How Do Solar Panels Work with Your Electric Bill?
Author: Steve Fairless
Originally Published: 27th February 2024 · Updated: 29th August 2026
Solar panels reduce the part of your electricity bill that depends on how many kilowatt-hours you import from the grid. When your home uses solar electricity as it is generated, you buy fewer units from your supplier. If you export surplus electricity, a separate Smart Export Guarantee tariff can pay you for measured exports. Your standing charge normally remains because the property is still connected to the electricity network.
This is different from the “net metering” and feed-in-tariff language still found on many older web pages. For a modern Great Britain installation, the practical model is imported electricity billed by your supplier + separate export payment where you have an eligible SEG contract.
At Sustainable Energy Engineering, we explain the bill in terms of imported kWh, self-consumed solar, exported kWh and standing charges so customers can see which part of the forecast comes from actual electricity flows and which part comes from tariff assumptions.
Updated: 29th August 2026 using current Ofgem price-cap data, current SEG guidance, Energy Saving Trust solar guidance and MCS performance-estimation requirements.
The short version
If your home is using 1.5 kW and your solar system is producing 1.5 kW at that moment, the household can avoid importing roughly that 1.5 kW from the grid. If solar production is higher than demand, the surplus can be exported or stored. If demand is higher than solar production, the grid supplies the shortfall.
Your supplier still bills imported electricity according to your import tariff. Export payments are a separate commercial arrangement.
Your electricity bill has two main charge types
A standard domestic electricity bill normally includes a unit rate for the electricity you use and a daily standing charge. Ofgem explains that the standing charge is paid every day even if you use no energy that day. Solar therefore does not normally eliminate the standing charge unless you leave the grid entirely, which is a very different system design.
For 1 July to 30 September 2026, Ofgem's average direct-debit default-tariff benchmark is 26.11p/kWh with a 57.19p/day electricity standing charge. For 1 October to 31 December 2026, the benchmark is 26.32p/kWh with a 54.83p/day standing charge. Actual regional rates and customer tariffs differ.
What a self-consumed solar unit is worth
If one solar-generated kilowatt-hour is used in the property and would otherwise have been imported, its immediate gross bill value is approximately the import unit price avoided. On the October–December 2026 Ofgem average benchmark, that reference value is 26.32p for one kWh.
That does not mean every generated kWh saves 26.32p. Some generation may be exported, some can be lost through system conversion, and the customer's actual tariff may be lower or higher. Savings calculations therefore need an estimate of self-consumption, not just annual PV generation.
Illustrative annual bill example
Assume a home imports 2,500 kWh per year before solar. At 26.32p/kWh, the unit-rate portion is approximately £658 before the standing charge.
If solar later reduces grid imports by 1,300 kWh, the avoided unit-rate cost at the same tariff would be about £342. The remaining 1,200 imported kWh would cost about £316 at that same rate. The standing charge would still be added separately.
Illustrative only: real bills depend on tariff, region, time bands, usage and the amount of solar actually used on site.
What happens when your panels generate more than your home is using?
Surplus power can flow out through the electricity meter to the grid. If you have an eligible Smart Export Guarantee contract, that measured export can be paid at the rate set by your SEG supplier.
Ofgem does not set one national SEG price. Each SEG licensee sets its own payment rate and contract terms, although the tariff must remain above zero. You can also choose an export supplier that is different from your import supplier, subject to the chosen tariff rules.
This is why we do not describe exported electricity as either “free money” or “wasted energy”. Its value is whatever your live export tariff pays, and that needs to be compared with the import rate you avoid by using the electricity yourself.
Why the old “net metering” explanation is wrong for most UK customers
Net metering is a term commonly used in other countries where exported units can be credited directly against imported units under a particular regulatory model. That is not the standard current Great Britain household arrangement.
Likewise, the Feed-in Tariff closed to new applicants in 2019. Existing accredited FiT installations can continue under their legacy arrangements, but a new 2026 solar customer will normally be considering SEG for export rather than joining FiT.
