11 Questions to Ask Before Going Solar

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If you are thinking about switching to solar, there are many things you need to know before pulling the trigger, like how much it’s going to cost you. To help you in the process, we’re working with Pick My Solar to answer 11 questions to make sure it is the right move for you.

1. Does my utility provide a bill credit for energy I put back on the grid?

The number one government policy affecting the economics of solar is Net Energy Metering (NEM).  Set at the state level, over 80% of states allow for some form of Net Energy Metering, allowing homeowners to produce excess power during the day, push it onto the grid, and take it back at night via an energy credit.  

Most states also allow for excess credits to be rolled over month to month for up to one year.  This allows a home solar system to be sized to meet 90-100% of a home’s energy usage across all four seasons of the year.  The map below from the Database of State Incentives for Renewable Energy (DSIRE) shows which states support Net Metering.

2. Which equipment manufacturers will be around to honor their warranties?

Modern solar PV panels are warranted for 25-years, and new glass on glass modules (PV cells sandwiched between sheets of glass) have 30-year warranties.  The more sensitive equipment, inverters, typically come with either a 12-year warranty, such as market share leader SolarEdge standard warranty, or 25-year warranty such as micro-inverter manufacturer Enphase and SolarEdge’s optional extended warranty.  

How can you be sure your equipment manufacturers will be around to honor those warranties?  Look for providers with a large financial balance sheet, a diversified product portfolio, and profitability.  Panel manufacturers such as LG, Panasonic, and Sunpower offer high-quality premium modules, but those can come at a 50-100% price premium over high volume manufacturers such as Hanwha Q Cells or Hyundai, both part of large Korean manufacturing conglomerates.  

For inverters, SolarEdge has maintained consistent profitability and a much larger balance sheet than any of their competitors.  This is likely the reason that SolarEdge consistently provides 60%+ of all residential solar PV inverters in North America.

3. Is solar a good investment?

If you plan to pay cash, it is fairly easy to calculate your Return on Investment in years and annual percentage.

Cash Investment: $21,000 (6,000 Watt DC system @ $3.50/Watt)

Federal Tax Credit: $7,000 (30% tax credit available through the end of 2019)

Balance: $14,000

Monthly Bill Offset: $160

Yearly Bill Offset: $1,920

Return on Investment: 7.3 years or 13.7% ROI per year, better than most stock investments

4. What if I want to finance with a lease or loan?

Not everyone wants to utilize their cash savings to pay for solar outright.  That doesn’t rule out solar being an attractive investment.  Online solar marketplace Pick My Solar has developed a handy tool to estimate the savings of various financing types including Cash, Loan, and Lease.  

While a lease may provide the best day 1 savings, the lack of ownership of the system means a lease is not much better than your current utility bill.  

Nowadays, solar loans are quickly becoming the most popular option to finance new solar systems.  With a solar loan, the homeowner keeps the tax credit and finances the balance of the system after the tax credit.  The most popular loan terms are typically zero down and 12 years with no prepayment penalties.  These solar loans can provide savings from day one, a flat payment, and be cash flow positive for the entire life of the loan.

You can see that during the 25-year life of the Solar PV system, the savings under the loan is only $5K less than if you paid cash up front, but both the cash and the loan will save you more than $30,000 over a lease option. I do not personally recommend going into debt for a solar system, however, I wanted to show you how the numbers work out.

5. Is it transferable if I sell the house?

If you buy the system with cash or a loan it is transferable because you own it. In fact, a recent study by Lawrence Berkeley National Lab showed that homes with solar owned by the homeowner sell faster and for an average of $4/Watt ($24,000 in the above case of a 6,000 Watt system) of solar installed more than non-solar homes.  If you lease it may be a different story. The company that is leasing the system will likely run a credit report of the new homeowner and transferring the system could be contingent upon their creditworthiness. Terms and conditions vary by state laws and individual companies, so be sure to read the fine print.

6. How do I know I am paying a good price for quality equipment?

It is always smart to get several bids for any large purchases you plan to make.  However, it can be very time consuming to research local solar providers and set a time for them to come out to evaluate your home.  If you’re not an engineer, it may be difficult to determine which installers are providing accurate information versus just trying to up-sell you on more expensive upgrades and equipment.  

To get the best deal, check out Pick My Solar who has an online solar marketplace that helps consumers collect 6-12 bids for their home and presents the top three proposals to the homeowner.  Their energy advisors assist as an unbiased guide to educate homeowners on all the questions that arise such as warranties, equipment options, system sizing, and making a final selection between the contractor’s bids.

