How much does solar save on an electric bill per month?

The average U.S. homeowner saves $100–$150/month on their electric bill with a correctly sized solar system. Savings vary widely by state: Connecticut and Massachusetts homeowners save $200–$300/month due to high rates ($0.25–$0.30/kWh), while Indiana and Tennessee homeowners save $50–$90/month due to lower rates and avoided-cost net metering policies. Hawaii is the outlier at $300–$500/month savings.

How do I calculate my personal solar savings?

Multiply your system's annual production (kW × peak sun hours/day × 365 × 0.80) by your electricity rate. Example: an 8 kW system in Boston (4.2 PSH/day) produces 8 × 4.2 × 365 × 0.80 = 9,811 kWh/year. At $0.27/kWh, that's $2,649/year = $221/month. In states with avoided-cost net metering (Indiana, Tennessee), multiply only your self-consumed portion by the retail rate and the exported portion by $0.03–$0.05/kWh.

Does electricity rate or sunshine matter more for solar savings?

Electricity rate matters more than sunshine for monthly bill savings. Connecticut ($0.27/kWh) consistently saves more per month than Arizona ($0.13/kWh) despite less sun, because each kWh of solar produced is worth twice as much. This is why New England states (CT, MA, RI, NH, ME) have some of the fastest solar payback periods in the country despite lower sun hours.

How does net metering affect my solar electric bill savings?

In retail-rate net metering states (NJ, MA, NY, CT, RI, NH, WA, VA, NC, and most others), every kWh your panels produce — whether you use it immediately or export it — reduces your bill at the full retail rate. In avoided-cost net metering states (Indiana, Tennessee, Alabama), exports earn only $0.03–$0.06/kWh, so you need to maximize self-consumption by scheduling laundry, EV charging, and appliances during peak solar hours.

Are there savings beyond the electric bill with solar?

Yes — three major additions: (1) SREC or PBI income in states with active markets (NJ, MA, IL, CT, MD earn $650–$2,700/year on top of bill savings); (2) VPP earnings of $150–$420/year for battery owners who enroll in virtual power plant programs; (3) home value increase of $4,000/kW (LBNL research) adding $32,000–$40,000 to a typical home's resale value. Long-term, inflation on electricity rates (4–5%/year historically) means your $130/month savings today may become $212/month in 10 years.

How Much Does Solar Save on Electric Bill 2026

The most practical solar question isn't "what's the payback period?" or "what's the ROI?" — it's simply: how much less will I pay each month? The answer depends on three factors: your electricity rate, how much solar your system produces, and your net metering policy. This guide gives you real numbers by state and shows you how to calculate your personal monthly savings in under 5 minutes.

The Short Answer: National Average Savings

The average U.S. homeowner with a correctly sized solar system saves $100–$150 per month ($1,200–$1,800 per year) on their electricity bill in 2026. But "average" hides enormous variation:

Connecticut, Massachusetts, Rhode Island: $200–$350/month (high electricity rates + strong incentive programs)
California: $150–$300/month (high rates, but self-consumption design required under NEM 3.0)
Hawaii: $300–$500/month (highest rates in the country at $0.38–$0.46/kWh)
Texas: $100–$180/month depending on utility
Arizona: $90–$160/month (high solar production, moderate rates)
Indiana, Tennessee, Alabama: $50–$90/month (lower rates, avoided-cost net metering)

The single biggest driver of your monthly savings is your electricity rate — not how sunny your state is.

Why Electricity Rate Beats Sunshine for Monthly Savings

This surprises most buyers: cloudy Connecticut ($0.25–$0.30/kWh) saves more per month than sunny Arizona ($0.12–$0.15/kWh) in many scenarios. Here's why:

Every kilowatt-hour (kWh) of solar your panels produce replaces grid electricity at your local rate. A panel that produces 400 kWh in a month:

In Connecticut ($0.27/kWh): saves $108 that month
In Arizona ($0.13/kWh): saves $52 that month

Connecticut gets less sun than Arizona — so the panels produce less electricity. But the rate advantage is so large that Connecticut buyers often come out ahead. This is the core insight behind the "Northeast Paradox" in solar: states like CT, MA, RI, and NH consistently have the fastest payback periods despite fewer sunny days.

