Not printed material: video showing solar panels getting installed on the White House. To see this video, visit www.solarchampions.us.
Hello! Welcome to SolarChampions.us. This page is dedicated toward discussing the details of anything related to using solar panels, including pros, cons, risks, benefits, pitfalls, scams, and viable financial solutions.
Unlike other web sites which focus only on the benefits provided by solar panels, get you excited, causing you to buy on impulse and glossing over the details, SolarChampions discuss the details so that you have all the information to make decision that is right for you and be able to avoid unnecessary risks, pitfalls, and scams. Because of this, this page is quite long, and you may not have enough time to read and understand all the factors involved, please continue, bookmark this page now, and the result is quite rewarding. You’ll save money, reduce impact on future generations, help the economy growth, and avoid unnecessary risks and pitfalls.
As a matter of fact, this single page web site is more like a mini e-book. It will probably take you several days to read it all. I’ve tried to make this shorter but that is quite difficult for me because I do not have enough time, resources, and do not want to leave out details. The benefit of reading this long e-book is that when you reach the end, you have all the information, and you don’t need to read another article or worry if you miss something.
To help you read this e-book faster, I've used a text-to-speech technology to read this page out loud and use a sound recording software to record the audio. You can play this recording using the Play Audio Recording button below. The audio recording is about 2 hours and 55 minutes, so you may want to put on your earphones, lay down, close your eyes, relax, and listen. You can pause the audio recording and resume later if needed.
You may also want to print this page, staple the pages together and read it offline. This will take about 64 pages (or 32 sheets if your printer can print on both side). By printing it, you’ll be able to flip the pages backward and forward much easier. Don’t worry much about the number of pages. If you do decide to use solar panels, you will reduce the impact on the environment much more than 64 pages, and if you decide not to use solar panels, these 64 pages may have save you from the pitfalls, and scams.
Before we dive in, allow me to take a moment to talk about myself, my goal with SolarChampions, and its business model. I consider myself as an environmentalist. I am conscious about the impact that we have on this planet and future generations. My family recycle as much as we can.
Like many people, I learned about solar panels years ago in my high school science class, and I had long forgotten about them. Also like many other people, I constantly seek out business ideas (environmental related or not), and one day, during my regular after-lunch walk, I asked myself "what if we can capture sunlight during day time, and use it during night time or do some work with it..."
This question reminded me about solar panels and caused me to wonder why solar panels aren’t being widely used by households. I did research, and it turns out that using solar panels is among the best way to produce the electricity that we need, save some money, and to cut down our impact on this planet and future generations.
As I started doing my research, I noticed that solar panels are installed on some roofs (they are becoming more popular), and I also realize that some people, including myself, are still in the dark (know nothing about solar panels), and that there are some pitfalls or risks associated with using solar panels that people should know about.
As an environmentalist, my goal for SolarChampions is to reduce our impact on the environment by inspiring you to use solar panels, and do so in such a way that you know all the pitfalls, risks, and have all the information that you need to make the right decision considering your current financial circumstance.
Getting solar panels installed requires inspection, and approval from various parties (the electricity company, the local city or county fire department and / or building inspection unit). And to be eligible for some rebates or government incentives, solar panels must be installed by professional licensed installer. This process can be frustrating. Hiring a reliable local installer is essential for making your solar installation successful and less frustrating. And this is an integral part of my goal for SolarChampions.
SolarChampions pre-screen installers for you free of charge. I have spent many months researching solar panels, and organizing all the information into this one page, but in order for me to be able to inspire as many people as I possibly can to use solar panels to reduce the impact on the environment, I still have to a lot of work to do, the actual hard work of spreading the words, or getting this page / information to as many people as I possibly can. In order for me to do this, without putting my family on the street, I do receive a small referral fee from the installers that I refer you to.
The installers do not charge you a higher price if referred through SolarChampions. This fee is part of their marketing cost / budget, and they charge you the same price regardless of whether you are referred to them through SolarChampions or not. Some installers pay a larger referal fee, but this is not the basis for referring this installer over another installer. Referring a lousy installer with a higher referal fee will do more damage than good.
Lousy installers can cause electrical fire, burn down your house, damage your roof, and that is not a good way to do business or to set example to inspire people to use solar panels to cut down the impact on the environment. Rest assured that the installers that I refer you to are reliable local installers. If you have any question, feel free to use the contact button above and I will reply as soon as I can.
Why are people spending money to install solar panels? What are the risks and benefits?
Not printed material: Various images of solar panels being used by schools, businesses, cities, and homeowners not printed. See them on www.solarchampions.us.
As you can see from the video atop, and the images above, solar has the right support from the government, and is becoming more popular. More and more people, and businesses are starting to spend their money to install solar panels (also known as PhotoVoltaic or PV system) on their roof so that they can save money on their electricity bill, and to protect the environment.
Solar panels produce electricity. If you have to work under the sun for an hour, you feel really warm or hot. This is because sunlight contains a lot of packets of energy. Solar panels harvest these packets of energy from sunlight to produce electricity. When sunlight strike the surface of your solar panels, it heat up the electrons in your solar panels, cause them to get excited and jump around. Your solar panels contains of charged plates. These charged plates are connected via wires, allowing these excited electrons to travel in a controlled and usable way. The more electricity that your solar panels produce, the less you have to buy from the utility company, thus save you money.
Beside saving money, people use solar panels to reduce their impact on the environment and future generations. Traditionally, electricity is produced by burning coal, oil, or natural gas, which release carbon dioxide and other toxic chemicals into the air, causing global warming and health issues. The process of manufacturing solar panels does produce some carbon dioxide but much less compared to other methods for producing electricity.
Once installed, PV systems do not produce any carbon dioxide. PV systems are expected to last for a very long time, up to 25 years or more. It does not require raw materials like oil, coal, or natural gas to be constantly extracted, refined, and safely transported to the power plant. With PV systems, the energy is generated near the point of use, and therefore does not lose energy compared with traditional long distance transmission.
We will now focus more on the aspect of saving money, cost, etc. We will discuss various risks, and why using solar panels is the best method for producing electricity further below.
How much can I save? How much does it cost? How can I determine the appropriate size for my system?
This depends on:
- how much electricity you currently use
- how much you want to save (how much electricity you want to be provided by your solar panels)
- and how much you are willing and can afford to spend
While sunlight is free, these solar panels are not. The good news is that they are within the affordable range, and there are several financing options available.
You probably have heard on TV or other online channels that you can save 15% or 20% off your electricity bill, with no upfront cost using a solar lease or a PPA (Power Purchase Agreement). This is perhaps too good to be true. As it turns out, there are some strings attached to these solar lease programs. For now, we will cover the option of paying with cash first, and then we will cover these leasing programs in more details, as well as other financing options.
Prior to buying solar panels, my family pays about $80 per month (or $960 per year) for electricity, and being an environmentalist, I want all of the electricity that my family use to come from my solar panels. Based on the information in the previous electricity bills, I decided to purchase a PV system with $14,700 (original price, including labor and permit cost). Taken the current 30% federal tax incentive into consideration, the net price is $10,289, which seems affordable, not cheap, but affordable.
I chose to take a loan to pay for these panels. However, here, for simplicity, assume that I pay all cash upfront for these panels (as though I have enough cash in the bank), and because these panels generate enough electricity for my family, I save $960 per year. This means it will take me roughly 11 years ( $10,289 / $960 per year = 10.7 year ), to recuperate this investment (this is also known as the payback period). In other words, these panels pay for themselves in approximately 11 years. Because I chose to take a loan to pay for these panels, the actual payback period would be longer.
With this option (paying all cash upfront), depending on your point of view, you may say that for the first 11 years, I do not save any money, or you may say that I save $960 per year because I already paid for the system in full. Anyway, solar panels are typically warrantied to last 25 years, with life expectancy between 30 and 40 years. This means, my solar panels will produce free electricity for at least another 15 years, saving me approximately $14400 ($960 per year * 15 year = $14400) over the life of the system, assuming that the electricity rate does not increase or decrease.
If your family consumes more electricity than my family, you may want to purchase a larger PV system, which will cost more. I’ve seen systems priced between $30,000 and $40,000 as well, but you do not have to pay all cash upfront, or spend more than you are currently spending. There are several creative loan programs available such that the money you pay monthly on these loan programs is less than what you currently pay for electricity, so you end up saving money on a monthly basis. The money that you pay for these panels are the money that you normally are already spending to pay for the monthly electricity anyway.
Depending on your financial circumstance, saving $80 per month or $960 per year from electricity bill may not seem to be significant. However, this equates to reducing your carbon footprint by 8106 pounds of carbon dioxide every year to protect the environment may be a very important thing to do depending on your perspective. I am concerned about global warming and air pollution, so I would like for you to read the rest of this page, understand the risks, and buy solar panels if you can.
Depending on where you live (especially in hot climate), and how much you typically spend for electricity, your saving can be significantly more. Let us now talk about how to determine the appropriate size for the system. For that, we need talk about a technical term (kilowatt-hour), and how utility companies charge you for your usage.
Electricity is measured using kilowatt-hour (typically abbreviated as kwh). It is a unit of measurement. As a consumer, you may not need to care what a kilowatt is or what a kilowatt-hour is, but when you look at your utility bill, your electricity is measured using kilowatt-hour, and you are charged per kilowatt-hour.
Some utility companies charge their customers using a tiered-based rate plan. My utility company is PG&E, and their tier-based rate plan has four different tiers. Each tier is allotted a certain amount of electricity. Each month, you begin using electricity from tier 1, which has the lowest rate. Average consumers use all of their tier 1 allotment in about 15 or 20 days. Tier 2 has about one third the allotment of tier 1, and the rate is slightly more expensive (about +2 cents more per kilowatt-hour). If your tier 1 lasts about 15 or 20 days, your tier 2 could last 5 or 6 days. Tier 3 rate increases dramatically (+9 cents more per kilowatt-hour). Customers who use tier 3 are consuming significant amount of electricity compared to the average consumer. If you are using tier 4, you are using more than twice your tier 1 allotment, and the rate increases by an additional 6 cents per kilowatt-hour.
Another common rate plan is the time-of-use rate plan. Companies use most of their electricity during the day when employees are at work. Families also consume electricity most from noon to 5pm (peak time period) when the sun is shining, and it is hot (your air conditioner is consuming this electricity). During this time period, the demand for electricity is high, and utilities company has to either operate more power plants or buy more electricity from other source to meet this demand, and therefore have to charge you a higher rate. During non-peak time, they charge you a lower rate. Rates are lowest in the morning, late evening and weekends. Time-of-use rate plan works best for you if you can shift your usage. For example, consider using your dishwashers, clothes washers, dryers, etc in the morning, or evening (after 8pm) when the rate is low.
When we talk about solar panels, the capacity of the system is also measured using kilowatt-hour. For example, a 3.6 kwh system means that it is capable of producing approximately 3.6kw of electricity within one hour under the ideal laboratory condition. For solar panels to work, they must be installed at a location where there is a lot of sunshine for most of the day. Look at your your backyard, front yard, your roof or even your walls to see if there is a reasonable amount of space where sunlight shine for the majority amount of time throughout the day. If there is such a space (most likely is, your roof), then you may be able to use solar panels. The performance of the system also varies depending on other factors such as temperature, and shade. We will talk more about this later on.
There are two methods for determining the size for your system. The first approach is quick and easy. If you already know how much you spend on average per month for electricity, you can determine the approximate size for your system using this chart:
- A 1.68 kw system can provide approximately 60 to 80 percent of your electricity consumption if your electricity bills are between $50 and $99 on average per month.
- A 3.36 kw system can provide approximately 60 to 80 percent of your electricity consumption if your electricity bills are between $100 and $149 on average per month.
- A 5.04 kw system can provide approximately 60 to 80 percent of your electricity consumption if your electricity bills are between $150 and $199 on average per month.
- A 6.72 kw system can provide approximately 60 to 80 percent of your electricity consumption if your electricity bills are between $200 and $249 on average per month.
- A 8.40 kw system can provide approximately 60 to 80 percent of your electricity consumption if your electricity bills are between $250 and $299 on average per month.
The second approach takes a bit of work but may give you a clearer picture. Gather your previous electricity bills for the last few years. If you do not keep your previous electricity bills around, you can contact your electricity company and ask them how you can download your previous billing statements.
If you have never looked at your electricity bills in detail, it is a bit hard to understand it, but not too hard. It just take a bit of time and you should be able to figure out all the information. Your electricity bill may not use the term "tier 1" or "tier 2" as I mentioned here. On my electricity bills, PG&E uses the term "Baseline Usage", "101-130% of Baseline", "131-200% of Baseline", etc. Those are basically "tier 1", "tier 2", and "tier 3".
Now, extract information from those electricity bills and put them into a spreadsheet like this:
It may be a weekend project (or two) to dig up the previous electricity bills, and put the information into the above format, but you can do it. On your electricity bills, sometimes, the charge for electricity is broken into two date ranges, with different rates. You may have add those numbers together, and do some math. The online math calculator ( http://www.mathpapa.com/algebra-calculator.html ) is really helpful because it allows you to enter expression such as: 24.57 * 0.14602 + 84.24 * 0.15040 and it allow you to easily copy the result so that you can paste the result into your spreadsheet.
The above spreadsheet show that my family consume about 503 kilowatt-hour per month, or 16.77 kilowatt-hour per day (503 divided by 30 = 16.77). To determine the appropriate size for my system, I divide this number by the number of hours that the sun shine. At my location, I can expect approximately 5 hours of sunshine. So, I take my daily consumption and divide it by 5, which lead me to 3.354 kilowatt-hour.
The size of the system, in turn, determine the cost of the system, which varies for different locations, because local governments and utilities have different fees and processes for inspecting and approving your solar panel installation.
To sum it up: Look at your previous electricity bills, decide on how much you want to save (how much electricity you want to be provided by your solar panels in term of kilowatt-hour per month). Divide that by 30 to determine the daily value, and divide that by the number of hours of sunlight that your location receive. This is the size of your solar panels, and experienced local installers can provide you with the price that they charge. I would be happy to put you in touch with experienced reliable installers near you.
If you can’t afford to buy a system big enough so that it provides all of your electricity consumption, you can scale back. Solar panels are modular. You can start out with a small system, and add more panels later on. However, perhaps it is best to install a system of the right size from the start because each time that the installer comes to your home to add more panels, the installer will have to charge you for their time, service, and the re-inspection / re-permit fees.
Do I have to spend money in order to save money?
Yes and no. You do not have to spend more than you are currently spending on electricity in order to save money. As mentioned, there are solar lease programs and PPAs (Power Purchase Agreement) that promise to save you 15% or 20% off your electricity bill, with no upfront cost, but there are some strings attached to those programs. There are also solar loan programs that allow you to achieve the same result. The same money that you currently pend to pay for electricity is used to finance your PV system. We will talk more about different financing options further on below.
Can I use solar panels if I am not a homeowner?
Yes, you can. Please read this entire page. Pay attention to the OBR program below.
Can I use solar panels if I have a homeowner association agreement?
Most likely yes. See below for more details.
How do solar panels really work? What is net-metering?
