You Don’t Need To Offset Your Entire Power Bill To Save Money With Solar

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There is a major misconception about solar, especially in the Pacific Northwest, that we would like clear up. We talk to homeowners every single day who think that solar is only a good investment if you can offset your entire power bill with your solar panels. We’re here to tell you the same thing we tell all of our customers (all of whom end up saving money on solar): that’s simply not true!

home with solar

By the above logic, solar in the Pacific Northwest, where winter days can be short (but summer days are long and mild) would be a total waste. And if that were true, nobody in Oregon would switch to solar energy! However, solar projects are on the rise in the Pacific Northwest. Companies like Intel, Ikea, and Albertsons have switched to solar at their Oregon locales, and in 2018, 70% of Oregon’s utility-scale net electricity generation came from renewable sources, including solar.

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Why Solar is Worth It

Even if you can’t offset your entire power bill with solar, you will still save a ton of money by making the change—even if you live in the cloudy Pacific Northwest! There are a few reasons for this. The climate conditions of the Pacific Northwest are a huge factor. Additionally, most people underestimate the lifetime cost of the ever-increasing rates of utility bills. There are huge incentives homeowners can take advantage of to both offset the cost of solar and the cost of using utility power to supplement your solar power. Let’s break these factors down in detail to understand why solar is still a good investment, even if you can’t offset your entire power bill.

The PNW Has Ideal Solar Conditions

Yep, you read that right—the cloudy, mild weather of the Pacific Northwest is the ideal climate for solar energy production! Don’t believe us? Get this: Germany leads the entire world in solar power production, yet it has the same long, mild summer days and cloudy fall and winter seasons that we see in Oregon, Washington, and Idaho.

Picture of the forest

Many people assume that solar panels fare best in Arizona and California, where it’s hot and sunny year-round. While solar panels do produce excellent rates of energy in these locales, solar panels suffer when they’re put in the never-ending heat. Solar cells burn out more quickly in hot, sunny climates, reducing the lifetime efficiency and longevity of a solar panel system. The Pacific Northwest’s mild temperatures are ideal for extending the longevity and reliability of solar panels.

It’s true that the average home in the Pacific Northwest is not capable of hosting a solar system that will offset the entire household’s energy use, but this isn’t a bad thing. Your home’s Total Solar Resource Fraction will indicate whether your property qualifies for solar and some of the associated solar incentives (more about that later). TSRF measures the sunlight the roof area will collect in a given year, and it accounts for things like shade from nearby trees, the tilt of the roof, and roof orientation. If a roof receives a rating of 100% TSRF, it means the space will get all of the sunlight possible, and there is nothing to obstruct the direct sunlight.

solar installation

Most homes in Oregon and Washington will not receive 100% TSRF, typically due to the nearby trees. Additionally, the average roof in the Pacific Northwest is not large enough for a solar panel array that will offset the homeowners’ entire power bill. However, you can still save with solar and qualify for incentives even if you’re in this boat. Let’s use a metaphor—imagine you have a well on your property that produces the cleanest, purest drinking water in the world, for free. The well only provides 75% of the total water that your family consumes, though—so you’ll need to purchase the other 25% of your water from the utility company. The well would still be worth it, right? Of course! Solar works the same way. When you switch to solar, you own the majority of your own power. You’ll produce the best green energy in the world for less than what you would have paid for your power bill. Sure, you might have to buy some supplemental energy from the utility company—but it’s still worth it, and you’re still spending less overall. Plus, there is an incentive in place that makes the additional power you purchase from the utility company even cheaper. It’s called Net Energy Metering.

Net Energy Metering Offsets Your Supplemental Power

Thanks to one of our favorite incentives—Net Energy Metering—homeowners benefit from those sunny summer days year-round, even when it’s cloudy and pouring down rain. Net energy metering allows homeowners to bank all of the excess energy their solar panels produce when their solar system is generating excess energy in the summer, and then receive credits for that excess energy in the winter. In the darker months, when your solar panels produce less energy than you use and you draw from the utility grid, your power bill will be offset by credits from the excess energy your solar panels fed to the grid in the summer. This keeps your power bill incredibly low. So, while you may still need to use power from the utility grid at night and in the winter, the cost of that power is negligible thanks to the extra energy your solar panels produce when it’s sunny outside.

