With utility bills rising nationwide, an increasing number of homeowners are turning to solar panels to reduce costs and increase energy independence. As solar power becomes more prevalent—there are already more than five million solar panels installed in the U.S., according to the Solar Energy Industries Association (SEIA)—the lower barriers to entry pave the way for homeowners to make the switch. However, the payoff for transitioning to this alternative energy source can vary significantly depending on where you live.
To explore the potential energy bill savings homeowners can expect after switching to solar, the research team at This Old House analyzed data from the U.S. Energy Information Administration (EIA), the Lawrence Berkeley National Laboratory, and the National Renewable Energy Laboratory (NREL).
Converting to solar power is becoming increasingly feasible and financially viable, particularly for homeowners in sunnier states. Despite the number of steps involved—from budgeting for solar panel costs to obtaining building permits—homeowners now have a clearer path to pursue this sustainable and cost-effective alternative energy source. Federal and sometimes state tax incentives can help offset homeowners’ initial investment, but long-term utility bill savings tend to offer the most noticeable benefit.
Key Findings
- From 2021 to 2024, the average U.S. electricity bill increased by 19%, significantly outpacing the 1.9% annual growth observed from 2010 to 2020.
- California’s electricity rates have nearly doubled since 2010—from $83 to $162 per month—making solar especially cost-effective.
- A 7kW solar system can generate about 916 kWh per month, covering up to 89% of the average U.S. home’s energy use.
- Arizona is the number one state for savings, where solar panels can save homeowners an average of $26.12 more per month than their energy bill, thanks to strong sun exposure and moderate rates.
The Rising Cost of Electricity
If you’ve noticed an uptick in your electricity bill, you’re not alone. The national average electricity bill rose from $111 in 2010 to $144 in 2024—a 30% increase in nearly half as many years. From 2021 to 2024 alone, the average household’s electricity bill rose by 19%, a sign of accelerating costs compared to the 1.9% annual growth rate from 2010 to 2020.
Among the top states with the largest surge in average monthly electric bill rates from 2010 to 2024, California ranks highest with a 95.2% increase. The Golden State’s average annual electric bill nearly doubled from $83 in 2010 to $162 in 2024. Each state in the table below saw an increase in the average monthly electric bill, even if it was only $4 (as in the case of Washington, D.C.):
How Much Can Solar Panels Save You?
The average U.S. home uses roughly 1,028 kilowatt-hours (kWh) of energy per month. A 7 kWh solar panel system generates approximately 916 kWh of energy monthly, or about 89% of the average American home’s energy usage. The remaining energy, around 112 kWh, costs homeowners an average of $19 per month.
When deciding if solar panels are worth it, homeowners should consider multiple aspects to make a more informed decision. How much are you willing to spend on this type of project, and how do you plan to recoup some or most of your investment? Evaluating the process from end to end can help homeowners understand not only the financial commitment but also the ongoing maintenance and upkeep that solar systems require.
States Where Homeowners Offset Their Electric Bills With Solar Panels
In the top six states listed in the chart below, solar systems enable homeowners to eliminate their monthly electric bills completely, generating enough solar power to more than offset the cost of their average electric bill by 100% or more.
Installing solar reduces the national average monthly electric bill of $169.45 to $19.20, given an average electricity price of 16.48 cents per kWh and nearly five hours of peak sun per day. Many of the states where solar returns less than the national average are located in the Northwest and along the East Coast. Hawaii is the exception, due to its high electricity prices (42.72 cents per kWh, the highest in the nation) and 5.23 hours of peak sun per day.
Arizona
Strong sun exposure and moderate electricity rates (14.95 cents/kWh) can completely offset Arizona homeowners’ energy bill costs when they switch to solar power. The state with the highest energy savings due to solar also has the highest average of peak sun hours per day (6.57) and offers the highest solar output per month (1,203 kWh).
California
California’s nearly six hours of average peak sun hours and steep utility costs make it an ideal state for solar power. California has the highest electric rates in the country, at 31.86 cents per kWh, resulting in an average monthly electric bill of $327.58. The 1,096 kWh of solar generated per month far exceeds the monthly utility bill, removing this expense from a household’s energy budget.