When we consider to install a PV system, we need to make a few decisions. One such decision is whether or not the PV system will be connected to the electric grid. Some people prefer not to connect their PV system to the grid. They prefer to live completely off the grid (grow their own food and produce their own energy) for different reasons (health, leisure, financial, self-reliant, independence). That is a matter of choice. Other people prefer to have their PV system connected to the grid. I prefer to have my PV system connected to the grid for reliability and economical reason. Additionally, if you want to receive government incentives (let the government help you pay for your system), your system must be connected to the grid.
There are two kinds of electrical current: direct current (DC), and alternating current (AC). You do not need to worry about the technical differences between DC and AC, but know that the electrical current that power your home is AC. PV systems, without an inverter, produce DC current. To make it works for your home, PV systems are connected to an inverter, a device that takes DC as input and convert it into AC output.
PV systems, by their very nature, only produce electricity when there is sunlight. They do not produce electricity at night and during rainy days (yes, those fews days when the sun doesn’t shine at all or shine for very little time). If you prefer to live completely off the grid, you will need to buy a bank of batteries which is bulky, expensive, and require some maintenance. When the sun shines, your PV system produce electricity for your usage, and the extra electricity is stored in this bank of batteries. At night, or during rainy days, your electrical usage is drawn from this bank of batteries. When the sun shines again, your PV system will again generate electricity and recharge your batteries.
If you want to live completely off-grid, you will need to calculate your electrical usage to appropriately determine the number of batteries you need to buy. If you only have enough batteries for two days, but if the sun doesn’t shine for three days, you may not have power on the third day. You may have to change your usage pattern (use electricity only when you absolutely need to use it) during rainy days so that you have electricity when you need it.
With an off-grid system, you need to have sufficient space for those batteries. If not, an off-grid system may not be ideal for you. You will need to replace those batteries from time to time. If you do not know how to handle batteries safely, an off-grid system may not be ideal for you.
With a grid-connected system, the extra electricity that your system produce during the day is feed back into the grid, and your utility company keep track of this. At night, your electricity usage is drawn from the grid, and your utility company subtract this from the amount that your system produce during the day. At the end of the month, if you use more than your system produced, your utility company will bill you for the difference. If you use less than the amount that your system produced, the extra credits is rolled over to the next month, and at the end of the year, if you have unused credits, your utility company will send you a check (do not expect a large check though).
Most utility companies made their money by buying electricity from coal-fired power plants or other type of power plants at wholesale rate and sell it back to consumer at a marked up price (retail rate). The fact that your PV system produce electricity for you means that your utility company now make less profit selling electricity to you. Utility companies are not happy about this.
However, they keep track of the electricity that your system produce, bill you for the difference, send you the check for difference, because most states recognize that global warming is indeed happening, and the need to move away from carbon-emitting power plants to cleaner source of energy, and therefore have policies that mandate utility companies to do this. These policies are known as net-metering policies.
Some utility companies recognize that solar panels provide clean energy and are working with the solar industry and legislators to come up with solutions that are sustainable for all. Nonetheless, there is certainly contention / debate going on between the solar industry, utility companies, and legislators.
Some states do not have net-metering policy, and in states that do have net-metering, utility companies may implement net-metering policy differently.
In most states that have net-metering policy, to be eligible for net-metering, your PV system must produce 10kw or less, and in other states that have net-metering policy, to be eligible for net-metering, you system can produce more than 10 kilowatts. This number varies between different states, and even between different utility companies, or same utility company but different region.
Net-metering policies vary between states, cities, and utility companies. Differences in net-metering can be quite confusing. Luckily, installers will help us through the process. The typical net-metering arrangements that you likely encounter are:
- Net purchase and sale: Under this arrangement, two uni-directional meters are installed: one records electricity drawn from the grid, and the other records excess electricity generated and fed back into the grid.
- Net metering: Under this arrangement, a single, bi-directional meter is used to record both electricity you draw from the grid and the excess electricity your system feeds back into the grid. The meter spins forward as you draw electricity, and it spins backward as the excess is fed into the grid.
With net-metering, the end-of-year is based on the date that the system was installed. On this day, depending on the utility company or the state the you live in, you may receive a small check, or your extra credit is forfeited. Either way, you don’t really have a choice. Your credit is not rolled over from year to year, unless you introduce a new law to make that happen.
Even if it is forfeited, it is not really wasted. Even though the utility company is profiting from it, that electricity is clean, and someone is using that clean electricity instead of the dirty electricity, and therefore it still benefits the environment.
What is REC / SREC / TREC?
Beside net-metering, most states also have policies that mandate utility companies to generate or buy certain amount of electricity from renewable or clean energy source. If utility companies fail to meet this requirement, they are charged with hefty financial penalty. These policies are known as Renewable Portfolio Standards (RPS). As per these policies, if a utility company generates 1000 kilowatt-hours (or 1 megawatt-hour) of electricity from a renewable energy source, the utility company earn one Renewable Energy Certificate (REC). The RECs is a way to show that a utility company is meeting its obligation.
If the utility company fail to generate enough RECs, it can purchase RECs from other entities (you and other homeowners with PV systems). RECs are traded on open exchange markets where supply and demand determine price. REC price varies between states.
In some states, the RECs generated from a solar energy source (such as your PV system), also known as Solar Renewable Energy Certificates (or SRECs), are treated differently from RECs generated from other renewable energy sources. SRECs are usually priced higher than RECs from other renewable energy sources.
If you live in New Jersey, SREC price is currently around $200. If you live in Massachusetts, SREC price is currently between $300 and $400. California currently does not seem to have a market for RECs. A 10 kilowatt PV system typically generate around 12 RECs per year. Depending on the capacity of your PV system, and where you live, you may be able to earn $1000 per year or more from your RECs. To be able to earn RECs, your PV system must be connected to the grid.
Tradeable Renewable Energy Certificate (TREC) is basically the same as REC or SREC.
Is there any government incentive programs to help me pay for my solar panels?
Yes. The federal tax incentive program reduces the total cost of the whole system by 30%. Depending on where you live, there may be incentive programs at the state, county, city, and utility company level. You can find these incentive programs using the Database of State Incentives for Renewables & Efficiency (DSIRE). Experienced local installers should be able to help.
Why do governments provide these incentive programs?
You may say that this is politics, and that is certainly correct, but we, as voters, are responsible for this, whether it is a good thing or a bad thing. Put that aside. Governments typically fund a technology development for military uses, economic development, and possibly for other reasons.
Solar panels were used to power remote satellites, and equipments. In 1978, Congress pass the Energy Tax Act in response to the energy crises of the 1970’s - the Arab Oil Embargo and the taking of U.S. hostages in Iran. The act encourage homeowners to invest in energy conservation such as solar and wind technologies through tax credits.
These incentive programs also spur local economic development. Installing solar panels means jobs for manufacturers, and installers. Every person has a responsibility toward the economic development of the community that they live in. There are good or practical reasons for outsourcing as well, but it should be done with careful considerations. It’s is true that most manufacturing jobs were outsourced, but with the advancement in the solar panel manufacturing process, it is highly automated, no longer labor-intensive, and it is possible to buy locally manufactured solar panels at a very competitive price with high quality. By its own nature, solar installation jobs must be done on-site and cannot be outsourced.
To sum it up, the government provide these incentive programs to spur local economic development, fight climate change, and be less dependent on foreign energy sources.
What is covered by the federal tax credit?
The federal tax credit reduces the total cost of ownership by 30%. If you buy an outdoor structure (pergola, gazebo, or whatever) so that you can install your PV system on top of it, you can claim the federal tax credit on the outdoor structure as well. The law does not mandate that you must install solar onto your roof in order to qualify for the federal tax credit. Any cost incurred in order to use solar also qualify for the tax credit. Depending your believes and financial condition, you may choose to claim the federal tax credit on this outdoor structure.
When does the federal tax credit expire?
The 30% federal tax credit had been recently extended until December 31st, 2019, after which it will fall to 26 percent in 2020, 22 percent in 2021 and 10 percent in 2022.
Should I take advantage of government incentives?
This may sound like a no-brainer, but there are some reasons for why some people talk bad about accepting government incentives. They says that, with the current deficit and record spending, the government is borrowing money from foreign country in order to provide these incentives.
People also mentioned a bit of unfairness with the federal tax incentive program because not everyone can claim the tax incentive. For example, if you are retired, or otherwise do not have to pay tax, you cannot claim the tax incentive. Low income families may not be able to afford to buy solar, or finance it with a loan, and therefore cannot take advantage of the tax incentive.
But, talks are just talks. Whether people actually walk the talk may be a different story. Nowadays, I do not believe that people are so poor that they cannot afford solar. In California, if you qualify as low income family, you can also use solar to reduce your electricity bill. Just go online and search for "California low income solar". The cost of solar had come down significantly over the years, and there are interesting loan programs that people can use to finance their PV system (see below). In other words, I believe that everyone can and should explore various options to pay for their solar panels and take advantage of these incentive programs.
At the national level, I look at the incentive program as an investment decision. Sometimes we will have to take a loan, make an investment, to get ahead. By installing solar, I am creating green jobs and supporting local economy.
Should my PV system be connected to the electric grid?
To be eligible for government or utility incentives, and to be able to take full advantage of your PV system, your PV system must be connected to the grid.
Will my solar panels produce electricity during a power outage?
Most grid-tied systems do not produce electricity during power outage. This is for the safety of the people that have to work to restore power. If having power during a power outage is important to you, you will have to buy additional equipment.Nowadays, power outages are relatively rare, but if you need to have electricity during a power outage, talk to your installer about this.
There are also standalone products that can act as a battery or a source of electricity during a power outage. These products are not connected to your house’s electrical wiring in any way. To use these products, instead of plugging your lights or appliances into the wall outlet, you plug your lights or appliances directly to these products.
Is it possible to have zero-dollar electricity bills? How much electricity can a PV system produce?
It is possible to have zero dollar electricity bill depending on where you live. Nowadays, some people no longer have to pay for electricity or natural gas. Their solar panels generate more electricity than they need. They have no bill for electricity or natural gas because they either have large solar panels (costly), or the amount of electricity or natural gas they consume is not too much that their small or medium size solar panels can produce more than they consume.
This also depends on how much you are willing to spend, the amount of sunlight that your system can receive, and whether your state has net-metering policy or not. In some states, it maybe possible to have zero dollar electricity bill, and in other states, you may have to pay minimum monthly fee. The amount varies between states.
What are available financing options?
- Pay it in full upfront
- Leasing / PPA
Take a loan
- mortgage refinancing
- regular loan
- solar loan
- energy retrofit / home improvement loan
If your relatives have money, tell them that you are thinking about buying solar panels so that you can save some money and save the environment, and ask to see if they can lend you enough money to buy the system and that you would pay them back as soon as you can.
What is a solar lease and what is a PPA?
A solar lease is a legal contract in which you leases (rent) the PV system from a provider for the specified period of time, at the specified rate or monthly amount. With most lease agreements, you do not have to pay any upfront costs. With a lease, you pay just a flat monthly fee, which is about 10 to 25 percent less than your current monthly electricity bill, and therefore you save 10 to 25 percents from your electricity bill. You see this saving on the very first month that the system is installed.
With a Power Purchase Agreement, you agree to buy certain amount of electricity from the solar provider for certain number of years at a certain rate. It is very much the same as a leasing agreement. The technical differences between paying for the electricity (PPA) and renting a piece of equipment (leasing) that happens to produce free electricity does not matter much. In both cases, the solar provider own the PV system, which is installed on your roof. With PPA and leasing, you are signing a contract for a long time (typically 15 years or more). At the end of the contract, you have the option to:
- renew the agreement (sign another contract)
- buy the system
- or have it removed
Some PPAs and leases require a down payment (upto $1000 or more), and some do not require a down payment. Solar leases and PPAs are only available in certain areas.
One potential difference between a PPA and leasing is when the system malfunction. With a PPA you would not pay the company anything because the system did not produce anything, you would just get your electricity from your normal utility company during that time period. However, with a lease you are still required to pay your monthly lease payment whether the system is functioning or not while you would get a bill from your normal utility company for the electricity while the system is not functioning, potentially causing you a double payment. PPAs and leases are long term legal contracts. Not all PPAs are the same. Not all leasing agreements are the same. Make sure you read the fineprint and understand each and every terms in the contract before you sign it.
What are the advantages and disadvantages of solar leases and PPAs?
The advantages of solar leases and PPAs are: With most lease agreements or PPAs, you do not have to pay any upfront costs (no down payment). You pay just a flat monthly fee, which is about 10 to 25 percent less than your current monthly electricity bill, to lease the PV system, and therefore you can see immediate saving from the very first month that the system is installed.
The disadvantages of solar leases and PPAs are:
No incentives. You cannot claim or apply for any incentive. Since you don’t own the panels, but just pay for the electricity, the leasing company receives all of the incentives at the state, county, city, and utility level, plus the 30% federal tax credit and green tax credits (RECs).
The federal income tax credit is not for everyone. If the federal government does not withheld income tax from you, you cannot claim the federal income tax credit.
If the federal government withheld income tax from you, then there is no such thing as a $0 down solar lease or PPA. With solar leases and PPAs, there is a mandatory condition that you forfeit the 30% federal tax credit and any cash rebate to the solar lease or PPA company. The 30% federal tax credit and cash rebate is typically no small amount of money, and can easily exceed $10,000.00 on a moderate sized system. These incentives can significantly reduce the cost of ownership by as much as 50% or more.
If you lease, you give away these incentives to the leasing company. You cannot claim or apply for these incentives. The leasing company claims all of these incentives.
No SRECs. If you lease, you do not own the SRECs (Solar Renewable Energy Credits) generated by the PV system because you do not own the PV system, even though it is installed on your roof. If you live in states that the price for SRECs is high, such as New Jersey or Massachusetts, you are really giving all this money to the leasing company as well. You should really consider buying the PV system rather than leasing.
Your monthly lease payment may increase (read the agreement carefully). If it looks too good to be true, then you haven’t read the fine print. Solar lease salespeople often use the argument that electricity rate had been increasing at 5% every year, citing resource depletion, or other reasons. However, there are studies indicating that the price for electricity has not been increasing at this rate. It may be a mistake to assume energy prices will continue to go up at this rate over the next 20 years.
Better energy technology, such as renewables, should increase supply and reduce costs over time, and with advance in energy-efficient appliances, it is expected that the amount of energy that we’ll consume will somewhat decrease rather than increase. In some areas, the price for electricity had only been increasing at 2%.
Some leasing companies guarantee a fixed / locked-in rate without any rate increase. Other leasing companies will include an escalator clause that are set to increase rate on an annual basis, but the salesperson may still use the term locked-in more frequently than they should. Perhaps, they are not technically lying in some context, but what we understand may not be what they mean to say. Make sure you read the agreement carefully.
An annual lease payment (escalator) increase of 2.9% per year for 15 years is typical. Depend on where you live, and whether you know the price of electricity and the rate that it has been increasing or not over the years, 15 years down the road, you may end up paying a higher price for electricity with a lease as compared to just paying the utility company if the lease contain an escalator clause, and your utility doesn’t raise rate.
