Residential solar is a terrific deal in New Jersey, thanks to generous state incentives. But many homeowners are hesitant to move forward due to widespread misconceptions about the systems, the incentives and the financing. Here, we address 10 common misconceptions about residential solar.
1. What happens to my power if my solar system malfunctions?
Many homeowners fear they will lose power if their solar system malfunctions. In fact, however, residential solar systems are tied into the electric grid. When the sun is shining, the system feeds power into the grid; when the sun is not shining, the system draws power from the grid. If the system malfunctions, which is unlikely since they are very reliable, the home would draw power from the grid.
2. If my home is feeding power into the grid, how does the utility keep track of how much power it has generated?
A residential solar system is typically installed with a “net” meter. When a home is drawing power, the net meter spins forward, and when the solar system is generating power, the net meter spins backward. (Many net meters now take the form of a digital display rather than a dial, but the concept is the same.) At the end of the year, the local utility bills you for the net amount of electricity you have used.
3. What happens if my household generates more electricity than it uses? Will the utility pay me for the excess?
No. Residential solar systems are designed to meet — but not exceed — a home’s annual electricity needs. The situation is different in other countries, including in Europe, where solar systems are designed to generate excess electricity, which is then sold to utilities under a system called a “feed-in tariff,” or FIT. Under a FIT system, the government sets the rates at which electricity is sold to the utilities. Several U.S. states are considering European-style feed-in tariff systems, but none have effectively implemented them.
4. New Jersey isn’t exactly known for its sunny weather. Does our abundance of cloudy days make solar a bad investment?
Not by any means. Another misconception is that solar systems don’t generate electricity when it is overcast. Although they don’t generate as much power on a cloudy day, they still generate power. In fact, there is little correlation between a location’s sunshine ranking and the prevalence of solar. Germany, which is also not known for its sunny weather, is the world’s largest solar market. The motivating factors for solar are cost of power and financial incentives, not weather.
5. Speaking of incentives, I don’t understand New Jersey’s SREC (Solar Renewable Energy Certificate) program. If I sell the SRECs my system generates, does that mean there’s less electricity available to me?
No. SRECs, each of which is the equivalent of 1,000 kilowatt-hours of electricity, represent an environmental benefit, and are separate from the power generated. If a 10-kilowatt residential system generates 11,000 kilowatt-hours of electricity annually, the homeowner will save that much in electricity costs. In addition, the system will generate 11 SRECs, which can be sold on the open market. SRECS are currently trading for $650, so 11 SRECs will earn $7,150 in annual SREC revenue.
6. SRECs create a valuable long-term revenue stream, but how do I cover the upfront cost of installing solar?
The federal government offers a 30 percent tax credit for solar, which can be taken in the first year. In addition, innovative financing packages are now being offered for residential solar systems that reduce the upfront cost to little, or, in some cases, nothing. The income from the sale of SRECs is used to service the debt on the loan in lieu of cash payments.
7. Won’t it take decades for my system to pay for itself in terms of savings on electricity costs and income from financial incentives?
Not at all. The typical residential solar system, which has a lifespan of 30 years, will pay for itself in less than five years. That leaves more than two decades of pure gravy in the form of avoided electric costs and SREC income. And, since electricity prices are only headed up — conservative estimates put the expected increases at 5 per cent annually — a solar system serves as a hedge against utility rate increases.
8. I have read that the cost for solar panels is coming down. Isn’t it to my advantage to wait to install solar until it is cheaper?
No. It’s true that the cost of solar panels is coming down, but the panels are only one element of the system, so the decline in the entire system price is not that great. Moreover, if you wait, whatever you may have saved on a cheaper system will be outweighed — and then some — by the loss of the free electricity and the loss of the SREC income that your system could have been generating.
9. Aren’t solar systems difficult to maintain?
Wrong! Solar systems require no regular maintenance. And, since they have no moving parts, they are not prone to failure. The inverter, a system element that converts direct current to alternating current for household use, will typically have to be replaced once during the 30-year life of the system. Apart from that, solar systems require no maintenance apart from occasional hosing down in dusty areas.
10. Can I install solar if my roof doesn’t face south?
It’s true that the closer the roof is to facing true south, the better. But roofs that face east or west may also work well, depending on factors such as roof angle, but with a slight drop in performance. The drop in performance simply means that more solar modules will have to be installed to make up for the off-south orientation.
Article by Gaurav Naik is the third principal and joined GeoGenix in 2003. He holds a Bachelors of Engineering degree in Photovoltaics from University of New South Wales, Sydney, and a Masters of Electrical Engineering from State University of New York, Buffalo. Naik was involved in R&D of crystalline silicon solar cells for terrestrial applications as well as thin film CIGS (Copper Indium Gallium Diselinde) cells for space applications. Naik is active in the solar trade industry associations, such as SEIA (Solar Energy Industries Association) and MSEIA (Mid-Atlantic Solar Energy Industries Association).
About GeoGenix
GeoGenix is an industry leader with a proven track record in residential and commercial solar installations. They are an East Coast pioneer of “community solar,” which allows residents of a community to band together to purchase solar for their individual homes at a discount. The firm’s many achievements include being awarded the “Outstanding Customer Service” in 2010 by SunPower and installing the first “net zero” electric commercial building in the nation. While there are many new entrants in the solar business, GeoGenix has been installing solar since 2001 and has the experience and expertise that have made it one of the region’s most trusted solar installers.
5 comments
Hi Adriana,thank you for your sharing,i like it a lot!
This cat got 1 and 3 completely wrong. This is an irresponsible post.
Very poor article.
#1: If solar system fails there is no guarantee that the grid inter-connection switch will work. Depends on the type of failure.
#2: Electric utilities track usage monthly and show a surplus or negative amount of kilowatt hours, just like they show dollars owed or credits. The yearly statement is used to ‘true-up’ the numbers and some utilities will continue to carry forward the excess amounts. It all depends on the billing policies of that utility.
#3: A typical solar electric system will generate more power than is needed by the home during the day when the occupants are at work. This excess in energy production is typically accounted for by the electric meter(s) or wireless system. When the occupants come home and use electricity into the evening they effectively repurchase their extra energy from that day. Unless the electrical energy is used in a ‘constant’ amount (all day & night), such as a hospital, it is impossible to match the supply curve to the variable need. (I suppose a ‘shut-in’ or patient in an iron lung will use a constant amount of energy…)
#7: Yikes! Solar photovoltaic systems cost between $6 to $8 a watt or more installed. Most homes need at lease 3,000 watts so a minimum of $18,000. The tax credit removes 30% or 6,000. This leaves $12,000 to be paid off in 5 years or $2,400 per year. If it reduces the energy bill by 50% this means that the home has an average electric bill of $400. The average monthly bill in the USA is $103.67, according to the US Energy Information Administration – http://www.eia.gov/cneaf/electricity/esr/table5.html This number includes all 50 states. A 50% reduction equals $50 month or a payoff of 10 years. Not bad but not as stated.
#9: Solar systems do require periodic maintenance and the panels should be cleaned of dust fairly often. Stated another way, “If you do not maintain it, it is destined to fail”.
#10: Solar systems that face East will not work very well at all. West is better that East but South is by far the best. Any solar book has this basic info in it.
Where did you find this ‘expert’?
My bad. #7 is incorrect. I should have used the $12,000 number for the remainder of cost to be paid off, not $6,000. This means that the pay-back for the solar system is actually 20 years, not 10. However, with the escalation in cost for all forms of energy, I would reduce that pay-back number quite a bit… But not to 5 years.
Thanks for the great information on solar panels. People should read this article before deciding on installating the solar panels.
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