With solar power, there’s no one-size-fits-all solution. Every installation needs to take into account electricity consumption, geographic location, roof orientation, local permits, and a host of other issues. This guide walks you through those concerns and how to decide whether to DIY or to hire a contractor to install and manage your system. Once you have a rough idea of how much power you’ll need, in most cases the first option you should consider is a grid-tied system made up of Suniva Optimus 335W monocrystalline solar panels paired with SolarEdge P400 power optimizers, plus a SolarEdge inverter at the heart of it all.
Suniva panels are efficient, affordable, and backed by a reputable warranty from a company with manufacturing in the US. SolarEdge inverter components, meanwhile, combine the reliability and cost savings of a traditional string inverter system with the placement flexibility and increased efficiency of microinverters.
Before deciding on whether we could recommend any components for solar power, we spent weeks compiling statistics, reaching out to solar-industry representatives, wading through specifications, and getting expert input—and even so, the picks we make here represent only a starting point on the road to solar for most people. If buying a home is the largest financial investment most people will make, installing solar could very well be the second. With that in mind, we didn’t just pick equipment for people already interested in self-installation; we also looked at the best ways to learn about and shop for solar.
If you’re comparing solar panels, your first consideration should be reputation and warranty, followed by price and, to a lesser extent, efficiency. In the past five years, solar panels have started to become a commodity item, with small technical differences that are immaterial to most homeowners. The Suniva panels, made at factories in Georgia and Michigan, come with a 10-year warranty and a 25-year power guarantee, though most other top-tier manufacturers offer the same warranty. Currently around $1 per watt, the price is competitive, too, but prices fluctuate, and a local installer may have competitive costs on a similar panel. The Suniva panels are right in the middle for efficiency, not so low as to require the extra space that cut-rate panels may need, but not so high that you’re paying 50 percent more for engineering prestige you’ll never notice. If you can find panels from a similarly reputable company with the same warranty and similar efficiency but a lower price tag, you’ll probably be just as happy with them. But the Suniva panels should be the bar that you try to clear as you shop.
Every solar-power system requires a second component, called an inverter. These devices turn the direct current (DC) that the solar panels produce into alternating current (AC), which is what your home operates on. We go in-depth on the subject below in the section about our inverter pick; for now, just know that our pick is a hybrid system that marries the best qualities of the two most common types of inverter, resulting in a versatile, reliable, efficient, and cost-effective source of power.
You can determine a good inverter going by some of the same qualities you’ll find in a good solar panel, namely reliability, warranty coverage, and cost. But the SolarEdge line of products sets itself apart with its hybrid nature, which couples the flexibility of a microinverter system with the reliability and affordability of a string inverter. Like a string of old Christmas lights, in which one bad bulb can ruin them all, solar panels wired into a string inverter can be hindered by one underperformer, whether the problem is due to shade from a tree, a glitch from manufacturing, or poop from a passing bird. SolarEdge power optimizers solve this problem: They’re small boxes that mount to the back of each panel, monitoring each panel’s performance and managing the output individually. Such an arrangement means that a problem on a single panel won’t ruin the output of your whole string. It also makes the central inverter proportionally cheaper and simpler, which probably helps to explain SolarEdge’s reputation for reliability. Available at a price comparable to that of top-quality string inverters, the SolarEdge models can chain together, and you can monitor them through a Web portal or smartphone app.
One of our experts told us, “If you’re the type of person that would replace their own water heater, you can probably install your own solar.” But you don’t have to be embarking on a DIY installation to use the info in this guide. Although the topic is a lot to digest, we think most homeowners can understand the basics of solar power and learn how to make the right choices. The last sections in this guide will be helpful if you’re just starting out, or if you’re already mulling over quotes from multiple installers. Solar isn’t an impulse buy, and you don’t need to have your whole system figured out today.
Not everyone who goes solar will need to shop for their own equipment. Our picks are intended for people who will buy and install their systems alone, or with their own electrician or contractor. If you buy or lease your equipment from an installer, you may not have much choice in which equipment you get, but understanding our picks can help you evaluate quotes and proposals. Your first choice should be purchasing a system outright in order to get the best return on investment, even if you’re tapping equity to pay for it. We talk about purchasing versus long-term contracts in the How should you pay for solar? section.
In the future we may consider looking at off-grid components such as purpose-made inverters, charge controllers, and batteries, but for now we’ve focused on the grid-tied equipment that’s most common.
