Once you have decided to go solar, the first challenge will be choosing the right installer. Because solar is a competitive but specialized field, you will find a great deal of conflicting information. But don’t worry, this often confuses even the savviest of homeowners.
Turning to “neighborhood” websites or social media for recommendations only provide half of the information and you can be certain that some of the information is biased (i.e. the referring source is related to the recommended party).
Plus, you never know if the recommending person has the same perception of cost, quality, or timing (the 3 factors in judging any service provided).
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We have seen, far too many times, someone recommend a service professional for solar installations based on their experience with completely different tasks (like electrical work). This is an ever-growing problem.
Our top recommendation is to collect multiple bids and try to obtain as much information as possible. Do this up front and seek ways that help you accomplish this task as efficiently as possible. Save your energy to focus on making the final decision (not the first round of filtering).
In 2015, a national polling company released data that showed 30% of all homeowners believe the hardest part of any home improvement projects is simply finding the right person.
You are not alone is researching this topic and solar is no exception to this rule. Because the solar industry is so complex, it is often hard finding the correct information and that is what we are hoping to help you accomplish.
In the U.S., solar energy began to gain popularity in the late 2000’s. Prior to that, renewable energy was a niche market and, if there were a small handful of installers (by handful, maybe 2 or 3) in an entire market, it was probably “crowded.”
During this time you could usually call the panel manufacturer and ask for an installer. The industry was so small that the network of installers were actually connected from coast to cost. One could literally ask someone in Massachusetts for a recommendation in Florida. Chances are they would know someone!
Once solar began to grow, the industry became more complex and changed. Regarding the actual installation of solar, it is not that complicated. Any qualified contractor who is experienced and comfortable working on rooftops can probably “fake” their way to powering up the system.
But that is probably not what you are looking for, because we all want to have the system installed properly and be the most efficient system possible. The installation methods rely on the simple principals of roof construction and if the contractor understands this, he can handle the equipment install.
Most problems occur in the design and electrical portion of the installation, and that is why you first need to make sure your solar installer is a specialist. As you are likely aware, solar panels produce DC power and require inverters to invert (*not “convert”, technical jargon) the energy to AC (which is what you home uses). We also know that panels require sunlight but, do you know how shading or orientation can effect output?
These are questions that you average contractor may not fully understand but an experienced solar installer will take into consideration–almost by nature. You need to make certain that the installers you review, at a minimum are groups who understands all of the issues involved in designing, installation, and maintaining an efficient solar energy array.
Remember, your panels could be powering your home for the next 30 years- efficiency, design, and even aesthetics should be topics any good installer speak with you about, from the beginning.
In order to help you on this topic, we have put together the following items that we think will help. You have to first use your knowledge and intuition, the same skills that are implemented when hiring any home improvement professional.
Then consider the complexity of solar and how to insure that you hire the right pro. But don’t worry, with proper guidance you can find the right installer who will make sure the array you purchase is the best one for your unique home, and goals.
– Services Provided is an important topic. You want to find out what services are included in the contract. This should include permits, change orders, registration of SRECS, Utility Interconnection, etc.
– Regarding Price, do not automatically accept the lowest price. In fact, we recommend first choosing the highest ranking solar installer from your evaluation and then negotiate price with that specific person.
7. Finally, find out if the installer offers any financing or credit options. Even if you plan on paying for the system in full, some installers have special incentives such as interest fee financing to provide funding until rebates are obtained, etc.
Hiring a solar installer can seem like a daunting task at first. Although we discussed how the industry has grown, it is still small enough that you can obtain good information from various sources in your local area to double check everything.
Luckily, most homeowners who have already had solar installed, are passionate solar enthusiast and are happy to talk about their experience. The important task is to speak to as many homeowners as possible and make an evaluation that works best for you and your own goals. Go with your feeling and enjoy the process- most of us did!
In the early 2000s, Massachusetts was one of the leading states in the initial solar energy revolution that began sweeping across the United States. The industry has grown tremendously since those early days and Massachusetts continues to be a pioneer, ranking in at No. 6 for Solar Growth and often providing some of the most aggressive payback period for homeowners in any state.
While many other municipalities have joined in and are now embracing solar, Massachusetts continues to promote the technology and experience some of the highest growth due of positive public policies and a solar friendly grid which helps promote renewable and other forms of distributed power.
