Levelized Cost of Energy (LCoE) — The cost of energy from a solar power system, over the lifetime of that system, measured in $/kWh. LCoE is calculated by taking the total cost of the system minus incentives but plus any equipment replacement or other maintenance expenses, and divided by the total energy produced by the system over its lifetime.
Return on Investment (ROI) – Return on Investment is a calculation that determines how soon a particular investment will be paid back (the “payback period") based on a series of anticipated cash flows, specifically, the initial expense, any maintenance expense, rebates, tax incentives, and savings from the energy produced by the solar system.
Internal Rate of Return (IRR) – A common measure of the relative value of competing investments. Technically it is the interest rate for which the present value of all of the future cash flows associated with a given project is equal to the cost of the project. The higher the IRR the more desirable the investment.
Payback – This is the time when you “break even". Meaning it is the point when the total cost of the solar system (including any maintenance costs) is paid back from savings on avoided energy purchases, rebates, and tax incentives.
Annual Solar Savings — The annual solar savings is the energy savings attributable to a solar system relative to the energy requirements of the same building without solar.
Solar Investment Tax Credit (ITC) – The ITC is a federal tax credit for solar systems commissioned on residential and commercial properties before December 31, 2016. The ITC is a dollar-for-dollar credit worth 30% of the cost of a solar power system applied to the system owner’s income taxes. The ITC will reduce to 10% for commercial and ZERO for residential solar come January 2017 unless Congress extends this deadline.
Solar Lease – A contractual agreement by which the property owner agrees to let a third party install and own a solar electrical system on your property and you pay rent for this privilege. If you’ve been paying attention at all, you are aware that this is a horrible idea. We even wrote an entire blog about why you should avoid solar leases.
Solar PPA – A power purchase agreement (PPA) is a long term contract to purchase energy from a third-party owner of a solar power system at a defined cost which may rise over time. In a PPA, the homeowner pays a fee per kWh of energy produced as opposed to a flat monthly fee in a lease agreement. Here’s the kicker, if the system produces more energy than you consume…and is going back to the grid…you get a credit from the utility for this excess energy but you also are paying for this excess energy to the third party owner of the system. Whether those fees cancel each other out or not varies.
Congratulations! You’ve passed Solar Terminology 101,102, and 103! You’re officially an expert on solar concepts! Hopefully the “Greek” terms you’ve been reading as you do your research into going solar will make a lot more sense. If you do decide solar is right for you you’ll have a better understanding of how the big electronic system you purchased and installed on your property really works. Lastly, we hope that this information will help prevent homeowners from being taken advantage of by unethical solar salesmen who really don’t know the first thing about solar! After all, knowledge is power!
Click here if you missed Solar Terminology 101: The Wonderful Magic of Electricity.
Solar Energy — Electromagnetic energy transmitted from the sun (solar radiation).
Photovoltaic (PV) – The direct conversion of light into electricity. Photo means “light”, and voltaic means “electric”.
Solar (PV) Cell — The smallest semiconductor element within a PV module which converts light (photons) into electricity. Also called a solar cell.
Solar (PV) Module — Also referred to as a solar panel, an integrated electronic device consisting of multiple Solar Cells, arranged in an interconnected grid, encapsulated against moisture and other environmental agents,and held together by a rigid frame for mounting. A typical PV module that we use is roughly 65 inches by 40 inches and contains 60 cells.
Solar (PV) Array — An interconnected collection of PV modules that function as a single electricity-producing unit. The modules are assembled with common support or mounting, common pitch and azimuth (direction).
Solar (PV) System — A complete set of components for converting sunlight into electricity by the photovoltaic process, including the array and balance of system components (e.g., switches, subpanels, etc.).
Grid-Tied - A grid-connected solar electric system generates its own electricity and feeds its excess power into the utility grid for later use. Grid-tied solar electric systems are eligible for incentives and rebates as opposed to “off-grid” systems which are not.
Net-Metering - Net metering is a billing arrangement between a solar customer and their utility which allows the solar system to send excess electricity back to the grid through the customer’s electric meter. The meter actually runs backwards! Your utility then bills you for the net (kWh used – kWh generated). While most utilities will pay you a small rate if you generate more than you use, many opt to carry forward a credit toward your next bill.