If you’re not that far down the road to solar, start with the If you have no idea what we’re talking about section, which includes a handy animation of how a solar-power system works. From there, go through the other sections that cover the basics of system sizing, purchase options, and installation options.
Regardless, everyone who is thinking about solar needs to answer some fundamental questions about financing and installation. We cover the details throughout this guide, but we’ve gathered the basics into the following flowchart, which will help you figure out where you need to focus:
I’ve wired up two off-grid, mobile solar installations in the past two years: a single-panel 330-watt system and a four-panel 760-watt system, the latter of which supplies my power full-time. I started as a complete novice, scouring websites and learning from technical manuals, tutorials, articles, and building codes, after which I scraped knuckles, pulled muscles, and strained my hands to get it all wired. Then I read some more and redid it the right way. I’m the type of person who shows friends my power system while exclaiming, “I power my life with STARLIGHT! Isn’t that AMAZING?!”
For this guide, we’ve coupled my hands-on lessons with input from experts such as Jeremy Allen, who helps design, size, and sell systems direct to homeowners at Wholesale Solar, a major player in the solar field, in Mount Shasta, California. We also checked in with David Savarese, the director of project development at Sullivan Solar Power in San Diego, who was kind enough to answer an inappropriately large number of questions. Sullivan Solar Power has installed almost 5,000 systems throughout Southern California, providing support and product guarantees that have made the company a leading independent installer in the region.
As mentioned earlier, there’s no one-size-fits-all solution to solar. And not all solar panels are created equal. Suniva Optimus monocrystalline solar panels are competitive with panels from other top-tier manufacturers on every technical metric, but they’re often priced 30 percent lower per watt than other modules with similar warranties.
Many manufacturers and vendors toss around the efficiency ratings of their panels to prove they’re the best. If you’re new to the term, you may be disappointed by efficiency ratings of 15 to 20 percent. But efficiency percentage is just a laboratory measure of how much of the sun’s total power—around 1,000 watts per square meter of earth—a panel turns into electricity, and bragging rights for the most efficient panel still belong to products that achieve only about 22 percent. Panasonic, SolarCity, and SunPower have all been scraping to get an extra fraction of a percent into their panels, so shoppers are a long way from being able to buy anything much higher than that. The Suniva panels we recommend are rated at 17.18 percent efficiency; that hits close to the 17.89 percent of more expensive SolarWorld panels and beats out the rating of popular panels from Astronergy, which operate around 16 percent. In fact, even highly ranked Kyocera panels stall out around 16 percent efficiency. LG’s black monocrystalline panels produce power at close to 19 percent but often cost 30¢ to 40¢ more per watt than our pick. Since most homes need at least a few thousand watts, that difference adds up fast.
But panel efficiency isn’t all it’s often cracked up to be. The difference between 10 percent and 20 percent might mean a lot of roof space to produce the same wattage, but the difference between 17 percent and 18 percent probably won’t matter to you. As with so much in solar, how much you care will depend on your circumstances: If you have a huge, flat roof with space to spare, for example, you might find that low-efficiency panels offer great value per watt, especially if you’re installing them yourself with zero labor cost. On the other hand, if your roof has intersecting gables and lots of obstacles, every square inch might matter, and high-efficiency panels may be more attractive. The Suniva panels we’ve chosen hit the sweet spot between cost and efficiency, though, and they’re a good yardstick for measuring other options. Efficiency can be considered a metric for panel quality, so while the most efficient panel might not be worth a huge premium, a dirt-cheap panel might not be worth the discount, either.
And no panel is worth anything if it won’t last long enough to recoup its cost. With any luck, your panels will still be going at it in 30 or 40 years. Every reputable panel manufacturer we looked at offers a warranty that covers the workmanship and materials for a decade and guarantees the power output to be at least 80 percent after two decades or more. Suniva is no exception, offering a 10-year product warranty and a 25-year output warranty.
That’s a long time to back a product, which is why we took the manufacturers’ reputations into account as well. Around 2012, solar-panel manufacturers were powering down left and right, and a lot of them were companies based in North America. Since then, various articles have discussed and analyzed the trade implications, the warehouses stuffed with imported panels, and the sometimes strange bedfellows that have arisen as the industry steadied itself. Fortunately, those politics don’t matter much to the soon-to-be-solar homeowner. What does matter is that in 2016, a good-quality panel can come from anywhere—we looked at panels from the US, Canada, Germany, South Korea, Japan, and China. While we had no reason to specifically rule out panels from any one country, Suniva just happens to have a patented manufacturing process that the company claims is behind the low prices that make its panels competitive with imported panels, even though they’re made at factories in Georgia and Michigan.
