How Much Does The Electric Company Pay For Solar Power?

It may seem like a dream too good to come true. Electric companies pay the same amount to buy electricity as you do. They generate the energy they supply to you by burning coal and natural gas, but solar panels let you convert the sun’s energy into power with no side effects. Residential electricity in Colorado costs 11.46 cents per kilowatt-hour (c/kWh) whether you pay your utility bill or receive a credit for selling your energy. Known for his practical frugality, Benjamin Franklin considered a penny saved the same as a penny earned. 

Looking at Colorado's Energy Use

Rates for residential energy in the U.S. may range from 8.37 c/kWh to 37.34 c/kWh. Colorado’s average rate of 11.46 c/kWh ranks 21st in the country. Most homes in the state use about 706 kilowatt-hours per month, while the national average stands at 903 kilowatt-hours/month. The abundant sunshine on home solar system roofs offers a convenient way to reduce or eliminate your monthly utility bill. Homes in some states may use less energy, but most use more. Coloradans use about 21.82 percent less energy than the national average every month. 


Seeing How Roofs Make a Difference in Energy Collection

Many roofing factors go into producing electricity with solar panels. The size provides a significant one, but other characteristics matter as well. For example, each roof area’s pitch, size and orientation determines how much total sun it receives. In addition, nearby tall buildings or trees can affect the amount of sun that can reach a roof and block sunlight.

Some factors may seem obvious as you look at the tilt and orientation of your roof to the sun. For example, a roof with a steep slope can receive more direct sunlight than a flat roof or one with less pitch. Because the sun shines brightest at the equator, a roof that faces south can get more rays than any other direction. Installing more panels on a roof that faces away from the south can compensate for direction. Additionally, ground-installed systems open other options for achieving energy independence with solar.

Complicated math formulas can help you calculate your potential to get paid for the energy your solar panels generate. However, a federal government-sponsored app that Zillow popularized can calculate it for you. A representative for Zillow points out that energy conservation does more than support the environment by creating savings on energy bills. In addition, it relieves some of the demand on the electrical grid. Worth noting when you consider installing a solar panel system, the real estate company finds homes that have them sell for more than others. 

Getting Credit for Your Energy

Electric companies in Colorado participate in net metering. Thus, you can get a credit for the retail value of the electricity your solar panels return to the grid. The process requires utilities to track how much energy your panels produce and the amount you use while storing any extra your system produces.

On nights or days when the sun does not shine, the electric company supplies your power without charge. Forbes regards Colorado’s net metering laws as the best in the country. If your solar panels can produce more energy than you need, you get a credit on your electric bill.

net meter - xcel

Understanding How Net Metering Works

A billing method that gives you credits for the electricity you provide to the grid offers a unique way to save money and protect the environment. Net metering can make your meter run backward if your solar panels generate more electricity than you need. The process creates a credit against the energy you need at night or anytime you need more than you produce. Your monthly bill reflects the net amount of energy you use.

Using an Innovative System for Renewable Energy

Colorado led the way in passing the United States’ first renewable energy standard by public ballot in 2004. The results allowed the Colorado Public Utilities Commission (PUC) to set standards for the net metering process and for interconnecting with the electric grid the following year. The policy allows you to get a credit for each kilowatt-hour your system produces. 

In addition, it must equal the price you pay for residential electricity. Any excess energy production rolls over to your next month’s bill. Subsequent actions in 2018 made solar-plus-storage systems eligible to participate in net metering.

Becoming a Player in Electricity Production

As you consider installing solar panels that can generate electricity and provide it for others while benefiting from it financially, you may want to understand how the grid works. As one of the most significant examples of American ingenuity, the grid exists as a complex and highly essential system. Consisting of four major components, it transmits the nation’s power every minute of every day.

