The pitch is always the same: solar will slash your electric bill. But how much do you actually save? It depends on your utility rates, usage, system size, and whether you go grid-tie or off-grid. Here are the real numbers for California homeowners in PG&E, SCE, and SMUD territory.
Baseline: What Are You Paying Now?
The average California household uses 500 to 700 kWh per month. In PG&E territory, at 40 to 45 cents per kWh, that is $200 to $315 per month. SCE customers pay 30 to 36 cents per kWh, or $150 to $250 per month. SMUD customers pay 16 to 22 cents per kWh, or $80 to $155 per month.
Time-of-use rates complicate the math. Peak hours (4 PM to 9 PM) cost 50 to 55 cents per kWh in PG&E territory. Off-peak hours cost 30 to 35 cents. If you run AC, cook dinner, or charge devices during peak hours, your effective rate is higher than the blended average.
Pull your last 12 months of bills and calculate your average monthly kWh and cost. This is your baseline. Solar savings are measured against this number.
Grid-Tie Solar Under NEM 3.0: Reduced Bills, Not Zero Bills
Grid-tie solar under NEM 3.0 reduces your bill but rarely eliminates it. You still pay connection fees, non-bypassable charges, and the cost of any grid power you draw at night or during cloudy weather. A well-sized system cuts your bill by 60 to 90 percent depending on how much you export vs consume.
Example: you install a 5 kW grid-tie system in PG&E territory. The system produces 7,000 kWh per year. You use 7,200 kWh per year. During the day, solar covers your usage and you export excess at NEM 3.0 rates (5 to 10 cents per kWh). At night, you draw from the grid at 40+ cents per kWh.
Your annual grid draw is 3,000 kWh (nights and cloudy days). At 42 cents per kWh, that is $1,260 per year or $105 per month. Add $15 per month in connection fees and non-bypassable charges. Total bill: $120 per month, down from $250 pre-solar. Annual savings: $1,560.
Add a battery to store daytime solar and use it at night, and your grid draw drops to near-zero. Your bill falls to $20 to $40 per month for connection fees only. Annual savings: $2,400 to $2,760. But the battery adds $10,000 to $15,000 to system cost, extending payback from 6 years to 10 to 12 years.
Off-Grid Solar: Zero Bills Forever
Off-grid solar eliminates your utility bill entirely. No meter. No monthly charges. No rate hikes. You generate, store, and use power on-site. After the system pays for itself, your electricity is free.
Example: you install a $10,000 VoltSol off-grid system covering HVAC, lights, and essentials. Pre-solar, you paid $250 per month to PG&E, or $3,000 per year. Post-solar, you pay $0. Annual savings: $3,000. Payback: 3.3 years. After year 4, you bank $3,000 per year in avoided utility costs.
Over 20 years, assuming 4 percent annual rate increases, you save $89,000 compared to staying on the grid. That is $10,000 upfront investment returning $89,000 in value. Even after accounting for occasional maintenance or component replacement, off-grid solar is a massive long-term win.
Payback Period: How Long Until Solar Pays for Itself?
Payback period is total system cost divided by annual savings. A $10,000 system saving $3,000 per year pays back in 3.3 years. A $30,000 system saving $2,400 per year pays back in 12.5 years.
The 30 percent federal Investment Tax Credit shortens payback significantly. A $10,000 system returns $3,000 as a tax credit. Net cost: $7,000. At $3,000 per year savings, payback is 2.3 years. After that, you are cashflow-positive.
In PG&E and SDG&E territory, where rates exceed 40 cents per kWh, payback is under 5 years for most systems. In SMUD territory at 18 cents per kWh, payback stretches to 8 to 12 years. Higher utility rates make solar more attractive.
Monthly Savings by System Type
Off-grid system covering HVAC and essentials, $10,000 installed: PG&E customers save $200 to $300 per month. SCE customers save $150 to $250. SMUD customers save $80 to $150. Payback: 2.5 to 4 years in PG&E/SCE, 5 to 8 years in SMUD.