PPAs and leases may be treated as a lien on your property.
Problem if you need to sell your house quickly.
Solar leases and PPAs are long term legal contracts that are typically last between 15 or 20 years, and are not easily transferable if you need to sell your house quickly. A lease is a liability. There is no backing out. After you sign a lease, and the system is installed on your roof, you are locked in, and you cannot easily break the lease.
If you need to sell your home before the end of the lease, you can transfer the lease to the new owners if they qualify with excellent credit, or you can prepay the lease and add it to your home asking price.
"Qualifying" means a 700 or higher FICO score. In some cases, the home buyers qualify for a loan to buy your house, but their credit score is still not good enough for the solar leasing company to approve the transfer. If you plan the "prepay the lease and add it to your home asking price" route, think about it. If you need to sell your house quickly, chances are that you are already short on cash, and now you need to come up with enough cash to prepay the lease, and at this point, you are locked in with the terms and rates specified in the contract.
If you plan to move to a new house within a few years, you should not lease. You can take the lease with you, provided that the roof of your new home is not shaded and their system can be installed. You have to pay additional fees associated with the removal, transfer and reinstallation on the panels. But life can be full of surprises. Consider the situation that you have to sell your home and move into an apartment where you do not have the right to install their solar system.
Problem with selling your house.
You’ll probably have trouble selling your house in the future (even if you do not need to sell your house quickly) because most home buyers will not want to assume the lease payment on a used solar system with yesterday’s technology, especially since they would only be saving a fraction on their electric bill. Imagine trying to sell your home in the future with a 9 year old PV system on your roof while trying to convince your home buyer to assume the 11 remaining years on your solar lease.
Why would someone want to buy your home and assume your remaining payments on a used solar system, when they can buy a brand new solar system for less? With favorable economic condition (when low interest rate loans, and various incentives are available), home buyers would not want to buy a house with a lease if they can afford to buy a brand new PV system and can recover the cost in a few years.
Incorrect usage. If you sign a lease when you have a large family and then your family reduces in size (kids move out, or go to college), the monthly lease amount now exceed your electricity consumption because it was done with data when more people reside in the home. In other words, your electricity consumption is now reduced (less people living in the house, and using electricity), but you are still obligated to the amount specified in the lease at the time you signed it.
Inflated price. Because current tax law allow solar companies to use what is called a "fair market value" instead of the exact cost, solar leasing companies tend to inflate the price of the PV system so that you feel that leasing make more sense (and that they can get more money from the government incentives).
Solar leasing companies typically buy solar equipments in large quantities at cheaper price, store them until installation. They have to pay rent on the space that is used for storage. So on one hand, it is hard for them to determine the exact cost, and so the law allow them to use "fair market value", and they are using this loophole to make you feel that leasing make more sense, but it is really not true.
When providing a quote, the solar leasing/PPA companies will typically mark their system pricing up to nearly double what you can purchase a system for on the open market. The solar lease/PPA salesman will quote you this much higher pricing in an effort to convince you that solar is too expensive to buy and that you would be better served by a lease or PPA.
They are also using this inflated "fair market value" so that they can claim more money from the federal tax credit. The IRS is doing its investigation on this issue, and it is a hard legal battle on one hand, and on the other hand, the law allows the IRS to pay the leasing company base on its own "fair market value" rather than basing on the "fair market value" claimed by the leasing company.
I guess that the IRS will take the easy route (paying the solar company based on the IRS’s assessment of the fair market value) rather than a full legal battle. As a consumer, we can see for ourselves if this "inflated price" practice is really occurring by talking to both leasing and non-leasing companies.
You pay 3 times more than you should. When you consider the inflated price, the forfeiture of the 30% federal tax credit and the forfeiture of any available cash rebate and the 20 years worth of lease / PPA payments, and any annual escalator, you’ll find that you’ll end up paying up to three times what you would have paid if you purchased your system instead.
You pay for maintenance. Solar leasing salespeople often say that they handle all the maintenance. However, if you use good quality PV system, there is very little maintenance involved. It is in their best interest to use good quality equipment, and they have more experience with choosing good quality equipments, but using the information on this page, you can choose good quality equipments as well. You only need to wash your PV system once within a few months if you live in a dusty area. Solar panels last 25-30 years, some even longer. Inverters generally last for about 12-15 years. So, when they say that they will handle all the maintenance, you have to ask yourself "what maintenance?". Do you think that they will come to your house once every 3 months to wash and inspect the system? They typically install a monitoring component which notify them if something go wrong, but the monitoring component typically doesn’t cost much neither.
Considering that you are paying up to three times what you would have paid if you purchased your system instead, it is actually you who will be paying for any monitoring, maintenance/repairs and insurance, not the leasing company.
No tax deduction. Home owners that lease a solar system, not only forfeit the 30% federal tax credit which is worth thousands of dollars but they also cannot claim their solar lease payments as a tax deduction. Some (not all) solar loan programs allow homeowners to claim the loan payment as a tax deduction.
Hassle of having to deal with aggressive salespeople. Solar lease salespeople are aggressively trained as high-pressure salespeople. They are trained not to leave your home until they get your signature on their contract on the same day. This means you won’t have enough time to evaluate your options.
The leasing/PPA company’s inflated price is so high that their salesman knows full well that if you shop, they will lose. Solar lease/PPA salesmen are taught to get your signature on the very first visit to your home. Most solar lease/PPA salesmen undergo months of specialized training and are experts at overcoming just about any objection that you can imagine.
Their entire sales pitch centers on the simple premise that if a solar lease or PPA can lower your monthly electric bill without paying any money out of pocket, then you would not object to signing their contract.
They are trained not to discuss the amount of the 30% tax credit nor the amount of any cash rebate. They will never disclose the price of their system when it comes to calculating the tax credit. They will only tell you that you don’t have to concern yourself with the tax credit because they will apply the tax credit to the system so that your monthly cost is reduced. But with the inflated price, the long term contract with string attached, the escalator clause, you ought to question whether the monthly saving offer by a lease is worth it compared to other non-leasing options.
They are also trained never to discuss the option of a $0 down loan instead of a lease or PPA. You will never hear them mention that $0 down loans exists and offers tax deductible interest.
They are also trained to convince you that a solar system requires a lot of maintenance and repairs (an absolute myth), and that very few people qualify for the 30% tax credit or that it is difficult to apply for (another myth). It’s all about a lower payment with no money down. Simple, elegant, but financially deadly in the end for the average income tax paying consumer. You can take a chance and deal with them if you want and if you know that leasing is your only option.
You still do not own the panels at the end of the lease. With a lease or a PPA, at the end of the contract, after making 20 years worth of lease payments, you would have paid more to the leasing company than you would have paid to purchase the system, and you still do not own the system. The PV system will still belong to the leasing company.
After year 20, you’ll have to:
- give your solar system back to the leasing company (who would be responsible for damages that is done during the removal process)
- sign another agreement, or you’ll have to
- buy it from them at fair market value (determined by the solar company) if you want to keep it.
Before signing any contract, always demand to be shown, in writing, both the amount of the tax credit and any rebate that you're in essence providing as a down payment as well as the total system price. If your solar lease or PPA salesman refuses to provide this information, then it is in your best financial interest to ask the salesman to leave.
Always add the amount of the 30% federal tax credit and any cash rebate and the 20 years worth of lease payments and any annual payment escalator together to determine your actual cost of the lease or PPA when comparing to the cost of a purchase. Never, ever sign a solar lease or PPA without comparing your total cost of a lease to at least 3 separate non-leasing quotes.
What loan programs are available?
While leasing comes with a lot of disadvantages and is becoming less popular than it used to be, it did make solar more affordable and more popular. Solar leasing companies took the risk of financing the system (either directly or indirectly) instead of financing other investment opportunities. This contributed to the growth of the solar industry, and brought solar industry to the attention of the banking industry, and therefore more banks are willing to make loans available to finance solar systems.
Nowadays, if you do not have enough money to pay cash upfront for the solar panels, it is quite possible that you can achieve everything offered by a lease (the 10 to 20 percents saving with zero down payment) using a loan. Yes, you can get a zero down loan to pay for the solar panels, and achieve 10 to 25 percents saving on your electricity bills, using one of the following loan programs:
- PACE (Property Assess Clean Energy)
- OBR (On-Bill Repayment)
- FHA solar loan
We will talk more about these loan programs below, but do not forget the traditional options such as a regular bank loan, or mortgage refinancing, are still available, just as you need money for any other thing.
Should I go with a short term loan or a long term loan?
With any loan, it is best that you pay it off as soon as possible, which mean you should prefer short term loan instead of long term loan if you can afford the monthly payment of the short term loan. Long term loans are riskier, and more expensive (you end up paying more on interest), but allows you to have a lower monthly payment.
If you cannot make the monthly payment of a short term loan, ask for a longer term loan. The goal is to have low monthly payment so that in the case of adversary events, you are not stuck with high monthly payment that you can’t handle. If your monthly loan payment amount is less than your current electricity bill, chance are good that you will be able to afford the payment, unless you have really high electricity bills, in which case you are probably better of with a short term loan.
What is PACE and what is OBR?
PACE is a long term loan program designed to help homeowners finance clean and efficient energy upgrade. Unlike traditional loans or home mortgages, PACE is financed through city or county governments. In areas with PACE legislation in place, municipal governments offer a specific bond to banks or private investors and then loan the money to homeowners. And instead of issuing bond, the local government can also borrow money from banks at a lower interest rate than an individual can, and therefore the interest rate of a PACE loan is typically lower compared to the market rate.
To repay the loan, homeowner agrees to pay higher property tax bills for up to 20 years, though shorter periods may be chosen or required by the municipality.
Because it is a 20-year loan, a PACE loan allows property owners to begin saving on energy cost immediately while they are paying for their solar panels (the increase in your property tax is less than your monthly electricity bill). This means that property owners have net gains even with increased property tax.
OBR (On-Bill Repayment) is a program spearheaded by the Environmental Defense Fund (EDF). EDF has been building a coalition of environmental groups, contractors and financial institutions to help develop OBR platforms that will work for all. OBR is similar to PACE (it is also a long term loan program), but instead of repaying the loan through property tax bills, homeowners repay the loan over time using their existing utility bill. All OBR programs are designed so that customers save money starting on day one.
What are the advantages and disadvantages of PACE and OBR loans?
The advantages of using PACE or OBR are:
- No money down, and no upfront cost.
- No credit score requirement.
- Low fixed payment.
- Make payments with your property tax bill or existing utility bill.
- Interest is tax deductible (PACE, FHA loan).
- PACE solves the problem of "what happens when I sell my home?" The simple answer is that the PV system and whatever tax liability you have both go to the new owner of your home. The new owner takes over the remainder of the debt and the benefits of solar for their new home.
- The interest rate may be lower compared to the market rate because it is done through the local government.
- Contractor quality assurance and auditing. OBR programs verify that that the contractors have appropriate licenses and certifications. OBR programs also inspect and audit the quality of the work. This is not necessarily true for PACE.
- You’re entitled to all of the rebates at the state, county, city and utility level, and federal tax credit.
PACE and OBR are not the same. The disadvantages of PACE or OBR are:
- They are not available in all areas. Check with your installer.
- They are long term loans, around 15 or 20 years.
You should make sure that the increase in your property tax bill divided by the number of months that the payment is for is less than your current electric bill.
OBR programs are a bit more complicated than PACE. OBR programs are structure in different ways. With some OBR programs, the obligation to repay the loan is tied to the meter. With other OBR programs, the obligation to repay the loan is tied directly to you, and in case you need to move, you must repay the loan in full. OBR programs can also be structured as a PPA or lease. Before you sign or agree to anything, read the loan and the contract thoroughly.
Both PACE and OBR are long term loans. Therefore, they do share some disadvantages similar with leases and PPAs.
Even though they lower your monthly payment, you may still end up paying more on interest over the entire life of the loan.
During the life of this long term loan (15 or 20 years), adversary events can happen which may create extra hardship compared to not having this loan. If you need to sell your house before you completely pay off this loan, you are obligated to disclose and explain this to the homebuyers. You will need to tell the homebuyers about the increase in the property tax bills, and the remaining obligation.
This will deter some potential buyers if they cannot see the saving. If the home buyers have electricity bills that are higher than yours before you installed solar, they will be able to save money. If they have electricity bills that are lower than yours before you installed solar, they will most likely not be able to save money if the monthly loan payment amount is more than their monthly electricity bill.
If your PACE or OBR program is not yet paid in full, some homebuyers may not be willing to take over the remaining amount, particularly if the price of a brand new PV system at the time that you sell your house is cheaper than the remaining amount on the PACE or OBR program.
Under good real estate market condition, this may or may not be an issue, but under poor real estate market condition, you may have to subtract the remaining obligation from the asking price, or pay the remaining obligation and factor that into the asking price. For example, if your house, without the PV system, worth $600,000, and your PV system was priced at $30,000, you can price your house at $630,000 (houses with solar panels typically worth more), but because you still have $10,000 left on the OBR or PACE, you can price your house at $620,000 (make sure you explain this to the homebuyers), or you can pay the remaining $10,000 and price your house at $630,000.
Either way, you have to do some explanation. If you do not have any remaining obligation, then you are not obligated to tell the homebuyers anything. You can just talk about the PV system and the benefit that it is providing to you and why it justifies the higher price that you are asking for.
With PACE and most OBR programs, you are the owner of the solar panels, and therefore should be able to take full advantage of any government incentives, but make sure you read the contract carefully.
Why do I want a loan program with no prepayment penalty?
If the total price for your PV system is $30,000, and you decide to take a loan to pay for it, the loan amount would be $30,000, and at the end of the year, you will get $10,000 if you apply and qualify for the federal tax credit. You can use this money to pay down the loan, so make sure that the loan does not have any prepayment penalty (even if you use PACE or OBR).
Do I have to go with a loan program offered by the installer?
Installers typically work with banks, credit unions, or other financial institutions to offer loan programs. They may be able to give you a lower rate. However, you should also shop around, compare interest rates, and choose the best loan possible. Contact several banks, and talk to the people that handle your mortgage loan. Tell them that you need to borrow money to finance your solar panels. Ask them if they offer loan program for solar or energy retrofit. You should also check out solar loan programs offered by:
- Admirals Bank
Look for loans that has low interest rate, no down payment, and no prepayment penalty so that you can pay the remaining amount at anytime without any penalty.
If you find a loan program that works best for you, installers should not have any problem with it.
What are the advantages and disadvantages of owning the system?
The disadvantages of owning the system are:
The initial large upfront cost barrier. You have to pay the full system price first, and then apply for the federal tax credit, and other incentives afterward. You have to have enough cash to pay for the system upfront, or you have to have a stable financial situation where you can be comfortable with taking a loan from a bank to pay for the system.
You are responsible for the maintenance, which is little (see below).
The advantages of owning the system are:
It saves you money. PV systems are typically warrantied for 25 years, but are expected to last for 40 years. With various incentives available, homeowners typically recover the cost of the system within 10 years or less, and after that, the electricity that your panels produced is free for another 15 to 30 years.
