Understand Your Energy Bill and Rate Structure
Before investing in a solar energy system, it’s critical that you talk to your utility and understand your rate structure. The rate structure that
you’re currently on may change once you install a solar energy system
and should be factored into your calculations as it will impact your
monthly bill. Below is a description of some of the charges that could be found on a utility bill.
The fixed part of the bill is often referred to as a service
charge and is designed to cover the utility’s cost to
construct facilities and to connect your electric service.
The variable components of the bill are those billed on an
energy basis. These are designed to cover the costs associated
with the actual monthly usage at your service location and
appear as a per kilowatt-hour (kWh) charge. Some utilities also
adjust the price of a kWh based on a seasonal rate or the time of
day that kWhs are consumed.
Some electric bills may include a demand charge, billed per kilowatt
(kW). So, if your bill has a demand line item it is helpful to understand
the difference between energy and demand. Energy is analogous to
the odometer in your car. It tells you how far you’ve traveled, or on your
electric bill, how much electricity you have used. If energy is the odometer, then demand is your speedometer. The speedometer tells you
how fast you are traveling; similarly, demand tells you the rate in which you are using electricity at a particular point in time.
f. Does your utility offer a community-based solar opportunity or green pricing program?
A community-based solar program may afford you the benefits of your own solar array
without the ownership and maintenance responsibilities.
g. Note that the information that you receive from your utility will represent current rates and
tariffs. With the appropriate approval, rates, rate structures and tariffs may change over time
to reflect changes in your utility’s cost of providing service.
4. Understand your electric utility bill and your electricity usage patterns.
Review one to two years of historical usage and cost records. The history will help you to understand how much and when you are using electricity. You also should talk to your utility to gain an understanding of the potential for future rate increases as this will affect the economics of your project.
If you are looking to reduce your peak/demand with a solar installation, you will want to make sure you understand the time and duration of your historical peak/demand and understand if the expected output of your solar energy system will adequately serve that purpose. Before purchasing a system, it is critical to speak with your utility to understand how solar energy generation will be applied to your bill. This will help you to develop a realistic estimate of potential savings from a solar energy system
5. Prepare for a site assessment.
After completing your initial research, a preliminary site
assessment will help to determine the parameters and constraints that need to be considered
during the design, bidding and construction phases.