See our Solar ROI by State guide for full payback period and 25-year savings comparisons.

Monthly Savings by State: 2026 Reference Table

The table below shows estimated monthly savings for a correctly sized system covering 90–100% of electricity usage at the national average consumption (~900 kWh/month for a 3-bedroom home):

State	Avg Rate (2026)	Est. Monthly Savings	Notes
Hawaii	$0.38–$0.46/kWh	$300–$500	Battery required for max savings under Smart Export
Connecticut	$0.25–$0.30/kWh	$200–$300	RSIP adds PBI income on top of bill savings
Massachusetts	$0.24–$0.28/kWh	$190–$270	SMART PBI income boosts total savings
Rhode Island	$0.22–$0.27/kWh	$175–$250	REF rebate + high rates = fast payback
New Hampshire	$0.22–$0.27/kWh	$170–$240	No sales tax + high Eversource rates
California	$0.20–$0.35/kWh	$150–$300	NEM 3.0 requires battery for full savings
Vermont	$0.19–$0.23/kWh	$150–$200	GMP rates rising, EVT rebates help
New York	$0.18–$0.24/kWh	$140–$210	NY-Sun + 25% state credit stacks with bill savings
New Jersey	$0.17–$0.20/kWh	$130–$180	SREC II income adds $1,940–$2,835/year on top
Illinois	$0.14–$0.17/kWh	$115–$155	Illinois Shines PBI adds $65–$80/REC income
Colorado	$0.13–$0.16/kWh	$100–$140	Xcel Solar*Rewards adds $0.03–0.045/kWh income
Oregon	$0.12–$0.15/kWh	$95–$130	ETO rebate upfront + decent rates
Florida	$0.12–$0.15/kWh	$95–$130	High AC loads help solar self-consumption
Texas (Oncor)	$0.11–$0.14/kWh	$85–$120	Depends heavily on REP/utility
Texas (Austin Energy)	$0.10–$0.12/kWh	$75–$100	PVFIT export rate helps
Georgia	$0.10–$0.13/kWh	$75–$105	≤10 kW for retail NEM
Arizona (TEP)	$0.12–$0.14/kWh	$90–$115	Retail NEM, good sun
Arizona (APS)	$0.11–$0.14/kWh	$70–$100	Net billing reduces savings vs. retail NEM
Ohio	$0.11–$0.14/kWh	$85–$110	Property tax exemption is the standout incentive
Indiana	$0.12–$0.14/kWh	$55–$80	Avoided-cost NEM — right-size to self-consume
Tennessee	$0.11–$0.13/kWh	$50–$80	TVA GPP buyback at $0.048/kWh; $15.64/month PSC fee
Alabama	$0.11–$0.13/kWh	$50–$75	Avoided-cost NEM; design for self-consumption

Note: Savings shown are for a system sized to cover ~100% of usage with retail-rate net metering. States with avoided-cost net metering (Indiana, Tennessee, Alabama) require self-consumption-focused design to achieve these savings.

Step-by-Step: Calculate Your Personal Monthly Savings

Use this 4-step formula to estimate your specific monthly savings before getting quotes:

Step 1: Find Your Monthly kWh Usage

Pull your last 12 utility bills and find your annual kWh consumption. Divide by 12 for your monthly average. A typical U.S. home uses 850–1,100 kWh/month.

If you can't find 12 months of bills, use these benchmarks:

1,000–1,500 sq ft gas-heated home: 500–750 kWh/month
1,500–2,500 sq ft home with A/C: 750–1,100 kWh/month
2,500–4,000 sq ft home (all-electric): 1,200–2,000 kWh/month
All-electric + EV: add 250–500 kWh/month per vehicle

Step 2: Calculate Your Target System Size

System size (kW) = Monthly kWh ÷ (Peak sun hours/day × 30 days × 0.80)

The 0.80 accounts for real-world system efficiency (inverter losses, temperature, wiring).