The 30% federal tax credit and cash rebate is typically no small amount.
It adds value to your home. The homebuyers will be saving money from their power bills that the premium makes sense. One way to estimate your house’s resale premium is to calculate how much you have reduced your annual electric bill, and then multiply that by 20. If you’ve reduced your annual electric bill by $1,000, you can expect that your house will be able to sell for about $20,000 more than it would have without solar panels.
On average, installing PV system adds about $20,000 to the value of your home, an amount that exceeds the average cost of most residential solar installations. This means you not only be reducing or eliminating your electricity bill but also getting 100% of your money back when and if you sell the home.
You may be wondering if the increase in the value of your home will increase your property tax bill. Well, in most states, the increase in property value as the result of installing PV system is tax exempt, and thus does not increase your property tax bill.
What is the best financing option?
- Pay it in full upfront if you can, or borrow money from relatives if needed. With this option, you get to keep all the available incentives or rebates.
- Take a short term loan if you can afford the monthly payment. With this option, you get to keep all the available incentives or rebates.
- Use PACE, OBR, or refinance your mortgage. With this option, you should be able to keep all the available incentives or rebates but please read the contract carefully.
- Lease / PPA if you are not qualified for the federal tax credit. The federal income tax credit is not for everyone. If the federal government does not withheld income tax from you, you cannot claim the federal income tax credit. With this option, you are not qualified for any incentives or rebates.
In my case, before installing solar, my family spent about $80 per month on average, or $960 per year on electricity, and over the expected life of the system (25 years), this would amount to $24000 assuming that the rate for electricity, and the amount of electricity that my family use does not increase or decrease much. And because I paid $10,289 for my PV system, over the expected life of the system, I would have save $13711 ($24000 subtracted by $10289 = $13711). I am not an investment expert, but you can look at these numbers and compare that to the return on investment that you receive from your other investments, and if your other investments is not producing a high return on investment, you may want to liquidate those investments and buy solar.
NEED ONE OR SEVERAL CHARTS OR GRAPHS TO COMPARE THE ABOVE PAYMENT OPTIONS (PAY CASH, LEASE, SHORT TERM LOAN, LONG TERM LOAN, PACE, OBR). NEED TO SHOW TOTAL COST, SAVING, PAYBACK PERIOD OVER 25 YEARS.
What are the financial risks involved?
In case of an adversary event, if you do not have a PV system, you may be able to reduce your electricity bill by turning off your air conditioner (go elsewhere or to the mall to get cool), etc. However, if you purchased your PV system with a loan (PACE, OBR, or other), or if you lease, your total monthly expense will decrease (you lower your electricity bill), but your total monthly obligation will increase (you have to make the monthly payment on your PACE, OBR, loan, or lease). There is not much flexibility. Before you decide to buy or lease a PV system, you need to get quotes from a few installers, figure out the monthly payment and consider various risks:
- Would you be able to make the monthly total expense in case an adversary event happen?
- Are your kids getting into college? Would you be able to make the additional expenses associated with sending your kids to colleges? Will you need to buy them a used car so that they can get around between school, and work?
- Are you expecting a newborn baby? Will you be able to pay for expenses associated with a newborn baby (clothes, diapers, milk, etc)?
- Do you anticipate any other expenses?
Don’t commit to using solar if you are expecting near term expense. If you think that that you can not afford to use solar (even with leasing), then by all mean, do not use solar. But if you can afford to use solar, you should.
As more and more people start to use PV systems, and selling SRECs generated by their PV systems, the price for SRECs will come down to the point selling SRECs does not worth the time and effort, but for now, the price of SRECs are still very attractive depending on the states that you live in.
Selling SRECs generated by your PV system helps you recover the cost of buying the PV system. However, because utility companies can buy RECs from you and other homeowners, some homeowners feel that this is an excuse for utility companies from generating their own renewable energy, and therefore these homeowners will stop selling their SRECs after the PV system reach the payback period. The point is that the price for RECs will come down, and you should not rely on it as a source of stable income.
Will electricity cost be increasing or decreasing?
Before buying solar panels, another risk that you may want to consider is whether or not the rate (price) of electricity will increase or decrease. If the electricity rate will increase, buying solar panels now make sense because it guards against this price increase. However, if electricity price will decrease, buying solar panels may not make sense from the financial point of view.
If you look at your utility rate for the past few years, you may notice that your rate have been increasing. There are several reasons why this happened:
We are using more and more electricity each day to power our electronic gizmos. The Internet is very beneficial. It makes information and communication accessible world-wide. As the younger generations, and even the older generations, become more knowledgeable on how to use computers and mobile devices, more and more people are getting online. Not only your computers and mobile devices consume electricity, on the other side, more servers (computers) are required to keep these services available to the ever increasing amount of users.
Traditional way of producing electricity is by burning coal, natural gas, or oil. Companies had to spend significant amount of effort to find these resources, sometime successful and sometime not. Building a safe and reliable method for transporting these resource is also difficult and expensive. Some are also saying that these resources are getting depleted. I am not sure how true this is.
As it becomes more evident that global warming is taking place, governments and companies around the world are beginning to take action to reduce carbon dioxide emission. Government are creating regulation that restrict power companies in term of the carbon dioxide that they can emit. This forces power companies to invest in solar and wind technologies, and in turn, also forces power companies to increase your rate even that you do not use solar.
On the other hand, better energy technology, such as renewables, should increase supply and reduce costs over time, and with advance in energy-efficient appliances, it is expected that the amount of electricity that we’ll consume will somewhat decrease rather than increase.
There is no right or wrong answer for this question, and this depends on local laws and politics as well. While I cannot predict whether the price for electricity will increase or decrease, I would assume that price for electricity will continue to rise, perhaps not at the rate that solar leasing companies had been mentioning. Anyway, do not let this discussion alone stop you from using solar. I would rather use clean energy than dirty energy anytime.
What are different types of PV cells and what are their efficiency?
There are different types of PV cells:
Multi-junction: These cells contains multiple layers of different materials catering to absorb light at different spectrum. These cells are very efficient, expensive, and are not used in typical PV systems.
Concentrated: These cells are a bit larger compared to typical solar cell. Each cell contains a lense that focus light onto one or more solar cells inside. These cells are very efficient, expensive, and are not used in typical PV systems.
This technology is different from the Concentrated Solar Power (CSP) technology that use a vast array of large mirrors and lenses to build solar power plants.
Monocrystalline Silicon (Si): These panels are black, made from a single, very pure silicon crystall. Their efficiency is between 20 and 30%.
Polycrystalline Silicon (poly-Si): These panels are blue, made from multiple silicon crystalls which may contain some impurities. Like Monocrystalline, their efficiency is between 20 and 30%.
Thin-film: These cells are less efficient. Their efficiency is around 10 and 20%, The process of manufacturing thin-film solar cells involve printing or spraying different chemical compound onto the two side of a plastic or other materials.
This process is a lot simpler compared to the process that is used to produce monocrystalline and polycrystalline solar cells. Therefore, thin-film solar cells are cheaper compared to monocrystalline and polycrystalline solar cells. Life expectancy for thin-film solar cells are also typically shorter compared to polycrystalline and monocrystalline cells.
Some thin-film solar cells are produced using chemicals that may have environmental impact such as Cadmium. I will do a further study on this.
Amorphous Silicon: This is a sub-category of thin-film.
Building Integrated PhotoVoltaic (BIPV): This is a sub-category of thin-film. They are designed for customers who are concerned that the color of the solar panels does not match with the color of their roof. These cells are designed to take the place of the roof's shingles. They are the roof's shingles. You will not see any frame. The entire roof will contains just a single uniformed color.
BIPV cells are more suitable older houses that cannot support the weight of the regular monocrystalline or polycrystalline PV system. If you need to replace your roof, consider using BIPV.
The black monocrystalline panels are made from a single, very pure silicon crystal. They are more stable, more efficient, harder to make, and therefore, a bit more expensive. The blue polycrystalline panels are made from multiple silicon crystals that are not as pure. Therefore, polycrystalline panels are less stable, less efficient, but are easier to make, and thus less expensive. But the differences between monocrystalline and polycrystalline is not that much. As technology improves, the efficiency gap continues to close.
When choosing between monocrystalline and polycrystalline, rather than looking at its characteristics, it is more important to look at brands, their financial strengths, warranty, safety standards, etc, unless the installer provide specific reason. If everything are equal, then go with monocrystalline.
What are the factors that influence the performance of a PV system?
As mentioned above, the type of cell influence its performance. Other various factors that also influence the performance are:
The amount of sunlight (in term of hours) that your location receive. Ideally, your location should receive about 5 hours of sunlight.
The amount of shade. Shade will prevent system significantly from functioning. Ideally, your system should be mounted where there is no shade at all.
Heat / temperature of your location. It may seems that PV systems should function well in hot climate where there is a lot of sunlight, but that is not necessarily true. Too much heat can damage your system and / or degrade its performance. PV systems actually work better in cooler climate.
Direction: if the best location is your roof, the direction of the roof also affects your system’s performance.
Tilt / pitch: if you will be mounting your PV system on your roof, the angle of your roof also influence the performance of your system’s performance.
Will a PV system work for my property?
Your PV system needs clear, unobstructed access to sunlight. It must not be shaded, not even a tiny bit, because this shade can significantly reduce your system performance or make it failed completely.
You can make an initial assessment yourself. Look at your your backyard, front yard, roof or even your walls to see if there is a space where sunlight shine for the longest amount of time throughout the day. The amount of space available is usually not a problem. If you do not have a lot of space, you can consider using more efficient PV modules, which typically cost more, however, if you have plenty of roof space, using low efficiency modules may make more economic sense (they are cheaper).
If you only have limited space, just buy enough solar panels to cover that space. If that is all you can use, that is all you can use, just so long that the cost is comparable as though you have enough space. Whatever the amount of electricity that PV system can produce is clean, and if that is all you can do to protect the environment, that is all you can do.
To be effective, your PV system must receive roughly 5 hours of sunlight.
To be eligible for some rebates, your system must be unshaded between certain hours during certain times of the year.
Consider Germany. The amount of sunlight that Germany receive from the sun is comparable to Alaska, which is not much compared to California. However, Germany is the top country in term of manufacturing solar panels and installations. No matter where we are in the world, we can capture and use energy provided by the sun. This includes cloudy cities such as San Francisco.
Your roof is likely the place that get the most sunlight, and therefore, is likely the place that you will install your PV system. However, there are some factors that people typically consider:
For some homeowners, the look of the house (including the roof) is important. They are concerned that the PV system may make their roof, their house and the entire neighborhood look ugly and thus lower the value of their house. I shared the same concern, but after looking at a few houses with PV systems up top, and thinking much about the benefits provided by PV systems (clean energy, the environment), this seems to be less of a concern for me. If this is a sticky point for you, perhaps, you can install PV system in the rear (less obtrusive) part of your roof even if it is not the most ideal direction, or consider using BIPV (Building Integrated PhotoVoltaic cells). Ask the installers for their opinions on this.
The orientation of your PV system affects its performance. In the United States, the sun is always in the southern half of the sky but is higher in the summer and lower in the winter. The best location for a PV system is usually a south-facing roof, but roofs that face east or west may also work. Flat roofs also work because PV modules can be mounted flat on the roof facing the sky or bolted on frames tilted toward the south at an optimal angle.
Your roof is probably the most expensive or valuable structure of your home. You will likely regard a leaky roof in a rainy season as an emergency, and you will probably want to fix it immediately. Installing a PV system on your roof does carry a risk of damaging your roof. An experienced solar installer knows how to work on all types of roofs and can use roofing techniques that eliminate any possibility of leaks. Ask your installer to see if he offer warranty for his work, and how it affects your current roof warranty.
If you need to replace your roof soon, you should plan it so that the PV system is installed after the roof is replaced. Roof work typically requires that your PV system be temporarily removed. You may have to pay for this service, which typically cost hundreds of dollars. Some solar companies offer one free removal and reinstallation of your PV system if you need to replace your roof down the line. Check with the installer. Read the contract during the price comparison or selection process. Confirm that they actually offer this free service, and make sure that they include this service into the contract before committing with the installation.
Solar panels are fairly heavy, and may not be suitable for all roof. Consult your installer. Consider using solar shingles (BIPV). They are lighter in weight, making them ideal for older structures or buildings already under stress.
The total cost of using a PV system also depends on the type of roof that you have. If your roof contains asphalt shingles, it is easier for the installer to do the job without damage to your roof. If your roof contains slates or tiles (which break easily), it is hard for the installer to do the installation, so the installer has to charge extra.
If your roof is small and you cannot install a single large PV system on one side of the roof, you can install two smaller PV systems. Installing two smaller PV systems will likely cost you a bit more because they are a bit more complicated to install. Check with the installers.
When you install your PV system on top of your roof, and if it is not securely attached, mounted, or bolted to the roof, there is a risk that it can get blown away by strong wind. However, professional installers use professional equipments, know how to do it right, and offer warranty for their work.
If you have limited roof space, perhaps you can build a structure that has its own support from the ground, but cover the roof. This system does not touch the roof, and you can install solar panels on top of that. Discuss this possibility with the installers.
If you have some unshaded space in your backyard, or frontyard, you can potentially buy or build an outdoor structure such as a gazebo, a pergola, or an awning, and install your PV system on top of that. You can by these things from Costco, Home Depot, Lowes, Ikea, etc, or online.
If you have a wall that receive significant amount of sunlight, you can perhaps consider installing solar panels on that wall. These solar panels provide shade for that side of the house and may make your house a bit more comfortable.
Installers can also mount your panels on poles with sun-tracking devices. Discuss this with different installers to determine the cost, and see if the installers can do it.
Some states have laws saying that you are entitled to your share of the sun under some conditions. These laws are commonly known as "solar easement" laws. If your house is shaded by neighbors’ trees (which may or may not keep your house at a comfortable temperature), and if you don’t like it, you can ask your neighbors nicely to cut down their trees, and keep them at certain height.
If they don’t do it, you can take them to court, but that may be an expensive option. Whether you will win the case or not may depends on whether you buy the house when the trees were already covering the house, or whether the trees are legally protected for environmental reason (check with your local government).
The same solar easement law mentioned above also give you some legal leverage against your HOA.
If you have a homeowner association, you or your installer need to submit your plan and get approval before you begin installing your PV system. Solar easement laws may apply to HOAs, but HOAs may still fight back, and in some cases, they won. HOAs may still have the right to make you move your system to another location. Make sure you get their approval before installing PV on top of the roof.
You may also have the option to install solar panels in the little backyard. You can consider buying a pergola or a gazebo, put it in the backyard so that you can install solar panels on top of that. Check with your HOA to see if they allow this, and get their approval before installing solar.
If your HOA does not allow you to install solar panels, please contact SolarChampions with the address and contact information so that SolarChampions can get your neighbors to create a petition, educate the HOA on the benefits and importance of using clean energy. If enough of you want to install PV, your HOA will likely approve it, or they may otherwise make clean energy accessible to you via other arrangement.
Some HOAs are aware of the importance of using clean energy and are fully supportive of your desire to use clean energy, but you must still get their approval before you install solar.
