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So far in our Electric Bills Decoded series, we’ve covered electric rates and bill charges, how electricity is used at home, and how to use data to decide on a Georgia Power residential rate plan. If your goal is to shield your household budget from rising electricity rates, you might be wondering how much you can save by going solar at home. Loyal readers of this series won’t be surprised to hear once again that “it depends.”
You’re not alone in turning to the Sun for savings. As installing solar photovoltaic panels becomes more affordable, the popularity of solar energy has skyrocketed. In their 2022 Solar Industry Research Data, the Solar Energy Industries Association estimates that the cost to install solar has dropped 60% in the last ten years, while the amount of residential solar (measured as installed capacity) in the US has increased 19-fold. Even with lower prices and historic levels of federal incentives, installing a residential solar system remains a significant financial investment.
There are many factors to consider with solar within the context of Georgia Power’s rate plans, including the size of the solar system in relation to your electricity use and how exported energy is metered. Using my home as an example, let’s explore how installing a solar system on our roof would change our electricity purchases from Georgia Power and which rate would produce our lowest bill in that hypothetical situation.
From the perspective of your electric utility, your behind-the-meter solar system looks like a high-efficiency air conditioner or other energy efficiency upgrade; your solar system reduces your electricity demand from the grid when the equipment is in operation.
Obviously, a solar system differs from a more efficient AC unit in that it operates during sunlight hours, which doesn’t always correspond with your higher-use hours. In the early evening hours, solar generation might taper off while your electricity use stays high. During certain hours, solar can exceed your demand and push electricity back onto the grid. When a solar system generates more electricity than you’re using onsite and the excess flows to the grid, you have “electricity exports”—a key consideration that we’ll cover in more detail further on.
I began by modeling the output of 1 kW solar system on my southeast-facing rooftop. Picking this size system was not arbitrary. I looked at seven different sizes of systems (1.0 to 4.0 kW in 0.5 kW increments) and selected a 1.0 kW system because it minimized the frequency and extent of electrical exports. This is important in my calculation because I’m assuming that exported kWh are less valuable than those that I use onsite. Anyone interested in the nitty-gritty of my solar evaluation and modeling can review these notes.
The figure below shows estimates of hourly solar production of a 1 kW rooftop system (yellow bars) on April 3 and August 25, 2022. My family’s pre-solar (blue line) and post-solar (green line) hourly demands for those two days are charted along with our solar energy exports to the grid (as negative values; red line). April 3 showcases a day with high energy exports, while August 25 reflects what might be considered a high-value day, when most of our solar production would be used onsite.
In the hours that the solar system is not producing, our pre- and post-solar demand lines are the same. When it is producing, our post-solar demand dips since we don’t need as much electricity from Georgia Power. In April, my family’s lower electricity demand in the middle of the day makes the post-solar line bottom out at zero, while the system exports the excess energy to the grid. Alternatively, in August, we use nearly all the solar generation onsite during the “solar hours” with very little exports. The different demand patterns impact how much electricity we purchase, which in turn impacts our bill.
Ultimately, a 1.0 kW solar system on my roof would reduce my utility energy purchases (kWh) by 17% and result in about 296 kWh of solar exports over the 12-month period I examined.
There has been much debate about the value of solar energy exports in Georgia and around the country. You might say the two ends of the spectrum on this issue are net metering and “instantaneous” metering at avoided cost.
With net metering, the utility deducts all exported kWh from the customer’s total of purchased kWh at the end of the month before calculating the customer’s bill. Every kWh produced by that customer’s solar system offsets electricity they would have otherwise purchased from the utility at that customer’s average retail rate. Net metering ensures a higher value for a solar customer’s generation.
Alternatively, a utility may measure all exported electricity ‘instantaneously” and separately and pay the customer for this electricity at the utility’s marginal cost of production (aka avoided cost). This approach typically reduces the overall value a customer gets from their solar system. Generally, the difference between these two for Georgia Power customers has been meaningful – between roughly 13 cents per kWh (average retail rate) and about 2.7 cents per kWh at avoided cost.