Example: 900 kWh/month in Phoenix (6.0 peak sun hours/day)

900 ÷ (6.0 × 30 × 0.80) = 900 ÷ 144 = 6.25 kW system size

Example: 900 kWh/month in Boston (4.2 peak sun hours/day)

900 ÷ (4.2 × 30 × 0.80) = 900 ÷ 100.8 = 8.9 kW system size

Step 3: Calculate Annual Production

Annual production (kWh) = System size (kW) × Peak sun hours/day × 365 × 0.80

Example: 8 kW system in Denver (5.2 peak sun hours/day):

8 × 5.2 × 365 × 0.80 = 12,147 kWh/year

Peak sun hours by region: Hawaii 5.5–6.5, Southwest 5.0–6.5, Mountain West 5.0–5.7, Southeast 4.5–5.2, Midwest 4.2–4.8, Northeast 3.8–4.5, Pacific Northwest 3.7–4.3.

Step 4: Multiply by Your Electricity Rate

Annual savings = Annual production × Your electricity rate

Example: 12,147 kWh/year × $0.14/kWh (Colorado) = $1,701/year = $142/month

For households in states with avoided-cost net metering (Indiana, Tennessee, Alabama), multiply by your rate only for the portion you self-consume (typically 70–80% of production for daytime-home users; 30–40% for commuters).

How Net Metering Policy Affects Your Monthly Bill

Your net metering policy is the second-biggest driver of savings after electricity rate.

Retail-rate net metering (most states): Every kWh your panels produce reduces your bill at full retail rate, whether you use it in real-time or export it. A 10 kWh sunny afternoon that your home doesn't immediately use still credits your account at $0.14/kWh (or whatever your rate is). States with statutory retail NEM protection: NJ, MA, NY, CT, RI, NH, VT, ME, VA, NC, WA, OR, NV, CO, MI, MO, and many others.

Avoided-cost net metering (Indiana, Tennessee, Alabama, some rural co-ops): Exports get credited at only $0.03–$0.06/kWh instead of retail. If you work from home and use most of your solar production in real-time (self-consumption), your savings approach the retail-rate scenario. If you commute and export most production during the day, your savings drop by 40–60%.

California NEM 3.0: Exports get credited at a time-varying rate averaging $0.05–$0.08/kWh (vs. retail $0.20–$0.35/kWh). California buyers need battery storage to capture full savings — storing excess production for peak evening use rather than exporting it.

See our Net Metering Guide 2026 for the complete policy breakdown by state.

Real Bill Impact Examples

Example 1: Boston, Massachusetts (heat pump home)

Monthly usage: 1,100 kWh (heat pump + A/C)
Electricity rate: $0.27/kWh
Annual bill before solar: $3,564
10 kW solar system production: ~12,000 kWh/year
Monthly savings: $270 ($3,240/year — solar covers 91% of annual bill)
SMART PBI bonus: additional ~$1,728/year in performance payments
Total first-year benefit: ~$4,968 (vs. $11,000 net system cost after ITC)

Example 2: Raleigh, North Carolina

Monthly usage: 950 kWh
Electricity rate: $0.12/kWh (Duke Energy)
Annual bill before solar: $1,368
8 kW solar system production: ~10,400 kWh/year
Monthly savings: $104 ($1,248/year — solar covers ~91% of annual bill)
Net system cost after 30% ITC: $17,500
Payback period: ~14 years (but home value adds ~$32,000)

Example 3: Phoenix, Arizona (APS territory — net billing)

Monthly usage: 1,500 kWh (heavy A/C)
Electricity rate: $0.13/kWh
12 kW system production: ~22,800 kWh/year
Self-consumption rate: ~45% (commuter household)
APS net billing export rate: $0.028/kWh
Monthly savings: $148 (self-consumed kWh at $0.13 + exports at $0.028)
Note: With battery storage to increase self-consumption to 75%, monthly savings rise to ~$220

Example 4: Rural Indiana (avoided-cost NEM)

Monthly usage: 850 kWh
Electricity rate: $0.13/kWh
7 kW system (sized at 90% offset to avoid year-end avoided-cost surplus)
Self-consumption rate: ~60% (work-from-home)
Monthly savings: $81 (60% at $0.13 + 40% at $0.04 export rate)
Key lesson: right-sizing to self-consume maximizes savings in avoided-cost states

Additional Savings Beyond the Electric Bill

1. SREC Income (New Jersey, Massachusetts, Illinois, Maryland, others)

If you're in a state with an active SREC market, you earn tradeable certificates for every 1 MWh your system produces — regardless of whether you export or self-consume. This adds:

New Jersey: $185–$270/SREC × ~10 SRECs/year/10 kW = $1,850–$2,700/year
Massachusetts SMART PBI: $0.06–$0.22/kWh × 12,000 kWh/year = $720–$2,640/year
Illinois Shines: $65–$80/REC × ~10 RECs/year = $650–$800/year

These are additional to your electric bill savings — not a replacement.