Can I do it myself?
DIY is not recommended for a number of reasons:
Risk of electrical fire or being electrocuted. Have you ever tried to, or watched someone, fix an electrical outlet but accidentally connect the wrong wires and cause it to spark, or saw someone getting electrical shock? If you have, you know that the electricity that power your house and your appliance is dangerous. In order for your PV system to be usable, it must be connected in such a way that it produces electrical current at the same power rating as the electricity coming from the grid, which is deadly. If not designed and connected correctly, your PV system can overload your house electrical wires, burn down your house, electrocute, or even kill you.
Risk of damages to your roof and voiding your home warranty. If you install your PV system yourself, you may void your home warranty regardless whether your system is ground-mounted or roof-mounted. If your PV system is connected to your home, and you installed it yourself, you’ve voided your home warranty. If an electrical fire is caused by your PV system, you are responsible for paying the cost of repairing your home.
If you install your PV system onto your roof yourself, you may void your roof warranty, and you will have to fix the roof (or hire a professional to fix it) if you damage your roof during the process.
Risk of it being blown away by a strong wind. Your PV system may get blown away by strong wind if it is not securely attached, mounted, or bolted to the roof. Professional installers know how to mount PV system on top of roof better than most of us.
Risk of falling off your roof and injuring or killing yourself. Professional installers use appropriate gears so that in the unfortunate event that they do loose balance and fall, they won't die.
To be eligible for incentives, your PV system must be installed by a licensed professional installers. You can buy complete solar kits online that allowed you to do the installation yourself. They say that those kits qualify for government incentives, but in my opinion, you shouldn’t take a chance on those, unless you are willing to take all of these risks.
Does a PV system require a lot of maintenance?
If you choose reliable equipments (see below), there is very little maintenance. Most solar panels have no moving parts. Once they're installed, there's not a whole lot that can go wrong. Pretty much the only thing a homeowner needs to do is keep the panels clean.
Too much dust and bird droppings on the panels can reduce the amount of sunlight hitting the panels. Dust buildup can reduce the amount of electricity produced by the system by as much as 7 percent. You'd probably only have to hose the panels down from one to four times a year. You don't need to get on the roof. A hose with nozzle from ground level works fine. If there's construction in your area, you may have to wash the panels more often to avoid the extra buildup of construction-dust residue.
Hosing the panels off a few times during the summer and keeping leaves off them in the fall is about the only maintenance required.
How can I tell if my system is not performing?
When you talk to the installers, ask about the monitoring component. It should not cost you much. The monitoring component allows you to see the system’s output and therefore know if there is something wrong with the system. You can also tell if there is something wrong with your system when you pay your electricity bill by looking at the amount that you have to pay and compare it with the amount of the previous bill.
If there is anything wrong (unlikely if you choose reliable equipments, see below), you are responsible for contacting the installer, who can come to examine the system. If the failed part is still being warrantied (defective), you are responsible for contacting the manufacturer to get the replacement part. If the failed part is no longer warrantied, you will have to pay for the replacement part. In either case, the installer may charge you a fee for his service.
How can I prevent my system from being stolen?
PV theft is currently extremely rare in the US because:
PV is not quite popular yet.
Most homeowners don’t know how to install a PV system, or they do not like to take the risk of voiding their home warranty, so homeowners typically buy PV from installers, who typically purchase the systems from the manufacturers in bulk (depending on their volume and financial strength) at discounted rate rather than buying one-off system from online marketplace.
PV systems (particularly the panels) are warrantied for 25 years, and cost a lot of money to install, so most homeowners don’t plan to replace or upgrade them anytime soon, which means that the market for used equipments isn’t as popular as other items.
As PV becomes more popular, there will be more scams, and some homeowners may unknowingly buy used or stolen systems from online marketplace, and thus may unknowingly create a stronger demand for used or stolen systems. Here are some tips on theft prevention:
Solar equipments have serial numbers, which doesn’t stop them from getting stolen, and may not be a great help in getting them tracked down. Nonetheless, writing the serial numbers down before the equipments are installed won’t hurt.
Put some sticker on them that says "protected by ..." whether it’s true or not. Deterrence helps. Make sure you don’t put the sticker on the face of the panel though.
I don’t know how a car alarm work, but perhaps someone can invent an alarm (similar to car alarm) for PV system, or share the instruction on how to make an alarm system for PV.
What are the risks associated with buying solar panels from big box stores or online?
Nowadays, you may have seen solar panels displayed inside big box stores such as Best Buys, Home Depot, Lowes, Costco, Ikea, Walmart, etc. However, rather than just selling you the panels, these stores often have partnership with leasing companies, and will often try to talk you into signing a lease. Considering the list of disadvantages associated with leasing mentioned above, you should be careful if you want to talk to the solar salespeople at these stores.
You can also buy solar panels / equipments online, but be aware of the risks (cheap and unreliable equipments may burn down your house, etc). You should only buy panels from a reputable installer.
How can I use solar panels if I do not own a home or do not want to install solar panels?
If you rent, and you want to use clean energy and save money on your electricity bill, you may want to see if OBR is available, and if it is, talk to your landlord and point him or her to this web site. Most likely, it does not cost them anything to install a PV system. You (and future renters) are the ones that pay the monthly payment on the OBR loan. Because the monthly payment is lower than your electricity bill, you save money. When you move, because the loan is attached to the meter, you are not responsible for the remainder of the loan.
The landlord now has a way to attract renters who are conscious about saving the environment and saving money on their electricity bill. For the landlord, it is both a competitive advantage, and a responsible thing to do. And it is a win-win situation for both parties. If the next renter has the same electricity bill or more, he’ll save money too.
There is also something known as solar gardens, which had root in rural or remote areas development. The idea is that the community or investors would build a solar power plant to provide power for the community. Nowadays, the concept of solar gardens had expanded into cities as well. If you live near a solar garden, you can subscribe to it, or buy shares from it. The solar garden will sell the electricity to the electricity company, and because you subscribe to the solar garden, you receive credit / saving on your electricity bills.
The electricity company acts as an intermediate between you and the solar garden. The electricity company track your usage, collect your payment, and pay the solar garden after keeping a certain agreed percentage for this work that they are doing.
As of 2014, according to the Solar Energy Industries Association, there are at least 52 solar gardens (either had been developed, or are in the process of being developed) in at least 17 states. As you can see, there is not a whole lot of solar gardens yet.
Depending on local laws, in order for you to be able to subscribe to a solar garden, you need to live in the same county where the solar garden is located, and you must also live within the same utility service area as the solar garden. If you do not live near a solar garden, perhaps, you can build one if you have time and resources. The steps for building a solar garden involve:
- Finding locations that receive a lot of sunlight (public schools, universities, parking lots, hills, farms, etc)
- Getting investors interested
- Getting electricity consumers interested
- Work with electricity company to get their approval / agreements / contracts
- Lobby elected officials if your state does not yet have a policy that allow solar gardens to be built
- Find appropriate company that can build such solar power plant
- Establish the legal business identity for the solar gardens. Should it be a for-profit business? Should it be a non-profit business? Will it need employees or officers? Who will be doing what?
- Work with lawyers to make sure that everything is legal
That is a lot of work, but not impossible if you have the right knowledge, resources, time, dedication, and people. On the other hand, installing solar panels on your property or convincing your landlord to install solar panels seem to be the easier route.
Why should I reduce electricity consumption before investing in solar panels?
As you can see, solar is affordable, but not necessary cheap yet. It is still like buy a car (a semi-major or major expense). To make the most of your money, before you buy a PV system, you should use the following tips to reduce your energy usage:
Dry your clothes in the sun. Electric dryers are energy hogs. They suck money out of your wallet, so let the sun dry your clothes if you can.
Replace your incandescent light bulbs with modern CFL (Compact Fluorescent Light) bulbs, or LED (Light Emitting Diodes) bulbs. If you are still using incandescent light bulbs, the ones that you can look through and see the thin wires inside, you need to replace them. Incandescent light bulbs generate a lot of heat and consume a lot of electricity.
CFL light bulbs look milky due to the gas that is used inside. CFL light bulbs generates about 75% less heat, and therefore consume about 75% less electricity compared to incandescent light bulbs. LED is the latest energy efficient lighting technology. LED had been around for a long time (small LED bulbs were used as power-indicator inside electronic devices), but was recently redesigned for general purpose lighting.
LED bulbs, designed for general purpose lighting, contains a lot of smaller LED bulbs inside. LED bulbs should be more efficient, and should last longer than CFL bulbs, but LED bulbs are still somewhat expensive. If you can afford LED, get it.
Chandeliers are nice, but they are energy-hogs. When you buy light or light bulbs, buy the one that have the Energy Star label on them.
Install a sunroof or skylight. Skylights are a popular option for bringing natural light into a home. Even a single skylight can transform a room, adding 30% more light than a window. A quality 2-by-4-foot skylight and flashing kit costs $150 to $500. Installation adds another $500 to $3,000 to the project cost.
Turn off lights and other appliances when we’re not using them. This includes lights, desktop computers, laptop computers, TVs, VCRs, DVD players, printers. If you are not going to use it for the next 30 minutes, you should turn it off. Consider buying vacancy sensors that automatically turn off lights when your kids leave the room. At work, encourage your employers or your peers to do the same. Whenever I walk by a room, I’ll turn off the light if the room is empty.
Set your freezer so it freezes, but does not deep-freeze. If you have a garage freezer, insulate it with a silver mylar/bubble-wrap cover.
Adjust your hot water heater thermostat to the optimum setting. Water heating is the second largest energy hog in your home. The hot water heater works constantly to keep water hot and ready whenever you want it. But as the water sits, it naturally cools down, and the burner or heating element kicks on to warm it up again. It is a constantly repeating cycle. Most water heaters come preset at 140 Fahrenheit degrees. The Energy Department recommends that most households should lower it to 120 Fahrenheit degrees. That’s high enough for your needs. If you have an electric water heater, a timer can be installed to regulate heating cycles.
Make sure that your hot water heater, and your hot water pipe are well-insulated to prevent heat lost. Too much heat is lost from the pipes coming directly from the hot water heater, and even more is lost in unheated crawl space. Pipe insulation greatly reduces heat loss in these areas. You will spend less time waiting for hot water at the tap, and this will lead to less waste. On demand hot water circulation is an exciting innovation in this area, and can maximize efficiency.
Cover your windows with blinds (both during the summer and winter). Reflective blinds may help. Close your window blinds during the summer to keep your house cool. Close your window blinds during the winter (especially at night) so that less heat escape through the window if you live in an area where the outside temperature is lower than the inside temperature. In the winter, if the outside temperature is higher than the inside temperature, you may want to open the window blinds instead.
By simply opening the drapes or insulated blinds on your south facing windows during winter days, when the sun is low in the sky, you can raise the room temperature. Heat gained from the sunlight increases as it passes through glass. Be sure to close the blind at night to hold the heat in. Use a timer to automate this process (close the blinds at night, but open it early in the morning).
Make sure that your windows and doors are closed when your air conditioner or heater is running.
Upgrade your windows. If your windows is single-glass, you should replace it with double-glass windows.
Upgrade roof insulation. This can be a major save.
Insulate floors in crawl spaces. Heat leaks out and cold gets in from there too.
Upgrade your home appliances (refrigerators, dishwashers, clothes washers, dryers, TVs, old desktop computers, old laptop computers, etc). Buy Energy Star compliance models. Typically, these appliances do not cost much and will pay for themselves within a few years.
Turn the thermostat for your central air heater off when you leave the house, and set to relatively low before you go to bed. Use blankets and portable electric heater in your bedroom if needed. You do not need to keep the central heater running to keep the other unoccupied rooms at comfortable temperature.
During the day, if you work from home, set the thermostat for your central heater to low. Use a portable electric heater in the rooms that you occupy. Use a small heater in each room as needed (especially ones that are equipped with thermal sensor or motion detector) is probably better than using the central heater.
Make sure that the doors of your refrigerator are only opened when needed, and that they are fully closed when you close them.
Reduce the number of loads (dishwashers and clothes washer) if possible.
Use daylight for working, reading, and living. Some people are accustomed to use electricity for their lighting regardless whether it is day or night. During the day, open your windows, turn off the lights, and use natural light for your need.
Wash your laundry during off-peak hours instead of during peak hours when the cost of electricity is most expensive. The rates are lowest during off-peak periods: weekends, holidays, and weekdays from 10 p.m. to 10 a.m.
Discover all the different areas in your life in which you waste resources. From lighting four burners in the morning just to get things going, to letting tap water go down the drain until it gets hot, its the little things that add up.
Look at your utility bill to determine your current rate plan. Ask your utility companies to see if they have other optional rate plan, and see if those rate plan would work better for you. If you own an electric vehicle, ask your utility company to see if they have a rate plan for that. I didn’t know that PG&E has a rate plan for electric vehicle until now.
It is recommended that you hire a professional energy auditor to audit energy-efficiency features of your home. There are information on the Internet on do-it-yourself energy audit. You should familiarize yourself with these information, and do some yourself if you are up for the challenge. However, you should hire a professional energy auditor because they use advanced equipments and techniques that can detect energy leakages in places that are hard to find.
A professional energy audit is also required in order to qualify for some government incentives. By becoming more energy efficient before buying solar panels, you reduce the size of the PV system and therefore lower the cost. If you already followed all the advices mentioned above, buying solar panels is a great way to further reduce your electricity consumption, save more money, and to further protect the environment.
Note: If you own an electric vehicle, and if you do not yet use a PV system, your electric vehicle is using electricity that is still mostly produced by burning coal, oil, or other fuels that are polluting the environment, causing global warming and other health issues. Consider using a PV system to power your electric vehicle. Contact your utility company to see if they offer a specific rate plan for electric vehicle, and even so, using a PV system should help reduce cost further. Look at your utility bills, and read the "How can I determine the appropriate size for my system" question from above to determine the appropriate size and cost.
Why should we use solar now?
The price for solar is not what it was 3 decades ago. But as you can see from above, in 2014, a 3.36 kw system cost me $10,289 (including the 30% federal tax credit). It is not cheap. It is still like buying a car or vehicle, a major purchasing decision, but it is affordable, and it is not too out-of-range for most people.
In the United States, currently, the difference between hardware cost and whole system cost (hardware + labor + permit, etc) is quite significant, with the cost of hardware only account for perhaps less than 50% of the whole system cost. Most of this is due to the inefficiency in the process of getting the permit approved. In order for your system to be functional, it must be inspected by at least your utility company, your city building inspector and / or fire department. Some cities and electricity companies do not have good process in place, or do not have enough trained personnel to do the inspection.
As the result of this, installers have to have additional personnels just to deal with different processes that are used by different cities, and different utility companies. The industry is frustrated with this. Governments (at various levels) know this, and are working to improve the permitting process, but getting everybody to agree on one standard process can be difficult, and can take a long time.
On the hardware side, because price already drop significantly over the last few years, analysts predict that price won’t drop much anymore.
But the risks of not using PV now include:
The longer we wait, the more we continue to pollute the environment because we continue to use electricity that is produced by burning coal and natural gas.
