Solar Panels 101
Solar panels are one of the biggest investments you can make to your home, and it’s one that comes with years of money-saving benefits. But with so many elements and such a high installation cost, you may be asking if it’s worth it. We have compiled an extensive solar panel guide to help you answer these questions you may have, and decide if going solar is the right decision for you.
How do solar panel systems work?
A solar energy system is composed of a series of solar panels mounted to a roof and connected through electrical wiring to an inverter. From sunrise to sunset, the panels generate direct current electricity (DC) from the sun’s solar energy, which is sent to the inverter. The inverter converts this DC into AC, or alternating current, which is the type of electricity required for your home. This AC is then delivered from the inverter directly to your home’s main electrical service panel for use within your home. With a normal home solar system, there is no way to store excess electricity, so any additional electricity that is generated throughout the day that you do not use is then bought back by your electric company (see What is Net Metering? below).
What is Net Metering?
Within the solar world, you may have heard talk of “the grid” or “net metering.” When people refer to the grid, they are referring to the electrical grid that connects your home with the electric company. You may be thinking, “But if I have solar power, do I still need to be connected to the electric company?” In most cases, yes. This is where net metering comes in. Net metering is a solar incentive where you receive credit on your electricity bill when your solar system overproduces electricity. It is hard for home solar to be able to store this excess electricity, so the electrical companies will essentially buy it from you, and credit you the difference. Then, when it is nighttime, cloudy, rainy, etc., and you are not gaining enough solar energy for your home, you can still use the energy from the electric company.
Is my home suitable for solar?
When you choose a solar company, they can do an on-site visit to your home, and provide a detailed and accurate assessment of your home’s solar potential. But you can also do a general assessment on your own, which may aid in your decision-making process.
- Look at your roof’s access to sunlight. Which direction is it facing? Southern-facing roofs are the best while northern-facing are the least suitable.
- How old is your roof? Will it have to be replaced anytime soon? If the answer is yes, you will most likely want to replace the roof first before going solar.
- Are there any nearby shade trees that may block sunlight throughout the day? Access to sunlight is the biggest necessity. If your roof is covered in shade half of the day, you may not be generating the amount of solar energy you expect.
- How much roof space is available? The amount of roof space you have will determine what size of system you can install. On average, for a 6kW system, you will need about 400 sq. ft. of roof space. In addition, it is best if your roof slope is between 18-30 degrees. Something to keep in mind: if you do not live in a single-family home or if you are renting, you will not be able to install solar.
How much does a solar system cost?
There are several different factors that contribute to this answer, including size of the system and your location. While it is hard to get an exact figure right away, there are numerous online tools that can help you estimate the cost, based on data that has been collected over a number of years. The easiest and most popular way to calculate an estimated cost is in dollars per watt ($/W). The watt refers to the amount of electricity produced by the system, and the dollar is how much each watt will cost. For example, if you are estimated to pay $3.14/W and you want an average-sized system at 6kW, you will be paying $18,188 before tax credits. This number of $3.14/W is the estimated national average for January 2019, which is a nearly 70% drop since 2009. In California, the current estimates for a 6kW system are between $12,000-15,000 while the estimates for a 10kW system are $20,000-25,000 before tax credits.
What kind of savings can I expect?
This question is a bit difficult to answer with a specific figure. The savings you will have depends on how much energy you use during the day, how much sunlight you have access to, and local electricity rates. Initially, when you install your solar system, you will be spending more than you are saving based on the large installation cost. The savings will come over time. Once you hit the “break-even” point between installation cost and savings, it’s all uphill from there. But how long does this take? The time ranges across the country, but the average break-even point is met after about 7.5 years. Furthermore, it is estimated that over a 20-year period, the average savings for California residents with solar can be around $30,000.
How long do they last?
The life of a solar system will be affected by the quality of the system, and therefore can vary slightly by the company that you choose. The average is that solar systems will still produce 80%+ of their rated power for 20-25 years, and then degrade at an average of 1% every year after that.
Is it worth the money?
This question comes down to personal opinion. As we have previously mentioned, the decision to go solar is a big commitment, and the initial cost is high. But on the other hand, the savings over time is what draws many people in. It is the bigger picture that persuades many homeowners to go solar, and with the dramatic increase in popularity over the last decade, we don’t think that will stop any time soon.
Lease vs. Buy
There is a big debate over whether it is better to lease or buy solar systems for your home. While buying solar is a big commitment, especially if you don’t see yourself living in the same home for 20 years, it is still the more common choice.
