One can imagine that when the telephone or automobile (or any type of new technology) came out, there were hucksters and frauds taking advantage of the uninformed. Unfortunately, the solar industry is going through these growing pains.
Solar technology is not new -- solar panels have been on satellites since the 1950s -- but a combination of factors has allowed the solar industry to explode worldwide over the past five years. While annual solar installations in the United States have skyrocketed over 300 percent from five years ago, customer education has lagged behind.
From residential to commercial, we are going solar in droves. An important question remains: Do we know what we are buying or signing up for? This ties into another question: What are solar companies selling?
As a rule, solar companies are selling a quality product at a reasonable price. As with most rules, howeverthere are exceptions. Herein lies the conundrum -- the customer's solar education is being conducted by the salespeople who are selling the product. Further confusion is created by the complex nature of not only the technology, but the finance terms as well. In addition, the education involves an understanding of something that a large segment of the population doesn’t understand -- their electric bill. The following list can be used as a helpful guide to understand what is being sold and what questions should be asked.
Understand what you are currently paying
Depending on the utility company, the electric bill can be simple or complex, but for the layperson, it usually requires some sort of explanation. In most cases there are three to five parts of the utility bill:
- Service charge: It might have different names, but it’s basically a flat monthly fee for doing business with the utility. This can be as low as $1 for residential. Going solar will not change this cost.
- Generation charge: This is the actual cost of the electricity that is used. It can be generated by many entities using various methods, including: nuclear, coal, oil, etc. The cost is charged in increments of kilowatt-hours, or kWh, and can range from $0.06/kWh to $0.40/kWh. Going solar will change the usage and overall cost.
- Delivery charge: This is the charge to transport the electricity to your location. This can vary greatly, even within the same utility region. This is also charged in kilowatt-hour increments. Going solar will change the usage and overall cost.
- Demand charge: This charge is often misunderstood, and different utilities process it differently. It is used to analyze the maximum amount of wattage that a location needs at any one time during the month. It can be understood as how big the pipe needs to be in order to ensure that the location has enough electricity at its peak demand. This charge varies greatly. Going solar might affect this number, but it’s hard to quantify so it is generally considered a charge that will not change with solar.
- Time-of-use billing: In some regions there are different electricity rates for different parts of the day. Solar may affect the cost of this charge, depending on the TOU rates and times. A solar PV system, together with a battery system, might work well to alleviate this charge.
Takeaway: Solar salespeople may identify what a customer is currently paying in a less-than-honest manner. Using this analysis, you should be able to calculate what you’re actually paying just by looking at your bill.
Understanding the solar PV system
There are many variables when it comes to the actual solar system, but the hardware portion usually comes down to three main parts: the solar panels, the inverters and the racking.
Solar panels: This is the main component, and the most expensive. They are generally rated by the amount of watts produced in an hour under rated conditions. Utilizing this rating, you can compare the basic production numbers between different panels; for example, a 320-watt panel will produce more electricity than a 260-watt panel. Generally, the higher the efficiency, the costlier the panel. This higher cost can be reflected in the lease, PPA, financing and overall return on investment (ROI).
Takeaway: When one company quotes you a 10-kilowatt system and another quotes you a 12-kilowatt system, you should identify the per-watt price in order to make a proper comparison.
Inverters: This important component converts the DC power from the panels to AC power for the grid. There are two main types: a central inverter and a microinverter. Central inverters are wired into multiple panels. Microinverters are small units that attach to each panel and convert the electricity at the panel.
Takeaway: There are certain benefits in choosing a microinverter over a central inverter, but they are not always relevant. If the roof has multiple directions, or there is shade on some of the panels, microinverters might be a better solution, although most solar companies charge more for microinverters.
Racking: This is the mounting that secures the panels. The main racking systems use rails, although rail-less systems are also available.
Understanding the solar production estimate
This is where it gets a little tricky. Production estimates can vary greatly, depending on many factors. Barring the claims of certain manufacturers that claim higher production from the same-sized systems without actually guaranteeing it, the estimate is dependent on shading, azimuth and pitch.
Shading: Although it’s a simple concept, it’s not always simple to accurately calculate. Often we hear about a certain part of the roof that’s always sunny, even though there is a large tree to the south (the direction from which the sun is generally shining). Shading can come from a tree, a dormer on the roof, an adjacent roof or some other obstacle.
In addition, shading varies with the seasons. During the winter, the sun is lower in the sky and any obstacle causes more shade than in the summer, when it’s higher in the sky. Solar installers use specialized shading tools that analyze, and account for, shading throughout the year.
Azimuth: The solar azimuth is used to calculate the orientation of the panels toward the direction where the sun is shining from. This is equally important as the shade, as it dictates how much of the sun will be shining on the panel throughout the year.
Pitch: In most cases, the pitch, or the tilt, of how the panels are laid out is the least important of the three, but it does affect production.
Takeaway: Solar system production is, in some cases, the most manipulated part of the solar proposal. Estimating a higher production than a competitor is an easy way to show more value, without actually giving any.
The National Renewable Energy Laboratory (NREL) operates an online calculator which calculates how much a solar system will produce. You can input different variables and learn how much electricity your system will produce each month and for the year. The data is based on historical weather data. It takes into account the location and the specifics of your system. It is not exact, but it’s an objective way to project energy production.
You can use this to compare against the figures that the solar company is projecting. This is also useful when comparing competing quotes, since you can plug the numbers in to see the efficiency of each system from an objective source.
As with purchasing anything, you need to educate yourself on the product that you are acquiring -- and solar is no different. As a whole, the solar industry works to deliver a quality product at a competitive price. That said, you should look at a solar proposal as a starting point of what you’re being sold. Analyze the proposals with the tools at your disposal -- and go solar.
Cy Yablonsky is vice president of PowerLutions Solar, a solar firm based in New Jersey.