Things to know before buying a solar electric system
Are you a home or business owner who is thinking about installing solar photovoltaic panels to save money on your electric bills? Good for you. You may be the first on your block, but you are probably far from the first in the area. There is a lot of excitement about new solar panel technology, but more likely than not you will choose to install modules that use the same basic technology that has been available for 30 years. Today's solar panels are a proven, long-lasting way to convert sunlight into electricity. The latest models have good efficiency, turning 20% or more of the energy that strikes them into power. New technologies continually make the news, but for the most part are only applicable to very large commercial installations, not residential rooftops.
Here are 10 things you should know before speaking with a solar installation professional:
1. Your system will not need batteries. At night, you will get your power from your utility, just like you do today. This applies to most all utilities, and in California, includes PG&E, SCE, SMUD or LADWP. In addition, this applies in many other states including Arizona, Colorado, Massachusetts, New Jersey and New York, to name just a few.
2. Understand your electricity rates. There are currently many price tiers. Each tier has a different cost. If you are a frugal household, you may be able to get all your energy needs at the lowest, Tier 1 rate. As your energy use rises, you pay Tier 2 rates then Tier 3, etc. As an example, in parts of California, the tiered rates from $0.12 to $0.49 per kWh. If your monthly electric bill is over $200, you are up into Tier 5 territory. When you add a solar system to your roof, you eliminate the top tiers first. So, the more you spend on electricity now, the higher the return on investment you will get from a solar system.
3. Solar panels last up to 30 years, losing approximately 0.5% of their efficiency each year. The only required maintenance is to hose them off a couple of times each summer. Do this from the ground with a nozzle on your hose. The inverter, which converts direct current from the panels to alternating current used in your home, will need to be replaced after about 15 years. Using today's prices, expect to pay $2000 for the inverter and $400 for the labor.
4. Ideally, a solar system will go on a southwest-facing roof. However, the direction it faces does not matter as much as you might think. West and south are quite good and southeast, east and north-northwest can provide good payback too.
5. Know exactly how much electricity your home uses each month. If you keep old bills, great. Otherwise, request the data from your utility. Also think about how your electricity needs will change over the next 10 years. If your family is growing, you will need more energy as your kids grow. On the other hand, if your nest is about to become empty, you may expect that your energy bills will decline and stay low. If you plan to replace incandescent lights with compact fluorescents or do other things that will make a big difference in the amount of electricity you use, you should ask the salesperson to base their bid on your PLANNED electricity use, not your actual use.
6. Solar power's natural enemy is shade. One of the key things a salesperson will do when they climb on your roof is to get a very good understanding of how the roof is shaded in different seasons. You and the sales rep will have to think about the growth of trees over 10-30 years.Some trees that shade your roof may be several houses away from yours - tall redwoods for example. Even if your current neighbors are good friends and will trim their tree that shades your roof if you ask, what if they move in 2 years and the Grumpy family moves next door?
7. State solar rebates and Federal energy tax credits (which you claim on your IRS 1040 Tax Form) are an important part of the cost/benefit decision. Most state rebates decline in pre-defined steps over time. For the next few years, rebates will probably decline faster than prices. So when the sales person tells you it is cheaper to buy now then to wait, it is the truth.
8. Most families that install solar switch to "time of use" metering. Under time of use, electricity costs more in times of high demand. Many utilities have two rate schedules. The more favorable for solar owners is called E7. It has "peak" and "off-peak" periods. Prices vary by winter and summer as well. The E6 rate has another category called "partial peak." Now, you probably think that the E6 sounds like a better deal, because the price is lower - but that is probably because you are thinking like an energy consumer instead of an energy producer. Once you have solar on your roof, you will be selling electricity that exceeds your usage. When your system is cranking out power on a sunny summer afternoon, you will want to get credit at the higher rate. The E7 rate is going away, so be sure to ask your sales rep if it is still available. Being able to get onto the E7 rate schedule is another reason to act now rather than later.
9. Solar panels will add to the resale value of your home. Industry studies indicate an increase in home value equal to the total cost of the installation X 0.72. In other words, 72% of the cost of the installation could be the amount of home appreciation. It is fair to say that a few years from now potential buyers will be much better able to assess the value of a low electric bill.
10. Location matters. You can cost-effectively reduce your electric bill to zero in some states, but not in others. Typically, the utility will buy your power, but only to the extent that it drives your net energy bill to zero. They will also charge you a monthly "account fee" of $5 to $15 per month that covers services like maintainingthe grid and coming to read your meter. The utility will, however, take all the power your system produce in excess of your needs, so you should not "oversize" your system.
Talk to several solar companies before you make a commitment. You will probably find that their prices may vary, and your final decision should also include intangibles like quality and reputation. Any reputable solar salesperson will give you one piece of advice before they sell to you: first conserve, by identifying electricity wasters in your home. Conserving is cheap. Only after you have conserved should you invest in solar.
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