• At this point, most people know that solar is great for the environment, and presents the clearest path forward for society to wean itself off fossil fuels. While most people understand this, many homeowners are still unaware of the benefits solar presents to the individual. The truth is, while solar is great for a society as a whole, it is equally as beneficial to the average homeowner, who can save a ton of money, add to their home value, and achieve energy independence by installing. Let’s take a look at the benefits of installing solar panels on your roof and how it helps society as a whole.

    Save Money

    The primary benefit of installing solar panels is that the homeowner can save money on their utility bills. By installing solar and producing their own power, the homeowner no longer has to rely on the utility company to provide them all their power. This allows them to greatly reduce or fully eliminate their power bills, which, in San Diego, where the electric rates are very high, can result in significant savings.

    How it Works

    Before meeting the solar panel installation requirements, it’s important to understand how these solar panel systems work in the first place. When a homeowner installs solar, the system produces power whenever the sun is up, on both sunny days and cloudy days, from sunup to sundown. Naturally, the brighter the light and the more directly it shines on the panel, the more power is produced, normally peaking in the middle of the day when the sun is directly overhead. Also, in summer when the days are twice as long as in winter, about twice as much power is produced each day. This usually results in the production of more power than the house needs during the day and of course, no power at night when the sun has set.

    Net Metering

    In order to capture the full value of solar power being produced, homeowners enter into a special arrangement with the utility called “net metering.” This allows solar customers to get credit for any solar power their home can’t use, minute by minute, by “selling it” directly to the utility; i.e., the meter “runs backward” and the bill reflects a negative dollar amount. At night, when no solar power is being produced, the customer takes power from the grid and their meter “runs forward” again so they are charged for the power they are using. Essentially, they are “depositing” power during the day and then “withdrawing” it again at night. Likewise, solar homeowners produce more power and get credit in the summer and then take some of it back in the winter. The important point is that customers only pay their net metering bill once per year and have the whole year to average-out the debits and credits and to greatly reduce if not eliminate their power bills.

    Time of Use Rates

    Recently, SDGE introduced a new electric rate structure called “Time of Use.” The idea behind this rate is to create different energy prices, based on WHEN power is being bought or sold, in addition to HOW MUCH power is bought and sold.  This is based on the new reality that, thanks to all the added solar power in California, there is more grid power during the daytime and less when people come home and turn on their A/C and lights, etc. during evening hours, (4-9 pm). In an effort to reduce usage during these hours, the utility is raising the price during this time and lowering it during midday (which used to be the highest price, also called peak period).

    This change in the rate also affects Net Metering and how much credit that solar homeowners get for the power sent back to the grid. So, during the day, when the solar is producing more power than the home needs, the extra power is credited at a lower rate -- 28.6 cents per kilowatt hour (kWh). Later, from 4-9 pm (peak period), the rate goes up to 53.8 centers per kilowatt hour. This means that more power must be produced during the day to offset the more expensive power used in the evening; the good news is that it’s possible to add extra panels to the system to offset this price differential.


  • Protection Against Rate Increases

    The other way that solar can enable the homeowner to save money is by protecting them from utility future price increases. When the homeowner installs solar and is reducing or eliminating their electric bills, they are no longer susceptible to the constantly increasing electricity rates used by the utility. On average, utility rates increase 2-3% a year, but specifically in San Diego, rates are increasing even faster. SDGE recently proposed a 28% rate increase over the next four years, a stunning increase that will cost already cash-strapped homeowners thousands of dollars in utility bills over the coming years.

    We should note that this protection from the power company rates means that savings tend to compound over time. Due to the unpredictable nature of electric rate increases, homeowners may be able to estimate their savings a year or so in the future, but in successive years rates may increase dramatically, making future electricity costs completely unpredictable. So, this makes it hard to predict exactly how much homeowners will actually save with solar. For this reason, savings based on average rate increases are more like minimum savings that can only go up over time. No matter how much it increases though, the homeowner will rest easy knowing that they will be zeroing out their electricity bills, even into the distant future.

