People install solar panels to save money. Solar offset measures your energy production compared to your energy usage. Getting all your energy from solar panels may seem like the easiest method to save the most money, but the reality is more complex.
In this blog, we discuss how to best determine solar offset, and minimize your energy expense. Typically and when possible, you want to increase your solar offset to make your solar investment cost-effective. By how much is determined by anticipated usage compared to actual usage.
Offset Definition
If your home’s annual power demand is less than your solar panels’ energy output, your solar offset is over 100%.
If your home utilizes the same energy as your solar panels, it would be 100% offset.
If in a season when usage goes up – winter heating or summer cooling – and your home utilizes more energy than your solar panel’s energy out, without an offset (extra energy production), your utility company will pick up the slack and charge you for it.
Ideally – as roof space and your local utility company allows – you want to build a somewhat larger solar system that considers your historical energy usage, anticipated future usage increases, and buffer against seasonal variances. That sweet spot may be an offset landing around 110-130% – which can be enough to meet your household’s needs. Note, the notion of “selling energy back to the electric company” may not be possible with your area’s electricity provider. In some cases, that overproduction may go to waste.
In some months, your household may use less electricity than your solar panels produce. As your solar system is connected to the grid, your over production “credits” may satisfy your energy demands during high electricity usage months.
Solar offset shows how much power your solar system generates vs how much your home uses. Knowing your solar offset helps you plan your energy consumption and make wise decisions about sizing your solar system and reducing your grid dependence.
How to Calculate Solar Energy Offset
Your energy adviser’s solar design app does the calculations for you.
It begins with historical data.
To start your offset calculations, 12 months of data from your most recent utility bill is reviewed. If you have less than 12 months (e.g. moving in 6 months’ ago), we can get a read on estimates based on square footage and neighborhood norms.
We use these statistics to determine how many panels and batteries you need for your desired solar offset, ensuring you make the wisest choice possible.
How Much Solar Power Offset Do I Need?
Many homeowners want to install enough solar panels to cut their energy expenses with solar power and eliminate overages that utility company will charge you for. You’ll typically pay a modest interconnection fee to keep connected to the grid, but if you create a solar power system that meets all your power demands, you may be able to eliminate your utility payment. Many regions employ net metering, so you might be limited to 100% solar offset – which typically still delivers savings – but you may still owe the utility provider for some power.
To simplify, suppose your household uses 20 power units each month and has just two seasons: summer and winter.
Solar panels receive more sun hours in summer and generate 30 units of power. Since your home only requires 20, you may send 10 units back to the grid. The utility provider may only credit half or less of the electricity you return under net metering. In this example, you only got 5 credits for deploying 10 units to the grid.
Winter days are shorter thus solar panels can only produce 10 power units. After five summer points, you gain 10 winter points, bringing your total to 15. Since you require 20 units monthly, you still need five from the electricity provider.
When possible, we highly recommend creating a solar system with an offset greater than 100% to save you the most money. Should you create more than you use, you will see your “credits” on your electric bill.
Additionally, for net metering (NEM 3) jurisdictions (in California, it’s predominantly SCE, SDG&E, and PG&E), consumption batteries that switch on at night are worth the investment.
To summarize, we recommend a solar offset greater than 100% (if permitted and if roof space can accommodate) but not excessive. This strategy will save you money in the long run by preventing you from under- or overproducing energy.
Factors That Impact Solar Panel Offset
Calculating the solar panel balance requires looking at historical data and predicting the future. There are several factors to consider:
Roof Size: Your roof size may limit the number of solar panels. Your roof may be too small to generate enough energy for a larger offset.
Solar Seasonality: The amount of sunshine your roof gets affects the power your solar panels can generate. Winter’s fewer light days might decrease your annual energy production.
Utility regulations: Some providers may limit how much solar offset your system may offer. These regulations may impact your solar power system’s energy savings.
Battery Storage: You may store solar energy after your panels aren’t producing power. This can reduce your net metering dependence and improve your balance.
Understanding these factors help to design the optimal solar system.
Roof Size and Type
Pitched roof homes give additional area for solar panels at the ideal angle. If the size of your roof is insufficient for the required number of panels for the solar offset, you might consider using a detached garage rooftop or ground mount (if economically and spatially feasible) and/or adding one or more solar batteries to store energy for later, once the sun sets. The goal is to optimize your solar system’s performance.
Amount of Sunlight and Seasonality
At night, solar panels don’t generate power. Nighttime power comes from energy your solar system has pushed onto the grid during the day, and/or from what’s been stored in your battery.
The seasons alter how much sunlight your panels get. On sunny days, your panels will generate more power than when overcast or winter. Local weather affects how much electricity your solar system generates, and thus, your solar offset.
Utility Company Regulations
Local power companies may limit how much your solar energy system may offset. These limitations may limit your solar energy production and grid feed. If your power company won’t let you receive the solar offset, you may have a few energy-saving options, so consult with your solar energy adviser.
Power Storage Options
Solar panels don’t produce electricity at night, so you’ll need power. Net metering credits may not be enough to cover that energy usage, depending on your utility company’s requirements. In certain regions, credits for delivering excess power to the grid may not meet your nighttime energy demands.
You may store surplus power in batteries instead of net metering. You can store daytime energy in batteries for nighttime usage. This is particularly true for SCE, SDG&E and PG&E customers. Your solar offset determines how much storage you need. If your offset is low, you may be using more energy than you are generating. Therefore, additional battery storage can reduce grid dependence.
Energy Consumption Habits
Your house’s energy depends on temperature, time of day, appliance usage, EV charging, heating and air conditioning usage, pool pumping, lighting, etc. Knowing how much energy you use helps your solar system fulfill your demands.
It’s also cost and environmentally wise to cut back on unnecessary appliance usage or switch to energy-efficient lighting. Reduce your power usage during off-peak hours to improve your solar system and reduce your grid dependence.
Solar Offset Is an Important Design Decision
Solar offset must be considered while designing and developing your system. Depending on your future energy consumption and net metering rates, a solar offset larger than 100% may save you the most money. However, a low offset could cost you more. Sometimes it’s worth adding 1-2 more solar panels at the time of your initial design consultation.
(NOTE: do your due diligence and fully understand the tradeoffs when considering retrofitting panels or batteries to an existing system or adding a second solar system).
Prepare in advance for the correct solar offset. Your solar system size, net metering, and battery storage determine your balance. Homeowners may conserve energy by changing their habits, installing smart appliances, and switching to LED lights. These actions increase the probability that your solar system reduces power use and provides enough output.
Here at Dowd Solar Group, we offer free solar designs, offset calculations, and savings estimates to help with your smooth transition to solar to save money and lower your carbon footprint. Book a free consultation with us today.