Direct current (DC) — Direct current refers to power that never changes polarity. DC power flows in one direction through the conductor. To be used for typical 120 volt or 220 volt household appliances, DC output such as from a solar panel or battery must be converted to alternating current.
Alternating current (AC) — Alternating current refers to power that constantly changes polarity between positive and negative over time. Power produced in the United States moves in current that changes polarity at a rate of 60 times per second. Electricity transmission networks use AC because voltage can be “stepped-up” to high voltage (for long-distance transmission) or “stepped-down” to low voltage (for local distribution) with relative ease. This is the current that your household devices use.
Inverter- An electronic device that converts DC power from solar modules into AC power for using in your home and feeding back to the grid.
String Inverters – A string inverter is designed to handle multiple strings of solar modules wired together in series. These are the oldest type of inverter for residential and small commercial PV systems.
Microinverters- A Microinverter (like the Enphase inverter to the right) is an inverter designed to handle small amounts of power and is paired with each solar module. They provide many advantages over string inverters such as eliminating a single point of failure, individual module monitoring, and avoiding string degradation from minor shading.
Central Inverters – These are only used to handle very large PV systems, 1 MegaWatt or more, often only in the largest utility-owned solar power systems.
Click here to continue to Solar Terminology 103: Show Me the Money!
So… you want to be an informed buyer but every time you try to research going solar you feel like you’re reading Greek? Well I’m here to tell you, you don’t have to be a licensed electrician to understand the basics of a solar-powered electrical system. While operating your HVAC unit from the sun may seem a bit like a miracle, the concept is actually quite simple. The first step is to dust off those terms that have been collecting cobwebs in your brain since you passed tenth grade science.
When we’re talking about electricity it all comes down to this simple calculation:
Watts = Volts x Amps Or Power = Voltage x Current
Totally confused? Ok, let’s define our terms:
Power — The ability to do work, measured in Watts.
Watt — The rate of energy transfer equivalent to one ampere under an electrical pressure of one volt. One watt equals 1/746 horsepower, or one joule per second. It is the product of voltage and current (amperage).
KiloWatt (kW) — A standard unit of electrical power equal to 1000 watts. Ten 100-watt light bulbs use one kilowatt of electrical power. This is the term we use to describe the system size needed to provide the power to suit your energy needs. A typical home in SoCal needs around a 5kW solar system.
Voltage — The amount of electrical potential, measured in volts, that exists between two points.
Current — The flow of electrical energy (electrons) in a conductor, measured in amperes.
Energy — Energy is simply power consumed over time.
KiloWatt Hour (kWh)— One kilowatt of power consumed over one hour of time equals one kiloWatt hour. The kWh is the most common measure of electrical energy. Electricity rates are commonly expressed in cents per kilowatt hour. One kilowatt of power (say from lighting ten, 100-Watt light bulbs) used for an hour equals one kilowatt-hour of energy. An average home in SoCal uses around 25kWh of energy per day. This is the measure we use to determine your usage needs to offset with solar.
Peak Demand — The maximum power demand (in kW) in a specified time period. Commercial clients will often have high charges on their electric bills associated with peak demand. As a general rule, solar by itself does little to offset peak demands, but if you can determine the cause you can often make changes in your usage habits to reduce peak charges.
Usage - The most common component of electric utility bills, based on the total amount of grid-provided energy consumed during a billing cycle. When a solar provider asks for your usage they are looking for a full year (i.e., the latest 12 months) of data showing the kWh used and how many days in each billing cycle. The easiest way to share this information is by providing the most recent 12 months of electric utility bills for the meter you want to offset with solar.
Click here to continue to Solar Terminology 102: What exactly makes a Solar Power System?
So you’ve decided to go solar (congratulations!) and you are about to sign on the dotted line. Before you do, please take a moment and follow these three simple rules to avoid getting burned.
It goes without saying that for a project as elaborate as a solar installation, a written contract is required. But a written contract will do you no good, and could do you a great deal of harm, if you don’t take the time to read it!
I know, I know, contracts are boring. But lawsuits are not, and the best way to avoid such excitement is to spend a little tedious time now laboring over the fine print.
