Arizona’s endless sunshine continues to make rooftop solar panels an enticingproposal for homeowners. Already, tens of thousands of Arizonans have installed panels to make electricity for them, and falling prices and new financing options continue to draw consumer interest.
But homeowners should consider several questions before deciding to install rooftop panels. Here are 10 primary considerations you should think about before signing a contract:
1. Trees reduce output, savings
Solar panels need direct sunlight, so homes heavily shaded by trees are not good candidates, officials from American Solar and Roofing and SunHarvest Solar say.
Although some homeowners opt to cut down trees to accommodate solar panels, homeowners should consider whether the cooling shade the trees provide outweighs the benefits of solar panels.
In some cases in which a home is only partially shaded, the panels can be installed to avoid the shadows, or a few extra panels can be added to make up for the lost production.
2. Is the home efficient?
It makes little sense to add solar panels to a home that has leaky air ducts, poor insulation, 70-year-old windows or other inefficient features. Often those repairs and upgrades are less expensive and more cost-effective than adding solar.
Also, a home that is energy-efficient will require fewer solar panels to offset a significant portion of its energy needs.
3. What is the condition of the roof?
If the roof is near the end of its useful life, new shingles should be placed before or during the installation of solar panels.
If the roof will need to be replaced in a few years, it can cost $2,000 or more to remove the solar panels to make way for that work. So, waiting to install the panels, or proceeding with the new shingles, is prudent.
Installation companies consulted for this story said there is no problem installing solar on homes that have recently reshingled, as the companies can place the equipment without causing problems on a good roof.
4. Get multiple estimates
This is solid advice whether buying new countertops, solar, or any other home improvement.
Hearing how different companies would install the equipment, what they estimate in utility-cost savings, and what they offer in their warranties, can save homeowners thousands of dollars.
Estimates from installation companies also will let consumers see whether the companies understand the homeowners’ needs. Installation companies should base the size of a rooftop system on how much electricity a particular family uses, not simply install the most solar panels as can fit on a roof.
5. Can your HOA stop you?
Homeowners associations can restrict some visual aspects of solar installations, but they can’t prevent homeowners from installing panels altogether.
Arizona Revised Statutes state that any association rules that essentially prevents solar installations are void an unenforceable.
6. To lease or purchase?
Leases with little or no money down have become popular options for homeowners who want to generate their own electricity but don’t want to pay a lot up front.
Leases come with the benefit that another company owns and maintains the panels, but the drawback that customers will save less money over time making monthly lease payments.
Also, homeowners should carefully consider leases that escalate over time.
Companies that sell rather than lease can often offer loans with little or no money down that mimic the lease products. Comparing multiple offers can help homeowners find the best deal.
7. Will the home be sold soon?
Calculating the value that solar adds to a home has generated controversy.
Leased panels don’t add value to a home resale, because they are not part of the home. Anyone buying that home will have to qualify to take over the lease, or the family selling the home could have to pay a penalty to end the lease prematurely.
Panels that are owned add some value to the resale. But It’s not a straight calculation.
If a homeowner paid $18,000 for solar, those panels don’t necessarily add $18,000 to the resale. The panels add value in proportion to the amount of money they are expected to save on utilities through the remainder of their warranty.
For example, if there are 15 years left on the warranty and the panels save $80 a month in electricity, the system could add $14,000 to a home appraisal.
8. Understand the rate plans
Some solar companies might advertise energy independence as a reason to install solar panels, but the vast majority of people who install solar are still connected to the utility grid.
That means they still rely on a traditional electric company to provide power at night and when their panels aren’t making enough electricity to serve all the home’s appliances.
How an electric company charges customers makes a huge difference in how much they can save with solar.
Companies installing solar on homes should understand utility rate plans and help homeowners choose the appropriate plan from their utility based on how much power the solar panels will generate and how much electricity homeowners use.
For example, solar customers in the territory of Salt River Project are required to go on a “demand rate” that sets one portion of the bill based on the highest use of electricity during the month. Even if customers generate a lot of their electricity themselves with solar panels, they can pay a high bill if they set high demand during certain hours of the month.
American Solar and Roofing encourages customers to use a device that allows them to monitor the instantaneous demand of their home, allowing them to avoid setting a high demand fee for the month.
SunHarvest Solar goes a step further and encourages the use of a load controller for homes served by Salt River Project. The device prevents the air conditioning, electric water heater and other large devices like pool pumps from running concurrently, limiting demand fees for those customers.
9. Understand that rates can change
Utilities in the past, including Salt River Project, have considered changing the rates on solar customers even after they have installed their systems.
If a utility decides to add new fees for solar customers, it could affect the savings in the future.
Salt River Project’s board of directors ultimately decided in 2015 not to raise rates on existing solar customers, only those who installed panels in the future. But debate was intense.
Solar companies also sometimes use high-pressure sales pitches, saying utility rates will soon increase for solar customers. They use that to persuade people to sign up today, rather than wait.
It is true that rates and policies for solar customers are changing. For example, the credit that Arizona Public Service gives customers for their surplus solar energy will be recalculated and likely reduced based on market prices in the future (also see related tax credit information below).
But those pending changes are never worth rushing a purchase without reviewing multiple bids.
10. Federal tax credits still available
Finally, consumers should understand the federal investment tax credit for solar. Homeowners can apply the federal tax credit to their personal income taxes, reducing their taxes.
The credit today is 30 percent of the cost of the solar equipment.
It is scheduled to decline over time. After 2019, the investment tax credit steps down to 26 percent for projects that begin construction in 2020, and 22 percent for projects that begin in 2021, the Solar Energy Industries Association reports.
After 2021, the residential credit will drop to zero.