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In Massachusetts alone, over 14,582 residents identify as being involved in the solar energy industry within some capacity. MA is home to over 500 companies and estimates claim these numbers may double over the next 5 years. Because of install and equipment price declines of nearly 55% over the last 5 years, the regions solar production is quickly approaching 2,000 MW of generating power. In fact, it is estimated the growth will continue to increase at an increasing rate and quickly top over 3,000 MW of capacity within the next few years.
Massachusetts legislatures recently debated some of the issues that accompany such explosive growth and are currently looking at ways to address the explosive growth. Currently there are minimal effects on the public utility grid, however, officials are concerned that as the State approaches 3,000 megawatts, a majority of energy might be installed in places where the grids are not able to handle such large amounts of energy generation. This would be due to an excess of energy being produced which is higher than the current demand.
Unlike other solar states, Massachusetts’ summer climate is much milder than southern states and this issue remains a great concern, especially in the higher elevations of the State and along the coastline. Comparatively, these areas require less energy usage during hot summer months when solar produces a bulk of energy. Energy events are less common which means the supply of energy might exceed the grid’s capacity to carry the energy outside of localized areas.
This can cause grid strain and utilities are looking to enact measures that give them the authority that temporarily suspends net metering in order to prevent overcharging of power lines. (*in southern states, energy usage spikes higher during hot summer days than in these effected areas- these are called “events” and oversupply has a higher threshold).
If you are considering solar today, do not let this deter you. In fact, 2018 is expected to be one of the best years for solar in Massachusetts and local legislators are hoping for this to occur. In 2016 the Legislature and Governor passed An Act Relative to Solar Energy in order to continue promoting a homeowner’s ability to install solar on their home. This legislative action raises the cap of solar energy allowed in the State to the maximum load that the grid may handle (raising from 5% to 8% of total state energy usage coming from Solar Energy). The act was passed with a bipartisan measure which recognizes the positive effects that solar energy has on both the environment and economy of Massachusetts, especially smaller town or suburban area surrounding Boston.
If you are considering Solar Energy on your home, and live in Massachusetts, below is a list of the various benefits, laws, and incentives to take action now. As the State approaches the 8% threshold, many of the economic benefits may be reduces so therefor, we recommend speaking with a licensed solar expert to consider taking action as soon as possible.
These incentives can be combined with several Federal Programs that include the same 30% tax credit that many homeowners are currently allowed to take.
As one can imagine, Massachusetts is a very serious state when it comes to cleaning up the environment and promoting the use of renewable and distributed energy products. As the State approaches the 8% limit, many of the programs are set to be reduced or simply expire, making 2018 to be the year of solar according to several industry insiders.
When you combine these incentives with the low cost of installing solar and various financing options, there are several scenarios where solar will make the best sense for Massachusetts homeowners.
When it comes to incentives, it is important to consult a professional. We recommend speaking with both your installer and personal accountant prior to making any decisions on purchasing and having a solar array installed in your home. Solar incentives can be great, after all, they allow the average homeowner to reap the same investment benefits that used to be reserved for large corporations and utility power plant operators.
Solar is an excellent way to reduce your energy bills and help the environment. Because the recognition of this is widely accepted, many Local, State, and the U.S. Government have various incentives designed to provide financial benefits for those choosing to install solar on their properties. Some of these incentives are in place to make the actual installation process more efficient (thus less expensive), or reduce the period of time to recoup the initial capital outlays. These are all part of an overall objective that the United States must switch to clean, energy independence, and by installing a solar array on your own home or property, you help contribute to this effort.
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Solar is often referred to as the “individual’s power,” or “power for the masses,” and below are some of the incentives that you can obtain by installing solar on any property you manage. As a professional, solar incentives are usually broken into 3 categories (1) Federal, (2) State, and (3) Local, with 2 subsections (a) credits, or (b) rebates. Incentives vary from location to location and the type of credit can either come in the form of a credit against a financial obligation or actual disbursement of funds from relevant sources.
*Please note- these incentives were in place during the time of this article being written (December, 2017). It is important to consult with a qualified and local professional to verify your personal ability to participate in each of the programs.
As an individual, many of the federal incentives are designed to help you capture the same tax credits that large utility operators have enjoyed for years. Because large companies often have large tax burdens, the individual Federal Incentives help a homeowner obtain the same credits but in a way that might be more suited for an individuals tax scenario. Individuals do not have a relatively large tax burden and therefore the federal government allows the credits to be taken which are designed in a way to benefit the individual over the corporation. These include:
If you live in Massachusetts or Maryland, we previously discussed the various incentives in these two states here; (Mass) (Maryland). The incentives in states are typically state-wide rebate programs, Interconnection Standards, Sales and Income Tax Credits, Renewable Energy Portfolio Standards, and often small grants provided through local utilities or municipalities.
