How Your Electricity Rate Affects Solar Savings
By Solar Cost Predictor Team · June 16, 2026 · 6 min read
Solar savings come from one simple mechanism — every kWh your panels produce is a kWh you don't buy from the utility. The higher your electricity rate, the more each kWh of solar production is worth, which is why identical systems save very different amounts in different states.
Why a 6 kW System Saves Differently in Different States
A 6 kW system producing roughly 9,000 kWh/year saves about $810/year at Louisiana's $0.09/kWh average rate, but about $1,980/year at Massachusetts's $0.22/kWh rate — more than double, from the identical system.
Rising Rates Make Solar More Valuable Over Time
Utility rates have historically risen roughly 3–5% per year on average nationally. A solar system installed today locks in your production cost while your utility's rate keeps climbing — meaning your effective savings typically grow year over year, not just stay flat.
Time-of-Use Rates Add Another Layer
In states with time-of-use pricing, electricity costs more during peak afternoon/evening hours. Since solar production peaks midday, pairing solar with battery storage lets you shift that midday production to cover expensive evening peak usage, increasing effective savings further.
Frequently Asked Questions
Does a higher electricity rate make solar more worth it?
Yes — the same solar system saves significantly more in a high-rate state (like California, Massachusetts, or New York) than in a low-rate state (like Louisiana or Oklahoma), since each kWh of production offsets a more expensive utility purchase.
Will my electricity rate keep going up?
Utility rates have historically risen an average of 3–5% per year nationally, though it varies by utility and state — this trend is a major reason solar savings tend to grow over a system's lifetime rather than stay flat.
How do time-of-use rates change solar savings?
They add a timing dimension — solar production during cheap midday hours offsets less expensive electricity, while battery storage lets you shift that production to cover more expensive evening peak hours.