Grid-tie system without battery, $18,000 installed: PG&E customers save $100 to $150 per month. SCE customers save $80 to $120. SMUD customers save $50 to $80. Payback: 6 to 10 years in PG&E/SCE, 10 to 15 years in SMUD.
Grid-tie system with battery, $30,000 installed: PG&E customers save $180 to $220 per month. SCE customers save $140 to $180. SMUD customers save $80 to $120. Payback: 8 to 12 years in PG&E/SCE, 12 to 18 years in SMUD.
Off-grid delivers the fastest payback and highest total savings in high-rate territories. Grid-tie with battery delivers resilience but slower payback. Grid-tie without battery is cheapest upfront but saves the least.
Rate Increases: The Hidden Multiplier
California utility rates have increased 4 to 6 percent per year over the past decade. PG&E rates have doubled since 2015. This trend is not slowing -- wildfire costs, grid upgrades, and regulatory mandates keep pushing rates higher.
Every rate increase magnifies solar savings. If you save $3,000 per year today and rates increase 4 percent annually, your year 10 savings are $4,440. Your year 20 savings are $6,570. Total 20-year savings compound to $89,000 instead of $60,000 at flat rates.
Locking in zero or near-zero energy costs via solar insulates you from this rate spiral. Your savings grow every year while your neighbors bills climb. Over 20 years, the difference is tens of thousands of dollars.
What Reduces Your Savings?
Undersized systems do not cover your full usage, so you still buy grid power. Oversized systems waste money upfront without proportional savings. Right-sizing is critical -- match your system to your actual needs, not your aspirations.
Shading, dirt, and equipment failures cut production. A dirty panel array loses 5 to 15 percent output. A failed inverter stops production entirely until replaced. Regular cleaning and monitoring prevent these losses.
Increased usage post-solar erodes savings. If you install solar, then buy an electric car, add a pool, or run the AC 24/7, your savings shrink. Solar is not a license to waste energy -- it is a tool to cover your existing loads at lower cost.
Real Customer Example: Fresno Off-Grid
A VoltSol customer in Fresno installed a $9,800 off-grid system in 2024. Pre-solar PG&E bill: $280 per month average, $3,360 per year. Post-solar bill: $0. Annual savings: $3,360.
After 30 percent ITC, net system cost: $6,860. Payback: 2.0 years. By year 3, the system was cashflow-positive. Over 20 years at 4 percent annual rate increases, total avoided utility costs: $100,000. System cost: $6,860. Net savings: $93,000.
This is not hypothetical. This is real data from a real customer. Off-grid solar in high-rate PG&E territory delivers life-changing financial value.
Frequently Asked Questions
How much will I save per month with solar in California?▾
It depends on your utility and system type. PG&E customers with off-grid systems save $200 to $300 per month. Grid-tie systems save $100 to $150 per month without battery, $180 to $220 with battery. SMUD customers save less due to lower rates.
How long does it take for solar to pay for itself in California?▾
Payback ranges from 2 to 12 years depending on system cost, utility rates, and usage. Off-grid systems in PG&E territory pay back in 2.5 to 4 years. Grid-tie systems take 6 to 12 years. SMUD territory payback is longer due to lower rates.
Will solar eliminate my electric bill?▾
Off-grid solar eliminates your bill entirely. Grid-tie solar under NEM 3.0 reduces it by 60 to 90 percent but leaves connection fees and nighttime grid usage. Adding a battery gets you closer to zero but increases upfront cost.
How much do I save over 20 years with solar?▾
In PG&E territory, a $10,000 off-grid system saves $89,000 to $100,000 over 20 years accounting for rate increases. Grid-tie systems save $50,000 to $70,000 depending on battery inclusion. SMUD customers save $30,000 to $50,000.
Are higher utility rates better for solar savings?▾
Yes. Higher rates mean bigger savings per kWh generated. PG&E and SDG&E customers at 40+ cents per kWh see payback under 5 years. SMUD customers at 18 cents see payback over 8 years. Solar makes the most financial sense in high-rate territories.