Is Solar Energy Right for You?

The questions to ask before you buy

Any company that installs solar electric systems (also known as photovoltaic, or PV, systems) can help you figure out if solar energy makes sense for your household. But as with any home improvement project, buyer beware. While reputable companies won’t try to talk you into a deal that doesn’t make sense, unscrupulous companies may overpromise on performance, overestimate how big a system you need, or underestimate potential problems at your site. Take the time to learn about the basics of solar energy, so that when you talk to the pros you can ask good questions, make sense of the answers, and know if you are getting the straight scoop.

Alternative Energy

It’s also wise to add up the cost of a solar electric installation in your area. In 2007, the average cost in the United States in 2007 was $7.62 per watt, after available state and federal incentives. That comes to roughly $15,000 to $30,000 for a typical 2 to 4 kilowatt system. But with a newly expanded federal tax credit and an increasing number of cities, states and utilities offering residents cash or loans to install photovoltaic (PV) systems, there’s never been a better time to go solar.

Even in areas with high electricity prices, it can take 10 years or more for a typical solar energy system to pay for itself. That’s still an excellent return on your investment-10% is much more than your bank pays you–but in most cases you must be willing to make the large up-front investment. As energy costs rise and the cost of renewables comes down, however, solar energy will become even more cost competitive. And in remote areas where it would be exorbitantly expensive to hook up to the electricity grid, a photovoltaic (PV) system may be the most economical choice.


Before You Put a Power Plant on Your Roof

Even though rebates and incentives are bringing down the cost of solar energy, it’s still a lot cheaper to save a watt of electricity than to produce one. Before ponying up for a PV system:

  • Look for free ways to use the sun’s energy. A PV system is a big-ticket purchase, so before taking the plunge look for free ways to capture the sun’s energy, like passive solar design, daylighting, or a good old-fashioned clothesline. Read our “Free and Low-Cost Solar Energy” article to learn more.
  • Invest in conservation. For starters, that means installing more insulation, swapping out energy-guzzling appliances for super-efficient models, sealing air leaks, and replacing incandescent bulbs with fluorescents. It also may mean changing habits: turning off lights and gadgets when you’re not using them, lowering the heat, skipping the air conditioning except on the hottest days, or piling on an extra comforter instead of switching on an electric blanket. If you do all of that first, you won’t have to invest as much in solar energy to bring your energy bill under control.

Is Your Site Right?

Assess your site. PV modules need south-facing exposure that’s not shaded by trees, buildings, or other structures. They can be installed on sloped or flat roofs, as long as there’s unshaded south-facing exposure. In general, the smallest systems require at least 120 square feet of unobstructed space; larger systems may require 1,000 square feet or more. But it doesn’t have to be on the roof. PV modules can be mounted on the ground, on walls, on window overhangs, and even on trellises where they can do double duty by shading your patio table.

Check out your roof. If you’re thinking of installing the PV system on your roof (which is where most people put them), assess the roof’s age and condition. If your roof needs repairs or if you’re planning to reroof within the next few years, do it before installing the PV panels. For more about roof and PV system maintenance issues, read our “Buying and Maintaining a Solar Electric System” article.

Plan ahead. If you’re building a new house or planning an addition or major remodel, think solar. That means orienting a new house or an addition so there’s plenty of unshaded, south-facing roof space for PV. If you can’t squeeze a PV system into your construction budget, at least plan for where it can be installed in the future and run conduit (without the actual wiring) from that area to the utility meter. This will make it less expensive and less disruptive to install PV later.


What Size PV System Do You Need?

Size it right. Typical residential PV sizes are between 2 and 4 kilowatts. (One kW equals 1,000 watts-the amount of power needed to keep ten 100-watt light bulbs burning.) How large a system you need depends on how much electricity your household uses, what portion of that demand you want to offset with the PV system, how much unshaded south-facing space you have available, and how sunny it is in your part of the country.

Solar companies can usually estimate system size over the phone, after asking about your current electricity use and looking at your property on a satellite map to check out shading issues.

