Are Solar Panels A Good Investment?

A relative is considering to go solar, so I decided to look for information about the topic to know how the system works, the pros, and the cons. Here it is what I found

Are Solar Panels a Good Investment? A Solar Panels Installation is a good investment if the savings in your electric bills are substantial and you can recover the investment in an acceptable period of time.  

Important factors to consider are the cost of the investment, the savings that the solar project is expected to produce, the cost of energy in your area, the availability of Tax Credits in your state, and how long is going to take for you to recover the investment.

The Installation Cost of Solar Panels in The U.S.

The average installation cost of Solar Panels in the U.S. is between $3.0 – $4.0 per watt, which should include materials, parts, and labor.

Installing Solar Panel should be planned carefully, as is a major investment.

If you are planning to install Solar Panels, get 2 or 3 quotes to compare costs before making a final decision.

Also, you don’t need to install all the panels at once, meaning if you plan to have 10 panels installed, you can start with 5 and proceed with other 5 at a later time. It will depend on your budget.

You can choose to have a system installed that will cover the entire electric load of your home, or you may opt to offset a certain percentage.

Let’s take a look at those factors with an example:

How Much kWh Are You Using and Paying Every Year?

If you have your electric bills for at least a year, you can summarize your expenses in a spreadsheet.

If you don’t have the monthly bills, you can get the information from your utility company via online.

The bills from the utility company show how you are charged. Some of the charges are:

Power Access Charge (PAC) is a FIXED Fee from the Utility Company: Actually $12.50 in my area; it was $9.8 six months ago, which is equivalent to a 27% increase.

We pay those Fixed fees regardless of how much energy we use, and the utility company increases them every year, which is a sad thing – out of our control.

Los Angeles Tax: 10% of your electric bill from the utility company.

State Charge: $0.0003/kWh you use – If you used 1000kWh in a month, your charge will be $0.3

The Utility company has a rate for the first 700 kWh used – Called Tier 1 Energy and another rate – Tier 2 Energy per kWh over 700: So if you use 1000 kWh in a month, you will be charged:

Tier 1 Energy for 700kWh: 700lWh*$0.172/kWh = $120.4

Tier 2 Energy charge: 300kWh*$0.21/kWh = $63

Total charge: $120.4 + $63 = $183.4

In your bill, additionally to the number of days and kWh used, you can find the average daily kWh usage and the daily cost.

Once you have your yearly expenses you need to figure out what savings the solar panels will give you.

In this example, I will try a yearly usage of 4500kWh with a charge of $980 from the utility company.

You can view or download a pdf file as an example of an electric bills summary here: Electric Bill Summary

Installing a 4 kW Solar System

A key factor is your yearly kilowatt-hour usage, and how much are you paying for it.

You can get that figure from adding up all your kWh use per month if you happen to save your bills, or you can get it directly from your utility company.

Solar Panels have 25 years guaranty

The installation cost include: Panels + Micro-inverters + Hardware + Installations + Permits

Installation cost per Watt: $3.5

Total Cost for a 4kW System: 4*1000*3.5 = $14,000

To estimate the generation of electricity in kWh/year below, I used the Solar Hours Calculator by Zip code:

Zip code 91606, and a cost per kWh = $0.172

A 4kW Panel system will generate approximately 6,570 kWh/year, and $1,135 in savings.

Actual Energy Usage Vs. Energy Projected With a 4kWh Panel System

The actual energy usage is 4500kWh.  A 4kWh Panel system will produce approximately 6,570kWh per year which will cover 100% the actual usage.

The exceding energy could be sold back to the utility company. You need to verify how they operate when that happens.

It is then worthed to install the 4kWh system, as it will cover your actual needs and provide a good cushion for future growth.

Be aware that even with a system that covers 100% of the electricity needed at your home, the utility company will still charge you for the access to their network, in this case, the Power Access Charge (PAC): $12.50

Let’s see now how long will it take to recover the investment.

How Long it Will Take to Recover the Investment?

Initial investment: $14,000.

The Tax Credit in California in 2019 is 30% of the cost or $14,000*.30 =  $4,200

Cost of the system after Tax Credits: $14,000 –  4,200 =  $9,800

No. of years to recover the Investment: Investment/saving: 9800/1135 = 8.63 years

As the solar panels have 25 years guaranty, the system will continue to provide a saving of $1,163/year for at least 15 more years.

The installation will also provide coverage against future increases in the electricity from the utility company.

California Tax Credit for Solar Panels

With the current legislation, the California Tax is as follows:

The year 2019: A 30% Tax Credit is available for systems placed in service through December 31st.

For the year 2020: The Tax Credit will be 26% through December 31st.

For the year 2021: The Tax Credit will be 22% through the end of the year, then it will drop to zero.

The federal tax credit is a one-time credit but may be carried forward if not completely usable in the system installation year.

Please consult with a tax professional for the current rules.

