Solar Energy in Utah is becoming more and more affordable and is proving to be a great investment for many Utahns. Due to this increase in demand on the industry, there are many questions that come up from potential buyers. Our goal is to provide advice and information to help each consumer make the best decision for their household.
HOW SOLAR WORKS:
Today, most residential solar systems are photovoltaic (“PV”) systems. PV systems generate electricity through two main 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 power rating of the system (measured in kilowatts, or kW); and
• The amount of sunlight that the system receives.
Calculating the amount of sunlight a solar system receives depends on several factors:
– The location of your home- Utah is the fifth sunniest state and therefore very solar friendly
– The orientation of the planned system:
– the angle/pitch of your roof
– compass direction impact how much of the sunlight in your area hits the panels:
– South facing panels receive the most sunlight throughout the day
– West facing help to optimize the sun as it sets
– East facing can help generate during the morning hours
– North facing panels in Utah are not ideal
– Shading from nearby objects (such as chimneys, trees or neighboring buildings)
YOUR OWNERSHIP OPTIONS
Today, Americans have ownership options for solar similar to those for cars. It’s important to understand the differences and choose the one that’s right for you.
The main options available today are listed and explained below:
• Purchase a system with cash or a loan and own both the system and all the power it produces
• Lease a system and own only the power it produces home
• Enter a “power purchase agreement” (PPA) to buy power from a system owned by a solar company at an agreed-upon rate
Like buying a car, you can purchase a solar system outright with cash or with a loan. When you buy the solar system, you are the owner and benefit from all electricity the system produces. You are usually responsible for system upkeep, although 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.
You can lease a solar system for a certain period of time. The solar company owns the system and leases it to you to use it and benefit from the electricity it produces. The solar company is responsible for upkeep. You make monthly payments to the solar company at the agreed upon rate specified in the lease for use of the system. Some solar companies will allow you to lease with no initial costs (“no money down”). Some companies also give you an option to purchase the system after a certain amount of time.
POWER PURCHASE AGREEMENTS (PPA)
Some consumers prefer just to pay for the electricity generated from the system rather than entering into a lease for the system itself. In a power purchase agreement, you agree (i) to allow the solar company to install and own a solar system on your property, and (ii) to purchase the electricity produced by that system for a set rate and agreed-upon terms specified in a contract. Some companies give you an option to purchase the system after a certain amount of time.
More information on financing can be found on the Solar Simplified website: http://www.solarsimplified.org/incentives-financing/buy-or-lease
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 an informed consumer.
Seek Multiple Bids
Again, much like shopping for a car, it is beneficial to seek out 3-4 bids from local solar installers. Each installer has access to different types of panels, will have different ideas on how to maximize your rooftop space, offer different prices, and possibly even offer different levels of warranties and guarantees.
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 (kWh) 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)? 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? Look at its physical features and discuss with a solar professional. A solar professional can calculate the amount of sunlight expected to reach a planned system over the course of a year. Does it receive a good amount of sunlight or is it mostly shaded? What about the age of the roof? If you plan on replacing it soon, you may want to replace it prior to a rooftop solar installation. In Utah, roofs facing due north are not good candidates for solar because they don’t receive direct sunlight.
• Know your finances. Like any major decision for your home, it’s wise to understand your finances when shopping for solar systems. Although sunlight is free, buying or leasing solar systems, or paying for electricity under a PPA, are not.
DO YOUR HOMEWORK
• Get the best deal- As stated above, be sure to get multiple bids on a system. Utahns will find the market quite competitive, with multiple solar companies competing for your business. Use this guide and other resources, and compare costs and terms from different firms.
• 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 Utah Solar Energy Association, that holds member solar firms accountable for their actions. You can also 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 credit drops to 26 percent for 2020, and 22 percent for 2021). The State of Utah currently offers a maximum tax credit of $2,000 per solar system. This credit may change in the coming years but is still available.
• 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 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 for it. Remember: make sure terms that are important to you are included in the official signed contract documents.
• 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. 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 increased more or less, and may increase more or less going forward. Check with your utility or State utility regulatory office for any planned increases.
• 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 and its warranty. Ask your solar company to explain what your warranties protect, for how long, and who stands behind them.
KEY QUESTIONS TO ASK
For all solar systems:
• What is the total cost of the solar system?
• What is your timeline for this investment? Do you want a short term arrangement or a long-term asset?
• 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)?
• Do system output calculations consider actual installation details of the 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?
• What will the system look like once installed? Will I receive a system design for my review and approval before installation?
• 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 durations?
• What type of maintenance or cleaning is required? Are any maintenance services included?
• Who should I contact if I have a question about the system following the installation?
•What are the rules of the HOA that I live in, if applicable?
• What is the length of the lease or PPA?
• Who receives solar tax incentives and how are they factored into the cost?
• Will my payments increase over time? How does the rate of increase compare to the expected/historic utility rate increases?
• What happens if I wish to end the lease or PPA early? • Can I purchase the system, either during the agreement or once it ends?
• What are my options when I sell my home?
• Am I free to sell my home or do I need the system owner’s permission?
• Are there fees to transfer the PPA or lease agreement to the new homeowner?
• Do I have to pay off the lease when my home is sold?
• Who is responsible for repairs and maintenance on the system?
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. USEA and the solar industry are strongly committed to consumer satisfaction and protection.
• First, try to resolve problems directly with your solar company.
• Your contract or lease may have a dispute resolution section and process.
• If you choose a USEA solar company to work with, USEA may be able to assist you in resolving your issue.
• 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
• Solar Simplified – http://www.solarsimplified.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 • Utah Division of Consumer Protection – http://www.consumerprotection.utah.gov/
• Email USEA with any further issues: email@example.com