An excellent resource to review what is available in your state can be found by visiting www.dsireusa.org, a website that is maintained by The N.C. Clean Energy Technology Center. This website is widely viewed as the most comprehensive list of State and Local incentives, and it is update regularly. We also highly recommend consulting with a local professional that has experience in working within your municipality and understand the various application processes and permitting systems.
Other solar leaders are: California, North Carolina, Arizona, Nevada, New Jersey, Utah, Georgia, Texas, New York, and Maryland.
Each state has various regulations, rebates, and credits. Some local municipalities also programs which can be limited to projects installed within a city or boundary perimeter. Because the programs vary in the type and amount of offerings, it is difficult to determine trends. Often the offering municipalities are diverse from each other and although renewable energy is often associated with more progressive ideologies, this is often not the case on local levels (remember, the current tax credit structure of solar energy was first signed into law under George W. Bush).
There are relatively few municipalities that offer solar incentives. Some cities and towns are very progressive when it comes to energy policies and offer incentives on top of the other federal and state incentives. These incentives can range from a flat payment for each installation to faster or cheaper permitting processes and everything in between. Contact your local town hall for information specific to your location, but keep in mind that most cities and towns don’t offer anything.
Like any other product, there are sometimes rebates or discounts on the purchase of certain solar panels at certain times. Your installer would be familiar with these and they change over time and by manufacturer so there isn’t a better method than having the conversation with your installer. They’ll be more than happy to help you get the best deal on the equipment.
Credit: A way to help the homeowner offset paying an amount that would otherwise be due. Tax Credits are common for solar energy and although the homeowner does not get a check (as they do with a grant), the credit is an amount applied against the usual tax credit (income and property tax credits).
Deduction: This is an amount that is allowed to be applied against (reducing) your taxable income. Unlike Credits, this amount is not recouped on a dollar for dollar basis. Instead it is an amount that is subtracted from your taxable income to reduce your overall tax burden.
Distributed Energy: Smaller power plants that are typically limited to localized areas or single properties/ homes.
Rebate: The same as a grant, a rebate is a program that allows for actual monetary compensation. Typically they are tied to an earmarked fund and once registered within the system you space is reserved. Grants and rebates do expire so keep up to date with these and register as soon as a design is finalized.
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Incentives are an integral part of the Energy Market in the United States. Across the globe, all energy is subsidized in order to lower the overall cost and spur economic development. The United States is no different.
The first major federal solar incentives that are still in use today were enacted and signed during the presidency of George W. Bush. This includes a program for a federal tax credit. Commercial systems can also depreciate the system on an accelerated schedule, however, we will not use this in our calculations below.
In Maryland, a homeowner choosing solar as their next home improvement project can utilize the following incentives:
Federal: 30% Tax Credit
Baltimore County: $2,500 property tax credit
In order to determine the payback with the incentives, we have used many of the same calculations from the example above. However, we will add the incentives listed above. Most of these savings are “front-loaded,” meaning they are recouped within the first few year to accelerate the payback period.
As you can see from the illustration above, the payback period occurs toward the end of the 4th year (highlighted in green). With individual homeowners now able to obtain many of the tax credits and/or grant programs that large corporations obtain when building utility power plants, solar energy becomes a more attractive financial play for homeowners.
Finally, financing a solar energy system can provide a stronger incentive to have the solar array installation. When comparing your new solar array to the option of staying on the public utility grid, you must take into consideration that you will likely have to spend some money up-front. Financing the system can often reduce this requirement and can make your new solar energy system more attractive.
Whether or not solar energy is worth it depends on each individual circumstance. The information and calculations above were for specific examples and may vary from homeowner to homeowner but you can see that countless financial scenarios are possible. Every person has various sensitivities for risk and the assumptions above are reliable, however they are for example purposes only.
For instance, we did not consider maintenance, replacement of equipment, insurance, or other items that you may or may not encounter. Financing your new solar array may come with varying terms and may also affect payback. Often, banks and installers offer different terms for solar energy installs. Please consult with an attorney, accountant, your installer, or another qualified professional prior to making any decisions to partake in a solar installation.
There are two main take-aways we hope you get from this:
*Derate Factor – Solar panels are warranted to produce electricity for 25 years. Because they are made from organic compounds, the cells degrade over time. Thus, a derate factor is assumed because each year the panels will produce slightly less electricity than the year before. A .87 derate factor is used.
