Solar panels seem to be popping up everywhere – on homes, businesses, on farmland and even vacant land. So what is going on? Is this just a faddish trend or is there something more going on? It’s really all about energy; more specifically, electricity, and saving money by producing that electricity directly from the sun shines on the planet every day. Solar panels, known as “modules” in the industry, create electricity when sun releases electrons from the silicon wafers that are embedded in the module. Being able to capture that electricity and use it close to the source is far more efficient than having it delivered through long distance wires from a power plant far way. So in effect, solar power is local, decentralized power, and thus, is more cost effective for the consumer who can utilize it.
So, how do you know if solar power is right for you? Well, quite simply, you need the sun – on a roof surface that faces south – it does not have to be directly south, but should have at least 4-6 hours of insolation (sunshine opportunity) daily. A directly south facing roof is best, as the sun is highest in the sky at noon. East and West facing roofs are OK, preferably with at least some angle towards southeast or south west to get that critical 4 hour time span. Shade from tall trees will affect solar output, so you really want to have as little shade as possible during this peak time. With our forested landscape, this may mean that some trees will have to be cut so that the solar “view” is optimized.
In New York, solar operates as “net-metering” with your utility, which simply means that the excess production gets a negative credit on the meter. The grid is your bank account, and you can draw the surplus from it at night time or on cloudy days or when snow covers the panels. A properly sized system can produce enough power to offset most if not all of your annual electric bill.
The question now is, do you own the system or lease it from a third party? There are pros and cons to both, and it depends on your specific needs wants as to what is best for you. Although lease programs are fairly new, they are responsible for the huge uptick in solar installations in the last couple of years. Let’s take a look both options
Ownership: Like anything you own, it’s yours, and you get the full benefit of ownership. The excess watts produced by the system are yours, and they can potentially negate your electric bill (the line connection charge remains). You must be able to afford the up front cost, or get a loan to pay for the investment. New York State still has an incentive pool that can discount about a third of the system cost, and there is a 25% state income tax credit and a 30% federal income tax credit available for those who have the “tax appetite,” or tax liability that can benefit from taking the credit (expires in 2016). Fully utilizing these tax credits and incentives, the ownership route can have a payback of the initial investment in as little as 7-8 years. After that, you are “golden” and can laugh at any electric rate increases! You are responsible for any maintenance of the system, but the good news is that solar panels are virtually maintenance free over their 25 year lifespan.
Leasing: Many companies have cropped up in recent years offering “no money down” or “free installation” of a solar system. Now we all know we can’t get something for nothing, so what is the catch? The solar lease companies and their investor partners are the actual owners of the solar system, and you purchase the electricity that is generated from the system from them. In effect, the lease company is your new utility; the benefit is that the cost for the power is offered a price less than that from the grid utility – again, the “local energy” being cheaper to produce. There are a myriad of leasing options out there, and they typically use your credit score as a determinant factor. With a lease, you are buying the energy, not the solar panels, and there can be things like annual price escalators, transferability terms, default penalties, and buyout options that can make a good deal on the front end look not so good down the road. Keep in mind that you are engaging in a long term contract – 20 years, and it is paramount that you read the fine print. Paying less for electricity is very attractive – just make sure that the terms and conditions are to your benefit and not just to the lease company.
If you’re lucky enough to have that shade free south facing roof, solar power is a wise investment that will pay dividends year after year. The mantra that used to be “Save the Planet, Go Solar” is now “Save your budget, Go Solar!” Whether purchasing or leasing, solar power can make good financial sense, and provide some energy security into the future. And your neighbors should love you for it, because they get to use your excess production. They are benefiting from your green energy power plant too!
