Is Solar Right for Me?
Snapshot | Benefits | How it works | How to pay for it | Rebates | Take action!
Snapshot
Incentives and rebates for solar abound: federal tax credits; state subsidies; utility rebates; and sometimes even city subsidies. A solar installer will help you navigate all the paperwork and will credit these incentives against the purchase price, saving you out-of-pocket costs.
Benefits
A solar PV system offers myriad benefits. A solar system supplies a sizable portion of your electricity, 60% to 70%, with nearly no carbon emissions. (A small amount of electricity is used to keep the monitors on system operating when the sun is not out.) Solar systems last about 20 to 30 years, so installing one keeps your emissions down for years.
The second benefit of going solar is savings on your energy bill. Your monthly savings will depend on how you pay for the system. If you use a financing program and you are a large electricity user, you'll find that your total bill drops (total = solar payment + utility bill). If you are a smaller user, you'll find that your total bill is about the same, but you also get the green and price assurance benefits.
If you pay for your solar system with cash, your monthly utility bill will definitely go down.
Many argue that investing in a solar system for your roof is a better investment than the stock market.
How much you save will also depend on your electricity rates. In California, our electricity prices rise with usage—the more we use each day, the higher the price. If you are in the top price tiers, you'll find that solar is cost competitive with what you pay your utility.
Price assurance is another important benefit of going solar. Historically, electricity prices have increased 5% to 7% per year. A solar system helps you lock in a fixed price for electricity. Energy savings grow each year as the gap widens between what you pay and the new higher electricity rates. This gap can be sizable. Suppose your solar cost and electricity cost are the same today and electricity rates grow 6% per year. In 10 years, your electricity rates will have risen by a total of 80%. A solar system protects you against the inevitable rate increases.
What if you generate more electricity than you use? It feeds the power grid and the utility pays for it by crediting your power bill. One day, if California follows the lead of Germany, you might even get paid for your unused electricity at a competitive rate.
How it works
A solar PV system comprises 2 components: Solar panels and an inverter. Solar panels are typically installed on the roof, but backyard installations are also possible. Inside each panel are an array of photovoltaic cells, which convert the sunlight into direct current (DC) power.
The DC power is sent to an inverter, where it is converted to alternating current (AC) power. The inverter is connected to your electrical panel (also called the breaker box), and the electricity from your solar system is now ready for use in your home.
And finally, the electrical panel connects to your utility meter. When your solar system produces more electricity than you can use, your meter will literally spin backward, as you feed your power into the grid. Each month your electricity bill will show your "net usage," which is your total electricity use minus your solar production. This is also known as "net metering."
In the summer, your solar-energy production could exceed your electricity use, and these credits are saved up and used against your bill in the winter months.
Your exact annual bill will depend on the rules about net metering. Currently, homeowners in California do not receive any payments from their utility when annual solar production exceeds annual use.
Is solar PV for you?
Definitely consider solar PV if your electricity bills are high.
Then think about where you will put the system. Typically it's placed on the roof. You'll need about 100 square feet per kilowatt, and most homes need a 2- to 4-kW system. So look for 200 to 400 square feet of south and southwest roof exposure to get the energy of our long summer days. The preferred area will have very little or no shading.
Your solar installer can also help you evaluate your roof. It's difficult to install a PV system on slate or wood shakes. Older roofs might benefit from a re-roofing before installing the solar panels. If you need to re-roof once the system is installed, simply have the panels removed, re-roof, and then re-install the panels.
Not every home is ready for a solar PV system, but don't be discouraged. Solar hot water systems need much less roof area, and tolerate shading.
How to pay for it
The good news is you'll get significant help to pay for your solar system. In California, federal tax incentives and state or utility rebates whittle down the cost of a system. Statewide rebates change every month or two; your solar installer can update you. Combined, the federal, state and utility incentives knock off 40% to 50% off the cost of the system. Typically, solar installers help you with the paperwork and collect the rebates for you, so your out-of-pocket costs drop.
Of course, you can pay cash for your solar PV system, but many residents use a financing program available from solar installers. Some types:
-
Purchase Power Agreement (PPA): In this arrangement, the solar system on your roof remains the property of your financing provider. It maintains the system and charges you a pre-set price for electricity as it is generated. Each month, you get two bills: an electricity bill from your utility (now much lower, thanks to your solar power) and an electricity bill from your financing provider. Typically, purchase power agreements are set so that in your first year the sum of the two bills is exactly what you pay now. Your solar power price is fixed or increases at a pre-set rate over the life of the contract. Purchase Power Agreements typically last 10 years. At the end of the contract term, you can buy the panels, remove the panels, or start a new purchase contract. If you sell your house, you can transfer the contract to the new owner or close it out.
-
Lease agreement: Very similar to a Purchase Power Agreement, this lease, however, charges you a flat monthly payment. Sometimes the lease arrangement is longer, as much as 15 years.
-
PACE financing: PACE, or Property Tax Accelerated Clean Energy, is an innovative financing program coming to most parts of California. PACE allows the homeowner to take out a loan for clean energy (energy efficiency and solar) and pay the loan back through a voluntary increase in property taxes. What is great about PACE is that property tax increase transfers to a new homeowner, so you can make the best decision for your home regardless of how long you plan to stay in it. Look for PACE financing through your city or county or from the statewide program, CaliforniaFIRST. Sonoma County has a PACE program underway already; get program details here.
Rebates
Check out our guide to Federal & California incentives for going solar.
In addition to the incentives in the table below, some local governments have initiated their own solar incentive and financing programs:
San Francisco: One of the earliest cities to promote solar, San Francisco's GoSolar has been so successful, it is now out of funds. Only applications from low-income residents are being accepted. Details here.
Berkeley: Berkeley was the pioneer and innovator for PACE financing of energy efficiency and solar home upgrades. Their pilot program has successfully concluded and the city will now be part of the CaliforniaFIRST program, launching in 2010.
Sonoma County: Another pioneer in PACE financing, the Sonoma County program accepts applications from residents for property tax-based financing. Details here.
|
Utility |
Rebate |
Next Steps |
| Alameda Municipal Power | $2.75 per watt, up to 110% of load | Program details |
| City of Palo Alto Utilities | $1.60 per watt, up to $48,000 | Program details |
| PG&E | $1.10 per watt (February 2010) | Program details |
| Silicon Valley Power | $3.75 per watt, up to $37,500 | Program details |
