Your solar electric system will save you money in two ways.

As your solar electric system produces electricity, it is first used by any loads you have turned on, such as your lights, refrigerator, dishwasher, and electronics. This is called “self-generation.”

When you produce more electricity than you’re currently using in your home, this energy flows back to the utility grid. Your utility meter records this “exported energy,” in addition to recording the energy you use from the grid.

For most utilities, you will pay more for energy the utility sends to you (retail rate) than the utility will pay you for energy you send to them (export rate). This means that to maximize your savings from solar, you will want to use as much of solar energy as it is produced as possible.

At the end of your monthly billing period, the utility will calculate the cost of the energy you used from the grid, subtract a credit based on the energy you exported, and bill you for the remaining amount. For a detailed breakdown of how this works, see the infographic below.

Because retail rates are different than export rates, your solar installer will have to figure out much energy you will self-generate and how much you’ll use from the grid to accurately estimate your savings. Ideally, you’ll need hourly energy data for your home or business from your utility or another source. We will compare your energy use and expected solar production for each hour of the year to determine your self-generation percentage, and model your electric bills with solar using this information.