Solar is a new, emerging industry. To date, there are no industry standards for how to predict the energy output of a completed solar system in the real world. Each solar sales person can use his own assumptions in making this prediction. Some are intentionally optimistic, some are naïve and don’t have enough experience to make realistic predictions. As a company, our approach is to be intentionally conservative in making performance predictions. We live by our reputation and we want you to be very satisfied with your solar system. We’d rather lose the sale than make an overly-optimistic prediction and have you end up disappointed in a couple of years. Our company mantra is, under-promise and over-deliver. We feel it’s the best way to be as a company. And it is one of the reasons why we are a B Corp.

We build great solar electric systems. We under-promise and over-deliver. And we sleep very well at night.

The percentage of annual utility offset you can achieve with solar is driven by several factors, starting with how much energy your house uses. The size of the solar panel system, the type of panels used, and the orientation and shading of solar panels determine the clean energy output that is possible.

In some case, when a customer wanted to produce more power than their rooftop size would allow, we have built a combination system using rooftop and ground-mounted solar panels. We have also used solar panels to build awnings and other shade structures.

Alternatively, we recommend using SunPower modules to maximize your clean energy output. SunPower panels are unparalleled in terms of energy production. They have the highest output per square foot and deliver more energy per kW, year over year, than other modules. However, that extra efficiency costs more to achieve. So, if your primary consideration is maximum performance, then you should go with SunPower. If your primary constraint is cost, then we recommend one of our other brands of modules.

One of the reasons many people prefer Smart Solar Financing over leasing is that it is simply a better deal. With a lease, several companies and their investors all need to earn a profit. When YOU own the system, there is only ONE investor – you. With solar ownership, all of the financial return goes to you, so that even if a solar project in OH doesn’t have enough of a return to please the tax equity investors, venture capitalists and others that seek to make money through solar leases, it DOES make financial sense when YOU are the investor. As the owner of the system, you can take the Federal Tax Credit, sell your SRECs, and benefit from stable energy prices over time, as utility rates rise.

All solar panels lose a small amount of performance every year. Exposure to direct sunlight puts physical wear-and-tear on any material — think of lawn furniture, decking or shingles. The performance degradation of solar panels is expected and is very slight, only one-half of one percent per year. The panels are warranted to produce at least 80% of their rated power at year 25. In fact, they will continue producing power long after that, just a little bit less each year.

For efficiency sake, we have a large supply of Trina solar panels. Trina is a world-class supplier of high-quality panels. Using them enables to us to use the highest quality equipment at the best prices and maintain a very efficient delivery operation.

However, we are not wed to any one manufacturer. There are approximately 80 solar panel manufacturers offering about 600 different makes and models of equipment. One of the values we bring to our customers is that we can select the very best equipment for your particular job.

When choosing solar panels, we have three filters:

1. technology platform
2. specific performance and industry reputation
3. financial stability of the manufacturer

We are very careful in selecting quality solar panels from top-tier companies that will have the longevity to honor the warranties for their equipment. We offer many different solutions that are comparable in efficiency. We can also offer ARRA compliant solar panels (American Content) if that is a requirement.

We are also an Authorized Dealer of SunPower systems, which are the most efficient and energy dense solar panel available. There is a premium price differentiation for SunPower, but you can achieve more electrical output per square foot if you install a SunPower system, which would increase your system size and overall annual utility offset. SunPower is also a terrific solution when the roof is small but you want to maximize the amount of clean energy produced.

We have experience with installing both micro-inverter systems as well as centralized inverters systems and can help to accommodate what is best for your renewable energy and project goals. One obvious diffidence between micro-inverters in comparison to centralized inverters is an increase in price to install micro-inverters.

Some pros for micro-inverters:

1. ad hoc expandability
2. optimal performance under shaded conditions

Micro-inverters can, in theory, allow for easier incremental expansion of a solar array. But there are still the costs associated with mobilizing the crew and the question of racking. Do we build the whole rack now, or built the racking out in phases as well? Depending on the roof, this could be a limiting factor. Also, you can’t just keep adding micro-inverters forever. Even micro-inverters have limitations on how many can be connected together. If we install close to that limit today, then you’ll still be limited in future.

Some cons for micro-inverters:

1. They are installed on the roof under the solar panels where high heat could reduce their life, whereas central inverters are installed elsewhere, and have a documented history of reliable performance
2. Using micro-inverters increases the number of inverters for potential service repairs
3. Currently, micro-inverters cost more.

