Solar Energy has proven to be a great investment for many Idahoans. As the economics of solar get better and better, demand for solar installations grow. More Idahoans are considering solar than ever before.
The Idaho Clean Energy Association (ICEA) wants those considering solar to make the best decision for themselves and so is providing the following guide on what to do before entering into an agreement for solar with a company. This guide covers some solar basics, questions to ask contractors, what to look for, and more.
HOW SOLAR WORKS:
Today, most residential solar systems are photovoltaic (“PV”) – or solar electric – systems. This guide covers only PV systems. They generate electricity using two main hardware components:
- Panels (or modules) that convert sunlight to electricity; and
- Inverter(s) that convert(s) direct current (DC) to alternating current (AC) for use in your home
The amount of electricity (measured in kilowatt-hours, or kWh) produced by any solar system depends on two factors:
- The size (or “power rating”) of the system measured in kilowatts (kW); and
- The amount of sunlight the system receives.
The amount of sunlight a solar system receives depends on several factors, including:
- Geographic location (e.g., Idaho receives more sunlight on average than Florida)
- Orientation of system
- Angle/pitch of the roof
- Compass direction of the panels
- South facing panels generate the most energy
- West facing panels produce more energy later in the day
- East facing panels produce more energy earlier in the day
- North facing panels in Idaho are not optimal
- Shading (e.g., from chimneys, trees or neighboring buildings)
YOUR HOME SOLAR OPTIONS:
Today, most Americans have options for going solar. It’s important to understand the choices available to you under state law and the policies of your electric utility, the differences among those options, and selecting the right one for you. The main options available today are listed here and explained further below:
- Purchase a solar system (with cash or a loan) and own both the system and all the power it produces
- Solar Leases and Power Purchase Agreements (PPAs) for homes are not allowed by Idaho statute
You can purchase a solar system outright with cash or a loan. When you buy a system, you are the owner of the system and benefit from all electricity it produces. You are usually responsible for system upkeep, although most residential solar systems require no to low maintenance, and some providers offer maintenance services on purchased systems. In most jurisdictions, you also are the beneficiary of any tax credits or other incentives that promote solar energy.
When evaluating your options to go solar, you should always do your homework, talk to friends and neighbors who have chosen solar, use common sense, and be active and engaged in dealing with solar companies. Below are some suggestions on how to become a better-informed consumer.
KNOW YOUR SITUATION
- Know your electricity usage. You should understand how much electricity your home uses. Your utility bill will show your electricity usage in kilowatt-hours and the amount you pay for that electricity. Are you planning any changes that will affect your electricity use, such as buying an electric vehicle, planning an addition to your home, or improving your home’s energy efficiency? Does your home always need electricity even during a power outage? Electricity usage can vary significantly based on your geography and time of year. Discuss your usage with the solar companies you interview to get a system sized for your needs.
- Know your roof. Is your roof appropriate for solar? Does it receive a good amount of sunlight or is it mostly shaded? How old is the roof? If you plan to replace it soon, do so before installing a rooftop solar system—your solar company may help coordinate with the roofing contractor. In America, roofs facing due north are not good candidates for solar because they don’t receive direct sunlight. A solar professional can calculate the amount of sunlight expected to reach a planned system on any roof over the course of a year.
- Know your finances. Like any major decision for your home, it’s wise to understand your finances when shopping for solar systems.
DO YOUR HOMEWORK
- Get the best deal. As with any major purchase, get multiple bids for your solar system project. Idahoans will find the market highly competitive, with multiple solar companies competing for your business. Make sure you’re comparing apples with apples by closely reading the terms from different firms. Use this guide and other resources throughout the process.
- Research your solar company. Before entering an agreement with a solar company, do your homework. Ask for references of solar installations in your area and call them. Ask for proof of licensure, and check with your county or state to ensure the firm is in good standing.
- Ask if they are a member of the Idaho Clean Energy Association (ICEA), the state trade association for solar that requires all its members to abide by ICEA’s code of ethics and all licensing and consumer protection laws. ICEA holds member businesses accountable for their actions. For additional resources, check with the local Better Business Bureau and other consumer guides.
- Understand any tax credits or other incentives.
- There is a 30 percent federal tax credit available through 2019, on the total cost of the solar system, but only if you own the system. The federal tax credit drops to 26 percent for 2020, and 22 percent for 2021, before ending in 2022 for residential systems.
- Keep in mind that incentive programs can change, and some may only be available if you own the system.
