Save Big on Energy Bills

These are sunny days for solar power. In 2018, a new solar project was installed in the US every 100 seconds. There are now more than 1.9 million solar installations in the US. After reaching one million in 2016, two million should be hit in early 2019 and four million by 2023, thanks in part to rapidly falling prices for the equipment. Trouble is, few home owners have any experience with solar power, leaving them vulnerable to costly mistakes.

Seven things you need to know before you get solar power…

Your Power Company May Penalize You

Some power companies now impose special fees and minimum charges on solar homes, in effect “taking back” some of the savings of having solar. Various other power companies are lobbying state officials for the right to do the same thing…or for the right to reduce the amount home owners earn when their solar systems feed electricity back into the nation’s “power grid,” something that happens when a home’s solar panels provide more power than the home is using. (Most solar homes remain connected to the power grid.) The power companies complain that solar homes take advantage of the nation’s electricity infrastructure without paying their fair share for its upkeep. But these new charges and related changes make owning a solar system less economically attractive.

Examples: Texas does not allow home owners to sell excess electricity back to the grid…a process known as “net metering.” On November 8, 2017, the Public Utilities Commission of Ohio (PUCO) adopted updates to administrative rules stating that systems are sized to generate the customer’s own power only and cannot exceed 120% of the customer’s average electrical usage of the past three years.

What to do: To see whether this is a serious issue in your state, check websites of organizations that keep tabs on utility company efforts to increase solar bills. UtilityDive.com (then select “Solar” from the topics menu bar) is a good general site for news about the electricity industry…and the Database of State Incentives for Renewables & Efficiency  (select your state, then scan for listings identified as “Regulatory Policy”) is a great resource.

Don’t install a solar system that produces more power than your home regularly uses. (Talk to your utility company for an estimate.) Home owners may do this to generate a profit by selling power to the grid, but homes with solar panels that generate more power than they consume on an ongoing basis are especially likely to be targeted by new rules designed to reduce their earnings potential.

Don’t Install on Old Roofing

Man installing alternative energy photovoltaic solar panels on roof

If your roof must be replaced after solar panels are installed, you probably will have to pay $2,000 to $3,000 to have the panels temporarily removed and then put back in place after the new roof goes on.

What to do: If you have an older roof, replace it before solar panels are installed. If your roof is not new but still has a lot of years left in it, at least replace the section of roofing underneath where the panels will be installed. Replacing this section of roofing beforehand is very likely to save you money, compared with removing the solar panels to replace the roofing later, even though it means replacing something that still works. An experienced solar installer or roofer can help you evaluate your roof’s condition. Make sure that the service contract you sign with a solar installer or solar-leasing company includes coverage for repairs if water leaks in through the section of roof under the solar panels as a result of the installation.

Don’t Dwell on Climate

There’s a common misconception that home solar power makes great economic sense in the Sun Belt but much less anywhere else. That reasoning places too much emphasis on sunlight. In fact, the amount of sunshine in your area often is less important than the cost of electricity in your region…and less important than the state and utility solar incentives available to you.

Example: A recent report by North Carolina State University researchers found that home owners in the New York City and Boston metro areas stood to benefit the most from solar power, due largely to high electricity rates.

What to do: Give solar serious thought even if you live in a northern state if you are paying a high rate for electricity—the national average is around 13 cents per kilowatt hour (kWh). Check where your area ranks in the North Carolina State University report (enter “going solar in America” and “NC clean energy” into a search engine to find this report). Also visit DSIREUSA.org to see whether any ­significant state or local solar incentives are offered in your state.

Don’t Lose the Tax Credit

Home owners who have solar systems installed are eligible for a federal investment tax credit worth 30% of the cost of both parts and labor. (If you lease a system, the leasing company gets the tax breaks.) The typical rooftop residential solar system costs around $18,000, so that’s a savings of $5,400. Trouble is, this credit is being phased out starting January 1, 2020, and will completely end for residential installations on December 31, 2021.

What to do: If you do plan to install a solar system eventually, do so before the credit expires. Do not put this off until late next summer, either—reliable solar system installers might be booked solid as home owners try to beat the deadline.

Consider the Effect on the Home’s Value

Companies that lease solar systems make it sound as though you have nothing to lose—there are no upfront costs, and the amount you pay each month on the lease likely is less than you would have paid your local utility for the same amount of power. (The same goes for companies that offer solar “purchase power agreements,” where solar panels are installed at no cost, then the home owner pays the solar company a lower rate than the local power company charges for the electricity provided.)

Unfortunately, you do have something to lose—if you try to sell your home during the 15- or 20-year length of your lease contract, you will have to find a buyer who is willing to assume that lease—and many prospective buyers won’t want to do that. (Lease contracts usually do have an early payoff option, but the payoff terms tend to be unfavorable for home owners.)

What to do: Don’t lease. If you want a solar system but cannot afford to pay for one out of pocket, investigate whether taking out a home-equity loan—or a “solar loan” available through some ­major solar installers—makes sense for you. If you qualify for reasonable loan terms, you are likely to come out ahead, in part because you will get the 30% tax credit.

Investigate the Installer

There are lots of unqualified solar installers. Some point to their membership in the Solar Energy Industries Association (SEIA) to prove that they are experts—but anyone can become a member of SEIA simply by paying its dues.

What to do: Work only with installers who have at least five and preferably 10-plus years of experience installing solar systems…and who are certified by the North American Board of Certified Energy Practitioners. These installers have passed a challenging exam. Also, ask installers what brand of inverter they use. The inverter is the part of the system that converts the solar power to the 120-volt power used in the home. It’s a good sign if an installer uses one of the sector’s two most respected and established brands—Fronius or Sunny Boy. It’s also fine if the installer recommends using solar collection panels that contain micro-inverters rather than use a single inverter for the entire system. This new technology costs a bit more, but it’s more efficient, particularly in cloudy areas.

Trees Can Hurt

Even trees that do not currently block solar panels could grow tall enough to do so during the 20 to 30 years that these panels are in use. Removing large trees can cost thousands of dollars.

What to do: Before you have solar panels installed, have an arborist or other tree-care professional evaluate the growth potential of any trees that could later block your sunlight. It might be wise to remove these trees now before they grow.