Install Solar Panels
If you own your home and it has good sun exposure and a sturdy roof, you could generate your own clean power with solar “photovoltaic” (PV) panels. New planning and financing tools make it easy to go solar.
Your Impact
Action Steps & Tips
Introduction
By installing solar you can have the independence of generating your own clean renewable power, save money on your electricity bill, earn a great return on investment, greatly reduce your carbon emissions and increase the value of your home. So it’s no surprise that solar panels are becoming increasingly popular. Going solar also helps to protect you against future electricity price increases and create local jobs. It’s a win-win-win-win-win-win…
A few basics:
-
Cost. The cost of an average sized system (6 kW) is now $12,800 on average. Costs vary depending on where you live, ranging from $9,000 - $15,000.
-
Savings. The savings over 20 years range from $10,000 - $30,000+. The typical savings in Boston is $43,000 and in Los Angeles is $50,000.
-
New financing & lease options make it easy to go solar. The two main options:
-
Loans - low interest, $0 down loans, save money monthly from day one, save $10,000 to $30,000+ over 20 years.
-
Lease - rent the panels and save 10-30% on your electricity bill from day one, average savings about $270/year, ranging from $100 - $500/year.
-
-
Federal tax credit is 26% in 2022 and will be 22% in 2023.
Since the lifetime of solar panels is generally 25 years or more (savings above based on 20 years) your savings will likely be higher. The bottom line—this is a great time to go solar! Read on for information on how to get started.
1Find out if solar panels can work for you
A few simple questions will tell you if solar can work for you:
-
Do you own your home?
-
Do you have good sun exposure on your roof?
-
Is your roof in good condition?
If the answer to all of these is yes, you’re all set to explore solar options. If you have a lot of trees or are unsure of your sun exposure, you can use Google’s Sunroof tool to do a quick check. Just type in your address and it will show you an aerial view of your rooftop with the solar generating potential. The tool also provides some basic estimates on 20 years savings for both loan and lease options.
2Find an installer
If it looks like your house may be eligible for solar, the next step is to find an installer to get a complete assessment and help you through the process. They will help verify the results on Google Sunroof, identify whether your roof requires any repairs before installation, and help you choose your system size and other system options. They can often even help with financing options. Here are a few things to consider when deciding on a solar company:
Get multiple quotes. There are so many options with a solar installation, it’s best to get at least 3 quotes. This will ensure you get the best price.
Choose an experienced installer. This is a big job, experience matters. Check for a valid license, online reviews, and references before deciding. Ask how long they have been in business and how many systems they have installed. Do they have experience working with your utility company? Find out what warranties they provide. Does the warranty cover your roof? Do they provide a performance guarantee on the panel output (power produced)? Do they take care of the building permits and all the paperwork?
Schedule a site visit. Once you choose an installer, the next step is a site visit to go over system options and confirm the quote. During that visit, they will measure your roof, conduct a shade analysis, and answer any questions about the equipment they are recommending. Make sure to ask them to do a roof inspection as well and let you know if you need any repairs before installation.
This is a big decision. Ask lots of questions and don’t be pressured! Reputable installers should not pressure you to sign a contract during your site visit. Below find information to help you get up to speed on the important points so you can ask good questions. You can find more information on EnergySage.com.
3Size your solar system
How much solar do I need? The size of your solar system will depend on how much energy you use, your sun exposure and roof. Generally, the best option is to install enough solar to cover 98% of your electricity use. However, if you have shade, a small roof or other site restrictions, you may need to install a smaller system.
Average system sizes. An average system in the U.S. is 6 kW based on average U.S. electricity use of 870 kWh/month to cover 98% of annual electricity use. However, monthly electricity use varies widely from just over 500 kWh/month on average in Hawaii, California, and Vermont to over 1,100 kWh/month in Louisiana, Tennessee and Alabama. So based on where you live, system sizes will vary from around 3kW to 9kW.
Do a quick check on Google Sunroof. If you want to do a quick check yourself, you can use Google’s Project Sunroof tool for a basic assessment. This tool computes how much generating capacity you need based on how much energy you use, your sun exposure, and how many panels can fit on your roof.
Future energy use matters. Are you planning to purchase an electric car or perform energy efficiency upgrades in the near future? Consider any plans to change your energy use when planning your system. Here are few to consider:
-
Energy efficiency upgrades. It makes sense to do energy efficiency upgrades like weatherization, insulation, efficient appliances, smart lighting, and power strips before you install your solar system. This will lower the size and cost of your system.
-
Adding an electric car. If you’re considering purchasing an electric car, you may want to increase your system by 2 kilowatts or more. The savings from driving an electric car with home solar are huge, so even though it may increase the initial cost of your system the payout is far greater. Ask your installer to help you calculate this.
