Will An Inverter Increase My Electricity Bill?

Power Inverters are designed to convert direct electrical current (DC) from DC sources such as a battery or solar panel to alternating current (AC) to provide a source of pure uninterrupted AC power. Most household devices and appliances are powered by AC of 120V voltage and 60Hz operating frequency.

Inverters don’t run at 100% efficiency when converting DC to AC due to power losses, but this will not increase your utility bill. A solar inverter powered by solar panels will significantly reduce your electricity bill. A UPS Inverter will increase your electricity bill, but not by much.

Inverters typically consume no more than 10% of the power demand connected to the inverter. The efficiency of an inverter is determined by:

  • Inverter power output
  • Output range
  • Internal resistivity
  • Degree of Harmonic Correction

Let’s review how these factors influence the inverter’s efficiency and potential power draw to overcome them.

Electricity Bill on a Table

When Will An Inverter Use Grid Power?

Inverters are installed in both grid-tied and off-grid power supply systems. There is no connection to the power supply grid in an off-grid installation, and there can thus be no impact on your utility bill.

The situation with grid-tied systems is different. An inverter is used to convert the direct current (DC) generated by solar panels into alternating current (AC) fed into the grid via a net metering device.

In grid-tied installations, you will be billed for the difference between the solar power generated and fed into the grid during peak solar production hours and the power drawn from the grid during your peak demand periods.

If your solar system has produced more electricity than you have drawn from the grid, you will have earned some credits with the utility company. If you have used more grid power than your system fed into the grid, you will be invoiced for the balance per the net metering device.

Monthly Connection Fee

Some states and utility regions are contemplating introducing a monthly connection fee that will require you to pay for having a grid-tied solar connection. This may encourage homeowners to move to off-grid systems.

See also: Solar Inverter Problems and Solutions: A Comprehensive Guide to Troubleshooting Common Issues


A third scenario is when you have an Uninterrupted Power Supply Inverter System (UPS) powered by the grid but is used to filter the grid AC and ensure that the power supply is consistent and cannot be interrupted by power spikes or interruptions.

A UPS Inverter System consists of a rectifier (battery charger) that uses grid power to charge a backup battery bank. An inverter draws DC from the backup battery and converts it to AC to continually power critical devices and appliances.

If the grid power is unstable or variable, the UPS inverter system continues to supply the connected devices with power derived from the battery bank. The inverter will be able to provide power for as long as the battery bank has sufficient charge.

The conversion of AC to DC by the rectifier to charge the battery bank and the subsequent conversion of DC to AC by the inverter does result in some power losses due to the inefficiencies of the rectifier and inverter and will thus add to your utility bill.

These conversion inefficiencies are less than ten percent, and the additional cost will not be significant. The benefits of running critical appliances during power outages or supply instabilities will far outweigh the cost of the conversion inefficiencies.

Limiting The Power Draw Of UPS Inverter On The Grid

The only scenarios where an inverter will use some grid power and thus be able to add to your utility bill are in a grid-tied solar system with net metering or when an inverter functions as part of an Uninterrupted Power Supply (UPS) system.

The size of the inverter must be selected to be in balance with the power demand of the AC-loads and the solar panel power input capacity. It is recommended that the solar panel array have a power output capacity that is 20% higher than the inverter’s maximum power output capacity.

A 6.6kW output solar array should typically be connected to a 5kW inverter.

The AC load placed on the inverter should be in the 60% to 80% range of the maximum output rating of the converter. Running an inverter at a very low loading will be more inefficient than running it near maximum output.

However, to protect the longevity of the inverter, it is recommended not to exceed 80% of maximum output.

Overcoming the internal resistance of the circuitry and components will require about the same amount of power and will thus be proportionally high at low outputs. Some power is needed to run the cooling fans adding to the inverter’s inefficiency and thus accruing to the utility bill.

For the inverter to produce a pure sine-wave AC output from the DC input will require more switching and pulse wave modification by the inverter components, which will lead to higher efficiency losses. The evidence of the inefficiency is the heat generated by the inverter.

Sine Inverter

A modified sine wave inverter will be less demanding than a pure sine wave inverter, but the power produced will not be used efficiently by the appliances connected to the inverter. Fans and electric motors make more noise and generate more heat when powered by a modified sine wave inverter.

The purity of the AC output is measured by Total Harmonic Distortion or how smooth the output wave is.

Grid power has a THD in the order of 5%, and pure sine wave inverters generate AC with a THD of 3% or less.

UPS Inverters are used on computer systems and communication systems as it provides the purest form of AC at a consistent voltage.

You should correctly size the inverter for your grid-tied or UPS and ensure that they are correctly installed and maintained. There are more savings to be shaved off your power bill by looking at the efficiency of your AC appliances, lighting, and Air-conditioners.

Thermal energy losses on your hot water supply are an excellent place to start. Poo thermal insulation of your roof is another inefficiency that your AC system has to work to overcome.

A quality inverter will pay for itself and add to your power independence from the grid. An inverter’s impact on your utility bill is negligible and should be one of the last places to look for potential savings.



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Elliot has 20+ years of experience in renewable technology, from conservation to efficient living. His passion is to help others achieve independent off-grid living.

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