How much will you save with your photovoltaic system?

The value of your photovoltaic system's electricity depends on how much you pay for electricity now and how much your utility will pay you for any excess power that you generate. If your utility offers net metering (and so pays the full retail price for your excess electricity), you and your utility will pay the same price for each other's electricity. You can use the calculation box on the next page to roughly estimate how much electricity your photovoltaic system will produce and how much that electricity will be worth. Actual energy production from your photovoltaic system will vary by up to 20% from these figures, depending on your geographic location, the angle and orientation of your system, the quality of the components, and the quality of the installation.

Also, you may not get full retail value for excess electricity produced by your system on an annual basis, even if your utility does offer net metering. Be sure to discuss these issues with your photovoltaic provider. Request a written estimate of the average annual energy production from the photovoltaic system. However, even if an estimate is accurate for an average year, actual electricity production will fluctuate from year to year because of natural variations in weather and climate.

If your utility does not offer net metering, you can still use the calculation box to determine the amount of electricity your system will produce. However, this is not as straightforward, because the excess electricity will not be worth as much as the electricity you actually use. You may earn only 2 cents per kilowatt-hour—or less than half the retail rate—for your excess power.

PV systems produce most of their electricity during the middle of the day, when residential electric loads tend to be small. If your utility does not offer net metering, you may want to size your system to avoid generating electricity significantly beyond your actual needs.

Calculating Electricity Bill Savings for a Net-Metered Photovoltaic System: Get Your Power from the Sun

Determine the system's size in kilowatts (kW). A reasonable range is from
1 to 5 kW. This value is the “kW of PV” input for the equations below. Based on your geographic location, select the energy production factor
from the map below for the “kWh/kW-year” input for the equations.

Energy from the photovoltaic system = (kW of PV) x (kWh/kW-year) = kWh/year

Divide this number by 12 if you want to determine your monthly energy reduction.

Energy savings = (kWh/year) x (Residential Rate)/ 100 = $/year saved

(Residential Rate in this above equation should be in dollars per kWh; for example, a rate of 10 cents per kWh is input as $0.10/kWh.) For example, a 2-kW system in Denver, CO, at a residential energy rate of $0.07/kWh will save about $266 per year: 1,900 kWh/kW-year x $0.07/kWh x 2 kW = $266/year.

solar energy map

Note: The uncertainty of the contoured values is generally ±10%.
In mountainous and other areas of complex terrain, the uncertainty may
be higher.