Solar Neighbor Savings: Lower Electric Bills
- Most solar houses are grid-tied in the U.S., which means some solar electricity will be fed back to the grid - especially at noon on a sunny day.
- Although there is a wide array of types of rate structures in the U.S., most of them disincentivize feeding too much power back to the grid so most...
- Solar power provides economic benefits beyond simply lowering monthly electricity bills, including ample avoided costs that conventional utility studies frequently enough fail to account for.
You may walk past your neighbor’s house adn see some new solar panels quietly absorbing sunlight and turning it into electricity. Your neighbor is smiling because solar is now the least expensive electricity in history. So, your neighbor is almost certainly saving a lot of money. This will be better if you live in a sunny part of the country – but even every resident of cold and cloudy Michigan would save money with solar rather than buying it from the grid. Most of that electricity of the solar panels will be used to power your neighbor’s house. But some of the value of the solar will actually make its way to you and cut your electricity costs.
Grid-tied Solar
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How does that work? Most solar houses are grid-tied in the U.S., which means some solar electricity will be fed back to the grid – especially at noon on a sunny day.
Smart electric meter with solar photovoltaic array.Energy from the sun can literally spin electric meters backward.
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Although there is a wide array of types of rate structures in the U.S., most of them disincentivize feeding too much power back to the grid so most residential solar systems are sized to produce exactly what the annual load is highly likely to be. In the not so distant past, this was all based on what is called “net metering“. What this meant is that if electricity cost your neighbors 10 cents/kWhr
Solar Power Generates Savings Beyond Electricity Bills
Solar power provides economic benefits beyond simply lowering monthly electricity bills, including ample avoided costs that conventional utility studies frequently enough fail to account for. These savings stem from reduced pollution and health impacts associated with fossil fuel-based power generation.
understanding Avoided Costs
Utilities sometimes argue that solar customers impose a cost on the grid, publishing studies to support this claim. However, these analyses typically overlook the full range of benefits solar provides, specifically the “avoided costs.” These costs represent the expenses that are not incurred because solar energy is being produced,lessening the reliance on traditional power sources.
Avoided costs can include:
- Fuel costs (coal, natural gas)
- Power plant maintenance
- transmission and distribution upgrades
- Environmental compliance
- Water usage
- Waste disposal
- Health impacts from pollution
The Impact of Externalities
The failure to account for all costs is often due to “externalities” – unintended consequences of electricity production that impact parties not directly involved in the transaction. Such as, coal-fired power plants release pollutants into the air, creating health problems and environmental damage, but the cost of these impacts isn’t typically factored into the price of electricity.
This market failure means that polluting energy sources are artificially cheaper than they should be, hindering the adoption of cleaner alternatives like solar. A 2017 study published in the journal Renewable and Lasting Energy Reviews found that centralized fossil fuel power is responsible for more than 50,000 premature deaths annually in the United States.
when these health and environmental costs are considered, the economic benefits of solar power become even more pronounced.