Our research into efficiency, prices, and warranties showed that the Suniva panels are a great product, and when we spoke with Jeremy Allen in the technical design and sales office at Wholesale Solar in Mount Shasta, California, he strongly recommended them and told us that they’re among Wholesale Solar’s best sellers for all the same reasons. But if you start asking “What is the best solar panel?” the answer you’ll most often get is “It depends.” David Savarese, the director of project development at Sullivan Solar Power in San Diego, told us via email: “We are not married to one solar manufacturing company as we will offer clients multiple options and allow them to select what’s best for them.” Recently, that means “the majority of our clients select SunPower modules, which are the most efficient solar panel on the market.” We think you should start your search with the Suniva panels and compare the other options in your area against them. Often, our pick will be the right choice. But as with Savarese’s clients in San Diego, local pricing and installation concerns might mean that SunPower or another brand is the appropriate choice for you.
Even the best panels are only as good as the inverter you pair them with, so for most grid-tied systems we recommend looking at SolarEdge single-phase inverters and the company’s line of independent power optimizers before looking anywhere else. SolarEdge’s hybrid platform borrows the efficiency gains and individual panel management of microinverter systems yet avoids the extra costs and reliability issues that have kept micro systems from becoming mainstream. Think of the SolarEdge platform as being like a plug-in hybrid car, which has the low driving cost and emissions of an electric vehicle but the range and convenience of a combustion engine. Although the SolarEdge platform costs about the same as a traditional, top-of-the-line string-inverter system, it allows for more flexibility in roof planning, gains in power production, and reliable service with panel-level monitoring.
As you size and plan your installation, the benefits of the SolarEdge system start to become clear in comparison with a traditional string inverter, which operates with a string of solar panels wired together and fed into it, almost as if it were one giant panel. In addition to turning the panel’s DC power into AC, standard string inverters have to manage the DC power to wring the most power out of the string—something known in industry lingo as maximum power point tracking (MPPT). Unfortunately, solar-panel strings behave a little like a string of old Christmas lights: One bad component can ruin the bunch. For a solar-panel string, shadows from trees, chimneys, or well-aimed bird droppings that lower the output of a single panel will in effect ruin the average of the whole string managed by a single inverter.
To counter that problem, some companies offer microinverters, which are mounted to each and every panel and perform MPPT duties on a per-panel basis, increasing efficiency and adding more detailed data to the management system. Because each microinverter/panel system sends out AC power, together they avoid creating long, high-voltage runs that require extra care the way traditional string inverters do. But all those microinverters can get pricey—and maybe more worrying, they can get hot. When it comes to electronics, heat is the enemy of longevity. And mounting heat-generating inverters to the back of a solar panel is part of the reason that both Jeremy Allen at Wholesale Solar and David Savarese at Sullivan Solar Power warned against them in almost every install scenario.1
The SolarEdge system takes the best of both worlds by separating the DC power management (MPPT) from the DC-to-AC inversion duties. Essentially, the SolarEdge system incorporates individual components that each specialize in one task and do it well, rather than relying on multipurpose components that are jacks-of-all-trades and masters-of-none. Instead of mounting a complete microinverter to the back of each panel, a SolarEdge system employs a power optimizer that performs only the MPPT functions, obtaining all those delicious extra electrons before sending them on as stable DC power. The inverter then has nice, stable DC power coming in and thus manages less variation and less heat, and this system ultimately leads to less complexity and greater longevity. The SolarEdge SE6000A with power optimizers for 17 panels would cost roughly the same price as, for example, SMA’s Sunny Boy string inverters matched to the same panels (Sullivan Solar Power’s David Savarese told us that among the string inverters the company installs, the SMA Sunny Boy line has been among the most reliable). In addition to the praise from the pros at Sullivan Solar Power, the Sunny Boy line gets accolades in forum posts and satisfaction surveys, so it’s a good choice for a pure string inverter. But the SolarEdge power optimizer system adds hard-to-beat flexibility and value.