The Georgia Public Service Commission has, at least for a little while, laid the debate to rest with its recent decision in the 2022 Georgia Power Rate Case. The Net Metering Pilot program, authorizing net metering for a limited number of Georgia Power customers, hit its 5,000-customer cap long ago and remains closed. Small solar generators operating under Georgia Power’s Renewable and Non-Renewable Resources (RNR) rate schedule will have their energy exports netted “instantaneously” and valued at avoided cost (~2.7 cents per kWh on average) plus 4 cents per kWh for an approximate rate of 6.7 cents per kWh. It’s worth noting that the 4-cent “adder” is good for three years. The Commission will revisit the issue, so its future is uncertain.
For this analysis, I examined my 2022 electricity use and relied on electricity rates in effect in 2022. Consequently, my analysis uses instantaneous netting and values exported energy at the utility’s avoided cost (without the 4-cent “adder”). Whenever the hypothetical solar system in my model produces more electricity than our household consumes, our utility demand is zero, and exported energy is valued as a credit on our bill at the avoided cost rate of 2.7 cents per kWh.
Calculating that my family’s hypothetical rooftop solar system would reduce our utility energy purchases (kWh) by 17% and result in about 296 kWh of solar exports throughout the year, Georgia Power’s Standard Residential rate plan still results in the lowest total electricity bill, just like it did without solar factored in.
While the three next best rate plan options shift a little from my pre-solar analysis, the relative cost difference stays about the same (up to 7% more expensive), though there is a bigger difference between the lowest and highest total bill. The Smart Usage rate plan would result in a total post-solar electricity bill more than 30% higher than our post-solar bill under the Standard Residential rate!
Different Plans, Different Levels of Responsiveness
As discussed in the first post of this series, electricity rates don’t always work the way that you might expect them to. Unlike cutting your chai latte consumption in half, reducing your electricity use in half doesn’t always mean your bill goes down 50%. Utilities’ electricity rate plans, including Georgia Power’s, have different levels of responsiveness to onsite solar. Responsiveness, in this case, being the ratio of electricity use reduction to cost reduction.
The Plug-In EV rate plan came closest to achieving the 1:1 ratio that most people would intuitively expect—I calculated that the solar system would reduce our electricity use from the utility by 17%, and the Plug-In EV rate plan yielded a 16% reduction in annual cost. Standard Residential and Nights & Weekends are close behind.
The outlier in terms of responsiveness (and cost) is the Smart Usage rate plan, which returned only a 9% cost savings for our 17% energy reduction. This is partly because our prospective solar system reduced our monthly peak demand, which the Smart Usage plan prioritizes, by only 5.5% on average. This is far less than the 17% overall reduction in electricity use from solar. As is probably true for many of you, my family will still be cooling our home, using TVs and computers, and making dinner just as solar production begins to taper off around 6:00 pm. Solar production just doesn’t line up with our patterns of peak demand every day of the month.
While I did not model an energy efficiency upgrade, such as installing better insulation or installing a higher-efficiency AC unit, I suspect the Smart Usage rate plan would do better reflecting our systematically reduced peak demand across all current peak hours. However, it could remain uncompetitive for us since I concluded earlier that we would have to reduce our peak demand by more than 30% just for Smart Usage to be neck-and-neck with the Standard Residential rate plan.
Pairing a residential battery with my rooftop solar system would change this analysis, allowing me to size a larger solar system, avoid energy exports, and use stored energy to better flatten any peak demands outside the solar production window.
The Standard Residential rate appears to be the best value for my family, whether at our current pattern of use or if we installed a solar system, though solar would lower our bills across the board and eventually offset the cost of the system.
Up next, I aim to expand the applicability of these insights to cover case studies of other Georgia Power customers who use electricity differently than my family does. Thank you to my friends and work colleagues for sharing their hourly electricity use data. Follow along for more pricing comparisons!
Electric Bills Decoded is Southface Institute’s series exploring how Georgia Power residential customers can use data to help determine whether changing their electricity rate plan can lower their utility bills and offset recent rate hikes. Follow along to understand different types of rates and charges; identify electricity usage patterns; use your data strategically; consider the impact of going solar; explore several case studies; and learn about battery storage as a cost-saving tool. We’re decoding it all!