What are Solar Panels?
What you normally see on rooftops today are photo voltaic solar panels. They are comprised of a cell, made of semi-conductive material, that reacts to light by converting the sun’s energy directly into electricity. Several of these cells are assembled to produce a panel that typically provides somewhere between 24 and 48 volts of direct current (DC). Multiple panels are then combined to generate a substantial amount of electricity…enough to power a home or, at least, a portion of it.
Since today’s homes are attached to the electric grid, they are powered by alternating current (AC). Around the turn of the last century, Nicola Tesla, understood that AC was better than DC to provide power over long distances but DC was still adequate for short, local distances less than one and a half miles. Having our homes powered by AC means that the DC electricity, created by the solar system, must first be converted to AC before it can be used. Inverters perform that function. The solar panels, inverters, controllers and other support equipment are known as a solar power system or solar system, in short.
The solar system works well when the sun is shining but what happens when it’s not. If you guessed “nothing”, you are correct but something can be done about that. Battery storage can be added to store the power generated by the solar system, while the sun is shining. The batteries can then be tapped, to provide power, when the panels are inactive. Since batteries provide DC power, they would be charged by the panel’s DC output before that output is converted into AC for use in the home.
Did you realize that solar panels are not new inventions? They originate from the late 1800s but did not become a viable source of power until the mid 1950s and 1960s where they were developed by Bell Laboratories and adapted for use by NASA respectively. Back then, the cost of materials and production of these panels was expensive but, over time, the costs have been reduced significantly. Solar systems are now a scalable, marketable product available, to the general public, for multiple uses.
So, you want to install solar panels! Now that you know the basics of how the solar system works, let’s look at a few of the many options. Keep in mind, there are some you might consider avoiding.
Ways to Purchase
1. Buying your solar system outright is always a great option, if you have the budget.
2. Leasing reduces the up-front costs if your budget falls short of purchasing outright.
3. Financing, over a period of years, is an option if the first two are not right for you.
Things to Consider
If you are planning on staying in your home for the life of the solar panels, all options are viable. If you sell your home, buying your solar system outright is a plus because the new owners will automatically own the system just as any other of the home's built-in systems (e.g.: HVAC, Plumbing). This creates a less restrictive home sale and the new owner takes immediate advantage of owning a home with a solar system.
Leasing your solar system may limit the buyer pool as the buyer will have to qualify for the mortgage as well as the lease amount each month. Also, make sure that the lease is transferable and that you understand what happens when the lease expires. For example: the company can retrieve the system or maybe offer to sell it to you where you become sole owner.
Financing, like leasing, will require that the loan be transferable and the buyer qualify for the additional payment each month. Unlike leasing, the alternate option would be to pay off the balance owed on the panels from the proceeds of the sale of the house. This then becomes a plus for buyers provided that they don't object to solar panels.
There is yet another way to acquire a solar system but it requires signing a “one-sided” contract that, largely, benefits the solar company. The company will install the system and, in exchange, you will receive a “fixed” rate of electricity over a number of years. The initial rate is usually competitive, however; the fine print will often show that the rate will continually increase over the term of the contract. These are often 20 year contracts where you do not own the panels nor would you receive any of the rebates offered.
Rebate examples may include: a monetary reimbursement for all or part of the cost of your solar system or a credit, from your electric utility for any excess power your solar system put back onto the utility’s power grid. Who will receive these rebates? The company who holds the “one-sided” contract will receive them, not you.
When you sell your home, “one-sided” contracts will often transfer to the buyer, locking the new owner into the same contract. If the roof needs replacing, you must pay to have the solar panels removed and reinstalled. Also remember, if you are in a “one-sided’ contract, opting out may potentially be very expensive. The “one-sided’ contract, by far, appears to be the least desirable option so please use caution. Avoid the “one-sided” installation if the contract reads anything similar to what has been described here. Be sure to check with your insurer before installing any solar system.
With that being said, there are many ways you can enjoy the benefits of solar power to help reduce your utility costs as well as, potentially, help the environment. Understand the technology, choose your installer well and enjoy those benefits.