If you are a homeowner and are considering having a solar energy system installed, you’ve probably seen the term “Solar Renewable Energy Credit” or “SREC”. Although not a widely known concept, if you choose to install a solar array, understanding SRECs is incredibly important.
A Solar Renewable Energy Credit (SREC) is a certificate that confirms your solar array has produced a specific amount of renewable energy in a year. Because many state energy distributors are required to purchase or offset a percentage of renewable energy each year, the SREC is a certificate they can purchase in order to contribute to this requirement.
When you have a solar array installed, the contractor should register the system with the grid operator and file the details of your system. This is the start of the process.
Depending on the amount of energy that your system has produced each year, you will be given number of SREC certificates (1,000 kWh = 1 SREC). They are usually electronic records; so don’t expect an actual paper certificate. Each certificate has a value and can be traded as a commodity. The sale of SRECs takes place in SREC Auctions handled by SREC Traders (again, your solar install company should help register for this).
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If you do not have a solar energy system on your home, your electricity comes from the utility lines that connect your house to the power grid. Most properties do not have energy storage systems (batteries) and therefore the electricity from the power grid is delivered at exactly the moment that it is required (this is called “On-Demand Power”).
Between your home and the power grid is a meter, with which you are probably familiar. This energy meter is used by the power company to determine how much energy you have consumed during a period of time and how much you will be billed.
Before smart meters, the typical electric meter was powered by simple diodes, which powered a large wheel within the energy meter. Through a series of gears, dials turned on the front of the meter and gave the power company an accurate measurement to the energy which was delivered to your home. When you used energy, the term was coined that your electric meter was “moving forward,” or pushing energy forward and into your home.
In the early days of solar energy, when a home had solar installed on the property and more energy was produced than consumed, the meter would literally begin spinning backwards as electricity was pushed back onto the grid (FYI – electricity is like water, it follows the path of least resistance and can flow backwards back onto the grid if the path leads it that way).
At the end of the month you were only billed for the amount that was shown on your electric meter and, without having to make any calculations, the energy you were charged for was the “net” amount that was used during that billing cycle. This method was somewhat unofficial in certain areas and many municipalities and utility companies did not have net metering laws. In fact, some meters were made without the ability to “spin backwards” as a reaction to this.
The recent growth of solar energy also coincided with the widespread implementation of Smart Meters. Smart Meters use a completely different type of method to measure energy and rely more on electronics and processors.
The newer smart meters are capable of sending signals back to the utility grid operators in real time, and with more detail that tells how much energy you were using at a and how much energy you might also be producing. Because the new systems were capable of measuring so much more data and the popularity of solar had begun to grow, municipalities had to establish net metering laws in order to regulate the size, rates, and methods to accommodate solar energy.
Net Metering is simply a set of guidelines that dictate how you will be billed for the difference between the energy that you used compared to the energy that you produced. These laws vary from state to state and will tell you how to determine if you pay the “net” for the month and how your particular utility company will handle any excess energy that is produces and put back onto the grid (there are a variety of options).
During the day, if you use more energy than you produce, net metering is not at play. However, because many solar energy arrays produce a bulk of their energy during periods when many homes are unoccupied, there are several scenarios where your home has a surplus of energy. These overages are kWh of energy that you are able to “push” back onto the grid and obtain credits for them, thanks to net metering laws.
The reason that net metering is important is because a majority of solar energy arrays built produce up to 85% of the properties annual energy consumption during the sunniest 6 months of operation. Because homes use the least amount of energy when solar arrays are working the hardest, it would be difficult to offset your total usage if you were limited to only consuming what you produce and losing the extra energy without credits (unless you have batteries, which is covered below).
Many municipalities have recognized the benefits of net metering and the laws are not widespread. In summary, net metering allows you to produce excess energy during peak periods and retain those credits to use either later that month, or within a single year from the date of the credit. Because you do not need to have on-site batteries and because you are producing energy that can service other neighbors, there are many benefits to this program. However, we recommend you also check with your local solar company to make sure that you understand if any costs might be associated and that those are taken into your evaluation as well.
Without net metering, in order to capture solar energy and not “lose it,” you would have to have battery systems to store the energy you produce during the day and make it available for your home at night or during the winter months when solar arrays product less electricity.
Batteries are expensive, and even though Tesla and other battery manufacturers have begun making great advances in battery storage systems, the fact remains that they add to the cost of your solar energy system. With net metering, the homeowner has no need for a battery backup system in order to recoup their excess energy and essentially the power grid acts as a battery backup for them.
