When utilities track both energy consumption and energy production data, they can do simple arithmetic to determine how much energy your home truly used in a given time period. For example, if you used 1500 kWh of electricity in one month, and your solar panel system produced 1300 kWh in that same time frame, your total energy consumption really amounts to 200 kWh, instead of what you would normally pay for – the total 1500 kWh. Thus, the energy your system produces offsets your electricity bill, powered by the utility company and energy grid. An average sized solar system in the U.S. (~5kW) can reduce energy bills significantly – but it also depends on the size of your home (and more notably, the size of your roof), and your typical energy consumption habits. Most home owners see hundreds of dollars in savings per year in energy costs, which is why solar is becoming more popular all over the U.S., but savings are only possible through net metering policies which allow you to offset the cost of your electricity bill by generating electricity for the grid.