2. VPP Earnings (Tesla Powerwall, Enphase Grid Services, Green Mountain Power)

If you add battery storage, you can enroll in a Virtual Power Plant program and earn $150–$420/year letting the utility dispatch your battery during grid stress events. This adds to your electric bill savings without reducing your own backup power significantly. See our VPP Guide 2026 for program details.

3. Home Value Increase

LBNL research across 22,000+ home sales found solar adds $4,000/kW to home value (median). A 10 kW system adds ~$40,000 in resale value — creating equity gain that eclipses cumulative electric bill savings over 10–15 years in most markets. See our Solar Home Value Guide 2026.

4. Electricity Rate Inflation Hedge

Electricity rates have risen 4–5% annually for the past decade. A system that saves $150/month today may save $245/month in 10 years (at 5% annual rate inflation) — without any additional investment. The 25-year total savings grow substantially with time. See our Solar vs. Grid Cost Guide 2026 for the full inflation-adjusted analysis.

Factors That Reduce Your Savings

Oversized system in avoided-cost NEM states: In Indiana, Tennessee, and Alabama, producing more solar than you can self-consume is nearly worthless — exports earn only $0.03–$0.06/kWh. An installer who quotes a 12 kW system for a 1,200 kWh/month Indiana household is selling excess capacity at essentially zero value.

Dealer fees on solar loans: Many solar loans include 15–40% dealer fees that are baked into the quoted system price — not disclosed as a fee line. A $28,000 loan for a system that should cost $20,000 in cash increases your break-even by 4–8 years. See our Hidden Solar Costs Guide for the detection method.

PACE financing: PACE interest rates of 8–12% can consume much of your monthly savings, particularly in the first 10 years. PACE also creates a super-priority property lien that blocks FHA/VA mortgage transactions at sale.

Lease agreements: If you lease your solar panels, you don't own the system and don't claim the ITC ($8,400–$11,200 on a typical system). The leasing company captures that benefit. Your monthly bill savings may be real, but you're giving up $8,400–$11,200 in tax credits. See our Solar Lease vs. Purchase Guide for the 25-year cost comparison.

How to Maximize Your Monthly Electric Bill Savings

Size to 100% of your actual usage — not the installer's estimate of "average" households. Pull 12 months of bills.
Add a heat pump water heater and/or EV before sizing — both appliances can be powered by your panels, dramatically increasing self-consumption.
In states with avoided-cost NEM, design for self-consumption — right-size to 90% offset, schedule heavy loads (dishwasher, laundry, EV charging) during peak solar hours.
In California (NEM 3.0) and Arizona (APS net billing), add battery storage — even a 13.5 kWh Powerwall can shift 5–8 hours of solar production from low-value export hours to high-value peak hours, increasing annual savings by $600–$1,200.
Stack with state incentives — your electric bill savings are independent of SREC income, PBI payments, and VPP earnings. States like Massachusetts (SMART) or New Jersey (SREC II) offer programs that add $650–$2,700/year on top of bill savings.

Your Next Steps

Ready to get a real number for your home?

Solar ROI Calculator — input your state and monthly bill to get personalized savings, payback period, and 25-year net benefit
Solar System Designer — size your system and get a full component list with Amazon affiliate links
How Many Solar Panels Do I Need? — the full sizing guide with sun hours by region
State Solar Incentives Hub — SREC income, PBI rates, and property/sales tax exemptions for all 50 states
Solar Financing Calculator — compare cash vs. loan vs. lease total cost over 20 years

For home-type-specific cost and savings estimates:

1,500 sq ft home · 2,000 sq ft home · 3,000 sq ft home
2-bedroom home · 3-bedroom home · 4-bedroom home