Solar Savings Calculator
Calculate monthly bill savings from a solar PV system by multiplying solar production by your electricity rate. Use it to estimate the financial benefit of an installed or planned system month-by-month.
Last updated: May 2026
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About this calculator
The calculator computes simple monthly savings as Solar Production × Electricity Rate. Variables: Solar Production is the monthly kWh generated by the system; Electricity Rate is your utility's rate per kWh (the rate you would have paid without solar, currently averaging $0.16/kWh in the US but ranging $0.10 in low-cost states like Idaho/Washington to $0.40+ in Hawaii). Edge cases: the formula assumes every kWh produced offsets a kWh you would have bought, which is true under 1:1 net metering. If your utility uses time-of-use rates, daytime production may offset peak-rate consumption ($0.30+/kWh) while still being credited at lower off-peak rates if exported — this can double or halve the actual savings vs the simple formula. Under modified net metering (California NEM 3.0, Nevada NEM 2.0+), excess exports are credited at much-lower 'avoided cost' rates (~$0.04-0.08/kWh), making the formula optimistic by 30-60% for systems that export significantly. Net metering policy is the single biggest financial-economics driver for residential solar in the US, and it varies enormously by state and even by utility within a state. Monthly savings also vary seasonally — production peaks in summer (long days, low cloud) and bottoms in winter, while consumption may peak in summer (air conditioning) or winter (heating, depending on home type). Annual savings = sum of monthly = roughly 12 × average monthly savings for accurate-enough planning.
How to use
Example 1 — Average US household with average system. Solar production = 1,000 kWh/month (typical 8 kW system in moderate sun), electricity rate $0.16/kWh. Step 1: savings = 1,000 × 0.16 = $160/month. Verify ✓. Annual savings = $160 × 12 = $1,920. If the original bill was $180/month ($2,160/year), the post-solar bill drops to about $20/month — covering only fixed grid-connection charges and any non-offset consumption. Example 2 — High-rate market (California) with smaller system. Solar production = 700 kWh/month, electricity rate $0.34/kWh (PG&E peak-tier average). Step 1: savings = 700 × 0.34 = $238/month. Verify ✓. Annual savings = $2,856. Note that California NEM 3.0 reduced export credit rates dramatically post-2023; this simple multiplication overstates savings unless production is consumed onsite or paired with a battery. For accurate post-NEM-3 California savings, use a battery-paired model.
Frequently asked questions
How accurate is "production × rate" for actual savings?
It's a good first approximation in markets with 1:1 retail-rate net metering (NEM 1.0 or NEM 2.0 in most US states), but increasingly inaccurate as utilities move to modified net metering and time-of-use rates. In a true 1:1 NEM market, every kWh exported to the grid credits at the retail rate you would have paid, so production × rate is exactly right. Under modified net metering (CA NEM 3.0, Nevada NEM 2.0+, Arizona Solar Choice), excess production exported during the day credits at low 'avoided cost' rates ($0.04-0.08/kWh), while you still buy at much higher retail rates ($0.30+) in the evening — savings drop 30-60% for systems that export significantly. Time-of-use rates further complicate the picture: production during peak rate hours (typically 4-9 PM in California summer) is much more valuable than off-peak production. Modern accurate savings calculations require hourly modeling of production and consumption together with your specific tariff. For rough planning, the simple formula is fine; for serious financial analysis, use NREL's SAM or a solar-specific tool like Aurora Solar or HelioScope.
What is net metering and why is it changing?
Net metering is a billing arrangement where excess solar production exported to the grid credits the customer at the full retail electricity rate, effectively using the grid as a free battery. Customer pays only the 'net' usage (consumption minus production) over a billing period. 1:1 NEM was the standard for two decades and made residential solar economically attractive even where production didn't align with consumption. Utilities increasingly argue that 1:1 NEM unfairly shifts grid maintenance costs to non-solar customers (since solar customers pay less in fixed-cost recovery), and they have pushed for modified rates: California's NEM 3.0 (April 2023) cut export credits about 75%, with the result that new residential solar economics now strongly favour adding batteries to self-consume rather than export. Other states (Arizona, Nevada, Indiana, Hawaii) have moved similarly. Some states still maintain favourable 1:1 NEM (New York, Massachusetts, Illinois until 2026). Always check your state's current policy and your utility's specific tariff before installing solar — assumptions made in 2020 may no longer hold.
What are the most common mistakes when projecting solar savings?
The biggest is using current electricity rates without modelling rate inflation. US electricity rates have risen 2-4% per year for decades; over a 25-year system life that compounds dramatically. A system saving $1,500/year at today's rates saves about $3,000/year in year 25 if rates rise 3% annually. The second is using simple production × rate without considering net metering structure; in states with poor NEM, real savings may be 40-70% of the headline number. The third is ignoring degradation; panels lose 0.5-0.7% capacity per year, so year-25 production is 12-15% lower than year-1. The fourth is not accounting for utility fixed charges; even with 100% offset, you still pay ~$10-20/month in connection fees that show up on your post-solar bill. The fifth is conflating monthly bill reduction with monthly savings — if your bill drops from $200 to $30, the savings is $170 not $200, because fixed charges and minor consumption remain. Always use net savings (pre-solar bill minus post-solar bill) for accurate financial analysis.
When should I NOT use this simple calculator?
Skip it for any market with non-1:1 net metering (post-NEM-3 California, Hawaii without NEM, many recent state changes) — savings will be significantly overstated. Avoid it for systems paired with batteries where the value lies in time-shifting consumption rather than simple offset — battery-paired solar requires modeling time-of-use rates and self-consumption rates. Do not use it for commercial solar where demand charges (based on peak monthly kW draw) often equal or exceed energy charges; solar can dramatically reduce demand charges by clipping daytime peaks. Skip it for off-grid systems where there is no utility bill to compare against and the economic value comes from avoided generator fuel or extended battery life. Do not use it as the sole basis for system sizing without modeling production-vs-consumption matching by hour — oversized systems in poor-NEM markets produce excess that is wasted or credited at near-zero rates.
How do time-of-use (TOU) rates change solar economics?
Dramatically. Under flat-rate billing, every kWh costs the same regardless of when used or produced, so simple production × rate works. Under TOU, rates vary by hour: typical structure in California (PG&E E-TOU-C) is off-peak 12 AM-3 PM at $0.30/kWh, peak 4-9 PM at $0.50/kWh, super off-peak weekend at $0.27/kWh. Solar produces almost entirely during off-peak hours, so its raw kWh value is at the lower rate. Without storage, you can't time-shift production to peak hours when rates are high. With a battery, you can — charge it from solar during noon, discharge during 4-9 PM peak, effectively converting $0.30 production into $0.50 displacement. This is why battery economics improved dramatically under California's NEM 3.0 + TOU combo: instead of selling noon production at low avoided-cost rates, store it and use it during peak hours. The combined value math: a 10 kWh battery cycled daily at a $0.20/kWh peak-vs-off-peak spread saves $730/year, equivalent to ~6-8% per year return on a $10,000 battery — barely beating bond rates but adding resilience value during outages.