be helpful in estimating your solar savings, especially if your system can’t fully replace the energy you use from the grid. You can use the per-kWh rate to calculate the cost of the energy you’ll have to buy to supplement your solar setup.

It’s possible that your electric bill is cheap enough that solar isn’t worth it. For example, say a solar system costs you $15,000 and would only save you $50 per month. It would take 300 months (or 25 years) to recuperate your investment.

Consider how much solar panels cost

The money you save each month in utility fees is just one part of the equation. You also have to consider the cost of a solar panel system, as you haven’t actually saved money until the system is paid for.

In the U.S., the average cost of a new solar panel energy system is $17,823, and typically ranges from $13,958 to $21,082, according to our data. Whatever the cost of your system, you’ll need to weigh that against your monthly energy savings over the lifetime of your system to get an accurate estimate of the money you could save with solar energy.

How long do solar panels last?

Modern solar panels are guaranteed to perform with minimal degradation between 25 and 30 years. They can continue to put out power long after that, too. This is another critical factor in determining your solar savings potential. It may take several years—10 on average in the U.S.—for your solar system to pay for itself. This is called the payback period. However, once your panels are paid for, everything you don’t spend on energy for the remainder of your panels’ lifetime is yours to keep.

How net metering shapes total savings

In many cases, your solar panels can actually generate some revenue through net metering. Net metering is a billing policy that allows solar panel owners to sell energy they create and don’t use back to the grid, typically at market rates.

If your home makes it possible to generate excess electricity, net metering can significantly increase your energy savings and increase your return on investment (ROI) from your solar panels. Regulations around net metering vary by state, so be sure you understand the regulations where you live before factoring these figures into your savings formula.

Your location impacts solar exposure and financial return

Where your home is located also has a powerful effect on how much you can save with solar. Location plays a role in a few different ways:

Federal tax credit no longer applies

The federal Residential Clean Energy Credit expired for homeowners at the end of 2025, so you can't figure that into solar panel savings anymore. However, some utilities and state programs can offer incentives like rebates.

When Solar Panels Won’t Eliminate Your Electric Bill

Although solar panels can significantly reduce electricity costs, there are several situations where they may not eliminate your bill entirely.

Fixed Utility Charges

Many electric utilities charge fixed monthly service fees that cannot be offset by solar generation. These fees pay for grid maintenance, infrastructure, and administrative costs. Even if your solar system produces enough electricity to match your usage, you may still pay basic service or connection charges, which typically range from $10 to $30 per month depending on the utility.

Seasonal Production Deficits

Solar production changes throughout the year. In many parts of the United States, systems generate more electricity in summer and less in winter because of shorter daylight hours, lower sun angles, and increased cloud cover.

If winter production falls below your household’s energy use, you will need to purchase additional electricity from the grid, resulting in a bill during those months.

System Size Limitations

A solar installation must be sized appropriately to meet your home’s energy demand. If the system is smaller than your annual electricity consumption, it will only offset part of your bill.

Homeowners sometimes intentionally install smaller systems due to:

• Roof space limitations

• Budget constraints

• Local regulations limiting system size

Utility Policy Restrictions

Savings also depend on local policies such as net metering rules and compensation rates for excess electricity. Some utilities compensate solar generation at lower wholesale rates rather than retail electricity rates, which can reduce the total financial benefit.

Typical Solar System Output

To put solar savings into perspective, a typical residential solar system in the United States is about 7 kilowatts (kW) and produces roughly 9,000–11,000 kilowatt-hours (kWh) of electricity per year, depending on location and sunlight availability.

For comparison, the average U.S. household uses about 10,791 kWh per year, according to the U.S. Energy Information Administration (EIA).

This means a properly sized solar system can cover most or all of a typical household’s annual electricity consumption, though seasonal differences and utility fees may still leave a small remaining bill.

Bottom line on solar panel savings

A solar energy system could save you everything you currently spend on your electric bill, which could be thousands of dollars per year in some cases. While a new system will set you back nearly $18,000 on average, it is likely to pay for itself over time and help you save money for many years to come. That said, solar isn't worth it for everyone, so calculate your potential carefully.

FAQ about solar panel savings

Below are a few frequently asked questions about solar panel savings: