Things to Consider
The Solar Investment Tax Credit (ITC) is a 30 percent federal tax credit for residential and commercial solar systems that, under current law, remains in effect through December 31, 2016. Homeowners apply this dollar-for-dollar credit to their income taxes when they purchase solar systems (non-leased, non-PPA systems) and have them installed on their home. Take a look at the incredible effect the ITC has had on not only the solar industry but also America’s pursuit of renewable energy!
Supporting solar is incredibly important, not just for energy independence today, but for a cleaner more renewable future! Join the fight to extend the ITC and tell your representative how vital this incentive is to furthering America’s RENEWABLE tomorrow! With the uncertainty of the ITC’s future, there has never been a more urgent time to GO SOLAR!
You have decided to GO SOLAR but now are tasked with comparing quotes from competing solar companies. This can be daunting especially when not all quotes (or companies) are created equal. Here are some things to look for when separating the apples from the oranges:
NABCEP Certified Installers
There is little oversight to protect a homeowner from a fly-by-night solar installer, so make sure your installer has done their homework! The North American Board of Certified Energy Practitioners is the most widely recognized and well respected certification organization in the industry and has been accredited to the ISO/IEC 17924 standard by ANSI. It is considered the “gold standard” and should be a requirement for the solar installer you choose.
American Made Panels/High Quality Panels
A solar installation is an investment. Make certain that your investment is not wasted on poor quality panels. American-made panels, like those from SunPower and Solar World, far exceed cheaper foreign-manufactured panels in efficiency, durability, and quality control. The same can be said for string and micro-inverters. Choose a solar installer that uses products in which you can be confident. As Benjamin Franklin said, “The bitterness of poor quality remains long after the sweetness of low price is forgotten.”
The Nickel and Dime Factor
Some solar installers will charge extra for things other companies include. Be sure that online monitoring and management of SREC’s (Solar Renewable Energy Credits) are included in the quote. A company’s warranty is wasted if they are not also monitoring the system for any changes in performance. Things like permitting, inspections, and interconnection with the utility company all require fees that can stand between you and turning your system on. Make certain the quote you receive is final and that you will not be upsold later for something that should have been included from the beginning.
The Bottom Line
The bottom line on a solar quote does not necessarily indicate the best value. Be aware when comparing quotes that they may not be apples to apples. Find out why that one quote is cheaper before you sign the dotted line and make certain you are comfortable with the products and people performing the work as well as the price. After all, with a 25+ year investment you can’t afford to choose the wrong company!
Power outages cost more than their inconvenience. Americans spend between $25 to $75 billion on weather-related power outages each year, and outages have double since 2003. Check out at the true cost of power outages for America’s aging electrical grid- click on the image for a closer look:
Today, the average period of home-ownership is 7 years. This means that while you may intend on staying where you are for the next 25 years, the numbers tell us this is unlikely. But how should that impact your decision to pull the trigger on a residential solar power installation at home? The following study can give us some insight.
At the Lawrence Berkeley National Labs, a study from 2002-2012 looks at the resale value of homes with solar installations. Out of the over 500,000 homes in the US with rooftop solar, the study focused on the 150,000 “host-owned” or non-leased solar systems. Leased systems indemnify the home owner to a contract that includes escalated recurring payments for the life of the solar system (25 years). As the majority of people move within 7 years, any remaining payments due to the leasing company either need to be paid off out of pocket or by discounting the price of home to the new home-buyer attaining your lease. The liability of transferring the solar system at the time of resale for the home lies upon the homeowner and not the company who sold the system (lessor). On the other hand, homeowners who have purchased their solar system outright are experiencing much different results in the secondary market of home sales. According to the study, the average premium by which a home’s resale value increases is $4/W installed. The average residential rooftop installation in the US is roughly 3.75kW DC. This means that solar increases the value of a home on average by $15,000. (3750W x $4 = $15,000)
Home-buyers are consistently willing to pay more for a property with solar- regardless of state, status of housing market, home type, and incentives available. New systems seem to have more value than old systems, but this appears to be due to perception rather than actual degradation of the system’s production. From a realtor’s perspective, the house will be easier to sell because of its lower utility bill and “green energy cache”.
For a 5000W system, the value of the home would increase by $20,000. The average cost for a 5000W system (after the 30% Federal Investment Tax Credit) is $14,000. This means that upon selling your home, you have recouped a net gain of $6000 or a 143% improvement to your home. Let’s compare this to some typical home improvements done prior to selling a home:
Considering that most of us do not stay in the same home more than 7 years, not only will a solar installation save utility costs in the meantime, it is also a great investment as a home improvement!
When I was growing up my father used to say “If it is too good to be true – it probably isn’t.”
To many people, the upfront cost of a solar system is the initial barrier that is difficult to overcome when considering making the switch to producing your own energy with a residential solar power system. Solar companies compete not only to give customers the most cost effective solution for a solar power system, but also to provide customers with the least financial impact in the immediate future. Zero-money-down options provide homeowners with the opportunity to obtain a solar system for virtually no upfront cost, essentially “Free Solar”. This is a very powerful concept when considering whether a solar power system is right for your home, but it is important for homeowners to understand the fundamental differences between “Free Solar” with a lease agreement versus ownership through a solar loan.
“Free Solar” is becoming an increasingly popular way to describe solar power installations that require no money down. The concept of “Free Solar” gives homeowners a fantastic opportunity to take immediate actions to improve our world and gain financial benefit with little to no risk on their own part. This term is generally associated with solar-leasing agreements, but there are other factors when considering a solar installation that provide homeowners with zero down solar power installations.
A residential lease provider allows you to have a solar system installed at your home without paying up front for installation. The lease provider will charge you a monthly rental fee that escalates annually. Solar leases allow homeowners to go green with a solar system that will generate clean and renewable energy throughout the years, while also keeping monthly payments lower than or equal to the market utility rate. While this may seem attractive to potential homeowners who balk at the initial investment in ownership, “free solar” lease programs end up costing you more and undermining the true value of a solar system— Energy Independence. The escalating monthly payment of a leased solar system, typically 3%, means that you end up paying more over the life of the system than you would have purchasing the system at a static interest rate. While avoiding the upfront costs may be enticing, this will be more costly over time and denies you the financial benefits to ownership. Lessees forfeit the 30% federal tax credit, any state incentives available, as well as SREC (Solar Renewable Energy Credit) sales to the solar lease provider.
Whether you purchase a solar power system outright, add the cost of a system to a home equity loan, or obtain a loan from a third party solar-loan provider the outcome is the same – Ownership. Solar ownership may come in all shapes and sizes, but ownership through a solar loan allows the homeowner to retain the idea of “Free Solar”, while still preserving all of the benefits that come along with a solar power installation. These benefits include a 30% Federal Tax Credit on the total cost of the system, SREC sales (roughly $350-$1700 annually, varies by state and system size), and any state incentives available to you (check your state here). In a solar lease scenario, all of these financial bonuses that increase the value of the investment and reduce payback time will be recouped by the lease-provider instead of the homeowner. A recent study also determined that ownership of a solar system increases the value of a home by an average of $15,000. Rather than being rewarded for the extra value added to your home through ownership, lessees will face early cancellation fees or negotiating a lease transfer agreement with the new owners should you sell your home within the lifetime of the solar system. Financing a solar system gives homeowners the ability to maintain a fixed payment schedule and term of loan. Solar loans offer similar monthly payments to a solar lease program, but the difference is those payments eventually end (with plenty of life left in the system).
True Value of Solar
The true value of a solar system— aside from clean, renewable energy— is energy independence. Owning your own solar system allows you control over how much energy is purchased from your utility company. While a lease will avoid an initial upfront cost, you do not gain energy independence on a personal level. There are many ways to lower an electric bill that don’t involve solar, such as installing energy efficient lighting and appliances or simply limiting your existing energy usage. Solar ownership, however, means you are no longer at the mercy of your utility company. You are your own power plant and have essentially pre-purchased 25 years of energy! Ownership effectively hedges against rising utility costs, while lease payments increase annually to keep up with rising utility costs. Instead of breaking the utility company chains, lessees are beholden to both the utility company as well as their lease provider.
“Free solar” may seem like a cheap way to go solar, but will end up costing you in the long run. As my dad would say – “There is no such thing as a free lunch.”
According to the Bureau of Labor Statistics, 2014 was the most expensive year for electricity to date. In January of this year, the price for electricity hit an all time high. With electricity costs on the rise, a solar system for your home is an excellent investment and can allow you to “lock-in” a much lower rate through the life of your system.
How does it work?
When installing a solar system on your home, you are essentially pre-purchasing 25 years of guaranteed power at a fixed rate. By determining how much power your system will generate over its lifetime and comparing this to your cost of electricity and the expected continued rise of electricity costs, the fixed rate of electricity can be calculated. Take a look at a recent customer of our’s as an example:
The levelized cost of electricity (LCOE) is calculated by dividing the total project cost after incentives (i.e. the 30% federal tax credit and the estimated SREC revenue) by the total amount of energy the system is estimated to produce over 25 years based on the solar module manufacturer’s 25 year power production guarantee. The proposed solar system’s levelized cost of electricity can be calculated as follows:
Therefore, with the solar system you essentially lock in the cost for this portion of your electricity needs at the very low price of $0.068/kWh! The graph below shows this levelized cost for each system compared to the utility electric rate which was estimated to increase 3% annually.
Contact us for a FREE SITE ASSESSMENT to lock in your lower rate for the next 25 years!
For many, one of the main hesitations before investing in solar panel installation is a worry over how the panels will affect the value of a home. We’ve always assured our clients that installations actually tend to boost your home’s value, and now the U.S. Department of Energy’s Lawrence Berkeley Laboratory is backing us up.
The Berkeley Lab studied home sales in eight states between 1999 and 2013. They found that to home buyers, a solar panel system is worth $4 per watt — or roughly $15,000. This information combined with lower utility bills and current solar energy tax incentives makes right now a great time to consider a home solar system. Thanks to grid-tied solar panels, using power at night or on cloudy days isn’t a problem. Extra energy generated by your panels but not used is credited on the grid and becomes available to you when you need it. Not only will the system pay for itself in just a few years, but it will also increase your home’s worth when it comes time to sell.
Owning a Home Solar System
The report goes further to state that this value isn’t always true for homeowners who lease the panels. In fact, leased solar panels are considered a liability and could actually take value away from your home. That being said, it may not be worth it to take on a 20 year lease for a home solar system. Instead, talk with the company and do some research into local tax incentives to better understand your options for owning the solar panels. Everyday solar panels become more affordable.
For more information, read the full article at Daily Finance.