Wondering if you should get solar panels for your home, but want the basics first? Curious about how solar panels generate electricity, save you money, and reduce CO2 in the atmosphere?
You’ve come to the right place.
The questions and answers below will help you understand something about how solar panels work and whether you can benefit from installing them on your home. We’ll explain some of the terminology you might encounter as you get solar quotes for your home and think about whether solar panels can save you money.
If you’ve got a question we don’t answer below, feel free to leave a comment or drop us a line! Now, on to the questions!
There are currently two major technologies or types of solar panels: silicon solar panels (broken down into monocrystalline and polycrystalline based on how the silicon is processed), and thin-film (in order from most expensive to cheapest). Hybrid technologies and other types exist, but haven’t left the research and development stage yet.
Typical silicon-based solar panels contain two layers of crystallized silicon (an excellent electrical conductor) joined by a wire. One layer is positively charged and attracts electrons, while another is negatively charged with excess electrons. Photons of sunlight knock electrons loose from the negatively charged side, and those electrons then travel through the wire to get back to their positively-charged mates. When multiple panels are connected together into an array and the wires are run through a solar inverter and your main electric panel, those electrons create electricity that can power your home.
This electrical current is called DC (direct current) electricity. “But wait,” you say. “My home uses AC electricity, so how does the DC solar power become AC power for my home?”
Great question, you! An inverter, which comes installed with solar systems, converts this DC power to AC power by ‘pushing’ and ‘pulling’ electrons, creating an alternating current. AC power was chosen for the USA’s power grid because it’s cheaper to transmit over long distances.
This power generation can provide energy for your entire home, and depending on where you live, excess energy can be fed into the power grid for a credit through your power company.
A typical home solar installation consists of solar modules (i.e. “panels” on a roof- or ground-mounted metal rack, wired through an inverter that changes the DC electricity produced by the panels into AC electricity, and connected to the home’s main electrical panel.
This type of installation is called “behind the meter,” because the system is connected to the home’s wiring, which in turn is connected to an electrical meter that measures electricity coming and going from the home. This allows the homeowner to use solar electricity up to their needs and send the excess to the power grid, while also drawing power from the grid when the sun isn’t shining.
Solar panels and their accompanying components and warranties are designed to last 25-30 years, though there are several accounts of them lasting much longer. Their efficiency decreases around .5% every year, but with the increasing efficiency of our homes and devices, peppered with some solid energy usage habits, you might not even notice. According to NREL, by that math a solar panel will still generate 90% of its original energy output in year 20!
In theory, solar panels can last forever, or until their efficiency reaches zero. It’s the expiring warranties that usually signal the end of a solar panel system’s lifetime.
You can read more about the lasting power of solar panels here.
Solar panels require very little maintenance in their lifetimes. The glass, silicon and metal components are designed to last through year after year of scorching-hot sun, pouring rain, howling wind and falling hail, snow, debris, etc. There are no moving parts, and the panels are sealed and designed to be weather-tight. Nearly all modern panels come with a warranty that protects you against material defects and guarantees energy production for 25 years.
That being said, the occasional check-up or light sweeping of debris definitely won’t hurt. In winter, snow will usually slide right off your panels’ smooth surface.
In most places in the United States, people can install solar panels on their roof and use the electricity produced to offset their needs. With the panels hooked up behind the electric meter, the utility company is responsible for tracking the amount of solar energy produced and the amount used by the home when the sun isn’t shining.
In the best states for solar power, the home’s solar electricity is credited to the homeowner’s utility account on a 1-to-1 basis. This kind of billing is called net metering, and it means the homeowner saves the full price for every kilowatt-hour of solar energy they use solar to offset.
Over the typical 25-year lifespan of a solar installation, these savings can add up to tens of thousands of dollars more than the initial cost of the system, essentially making the purchase of solar panels like an investment, and the energy bill savings like dividends.
Depending on where you live and which installer you choose, the cost of solar panels in the United States is typically between $2.70 and $3.50 per watt of power-generating potential. That’s $3.10/watt on average.
The average home needs a solar installation of about 6.2-kW, making the total cost for that installation around $19,200 as of late 2019. These costs can be reduced by solar incentives, such as rebates and state and federal solar tax credits.
Solar incentives fall into 4 categories: solar tax credits, rebates, performance payments, and tax exemptions.
The most widely-used incentive for home solar is the federal solar tax credit, which provides 26% of the total costs to install solar back to a homeowner in the year after installation.
Some states also offer solar tax credits, including Arizona, Massachusetts, Montana, New York, and South Carolina, among others.
Solar Rebates offer direct cash back on the purchase of a solar system. States with rebate programs include Connecticut, Delaware, North Carolina, Oregon, and Rhode Island, among others. Rebate programs tend to have a maximum total budget, and expire when that budget has been filled.