Micro inverters can also create more potential future maintenance risk. With a central inverter, you have a single point of failure; with micro-inverters, you have many points of failure.

In our opinion, micro-inverters are not worth using if you have a large, simple roof, without much shading. However, micro-inverters can be worth the added cost if you have a complex roof, where the modules will have multiple orientations, or complex shading patterns.

Most important to remember is that micro-inverters are still new technology and have not been proven enough yet to wear their “25 year warranty” with any kind of credibility.

Why on the roof? Why not on the ground?

We can build solar panel systems on the roof or on the ground. Rooftop solar offers a lower-cost option. The roof is an existing structure that can usually serve well as a mounting surface for solar panels.

A ground-mounted solar system requires a foundation and may demand a long underground wire run back to the house.We have built many ground-mounted systems, usually at a slightly higher cost than a roof mount.

Either type of installation can work well. We can provide whichever option you prefer, and we will advise you as to our opinion of which will work best in your case.

Solar panel subsidies and incentives might increase in the future—if I install solar panels now, will I miss out on solar panel incentives?

There are two broad classes of solar incentives: Purchase-based incentives and Performance-based incentives.

Purchase-based incentives are tied to the cost of the system, and apply one-time-only to the purchase of a new system using brand new equipment. They are designed to reduce or offset the initial cost of purchase. These incentives include tax credits (like the current Federal Tax Credit of 30% on renewable energy systems), low-interest loans, grants, and rebates.

Performance-based incentives are tied to the ongoing energy production of a solar system. There are several types of performance-based incentives, including Feed-in-tariffs, performance payments, Solar Renewable Energy Certificate sales, and a range of Carbon-tax or Carbon Cap & Trade mechanisms. What all performance-based incentives share is a solar income/savings structure based on the quarterly or annual output of the solar energy system—not a one-time-only payment, but an ongoing revenue stream as clean electricity is produced.

In a purchase-based incentive, the system owner must purchase the system within the time constraints of that particular incentive program. Performance-based incentives can apply equally to new and existing systems.

For several years now, the solar industry has been trending away from purchase-based incentives and toward performance-based incentives. This trend is expected to continue at both the state and federal level.

The advantage of this trend is that it makes project timing less critical—there is no need to wait for some potential future incentive. If and when that future incentive arrives, it will most likely take the form of a performance-based incentive and therefore be available to owners of existing solar energy systems.

Like all emerging technology-based businesses, the solar industry continues working on technical improvements. According to physicists, the theoretical maximum possible efficiency of a solar cell is 31%. Current laboratory cell efficiencies are hovering around 24%. So there is some room for growth in efficiency, but as the maximum efficiency is approached, each incremental increase is smaller and harder to achieve than the previous one.

Today, low-cost crystalline solar cells are by far the most dominant technology type available, holding 85% of total market share. Numerous laboratories continue to experiment with alternative technologies that could exceed the 31% efficiency cap of standard crystalline silicon, but none of these are close to commercial readiness. Any new start-up technology promising a significant efficiency boost would face serious cost hurdles and a long timeline to compete with crystalline silicon on a lifetime cost-of-energy basis.

While manufacturers have continued to improve solar panel efficiency, they have found more efficiency (and more savings) in reducing their manufacturing costs. As solar panel prices drop, it is that manufacturing efficiency, and the growth in scale of solar manufacturing operations, that are driving those cost reductions. Solar panel prices are not likely to drop much further, because if they did, the manufacturers would be forced out of business.

Solar panel prices have been falling ever since the technology was invented. 40 years ago the solar cells alone (not counting the other components) cost $2,000 per watt. Today, an entire system, including permitting and engineering, can be built for about $2 per watt. The previous two years alone saw a nearly 50% reduction in solar panel prices.

However, as solar panel prices fall, the dollar amount of each percentage point becomes smaller and smaller. Today’s panel prices are so low that many solar panel makers are struggling to remain profitable. The solar panel manufacturing sector has entered a tough period of mergers, acquisitions, down-sizing and right-sizing. Currently, we are in a period of overcapacity on solar panels. How this will affect prices in the future is not clear, but solar panel prices have stabilized in recent months and could soon begin to increase.

Historically, the solar panels were the largest piece of the cost equation in a solar energy system. As a result, the total system price trends followed the panel price trends.

Today, the substantial drops in solar panel prices means that the solar panels now have a much smaller affect on the overall cost of a complete system. Costs of the other equipment (which includes racking, inverters, wires, and conduit) are tied to the cost of commodity metals like copper, and these prices are not expected to decline anytime soon. Labor prices, project management costs, and engineering costs are currently at their most competitive and will likely not decline further.

