Solar panels save families an average of $2,000 a year, according to a new study

Household energy costs do not hit everyone equally. Some families spend a much larger share of their income keeping the lights and heat on, and that strain adds up over time.

A large national analysis looked at what happens when homes install rooftop solar, and the results point to real relief. The picture is nuanced, and the numbers tell an important story.

Sydney P. Forrester of Lawrence Berkeley National Laboratory (LBL) led the analysis. The work helps separate hopeful claims from what the data actually show.

Solar panels and energy burden

The term energy burden refers to the share of a household’s gross income that goes to energy bills like electricity, gas, and heating fuel.

By definition, a high burden begins above 6 percent of income, while a severe burden begins above 10 percent.

Those thresholds matter because a high or severe burden often forces tradeoffs that affect comfort, health, and stability. When energy takes too big a slice of income, it can crowd out essentials and reduce options.

Policymakers use this metric to track equity and target support to households under pressure. Clear definitions help programs focus on the people who need help most.

Cutting energy burden is not only about saving money. It is also about reducing the risk that families have to ration heat or power during unsafe conditions.

What the researchers found

The new study examined roughly 500,000 U.S. households that adopted rooftop solar. It found that the median energy burden fell from 3.3 percent to 2.6 percent across adopters.

The authors put it plainly, “rooftop solar reduces energy burden across a majority of adopters during our study period from a median of 3.3% to 2.6%,” wrote Forrester. That is a national view, not a single city snapshot.

Low income and moderate income households also saw declines. Median burden dropped from 7.7 percent to 6.2 percent for low income households, and from 4.1 percent to 3.3 percent for moderate income households.

The share of low income households facing high or severe burden fell from 67 percent to 52 percent after adoption. For moderate income households, the share fell from 21 percent to 13 percent.

Solar panel results differ

Solar does not play out the same way in every region. The study reports larger average reductions in the West, smaller in the Midwest and Northeast, and increases for the median household in the South due to cheaper electricity that limits bill reductions.

Income levels shape outcomes as well. When energy already costs a high share of income, even moderate bill cuts can matter a lot.

Heating fuel type also influences results. Homes that rely on propane or fuel oil have higher burdens that solar cannot fully offset because those fuels are not displaced by on site generation.

Weather, housing stock, and local tariffs round out the picture. Those details explain why two similar systems in different places can yield very different financial outcomes.

Loans, leases, and the fine print

There is a difference between what the utility bill shows and what the full budget feels like. The study compared bill savings alone to net savings after including off bill costs like loan or lease payments and incentives.

On bills alone, the median customer saved about 1,987 dollars per year. After counting loans or leases, the median net savings was about 691 dollars per year.

That gap is not a trick, it reflects financing and incentive structures. It also shows why simple bill comparisons can overstate what households actually keep.

The ownership model matters. Lease customers, on average, saw slightly larger percentage point burden reductions than loan financed owners, but they tended to start with higher burdens.

Household savings from solar panels

Solar helps many households, but it is not a magic switch. You still need to look at total costs, incentives, and how your utility credits excess generation through net metering if it applies in your area.

Comparing quotes from vetted installers can lower upfront costs and clarify long term terms. Transparent proposals make it easier to choose a system size and financing plan that fits your usage.

If your home uses natural gas, fuel oil, or propane for heat, solar will not touch those costs directly. You might see bill relief on electricity but still face high heating expenses in winter.

Pairing solar with weatherization and efficient electric heating can change the math. Insulation, air sealing, and heat pumps lower total energy needs, which lowers burden.

Policy and equity angles

“Policymakers at the federal and state level have begun to incorporate energy burden into equity goals and program evaluations,” wrote Forrester. That framing reflects a shift toward measuring whether programs reduce strain on households.

Results in the South underline a key point. Where electricity is cheap, solar may not reduce bills enough to cover financing costs in the short term, even if burdens remain relatively low.

For households with very high burdens, solar may help but not solve the problem. Pairing solar incentives with weatherization and targeted bill assistance can bring burdens below 6 percent.

Data like these help agencies set realistic goals. They also help identify groups that need tailored support, such as households heated by fuel oil or propane.

Solar panels and the future

The analysis used modeled hourly household loads tied to real homes, which allows coverage of many places but adds uncertainty. That approach is standard when metered data are not available at the needed scale.

Tariff assumptions reflect 2021 conditions and may differ from more recent rate reforms in some states. Changing compensation structures for exported solar can shift household outcomes.

Income estimates came from 2021 data to match the study period. That choice captures the right year for burden calculations but can differ from income at the time of adoption.

Future studies can track newer tariffs, time of use rates, and evolving incentive designs. They can also follow households over time to see how savings hold up across years.

The study is published in Nature Communications.

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