This is intended as a resource for people interested in adding solar panels to their homes. Please let us know if there are questions you have that we haven't addressed!
What is solar energy?
Solar energy is one of the fastest growing renewable energy sources, with more energy reaching the Earth’s surface in a single hour than is consumed by everyone on the planet in a single year. The solar panels you see on buildings are more formally known as photovoltaic (PV) systems which convert the sun’s energy into electricity for commercial and residential use. As the price of solar panels continues to fall, having solar panels on residences and businesses will reduce electric bills, increase independence from the power grid, and reduce carbon emissions.
Interested in solar on your home?
If you are looking for ways to get access to solar energy or solar PV systems on your home, there are many resources available. The fact of the matter is that a lot of important detail goes into planning, installing, and paying for solar. While it may seem complicated, the process can be broken down into some general steps that make it more manageable. Here, we have compiled guidelines as well as additional resources. While each step will require research specific to your home, this is a great place to start!
So how do you go about each of these steps? We've compiled some comprehensive websites that are great to help you start your research here :
- Assessing Solar Potential: To decide if your residence is suitable for solar in the first place, try a solar calculator that assesses the potential of a solar PV system at your location. The National Renewable Energy Laboratory (NREL) developed a calculator to estimate potential which you can find here. It will not produce an exact estimate but will give you an idea if your residence is a good candidate for a system.
- Financing Options: See next section for a description of each option. For more in-depth financing descriptions, definitions of terms, and other useful information, try looking through the Clean Energy States Alliance (CESA) solar guide found here. Even further, if you are purchasing a system for ownership, check out what the financial incentives are in your area on the database of state incentives here.
- Contact Installers: It can be overwhelming to pick an installer so find out what other people that have already been through the process are saying! Solar Reviews contains information about solar installers and developers all over the country here. As with any large purchase, comparative shopping is recommended. Aim to contact at least 3 installers for quotes.
- Questions for installers: It's understandable that you might be apprehensive about making such a large investment. To protect yourself we encourage you to do your homework. When you talk to potential installers, what questions should you be asking them to ensure reliable service? Visit the CESA solar guide and scroll to pgs 18-21 for suggested questions about going solar, financing, and operation of your system. Their list of questions is comprehensive and a great resource.
Lease and PPA: Third-Party Ownership
Third-party ownership avoids purchasing solar panels upfront and has traditionally been the more popular way to finance a system. Third-party ownership can come in the form of power purchase agreements or PV leases. In both arrangements, you will pay the regular utility rate for any electricity consumed beyond what the system produces. In addition, while you may have seen promotions about tax incentives and the benefits for residential PV systems, incentives go to the third-party owner since you don’t own the system.
- Solar leases: A solar lease involves having solar panels on your roof and allows you to use the power they produce, but a third party owns the actual system equipment. A solar leasing company will install the PV on your home with limited upfront costs to you. Afterwards, you pay a set monthly lease, which is based on the system’s estimated electricity production. Ideally, over the course of a typical 15 to 25 year lease, monthly electric bill savings will be greater than lease installments, making for a net-positive cash flow. In some cases (depending on where you live), it is possible to sell excess electricity produced by the system back to your utility in a net-metering arrangement. In terms of maintenance, the responsibility of the solar contractor depends on the specific wording in the contract with two common options being a single payment towards upfront maintenance or a minimum performance guarantee.
- Power Purchase Agreement (PPA): A PPA is similar to a solar lease in that a third party owns the system and it is installed on your house, but instead of leasing the equipment your house acts as a host to the owner and you purchase the power. Usually a solar finance company will buy, install, and maintain the system on your house and you buy back the electricity generated. The fixed monthly lease payment is replaced by a fixed per-kilowatt-hour rate, protecting you from any increases in electric rates over the course of the system’s lifetime. The fixed rate is ideally going to be less than your current electric retail rates, creating a net-positive cash flow. As with a lease, the third party is typically responsible for operation and maintenance and you avoid the large upfront costs you would incur if you owned the panels. Third-party solar PPA’s are not allowed in every state. Please refer to the resources above to learn about finance options available in your area.
Ownership Purchasing a solar energy system (either upfront or with a loan) is actually the least-expensive option long-term and maximizes financial benefits. You are able to take advantage of tax
incentives, sell all unused energy back to the grid, and increase the market value of your home. However, PV systems are expensive and it might be difficult for some to shoulder the upfront costs. If this is the case, leasing or PPA might be a better fit for you.
Solar Loan A solar loan operates as any other loan does; money is borrowed from an institution (banks, credit unions, solar developers etc.) to buy a solar PV system and is payed back in monthly installments with interest. The monthly payments, interests rates, and overall money saved will vary depending on the lending institution and your agreement with them.
If you want solar energy, but you don’t have access to any of the options described above, what now? If you have something that prevents you from getting personal solar, like the fact that you are a renter, live in a multi-family building, or have an unsuitable roof for PV, you can still access solar energy through community solar programs. In this set up, multiple community members share a solar facility; each member receives a portion of the energy generated by the system that is located nearby. Even though the panels are not physically on your roof, you still benefit from the same net-savings on your electric bill that come with rooftop solar. The only difference is that they are instead applied as virtual net-metering credits. For example, if you consumed 800 kWh at home in one month, and your share of community solar produced 600 kWh, the 600 kWh in credits are applied to your electric bill, and you are billed by your utility for the remaining 200 kWh. You also pay your community solar provider directly for the 600 kWh, but at rates that are less expensive than standard utility rates.
There are two main pricing models for a community solar project, namely ownership or subscription. With ownership, you directly purchase the power from a set number of solar panels. You still do not own the actual solar panels, but you receive the energy they produce. With a subscription model you pay a fixed monthly rate for a specified amount of energy from your community solar array.