Meanwhile, increases in other project requirements (such as structural engineering and permit fees, and electrical safety and project oversight requirements) are gradually adding to the list of cost items incurred on any project.

On the whole then, the price of a solar system is expected to remain fairly constant for the foreseeable future. Any reductions are projected to be small, while the possibility of price increases becomes more real as the market shakes out.

Will solar damage my roof? The short answer is no. In fact, the reverse is true—by shading the roof from the sun’s rays and from the damaging effects of wind, hail and debris, the solar array will actually increase the life of the roof beneath it. And the panels themselves are quite durable—about as hard to break as a car windshield.

As experienced, certified installer, we take great care to ensure no damage is done to the roof during the installation or anytime thereafter. With the exception of large businesses, we generally sell one solar system to each customer, and therefore live and die by our reputation and word-of-mouth marketing. We work very hard to ensure that each and every one of our customers is satisfied with their solar system results.

Prior to the solar installation, a structural engineer evaluates your roof to make sure it can support the solar array. This evaluation considers both the weight of the array and the potential uplift due to wind. We make sure there is no way that solar will damage your roof.

Solar modules are mounted parallel to the roof with a 1-to-3 inch gap between the roof and the modules. In this configuration, the wind forces are not extreme and are easily handled by any roof that was built to code. Nonetheless, on every job we rely on a professional structural engineer to evaluate the specific site and ensure that the roof and the array comply with all the local wind requirements in the building code and will be able to withstand all expected winds.

In addition to the structural evaluation, we take great care to ensure every roof penetration is watertight. Our crews are experienced with all types of roofing; we fully flash every roof penetration using standard roof flashings. We have built over 350 solar systems in our 14 years of operation and we have never caused a roof leak. Not one!

For our solar panel installations, we are very careful to find the very best solar panels based on reliability, performance, and long term value. Trina solar panels, for example, are made by one of the world-renowned leading solar companies; they have been listed at either #1 or #2 in the world for the past several years. We often use Trina panels because they are superior solar panels from a global leader. But we are not wed to them, and sometimes recommend other panels. It just depends on the specific project — each is customized to a great degree.

Many solar experts use the term “bankability” to refer to solar panel manufacturers that have proven to be reliable and stable, both in their product quality and in their overall company financial health. There are about 15 truly “bankable” solar panel manufacturers in the world, including Sunpower in the US. Most of the U.S. solar panel companies are smaller companies, though some meet our requirements and are approaching bankability as discussed above.

In our experience, many “U.S. made” solar panels are not too different from the rest, in that most of the manufacturing is done by the same global supply chain. In some cases, the individual solar cells are made here in the U.S., then shipped overseas for final assembly into solar panels. In other cases, the companies are based here in the U.S., but actually manufacture overseas, where manufacturing costs are lower. This is not only true of solar panels — it is true of many products, especially technology products like computers, tablets, and smart phones.

When “U.S. Made” is a priority for a customer, we present them with options and show the cost differences. U.S. Made typically adds about 25 cents per watt to the customer’s cost. That is a not a huge cost difference, but to an extremely cost-sensitive customer, it may make a difference.

The 30% federal tax credit available to homeowners and businesses to install solar energy systems was recently expanded and extended [in 2010]. A dollar-amount cap was removed from the credit for residential solar water heating systems, and the availability of the credit for all systems was extended through the end of 2016. Many state and local governments also offer incentives. The cost of solar components has been dropping, and electricity prices will likely go up. Taken together, these developments make installing a solar electric or solar water heating system much more appealing than in the past.

RESIDENTIAL SYSTEMS

The residential energy efficient property (REEP) credit in IRC § 25D applies to expenditures for solar water heating and solar electric systems installed in a residence in the U.S. that is used by the taxpayer (not necessarily as a principal residence). Taxpayers who own solar in condominiums or are shareholders in a housing cooperative are eligible for their proportionate share of credits resulting from solar energy installations by the condominium management association or cooperative.

The REEP credit is available in the year in which the use of the solar energy system begins. The credit is nonrefundable, but any unused portion can be carried forward. For tax years beginning after 2009, it can be applied against the alternative minimum tax. Allowable expenditures for purposes of the credit include the costs of the system, piping and wiring to connect the system to the home, plus labor related to preparation, assembly and installation. Expenditures for solar energy systems increase the basis of the taxpayer’s property, but the property’s basis must be decreased by the amount of the credit allowed.

