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Residential solar panels: 10 things to know about home solar electricity systems in 2021

Updated: Sep 15, 2021


The ten most important things to learn about home solar, incentives, and batteries in 2020.
10 Things To Know About Home Solar In 2021

Introduction 10 things to know about home solar electricity systems in 2021:


Solar panels for homes has transitioned from a niche product into a leading home improvement project in the past decade. Driven by a need to move away from a fossil/carbon fueled utility grid, states and utilities have emphasized the importance of clean energy production to hit the reduced emissions targets needed to combat global climate change. Driven by this need and the enormous economic benefit that homeowners see, residential solar has taken off!


Ten most essential questions about home solar energy systems in 2021

1. Can I afford to go solar?

The number one question we get from customers is, “is solar installation expensive?” Fortunately, solar has become very affordable in the past decade for most homeowners. Since 2010, the cost of a solar energy system has decreased by around 70 percent. As the industry has grown, efficiency on the installation side, and improvements on the solar panels and inverters, have helped improve the economic returns for customers who go solar. In 2021, installing a solar panel system at your home is one of the best investments that can be made.

2. What are the financing options available for solar home projects?

As the solar industry has matured, the ways to finance a solar energy system have improved significantly. In the past, customers were limited to where they could get financing or locked into agreements that hurt their investment return. Luckily, that has changed. In 2021, most customers choose to finance the system they have using two options, Solar Loan or PPA/Lease. We have outlined a few things to know about each option:

  1. Solar Loan-For a homeowner who wants to own a system but does not want to pay the full amount upfront, Solar Loans are available.

    1. Pros:

      1. Loans can finance the entire solar panel system, spreading out payment.

      2. Monthly savings on electricity bills can be more significant than the loan amount starting on day one, allowing instant savings.

      3. By purchasing the system, the homeowner is eligible to take advantage of the Federal Investment Tax Credit (ITC).

    2. Cons:

      1. Secured vs. unsecured option: Some solar energy loans can be secured or unsecured. A secured loan requires an asset as collateral, and in many cases, this asset is the home. Make sure you have a full understanding of how a secured loan could impact your asset.

      2. Interest rates: Like any loan, the interest rates will vary based on the loan provided and specific requirements. The higher the rate, the more a homeowner will pay over the life of the loan. Make sure you are aware of the interest rate and are comfortable with it.

  2. Power Purchase Agreement (PPA)- A power purchase agreement allows the homeowner to see a financial benefit from a solar system owned and maintained by a third party.

    1. Pros:

      1. Low or no upfront payment- PPAs allow homeowners to start seeing savings without putting any money down upfront.

      2. Levelized electricity rates- Instead of paying the utility for electricity and dealing with the yearly escalation of utility electricity rates, a PPA allows a homeowner to fix the amount paid for electricity for the next 20 or 25 years. This can allow for substantial electrical savings over the life of the solar energy system

      3. Maintenance and monitoring- When selecting a PPA, make sure that you select one that includes maintenance and monitoring. Because a third party owns the system, the third party is responsible for maintaining, monitoring, and providing a performance guarantee.

    2. Cons:

      1. Homeowners do not qualify for the Federal Investment Tax Credit (ITC)- When a homeowner decides on a PPA, they will not receive the ITC or other solar incentives. The ITC and other incentives will go to the owner of the system.

      2. Savings: In some cases, the overall savings from a PPA might be lower compared to purchasing a solar energy system.

3. Will my solar system be connected to the utility?

When going solar, we highly recommend that a homeowner goes with a grid-connected solar system. By connecting the solar system with the grid, homeowners can take advantage of Net Metering to reduce their electricity bill, will no longer deal with escalating utility rates, and can reduce reliance on nonrenewable energy. Homeowners who want to go off-grid are forced to add substantial cost to their solar systems that make off-grid solar uneconomical for most people. Off-grid systems also lose the additional resiliency that utility power grids provide.