Nevada
Nevada and New Mexico tie for the highest solar output at 1,171 kWh per month. However, electricity costs slightly more in Nevada, at 15 cents per kilowatt-hour. With energy rates less than half those of California, a higher solar output, and a dry desert climate, Nevada offers residents a strong combination of factors that lead to notable returns on installing a solar system.
New Mexico
New Mexico and Nevada experience the same 6.39 average peak sun hours per day, but electricity costs only 14.37 cents/kWh in the Land of Enchantment. The average monthly electric bill totals $147.75, yet homeowners can typically generate $168.25 worth of solar. In a state known for its reliable sunlight and affordable electricity rates, installing a solar system makes financial sense.
Texas
Texas is home to a fast-growing solar market that leverages an average of 5.65 peak sun hours per day to generate more solar power than the average monthly electric bill. Monthly solar output in the second-largest state in the nation totals 1,035 kWh, with each kilowatt-hour costing residents 14.94 cents.
Florida
In Florida, electricity costs the least (14.15 cents per kilowatt-hour) of the top six states for the highest value of monthly solar generation. These lower rates are reflected in the $145.49 average monthly electric bill, which is eclipsed by the 1,033 kWh of solar generated per month. Florida residents experience an average of 5.64 hours of peak sun per day, likely due to their proximity to the Gulf of Mexico and its tropical weather patterns.
With Rising Energy Costs, Long-Term Value Still Grows in Other States
Tangible utility bill savings in the six states named above demonstrate one of the primary benefits of transitioning to solar beyond sustainability and energy independence. Yet, as grid electricity becomes more expensive, solar’s annual return on investment improves. When installed and maintained correctly, solar panels can last anywhere from 25 to 30 years, extending homeowners’ access to energy savings for up to three decades in the future.
Residents of Colorado, Louisiana, Oklahoma, Utah, and Wyoming can still enjoy the immediate benefits of modest utility bill savings. Lower electricity prices, fewer peak sun hours, and smaller utility bills influence the return on investment differently in each state. Yet, for many homeowners nationwide, solar power remains a smart hedge against unpredictable energy costs.
However, installing solar panels on your roof isn’t the only way you can integrate this alternative energy source into your home’s energy consumption and make a positive environmental impact. Solar generators enable homeowners to access backup or emergency power in the event of a grid outage. These eco-friendly energy solutions cost less than a solar system and still contribute to energy independence and a sense of security.
Is Now the Time To Go Solar?
Adopting solar makes strong financial sense for households in many parts of the country. Payoff is nearly immediate in states where utility rates and annual temperatures are high. Even in states where homeowners must take a long-term view, installing a solar system can still add to a home’s value and enhance energy resilience in the face of rising energy costs, grid outages, and natural disasters.
Interested homeowners should first consider the feasibility and benefits of integrating solar into their lives before jumping feet first into installing a complete system. State tax credits and rebates vary greatly, but contacting your local energy department or the department of revenue can help uncover specific resources available to homeowners. The best solar companies can also help educate homeowners and connect them to the resources necessary to make a more informed decision.
Methodology
To determine average electricity consumption, costs, and potential solar energy generation across the U.S., we gathered our variables from the following:
- Electricity consumption and cost data: This data was collected from the U.S. Energy Information Administration (EIA) datasets to establish a baseline for utility bills and consumption.
- Solar PV system specifications: To determine average photovoltaic (PV) system characteristics, we used the Lawrence Berkeley National Laboratory report “Tracking the Sun.”
- Sun peak hours: We extracted peak sun hour values for each state using the PVWatts Calculator API, developed by the National Renewable Energy Laboratory (NREL).
- State-level inputs were selected using sample sizes based on population density and geographic size to ensure balanced regional representation.
- System efficiency assumptions: We applied a standardized 14% overall system loss.
- It factors in real-world losses such as soiling, shading, wiring losses, inverter inefficiencies, and other environmental factors that are in line with NREL guidelines.
