Is solar right for you?
Solar power is an exciting renewable energy source. An optimally installed system in Snohomish County or Camano Island will generate approximately 1,100 kilowatt-hours per year for each kilowatt of installed capacity. Incredible!
That said, even though solar systems are coming down in cost as the market evolves, the program and bills are complicated and customers will need to take on a great deal of self-study to ensure they are making the most of their energy-savings.
Before you make your final decision on whether rooftop solar is a practical idea for your home or business, consider these three questions:
- Does your site have good solar exposure? About 250 square feet of un-shaded roof space facing south, southeast, or southwest is a great start, though not always required.
- How much electricity do you use in a year? Review your PUD bills, keeping in mind that energy use can vary dramatically from winter to summer.
- What are your financial goals? Do you have a fixed budget, are you considering financing options, or do you have a certain payback period in mind?
A good place to start when looking for a solar installer is the Washington Solar Energy Industries Association website. If you have any questions, reach out to the PUD’s Energy Hotline at 425-783-1700.
Helpful tips for choosing a solar installer
No two solar installers are alike. Some handle everything in-house, some subcontract out parts of the project. Some aim for quality, others for competitive pricing. Speaking to multiple installers will help you understand the nuances of your project and ensure you’re getting the quality and value that best suits your needs.
Everyone’s house is different. A well-designed solar energy system takes your needs and the practical aspects of your house into consideration. A solar energy system is always a custom design. When getting bids, make sure you are dealing with the system designer and not just a commission-based sales rep.
Tip: To ensure best results, challenge the sales rep. Ask about your property, the pitch of the roof, how they have accounted for shade. If you don’t feel the person you are talking to has in-depth technical knowledge, ask to speak with the system designer, as they will ultimately determine whether the system operates as sold.
The solar industry is constantly changing. The best value-for-money equipment on the market 10 years ago is not necessarily best today. Your solar installer should have a good working knowledge of equipment options. When you sign a contract, you should know exactly what you are buying and why it’s best for you.
Tip: Some solar panel, inverter, and battery manufacturers require installers to be vetted and certified in order to install their products with the full warranty. It pays to ask your installer if they are authorized installers of the products they are selling. Otherwise you could be caught without a full warranty. Additionally, make sure the installer handles any product registration requirements.
The most important parts of your solar financial case are:
- How much energy the solar system will produce
- How much money that ultimately saves you
- What is and isn’t included in your solar tax credit
An accurate energy production estimate takes into account your location, roof pitch, orientation and the efficiency of the equipment being installed. Do not accept a ballpark estimate as a final production report — a system designer should be able to show you a detailed shading analysis specific to your roof. Double-check the math — what rate of inflation is being used on the cost of energy; what cost per kilowatt-hour (kWh) is being used?
Finally, your tax credit is based on the final cost of the system. If an installer offers you a rebate after purchase, that installer is artificially inflating the system cost to make your tax credit look bigger than it is. Remember, your tax credit is based on the final amount you pay for the solar system after rebates.
Tip: While the final installation cost is very important, remember that your system is supposed to last 25 to 40 years so warranties are important. If a solar sales rep is showing you a 25-year energy saving but the equipment they are suggesting only carries a 10-year warranty, they should also advise you on the cost of out-of-warranty replacements.
Talk to the installer’s past customers and understand their experience. Ideally, you want to find both people who have had a system installed recently and also people who have had their system for 5-10 years. This helps you understand the current experience but also the long-term customer service you can expect.
Never feel pressured to sign the contract immediately. You need a chance to process what you’ve been told, compare bids, and make an informed decision.
Tip: A system designer needs to perform a site assessment before your final bid is created in order to:
- verify that the panels will fit
- account for roof vents
- measure on-site shading and solar resource
- confirm that the roof has enough life left in it to install over, and
- confirm adequate capacity in your electrical panel for the solar system.
If no one has checked these things, then the savings estimate, roof layout and price probably aren’t accurate. Be wary of any sales rep coming out with a final contract drawn up before the site visit.
Excited about exploring the possibility of solar energy for your home or business?
You’re not alone. Thanks to booming interest and industry growth, solar is more accessible than ever. However, be wary. As interest in solar has grown, so have high-pressure sales tactics.
Here are some of the most common misleading/false statements (click on each statement to learn more):
This headline implies that Washington state has a state-run no-cost solar program. It does not. Washington has a sales tax exemption and — in limited circumstances — there are federal or private grant opportunities for rural businesses, public buildings/facilities, and nonprofits that can reduce the total cost of solar installation. Some credit unions do offer 0% down on financing over 10- to 20-year terms. For residential installations, expect to pay 74% or more of the cost of the system (after tax credits) either up-front or through financing. So while you may opt to put no money down by financing, claims that you can install solar at “no cost” are misleading.