BUSINESS SYSTEMS

Nonresidential installations can qualify for a business energy credit under IRC § 48 as part of the investment tax credit. Qualifying property includes that which uses solar energy to generate electricity, to heat or cool a structure, or to illuminate the inside of a structure using fiber-optic distributed sunlight.

Because of the difficult economic times, Congress was concerned that a nonrefundable credit might not create enough incentive for businesses to install alternative energy systems in the near term. Therefore, Congress in the ARRA authorized grants in lieu of the business energy credit for energy property placed in service in 2009 and 2010, or placed in service after 2010 if construction begins on the project before 2011 and is completed by Dec. 31, 2016. Additional information about this program and applications are available at treasury.gov/recovery.

OTHER INCENTIVES

Some states, local governments and utility companies also offer incentives. Other incentives that may be available include:

Property tax exemptions. Most states provide that the added value of a renewable energy system is excluded from the valuation of the property for taxation purposes. For example, Montana exempts the first $20,000 of investments in residential solar energy from property taxes for 10 years following installation.

State income tax credits and deductions. These may be available for both personal and corporate returns. Arizona, for instance, provides a 10% tax credit on the installation of solar energy systems in nonresidential buildings. The credit is limited to a total of $25,000 for any one building in the same year, and $50,000 of total credits in any year.

State sales and use tax exemptions. For example, New York exempts the sale and installation of residential solar energy systems from the state’s sales and use taxes. The law also permits local governments to grant an exemption from local sales taxes.

Rebates. States, local governments and utilities may offer rebates to promote the installation of renewable energy systems and energy-efficiency measures. The majority of rebate programs that support renewable energy are administered by states, municipal utilities and electric cooperatives. CPS Energy in Texas, for instance, offers a $3-per-watt-produced rebate for installation of solar electric systems. It is important to keep in mind that any rebates received by the taxpayer reduce the cost of the system and, therefore, the size of any federal or state income tax credits.

Low-interest solar financing. Low- or zero-interest loans for energy-efficiency projects are offered by electric utilities and state and local governments, commonly for both residential and business installations. The U.S. Department of Energy’s Database of State Incentives for Renewables & Efficiency (DSIRE) also covers local incentives and provides a comprehensive listing at dsireusa.org.

WILL A SOLAR SYSTEM PAY FOR ITSELF?

To determine return on investment (ROI) of a solar energy system, besides the savings available from incentives, the owner must also know a system’s cost, the length of its useful life and the current and likely future cost of conventional energy the system will replace. Besides generating their own electricity, owners of solar electric systems can in many cases sell their excess power back to the electrical utility, which offsets their cost of having to purchase power when the sun isn’t shining. This is called net metering. The Energy Information Administration (www.eia.doe.gov) provides statistics on the average retail price of electricity around the U.S. For a solar electric system, additional factors include the system’s electrical output and average daily hours of sunlight at its planned location. A spreadsheet incorporating these variables is available for download here. They indicate that for an average-size solar electric system receiving an average of five hours of sunlight a day, the ROI ranges from 1.34% to 6.67%, depending on future increases in the cost of power and the useful life of the system.

For average sunlight in cities across the U.S. and other information, see tinyurl.com/crsghf.

By Kenton D. Swift, CPA, Ph.D., associate professor of accounting at The University of Montana in Missoula.

One of the reasons that people prefer Smart Solar Financing over leasing is that it is simply a better deal. With a lease, several companies AND their investors all need to earn a profit. When YOU own the system, there is only ONE investor – you.

With owning a solar array, all of the financial return goes to YOU, so that even if a solar project in OH doesn’t have enough of a return to please the tax equity investors, venture capitalists, and others that seek to make money through solar leases, it DOES make financial sense when YOU are the investor and you are dealing with a known, reputable institution. We make that happen.

We now offer a Smart Solar Financing option that gives our customers the best options:

• low (or no) money down
• easy terms with a good, stable financial institution that specializes in renewable energy financing for homeowners
• PLUS you own the system and get to reap those financial benefits over time

With solar energy systems having a productive 30+ year life cycle, a purchase decision can pay you and your children the dividends, rather than letting someone else make that money off your rooftop. And with Smart Solar Financing, we make it easy for you to own and profit from your own roof or ground.

Mainstream, reliable solar financing for homeowners: make sense to you? It does to us. Because one of our core company values is, “We’re in this for the long haul.” We want our customers to be happy and profitable – for decades! Because if you are, we will be too.

(For more on this subject, check out this page.)