What you need to know about installing solar energy
Over the past few years, solar energy has become increasingly more popular among homeowners, and is predicted to be more ubiquitous in the future. By now, most of us probably know someone with solar panels on their home, or have considered going solar ourselves. The pitch is simple and the advantages of solar are clear; the cost of solar panels has come down over 80% over the last five years, and installing them will save you money by offsetting electricity costs with clean and renewable electricity. As a result, many solar installers, big and small, have hopped on the solar bandwagon, marketing solar to consumers, each claiming to provide the best prices and service.
Simply put, solar is a way of making energy from the sun, generally by putting sunlight collectors or panels on your roof. There are two broad categories of solar: solar thermal, which uses the energy of the sun to heat water; and solar photovoltaic or PV, which uses the sun’s energy to create electricity.
Should I go Solar?
- The first point is not a knock against solar, but rather the fact that the average homeowner has a lot they should be doing first, before a solar system makes sense. And all of those things – be it more insulation, weatherization, cleaning your HVAC system, changing your light bulbs, etc. – are probably going to have a bigger and more immediate energy efficiency and money-saving impact than switching to solar.
- A home solar system will not make sense for everyone. (Notice how I said “home solar system.” There are other solar options, e.g. community solar). Only about a quarter of homeowners that want to go solar have suitable infrastructure.
- In the case of solar PV, if your house is not facing just the right way (south with a roof pitch of ~30 degrees) or if the panel is shaded in any way, you will produce small amounts of electricity. Yes, many times there is leeway (e.g. put the panels in your yard) , but for a system to really make an impact, ideal conditions are necessary.
- Also, it takes many panels to make a reasonable amount of electricity, and most homes’ roofs just don’t have the real estate needed. Typical systems require roughly 400 square feet. So despite the hype, few people can actually power their entire home using solar panels, and even fewer actually sell electricity back to the grid (despite the stories).
- Geographic Location: solar systems will work in most places, even places that aren’t particularly sunny such as the north east. Utility rates and rebates/incentives will factor into solar savings, so don’t think you can’t save due to geographic location.
- Solar thermal has similar drawbacks. You need big panels to make a lot of hot water and the sun has to cooperate. This means that during certain seasons of the year and times of day, there is plenty of hot water being made, but as the seasons change, and the time of day shifts, you may end up relying heavily on traditional water heating systems.
- So does that mean you should forget about solar? Not at all. Rather than being the first thing on your home energy improvement to-do list, solar should probably be towards the end.
Solar System Components & How it Works
A solar system can be broken down into the following components:
- Mono-crystalline panels are more efficient and more expensive than polycrystalline panels.
- Each panel can have its own inverter (micro inverter) or all the panels can run into one inverter (central inverter).
- Mounting System
- Can be fixed or variable to track the sun.
- Monitoring System
- Can be on site or remote.
In a nutshell, the mounted PV panels convert the sun’s energy into direct current (DC) electricity. Since our homes use alternating current (AC), an inverter is necessary to convert DC into AC. The electricity then runs to the meter and either gets consumed by the homeowner, or goes back to the grid. The monitoring system collects data and tracks performance.
Solar Financing Options
- Buy the system yourself: Going solar is expensive; even after a 30% federal tax credit and other potential rebates, you are still looking at multiple thousands to tens of thousands of dollars for your solar energy system. A big chunk of change, no matter what. For example, a 5 kilowatt system is about $25,000 before tax credits, and the average home will put in a system that is anywhere from 3 to 7 kw.
- Solar Loans: There are multiple types of solar loans to choose from: banks, utilities, manufacturers, credit unions, private institutions, and more. Many can completely finance the system, with little to no cash up front, and may offer zero interest. The loans have a similar structure to an ordinary home improvement loan.
- Solar Lease and PPAs: Leasing a solar system requires little to no up front cost, and you are entitled to the benefits of owning a system. However, the leasing company owns and maintains the equipment, and is entitled to all tax credits. Furthermore, a contract of up to 20 years may be required.
- Community Solar: In its simplest form, community solar allows individual homeowners to buy a piece of an off-site solar array, and then benefit from the electricity the array produces. They can then use that electricity to offset their own energy bills. The amount of electricity that’s offset is purely a product of the size of their initial payment. So you can buy as much as you want and need and over time, and you can even buy more if it’s working for you. For more on community solar, check out this blog post.
Weighing the Options
- Solar systems are an investment. If you can afford it, buy the system yourself, or opt for a loan. The system will eventually pay for itself (typical payback periods range from 7 to 10 years), and you will save money on electricity bills in the long run.
- Avoid solar lease and PPAs if possible. If you are going to finance a system, you may as well own it when the financing period is over. Yes, free maintenance is nice, but systems are durable and do not require much maintenance in the first place. Furthermore, most equipment comes with a warranty of up to 25 years from the manufacturer. At the end of the leasing contract, you are usually able to buy the system, have the system removed at no cost, or renew the leasing contract.
- Community solar is the best option for homeowners who want to reap the benefits of owning a solar system, but do not have ideal conditions for a system in their home.
If you are considering going solar, you may want to read this blog post on a company called EnergySage that makes going solar, including comparing systems and financing, as easy as possible.