Solar Performance Payments are extra money paid to solar owners just for generating solar energy. Usually, performance payments are tied to Solar Renewable Energy Credits, or SRECs, which are a kind of “proof of generation.” SRECs have value because by purchasing them, a utility company can prove it is obtaining energy pursuant to a solar carve-out or Renewables Portfolio Standard.
Finally, many states provide tax exemptions for solar owners, essentially reducing the cost of going solar by exempting them from sales or property taxes that the owners would otherwise incur for making an expensive purchase that increases their property value.
The idea of “free solar panels” is an old one, and while it can technically be true, it is often better to pay for solar panels with cash or a loan and maximize your savings.
Solar panels are available for no money down, usually in the case of a Power-Purchase Agreement (PPA). Under these arrangements, a solar company installs panels on your home and owns and maintains the system. You sign a 20-year contract and agree to pay for the solar electricity produced at a slightly lower price than you had been paying the utility company.
A solar PPA can save you money in the long run, and it might be a good idea if you don’t have the income necessary to take advantage of solar tax credits, for example. But the amount of money you can save with “free solar panels” is almost never as much as you would have saved by purchasing a system and claiming all the available incentives.
While this is a very broad question and the answer is different for everyone, in general, the answer is “yes, home solar panels are worth the cost!”
The factors that determine to degree to which solar panels are worth the cost to you include your energy usage, the cost of installing the solar panels, the price you currently pay for electricity, and the laws and incentives that cover solar owners in your state.
Once you’ve figured out all the variables, you can plot the cost vs savings on a graph and figure out a few numbers. We in the solar industry look at time-to-payback, total savings over 25 years, and internal rate of return.
A more advanced number that looks at all the costs and benefits from solar and compares them to your estimated long-term costs of utility electricity is Levelized Cost of Electricity (LCOE).
There’s more to the cost of solar panels than just the panels. We’re talking labor costs to install panels, marketing and HR staff at the solar company, and the overall condition and orientation of your roof. Not just the present labor, but time-related factors as well. Things like maintenance costs, market shifts, panel degradation, and financing terms.
The levelized cost of energy (LCOE) provides one number for all of those factors. It’s incredibly useful for comparing the cost of solar to other energy sources like fossil fuels and coal.
Interested to see how this number is produced and compared to other energy sources? We wrote a great article that explains all the helpful things about LCOE!
Unless you’ve installed a battery backup system with a grid disconnect switch, the short answer is “almost certainly not.”
The vast majority of solar panel installations are connected behind the meter, meaning they feed power into the house first and to the grid if the house doesn’t need power. When there’s a blackout, the grid is down, and your system is designed to automatically shut off to protect workers who might need to repair lines connected to your house.
If, however, you have installed battery backup or taken some other measure to keep your solar panels working during a power outage, you may have enough juice to keep your lights on and your beer cold.
One of the only ways to have solar power in a blackout is to use a home battery bank. But batteries are expensive, and deciding whether they’re worth the cost has to be a personal calculation for you.
In general, home batteries are too expensive to “pay back their cost” in the same way solar panels do. In the future, it might be more economical to use your battery system to help the grid in case of high usage or reduce your peak power draw if you have time-of-use billing, but that’s not the case for the vast majority of people today.
Is it worth the cost to keep peace of mind during the perhaps 2-3 hours your power will be out every year? Do you live in a place with more frequent or dangerous power outages? Find out if adding a home solar battery is right for you.
We’ve seen some variation on this questions for at least 12 years now, and the answer is almost always “NO.”
There are two reasons for this answer: solar incentives are expiring, and saving money now is better than saving money later.
First the incentives. The federal solar tax credit is scheduled to begin “phasing out” as of January 1st, 2020. By January 1st, 2022, there won’t be a tax credit for home solar any more. For the average homeowner, this tax credit currently represents almost $6,000 in savings on home solar. We’d say it’s not a good idea to leave $6,000 on the table.
Depending on your state, other incentives might also be disappearing. Check on your state solar incentives to see what’s available. Unless you’re specifically waiting for a new incentive program to begin, the time to install solar panels is now.
Next, the “time value of money.” Solar panels save money now. We know this. And the savings they generate are currently estimated to continue for 20-25 years, depending on how (and how much) you pay. Taking a loan or paying cash now gets you saving money today, but waiting for a year or two reduces the value of those future savings by at least the amount of inflation, not including what else you could be doing with the money now.
Again, with incentives and net metering either disappearing or undergoing changes all over, it pays to evaluate your potential savings with solar now rather than wait to act when the deal might not be as good.
Last modified: February 6, 2020