Estimating Energy Cost Savings for a Net-Metered Photovoltaic System

Using the equations below, you can estimate electricity cost savings for a grid-connected small solar electric system with a net metering arrangement.

·       Determine the system's size in kilowatts (kW). A reasonable range is from 1 to 5 kW. This value is the "kW of photovoltaic (PV)" input for the equations below.

·       Based on your geographic location, select the energy production factor from the map below for the "kWh/kW-year" input for the equations below.

Energy from the PV system = (kW of PV) × (kWh/kW-year) = kWh/year

(Divide the number you calculate above by 12 if you want to determine your monthly energy reduction.)

Energy bills savings = (kWh/year) × (Residential Rate) ÷ 100 = $/year saved

(Residential Rate in this above equation should be in dollars per kWh; for example, a rate of 10 cents per kWh is input as $0.10/kWh.)

For example, a 2-kW system in Denver, CO, at a residential energy rate of $0.07/kWh will save about $266 per year: 1,900 kWh/kW-year × $0.07/kWh × 2 kW = $266/year.