Efficiency Before Solar: Cheaper Ways to Cut Your Electric Bill First

Before you spend $20,000 or more on solar, it is usually worth spending a few hundred dollars to cut waste. LED bulbs, a smart thermostat, air sealing, and a better rate plan often pay back in months or a few years, while an owned solar system in 2026 typically takes 10 years or more. Efficiency also shrinks your usage, so if you do go solar later, you need fewer panels. This guide covers the main options, with rough costs and savings. Savings vary a lot by home, climate and habits, so treat every number here as a starting point.

Why efficiency usually comes first

Think of it in dollars per kWh saved.

• Solar at $3.00 per watt costs about $24,000 for 8 kW. Over 25 years, that works out to roughly 10 to 11 cents per kWh produced, and you pay most of it upfront.
• Many efficiency fixes cost far less per kWh saved, and some are free.

There is also a sizing benefit. If efficiency cuts your usage by 1,300 kWh a year, that is about one fewer kW of panels in much of the country, roughly $3,000 less at 2026 prices. See how many solar panels do I need.

Efficiency and solar are not competitors. The point is order: fix the cheap stuff first, then size solar to what is left.

Step 1: Find out where your power goes

You cannot cut what you cannot see. Start here:

• Your utility account. Most utilities show monthly, and often hourly, usage online. Look for seasonal spikes and high overnight use.
• A whole-home energy monitor. These clip onto the wires in your electrical panel and show usage by circuit or device in an app. Many cost a couple hundred dollars or less, but installation means opening your electrical panel, so use an electrician if you are not comfortable. If you later go solar, the same monitor can check that your system performs as promised.
• A plug-in meter for individual appliances. Useful for finding old refrigerators, freezers, dehumidifiers or entertainment systems that draw power all day.

Common surprises include a second fridge in the garage, an old pool pump running too long, electric baseboard heat, a failing HVAC system, and devices that draw power even when “off.”

We list monitors and other low-cost tools on our cheaper first steps page.

Step 2: Check your rate plan

This one can cost nothing. Many utilities offer several residential plans:

• Time-of-use (TOU) plans charge less at off-peak times and more in the late afternoon and evening. If you can run laundry, dishwashers, pool pumps and EV charging off-peak, a TOU plan can lower your bill.
• EV plans with cheap overnight rates.
• Budget billing does not lower costs but smooths them.
• Retail choice: in deregulated areas, you may be able to choose a supplier. Read the fine print, because teaser rates can jump.

Before you switch, compare your last 12 months of usage under each plan. Many utilities have an online rate comparison tool. If you might go solar, the right plan can change with solar too. See time-of-use rates and solar and our rate history tool.

Step 3: LED lighting

LEDs use at least 75% less energy than old incandescent bulbs and last much longer.

Example: replacing a 60 W incandescent with a 9 W LED used 3 hours a day saves about 56 kWh a year. At 18 cents per kWh, that is about $10 a year per bulb, from a bulb that costs a few dollars. If you already have mostly LEDs, the remaining savings are small.

Step 4: Smart or programmable thermostat

Heating and cooling are often the biggest share of a home’s energy use. A smart thermostat can automatically set back the temperature when you are asleep or away.

• Cost: roughly $100 to $250 for the device. Many utilities offer rebates.
• Savings: ENERGY STAR estimates certified smart thermostats save about 8% on heating and cooling bills on average. Your result depends on your habits. If you already adjust the thermostat by hand, savings will be smaller.

Example: if you spend $1,200 a year on heating and cooling, 8% is about $96 a year. A $250 thermostat would pay back in under 3 years, faster with a rebate.

Some utilities also pay you to let them adjust your thermostat slightly during peak demand events.

Step 5: Air sealing and insulation

Leaky homes waste heating and cooling. Gaps around attic hatches, recessed lights, plumbing and wiring holes, windows and doors add up.

• DIY air sealing: weatherstripping, door sweeps, caulk and foam often cost under $100 to $200 in materials.
• Professional air sealing and attic insulation: usually a few thousand dollars, depending on the home.
• Savings: ENERGY STAR estimates homeowners can save an average of about 15% on heating and cooling costs by air sealing and adding insulation. Older, leakier homes in harsh climates usually save more.

A professional energy audit, sometimes discounted or free through your utility, can show where the biggest leaks are. Comfort usually improves too: fewer drafts and more even temperatures.

Step 6: Heat pump water heater

If you have an electric resistance water heater (a standard electric tank), water heating can be one of your larger electric loads. A heat pump water heater moves heat from the surrounding air into the water instead of making heat with a resistance element.

• Efficiency: typically two to four times as efficient as a standard electric tank.
• Cost: usually a few thousand dollars installed, more if you need electrical or plumbing changes. Rebates are common.
• Best time to switch: when your current water heater is near the end of its life, so you are only paying the difference.
• Caveats: it needs space and airflow, makes some noise, and cools the room it is in, which helps in a hot garage and hurts in a cold basement.

If you heat water with gas, the economics depend on your gas and electric prices.

Step 7: Other quick wins

• Low-flow showerheads cut hot water use.
• Wash laundry in cold water and clean dryer lint filters.
• Unplug or recycle an old second refrigerator or freezer.
• Use smart power strips for TVs and computers that draw standby power.
• Service your HVAC system and change filters regularly.
• Shade west-facing windows in hot climates.

Rough comparison

These ranges are illustrative. Your costs and savings depend on your home, climate and current equipment.

Upgrade	Typical cost	Payback	Notes
Rate plan review	Free	Immediate	Compare 12 months of usage under each plan
LED bulbs	A few dollars each	Often under 1 year	Only if you still have incandescent or halogen bulbs
Plug-in meter or energy monitor	Under about $200	Varies	Finds waste; useful for solar sizing later
Smart thermostat	About $100 to $250	Often 1 to 3 years	About 8% heating and cooling savings (ENERGY STAR)
DIY air sealing	Under about $200	Often 1 to 3 years	Weatherstripping, caulk, door sweeps
Pro air sealing and insulation	A few thousand dollars	Often several years	About 15% heating and cooling savings on average (ENERGY STAR)
Heat pump water heater	A few thousand dollars	Varies widely	Best when replacing an electric tank at end of life
Solar (owned, 8 kW)	About $24,000	Often 10 to 15 years	No federal credit in 2026

Federal credits for efficiency also ended

The same 2025 law that ended the homeowner solar credit also ended the federal 25C credit for efficiency improvements made after 2025. See the IRS FAQ. Many utilities and states still offer rebates for thermostats, insulation, heat pumps and heat pump water heaters. Check your utility’s website and your state page.

When to move on to solar

After you cut obvious waste, solar may still make sense, especially if your rates are high and your utility credits exports fairly. Run the calculator with your new, lower usage. The answer may be a smaller, cheaper system.

If you rent, have a shaded roof, or decide rooftop solar is not worth it, look at:

• Community solar, which can offer a 5% to 15% bill discount in states with programs. Try the community solar calculator.
• Plug-in or balcony solar, where it is legal.
• A portable power station for outages instead of a large battery. See generator vs battery backup.

Bottom line: The cheapest kWh is the one you never use. Find your waste, fix the cheap things first, then decide on solar with your new usage.

Our cheaper first steps page lists the specific products we would start with. We may earn a small Amazon commission on those links, which never affects whether we tell you solar is worth it. See how we make money.