Their process has been proven to save consumers 10-20 hours of research and they have thousands of customers who have gone solar all at their own pace and comfort online and over the phone.

7. Who is liable for the solar panels if they get damaged or stolen?

This will depend upon if you own or lease the system. In many cases, when you are leasing, the company will be responsible for replacing and maintaining the panels. However, if you own the panels then you are responsible for them. Many home insurance policies automatically include home upgrades such as Solar PV systems.  In some cases, there may be a small additional fee to add the system to your home insurance policy.  

8. How much will my utility bill change on a monthly basis?

This will depend in large part on how big your home is and whether or not you have natural gas. Another factor could be how old are your major appliances as well as the efficiency of your heating and cooling units. That said, here are some examples of how your utility bill might change.

Pick My Solar Calculator

9. What is the environmental impact of installing solar panels?

Because the solar panels do not contribute to the pollution in the air, they are environmentally friendly and do not produce greenhouse gas.

10. What is the typical warranty that comes with solar panels?

While warranties can vary, typical warranties (also know as performance guarantees) are 25 years. It is worth noting that they generally warranty up to 90% production for 10 years and then 80% production up to 25 years.

11. Are there any tax incentives when purchasing solar panels?

There is currently a 30% federal tax rebate available which can be helpful in reducing the overall cost of your system. In addition to that, many states provide tax incentives as well when it comes to renewable energy. This not only includes solar panels but solar water heaters, fuel cell properties and more.  Please be sure to consult with a tax professional to see if any of these incentives apply to you. See Energy.gov for more details.

Are you considering installing solar panels on your home? If so, what is the main reason why?


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4 COMMENTS

4 responses to “11 Questions to Ask Before Going Solar”

  1. Laura says:

    DH keeps wanting to install solar, but I’m the hesitant one. The roof orientation plus the need for other home improvements first are what make me question it. BUT, I would totally do it on a newer house.

    The neighbor in back of us did install solar on a roof that needs replacing…and then asked us to cut down our 60 y.o. tree that he was worried would block too much sun and drop branches on the panels :/ Needless to say, the tree is still there, and after some roof repairs, he’s wondering why he didn’t replace the roof first (just a couple other things to keep in mind).

    • Kyle C says:

      Hi Laura,

      I’m glad to hear you kept your tree! Trees give so much life and character to our world.

      Just FYI – if you have any roof repairs to do, if they are done in conjunction with going solar, you can take the 30% federal solar tax credit on the cost of the roof repairs as well, so that’s nice.

      Also, most homeowners are now adding solar through a zero down loan which is typically less than their monthly utility bill. So, its a total win-win. Best of luck in all your other home upgrades!

  2. Mark Peveler says:

    While this doesn’t seem to be industry biased, I would present more questions:

    Q: This says solar is attractive to home buyers: 1) When fully paid off 2) Requires another credit pull when buying a home, which could drop buyers credit score.

    Q: Leased/loaned solar panels might be transferable, but the seller is still liable until the buyer is approved for a loan and accepts the solar panel loan.

    Q: Panels are a haven for flying and crawling rodents. Will the solar company resolve rodent problems?

    Q: What happens if legislation changes and no longer subsidizes panels?

    Q: What happens if standards change for panel angles, fire shut off inverters, etc. Will the solar installer cover the cost?

    Q: If I move and the buyer doesn’t want panels, will my new property have to have a new roof felt before panels can be installed, and will there be enough South facing, non-shaded roof space?

    Q: If I move panels, what costs will be required for an install? Will the panels be part of the original install agreement, or will state and federal organizations consider this as a “new” install and will the seller have to comply with new regulations, ie: update inverter, panel angle, panel location, etc…

    Q: If panels are removed, will damaged tiles be replaced with tiles of the same color?

    Q: Will the solar company be around for the life of the panels?

    Q: Are the panels the property of the solar company and would there be a lien for them against the property as equipment or is this a financial lien on a loan only?

    Q: If there is weather or wind damage will the solar company owner cover internal property damage as well as roof damage?

    Q: If power local grid pricing drops below a sustainable price for the leased/loaned panels, can I have them removed?

    • Deacon says:

      I appreciate your additional questions. You have some good points. However, I could not include every question someone might ask in this post. It’s a good idea to research fully and ask these types of questions before jumping in and buying, or leasing, solar panels for your home. Thanks for including them in your comments so other readers can ask those that apply as well.

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