Currently, most power companies in Oregon and Washington offer a one-to-one net energy metering deal to homeowners who have solar panels. This means that for every kWh of energy your solar panels send back to the grid, you receive an equal kWh of energy credit that gets rolled over into your power bill. However, as more homeowners are installing solar panels, some companies are changing this policy and offering homeowners lesser credits in exchange for the excess energy their solar panels produce. The good news, however, is that you will be locked in to whatever credit system your power company is offering when you first switch to solar. So, if your power company currently offers one-to-one net metering credits, but changes the value of those credits one year after you install your solar panels, your original one-to-one deal will be honored for the lifetime of your solar panels.  For this reason, we recommend getting a solar audit sooner rather than later to determine your home’s eligibility. Solar incentives are designed to increase the demand for solar energy, so as demand increases, incentives will be diminished, which is why making the switch to solar now is the smart thing to do.

solar Net Metering diagram

Owning vs. Renting Your Power Production: Utility Bills Will Always Increase

Historically, power bills increase at a rate of 3% each year. If your current power bill costs $100 a month, you’re paying $1200 every year for power. However, in 25 years, you will be paying closer to $2,500 a month for the same amount of power! Buying a solar system makes sense for the same reason buying a home makes sense—you’ll lock in your monthly payments and become an owner. Using power from the power company, on the other hand, is essentially like renting a home—you don’t own it, and the costs will continue to rise forever. While most people understand the value of homeownership, the down payment can be a big barrier to entry. Luckily, solar panel installs don’t require a down payment of any kind, which means you don’t have to save up in order to make the switch.

Let’s do some math to look at lifetime costs of owning your own power (switching to solar) vs. renting your power (continuing to purchase power from the utility company). If your $100/month bill increases at the average rate of 3%, you will spend $43,751 over the next 25 years on power! The average solar system, on the other hand, costs $13,000. After incentives, this cost is reduced even further. The Federal ITC (more on that below) reduces your overall cost by 26% through a tax rebate, meaning you will save $3,380 when you file taxes, reducing the gross cost of your solar system to $9,620. Because your system is warrantied for 25 years, you can consider this amount to be your total 25-year power cost.

Even if you have a small power bill in the winter months, net energy metering will offset those costs, making any power bills you do receive very small dollar amounts. Let’s say your solar panels offset 70% of your total energy needs. The extra 30% comes from the power grid, which means you’re spending $30/month on your utility bill in the first year that you purchase your solar PV system. Factoring in the 3% annual increase in power costs, your 25-year total spend on utility bills would be $13,125. Add that to the $9,620 cost of your solar panel system, and your total power cost (solar and utilities combined) would be $22,745—which is still nearly half of the $43,751 you would have spent on power without solar panels! Overall, going solar is always going to reduce your total spend on power.

Incentives & Financing

As we mentioned above, incentives are designed to make it easier and more cost-effective to go solar. In addition to net energy metering, there are a few other incentives that make buying solar panels even easier:

Federal Solar Incentive Credit (ITC): The federal government offers an incentive to homeowners to switch to solar energy through a dollar-for-dollar cash rebate on the overall cost of your solar system. This rebate is applied to the taxes you file for the year you installed your solar system. In 2021 and 2022, this rebate is worth 26%, which means that 26% of the cost of your solar system will be deducted from the amount you owe in taxes to the federal government at the end of the year. In 2023, this credit will be reduced to 22%, and in 2024, the credit goes away entirely for residential solar installations. When you go solar with Smart Solar Energy Co., we assist you with filing all the paperwork to ensure you benefit from this tax credit.

Energy Trust of Oregon (ETO) Cash Rebate: Oregon homeowners benefit from the Energy Trust of Oregon’s cash rebate program. When you installing a solar panel system in Oregon, if you are a customer of Portland General Electric or Pacific Power, you receive a cash rebate from the ETO in partnership with your power company. If you are a customer of Portland General Electric, your cash rebate is worth $0.30 per watt, up to $2,400. If you are a customer of Pacific Power, your cash rebate is worth $0.25 per watt, up to $2,000. This rebate from the ETO is not available to those who are not PGE or Pacific Power customers, but many other local utility companies offer rebates. Find your utility company’s rebate value. To qualify for the ETO cash rebate, your home must receive a TSRF rating of 75% or more.

Washington State Tax Exemption: Washington homeowners benefit from a statewide and local use tax exemption on all solar systems smaller than 100 kW. This exemption saves Washingtonians thousands on solar panel installations. For a standard-sized solar system installation, a Washington homeowner will save $2,000+ on the overall cost of switching to solar. This tax exemption applies to solar panel installations done through 2029.

Financing: Finally, even with the huge cost reductions these incentives provide, you don’t need to pay for your solar installation in a lump sum. We recommend financing your solar system and paying off the solar loan in monthly installments. These monthly payments are typically less than what you pay for your power bill without solar, and—most importantly—once your loan term is up, you have no more payments! There is no need to make a down payment when you install solar panels. Smart Solar Energy Co. partners with several local banks and credit unions to offer low-interest financing options to our customers.

Hopefully, we’ve made it clear how you much you stand to gain by going solar—even if you can’t offset your entire power bill with your solar panels! To find out if your home qualifies for solar, book a free remote or in-person solar audit.

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