• Individual Generators

Your solar panels join a variety of power-producing facilities that you help to become less necessary. Power plants generate one source of energy the country needs from burning coal and natural gas. More results from hydroelectric dams and nuclear power plants. Some of it comes from wind turbines and solar panels from environmentally friendly users like you. The grid maintains a reserve margin to compensate for power plant shutdowns or mistakes in forecasting demand.

• Transmission Lines

Three main transmission networks across the country interconnect to ensure the reliability of electric supply, and some redundancy exists. Overhead and underground power lines carry high voltages to reduce the loss of electricity in transit. Overhead cables have no insulation, making them less expensive to install than underground cables. Voltages that can withstand transmission may reach as much as 110,000 volts or even more. Transformers convert electricity to higher voltages to make transport possible. The Colorado PUC must approve any transmission line before construction in the state.

• Distribution

A network of wires starts at the transformers where the transmission lines deliver power for distribution. PUCs or Public Service Commissions (PSC) in each state regulate distribution to homes, businesses and schools. In addition, it sets the retail rate for electricity.

• Load

When electricity arrives at a home, school or business, the transmission grid completes its job. If you have solar panels, it serves a less essential role for you than for others who do not have the advanced technology. However, it provides access to an exchange where you can sell the energy you produce. 

Tracing How the Grid Evolved

The electricity grid may have an earlier beginning than you imagine. Names you know well had essential roles in its early stages of conception. Thomas Edison and George Westinghouse had opposing views about using alternating current (A.C.) or direct current (D.C.). Companies in the early 1880s strung their wires along the same streets in populated areas, but they paid little attention to rural areas. Nikola Tesla sided with Westinghouse in the argument for A.C. current, and the electric companies at the time agreed with them. D.C. current allowed high voltages to travel long distances where users received it in lower voltages.

• Early Days

Reliance on A.C. current allowed utility companies to build the electric grid over increasingly larger areas and benefit from economies of scale. For many years, the companies had a regulatory compact that allowed them monopoly status, including setting a low limit on customer rates. Then, from around 1920 to 1980, they controlled the electricity grid completely, including generating it for distribution to customers.

• 1970s Energy Crisis

The oil embargo by petroleum exporting companies created fuel shortages and high prices. American consumption of gasoline and other oil-derived products occurred at the same time as domestic oil production declined. However, policymakers allowed importing to continue, believing that oil-producing countries did not want to risk losing the American market. When the high prices continued, Congress started allowing wholesale competition in electricity production. The change in policy allowed facilities that used more efficient production methods or renewable energy to compete in the marketplace.


Letting Your Solar Energy Help the Grid

When you install a solar panel system, you reduce demand on the grid. Whether you become energy self-sufficient with your own system or use net metering to send it to the grid, you offset the overall need for electricity. Especially valuable during the summer months when most homes need air conditioning or increased use of freezers and refrigerators, a supplement to the grid can prove helpful to many people. While your system generates the most energy during the hottest time of day, it helps the grid meet the needs of consumers across the state.

As you understand the importance of the transmission system, you can look at your electric bill in a different way. Transmission and delivery of your electricity produce a charge, and your use of it creates another charge. When you produce your own energy on your rooftop, it reduces the need to move it across long transmission and distribution lines. As the need lessens, it prevents the requirement to add more wires and erect more poles. 

A reduction in the costs of an electrical system can occur when home-owned solar relieves the stress on the grid. When you let solar panels collect energy, you save money on your utility bill. Further, net metering gives you credit for energy that you do not use.

Choosing Impact Energy for Satisfaction

Our locally owned and operated company serves locations in Colorado and Montana with distinction and professionalism. We honor a commitment to provide the highest quality service to every customer’s home or business solar project. 

We offer a free calculation of the savings you can earn with our solar satellite software. Our design team considers the factors that make your home unique, and we develop the best solution for your needs. As a result, we can design a system that meets your requirements and produces excess energy to sell to the grid. Call us 888-240-1131 to get started on the Impact Energy approach to a satisfying and enjoyable switch to solar.

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