4. What is Net Metering?

Net Energy Metering (Net Metering or NEM for short) is a policy that allows homeowners to receive utility bill credits for any extra electricity produced by a solar energy system that flows back into the grid. Net Metering allows homeowners to draw from the credited solar system power when the PV system does not produce power (at night or on cloudy days, for example). The NEM program has allowed homeowners to save tens of thousands of dollars by switching to solar. Net Energy Metering is available in many states and is such a well-established concept that parts of California like San Diego Gas and Electric is on NEM 2.0.

5. How long is the residential solar system installation process?

After a homeowner has decided to move forward with a solar system for their home, the solar installation process requires a few steps before the actual installation. The timing of these steps varies from location to location and utility to utility, but they involve system design, getting utility and permitting approval for the system, and ensuring that the system connects to the utility grid correctly in the case of NEM systems. In total, these steps move reasonably quickly, and the solar panel installation process itself can be completed in a day or a few days, depending on the system size and roof type.

6. Does residential solar still receive a tax credit? What is the solar tax credit? Who qualifies?

For homeowners who purchase solar in 2021, they can qualify for the federal Investment Tax Credit (ITC). Sometimes the ITC is known as the solar tax credit and currently equals 26 percent of the total cost of the solar energy system. Some states do still offer additional state tax incentives, and depending on the state, the additional tax incentive can dramatically impact the savings of a solar project.

People who purchase the solar system (either through a cash purchase or finance) can qualify for the solar tax credit. The tax credit is claimed on the homeowner's yearly federal tax return. If you have specific questions about how the federal Investment Tax Credit (ITC) works, please speak with one of our solar consultants and your tax professional.

7. Do solar panels have to be on the roof of a home?

Roof-mounted solar systems are by far the most common and economical way to install residential solar. Fortunately for those who cannot install on their roofs (limited roof space, aesthetic concerns, structural roof issues, etc.), if a customer has available space, they can install a ground-mounted solar system. Ground-mounted solar usually costs more than roof-mounted solar systems because of the additional labor and trenching required, but they can be located in a location that maximizes output and limits obstructions.

8. Does a home battery make sense to add with solar panels?

Energy storage, more commonly known as home batteries, have been a hot topic in the solar industry for a long time. Over the past half-decade, with the mainstream adoption of Tesla Powerwall and the LG Chem Resu, more and more homeowners want to know if they should add a home battery with their solar panel installation. While solar energy storage does not make sense for all homeowners, we recommend that anyone in the market for solar power learn more about whether home batteries are a good fit for them.

Products like Tesla Powerwall and the LG Chem Resu can allow a home to have a safe, sustainable, and affordable energy backup solution in case of a power outage. In utilities with Time-of-Use rate structures, home batteries can also increase your solar system's savings by stooging power at the cheapest utility rates and using the cheaper electricity when the utility rates are highest.

Despite some homeowner's concerns, with the ITC and other available incentives like the Self-Generations Incentive Program (which differ from region to region), the cost of energy storage can be extremely affordable.

9. When will my solar system investment break-even?

Unlike other home improvement projects, solar provides homeowners with tangible savings and increases the value of their homes. In many cases, homeowners will be paying less for electricity starting on day one of their solar installations. The average break-even point for a solar installation is different from state to state and home to home, but the national average for break-even is around eight years.

The incredible Return On Investment and fast payback period for solar are why so many homeowners are looking at solar in 2020. Even if a homeowner does not expect to be in the home for the full 25+ year lifespan if a solar system, the potential day one savings on electrification, increase in home value, and in some cases expedited speed of home sales, and makes it a no brainer for most people to go solar.

10. Can an entire home be powered with solar power?

When sizing a solar system, the objective is to power 100 percent of a home's electrical demand with solar. Many factors come into play when finalizing the system size for a home. Considerations like shading, future expected electrical usage (EV cars, for example, will increase the electrical demand at home), and even the long term efficiency of the solar panel, will all impact the production of the solar system over its lifetime. We do recommend that homeowners add a cushion when designing their solar system to ensure that the entire home is powered by solar.

If you are interested in exploring any of these questions more, or have other questions about how solar can work for you in 2020, schedule a free consultation with Alchemy Solar today.


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1 Comment


harrybrookk
Jun 28, 2022

I tried doing solar panel installation but it doesn't work right so i called a roof repair company near me to help me out installing it.

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