SolarEdge is pretty confident in its devices’ reliability, as well. SMA and Fronius, two top competitors, warranty their respective inverters for 10 years, with 15- and 20-year options available. SolarEdge provides standard warranties ranging from 12 to 16 years—larger inverters have longer warranties—and offers extended warranties for 20 or even 25 years. Given that some outdated solar blogs recommend planning to replace an inverter in seven to 10 years, knowing that your SolarEdge inverter is under warranty for as long as your solar panels are provides some serious financial peace of mind.
Not only do the per-panel power optimizers give more detailed data than pure string inverters, but the Zigbee Interface adapter also lets you monitor that data from almost anywhere. Zigbee is the same protocol that controls our favorite smart LED light bulbs, smart switches, and even Sonos speaker systems. Almost every inverter released in the past few years offers advanced monitoring through an Ethernet port, USB, Wi-Fi, or some proprietary connection, which you can access through a Web portal from inside—and sometimes outside—your home. Smartphone apps have become increasingly common, allowing owners or installers to monitor power output and watch for problems. Like many of the top-tier manufacturers, SolarEdge provides a Web portal and a smartphone app.
The only competitor in hybrid inverters is a system from Tigo Energy that is harder to find and more expensive than our pick from SolarEdge. At first glance the Tigo smart modules seem like the same basic idea: One module, a little box that looks similar to a SolarEdge power optimizer, goes on each solar panel to manage the panel’s power on an individual basis, increasing production. But the technology behind the Tigo system is completely different from the SolarEdge method. The Tigo devices rely on impedance matching, adding resistance to the strings as needed, as determined over a wireless connection by a maximizer management unit (MMU), which still uses a traditional string inverter that calculates MPPT for the entire string. If it sounds complicated, that’s because it is. Maury Markowitz, who writes about solar and energy news at his site Energy Matters, has an excellent head-to-head of the technical differences between the two approaches. Like Markowitz, we found no production advantage that would warrant using the slightly more expensive Tigo system.
As with other grid-tied inverters, one thing our inverter pick can’t do is provide power to your home when the grid goes down, no matter how brightly the sun is shining. While that may sound silly, it’s for good reason. During a blackout, your solar power could feed back into the grid, electrifying lines as utility workers try to repair them. To avoid serious injuries or even fatalities, grid-tied inverters will shut down power when the grid fails, and your building inspector—and likely an inspector from the electric company—will need to certify your system for safe operation before you get the final green light. Some inverters offer ways around this dilemma. Companies such as SMA are making inverters that can safely power limited outlets or subpanels, isolated from grid circuits, in case of an extended blackout. Magnum Energy, maker of our off-grid inverter pick, also makes systems specifically for this situation that create a micro-grid safely isolated from the blacked-out utility. Regardless of the technical way such a system achieves this isolation, we think it isn’t enough of a selling point to draw most people away from the otherwise fantastic SolarEdge products.
Panels and inverters are the core of any system, and off-grid systems have the added costs of batteries and charge controllers, but your final installation budget should also include some smaller items that can add up quickly.
The first extra cost to consider is the roof itself. Removing and reinstalling solar panels when you’re putting on a new roof can add $1,500 or more to the project. If you’ll need to replace or reshingle your roof in the next few years, it’s best to do that before installing solar. If your roof is around halfway through its useful life, you should be sure to account for the extra cost of having a roofing contractor remove and reinstall the panels when the time comes. Of course, if your roof is on the newer side, any solar equipment installed now will have long paid for itself by the next time you’re pricing out shingles.
Although your roof’s age matters for planning purposes, you actually won’t be attaching your panels directly to your roof but to a racking system that keeps everything rock solid. Jeremy Allen at Wholesale Solar couldn’t more highly recommend IronRidge racking. IronRidge has options for ground or roof mounting, and it can provide plans for all 50 states with engineering stamps that most building departments should accept. If you want to get an idea of what parts you’ll need, you can try out the company’s racking design assistant, which includes a database of solar-panel measurements so you don’t have to enter them by hand. Rock-solid mounting isn’t cheap, though: Be prepared for the racking to add around $70 to the cost of each panel. Discount racking might not meet the structural requirements in your area for wind and snow loads, so if you can’t find a racking manufacturer’s website, it’s best to steer clear.
