As the summer temperatures ramp up, Texas residents start to see their energy bill climb rapidly as well. A common question we get in the summer is, “How does solar save money on an electric bill?” To answer this question we need to start with the basics and explain how a solar system works.
From Sunlight To Power
First, the sun has to hit the solar panels. Next, the panels turn the sun into Direct Current (DC) electricity. This electricity flows to an inverter which changes the electricity to Alternating Current (AC), which is what most things run on in your house. This power then plugs into the breaker panel of your home or business. This electricity will feed any loads in the house or business first. If the system is producing more electricity than the house or business is consuming then the excess flows back through the meter, thus causing the meter to flow backwards and generating a credit with the utility. How that credit is applied depends on which type of utility governs where you live.
In Texas, 90 percent of the residents are in a deregulated market. This means that the homeowner or business gets to choose who they buy their electricity from. It is up to the consumer to shop and find the best deal or rates for a solar system. When shopping for a plan for someone with a solar system it is usually best to find one with a “solar buy-back” feature. A good place to start is The Texas Power Guide.
If you do not have a buy-back plan then you will not get compensated for the excess energy you send back to the grid. This is important because most solar systems will export energy to the grid during the day.
There are a few other things to consider when choosing a solar buy-back plan:
- What is their buy-back rate? Do they give you credit for the same amount that they are charging you for the electricity? Some of these plans will only pay “avoided cost” or “real-time pricing” which is less than full retail. In most cases these are not very good plans.
- Do they have a monthly fee? Some charge more than others for their monthly billing fee.
- What is the rate that they are charging for electricity? Now this may not matter if you are offsetting at least 100% of your kilo-watt hours (kWh), but if your offset is below 100%, then the amount they are charging for the amount you do have to buy will matter.
- What is the term of the contract? Sometimes it makes sense to lock in a longer term contract to maintain a great rate for as long as possible.
If your home is not in the deregulated market then your utility is probably a COOP or is Municipally run. Some examples of COOP’s are PEC, CoServ, Bluebonnet, Bartlett, or GVEC. If your utility is a Muni then you might live in Austin Energy, CPS, Georgetown, or College Station.
If you live in a COOP, it is best to look at these three things:
- Fees – Several COOP’s have now started charging application fees, interconnection fees, and monthly fees. These are not always deal killers but you need to research before buying so as not to be surprised.
- What is their buy-back rate? Most COOPs will not give full retail credit for the amount of solar that you export to the grid.
- Liability Insurance – some COOP’s still require you to add liability insurance to your solar system. This is crazy but some still do require it.
Solar in Municipalities
Most Municipalities are very good places to own a solar system. Austin Energy(AE) and CPS still offer a solar rebate of $2500 to help with the purchase of your solar system. Most Municipally owned utilities offer 1-1 solar buy back which means that they pay you full retail for what they are charging you for your solar export.
AE is the one exception and they offer a program called Value of Solar (VOS). In a nutshell, AE charges the customer the same rate for energy that they would anybody else. They then measure the total amount of kWh created by the solar panels before it offsets any loads in the house or business, and then they provide a credit for the full amount to the bill.
Maximizing Your Energy Usage
The last thing that a solar customer can do to save money with a solar system is shift their loads. When a utility is not giving you as much for your export or you live in the deregulated markets then it is best to shift as much of your energy usage as you can to during the day. This means charging your electric car, running the dishwasher or doing your laundry during the day. This way you are using your solar electricity when it is being generated instead of getting a lesser credit for it and then paying a higher rate at night.We’re happy to answer any additional questions. Learn more about how solar energy works, net metering and negative electricity bills on our blog. Or give us a call at 512-837-4800 or use our chat feature.