We see examples of solar contracts all the time, and some of them are pretty appalling. Written in tiny fonts, they just beg you to give up and simply ask, “Where do I sign?” Resist that temptation at all costs, less you discover the hard way that some unscrupulous contractor (or even worse, his unscrupulous lawyer) has snuck some awful prevision into your contract. Think I’m exaggerating? Take this beaut for example, from a section on Change Orders:
The change in the Contract Price caused by such Contract Change Order shall be as agreed to in writing, or if the parties are not in agreement as to the change in Contract Price, the Contractor’s actual cost of all labor, equipment, subcontracts and materials, plus a Contractors fee of 12% shall be the change in Contract Price…
Holy smokes! According to this, if the parties disagree as to the cost of a Change Order (more on this in a moment), then the cost is whatever the contractor says he has spent, plus 12%! What thinking person would agree to sign such a contract - or choose to do business with someone who is presenting it? Someone who didn’t take the time to read it, that’s who!
A contract is formed when someone - a contractor in our example - offers to do something - in this case install solar on someone’s home - and a second person - the homeowner here - accepts the offer and agrees to pay to have the work done. In order for a contract to be binding, the parties must actually agree on all of this, which is to say that the homeowner must know certain essential terms. For example:
Finally, if you are feeling rushed by the contractor (or his sales agent) to “just go ahead and sign already!” - then it is time to take a break. A legitimate contractor wants you to be comfortable with what you are signing. After all, a legit contractor doesn’t want there to be any confusion about what is going to be done or how much it will cost. So the legit contractor will be happy to answer your questions before you sign, knowing that creating understanding now, will help eliminate disputes later on. But the shady contractor just wants you to sign now - and give them a check! (Oh, and a word about initial payments - for a residential project, California law prohibits a solar contractor from asking for more than $1,000. A contractor who asks for more before work is done is violating the law.)
Worst case, go full stop and tell the contractor you want more time to review the deal before you sign. If you have doubts, consult a lawyer - yeah, yeah, I know all about lawyers (I used to be one!) but a little time spent now may save you major aggravation down the road. And you don’t want to end up on the wrong end of a bad deal.
Congratulations, you’ve decided to look into going solar!
Regardless of your reasons…be it economic, environmental, energy independence, or otherwise…it is a sad reality that not everyone can go solar. So how do you know if your property is even a good candidate? Of course, it is important to select a few different installers to do a professional assessment, but even someone with zero solar knowledge can learn how to do a quick preliminary assessment. Here are some simple steps to determining if your home may have a great solar powered future.
If your electric bills average $100 or under each month, solar probably won’t be more cost-effective than paying the utility. The costs for permitting, design and engineering all stay the same whether you buy a 3kW system or a 10kW system. Indeed, the labor required to install 5 panels and 10 panels is not very different since installers still have the same amount of electrical ground work. The installation of the actual panels is only a fraction of the total labor. Even the costs of products improves in bulk, so the bigger the system, often the better price per Watt you can get.
Beyond this, there are many other things to consider such as whether you plan to increase your usage significantly in the future. But since utilities don’t want you to be an energy producer they won’t actually allow for more solar than your historical needs indicate… unless you plan to buy an electric vehicle. These are things you should discuss more in detail with your qualified installer.
In my blog piece “Roofing Reality Check”, I outlined the main things to consider when you examine your roof’s potential. Here are the highlights:
You could put solar here,
but it will cost you!
Space: First and foremost, to be a good solar candidate you must have adequate obstruction-free space for rows or columns of solar panels facing South, West, or East. The solar array must be three feet from any roof ridge or rake, and 18 inches from valleys to satisfy Fire Marshall guidelines. In addition, most panels are about the same size…roughly 65 inches by 40 inches. An average home in SoCal needs between 15-20 panels to offset their energy needs. This means that triangular spaces and roofs with many small faces are not going to work well for solar, but big open spaces with right angles are perfect.