Whatever inverter system you go with, having a robust monitoring system is crucial to troubleshooting your equipment and making sure it’s performing as it should. Most inverter platforms offer Web portals or smartphone apps for monitoring live and logged data on power generation, but most manufacturers don’t include this functionality in their base products—you shouldn’t assume that monitoring will be built in. Most homeowners will want to pony up a few hundred dollars for a home gateway kit such as this one, which works with our pick from SolarEdge. If you lease a system from a major company or have that company install it, that company will likely offer to monitor it for problems. Still, many purchased systems rely on the homeowner to learn the portal and troubleshoot the basics. Sullivan Solar Power, for one, offers support for any of its systems, David Savarese said. “We have a dedicated service department of trained technicians that closely monitors our fleet of systems every day to ensure any issues are caught and resolved as quickly as possible – this is actually rare in the industry.” Regardless of who is ultimately responsible, you might simply want to monitor your system: One Wirecutter staffer told us their father watches his solar production closely, just for the joy of seeing the meter spin backward.
If you’re paying a contractor to install your solar, the contractor will likely have built in the costs of miscellaneous supplies that aren’t worth breaking out. But if you’re doing it yourself, check with your salesperson on what’s included and what you’re likely to need. DC-rated fixtures are uncommon in stores, so your best bet is to order things like DC breakers or high-amperage inverter cables from your solar supplier to avoid delays and headaches during your install. But you should plan to head to your local hardware store for all the things you’ll need to connect the AC elements to your existing electrical system. Depending on local codes and your system, you’ll likely have to budget for conduit, Romex wire, wire nuts, electrical tape, wire staples, outlet boxes, disconnect switches, AC breakers, and any small hand tools (such as our favorite wire cutter or this top-rated, one-squeeze wire stripper) you don’t already have.
Solar power is full of brilliant engineering, and you really don’t need to understand most of it to make the switch from utility-based power. In the most common systems, you install solar panels on the roof to turn sunlight into direct-current (DC) electricity, which goes into an inverter, which outputs alternating-current (AC) electricity into your home’s wiring. (AC is what your home regularly uses; AC and DC power aren’t interchangeable.) When the sun is out, you get free electricity; when it’s not, your power comes from the utility company just like always. If you produce more power than you need during the day, you may be able to sell it to the utility company for service credits or cash. This practice is called net metering because your meter spins forward when you use power from the utility and backward when you sell power to the utility, resulting in a much lower net cost at the end of the year. In fact, with equipment costs as low as they are now, a properly sized solar installation will result in your net utility bill at the end of the year being zero. That’s what makes solar such a great investment for so many people: Done right, solar will let you avoid a utility bill indefinitely.
Most articles and vendors talk about system size and panel size in terms of watts. Measuring wattage in a solar panel is a little like measuring a car’s speed—it’s an instantaneous measurement that could change at any moment. So even though solar panels may be sold based on their maximum wattage, the tactic is a bit like advertising a car with its top speed: “Introducing the new 150-mph Honda Accord!” Of course, that’s a professional driver on a closed course. You’d be lucky to get it to 135 mph. A 150-watt solar panel is the same way, as it will probably produce about 135 W, but only while it’s in direct sun, at the perfect angle.
The DC power from solar panels isn’t compatible with your home’s AC power system. So an inverter manages the incoming DC solar power, turns it into AC power at the proper voltage, and feeds it into your distribution panel. As with solar panels, inverter sizes are expressed in terms of maximum wattage, and you select an inverter to match the total wattage of your solar panels.
A grid-tied system like the one we recommend is the most common setup, but you’ll find variations on the theme. You can add battery banks made up of lead-acid batteries similar to what starts up your internal-combustion car, or lithium batteries like the new Tesla Powerwall, similar to a giant laptop battery; such battery banks store your spare power instead of sending it to the grid. Many manufacturers have come up with other clever ways to manipulate power to correct inefficiencies or squeeze out a few more watts. But a basic system includes solar panels to produce DC power and an inverter to turn it into AC power.
The size of your system will be largely based on two key numbers: hours of direct sunlight at your location and your average monthly electricity use, generally measured in kilowatt-hours. Small variations in those two numbers can mean huge differences in system requirements. Based on averages, homes in Texas and California, for example, both get around five hours of direct sunlight a day, but a Texas home uses over 1,000 kWh of electricity every month while a California home uses around 560 kWh. Farther up the West Coast, Washington homes average over 1,000 kWh of usage per month, as well, but many get less than four hours of direct sun per day. The average system in each of these three states will be very different, and you might not be anywhere near the average. The first step to getting a better idea of your needs is to pull up your utility account online and find the number of kilowatt-hours you’ve used each month for the past 12 months. Due to seasonal changes, you need all 12 to avoid under- or overestimating your power needs. If you’re lucky, your utility will provide a running 12-month average. Otherwise, total up the past year and then divide by 12 for a monthly average, or by 365 for a daily average. Have both your monthly and daily averages handy, since you might encounter system packages advertised either way.