Main Components of A Solar Panel System

The main components of a Solar Panel System are:

• Solar Panels

Most modern solar panels are made up of many silicon cells or photovoltaic (PV) cells which generate direct current (DC) electricity from sunlight.

It is light energy or irradiance, not heat, which produces electricity in photovoltaic cells.

Solar panels also known as solar modules are usually installed together in strings to create a solar array.

During cloudy and overcast weather solar panels can still generate energy but at a lower rate.

The amount of light energy is known as solar irradiation and it is usually averaged over the whole day using the term Peak Sun Hours (PSH).

The location of the panels and its orientation and tilt angle influence in the generation of electricity.

The photovoltaic effect is the process of converting sunlight into electricity. This process gives solar panels their alternate name, PV panels.

Solar panels are given output ratings in watts. This rating is the maximum produced by the panel under ideal conditions.

Output per panel is between 10 and 300 watts, with 100 watts be a common configuration.

• Inverters

Solar inverters are used to convert the DC electricity generated by the solar panels into alternating current electricity (AC) for use in our homes or businesses.

These are the types of inverters used in solar power:

String inverters: Solar panels are linked together in series and the DC electricity is brought to a single inverter to convert the DC current to AC current.

Microinverters: In this system, each panel has its own microinverter attached to the back side of the panel.

The DC current produced by the panels is converted to AC on the roof and is conducted to the electrical switchboard.

String inverter with power optimizers: Advanced string inverter system can use small power optimizers attached to the back of each solar panel.

Power optimizers monitor and control each panel individually to ensure they are operating at maximum efficiency.

• Solar Array Mounting Racks

  Solar panels are joined into arrays and commonly mounted in one of three ways: on roofs; on poles in free-standing arrays; or directly on the ground.

  Roof-mounted systems are the most common and may be required by zoning ordinances. This approach is aesthetic and efficient.

The main drawback of roof mounting is maintenance. For high roofs, clearing snow or repairing the systems can be an issue.

Free-standing, pole-mounted arrays can be set at a height that makes maintenance easy.

The advantage of easy maintenance must be weighed against the additional space required for the arrays.

Ground systems are low and simple, but cannot be used in areas with regular accumulations of snow.

Space is also a consideration with these array mounts.

Regardless of where you mount the arrays, mounts are either fixed or tracking.

Fixed mounts are preset for height and angle and do not move.

Since the angle of the sun changes throughout the year, the height and angle of fixed mount arrays are a compromise that trades optimum angle for a less expensive, less complex installation.

Tracking arrays move with the sun. Tracking array moves east to west with the sun and adjusts their angle to maintain the optimum as the sun moves.

• Array DC Disconnect

  The Array DC disconnect is used to disconnect the solar arrays from the home for maintenance.

It is called a DC disconnect because the solar arrays produce DC (direct current) power.

• Power Meter, Utility Meter, Kilowatt Meter

  For systems that maintain a tie to the utility grid, the power meter measures the amount of power used from the grid.

• In systems designed to sell power to the utility, the power meter also measures the amount of power the solar system sends to the grid.
• Breaker Panel, AC Panel, Circuit Breaker Panel. The breaker panel is where the power source is joined to the electrical circuits in your home. A circuit is a continuous route of connected wire that joins together outlets and lights in the electric system. For each circuit, there is a circuit breaker.Circuit breakers prevent the appliances on a circuit from drawing too much electricity and causing a fire hazard.When the appliances on a circuit demand too much electricity, the circuit breaker will switch off or trip, interrupting the flow of electricity.

• Charge Controller

  The charge controller – also known as a charge regulator – maintains the proper charging voltage for system batteries.

  Batteries can be overcharged if fed continuous voltage.

  The charge controller regulates the voltage, preventing overcharging and allowing charging when required.

• Batteries – 

  Batteries can be added to the system to provide power at night.

  However, they are expensive and need to be replaced after 5 years or so, depending on the battery type.

• Backup Generator

  For systems that are not tied to the utility grid, a backup generator is used to provide power during periods of low system output due to poor weather or high household demand.

  Homeowners concerned with the environmental impact of generators can install a generator that runs on alternative fuel such as biodiesel, rather than gasoline.

Types of Solar Systems

On-Grid System

The On-grid or grid-tie solar systems are the most common and widely used by homes and businesses. The system is connected to the public electricity grid.

Any excess of solar power generated is exported back to the electricity grid and you will get paid a feed-in-tariff (FiT) or credits for the energy you export.

On-grid solar systems are not able to function or generate electricity during a blackout for safety reasons.

The meter  

The meter could work differently in many states and around the world.

In some systems, the meter could measure all solar electricity produced before reaching the switchboard.

In other areas, the meter measures both produced and exported electricity and the consumer is charged or credited for the net electricity used over a billing cycle.

The electricity grid 

The electricity that is sent to the grid from your solar system can be used by other consumers on the grid.

When your solar system is not operating – like at night time – or if you are using more electricity than your solar system is producing, you will start consuming electricity from the grid and you will be charged for it.