Pitch and Height: Labor costs go up when installing on more difficult-to-reach roof spaces. Second story and steeply pitched roofs both increase the overall cost due to the time and effort required to keep crews safe. If you have a very steep roof solar isn’t necessarily impossible, but it will affect the bottom line, and some installers may not feel comfortable at all depending on just how steep. If it looks like an Appalachian incline more than a Rocky Mountain then you should be safe. But if we’re talking summit of Mount Everest, you may have a harder time finding a competent installer who doesn’t run when he sees the pitch.
Roofing Materials: The best roofing material for solar is composite shingles. Developments have been made to safely attach solar panels to metal and tile roofs but the cost for the racking attachments and labor are frequently higher. Run on Sun prefers to remove tile where the array will go, re-roof with composite shingles, install the solar, and backfill with remaining tiles. This incurs a re-roofing cost but is the safest way to avoid roof leaks and ensure safe attachment of the array to the rafters.
One of the first things an installer will do is take a quick look at a satellite image of your property to check for shade elements as well as the layout of your roof. A useful tool in the Los Angeles area is the LA Solar Map. This takes into account shading throughout the year and provides a handy report on your property’s viability for solar. It isn’t a perfect tool, however, so take a look around your property and note if there are any trees shading the roof spaces that you’ve identified as ideal for solar. Trees to the north would not pose a threat since solar will never be placed on a north-facing roof. But tall foliage to the south could negate any energy production value of a solar array. All may not be lost as microinverters, like the ones from Enphase that we feature on our projects, can do a lot to salvage a site plagued with shade. But even with this technology, 100% shaded areas are a non-starter. In addition to trees, note tall parapets on a flat roof, chimneys, satellite dishes, HVAC units, and second story walls which directly shade your ideal roof spaces.
Center-fed panels, like this one, can be a problem for going solar.
This is something many people are uncomfortable with, but a quick glance at your main electrical service you can be very informative. First, find your main service. This should be located on an outside wall of your home with circular enclosed meter protruding out. Open up the main panel where you’ll find a column of breakers. The main breaker, the one with the largest number stamped on it, is either at the top or sometimes in the middle of the column of breakers. If it is in the middle, this is called a center-fed panel and you may need to upgrade your electrical service before going solar.
If you find yourself tripping breakers every time you turn on a hair dryer, that is also a sign you should upgrade your service. Even if you aren’t tripping, depending on the size of your home, if the main breaker is stamped with anything under 200 you may need a higher electrical service before going solar to avoid tripping in the future.
Next, take a look at the rest of the breakers. Does it look like the entire column is full? Sometimes there are rectangles in the metal face plate which can be punched out to add breakers when needed. If there is no space at all for a new breaker for solar, then you may need to upgrade your service.
Unfortunately upgrading your service will add some cost. Ask your solar installer for their opinion but if any of the above rings true be prepared for this additional hurdle to sunshine power.
The reality is, solar is an investment. While some companies may insist you can go solar for free, I would never count on getting something for nothing. We have outlined some of the myriad reasons we recommend avoiding zero-down solar leases in other posts like “Top 5 Reasons to Stay Away from that Solar Lease” and “The Perils of Solar Salesmen”. Frankly, the costs can more than double over time when you lease instead of purchase your system.
So the last step to assess if you are a good candidate for solar is to assess your financial position. There are many low-interest solar loan options out there as well as property-assessed PACE financing, but in order to get the economic value of solar you need to be prepared to own the system outright. This way you can take the 30% federal tax credit and any additional rebates if available from your utility.
To give you a ball-park idea of the cost for going solar in Run on Sun’s service area (LA Metro area) today, including design, labor, permit fees and the whole shebang, is roughly $4 to $5 per Watt. This means that an average house with a 5kW system will cost between $20,000 and $25,000 before rebates and incentives. Obviously the cost will be on the low end if you have a composite-shingle, single-story, low-pitched roof with no need for a service panel upgrade. Depending on your electric bills pre-solar, this investment can pencil out with a return in as early as year 5 or as late as year 10+. But deciding if the financial outlay is worth the long term investment is something you must assess before signing on the dotted line.
After going through the above steps you should have a solid idea of whether solar is right for your home or not. If you’ve determined its a go, the next step is to call your local installer and make sure they check all the same qualifiers and more. Now that you’re an expert on solar assessment 101 you can even suggest solar to any neighbors with homes that beg to be powered by the sun!
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