Although many homes are equipped with some form of battery system or a generator, the cost to handle the amount of energy an average solar array produces would be tremendous. Even on the lower end, batteries could add at least 15% to the cost of having an array installed. This is not even considering the cost to maintain the battery or normal replacement, which can occur in the 10 to 20 year range (most solar panels are warrantied for 25 years and will have a useful production life of 30 years).
Thanks to net metering and the avoidance of having to purchase batteries, the cost for a new residential solar array is much lower and requires less maintenance. Large, utility scale power plants do not have batteries either and by foregoing this purchase, the residential solar array systems costs are much lower and can be more competitive with traditional power production.
In addition to saving the financial cost of a battery, you are also saving on the amount of raw materials required to make your new energy array. Because the goal of many homeowners who choose solar energy is to reduce their overall carbon footprint, skipping the battery bank is an added environmental benefit.
A simple car battery requires 140lbs of Lithium alone. This is in addition to the Lead and other metals/ plastics required to manufacturer a battery. A home would require up to 4 times the amount of energy storage in order to last through the night and on cloudy days when solar is less efficient.
As discussed previously, the resources required for batteries are tremendous and can be avoided thanks to net metering. The production of an average car battery can create carbon emissions to equal the amount of carbon that your car produces in 6 months. Imagine the impact that has on a battery bank large enough to power your entire home?
For residential solar arrays with an accompanied battery bank, it is estimated that in many cases the battery bank could add an additional year of production required to offset the carbon emission from battery manufacturing. Simply put, avoiding the batteries and subscribing to net metering is a good environmental decision in most cases.
Having said all this, there are cases where it makes sense to install a home battery back up system and when you’re installing solar is the best time to review whether a battery system is right for your home.
During the summer, it is becoming more common for energy companies to partake in “Emergency Cycling Events.” This is when the utility company isn’t able to produce enough electricity in order to meet the demand (imagine a hot summer day, home AC systems are running at their peak, office lights and computers are working away, etc). In some cases it would be too expensive to ramp up “peaker plants” which are auxiliary power plants that use natural gas or oil.
Therefore the utility company will instead dial down the amount of energy it sends to specific customers. These “rolling brown-outs” occur during the hottest times of day and because of grid strain, you actually see a bottleneck of energy being delivered. (*Note – blackouts are the same as brownouts but include times when electricity service is completely cut off to a specific area. This is a rare event in the United States and only occurs in the most extreme cases).
One answer to the grid strain is distributed energy production. In most cases this refers to smaller and utility scale solar arrays installed on commercial rooftops or farms. However, it can be argued that the array on your residential rooftop can serve that purpose.
During the summer, an average neighborhood may experience up to 5 “emergency events.” If everyone had solar, and energy production was at it’s peak (ironically, solar energy produces the most power during these types of events), it can be argued that grid strain will be reduced and your excess energy may also help keep your neighbors lights on!
Although net metering is a positive policy which helps solar, one thing any homeowner must consider is the volatility of the market. Depending on your state and the local regulations, Net Metering may be determined by either (1) kWh produced, or (2) value of the energy when it is being produced. This 2nd measure basically puts a value on the kWh which the homeowner back feeds onto the grid and then issues a credit in dollars to their bill.
This becomes an issue because the homeowner is subject to market conditions of the “spot market,” which is the value of electricity based on current market conditions.
For example, in the late spring when solar panels are getting maximum exposure but temperatures might not be that high, most houses use little to no electricity during the day if they are unoccupied and the owners have their HVAC turned off (as often the case in states like Massachusetts, Maryland, New York, Pennsylvania, and Virginia). In this case, many solar systems in a concentrated area or a simple overage of energy being produced can drive the market rates for energy extremely low. (In a rare case in Texas, there was such an overage of electricity that a Texas wind farm had to shut down operations because there was actually a “negative” value on energy, meaning they had to pay a penalty for producing it.)
If your local municipality has net metering laws which are centered on value, the financial payback for solar can be affected. It is recommended that you to speak with your solar installer about these fluctuations and consider various scenarios accordingly.
The way your net metering values are calculated can greatly affect your bottom line.
In summary, net metering allows the utility grid to act as your own personal battery system. In most cases there are associated fees with keeping the credits you have pushed back onto the grid, however those are minimal compared to the energy savings you will be rewarded with in the long run. Net metering has allowed many homeowners to install larger systems for less money, which is something that benefits us all.
Please see the sources listed below and a great reference for solar energy regulations is https://www.dsireusa.org, a non-profit with an excellent system for viewing all available credits for solar, wind, and other home improvement projects.