Once you have figured out your electricity use, determining the hours of sunlight where you are is much easier. The National Renewable Energy Laboratory maintains a detailed tool for calculating solar performance, but for a rough estimate you can glance at a solar-insolation map like this one.
Ideally you’ll have south-facing roof space available, at the perfect angle, to capture as many of those sun-hours as possible. If your roof has exposure to the east or west, solar is still an option, but you’ll probably need a 15 to 20 percent larger system to get the same amount of power production as a south-facing array. If your only roof space is north-facing, and you don’t have somewhere to install a ground-mounted system, you’re out of luck. We asked Sullivan Solar Power about roof orientation, and David Savarese told us that the company “will also not install solar on a north-facing roof or on any home where the system doesn’t seem beneficial to the customer. That approach has lost us some potential customers, but we did so honestly and ethically.”
Armed with your average electricity use and a rough estimate of the direct sunlight available, you should be able to make a ballpark estimate of your system needs. If your annual use is 7,800 kWh, that’s around 22 kWh per day. If you have five hours of direct sunlight per day, 22 divided by 5 is 4.4, so you need 4.4 kW, or 4,400 W, of panels. Add 5 percent if your roof isn’t quite south-facing, or 15 percent if your roof faces east or west. And everyone should add 5 percent for a buffer. With that buffer, 4,400 W becomes 4,620 W. If you use panels rated at 335 W each, divide 4,620 W by 335 W, and you get 13.8 panels. If you round to 15 panels to be safe, 15 panels multiplied by 335 W each equals 5,025 W. That means you’ll need an inverter rated for roughly 5,000 W. Without special circumstances, this package, which includes a SolarEdge inverter, SolarEdge power optimizers, Suniva panels, IronRidge racking, and cables, would be around $8,600 before installation costs or tax incentives. If you plug your own numbers into this example, you’ll get a good idea of how much power you need and how much money you can expect to spend.
The more power you use, the more money solar can save you over its lifespan. But how quickly you’ll break even has to do with how much electricity costs in your area: The higher the kilowatt-hour cost, the faster solar will pay for itself.
|Smaller system with 607 kWh per month (66% of national average)||The most average house, 911 kWh per month||Larger system with 1,221 kWh per month (134% of average)|
|Cash cost, parts, and labor||$16,120.80||$23,773.90||$30,933.10|
|Net cost after tax credits||$11,284.56||$16,641.73||$21,653.17|
|Savings over 25 years||$16,974.11||$25,769.55||$35,190.05|
|Number of years to break even||12||12||11|
Of course, you’ll find calculators strewn across the Internet that are designed to help you size your system and simplify the whole process. Some rely on you to research and input accurate numbers, while others are automated. Google’s Project Sunroof, the most impressive of the bunch, uses satellite and climate data to provide a detailed estimate of your roof’s solar potential. (It’s a great tool, if somewhat creepy.) But be careful about putting your contact information into these tools: Many serve to collect sales leads, and when you enter your phone number or email address to “get more information,” what you actually get will be call after call from local salespeople promising you the stars.
12-month average electricity use in kWh × 12 ÷ 365 = Average daily electricity use in kWh
Average daily electricity use in kWh ÷ Hours of direct sun = System size in kilowatts
System size in kilowatts ÷ Panel wattage = Number of panels
Number of panels × Panel wattage = Inverter size
If you want the best return on your investment, you have no better option than purchasing your equipment outright. Even if you need to tap home equity or other low-interest credit options, purchasing equipment should be your first choice. But if that isn’t within your grasp, leases and power purchase agreements that offer low- or no-money-down options are worth considering—carefully.
By purchasing your equipment up front, you’ll have the lowest possible component cost for the gear matched perfectly to your situation. If you can contribute even part of the labor to the installation, you’ll speed up your break-even timeline even more. But an outright cash purchase can be a challenge given that the equipment may cost $5,000 to $20,000, and professional installation adds to that number.2 Installation costs can vary, but for a rough estimate $1 per watt is a decent guess, with larger systems likely below that, and smaller systems above that.