- Understand any potential tax implications of credits or incentives. Remember, only a CPA can give tax advice and only an attorney can give legal advice. When consulting such professionals, choose ones who are experienced with solar.
- Understand how you are compensated for excess electricity. Net metering allows residential consumers to send electricity that they do not use back into the electric grid and “spin the meter backwards.” Although net metering is widely available, net metering rules are set by the jurisdiction that you live in. Ask your solar professional about the rules in your area.
UNDERSTAND THE AGREEMENT
- Understand the terms. Contracts are legally binding and should be read carefully. Make sure you understand what you are receiving from the solar company and how much you are paying. Be sure that terms that are important to you are included in the signed contract.
- Don’t hesitate to ask questions. The best transactions are ones where the consumer and the contractor both fully understand the deal. Asking questions upfront can avoid misunderstandings later in the process. Below are some of the top questions that consumers ask when entering into a solar transaction.
- Separate estimates from guarantees. Many Americans can save money by choosing solar, but savings depend on the cost of the electricity from your solar system compared to cost of electricity from your utility. If a solar company promises savings, or states that electricity costs from your utility will increase in the future by a certain amount, ask them to explain. Make sure you understand any assumptions made regarding future utility rates and rate policies. According to the U.S. Department of Energy, national residential electricity rates increased on average by 3.4 percent annually between 2004 and 2014. Rates in your area may have changed more or less during that period and may change more or less going forward. Check with your utility or state utility regulatory office for any planned rate changes. Rates and utility rate policies may change even if no changes are planned today.
- Fully understand warranties. Like any other major residential product or service, a solar system typically includes warranties covering parts and labor. There may be separate warranties for major system components, as well as how the system interacts with your roof warranty. Ask your solar company to explain what your warranties protect, for how long, and who stands behind them.
KEY QUESTIONS TO ASK BEFORE ENTERING INTO AN AGREEMENT:
FOR ALL SOLAR SYSTEMS:
- What is the total cost of the solar system?
- What is your timeline for this investment?
- How much do I pay up front, and how much over time, for how long?
- What is the system size?
- How much electricity will the system generate each year? Do you guarantee a minimum amount (a production guarantee)? Are there any other guarantees?
- Will my system be net-metered? How will I be compensated for excess electricity generated by the system?
- If there is a blackout, what will happen to my system?
- Can I expect to save money with this system? If so, how much? Based on what assumptions?
- Is the installation company licensed and insured in Idaho?
- What will the system look like once installed?
- Will I be required to make any changes to my home (e.g., roofing upgrades)?
- Are there separate warranties for parts and labor?
- What do the warranties cover and what are their duration?
- What type of maintenance or cleaning is required? Are any maintenance services included? If not, who should I contact?
- Who deals with the utility and arranges for interconnection, inspections, and permission to operate?
- Who should I contact if I have a question about the system following the installation? Who should I contact if my system stops working?
- What are the rules, if any, of my HOA regarding solar?
- Has your company committed to follow the ICEA Code of Ethics? Does your company follow them?
- What are my options when I sell my home?
- How does the solar energy system transfer if I have a loan on it?
WORKING OUT DIFFERENCES:
As with any other service or product, consumers may encounter issues in dealing with a solar company. In general, solar companies want satisfied customers and are willing to resolve any problems that arise. ICEA and the solar industry are strongly committed to consumer satisfaction and protection.
- First, try to resolve problems directly with your solar company.
- Your contract may have a dispute resolution section and process.
- If you choose an ICEA-member solar company to work with, ICEA may be able to assist you in resolving your issue.
- If you are still having issues, note that ICEA member companies are bound by the ICEA Code of Ethics. If you believe a company has violated the ICEA Code of Ethics, you may submit a complaint to ICEA, which can help resolve certain issues.
- You can contact private consumer organizations (e.g., your local Better Business Bureau) about your issue.
- In addition, state and local governments have resources to promote consumer protection. See below for more information
- SEIA Consumer Protection Portal – www.seia.org/consumers
- Better Business Bureau (BBB) – www.bbb.org
- Interstate Renewable Energy Council – www.irecusa.org
- National Renewable Energy Laboratory (NREL) – www.nrel.gov
- U.S. Department of Energy (DOE) – www.energy.gov
- Your state or local consumer agency– www.usa.gov/directory/stateconsumer/
- Your state attorney general – www.naag.org
- Federal Trade Commission (consumer protection)- www.ftc.gov
- Email ICEA with any further issues: firstname.lastname@example.org