Solar 101

If you boil down solar energy, with regards to panels, inverters, micro-inverters, conduits, roof penetrations, you are really talking about kilowatt hours. Kilowatt hours are a commodity, just like soy beans and corn. There is no Kilowatt Hour 2.0, like you would experience in tech and electronics. At the end of the day, who can provide you with the best service at the best value?

People are often misguided into thinking that there is more safety in a National Chain or they are more comfortable with an established local vendor with a proven track record. The reality is both large and small organizations have had projects that require change orders, have had roof leaks, equipment malfunctions, etc. Anytime the human element is put into the equation there is the opportunity for error. You want to do business with a company you feel comfortable with and who you think will stand by what they say. Track records are important, time in business is important, reputation is important. Cost is normally priority #1.

Most companies can find 2-3 references for you, and most could find 2-3 customers who aren’t 100% satisfied, that’s what you get in dealing with the general public, a normal bell curve distribution of satisfaction. Back to the point of commoditization, there are so many solar contractors in the world and this drives down price. The question is which one do you do business with?

You see ads on TV, people knocking on your door, they are in your local big box stores, you see ads in the mail, on the radio and they all say the same thing…we are the best, or we have the #1 solar panels, or we have the best Yelp reviews. The reality is all solar panels work, all inverters work, most have a 25 year warranty on the panels and a 10 year warranty on the inverters.

Come to grips with the fact that having solar energy is better than doing business with your utility. Most people prefer to have a 30 year fixed rate mortgage; with your utility, you are essentially on an adjustable rate mortgage and the rising rates are outside of your control. If you have the opportunity to lock in to a low rate, make sure it’s the lowest rate you can get. After all, energy is a commodity and it’s about finding the company that can provide you the best value at the best rate.

Solar can be somewhat tricky with regards to analyzing costs. If you are doing a cash purchase or a Pre-Paid PPA, the algorithm is very simple. Total cost/divided by total watts gives you a cost per watt output. Example:

An 8000 Watt (8Kw) system costs $28,000.

28000/8000= $3.50 cost per watt.

Where it becomes more tricky is when you are looking at a traditional lease method. There a $0 down leases, $3k down leases, $10k down, whatever amount you want to put down there is a lease available for that. Many companies offer between a 2.9-3.9% rate escalator, meaning your payment will trend upwards at just below the standard utility inflation of 6%. With these leases, you can request to have a locked in payment. I highly recommend this option as a low cost way to going solar. You can cut your bill by 40%, have a 3 year payback period on your total out of pocket and you lock in to protect yourself long term from the higher rates in tiers 3,4,5. That decision is ultimately up to you and what best suits your financial means. When calculating your monthly lease payment, simply take the total kilowatt hours guaranteed per year and divide that by 12. Then multiply by the rate per kilowatt hour.

Example:

Lease guarantees 12,000 kwh’s per year at a rate of $.15 per kwh on $3k down, 0% escalator solar lease.

12,000 kwh’s/ 12 month = 1000 x $.15 cost per kwh = $150 per month lease payment.