Avoiding Solar Quote Sticker Shock

Often, the first thing someone wants to know about solar is: How much does it cost? When I talk to people about their interest in solar power, I try to emphasize that this is not only a difficult question to answer, but often, it isn’t the correct one to ask in the first place. Having an idea of cost in mind is essential to pursuing solar for your home or business–but at the same time, looking at the price tag without knowing the context can discourage you from what could seriously be a great investment.

When you’re sitting across from a solar installer who’s prepared a quote for you, or when you’re looking at the (often inaccurate) results of an online solar calculator and you see more zeros in a row than you had expected, don’t panic. Your solar investment might turn out to be completely manageable, and provide you with an excellent return in a relatively short period of time. Getting a solar quote is the only way to know for sure if solar is going to make sense for you, but answering a few questions before you even approach the numbers game can help immensely:

Am I a good solar candidate? If you live in a state with strong solar incentives, have either a high per-kilowatt-hour electric rate or simply burn through a lot of electricity, and are interested in investing in clean energy, then yes–solar may be a great choice for you. States with good solar incentive programs include California, Arizona, Pennsylvania, New Jersey, New York (if they ever get around to re-issuing solar funds for 2010), Connecticut, and Massachusetts. You can see at a glance how your state measures up on this interactive solar incentive map.
Do I have a good site for solar panel installation? Solar panels can be installed on a rooftop or on cleared ground. Either way, their only non-negotiable requirement is direct sunlight, preferably uninterrupted by shadows at least between the hours of 10 and 3. If you’re talking roof space, a southern orientation is best, but other orientations can be worked with too–you’ll just lose a bit of efficiency.
Can I finance a large investment in my home or business? Take a step back and assess your current financial situation. How much additional debt could you take on? You can always, always get a solar installation sized to your budget (keeping in mind we’re talking thousands rather than hundreds) rather than to your total energy usage. Don’t be shy about letting your installer know this.
- If you run a business, take a look at your energy expenditures and see what portion of your budget is just being eaten up with keeping the lights on. You might be surprised. If you’re a business with no budgetary wiggle room, you may still be able to pursue third-party financing options like power purchase agreements (PPAs), so don’t give up before digging a little deeper.

And when you do start looking at numbers, keep the following in mind:

Time to payback for solar installations in competitive states is now often under ten years, or even five (New Jersey is kind of a show-off in this regard). However, even if you’re quoted a 15 year payback, remember that solar panels produce electricity for decades. Most solar panels come with a 25 year warranty; some, even longer.
You’re essentially pre-paying for a clearly defined percentage of your electric usage for the next 20-30 years. Multiply your current annual electric bill times 25–that’s a lot of zeros too, right? It’s good perspective to have. And by using solar for your own electric generation, you’re protecting yourself from energy price inflation over time, an extremely important value.

Yes, solar is expensive. But it can be an attractive investment–the days of going solar just to go green are long gone in many markets across the country. Don’t let the dollar signs knock you out of the game before you get a professional opinion on whether or not solar can work for you.

ECD Fan Said,

January 14th, 2010 @6:05 pm

Very interesting. But if PV solar were so great, why should the consumer take the risk? Let the installer take all the risk for 25 years by funding, installing and maninting this supposedly high-return/no-risk investment, while the consumer simply pay the installer 10c per kWh AC generated from the system (also known as PPA). When many of the PV systems built over the past 2-3 years start dying due to panel, wiring, and inverter failures (some have already died), the installers will go bust and then they will stop believing their own fairy tales, as many PPA pioneers are learning as we speak.

Margaret Collins Said,

January 14th, 2010 @6:39 pm

Thanks for the thoughts on this, ECD. Residential PPAs are in fact gaining traction, though they’re not available yet in most markets, and you make a good point. However, when working with a reputable solar installer, you should (a) have a service warranty of up to 5 years, 3 being pretty standard; and (b) have good quality equipment with MFR warranties: inverters are 10-15 years, while most solar panels are 25-30 years. We recommend that you always, always check your installer’s credentials or go through a service like GetSolar where we screen the installers for you.

We certainly do not ever advocate solar as no-risk investment–there’s no such thing–though it is an investment whose benefits are much more clearly defined than most, and more predictable. Any responsible consumer should do homework before an investment this large, which is what we’re here to help with.