David Savarese at Sullivan Solar Power told us in an email interview that for his company’s customers, financing a purchased system was the most popular way to go: “Owning the system allows solar customers [to] take the federal tax credit,” and in sunny and expensive Southern California, “the solar power system will pay for itself in 5 – 6 years (considering avoided costs on electric bills).”
If you have equity in your home, a home equity loan—with interest rates between 4 percent and 5.5 percent at this writing—may be worthwhile. The 5 kW example described in the previous section, which could replace the full power consumption in many homes, might cost around $8,500 for the equipment. With a professional installation priced at $5,000, and some miscellaneous supplies, the whole system might cost $15,000 before tax incentives. A $15,000 loan, at 5 percent for 15 years, will cost about $21,350 with interest. Most experts say you can expect your solar-power system to work with little trouble for 25 years, so your solar power needs offset only $71 a month in electricity to cover the loan payment. Based on utility rates in California in November 2015, the same house would have paid $119 for utility-based electricity. That means that even with a loan, solar would save around $50 per month.3 And keep in mind that this comparison considers today’s utility rates. If utility rates are going up, solar looks even better. Moreover, local, state, and federal tax rebates are generally available to people installing solar power. If you’re on the fence, federal tax credits of up to 30 percent of the system cost—plus additional state and local tax credits in some areas—may push you into worth-it land.4
|Low rates, $0.087/kWh||Average rates, $0.1251/kWh||High rates, $0.183/kWh|
|Cash cost, parts, and labor||$23,773.90||$23,773.90||$23,773.90|
|Net cost after tax credits||$16,641.73||$16,641.73||$16,641.73|
|Savings over 25 years||$12,829.37||$25,769.55||$45,349.20|
|Number of years to break even||16||12||8|
If you can’t afford to buy, and a home-equity loan or line of credit isn’t an option, you may still be able to go solar, though likely not with our picks. Instead you’ll want to look at vendors that can offer leases or power purchase agreements (PPA). SolarCity, one of the biggest names in residential solar, has grown in part because of its aggressive marketing of these no-money-down options. In the company’s latest public filing, SolarCity says that over 97 percent of its customers have some sort of long-term contract, presumably a lease or PPA. These no-money-down arrangements are a leading cause of the explosion in solar advertising across the Sun Belt, but they’re also the leading cause of small, fly-by-night operations. The rebates, tax credits, and financial incentives you hear about with solar power accrue not to the homeowner but to the system owner—the company you contract with. Leasing and PPA firms are able to offer the deals they do only because they reap those financial rewards. In some states leases and PPAs aren’t available, and in others they’re straight out prohibited.
Regardless of which agreement you’re considering, get at least three estimates and look past the bottom line. Although lease and PPA customers have no financial responsibility for maintenance or repairs, they’re 100 percent reliant on the installer to come back and fix any problems in a timely fashion. If the cost estimates vary only a little, remember that you might have a relationship with this company for a long time, so the cheapest option might not be the best. Will the company provide maintenance services or repairs? For how much? Can you contact any customers on its referral list? Has the company been around long? Is it likely to remain viable for the life of your lease, or your home mortgage? Research the equipment the company is quoting, too—are the manufacturers reputable, or do they seem cut-rate? Most people are drawn to leases and PPAs because they’re often available with little to no money down, and the installer will handle system design and installation with minimal input from the customer. While the lack of input can feel convenient at first, don’t let it make you complacent.
And if you’re thinking of selling your house anytime soon, a solar lease or PPA might not be a good choice. This type of contract isn’t an investment but an extended financial commitment for 10 to 20 years. While a purchased system can sometimes return up to $4 per watt (PDF) when you sell your home, a lease must be transferred to a willing buyer and might lower your home’s sale price or drag out your home’s time on the market.
With more installers fighting for every installation, leases and PPAs often come with performance guarantees and structured costs, which has started to make the difference between the two feel semantic. Tor Valenza at SolarPowerRocks.com has a nice breakdown of the differences that remain.
In a leased system, you agree to pay a fixed monthly payment, and in exchange you get to use as much power as the panels can generate. If the lease is $100 per month, for example, you’ll come out ahead so long as your system reduces your power bill by more than $100 per month—and in many areas that’s easier to do thanks to the ability to sell excess power to the utility, a process known as net metering, but that isn’t a guaranteed option. As with any contract, watch out for the fine print; some leasing companies also have escalating payments or extra fees at the end of the contract, and leases might place a lien on the home as well.
