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Do you still get an electric bill with solar panels?

Updated: 29 October 2020

The main goal of going solar for most homeowners is to reduce their bills and, if possible, eliminate the monthly costs.

In most cases, you’ll still receive an electric bill with solar panels installed. On average solar panels reduce your power bill by 91%.

The bill may come with a net-zero balance depending on your power consumption and feed-in rate that month.

large power bill with solar

Can solar panels eliminate electric bills?

In theory, yes, but practically, your best aiming for 90% reduction in bills. Solar power can generate 100% of your daily electricity usage, but you will need to install an over-sized system and add a battery to make it happen.

Since all your solar power is generated during the day, you can only use so much electricity. The surplus power is sent back to the grid to earn some credits with your utility company.

At night, when most Australians consume over 70% of their electricity, you’ll still have to rely on power from the grid.

The only way you’ll achieve net-zero balance is if you have a storage battery to store the energy you generate during the day. However, the cost of batteries is too expensive at the moment, and investing in batteries will increase the payback period for your solar system.

Alternatively, you can choose to invest in an oversized solar system. Such a system will generate excess power during the day, allowing you to store some energy in the batteries and feedback the surplus.

An oversized system also makes up for any power loss due to the reduced efficiency of your panels. This ensures you have enough power for use at all times, reducing your reliance on the grid power.

Can solar panels eliminate electric bills1

Why you might have a large power bill even with solar!

Even after installing solar power, some homeowners may still receive very high-power bills at the end of the month. There are many reasons why this could be so. Here are some of the most common causes:

1. Your system is faulty

High-power bills are usually one sign that there’s something wrong with your solar system – but this is rarely the issue. But to make sure it’s not, have your installer take you through the entire system and how it works.

Ask him/her to show how to identify early warning signs when it’s not working as it should. This can be monitored from apps these days that are connected to your system. It’s pretty easy to see.

2. You’re consuming more power than before

Once you’ve installed solar power, most homeowners get carried away by the idea of free power, and so, they start using more power than they did before. Doing this consumes all the savings your solar makes and adds up on your utility bill.

To fix this, regulate how often you use your large appliances like the washer and dryer, the central AC, and pool pumps. If possible, use these machines during the day when solar power is generated.

Strutting around your home nude in the middle of winter because you have “free power” is a great way to waste money and over shoot your power target.

3. You’re using your power at night

Statistics show that most Australian homes consume nearly 70% of electricity at night. Because all solar power is generated during the day, you need to eight store it in a battery, or feed back to the grid. Since the feed-in rates are lower than retail rates they will sell it back to you at night, you will spend a little each day.

4. You’re using old and outdated appliances

Old electrical appliances usually have very low efficiency. This means they hog up a lot of the electricity you generate. You’ll therefore have to depend on the grid to meet the total energy demand in your home.

To fix this, get rid of the old and outdated appliances in your home and replace them with more efficient ones.

Lastly, beware of fraudulent salespeople who may trick you into believing that your solar system will save you some ridiculous amounts. Be realistic with your expected savings, and remember that your utility bill all depends on how much power you consume.

Mistakes homeowners make when calculating their solar savings

Going solar obviously has many benefits, but if you’re doing your calculations wrong, it’s easy to think that solar is a rip-off. Some of the mistakes to watch out for includes:

Focusing on your net feed-in rate tariff

Exporting your power back to the grid is a great way to reduce your power bills, but it’s not the best way to increase your savings. With most utility companies in Australia paying as low as 8 cents per kWh exported, you stand to save much more when you consume your generated power.

Practically, assuming you’re in NSW, you’ll save 25.78 cents/kWh – which is the current average electricity rate in the city, compared to the 8 cents/kWh for feed-in Tariff.

Looking for your savings on your power bill breakdown

Your power bill makes your solar savings appear little only because it accounts for just the savings you made exporting power to the grid. But the majority of your solar savings comes from the amount of power you didn’t have to buy from your utility company.

To put this into perspective, here’s an example of how much you really save:

For a home without solar and using 800kWh monthly at a rate of 25.78c/kWh, the monthly bill becomes: 800 x 0.2578 = $206.24 (Before fixed charges and taxes).

Quarterly, this becomes $825.

With a solar panel, assuming you use 50% of the solar-generated during the day, you’ll be consuming 400kWh every month. This means you don’t have to buy: 400 x 0.2578 = $103.12 monthly or $412.48 quarterly.

Additionally, assuming your utility company pays you 10c/kWh for the power you export, you’ll save: 400 x 0.10 = $40 monthly or $160 quarterly.

Nonetheless, since you’ll have to depend on power from the grid at night, you’ll be spending:  400 x 0.2578 = $103.12 for power monthly. Quarterly this will be $412.50.

Now, your total power bill per month will be: $103.12 – $40 = $63.12 or $252.48 quarterly.

This means that you’re saving: $825 – $252.48 = $572.52

Annually you’ll save about $1717.56

Why will you get greater savings in summer?

As you know, solar panels work best with more sunshine. During summer, the days tend to be longer than during other seasons. This means that your solar panels get more daylight hours and hence generate more power.

In fact, your solar system may generate almost double its usual output in summer. For homeowners, this means that you can export more power back to the grid and hence more savings.

Additionally, the longer days means you can use more of your electricity during the day and hence, buy less power from the grid at night.

This way, you save a lot more compared to other seasons.

Keep in mind: Your savings will vary depending on the strength of solar radiation in your location.

How oversizing your solar system can eliminate your power bill entirely

How oversizing your solar system can eliminate your power bill1

If you’re looking to eliminate your power bill entirely, your best bet would be oversizing your solar system. This simply means getting more solar panels with a bigger capacity than your solar inverter.

By doing this, you’ll have more solar panels generating power and hence reduce your dependence on the grid. This will ultimately cut back your power costs.

Also, since solar panels rarely generate power at their maximum capacity, having more panels will ensure that you match the inverter’s capacity and hence avoid wasting any power.

This will give you an advantage when generating power under poor conditions, e.g., cloudy weather or partial shading.

The best thing about oversizing is that it doesn’t damage your inverter. According to the Clean Energy Council’s Solar PV guidelines, you can oversize your solar system by up to 33%.

Use battery backup to get the job done

Investing in a solar battery is another great way of cutting down your power bills to almost zero. Battery storage allows you to store any surplus power you generate during the day for use at night or during cloudy days.

Working with batteries is the best way to eliminate your electricity bills completely with solar power.

However, with the costs of solar batteries being quite high, investing in solar batteries at the moment doesn’t seem cost-effective. But since its price is slowly coming down, it’s cheaper to get a solar system and get your solar battery in a few years.

In the meantime, maximize on selling your solar power back to the grid for utility credits. It may not reduce your bill to net zero, but at least your power bills can stay under $100.

How long until solar pays for itself?

With a good 5kW solar system, your solar system can pay itself within 5 – 7 years. However, this period may be shorter if you consume all the power the system generates.

Ben McInerney head shotAuthor: Ben McInerney is a renewable energy enthusiast with the goal of helping more Australians understand solar systems to make the best choice before they purchase. Having an accredited solar installer in the family helps give Ben access to the correct information, which allows him to break it down and make it easily understandable to the average homeowner.