Estimating Annual Cost Savings


I admit it. I didn't start with this step first. I simply knew I was going to install some kind of a solar electric system. In most cases, you probably should do this step first, if not for you, then for the wife.

I created a spreadsheet to perform the calculations described below.

  1. Obtain your home's past electric usage data from your utility. I was able to log into the Ameren Illinois website and download two years of history. You will need the dollar amount of your monthly bill and the amount of power consumed in kilowatt-hours (KWh). If your utility also provides your home with something other than electricity, natural gas for example, then make sure and exclude that from the dollar amount. Put the monthly dollar amount and electric usage into two columns in a spreadsheet.
  2. Go to the NREL PVWatts website, enter your zipcode, and record the number of average hours of sun per day for your location. In my case, that number was 4.82 hours.
  3. Now enter the following equation into a cell in your spreadsheet:

System Size (kW) x Average Hours of Sunlight Per Day x System Efficiency x 30 days = Avg. Generated Power (KWh) Per Month

And in my case:

1.04 x 4.82 x 0.8 x 30 = 120.3 KWh/Month


Note that System Efficiency is assumed to be 80%.
  1. Now we can estimate what our past monthly electric bill would have been had we already installed the solar system. To do that, add a new column to your spreadsheet. Each cell should have the following formula:

Electric Bill – ((Electric Bill / KWh Consumed) x Avg. Generated Power Per Month) = Electric Bill Adjusted for Solar

  1. Now sum up each month's actual electric bill and sum up each month's bill adjusted for solar. Subtract the two, and you now have the estimated annual amount of savings.