With solar, you may save more than you think (and how to calculate it)

August 18, 2015
Joule Solar Commercial Installation Twin Creeks

Your solar system is a quiet ally. It’s not fancy or flashy, unless you are into high-tech photovoltaics.  It doesn’t get celebrity endorsements, although some celebrities have invested in systems on their own roofs (yes, we're talking about Tom Brady).  And it can’t remind you to pick up a birthday card for your coworker.

 

Its job is to reliably provide your business with as much free energy as it is capable of producing at a given time, based on weather conditions, shading, temperature, and a variety of other factors.

 

Solar keeps a low profile, until you see your electric bill. When having solar panels installed, you may experience delayed gratification, because you don’t start receiving the full benefit of the electricity production until your net meter is installed by your utility and that first bill comes in. Once you receive the bill and notice that the cost is significantly lower than usual, you have what we call your solar "woohoo!" moment.

 

Joule’s very own Michael Freeland purchased a solar system as soon as he joined the team.  A self-described “tough customer,” he eagerly started the process of going solar by looking forward to reaping the rewards.

 

“I knew it was the right move and we were excited to go solar,” Michael told me, “but it was funny.  There was some part of me that would not feel at ease until I could see that my Entergy bill was going to reflect my solar system’s output!”

 

how-to-read-energy-bill-with-solar

 

Michael’s first bill gave him peace of mind.  Looking at the “Previous Balance” line under “Account Detail,” you’ll see that the previous month’s bill totaled $177.41, while the “Current Month Energy Charges” was only $17.14, an 85% savings on the bottom line!

 

Dissecting the bill further, there are few things worth noting to determine the exact impact that his solar system made.

 

What the Bill Tells Us

 

The first thing to notice is the number of billing days, found in the second column of the top left box entitled "Total Monthly Energy Usage." In Michael's case, this bill covered 32 days, while the previous year's bill only covered 25 days.  He bought 672 kilowatt hours (kWh) from Entergy this year and paid for 858 kWh the previous year. Using these numbers makes it seem as if he only reduced his energy use by 22%, but this doesn't take into account the fact that last year's billing period was 7 days longer.

 

We also know that although Michael received 672 kWh from Entergy (shown beside “Company kWh to Customer” at the bottom right), we also see that they sold 540 kWh back to Entergy (shown beside "Customer kWh to Company"), for which they were credited.  This means they were only charged for the difference of 132 kWh.

 

In the “Current Charges” section halfway down the right side, you’ll see charges labeled “Energy Charge,” which is the base cost of any bill to connect to the grid, "Storm Restoration Offset,"and "Fuel Adjustment," a rate that is is multiplied by the 132 kWh for which they are being charged.

 

Calculating On-Bill Energy Savings

 

We've seen that comparing your energy use after going solar with your use last month or last year is somewhat limited in usefulness. More precise energy and cost calculations take a little more math (but don't worry, not too much math).

 

In MIchael's case, it starts by taking that net amount of energy he bought from Entergy (132 kWh) and normalizing it by the number of days in the billing period (32).

 

132 kWh / 32 days = 4.13 kWh/day

 

We perform the same calculation for the billing period 12 bills prior. For an accurate comparison, the billing period from 12 bills prior hopefully falls around roughly the same dates, or is at least in the same season.

 

858 kWh / 25 days = 34.3 kWh/day

 

To determine net energy savings, we then divide the current kWh use by the previous use and subtract that number from 1.

 

1 - (4.13 kWh / 34.13 kWh) = 0.88 or 88%!

 

This also means Michael's fuel adjustment charge is lowered by 88% as well, and as the utility rate increases, the savings per kWh will follow suit. This is another reason why solar can be a great long-term investment. 

  

What the Bill Doesn't Tell Us

 

We can only see the number of kWh that Michael bought from Entergy and the number of kWh his system sold back to Entergy.  What we do not see is the total kWh his system produced in March, which includes the energy both produced and consumed onsite.  

 

As his solar system produces energy, it first sends that energy to Michael's electrical load, and then any excess goes back into the grid to be sold to Entergy, and is recorded on the bill as “Customer kWh to Company."  Entergy’s meter has no way of seeing how much energy he consumed onsite aside from what the grid provided.

 

In short, while your bill shows you the net energy savings from your solar system, it is not a true reflection of what your system produced, because you will consume energy directly from your system. Your bill only captures the portion of energy flowing into and out of the grid.

 

This can be confusing even for our clients who are also utility employees. One remarked, "I was under the impression that 100% of our solar output was automatically sold back to the grid and that was netted with our [grid] usage, but it appears that... only the generation we don't use is sold back to the grid." So even if you work for a utility, reading an electric bill with a solar system can still be frustrating, and ultimately disappointing, because it is difficult to determine your system's total production using only the bill.

 

If Your Energy Cost Looks High

 

If your utility bill is particularly high one month, and you’ve gotten used to seeing a certain dollar amount with the help of your solar system, there could be other factors at play. You'll first want to think about how much energy you’ve needed over the past month.  Has it been unusually hot outside, causing the air conditioning unit to run non-stop?  If the "Customer kWh to Company” is much lower than usual, it may mean that you are using more electricity than you might during a typical month, as the bill shows only what the system produced beyond what energy was needed.

 

month-to-month-savings-solar-chart

 

Unless you purhase an energy monitor, calculating your exact energy consumption will require a little more math. It involves subtracting the energy sold back to the grid from the total output of your system, and then adding back the total amount you required from the grid. In Michael’s case, using 950 kWh as an example system output, the equation is:

 

950 kWh (produced) - 540 kWh (sold to grid) + 672 kWh (bought from grid) = 1,082 kWh (total consumed onsite)

 

So while Michael is actually consuming more total energy than it did last year, the fact that he gets a large percentage of it from solar is what accounts for the steep savings in the final bill.

 

Here is a simplified diagram demonstrating how this energy moves.

 

energy-flow-solar-system

 

If You Have Level Billing

 

Level billing is no longer necessary if solar power provides for a large portion of your energy needs.  Rather than "essentially pay[ing] an average of 12 months of bills," as Entergy explains on their website, you will pay for only what you need from your utility, and get credits for excess production.  Some months, this may result in a "negative bill," rolling over as a credit to the following month's bill!  With level billing, it's harder to see and appreciate the value of your system's output.

 

Another way to appreciate the output from your system is to log into and check your monitoring portal. You can see your system’s output on an hourly, daily, monthly, and yearly basis. Some clients even choose to show all of their friends their system's output remotely, like one of my favorite clients who monitors his system on his phone from the ship he pilots!

 

You can also check the output from the display of your inverter. This is useful if your Wi-Fi is not working and you need hard numbers.  Joule’s production guarantee is generally based off of the output recorded by the inverter.

 

If these numbers look good to you, and you are ready to have a choice in the matter of how much you pay for your electricity, and a chance to own your very own clean power source, take a minute to speak to a solar consultant about your options.  Your utility won't thank you, but your bank account will!

Interested in saving energy or have questions about our services? Click below or call us at 504-586-0625 to find out if solar or LED lighting is right for you.

GET STARTED

Interested in saving energy or have questions about our services? Click below or call us at 504-586-0625 to find out if solar power or LED lighting is right for you.

GET STARTED

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