If you live in a state that have good price for SRECs, the price for SRECs are also coming down over the year. If you plan to take advantage of SRECs, you should buy solar now.
By installing PV, you:
- save money on your electricity bills
- potentially protect yourself against future price increase on electricity
- help protect the environment by reducing your carbon footprint and other air pollution
- improve the value of your house (more on this below)
- help the local economy
- provide financial support so that PV manufacturers can continue to develop better technology for our future generations
Solar electricity don’t just simply benefit you — the system owner. It benefits everyone who enjoys having a cleaner and more sustainable environment.
As mentioned, buying solar panels increases the value of your home. Any home improvement project adds at least some value to your home. In case of solar, the new owners will be saving money from their power bills that the premium makes sense.
Studies by the Appraisal Institute, a worldwide association of real estate appraisers, say a home improvement that leads to documented energy savings can yield up to a 20-to-1 valuation. If your PV system saves $1,000 per year, you can expect a $20,000 increase in your home’s value.
This information is also echoed by a research from Lawrence Berkeley National Laboratory saying that every kilowatt of electricity your solar system is capable of generating adds about $3,500 to the resale value of a home. For a typical 5 kW system, that’s a $17,500 increase ($3500 x 5 = $17500).
To estimate your house’s resale premium: determine how much you have saved from your annual electric bill, and then multiply that by 20. If you’ve reduced your annual electric bill by $1,000, you can expect that your house will be able to sell for about $20,000 more than it would have without solar panels.
On average, installing PV system adds about $20,000 to the value of your home, an amount that exceeds the average cost of most residential solar installations. This means you not only be reducing or eliminating your electricity bill but also getting 100% of your money back when and if you sell the home.
You may be wondering if the increase in the value of your home will increase your property tax bill. Well, in most states, the increase in property value as the result of installing PV system is tax exempt, and thus does not increase your property tax bill.
So, join the clean energy movement. Use solar.
How can I compare quotes, choose reliable equipments and installer?
Getting your PV system installed and connected to the grid is a complicated process. There is a lot of paperwork that you have to do, and it requires inspections and permits from different authorities, such as your electric company, city and or county government. Sometime it is the building inspection department, sometime it is the fire department, and sometime it is both.
An experienced local installer will make this process smoother and less frustrating. An experienced local installer also knows more about available incentives, their requirements and will be able to help you with those paperwork.
As mentioned above, SolarChampions do refer reliable local installers for free (SolarChampions do not charge you a fee, and the installers do not charge you a higher price if referred through SolarChampions), but we do want to put all the details here, and talk about safety issues that happened within the solar industry so that you have all the information to make decision that is right for you.
Utility companies may have a group of customer representatives who are specifically trained with its policies regarding solar. Call your utility company, and ask for a customer support representative who is knowledgeable with solar. Ask this person the following questions:
- What is the process for getting solar panels installed and approved?
- Is net-metering available for me?
- Do I need a single meter or two meters? If a single meter is ok, can I use the existing meter, or do I need to replace it?
- Which installers would you personally recommend?
You may also want to contact your local Public Utility Commissioner, city government and ask them the following questions:
- What is the process for getting solar panels installed and approved?
- Which installers would you recommend?
Compile a list of installers. Those closest to you should have the lowest travel costs, and will probably know best about local incentives and requirements. Contact these installers and find out what products and services they offer. They will want to know:
- your home address
- the type of roof that you have
- the average dollar amount that you are currently spending on electricity per month
- how much electricity you want to be coming from your PV system
Most web sites recommended that you get quotes from at least 3 installers, but I think you should get quotes from at least 5 or 6 installers in order to know the best available price for your system, unless the installers are pre-screened by us, in which case getting quotes from 3 installers is probably enough.
Aside from comparing prices, a quote request can reveal how responsive a company is, and may foreshadow how a solar project will progress.
Do not sign the contract the same day. If the installer is pushy, it is time to ask him or her to leave.
Now, before we can compare quotes, choose reliable equipments and installers, we need to talk about warranty, quality and safety issues.
PV systems were invented, and used to power satellites and space station, and has proven to be reliable. As the matter of fact, 2014 is the 60th anniversary of the first practical solar panel. The initial solar panel made by Bell Labs still worked in the AT&T’s museum. The silicon crystal structured used to make solar panels is very stable, and can last for a very long time.
However, in today's competitive environment, solar manufacturers are forced to cut cost (their cost to manufacture the equipments) to survive, which lead to equipments that are not tested and are not reliable. Unreliable equipments can cost you money (repair), annoyance, frustration. Most of these failure come mainly from poor workmanship and poor quality materials used for soldering, sealant, protective glass, etc, and not necessarily from the crystal structure.
To be effective, your PV system is connected in such a way that it produce electricity at the same power rating as the electricity coming from the grid, which is dangerous and deadly. Unreliable equipments can burn down your house.
Electrical fires are caused faulty manufacturing, faulty wiring, defective soldering, ground faults, insulation faults, corrosion, rodents, and improper installation by inexperienced installers. For example, electrical current across a loose connection can produce sparks that can cause a fire.
Research indicates that rooftop solar-caused fires are relatively rare. A German study found approximately 75 instances out of some 1.3 million installations, while a U.S study found only seven instances in the entire country. Nonetheless, this safety issue is real (it happened), and should be taken seriously.
To protect consumers, in 2011, National Electrical Code (NEC) requires that an arc fault current interrupter (AFCI) be installed along with your PV system. The interrupter detect the increased electrical noise and will trigger a system shutdown before it cause a fire. However, states are allowed to implement NEC requirements at their own pace.
An AFCI device may protect your house from your PV system (if it works), but when it shutdowns the system, you will still need to get an installer to come out to repair the system, and while the system does not function, you will have to pay for electricity coming from the grid rather from your worthless panels.
Fortunately, if we do our research, and are willing to pay a bit extra, it is possible to choose reliable equipments and reliable installers such that your system will last for a long time. Here comes more details.
Warranties are keys to ensuring that your PV system will be repaired if it malfunctions during the warranty period. A warranty is a "good faith" promise that the company will stand behind its product for that period of time. It is a statement that the company believes that its product is good enough to last that long, and that the company will fix it if it fails to function during that time period, if the company itself is still around.
Within the solar market, depending on the type of equipments, warranties are typically offer for 10, 20, or 25 years. That is a long time, and business environment changes, and you can expect that some companies may not be able to survive that long. The solar panel market is just getting hot. If you look at the history of some solar companies, you may find that some companies have not been around that long, and you may wonder if they have enough experience with field testing their products and how they can issue warranty for such a long time if they have not been around that long. They issue warranty for such a long time because:
- As mentioned above, the silicon crystal structure is very stable, and those early solar panels (manufactured by some other companies) are still functional, and they HOPE that they can produce the same or higher quality.
- They do sophisticated stress tests on the performance of their products and model or project the reliability / quality of their products.
In some cases, if a manufacturer were forced to issue a recall, they may not have enough money left to stay in business. They may file for a bankruptcy and re-open with a different name. In such cases, your system is no longer warrantied and you will be responsible for buying replacement parts. If the manufacturer still exist, they will pay for the replacement part. But, under some circumstances, you may still be responsible for paying the repair fee.
There is no law requiring solar companies to purchase insurance for its warranty so that the warranty can outlast the company. Any company, regardless of its financial strength, can issue a 25-year warranty to match its competitors, and then goes bankrupted a few months later without any third party (insurance) company remaining to back up its warranty.
You should know the financial arrangements, such as third party’s insurance or bonds, that ensure the warranty will be honored if the company fall apart. Find out from the installers whom to contact if there is a problem. The installer should disclose the warranty responsibility of each party.
As with most warranties, a longer period is generally more advantageous to the consumer, but make sure you pay attention to the fine prints because some manufacturers cover the shipping and labor associated with replacing a panel, whereas other manufacturers do not.
Solar panels are subject to about 0.5% degradation in output per year. Most manufacturers offer a warranty that guarantees that your panels (monocrystalline or polycrystalline) will produce at least 90% of rated power for the first 10 years and 80% of rated output for a minimum of 25 years. BIPV are typically warranty for 10 years.
There are two types of inverters: central inverters and micro-inverts. Central inverters are typically warrantied for 10 years. Micro-inverters used to be warrantied for 10 years, but recently manufacturers began to warranty micro-inverters for 20 or 25 years.
The installers should also offer a warranty for the quality of their work (including roof repairs) for two to 10 years. To be eligible for some rebate programs, your installer must offer a full (not "limited") two-year warranty, in addition to any manufacturers’ warranties on specific components. This warranty should cover all parts and labor, including the cost of removing any defective component, shipping it to the manufacturer, and reinstalling the component after it is repaired or replaced.
Under some solar rebate programs, installers must provide documentation on system and component warranty coverage and claims procedures. To avoid any later misunderstandings, be sure to read the warranty carefully and review the terms and conditions with your installer.
As mentioned above, solar companies do come and go as the industry is growing up and consolidating. When it comes to solar, you should not evaluate a product based on just the number of years specified in the warranty. A warranty is not good unless the company still exist, and this applies to both installation companies and manufacturers. You should look at the company’s financial strength, reputation, policies and practices. You can do this by doing a simple online search for the company’s name, look up its financial strength (stock symbol, investors, etc) and see what other people are saying.
Companies that plan to stay in business for a long time must charge enough for their products and services to cover their costs, plus a fair profit margin. When it comes to solar, considering the safety issue mentioned above, cheap is not necessarily the best deal.
Assessing the manufacturer’s financial strength is just one aspect. It does not necessarily guarantee that the product is problem-free. You also need to research the particular product that you are planning to buy.
Choose equipments that had been thoroughly tested and passed certain safety and performance standards. Within United States, solar panels must be certified by United Laboratory (aka UL certified). That is the minimum safety requirement. United Laboratory is an global independent third party certification company with focus on safety and reliability. They do rigorous tests, but when it come to solar, even this is not enough (it is the minimum). There are other independent testing agencies and standards:
- Renewable Energy Testing Center (RETC)
- DNV GL / PV Evolution
- PV+ Test
- VDE Quality Tested
- TÜV Thresher Tested
- Atlas 25+® certification
- Fraunhofer PVDI Testing
- STS Certified
- International Organization for Standardization (ISO)
- Electrical Safety Tester (EST)
- International Electrotechnical Commission (IEC)
- CEC (California Energy Commission)
Various states also have safety and performance standards for solar equipments.
Solar equipments need to be tested for performance (efficiency), electrical reliability / durability, breakage (caused by heavy wind, snow, rain, hails, hurricane, high temperature, extreme cold temperature, frost, blowing sand, dense snow loads, excessive wind or suction, temperature swings), leakage (unreliable materials that are used as sealant), corrosion (caused by leakage, humidity).
Testing companies do their testing using simulated climate chambers. They also test the system performance under UV light, do voltage stress tests, and other mechanical fatigue tests.
As you can see, solar equipments need to be tested against a very wide range of conditions, but not all of these are mandatory, and different test agency perform these tests at various levels. In general, the more certifications that a particular product model received, the better it is.
You can verify the certification by going to the testing agency’s web site and they should have a page that list all the products that it certified.
Each solar company has a list of equipment that they feel comfortable with, and we recommend that you ask installers about the safety and quality aspect of why they choose such brands. Installers should be able to clearly explain why they choose such brands (beside cost). If the installer fail to clearly explain why they choose such equipments, you should choose another installer.
Before signing any paperwork, make sure that the paperwork specifically include the list of equipments (and product model number) that will be installed. Never sign any paperwork on the same day that it is given to you. Put the name of these equipments and model number into the Google’ search box and research the the reliability and quality of these equipments.
If the manufacturer no longer exists, or no longer manufacture this particular model, be very wary. Ask the installer to see if he offer his own warranty for these equipments. Get him to write it down onto the contract. Here are the list of equipments that are no longer being manufactured:
- BP Solar / BP
- Evergreen Solar
- Astound Solar
If you know of other equipments that have serious defects, let me know. Here is a list of reliable and financially stable equipment manufacturers:
- Enphase (inverters)
- SMA (inverters)
In general, for maximum efficiency and cost effectiveness, research both the company and the particular product model, and your installer should be able to clearly explain why they recommend particular product.
Next, we need to talk about inverters. Not all solar inverters are equal and inverter efficiency will have a direct impact on the amount of time it takes for a system to pay for itself. Look at the inverter efficiency before purchasing a system. Always look at the financial size and stability of the brand, and the certifications that the particular product model had received. Be cautious of generic brands.
As mentioned above, there are two different types of inverters: conventional inverters (also known as string inverters or central inverters) and micro-inverters. The differences between micro-inverters and string inverters are:
One micro-inverter is attached to each solar panel (one inverter per panel) at the back of each panel whereas one conventional (string) inverter is mounted at ground level, typically in the garage of a home and a single conventional inverter will convert power for about 30 solar panels. For a PV system consisting of 20 panels means 20 micro-inverters are mounted on the roof under the solar array.
Micro-inverters are linked in parallel whereas a conventional string inverter links several panels together in series. This allows microinverters to maximize the energy harvest from each panel. With a string inverter, if you shade enough panels in a row, you can bring the voltage of the entire string low enough so that the string inverter just stops, creating zero power output. However, with micro-inverters, if you have say, 5 panels shaded on an 8-panel array, the remaining 3 panels continue to work, each one creating maximum power.
If dust, grime, or bird poop are getting on panels disproportionately, they can drag down the power of the whole system if you use central inverter (or string inverters).
If you have a bunch of different panels lying around, or you have a system installed but your friend gave you a bunch of different type of panels, you can mix and match them with micro-inverters since each are independent to their own panel. String (central) inverters require that all panels be positioned with the same orientation, and must be the same type. Remember that DIY is not recommended.
With micro-inverters, there is no single point of failure. If one panel fail, the other panels continue to produce electricity until you have time to get the failed panel repaired.
The price for each micro-inverter is cheaper than the price for a single string inverter. However, the total price for all micro-inverters may not necessarily be cheaper than the price for a single string inverter, depending on the number of panels in your system.
It seems that micro-inverters is a better choice. However, according to at least one reputable installer, micro-inverters do not (based on actual real world data compiled across dozens of systems) offer a calculable increase in energy harvest over conventional string inverters, and should be avoided because micro-inverters are electronic devices and they are mounted on the back of a solar panel where temperatures exceed 150 degrees. We know that electronics and heat are not friends.
When a micro-inverter fails, it is not an easy fix. Technicians have to get on the roof, rip out the entire array to get to the failed inverter under the array, install the new micro-inverter and re-install the system. In some instances, micro-inverters are a preferred option over a string-inverter such as when the roof of the home has multiple different orientations, or when a system is subjected to substantial shading.
Another web site put it like this: If a solar system is facing multiple angles, meaning some panels are facing south, some east, and some west, then micro-inverters are the way to go. Or, if you have shading issues from trees or a large chimney, you should go with micro-inverters. In these situations, the solar panels will be producing different amounts of electricity at different times of the day, but micro-inverters will ensure you harvest all of the energy, while with a string inverter you will lose some of this production. With solar panels all facing one direction on your system, and you have marginal shading issues, then your best option is a string inverter.
