Understanding Electric Rates & How Solar Can Help California Residents Save

In the world of renewable energy, solar power has a popular clean energy option for many homeowners in California. But how much can solar actually save you each month?With rising electricity rates in the Golden State, the quest for a sustainable and cost-effective alternative has never been more pressing. This article will review the benefits of solar energy systems, with a financial breakdown, and the transformative potential for California homeowners to save on their monthly electricity bills with solar.

Electric Rates in California

The electricity rates in California are some of the highest in the country – with PG&E being the most expensive utility in California, impacting the majority of Bay Area residents. On average, PG&E’s off-peak rates are 48 cents/kWh in the summer months and 43 cents/kWh during the winter, with peak rates hitting 56 cents/kWh in the summer and 46 cents/kWh during the winter months. These rates are influenced by many factors, including the region’s reliance on fossil fuels, infrastructure costs, and policies set by the California Public Utility Commission (CPUC). In November 2023 the CPUC authorized PG&E to raise rates by 12.8 percent. This means that starting January 1, 2024, customers will be paying an average of $32.62 more every month. In December 2023, Pacific Gas & Electric asked for an additional $1.46 billion from rate payers. If the CPUC approves the second proposal for higher rates on an interim basis, monthly bills will see another increase in March 2024. These fluctuating electric prices have made it imperative for residents to seek more affordable energy alternatives, with solar energy emerging as the frontrunner.

The Solar Advantage: Beyond Just Savings

In California, your potential savings from solar energy hinge on two key factors: how much you your current electricity bill is and how much of your electric bill solar can offset.

Given California’s abundant sunlight and its duration, the typical electricity homeowner in the state would require a 6.3 kilowatt (kW) solar panel system to offset 100% of their yearly electricity usage, which averages 11,301 kWh.

Imagine erasing 100% of your electric bill using solar; the financial benefits add up quickly! If we factor in a projected 5.5% yearly rise in electric rates and assume you’ve opted for a $0-down solar loan for your system, you’re looking at a savings of $3,700 in the first year. Fast forward, and the savings amount to $20,600 over a span of five years, $47,500 in a decade, and an impressive $128,500 over two decades for Californian homeowners. This doesn’t even account for recent years where we’ve seen 10%-18% increases.

Electric Bills in California: The Savings Breakdown

While the immediate benefit of solar is a reduced monthly utility bill, the long-term implications are even more significant. Over a span of 25 years, without a solar power system, a Californian could end up spending approximately $188,500 on electric bills. By transitioning to solar, not only can this amount be drastically reduced, but homeowners can also protect themselves against future rate hikes. With the addition of solar batteries, households can store excess energy, further optimizing their energy production and costs.

Electric Rates and Their Implications

The electric rates in California vary based on consumption patterns, time of day, and even seasons. With solar installations, homeowners can lock in a fixed rate, insulating themselves from the volatility of traditional electricity costs. This stability can be especially beneficial for those on a tight budget, ensuring no unexpected spikes in their monthly electric bills.

FAQs About Electricity Rates and Solar

  • How long does it take for a solar system to pay for itself? By 2022, the typical solar payback period in California stands at approximately 5.92 years. This marks the moment when your solar investment begins generating profits for you.
  • Will I receive an electric bill even after installing solar panels? Yes, if you’re connected to the grid, you’ll likely receive an electric bill even with solar. However, if your solar system offsets your entire electricity consumption, your monthly bill could be as low as $0. In some cases, if you supply more electricity to the grid than you use, you might even receive a negative bill, depending on local incentives.
  • Is a solar loan’s monthly payment lower than my current electric bill? Typically, the monthly payment for a solar loan is less than your electric bill. This means that with a $0-down solar loan, you can start seeing savings right away. However, over the lifespan of your system, a solar loan might cost more than a one-time cash payment due to accumulated interest.
  • What does “time-of-use” mean in terms of electricity rates? Time-of-use electricity rates are structured to encourage reduced electricity consumption during peak demand times. With this plan, you’ll be charged more during high-demand periods, like hot summer afternoons, and less during low-demand times, such as late at night. You can maximize savings by strategically using appliances during off-peak hours or by integrating a solar battery to minimize grid electricity usage during peak rates.
  • How can solar batteries shield me from rising electric rates? Solar batteries store excess energy produced by your solar panels. When electric rates spike and your solar panels aren’t producing enough power, you can tap into your stored energy instead of drawing from the grid. This approach helps you avoid high surge rates, ensuring you benefit from the most favorable electric rate available.

Take Control of Your Electric Costs

The transition to solar isn’t just a financial decision, but a step towards a more sustainable future. With rising electricity rates in California, the decision to install solar panels is both economically and environmentally sound. As solar panel installation costs becomes more affordable, it’s also an opportunity for homeowners to take charge of their energy costs, reduce their carbon footprint, and contribute to a greener future.

If you’re ready to change the way you power your home and start saving more with solar and battery backup, contact us today for a free customized quote.

Let's Change The Way You Pay For Power.

Get started with a free quote