Do not compare a modern SEG quote with an old FiT article
FiT generation payments, deemed export and modern metered SEG export are different mechanisms. If you already own an older FiT system, check the terms before changing how export is paid because switching away from deemed export can have consequences.
How a smart meter fits into the bill
A smart meter can record electricity flowing into the property and, where configured for export, electricity flowing out. Export readings are not the same as the generation figure in the inverter app.
For example, a system might generate 4,000 kWh in a year. If the property uses 1,800 kWh of that directly and a battery later supplies another 800 kWh to household loads, the export meter would not show 4,000 kWh. Only the surplus that actually crossed the meter toward the grid is export.
How battery storage changes the bill
A battery can reduce grid imports by storing energy that would otherwise have been exported and using it later. It can also charge from the grid on a low-rate time-of-use tariff if the equipment and tariff allow it. Both strategies can affect the annual bill.
But the correct comparison is not simply “battery = more savings”. A battery has a purchase price, finite life and conversion losses. If a household already has a very strong export tariff, the additional value from retaining each solar unit may be smaller. Our solar battery storage designs therefore model the import/export spread and usage pattern before recommending capacity.
What about time-of-use tariffs?
Time-of-use tariffs can make the value of a solar or battery kilowatt-hour change throughout the day. Avoiding a 35p evening import may be more valuable than avoiding a 12p overnight import. Conversely, a specialist export tariff may pay more at particular times.
When tariffs vary by time, a simple annual average can hide important value. A more useful model looks at when the home uses energy, when the panels generate and when the battery charges or discharges.
| Electricity flow | What happens financially |
|---|---|
| Solar → appliance | Reduces imported kWh that would otherwise be billed at the import tariff. |
| Solar → battery → appliance later | Can reduce later imports, but battery losses and battery cost matter. |
| Solar → grid | Can earn an export payment if you have an eligible tariff. |
| Grid → appliance | Billed at the applicable import unit rate. |
| Grid → battery | Billed at the import rate at the time of charging; can be useful on some time-of-use strategies. |
| Standing charge | Normally remains payable regardless of how many imported units solar displaces. |
Can solar make an electricity bill zero?
It is possible for export income to offset a substantial part of a bill in some tariff and generation scenarios, but “zero bill” is not a responsible universal promise. Weather, household consumption, seasonal generation, standing charges and tariff terms all matter.
Winter is particularly important. A home may export large amounts on bright summer days but still import heavily during dark winter evenings. Annual bill modelling should therefore use a full-year generation estimate, not one summer month's app screenshot.
How MCS performance estimates relate to savings
MCS MIS 3002 requires an annual generation estimate and sets requirements around the information supplied to the customer. That technical estimate is the starting point for financial modelling. The next step is deciding how much of the forecast generation is likely to be self-consumed and how much is likely to be exported.
Two homes with the same roof and the same solar PV system can therefore have different bill savings because their occupancy and electricity-use patterns are different.
A better way to read a solar savings quote
Ask the installer to show these numbers separately
- Forecast annual solar generation in kWh.
- Estimated solar electricity used directly in the property.
- Estimated solar electricity sent to or through the battery.
- Estimated annual export in kWh.
- Import unit rate used in the calculation.
- Export rate used in the calculation.
- Whether standing charges are excluded from the “saved bill” claim.
- Any assumed tariff inflation or future price scenario.
What should you do after the system is installed?
Compare the inverter/app generation data with the smart meter and your supplier bill over time. Day-to-day figures will bounce around with weather, but annual totals help you see whether the system is broadly performing as expected and whether your usage pattern is making good use of the generation.
If you want a quotation built around your actual electricity consumption rather than a generic household profile, request a solar quote and provide your annual kWh use. We can then model generation, self-consumption, export and optional storage as separate parts of the financial picture.