The draw to lease solar is very compelling. You pay little to nothing for the system and save hundreds of dollars per year on electricity. There is no need to shop around at different companies, and the cost of installation is included within your lease payments, rather than being one lump sum all up front. You are also not responsible for the maintenance of any kind. There are a few downsides though. For one, you lose control of your roof. Leasing companies want to maximize their profit, so they may install more panels than what you want, or in places that you don’t want, without any regard to your home’s appearance. Your savings, while still great, will be far less than if you buy the system yourself. Most leasing companies include escalator clauses in their lease, meaning your payment will increase approximately by 3% each year. If the cost of electricity does not rise as fast, your savings will get smaller and smaller each year. In addition, leases can scare off future homebuyers. A solar lease generally lasts about 20 years. If you put your home on the market before then, the future buyers will either have to assume the lease, which some are reluctant to do, or you will have to buy out the lease, which can be very expensive.
Buying a solar system is a big financial commitment, but the rewards are worth it to many homeowners. When you purchase a solar system, you are able to maximize the benefits of the generated energy. You can even receive credit for excess energy, rather than having to make lease payments to the solar company. When you own the system, you also qualify for tax credits at various levels (state, federal, etc.). While you are responsible for the maintenance of the system, there are generally warranties involved in your purchase that will cover most, if not all repairs. Also, if you ever decide to move, you then have the choice to take the panels with you.
How to Buy a Solar System: Cash vs Loans
If you decide to buy your solar system, there are three ways you can do so.
If you are able, cash is the best way to purchase your system. It usually costs between $15,000-20,000 after tax credits. Also, since you won’t have any payments or interest to worry about, most systems pay for themselves within 5-7 years.
If you need to finance your solar system, the most cost-effective way is through a home equity loan. Your house will serve as collateral, making this option the loan with the lowest interest rates (around 3-5%). In addition, the interest you pay is tax deductible. Home equity loans have fixed interest rates, and range from 5-20 years.
Another financing option is utilizing the HERO program. The name HERO stands for Home Energy Renovation Opportunity. Nationally it is referred to as PACE (property assessed clean energy financing). The HERO Program provides financing for energy-efficient, water-efficient, and renewable energy products in approved communities within California and Missouri.
The third option is that of a solar loan. There are two types of solar loans: secured and unsecured. With the unsecured loan, your home does not act as collateral, creating higher interest rates, and the interest is not tax deductible. This may seem like a convenient option due to the fact that many solar companies work with lenders that provide solar loans. However, you will probably find better rates by checking directly with banks and credit unions.
What to do When you Move
The decision to leave or take the solar panels you have invested in is a decision that requires some serious decision-making. Though the choice may be difficult, make sure you make that call before putting your home on the market.
In this day and age, living a green lifestyle is a high priority for many people. Having a home on the market with solar panels is a huge selling point. The solar system will draw in many potential buyers and you can even raise the asking price of your home just because of the system. As we mentioned, make the decision to leave the panels behind before putting your home on the market. If your home is sold, and then you decide you want to take the panels with you; sorry. At that point, they are considered a fixture of the home and they are no longer yours.
If you decide to take your solar system with you to your new house, take these factors into consideration.
- Location: If you are moving locally, contact the company that originally installed your solar panels. You can ask them to remove and re-install at your new location to ensure that your warranty is not voided.
- Rules/Regulations: Check with the electric company in your new area about their regulations on solar systems. You need to know how it may effect feed-in tariffs or tax incentives, and how you can connect your solar system to the grid. If you are moving into an HOA, they may have their own regulations on solar systems as well. You will also need to double check the local building codes to make sure you wouldn’t be breaking any building codes and to find out if any permits are necessary.
- Sun vs Shade: The amount of sunlight in your new location will determine how effective the solar panels would be. If there are a lot of trees around your new property, the shade will affect how much energy your panels are generating. Also, if you are moving to an area that sees less sunlight throughout the year, or has more rainy or snowy climate, you may want to consider leaving them behind.
- Potential Damage: Removing solar panels is a very involved process. It is not a job that anyone can do, as it requires a lot of skill and experience. There is the possibility that your solar panels and equipment may be damaged during the removal/relocation process. Not only that, but it will leave damage to your roof as well. Where the system was anchored to the roof, there will be small holes in the roofing material. In addition, the areas on the roof that were covered with the panels will be a different color than the exposed roof, due to natural fading from the sunlight. These issues will have to be made clear up front to any potential buyers and it may affect the selling price.
Comparing Solar Systems on your Own
Once you have made the decision to go solar, you need to choose a company. Purchasing a solar system is like any other major investment; you don’t just want to choose the first option that comes along. It is recommended that you meet with and compare at least 3-4 different solar companies before making a decision on who to buy from. Some of these compressions you can do online, such as customer reviews, but there is more to consider than just that.