For a power purchase agreement, or PPA, you pay only for the power you use, as if the panels were a second utility company on your roof offering rates consistently below your traditional utility. This model will never save you as much money as purchasing, but you can regard it as more of a “sure thing.” If your company promises to stay 20 percent below market rates, you’ll always save around 20 percent. But beware of price hikes that may rise faster than utility rates over the life of the contract.
You don’t need 20 years of experience as an electrician in order to install solar. In the words of one of our experts, “If you’re the type of person that would replace their own water heater, you can probably install your own solar.” You can watch online videos for just about every step of the process, even making basic connections. It’s not quite like IKEA furniture, but all the equipment comes with instructions that often include guidance on the wire sizes and the order of operations. And reputable sales outlets offer their own line drawings, diagrams, and technical support, so you can get input in case you’re stumped.
If you’re handy and detail-oriented, it may surprise you how logically and easily the project can come together. But unless you have years of experience, be ready to reach out to a pro when a problem stumps you. Quickly and accurately diagnosing a problem isn’t always as easy as flipping through an instruction book, and years of experience can really pay off in such a situation. If you have a newer home built and wired to modern codes, you can expect a smoother installation. If you have a charming older home wired under the supervision of Edison himself, you may be in for, shall we say, a learning experience.
While anyone handy or technically minded can probably install solar, failing to follow procedure poses real risks. It’s important to know that without the proper safety precautions, even small residential solar systems can involve risks ranging from fire to electrocution. Wholesale Solar’s Jeremy Allen told us that he estimates 80 percent of his customers get some sort of assistance from a professional, whether it be helping with permit compliance, verifying safe connections before an inspector comes in, or even making the final connections. And permit compliance, though it sounds minor, is a big hurdle. According to Allen, the biggest mistake for most people is not checking on and filing for permits early enough. He recommends contacting your local building department early in the process to get more information.
You might do it all yourself, you might have a professional look over your shoulder, or you might buy the equipment and hand it straight to your contractor. If you’ve worked with a contractor or electrician in the past, give them a call before you get started. Even if they haven’t installed solar before, they can probably get up to speed in no time. Allen emphasized to us that the number one thing when you’re choosing an installer isn’t finding someone with years of experience but finding someone you trust. If your neighbors have solar panels on their roof, ask them about their experience and get the names of the people and companies they hired. As one Wirecutter editor who lives in a solar-heavy neighborhood said, few people know the details of their panels or inverters, but everyone has something to say about their installers and vendors.
Net metering is a fancy-sounding phrase that people in the solar world casually throw around. In simple terms, it means that your home’s power runs two ways, both into and out of the local utility’s grid. With grid-tied solar, your power meter will count upward at night and when the sun is hidden behind clouds. But when the sun is out, and you make more power than you need, the extra power will feed out to the utility and go to someone else; generally, this action will count your meter back down. So if, for example, you use 400 kWh over the course of a month but make 390 kWh, you’ll get a bill for just 10 kWh at the end of the billing cycle, or 400 minus 390.
That’s the simplest and most ideal situation. In some areas you might be paid more per kilowatt during the day than what electricity costs at night (a good thing), or you might have to pay more for kilowatts used than for those you make (a not-so-good thing). To put it mildly, most utility companies aren’t fans of net metering and residential solar, which they see as a threat to their business models. Some companies are trying to eliminate the practice completely and actually charge solar-equipped customers more, a policy that seems pretty detrimental to residential solar adoption. Freeing The Grid explains the situation in detail and tracks net-metering practices on a state-by-state basis, with easy-to-understand maps and graphics. Solar vendors, installers, and local utility companies will be able to tell you more about the practices in your specific area.
For an investment as large as solar power, you owe it to yourself to take your time. If you’ve done your best to understand solar and still don’t trust yourself to make the right decisions, ask your neighbors, friends, and family for recommendations of contractors and installers you can trust instead. Whatever path you decide to take, you should be prepared with notes on your energy use, how big a system you need, an idea of how favorable your roof is to solar, and what kind of financial commitment you can make. The more you understand your system, the more you’ll get from it, in both technical and financial terms. And when you finally throw the switch and see your power meter roll backward, the whole thing will be worth it.
Originally published: July 29, 2016