Hybrid Systems 

A Hybrid system combines solar and battery storage and are now available in many different forms and configuration.

The system is connected to the electricity grid and can take advantage of the battery storage as well.

The system is able to store energy generated during the day to be used at night. When the stored energy is depleted, the grid function as back up.

A Hybrid system charges the batteries via cheap off-peak electricity.

The Battery Bank 

In a Hybrid solar system, any excess of power will be sent to the battery bank, which will stop receiving power when the batteries are full.

Once the batteries are full, the remaining solar power can be exported to the grid via the meter.

When solar power is not in use and if the usable power of the batteries has been drained, then the power will be imported from the grid.

Off-Grid Systems

An Off-grid system is not connected to the electricity grid and requires battery bank storage.

The system must be designed to generate enough power during the day, and have enough battery capacity to meet the home’s requirement even during times when there is less sunlight.

Off-grid systems are much more expensive than on-grid systems and are usually needed in more remote areas that are far from the electricity grid.

The battery bank in an off-grid system 

The solar power is used first by the appliances in the property, and the excess of energy is sent to the battery bank.

When the solar system is not working, the appliances will draw power from the batteries.

Backup Generators

In off-grid systems, a backup generator could be needed as a backup power source to provide electricity to the house and to recharge the battery bank.

Things to Consider Before Installing Solar Panels

1. The condition and shape of the roof

   If you know that you will need a new roof soon, or that a part of your roof is damaged, it probably isn’t the best idea to install solar panels.If you can, take care of any roof repairs before the installation.

   The company installing the solar panels should verify if the roof is in good condition before proceeding with the installation.

   They also need to verify that your roof has enough space for the solar panels required.

2. How much weight the roof can handle

Installing solar panels will increase the weight on the structure of your roof.

If the weight of these solar panels is too much for your roof to handle, there is a potential that it will collapse.

It is critical to have a professional evaluate your roof to determine if additional support is required to complete the installation.

3. Where will the water go when it rains?

When it rains, water runs down the roof, into the gutters and out and away from your home.

When installing solar panels, equipment like racking and wire harnesses can prevent the water from flowing and draining properly.

In some cases, solar equipment can move the water in a different direction, which can create leaks and other problems.

To avoid all of these issues, make sure that you inform your contractor of these concerns.

They will be able to present a plan for you to prove that the installation will not impact the water runoff in any way.

4. The connection to the grid

 You need to consider how you are going to connect your solar power system to the grid.

When connecting with a local utility you need to determine, among other things:

How long will it take to get hooked up?

Do you need to pay any fees?

How will you be credited for the generated electricity?

When will you be credited for your generated electricity?

5. Signing a contract 

When you are ready to sign a contract, there are a few things to look out for in the agreement.

Some of these items include:

• Ownership and performance expectations
• Entities that might collect data on your electricity production and usage
• Companies that have access to your electricity production and usage data

If this information is not clearly defined in the contract, you might want to ask the contractor a few clarification questions.

Never sign for anything you are not comfortable with!

6. Warranties 

Warranties are an important aspect of protecting your solar panels and other related equipment.

If anything happens to your solar panels, having a warranty helps you to keep the manufacturer accountable — without any additional cost to you.

• Solar Panel Warranty

This type of warranty should cover your solar panels for 25 – 30 years.

If the warranty offered to you is for less than 25 years, understand that this is considered lower than the industry standard.

This warranty covers a guaranteed minimum power output over the warranty period of the panel.

Industry standards indicate that you should receive a minimum of 80% energy output for the length of time the panels are covered under the warranty.

• Installation Warranty

This warranty covers situations where the solar panels and related equipment have been installed incorrectly.

These types of warranties can generally last from 2 – 10 years.

Many of these warranties cover things like, the labor and parts related to repair or replace elements of the system, roof penetrations, shipping, replacing defective parts, and more.

For more information, make sure to ask your contractor what kind of installation warranties they provide.

• Inverter Warranty

There are a few industry standards that can help you to get a better idea about the warranties that you should be offered.

Standard “string inverters”, which handle power from a “string” of panels, often have a warranty period between 5 – 10 years.

Generic “micro-inverters”, which attach to individual panels, have warranties that can last between 20 – 25 years.

Inverter warranties generally cover, material or manufacturing defects and flaws.

Inverter warranties generally don’t cover, improper installations, normal wear, and tear caused by extreme conditions, and improper maintenance.

• Maintenance

Keeping your solar panels working and your roof in good condition is all about establishing proper maintenance procedures.

It’s a good idea to find out from your contractor what those maintenance procedures are before the installation begins.

If you are unable to meet those maintenance requirements, there is a good chance your equipment will not last as long as you want it to.

 

Below an informative youtube video about solar panel installation:

Resources: news.energysage.com, etmsolar.com, electricchoice.com, citylab.com, youtube.com, solarexpert.com, wholesale.com, solarelectricsuply.com