Protect your inverters. Your inverter should be easily accessible, protected from the weather, and kept away from combustible materials. Be sure to leave enough space around it for proper ventilation.
Next, we need to talk about agreements, and insurance.
As part of the process, you may need to sign the following agreements:
Interconnection agreement: If you are going to connect your PV system to the electric grid, you will need to sign an interconnection agreement with the electric company. Installers should be able to help you through the process, but this contractual agreement is between you and the electric company. Be sure to read the fine print in this agreement.
Sales and purchase agreement: This agreement specifies the metering arrangements, and the price that the electric company is going to pay you for any extra electricity that you send to the grid.
If you are unclear about your obligations under these agreements, contact the electric company for clarification. An experienced local installer should be able to help you with this as well.
In the interconnection agreement, your electric utility company may require you to do the following:
Carry liability insurance. Liability insurance protects the electric utility company in the event of accidents resulting from the operation of your system. Most homeowners carry at least $100,000 of liability through their homeowner insurance policies (although you should verify that your policy will cover your system), which is often sufficient.
Be aware, however, that your electric utility company may require that you carry more. Some electric utility companies may also require you to indemnify them for any potential damage, loss, or injury caused by your system, which can sometimes be prohibitively expensive.
Pay fees and other charges. You may be asked to pay permitting fees, engineering/inspection fees, metering charges (if a second meter is installed), and stand-by charges (to defray the electric utility comapny's accounting cost so that the grid can be used as a backup power supply). Identify these costs early so you can factor them into the cost of your system, and don't be afraid to ask question on any item that seem inappropriate.
Neither the manufacturer warranty nor the installer worksmanship warranty covers theft, fire, or other damages.
After installation, contact your homeowner’s insurance company and have your policy amended. You will face an increase on your property insurance of probably less than $10 a month, but protecting your system from fires or other damage is critical.
Tell your home insurance agent, and make sure that he or she include your PV system in the list of covered items. Make sure that it is added to your home insurance policy. If your system is stolen, your home insurance policy will pay for the replacement PV system, and the reinstallation.
If your house is burned down by your PV system, your home insurance company will work with you to sue the manufacturer to get the money to repair your home and replace your PV system. If the manufacturer is no longer around, your home insurance policy will cover your house, as well as other cost associated with getting another PV system installed.
Talk to your home insurance agent to confirm the details. Often times, they won’t even raise your premium. Better yet, check with your insurance agent before installing PV system to see how much they would increase your premium, and what they will do in case the system is stolen or cause fire.
In addition to insurance and fees, you may find that your electric utility company requires a great deal of paperwork before your system can be installed. Your installer should be able to help you through this process.
You will need to obtain permits from your city or county building department. Typically, your PV installer will take care of this, rolling the permit fees into the overall system price. However, in some cases, depending on where you live, your installers may not know how much time or money will be involved for a permit. If so, this task may be priced on a time-and-materials basis, particularly if additional drawings or calculations must be provided to the permitting agency, including your HOA if you have one.
In any case, make sure the permitting costs and responsibilities are addressed at the start with your installer before installation begins. Code requirements for PV systems vary somewhat from one jurisdiction to the next, but most are based on the National Electrical Code (NEC). Article 690 in the NEC spells out requirements for designing and installing safe, reliable, code-compliant PV systems.
Because most local requirements are based on the NEC, your building inspector is likely to rely on Article 690 for guidance in determining whether your PV system has been properly designed and installed. If you are one of the first people in your community to install a grid-connected PV system, your local building department may not have experience in approving one of these systems. You and your installer can speed the process by working closely with building officials to bring them up to speed on the technology.
Your system must also be inspected and approved by the electric company, and inspectors may require your installer to make corrections.
A copy of the building permit showing the final inspection sign-off may be required to qualify for solar rebate programs.
While we are on the topic of getting a PV system installed, let digress a bit and talk about another related solar technology: solar hot water heater. Solar hot water heater capture sunlight and heat to warm up or pre-heat your water. It won’t probably provide enough boiling hot water, but can pre-heat your water to room temperature which significantly reduces the amount of natural gas that is used to heat your water, and therefore save you money. This would also reduces the amount of carbon dioxide released into the air as the result of burning natural gas to produce hot water.
PV systems should be installed by an appropriately licensed contractor. The installer must have a contractor license, and an electrical license. Your state's Electrical Board can tell you whether a contractor has a valid electrician license. Call the city or county you live in for additional information on licensing. The installer should also be certified by SEIA, NABCEP, and / or the system manufacturer. Ask for all the license numbers. Once you have them, look them up. All states will have a website to look up any contractor’s license and give you the number of years of experience that the contractor has and whether there is any active / pending complaints or law suites.
A good installer should know your local utility’s regulations on interconnection requirements.
Many companies sub-contract their installations to other contractors. Consequently, the company quoting your project may not know anything about their installation crew or how they’re trained. If you have contractors installing solar power on your roof, they are going to be walking around up there, drilling holes in your roof .., it’s serious stuff and you need to know that they were trained properly. Ask your installer for specifics about their relationship with their contractors. Look for terms like "installation partners," in the contract.
As mentioned above, the performance of the system varies depending on location, temperature, roof direction and tilt, etc, knowing the amount of electricity that the system can produce at standard test condition make it easier to compare quotes. Take the total price of the system and divide it by this number will give cost per watt.
The solar installer should be able to explain the different brands of solar panels they install, along with the benefits and downfalls of each. The installer should listen carefully to your specific needs and concerns, and then recommend the panel that would best fit your requirements.
Some companies include free monitoring and maintenance of your system, while others charge.
If your utility does not offer net metering, you may want to size your system just right or a bit below your usage to avoid generating electricity significantly beyond your actual needs, and therefore lowering your cost.
If you go by brand and by the certifications that each equipment received, you should be good, but you may also want to dig a bit deeper. You may want to find out if the manufacturer maintain insurance coverage or bond for their warranty to ensure that their warranty survive its full lifetime even if the manufacturer do not. You can ask the installer for this information, or you can look at the manufacturer’s web site.
Finally, here is the list of questions that you should ask the installers:
- How many grid-connected systems had the company done?
- How many years of experience does the company have installing PV systems?
- Is the company properly licensed? What professional licenses does the company have? What are your license numbers?
- Does the company have any pending or active judgement or liens against it?
- Is the company bonded, and insured?
- Do you sub-contract the installation to another company or sub-contractor? The practice of sub-contracting is not necessarily bad provided that the do the quoting is well known, and has high standard for their sub-contractors.
- Have you done any installation in this city, with my electric company?
- Can I get references for these installations?
- Is net-metering available for me? How much will my electric company pay me?
- What agreements will I need to sign with the electric company, the city, etc? Will you help me with these paperworks?
- What brand do you use for the panels? Why should we use these panels?
- How long are the panels warrantied for?
- What brand do you use for the inverters? Why should we use these inverters?
- Is it a central inverter? Are they micro-inverters?
- How long are the inverters warrantied for?
- If I do not like the brands that you recommend, can I choose another brand?
- What warranty do you offer on your products and installation? How long is this warranty valid for? What does this warranty cover?
- How can I tell if my system is functioning? How can I monitor the performance of the system? I have seen people with monitoring system such that they can see the performance of their system online. Do you offer such capability?
- Who is responsible for fixing the panels?
- Who is responsible for fixing the inverters?
- Who should I contact, what number should I call in case of system failure?
- Do you provide any insurance against fire caused by solar panels that are not correctly connected?
- Do I need to purchase an arc fault current interrupter (AFCI)? How much does it cost?
- Will my roof be able to support the weight of the panels?
- If your team damage my roof in the process, and it is not discovered now, but until the next time it rains, will your team come out and fix it? How can I make sure that there is no damage to my roof after the installation? After the installation, can you take me up to the roof and show me how you inspect the roof? Do you offer any warranty or insurance that cover damages to my roof?
- Some installers offer a service, at additional cost, to routinely clean the system and inspect it for damages. Do you offer such service and how much do you charge for it? This is optional. You can spray the panels from the ground, or you can hire another company that focus exclusively on the maintenance aspect. If you live in areas where there is a lot of strong wind, snow, or earthquakes, you should consider having a maintenance contract.
- I have an HOA. Have you done any installations that require HOA approval? What do we need to do to get their approval?
- I do not want to install solar panels onto my roof. Can you do ground-mounted grid-connected installation?
- In your opinion, do I need to replace my roof now? If I need to replace my roof down the line, some installers offer to re-install the system one-time for free. Do you offer a one-time re-installation service for free? The useful life of solar modules is 20-25 years, so experts recommend a roof surface that will last at least as long as the solar modules. It can be very expensive to dismount and remount the solar panels and the mounting racks to replace the roof.
- Can you install the panels in such a way that it does not require penetrating or drilling holes into the roof?
- How can I be sure that my system is not at risk of being destroyed by wind, snow, storms, hurricanes, hails, lightening, or earthquakes? How will your installation and equipments guard against these conditions or protect my family from damage caused by my system during such conditions?
- What is the right size for my system provided that all electricity that I consume should be provided by my system?
- How much electricity in term of AC watts will this system produce per year at standard test condition?
- What is the total quoted price of the entire system? What does this cover? Does this cover the arc fault current interruptor (ACFI) and the monitoring system? What are some potential additional expenses? Ask the installer to list all the items that the total quoted price covers, and all the potential additional expenses.
- What is the yearly expected output of the system?
- What is the cost per watt for this system, and how do you calculate this number?
- Is there a minimum monthly fee that I must pay to the electricity company in order to use the grid as the backup system? What is the payback period for this system? Please show me how you calculate the payback period.
- Are all the permit fees included in the total quoted price?
- Are applicable sales tax included in the total quoted price?
- Who is responsible for getting the system inspected and getting proper permits?
- What incentives programs are available to me?
- What are the deadlines for these incentives?
- The California Solar Initiative program expired. Is there another state incentive program that I can use to reduce my cost, perhaps not directly under the solar umbrella, but perhaps under the home energy efficiency upgrade umbrella?
- How can we apply for these incentives? Will you or do you have someone to help me with applying for these incentives?
- Do I need to get an energy audit done in order to qualify for any of these incentives? Do you know a reliable energy auditor? Do I need to get this done now before you can give me the final quote? Based on the amount in my electricity bill, how much do you think that an energy audit will help with reducing the size of the system?
- How can I sell my SRECs? How much does each SREC currently worth? How can I sell my SRECs to utilities that are outside of my state? Can I trade SRECs on any web site or does it have to be done through a particular web site?
- I heard that in UK, they have roof tiles that have solar cells built-in. Is this available in the US? How efficient and cost effective is this compared to other solar cell technologies? How much will it cost me if I want to use these BIPV cells?
- How can I prevent my PV system from being stolen?
- What financing options do you offer? Which of these do you recommend? Please show me how you compare these options. Can I get my own loan?
- What is the turnaround time? What are the timeline? When will your team come to do the installation? How many days will it take you to install the system? When will the system be completely inspected and fully functional?
- What is the process for getting this system installed, inspected and approved? Throughout this process, what are your responsbilities and what are my responsibilities?
- Do you currently have any discount or promotion? Do you offer group discount? If I get my friends and my family members to go solar, do we get a group discount?
- Can you also do solar thermal (solar hot water heater) installation? Should I invest in solar hot water heater? If I want to invest in solar hot water heater, how much will it cost me? Do I need to change my water usage pattern, or install additional equipments inside the house for it to work? What will you do when you install solar hot water?
- I only need to use solar hot water heater to pre-heat my water to room temperature which is good enough for my shower. Do I need to buy a large tank to store water at room temperature? If so, can you safely remove or turn off the natural gas hot water heater? Should this be done? Will it cause any problem?
- PV system work best in cool climate. Nowadays, some manufacturers are combining solar hot water heater with solar electric to improve efficiency. What is your opinion on this?
- How much can I save? How much does it cost? How can I determine the appropriate size for my system?
- Will my solar panels produce electricity during a power outage?
Your quote or actual contract should contains all the relevant answers for the above questions. If not, you may want your installer to include those information into the contract before you sign it, and before the actual installation begins.
Beside regular cleaning / washing, homeowners living in a windy area should make a point of inspecting their racking for loosened bolts and signs of stress. Once or twice a year, a qualified solar inspector should examine the system for faulty connections, rodent damage or other fire hazards. Check with the installer to see if they offer such service, or know someone who offer such service, and how much and how frequent they will charge you for such service.
The lowest price may not be the best deal. It’s possible that a low price could be a sign of inexperience. Price should not be the only consideration. Quality, experience, reputation, professional service should be high on the list. You’re dealing with the roof over your head and electricity for your home. It’s probably worth it to pay extra for the more experienced installer. $1000 less may mean thousands more in repairs for leaks or blown inverters down the road. Go with quality over price. If they’re all experienced, insured, professional, polite, etc, and offer comparable products and warranties, then go with price.
The more expensive quote could be advantageous if that contractor uses better installation procedures, higher quality parts, or extends greater warranty coverage.
Solar companies typically have different teams: sales, design, installation. This can sometimes lead to confusion and miscommunication. Typically, you will work with the sales and design teams first. The design team will talk with you and design a system that meet your requirements. If you have specific concern, like you want the PV system to be installed on specific portion of the roof or on the ground, tell the sales and design teams this.
They will send you a drawing of the system. Make sure you understand the drawing, and make sure that your requirements are written and included on to the contract before you sign it.
On the day of the installation, you should plan to be at home, watch the installation crew, and if they do anything that seems to be not according to the plan, you should stop them, call the design team or the sales team, and have them come to your home to discuss the issue before letting the installation team proceed.
During the selection process, you should have agree on the brand of the equipments. During the installation day, you should verify the brand of the equipments to make sure that you get what you specified on the contract.
There is one more thing that I want to mention in this section. There is a not-so-silent battle going on between the solar industry and the electricity companies. Although electricity companies recognize the benefit of solar (clean energy), they argue that homeowners with solar panels are not paying a fair share for using the electric grid as the back-up. If you have solar panels, and they are connected to the grid (a requirement if you want to qualify for government incentives), your electricity bill will be next to nothing, which mean that the electricity companies will not able to sell electricity to you, which mean their profit will go down, and they won’t be able to stay in business to maintain the grid unless they charge other homeowners who do not own solar panels more.
To address this problem, electricity companies are proposing new laws which mandate a certain fee that everyone will have to pay to them regardless whether you have solar panels or not. While this may increase the payback period, I am probably OK with these laws if the fee is not outrageous. Within California, the proposed fee seem acceptable to me. However, I do not have knowledge on the minimum fee for other states or service areas. Ask your local installers on this.
My take on this is that everyone should install solar.
At this point, beside comparing solar with other methods for producing electricity, and a few other ideas or observations (below), I’ve covered enough information so that you can decide whether to use solar panels or not. I hope that I’ve shared some useful information. So far, we have talked about various risks associated with using solar panels:
- We’ve talked about the list of strings attached to a solar lease. The best option to finance your PV system is to pay cash if you can afford to, borrow money from your relatives, or take a loan (solar loan, energy-retrofit loan, PACE, or OBR) if appropriate.