If your property looks feasible for solar, they’ll come to your house and do a detailed analysis. (Learn more about this process in our article “Buying and Maintaining a Solar Electric System.”)

Reach for the sky. Even if a PV system only offsets a portion of your electricity use, you’re doing something good for the Earth and bringing your energy costs under control. If you can’t afford a system big enough to supply all your energy, consider installing a smaller system now and expanding it later. But if you’re ready to set really high goals, shoot for a zero-energy home. That means generating as much energy as you use over the course of a year. To do that, you’ll first need to get your energy use as low as possible. (Hang out on this site and you’ll become an expert in doing that.) And then produce the rest with renewable energy systems.

Don’t supersize. While a zero-energy home is a terrific goal, it usually doesn’t make economic sense to buy a system that generates more electricity than you’ll use over the course of a year. That’s because many utility companies won’t give you any money back if you put excess electricity into the grid over and above what your household uses over a 12-month period.


Can You Afford It?

  • Federal tax credit.Homeowners who install a solar electric system can take a tax credit on their federal income tax return of up to 30% of the installed system cost.
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    This credit applies to systems placed in service from January 1, 2006, through December 31, 2016 (for systems placed in service before 2009, the credit was capped at $2,000). So if your PV system costs $20,000 after state or local rebates, you can subtract $6,000 from the federal taxes you owe. If you can’t use the full credit in the year of the installation, you can carry it over to future years.

  • State, local, and utility incentives. Depending on where you live, tax credits, rebates, and other incentives can help bring costs down. These incentives are typically offered by the state government or by the local electric utility; check the DSIRE database for incentive details by state. New York State, for example, offers homeowners a personal tax credit of 25% of the system cost, up to a maximum of $5,000. Even cities are starting to offer innovative programs to help their citizens defray the upfront cost of PV. San Francisco gives households a rebate of $3,000 to $5,000. The city of Berkeley, California, provides loans to homeowners who install PV systems; the homeowners pay no money upfront and pay off the loan over 20 years as part of their property tax bill.
  • Loans. Taking out a loan for a renewable energy installation often makes good sense. If you’re building a new house, you can fold the cost into your construction loan. If you’re putting the PV system on an existing house, you might finance it with a home equity loan. Some banks now offer loans specifically for purchasing a PV system. Depending on the situation, your monthly loan payments for a solar system may be on par with or even lower than your old monthly electric bill. After the loan is paid off, the electricity generated by the system is free.
  • Leases. Recently a few companies have been offering leasing arrangements. In these deals, the solar company installs a PV system on your home and retains ownership of it. You make monthly lease payments that should be lower (or at least no higher) than what you’re currently paying for electricity. When the lease ends, you may have the option to buy the system or have it removed. Since this is a relatively untested arrangement, make sure you understand all the fine print before making a commitment.

What If PV Doesn’t Make Sense for You?

PV has a lot going for it, but it’s not the solution for everyone. If your property gets too much shade, if you don’t own your home, or if a PV system is out of your price range, you can buy green power instead of generating it.

To do that, first check with your local electric company. They may offer a green power option from sources like solar, wind, geothermal, biomass, biogas (such as methane), or low-impact hydro. When you buy green power you’re paying a small premium to support the utility’s renewable energy generation, but you’re not actually getting “green electrons” delivered to your home. Electrons are indistinguishable; those generated by renewable energy sources go into the grid and mix with electrons from all the utility’s other sources. Yet, if you are interesting in directly supplying clean energy to your residential or commercial area consider investing in fuel cell technology. To learn more visit ClearEdge Power.

If your utility company doesn’t offer green power, don’t despair. You can purchase “green tags” (they’re also called renewable energy certificates, RECs, or green energy certificates). It’s similar to buying green power from your local utility, except that when you buy a green tag, you may be supporting green power generation in other parts of the country, not necessarily in your region. When you buy a green tag, you’re rewarding power suppliers that offer green power, but you’re not necessarily funding the development of new renewable energy sources. To find out more about green power and green tags, check out the U.S. EPA’s green power website.

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