-
Switching to electric heat pump heating. Also, replacing a gas, propane or fuel oil furnace or water heater with an electric heat pump unit will increase electricity use and require a slightly larger system. However, this will allow you to power your home completely on clean, renewable energy and be carbon free! Solar panels, electric car, and electric home heating = BIG impact.
Are you on the grid? Most homes have access to the electricity grid now. If you do, you likely have the option to tie your system into the electric grid. It is recommended to connect your home system to the grid so you can send extra energy you don’t need from your panels to the grid during the day and pull energy from the grid at night. This provides the flexibility of not relying on your panels for all your energy. If you don’t tie into the grid, you might need to increase the size of your system to generate enough to power a backup battery for nighttime or for rainy days.
Net metering. If you are able to tie into the grid, you likely have the option to be paid for the extra energy you send to the grid. In most states, there is a program called Net Metering where your utility tracks how much energy you send and receive and gives you credit for energy generated. In most states, you are paid the retail rate—the same price you are charged when you use electricity from the grid. However, in some states, these rates have been reduced and home solar owners are only paid wholesale rates for the energy they send to the grid, generally only a few cents per kWh as opposed to $0.10 - $0.20/kWh. This is a big difference and has a significant impact on the savings you will see from your system.
If your state pays only wholesale rates, this may impact your decision to install solar or your system size. When battery prices come down in the next few years, it may also contribute to the consideration of adding a battery to your home system to be able to store and use your extra energy at night which will capture the value of your energy and increase your savings. This is a bit complicated and best discussed with your installer. However, it is an important concept to understand as a solar owner. This state policy can have a huge impact on the savings and value of your home system.
Be sure to discuss all of your possible future energy needs with your installer when sizing your system.
4Learn about incentives and financing options
The cost of solar has dropped drastically—over 60% in the last 10 years. Lower prices, incentives, and new finance and lease options have made solar affordable for many homes in the U.S. In fact, there is no better time to install solar! Home solar is a win-win for your budget and the climate.
Average system cost. The cost of your solar system will depend on the size of the system and any local incentives. An average system of 6 kW will run about $12,800 after the federal tax credit in 2019. Depending on where you live, this can range from about $9,000 to $15,000 (after tax credit).
Tax Credit and incentives. There is a 30% federal tax credit available for all home solar system installations through 2019. After 2019, it drops to 26% in 2020, and 22% in 2021. Often state or local programs provide additional rebates and incentives. Check out the Sunrun website, DSIRE, or in the resources section below to find local program information. Low-income programs that help lower the cost of systems and installation are available in some areas.
Financing options. There are three main financing options for your solar system: outright purchase (pay cash), loan, and lease. Here’s how they each work:
Loans: Loan options have expanded and there are now many $0 down, low-interest rate loan options available.
-
Home Equity Loan. If you already have a home equity loan you can use this option. This would likely provide the lowest interest rate on the loan.
-
Solar Loan. There are a number of companies now specializing in home solar loans. Your installer can often help you with this and will likely have relationships with some of the lenders. A few key points:
-
Secured or unsecured - Some companies will require you to secure the loan with your home, however, there are many now that don’t.
-
Property Assessed Clean Energy (PACE) financing is a special option where you pay back the loan through your property taxes with a once a year payment. PACE financing is available in some areas.
-
Interest rates - Interest rates vary and change. Current ranges are around 3-8% for secured loans and can be more for unsecured loans.
-
Loan lengths - Average loan length is 10-20 years, but some can be shorter or longer.
-
Tax credit loans - Some companies will offer to also finance the Tax Credit amount to avoid large upfront costs.
-
$0 down - Some lenders offer a loan that is $0 down, with longer loan terms to ensure you are saving from day one.
-
Additional projects - Some companies offer to finance other projects like energy efficiency projects or battery storage options.
-
Qualifying - Most loan companies generally require a credit score of 700 or above, but some companies will approve loans with a lower score, typically over 640. However, PACE financing is not dependent on your credit score but instead is based on your home’s value. This provides an alternative option for loan approval.
-
You can find a list of companies providing financing in your state on Energysage.
Lease or power purchase agreement (PPA): Leases and PPAs are like renting your solar system. The installer will own the panels and charge you a monthly fee to use them, which will be less than your current electricity bill. Generally, you save 10-30% on your electricity bill. There is no upfront cost required and no need to get financing. You often have the option to purchase the system at the end of the lease. Since you don’t own the panels, you are not eligible for the tax credits or any other local incentives. You will save less money with a lease or PPA than with a loan and system ownership. However, if system ownership is not an option, this is a great way to choose home solar!
Purchase outright: If you are able to purchase your system up front (pay cash), this will result in the highest savings. The initial investment might be expensive, but most systems pay for themselves within 6-10 years. Then after that, any electricity you generate is free!
Determining the best financing option for your home requires careful consideration. Discuss with your solar installer and choose the option best for you.
5Install, flip the switch on your panels, and celebrate!
Celebrate! Sit back and enjoy the quiet, clean power being generated on your rooftop every day!