There are over 100 different solar panel brands on the market these days, and each brand has multiple models. Each panel varies and has specific sizes, designs, efficiency, durability, and warranties. Each of these combines to impact the quality of your solar panel. While this sounds overwhelming, don’t stress. Each solar company should provide you with multiple quotes with several different models. They should know the ins and outs of each model and how it will affect the efficiency of your home’s system, therefore helping you to determine which is the right fit.
Remember, the solar panels aren’t the only part of this system. The inverters matter as well. Inverters come in three different models and are made by multiple manufacturers. The inverter you choose is dependent on the specifics of your property. Most solar installers have certain inverters they prefer, and may not give you the option to choose. But if you compare multiple companies’ quotes you may notice a difference in price.
It may not seem like it, but there are different ways that solar systems can be arranged on your roof. Each company may configure the panels a little differently. This does, in fact, impact the effectiveness of your solar energy. Different layouts can also look different from the ground, affect the aesthetics of your home. Take time to compare the layout designs from different solar companies. Ask your installers about any differences you see and what their reasoning is. You have to be comfortable with how much energy your system will generate as well as how it will look from the ground. Once you choose to move forward and installation starts, it is very hard to change the design.
Warranties and Loans
Different solar companies provide different warranties on your system. Make sure you are getting the warranties you want, and are told up front of anything you may have to cover on your own. The same goes for loans if you choose to purchase in that way. There may be several different loan options offered by the companies, so you will need to compare and see which option is the best for you financially.
Questions to ask a Solar Company
- As you go through the process to find the right solar company, you should meet with several installers to talk about your options. Here are some essential questions you should ask your potential solar company to ensure they meet all your needs for the project.
- How long have you been in business and how many installations have you completed?
Experience matters with solar because every house is unique, making every job different. A solid track record along with many years in business will be much more reassuring than the newest company in town. Those that have been around and have done many successful jobs will have a better sense of what works and what doesn’t for your home.
- What do your customers say about you?
Reviews say a lot about a company’s performance. Look online at reviews of different solar companies to get a sense of how they operate with their customers. If you want to take it one step further, ask the company for some customer contacts. A reputable company should have no problem with this, and you will be able to talk to the customers themselves about their experience.
- Do you sub-contract any part of the job?
One way that solar companies can guarantee a quality job is by having their own team of electricians and installers. You want someone who knows the ins and outs of the installation process, not someone who does solar part-time, roofing at other times, etc. In addition, if anything happens during the installation process, it’s not a guessing game on who takes the blame.
- What warranties do you offer?
There are actually three different kinds of warranties that solar companies can offer. Performance, Product, and Service. There may be one, two, or all three of these offered depending on the company. Performance warranties is a guarantee of how much solar energy your system is rated to generate after a certain number of years in operation. Product warranties cover the physical components of your solar system. This includes the mounting elements and inverter(s) along with the panels themselves. Service warranties are just as the name suggests. With this warranty, service calls to assess potential issues along with the cost of labor and shipping involved with repairs or replacements are all covered.
- How long will the solar panels last?
Due to the fact that this is a major home investment for many homeowners, you want to be sure that your system is built to last. You need to ensure the company you choose has a proven track record of success over a number of years. The performance of their previously installed systems is a true sign of the quality and durability of your own.
- Do I contact you if I move in a few years?
Different companies will vary on this topic, and it will also vary depending on if you choose to leave or take your solar system. If you are leaving your solar panels with the house, you need to find out how to transfer the warranty to the new buyer. If you want to take them with you, find out if the company covers any of the cost of the removal/reinstallation process.
- Which paperwork will you be submitting and what will I need to take care of?
There are various different forms and documents that are typically involved with going solar. These include applying for building permits and applying for local, state, and federal incentives. These permits are specific to where you live, so your installer should know what is required. In addition to these permits and incentives, if you are part of an HOA, you may need prior approval from them as well before you can go solar. In most cases, the solar company will take care of all of them for you, but it is better to know up front if there is anything you are responsible for.
- What kind of solar system do you have on your own roof?
Think about it. Would you really want to buy solar from someone who doesn’t even have it on their own home? That would be a pretty big red flag. Anyone working for a solar company should know their product inside and out. They will know of the benefits and should have a system of their own.
Don’t be afraid to ask questions! It is the only way to ensure you are making the right decision. The decision to go solar is a major home investment and something that takes a lot of consideration. Each house is different, each company and each family is different, so you want to make sure your system will fit all of your needs perfectly. Though it is a big step and a big investment, the increasing popularity over the last decade leads us to believe that solar will not be going anywhere anytime soon. So, is it time for you to go solar?