How to read your electricity bill

This is the central figure. Your bill shows how many kilowatt-hours you consumed in the period. Reviewing several months helps, because consumption varies through the year; an average gives a more realistic base for sizing the system.

If your bill arrives monthly, gather the last twelve; if it is bi-monthly, adjust the calculation to that period. The idea is to capture your real consumption pattern, not a one-off month.

Also check whether the reading for the period was actual or estimated. Bills indicate when consumption was estimated rather than read, and an estimate can be some way off. If you are going to size on only a few months, try to make sure they are actual readings.

Almost every bill includes a small chart with consumption over recent months. It is the quickest way to assemble the history without hunting for old bills.

That chart tells you two useful things. First, your real average, which usually differs from the impression you have. Second, the shape of your consumption: whether it is flat or has peaks. Steady consumption simplifies sizing; one with marked peaks forces you to decide whether to size for the average or for the high months.

If the history shows a step change — a before and an after — find out what caused it before averaging. A change of appliances, a renovation or a change in the number of occupants means the earlier months no longer represent your current consumption, and averaging them distorts the calculation.

The tariff is what you pay for each kWh. It sometimes appears explicitly on the bill; if not, you can calculate it by dividing the energy charge by the kWh consumed.

It is the number that multiplies your saving: the higher the tariff, the greater the benefit of generating your own energy. That is why two households with the same consumption but different tariffs make different savings from the same system.

Behind that figure sits a regulated structure. The unit cost of energy bundles the generation, transmission, distribution, retail, losses and restriction components. You do not need to break them down to size a system, but it does explain why the tariff varies between operators and between regions even though the energy is the same: a good part of the cost is transport and distribution, not generation.

This is where a Colombian bill differs from those in other countries, and where generic estimates go wrong most often.

Electricity is billed according to the socio-economic stratum of the property. Low strata receive a subsidy on part of their consumption, while high strata and commercial and industrial users pay a solidarity contribution that funds those subsidies. They appear on the bill as explicit lines, with a negative or positive sign.

The practical consequence for a solar project is direct: the effective price you pay per kWh can be quite different from the base unit cost. A user paying a contribution pays above that cost, which improves the appeal of generating their own energy; a subsidised user pays below it on the subsidised portion, which reduces the saving for each kWh replaced.

In addition, the subsidy applies only up to a consumption threshold, and consumption above that threshold is paid without subsidy. That means that in a subsidised household with high consumption, the kWh above the threshold are precisely the most expensive and the first ones solar replaces. It is worth looking at in detail before ruling a project out on the basis of stratum.

Besides consumption, the bill includes charges and contributions. It helps to distinguish the energy part — which a solar system can reduce — from other items that may be fixed, municipal or for other services.

It is common for the electricity bill to act as a collection vehicle for items that are not energy: the public lighting levy, waste collection in some municipalities, insurance or appliance financing contracted through the retailer. None of them falls because you install panels.

This distinction avoids a mistaken expectation: solar energy reduces the energy consumption component, so the saving is calculated on that part, not necessarily on the bill total.

Getting this straight before requesting quotes avoids the most common disappointment after installation.

A solar system reduces the kWh you buy from the grid. On those avoided kWh you stop paying the unit cost and, where applicable, the associated contribution. That is the real saving and it is usually the largest part of the bill for a user with medium or high consumption.

It does not reduce items unrelated to energy — public lighting, waste collection, financing — nor any fixed retail charges that may exist. And it does not eliminate the bill entirely: as long as you stay connected to the grid you keep a commercial relationship with your operator and an associated minimum charge.

That is why the honest metric is not 'I cut my bill by 90%', but 'I stop buying X kWh a year, which at my effective price equals Y pesos'. A proposal promising a percentage of the bill total without having seen its breakdown is oversimplifying.

Once the system is legalized and the bidirectional meter installed, the bill carries new information that is worth knowing how to read.

Imported energy — what you drew from the grid — and exported energy — the surplus you sent out — will appear, measured separately. The settlement nets the two amounts under the rules of CREG Resolution 174 of 2021.

If your system was well sized, you will see billed consumption drop noticeably and a surplus offsetting line appear. Comparing it with the previous history is the best way to verify the system is performing as promised: if the reduction in kWh purchased does not resemble the output estimated in the proposal, something needs checking.

Keep the first year's bills. They are the evidence you will need if you have to claim on performance with the installer, and the basis for deciding whether to extend the system later.

With your average monthly consumption in kWh and your effective tariff per kWh you already have the essentials. Adding the zone you live in — which determines the sun hours available — a calculator can estimate the size of the system and the potential saving.

For the tariff, use the effective price and not the base unit cost: divide what you actually paid for energy, including the contribution or net of the subsidy, by the kWh for the period. That is the value that corresponds to what you will stop paying.

That is the starting point for requesting informed quotes: you arrive with concrete figures rather than a vague idea of your consumption, and you can compare proposals with judgement.

These slips are the ones that most distort a savings estimate.