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Solar Panels Vs Electricity : Is Solar Cheaper Than Electric?

Utility rates seem to increase every year, don’t they? However, sunlight is free and plentiful. 

Accessing power directly from the source makes more sense than paying for it indirectly from your local power plant. Clearly, solar power is more cost-effective than conventional electricity. According to the World Economic Forum (WEF), installing new solar panels is cheaper than making a comparable investment in coal, natural gas, or other fossil fuel options.

When choosing between solar power and electricity, people often compare the benefits to electric heat pumps or heating systems. But solar systems have improved a lot in recent years and can now compete well with traditional electric methods. Choosing solar not only helps the environment but can also save you money and increase your home’s value over time.

Why Do People Choose Solar Power Over Electricity?

Solar Panels Vs Electricity

Foremost, it’s important to understand why so many people opt for solar power instead of traditional electricity. People choose solar power for the cost savings, despite the higher initial expense of solar equipment. Solar energy is highly efficient and can pay for itself over several years. In this way, it’s a smart long-term investment that typically pays off in around 5-7 years or even less.

Your energy bills will not only become more affordable, but you’ll also contribute to environmental conservation. Residential and commercial solar systems are a great way to reduce your carbon footprint and lower your environmental impact. Solar heating systems are low maintenance and more reliable than electric systems, making them a popular choice.

Cost of Electricity in America

The average residential utility rate is twelve cents per kilowatt-hour (kWh). The typical household uses about 899 kWh of electricity per month. The average monthly electricity bill for this household is around $144. This amount does not include taxes and fees.

Although electricity bills can vary significantly over the years, they have generally remained stable. Residential electricity rates have increased by 4% over the past decade. In certain regions like the Northwest, rates have increased by up to 40%.

According to the US Energy Information Administration, the average electricity costs per kWh for different consumer groups in April 2018 were:

  • Commercial: 10.44 cents
  • Residential: 12.89 cents
  • Transportation: -9.53 cents (negative because of credits or rebates)
  • Industrial: 6.58 cents
  • Overall average: 10.23 cents per kWh

The average cost of living for American households increased by 5.5% in 2018 compared to 2017. Over the past 10 years, electricity costs have risen by an average of 3.0% annually.

Costs for commercial electricity have increased by 2.5%, while transportation costs rose by 2.3%. Industrial electricity costs saw a slight increase of 0.2%. Overall, energy costs across all sectors increased by an average of 0.8% between 2017 and 2018.

In 2016, the average American household used 897 kWh of electricity each month, resulting in a typical bill of $112.59. Generally, electricity costs for commercial and residential customers are higher than those for industrial customers.

Distributing electricity costs more and uses lower voltages. Industrial consumers use larger amounts of electricity at higher voltages, which can reduce costs.

Industrial consumers often pay more than the wholesale price of electricity. Typically, regular electricity costs less than solar energy.

Electricity prices can change daily, but customers usually pay prices that reflect electricity costs. Price differences often occur because of changes in electricity demand, fuel costs, and the availability of generation sources. Prices tend to be highest in the summer months when demand exceeds supply.

Calculating Monthly Savings Using Solar Power

A solar power system on a sunny roof facing south can generate 1,840 kWh each year at full capacity. In the first year, a 5 kW solar array would produce 9,200 kWh (1,840 kWh/year x 5 kW). With a degradation rate of 0.5% per year over 25 years, this totals 8,050 kWh per year.

In California in 2017, electricity cost $0.125 per kWh. The savings would be $1,006.25 per year if using 8,050 kWh. This calculation does not take inflation into account. This translates to monthly savings of approximately $83.85 ($1,006.25 / 12 months).

Solar power is a cheaper option for people with expensive electricity bills and reduces dependence on utility companies. Solar panels can still generate electricity even on cloudy days.

Solar energy outperforms traditional electricity in efficiency and can help lower costs in colder regions. The size and quality of your solar system determine how much electricity it can generate. Solar panels can convert up to 22% of the solar energy they receive into electricity.

This is great news considering the amount spent on electricity each month. You may qualify for rebates if your solar system generates excess power.

Solar energy from your system is free after installation. It could pay for itself in 5 to 10 years, depending on your location. You can start saving money as soon as your solar panels begin producing power.

Solar power is much less expensive than traditional electricity, as evidenced by the points above. Businesses are developing systems to deliver electricity at a lower cost than traditional methods. People can easily install solar panels on rooftops to harness available energy.

Despite the rising cost of electricity in the United States, solar power remains a more affordable option.

How Does Solar Energy Compare in Cost?

Thinking about solar panels to save money? It depends on factors like how much sun you get, your electricity costs, and the size of your house.

Solar energy may cost more initially, but it is often cheaper in the long run compared to traditional electricity. This is because electricity prices tend to rise over time. Investing in solar energy requires purchasing and setting up the necessary equipment. With electricity rates constantly increasing, solar panels can be a smart investment for saving money over time.

If your monthly electricity bill is high, solar power could save you money and help the environment. This is especially true if you live in an area with expensive electric or gas rates. Solar power can be a cost-effective and environmentally friendly alternative to traditional energy sources. Using solar power can help you rely less on costly utility companies and lower your carbon footprint.

Interested in learning more about different uses for solar? Check out our range of Solar Solutions!