- We’ve talked about the risks of hiring lousy, unprofessional installers, such as damages done to your roof, your system gets blowned away, or burns down your house
- We’ve talked about the risks of any potential near-term expenses that you may have to deal with such as expecting a baby, your child going to college, or you lose your job, etc. Experts suggest that you should have at least 3 to 6 months (or even a year) worth of your current salary in your emergency fund. With various loan program available, using solar should not require you to dip into your emergency fund.
We’ve also talked about the risks of not using solar now: continue to pollute the environment, SREC price is coming down.
We’ve talked about the benefits of using solar: cleaner, healthier, and more sustainable environment for everyone including your children, supporting local economic development, boosting the value of your home, lesser dependence on foreign energy source. We’ve talked about how much you can save, and I gave you an idea on how much a PV system may cost you, and how long it may take to recover your investment. In my case, it cost me $10,289 after considering the federal tax incentive, and it will take me about 11 years to recover the cost, and after that, my system will continue to produce free electricity for another 15 years, saving me approximately $14000.
Depending on your financial circumstance, saving $80 per month or $960 per year from electricity bill may not seem to be significant. However, this equates to reducing your carbon footprint by 8106 pounds of carbon dioxide every year to protect the environment may be a very important thing to do depending on your perspective.
We’ve talked about finding reliable local installers and choosing the right equipments.
In my opinion, solar is the best way to reduce our carbon footprint, reduce other air pollutants that are result of burning coals, fight climate change, and save some money. We all should use solar if we can. With those loan programs, I am confident that you should be able to use solar without breaking your bank or dip into your emergency fund, but ultimately, only you know your current financial circumstance and only you can decide whether you can afford to use solar or not.
If you cannot afford to use solar, by all mean do not use solar (do not take on the additional financial stress if you can’t afford it). But if you can afford to use solar, you really should use solar now. Solar electricity don’t just simply benefit you — the system owner. It benefits everyone who enjoys having a cleaner and more sustainable environment, and your children may thank you for not leaving them with a hostile, unlivable environment.
Take a moment to consider all the risks and benefits, and click on the Request Quotes link in the top navigation bar. I will send 3 quotes from 3 local installers to your email address.
Going solar is a big commitment. Make sure you discuss all this information with your spouse or other family members. Together, you can decide whether solar is right for your current financial circumstance, and choose the right installer, but don’t dwell on this too long, because the more you stay on the coal-powered electric grid, the more you pollute the environment.
Why is solar the best method for producing electricity?
Most of us living in the modern world tend to take electricity for granted. We use electricity for our lighting during the night. We use electricity to power our air conditioner to keep us cool during hot summers. We use electricity to power our computer, recharge our mobile devices, gizmos so that we can play games, watch videos, browse the web, or chat with our friends online. However, we do not really know how electricity is produced, or we do not think about it.
According to the U.S. Energy Information Administration, in 2015, the percentages of electricity produced by different methods are:
- coal: 33%
- natural gas: 33%
- nuclear: 20%
- hydro: 6%
- oil: 1%
other renewable: 7%
- biomass: 1.6%,
- geothermal: 0.4%,
- solar: 0.6%,
- wind: 4.7%
- other gases: <1%
We have a problem with these numbers, because most of these technologies are not environmental friendly.
With regard to nuclear, in March 2011, a powerful earthquake caused a Tsunami to hit Fukushima I nuclear power plant in Japan, resulting in a meltdown of 3 of its 6 reactors and became the largest nuclear incidents since the Chernobyl disaster in April 1986.
Even though we can build nuclear power plant in a desert in an earthquake-safe zone, considering the radioactive end products, today political climate, the cost and inefficiency that are involved with transferring electricity over long distance, I am not a fan of using nuclear materials to produce electricity.
With regard to natural gas, we may think of it as a clean technology, but it is really not that clean. There is not much natural about natural gas considering the methods that are being used to produce natural gas. Companies are producing natural gas by pumping chemicals into the ground and these chemicals may leak over to our rivers, lakes, and our drinking water.
Another problem that I have with natural gas is that a few years ago, in 2010, in San Bruno, California, not far from where I live, there was an explosion caused by a leaked pipe. This explosion killed 8 people, burned down 38 homes. Like most forest fires, this explosion, beside the mentioned damages, also release much toxic gas, carbon dioxide, into the air.
The last problem that I have with natural gas is that it is burned to produce electricity. When natural gas is burned to produce electricity, it releases carbon dioxide into the air. As mentioned above, carbon dioxide is the gas that is mainly responsible for causing global warming and climate change.
When my family first migrated to America, our relatives told us to be very careful with the gas stove, otherwise, it can cause explosion and burn down the house. This is the reason why I’ve always prefer to use electric stove rather than gas stove.
Considering the way natural gas are being produced may contaminate our water supply, and the fact that its byproduct, carbon dioxide, contribute to global warming, I would recommend that if you are using natural gas in your home for your cooking, central heater, hot water, etc, you should consider using solar power.
Coal, oil, natural gas, biomass, anything that is burned to produce electricity, all produce carbon dioxide, and therefore all contribute to global warming. I have not been to the north pole or south pole, but I know that scientists and other people have, and according to them, through the news, the ice caps are melting and disappearing. And from personal observation, it seems that the weather keep getting stranger and stranger, hotter and hotter every year. I suspect that global warming is indeed happening.
As far as I know, Earth is the only planet that we know that can sustain life. I know that scientists are searching for planets that can sustain life but what if we cannot find one by the time that it becomes too hot to live on Earth?
Governments are taking action to reduce CO2 (carbon dioxide) emission, and companies are also taking action to reduce CO2 emission as well. However, I believe that this is still not enough. We, as individuals, also need to take action to protect Earth, our one-and-only home.
When it is time to discuss about energy, there is one term that I really hate. It is renewable. According to Wikipedia, a renewable energy source is generally defined as energy that comes from resources which are naturally replenished such as sunlight, wind, rain, tides, waves and geothermal heat. However, renewable does not necessarily mean environmental-friendly.
Consider, biomass, which is basically growing plants and grass, drying them into pellets, and burning them just like coal to produce heat, energy, and electricity. Biomass is considered as a renewable energy source, because it can be re-grow. Because biomass is carbon neutral, (the amount of carbon dioxide that it release into the air when burned is exactly the same amount of carbon dioxide that the plant consumed during photosynthesis), some people believe that it doesn’t do any harm to the environment, and therefore can be used.
But, if we do not have a good national policy in place, people may start to grow grass and plant, those that yield high energy when burned (so-called energy crops), instead of growing regular food crops. This will impact the food price, and the chemicals that are used to grow these energy crops may do harm to the land and leak into our water supply. While biomass does not increase the amount of carbon dioxide in the air, it does not reduce the amount of carbon dioxide in the air neither (unless we do not use it to produce electricity or energy).
With regard to tides, ocean waves, or hydro (waterfalls), if we put equipments into the water to harness energy from ocean waves or waterfalls, these equipment may kill or injure fishes, other marine mammals, and disrupt the whole planet’s ecosystem.
There are companies that grow algae to produce oil. While this is possible, and they can produce a fair amount of oil, this is like biomass. It is carbon neutral. It does not harm the environment in term of carbon dioxide released into the air, but it does not reduce the amount of carbon dioxide in the air neither (unless we do not burn the oil that it produces).
Algae, like viruses, have different strains, and these companies are genetically modifying algae to produce more oil. I am concerned that this may lead to other environmental problems, like super-viruses.
Compared to the technologies mentioned above, wind is a source of clean energy. At the national and state level, building more wind power plants may make sense. However, for homeowners, owning wind turbine may not make sense, because wind is not predictable, unless you live in a windy area, such as near a beach. Wind turbines typically require a lot of space, and they may make annoying noise that may cause your neighbors to complain.
There are other technologies that are being developed such as fuel cells, geothermal, but these technologies are still new, quite expensive, or not practical for homeowners in all area.
Within the solar category, there are different technologies:
Concentrating Solar Power (CSP): This technology use a vast array of mirrors and lenses to focus sunlight to spots to heat water to create steam which then powers turbine engine to produce electricity. This technology is very efficient, and is used to build large solar power plants in the deserts where there is plenty of sunlight. However, there have been sighting where a number of birds just fall dead from the sky around these power plants, and therefore some of these solar power plants were shut down, pending assessment on environmental impacts.
There are different variations of CSP, and not all variations of CSP has environmental impacts. However, these solar power plants share the same limitation associated with traditional power plants. That is, some of the energy produced by these power plants is lost during the long distance transmission from the power plants to your home.
PhotoVoltaic (PV) / Solar Panel: This is your residential solar panels or PV system.
Solar hot water heater: This technology capture the heat from sunlight and use it to produce warm water. Like PV, this technology is very clean, but it is limited to just providing hot water.
The process of manufacturing monocrystalline and polycrystalline PV cells does produce some carbon dioxide and therefore contributes to global warming. However, once installed, solar energy is free. PV systems do not produce any carbon dioxide. The electricity that it produces is very clean, and PV systems are expected to last for a very long time, up to 25 years or more.
It doesn’t require expensive and ongoing raw materials like oil or coal to be constantly extracted, refined, and transported to the power plant. With PV system, the energy is generated near the point of use, and therefore does not lose energy compared with traditional long distance transmission.
As you can see, PV is really good compared to other technologies. It is renewable. It is clean, and environmentally friendly. It helps fight global warming, saves you money, add value to your property, create jobs for your local community. When you buy a PV system, it means jobs for manufacturers and installers.
Solar also provide independence and security. The strength of our economy heavily depends on oil which is largely controlled by foreign countries. If those countries decide to raise oil price, we may end up paying more at the gas pump, as well as the grocery store, or at any other store for the things that we buy because oil is used as fuel for transporting goods that we buy.
While we still cannot use solar energy to power our trucks, and planes, we can use solar technologies to power our homes, vehicles (electric vehicles), and our factories, which mean that we will be somewhat be less dependent on foreign fuel.
From the perspective of being energy independent from other country, you may argue that the source of energy that is used to produce electricity is actually coal (not foreign oil), but if your electric vehicles use electricity provided by your PV system instead of gasoline, you’ve reduce quite a bit of dependency on foreign oil.
Energy independence also mean that we are less dependent on the grid. You can live completely off the grid if that fit your lifestyle or believes. Distributed generation such as PV systems also mean more stability, more security, and less power outage or crisis at the national level, such as the great Northeast blackout of 1965, which began when a power surge near Ontario set off a chain of failures across New York State and beyond, covered 80,000 square miles. Within four minutes, the line of darkness had plunged across Massachusetts all the way to Boston, according to the New York Times.
Distributed generation also reduce the severity of the damage when the national grid is attacked by terrorists or few of our own crazy citizens.
What else can I do to further reduce my carbon footprint?
As mentioned, natural gas is not really clean considering the way that companies are producing natural gas by pumping chemicals into the ground, polluting our water supply, we should reduce our natural gas consumption.
If you are not using all the electricity generated by your solar panels, but you are still paying for natural gas, consider switching these natural gas appliances to models that use electricity instead. For example, consider switching natural gas cooking stoves to electric cooking stoves.
Consider using solar hot water heater in addition to the natural gas hot water heater. Consider setting the thermometer of the central air heater to low and using small portable electric heaters in room that are actually occupied.
If you own a pool, buy solar hot water panels for your pool. You should also have a pool cover as well.
Drive moderately. Flooring the gas pedal uses exponentially more gas than a gradual acceleration. Brake moderately as well. Let go off the gas pedal as soon as you realize that you will need to stop. Drive less, and carpool when possible.
Consider using electric vehicle if you can.
What are my other miscellaneous / random thoughts and observations?
I am pro-PV, but I am not necessarily against utility companies. If they want to put PV onto my roof, give me discounted rate, lock it in for the life of the system, without any other string attached (such as a long term contract that are not easily transferable when I sell my house), I would probably be ok with that. If the new homeowners also get the same discounted rate, they would probably ok with that too (there probably won’t be any issue when I need to sell my house).
Likewise, I am not against leasing companies either, provided that they eliminate the disadvantages like the long term contract, the escalator clause, the ridiculously high credit score requirement, and make it really easy (and not too costly) for me to terminate the lease in the event that I need to sell my house without any string attached.
I’ve read somewhere that if my utility bill is below $100 per month, then it does not make financial sense to use PV. This is something that I don’t quite understand or agree on. The payback period would be longer, and this may not be a good investment compared to other investment, but $100 saved is still a $100 saved, and 470 kilowatts worth of carbon dioxide reduced is still 470 kilowatts worth of carbon dioxide reduced (to me, the amount of carbon dioxide reduced is more important than the other investment).
If farmers use removable or adjustable solar panels, this can provide shade for crops, reduce water consumption / evaporation. Have you ever drive across a farm during a hot summer day and see water being sprayed onto crop, and wonder where that water go or why we have water shortage?
We are not yet taking full advantage of all the sunlight available to us. Our roofs are not yet covered with solar panels. Our walls and fences are not yet covered with solar panels.
Have you ever experience a really hot summer night, and wonder where that heat is coming from when the sun had gone down for several hours already? During the day, when the sun shined,the earth, the wall, and the roof are heated up by the sunlight during the day, and at night, they release the heat back into the air. Light and heat are different forms of energy, which are interchangeable. While solar cells operate using sunlight and not heat, but without solar panels, sunlight is absorbed by the roof and is converted to heat. If your entire roof and walls were cover with solar cells, which convert sunlight into electricity so that the sunlight is not converted into heat, I wonder if this would make the planet a bit cooler and slow down global warming.
Solar panels also provide shade for that particular part of the roof, which makes that part of the roof cooler. Imagine that the entire roof, and perhaps the walls as well, are covered with solar panels, or Building Integrated PhotoVoltaic (BIPV) materials, the electricity that it generates should be more than enough to power the air conditioner, because the solar panels already absorb most of the heat that hit our house.
Solar is affordable, but it is not yet cheap. If we can make it significantly cheaper, I would probably cover my roof, walls, fences with solar panels, and use the extra electricity for scientific research such as:
- removing carbon dioxide from the air
- implementing artificial photosynthesis (release oxygen into the air)
- turning carbon dioxide into sugar or plant food
- split up carbon dioxide into carbon and clean oxygen
- removing toxic chemical from the air
If every roof is covered with solar panels or BIPV, I wonder if this would keep the planet cooler and slow down or reverse global warming.
I would like to leave you with a few popular quotes:
- The most beautiful thing in the world is, of course, the world itself -- Wallace Stevens.
- Someday, our children, and our children’s children, will look at us in the eye and they’ll ask us, did we do all that we could when we had the chance to deal with this problem and leave them a cleaner, safe, more stable world? -- President Barack Obama, June 25, 2013.
- I refuse to condemn your generation and future generations to a planet that’s beyond fixing -- President Barack Obama, June 25, 2013
So do your part, join the clean enery movement, use solar panels. If you are reading this, and have not yet install solar panels or use clean energy, take a moment to consider all the risks and benefits, and click on the Request Quotes link in the top navigation bar.
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