    The Federal Solar Tax Credit

    Besides just saving money on energy bills, installing solar and owning it allows the homeowner to be eligible for the 30% Federal Solar Tax Credit. Also known as the Solar ITC, the 30% Solar Tax Credit allows homeowners to subtract 30% of the cost of their solar installation from their federal tax bill. As a typical solar panel installation costs around $20,000, this Solar ITC can potentially save the average homeowner $6,000 on the total out-of-pocket cost! (Think of how many electricity bills THAT would cover!) Important note: if the homeowner doesn’t owe enough in taxes during the year that they get the solar installed, then the credit can be rolled over to the next few years.

    Power Your Electric Vehicle

    Another way solar can save homeowners money is by providing extra power to charge their electric vehicle. With the recent rise of the electric vehicle market, many homeowners are installing extra solar to provide the extra electricity their electric vehicle may require. This allows them to spend less money on gas, which can save them a ton of money.

    As an example, consider the fact that the average car owner drives around 12,000 miles a year. If gas is costing the car owner around $4/gallon and gets 20 MPG, that means that they are spending around $.20/mile or $2,400 a year just on fuel. By installing solar, electric car owners can cut down those costs down to $.05/mile (or less) or only around $600 per year! So, powering their vehicle on solar actually provides greater savings than powering their home on solar.

    Electric cars have become very affordable and now are in the reach of a much larger proportion of the population. The 2017 Smart Electric Drive, for example, starts at $23,800 before tax credits. Rebates and tax credits are available for electric car purchases in many states as well, which further sweetens the deal for homeowners.

  • Add to Your Home Value

    In addition to saving money on power bills, solar energy also adds new resale value to the home as homebuyers are more aware that they are buying a home with no power bill for years to come.

    Solar systems are becoming more popular, having a paid off solar system on a home can greatly increase the chances that the homeowner will sell the home as well. This makes the home more attractive to potential buyers. Also, a homebuyer not paying $200/month for electricity can now afford to make a house payment that’s $200 larger. While the exact added value of solar can vary greatly, studies have recently been done on the subject and have found that the added value can be quite substantial.

    Researchers at the U.S. Department of Energy’s Lawrence Berkeley National Laboratory, in a partnership with Sandia National Laboratories, recently did a massive study on the effect of solar systems on home resale values. This study looked at more than twice the number of solar-equipped homes compared to earlier studies, evaluating about 22,000 home sales, 4,000 of which had solar installed. This included homes outside of California and is the most encompassing of its kind to date.

    The research found that home buyers will pay an additional $4 per watt of installed solar, a high price which means that the average system will add around $20,000 in value to the home. Due to the fact that this value is an average, based on information from both housing busts, booms, and recoveries, it should remain consistent or increase in the future.

    In conclusion, installing solar energy can be very beneficial to individual homeowners by enabling them to save a significant amount of money while adding new value to their home. This benefit can also be spread out into the greater economy, because saving money on their energy bills also increases discretionary spending: money homeowners can spend on other things. So it’s clear that solar is not only good for the planet, but also good for homeowners’ pockets, and the economy as a whole.

    If you’d like to learn more about solar and how it can benefit you, contact our San Diego solar panel company today to get your free solar quote. You may be surprised at how much you can save - and how reasonable the cost can be.

  • About the Author

    Michael Powers


    Michael is one of the founding partners of Stellar Solar. In 2001, he helped launch The Home Depot’s national solar energy program which is now offering home solar through hundreds of stores in nearly a dozen states. He is a writer and marketing professional with over 30 years’ experience in the fields of energy, market intelligence and leadership training. He currently serves as treasurer and board member of Global Energy Network Institute (GENI), a San Diego-based non-governmental organization that advocates linking renewable energy resources around the world using electricity transmission.