Going Solar: What You Should Know About Solar & Utilities

So you’re exploring solar. It’s good for the planet, it’s a renewable source of electricity, and it will save you money in the long run. The first step in going solar is understanding your current utility costs and understanding the extent that solar power systems will or may affect your electric bills. This is often a very important step in deciding to switch to solar. It is also essential to understand how solar photovoltaic systems (PV) work, and what factors can affect your production levels. So, let’s go over it!


First, let’s break down your utility bill and the fees you are currently paying. Your statement can be simple or complex, depending on your utility company and amount of energy you use, but either way, it might require a little explanation.


Service Charge:

Is mostly a flat monthly fee for doing business with the utility. It can be as small as $1 for residential and is a bit larger for commercial. Putting solar on your home or business will not remove this fee.


Generation Charge:

A generation charge is the actual cost of the generating electricity that you use each month. That electricity can come from multiple entities using various methods for generation including nuclear, coal, oil, clean energy, renewable energy, etc. The cost is charged in increments of kilowatt-hours (kWh) and can range from $0.06/kWh to $0.40/kWh. Going solar WILL change this usage and overall cost.


Delivery Charge:

Also known as Delivery Service Charge, this is the charge to transport the electricity to your home/business including lines, poles, transformers, and substations. This fee can vary greatly and is charged or stated in kWh increments. Solar WILL change the usage and overall cost.


Demand Charge:

The demand charge is a charge for when you use electricity the most, based on the billing dates detailed in your rate plan. This charge is often misunderstood; it is used to analyze the maximum amount of wattage that a home/business needs at any one time during the month. This ensures that the location would have enough energy at its peak demand. This charge varies significantly between areas and providers. Solar could affect this number, but it’s generally considered a fee that will not change with solar.


Arizona: APS just rolled out a new demand charge plan that would make it much more affordable for Arizonans to go solar. See how it works here


California SDG&E: SDGE has a commercial program for businesses to participate. You can find it here 




On-Peak & Off-Peak Generation:

Also referred to as “Time-of-use billing,” these charges vary on the amount of electricity you used throughout the month during on-peak and off-peak hours. These on-peak/off-peak hours vary based on your utility and location, but primarily off-peak hours are 7pm-noon and on-peak hours are noon-7pm. In Arizona, On-peak hours can reach their most expensive rate usually 3-6pm weekdays during June-August. A solar array, especially with a battery backup system, can work well to alleviate these charges.


Critical Peak Pricing:

Critical Peak Pricing refers to a “Time of use- Plus” plans. It works similar to “on-peak and off-peak generation” and goes year round from 2 pm – 6 pm. Customers will incur higher charges for using electricity during this time. SDGE has given three options on how to reduce or avoid these charges.


1. Offset your energy use to another time.

2. Continue to use energy like normal, and incur substantially higher prices.

3. Protect a portion of your energy usage during event hours. This is known as “Capacity Reservation.”


You can read more about that program here: https://www.sdge.com/businesses/savings-center/energy-management-programs/demand-response/critical-peak-pricing


If you have more questions, most utility companies will have a page defining all the terms and charges you will see on your bill.


In Arizona:





In San Diego Area:


When understanding Solar PV Systems, several variables can affect the system, but hardware-wise it primarily comes down to three parts: the solar panels, the inverters, and the racking.


Solar Panels or Solar Cells: 

The panels are the primary component of any solar system, and also the most expensive. Solar panels actually produce the solar energy and are rated by the amount of DC (direct current) they produce under standard test conditions. Their rating is used to represent the panel’s predicted power production under ideal sunlight and weather conditions. 

Using their rating, you can compare basic solar electricity production numbers between panels; for example, a 320-watt panel will produce more energy than a 280-watt panel. Most of the time, the higher the energy efficiency, the more expensive the panel. Higher cost in panels can affect a power purchase agreement (PPA), financing and overall return on investment so do your research or ask your Rooftop Solar representative for recommendations on panel sizes specific to your needs.


Solar Inverters: 

Grid tie inverters convert the DC (direct current) power from your solar panels into AC (alternating current) power for the grid. The two types of inverters commonly used include central inverters and micro inverters. Central inverters are wired to multiple panels, while micro inverters are string inverters that are wired to individual panels and convert electricity at the panel. To learn more about the differences and pros/cons of each type of inverter, especially in hotter climates, read this blog post.



Racking refers to the mounting that secures the panels – usually rails, although there are rail-less systems as well.

It is somewhat tricky to predict production estimates because many components can influence your power production. The three main factors taken into account when estimating your production levels include shading, azimuth, and pitch.



Shading can come from trees, adjacent roofs, or other obstacles around your home. We use specialized shading tools, similar to Project Sunroof (where you can estimate your roof’s solar potential), and analyze the amount of shade your roof receives throughout the day/year. Shading varies throughout the year because of the angle of the sun changing with the seasons (The sun is lower in the winter, leading obstacles to create more shade than when it is shining high in the summer.)

If there are too many trees in the way, we may suggest cutting or trimming them before we start your solar installation. We will do the cutting for you, but never without discussing it first, and getting consent to do so.



[az-uh-muh th]: Solar Azimuth determines the angle or angles to place the panels so that they are facing the direction that the sun is shining. Azimuth is just as crucial as shading because it dictates how much sun will be shining on the panel throughout the year. Solar panels are the most efficient when they are on the south-facing roofs.



Pitch, or tilt, refers to the actual angle of the solar panels. It is the least important of the three, but it does still affect production.

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