Solar Planning Guide
The single most important number you need for an accurate solar calculation isn't on your roof — it's on your electricity bill. Your electricity rate determines how much every kilowatt-hour of solar production is worth to you in real dollars. Get this number wrong, and every savings estimate, payback period, and ROI figure that follows will be wrong too.
Electric bills are designed to be difficult to read. Utilities bury the actual energy rate behind fixed charges, delivery fees, taxes, and surcharges — often making it impossible to identify at a glance. This guide shows you exactly where to find the numbers that matter, what they mean, and how to use them in a solar calculation.
Your electric bill shows a total amount due and a total kilowatt-hours consumed. The simplest way to calculate your effective rate is to divide the total bill amount (before any solar credits, but including all fees and taxes) by the total kWh consumed.
Effective rate formula: Total bill amount ÷ Total kWh used = Effective rate per kWh
Example: $187 ÷ 1,100 kWh = $0.17/kWh
This effective rate is the right number to use for solar savings estimates because it captures everything you're actually paying per unit of electricity — including fixed charges and taxes that don't disappear with solar. Use this for the "Electricity Rate" field in the sun-calc.com calculator.
This is the per-kWh charge for the electricity itself — the commodity. It's typically listed as a rate in cents per kWh multiplied by your usage. In a deregulated electricity market (Texas, parts of the Northeast, Ohio, Illinois), you may have a separate retail electricity supplier, and this charge appears as "Supply" or "Generation" on your bill. This is the most straightforward part of the bill to read.
This covers the cost of maintaining the poles, wires, substations, and infrastructure that deliver electricity from power plants to your home. It's often expressed partly as a per-kWh charge and partly as a fixed monthly fee. An important nuance: solar panels can offset your energy supply charge, but they generally do not reduce the fixed monthly delivery/customer charge — which is typically $10–$25/month regardless of how much electricity you use or produce. When calculating solar savings, this fixed charge continues, so your effective solar savings rate is slightly lower than your gross electricity rate.
Most utilities charge a flat monthly fee — typically $7–$30 — just for being a connected customer, regardless of usage. Solar does not reduce this charge. If your goal is to get to a $0 electricity bill with solar, the customer charge is the floor you can't eliminate without going fully off-grid (which involves a completely different cost-benefit analysis).
These pass-through charges reflect the utility's actual cost of fuel or purchased power, which fluctuates with commodity markets. They're included in your effective rate when you use the total bill ÷ total kWh formula, which is why that formula is better than trying to add up individual line items manually.
State and local taxes, utility fees, renewable energy surcharges, and low-income assistance fees typically add 5–15% to your pre-tax electricity cost. These are again captured in the effective rate formula, so you don't need to analyze them separately.
The simplest structure: you pay the same rate per kWh regardless of how much you use or when you use it. Most rural cooperatives and many utilities in the Southeast and Midwest use flat rates. If you have a flat rate, the effective rate formula gives you exactly the right number to use in a solar calculator.
California's major investor-owned utilities (PG&E, SCE, SDG&E) and some others use tiered rates, where the per-kWh cost increases as you use more electricity in a billing period. For example, the first 400 kWh might cost $0.27/kWh, the next 400 kWh costs $0.37/kWh, and anything above that costs $0.45/kWh. Solar panels offset your most expensive electricity first — the top tier — which means the effective savings rate is actually higher than your average rate. In this situation, the effective rate formula slightly underestimates the value of solar. Using your top-tier rate gives a more accurate picture of the first few years of savings, though the blended average rate is a reasonable single-number estimate.
TOU plans charge different rates depending on the time of day and often the day of week. Peak hours — when grid demand is highest and power is most expensive to provide — are typically 4–9 PM on weekdays. Off-peak hours are late night and early morning. Mid-peak or shoulder hours are in between. A typical California TOU rate might be $0.47/kWh on-peak, $0.29/kWh mid-peak, and $0.18/kWh off-peak. Solar panels produce most of their power during mid-peak and on-peak hours (approximately 8 AM to 5 PM), but under NEM 3.0 the export credit for that midday production is low. If you have TOU pricing, the effective rate formula still works for historical usage — but the interaction with solar is more complex and depends on how much solar production you self-consume versus export.
Most utility bills show 12 or 13 months of usage history in a bar chart or table. Add up all 12 monthly kWh figures for your annual total — this is what you're sizing a solar system to offset. Common annual usage by household type:
If you have an electric vehicle or are planning to buy one, size your solar system for your anticipated future usage, not just current usage. Adding an EV often increases household electricity consumption by 25–40%.
Some utilities charge higher rates in summer months (to reflect peak cooling demand) and lower rates in winter. If your rate varies seasonally, use the average of your 12 monthly effective rates, weighted by usage — or simply use the effective rate formula with your full-year total bill and full-year total kWh. The annual average captures the full picture better than any single month.
If you want to look up the published rate schedule rather than calculate an effective rate, most utility websites publish their current tariff schedules — search for your utility name plus "rate schedule" or "tariff." Look for the residential rate schedule that matches your account type. The "Energy Charge" or "Distribution Energy Charge" line item(s) are the per-kWh rates. Be aware that the published rate schedule may not include all surcharges and taxes, so it will understate your true effective cost.
For the most accurate results in sun-calc.com:
Quick tip: If you have online account access with your utility, look for a "Usage History" or "Energy Usage" section. Many utilities now show your rolling 12-month kWh total and average monthly cost directly, saving you the manual calculation.
Once solar is installed and you're on a net metering plan, your bill changes significantly. Instead of a single "energy charge" line, you'll see separate entries for electricity you imported from the grid and electricity you exported (as a credit). In states with monthly true-up, credits are applied each month. In states with annual true-up (California NEM), credits accumulate throughout the year and are reconciled once annually — during that year, your monthly statement may show a growing credit balance rather than a payment due. Understanding this before installation avoids surprise when you see your first solar bill and the format looks unfamiliar.
Now that you know your electricity rate, see how much solar could save you at your specific address.
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