“If you’re a Washington homeowner, 2022 is your last chance to go solar!” and “The federal solar tax credit is expiring at the end of the year!”
Congress passed an extension of the Investment Tax Credit (ITC), raising the tax credit to 30% for solar systems installed between 2022-2032. (Systems installed on or before December 31, 2019, were also eligible for a 30% tax credit.) It will decrease to 26% for systems installed in 2033 and to 22% for systems installed in 2034. The tax credit expires starting in 2035 unless Congress renews it. There is no maximum amount that can be claimed.
(Sources: IRS.gov & Energy.gov Homeowner’s Guide to the Federal Tax Credit for Solar Photovoltaics)
Do the math. Some companies that still have installation capacity in 2022 are charging system premiums, which could ultimately cost you more, even with a larger tax credit. Seek bids from at least 3 installers — even if they’re scheduling into next year — to ensure you are getting a good price. A great place to start is with installers who are members of the Washington Solar Energy Industries Association (WASEIA). All members of WASEIA have to abide by an ethics standard designed to protect Washington homeowners.
“If you need to re-roof before installing solar, you can claim your new roof cost as part of your 26% solar tax credit.”
IRS information about whether a roof is eligible for the 26% Residential Energy Efficiency Credit:
In general, traditional roofing materials and structural components do not qualify for the credit. However, some solar roofing tiles and solar roofing shingles serve as solar electric collectors while also performing the function of traditional roofing, serving both the functions of solar electric generation and structural support and such items may qualify for the credit. Components such as a roof’s decking or rafters that serve only a roofing or structural function do not qualify for the credit. (Source: IRS.gov)
There is a different credit available for qualified energy-efficiency improvements under the Nonbusiness Energy Property Credit, which has a total combined credit limit of $500 and can apply to:
…metal roof with the appropriate pigmented coatings or an asphalt roof with the appropriate cooling granules that are specifically and primarily designed to reduce the heat gain of your home, and the roof meets or exceeds the Energy Star program requirements in effect at the time of purchase or installation. (Source: IRS Instructions for Form 5695)
Your tax credit is based on the final cost of the system. If an installer offers you a rebate after purchase — especially after you claim your tax credit — they are artificially inflating the system cost to make your tax credit look bigger. Sometimes the “rebate” is just the installer getting you a cash-out loan or other financing method that raises the overall loan amount. Please clarify with a tax professional as to how any rebates should be handled with regard to your taxes.
According to the IRS:
Rebates generally represent a reduction in the purchase price or cost of property, and the taxpayer must exclude the amount of the rebate from the amount of the qualified expenditure on which the taxpayer calculates the tax credit. (Source: IRS.gov Notice 2013-70 Section 3 A-11.02)
Some companies offer in-house solar financing and promote perks to incentivize you to use their services. If a company is offering to “cover” your first loan payments for a specified period, read the fine print and consider these points:
- Are they covering your payments or simply deferring them?
- If covered, that could be considered a rebate off the total cost of the system, which would affect your solar tax credit (see previous section about rebates).
- If deferred, you could still be paying interest for the period of time before payments begin.
- Some companies also require you to apply your tax credit to the balance of your loan or risk your monthly payments increasing.
- Make sure you understand the full terms of your financing and clarify all conditions under which payment terms could change.
Consider independent financing. Washington state is home to several credit unions that offer solar financing independent of your installer.
Under Washington state law (RCW 80.60), electric utilities are required to allow you to send excess electricity back onto the grid and credit your account for excess generation (in kilowatt-hours) at the utility’s retail rate – this is called “net metering.” While you are credited at retail rate, you are generally not issued a check for excess production. This kWh credit remains on your account until you use it and resets each year on March 31. This means any credit remaining at that time is zeroed out and the cycle starts again. This is why you should aim to size your system to meet but not exceed your annual electrical usage.
It’s also important to make the distinction between solar net metering offsetting your electric usage as opposed to replacing your utility bill. Net metering cannot offset minimum monthly charges for grid connection or other utility charges such as water.
Washington state used to have a production incentive program that closed to new applicants in June 2019 due to hitting its funding cap. Systems installed and certified as part of this program receive an annual incentive payment based on the system’s total production for eight years or until cumulative incentive payments are equal to 50% of the total system price. These checks are issued by the state via the customer’s electric utility company, and are separate from net metering. (Source: WSU Energy Program)
As mentioned above, Washington’s net metering law (RCW 80.60) requires utilities to offer net metering “until the earlier of either: (i) June 30, 2029; or (ii) the first date upon which the cumulative generating capacity of net metering systems equals four percent of the utility’s peak demand during 1996.” Utilities that reach this cap have the option to continue to offer net metering at current retail rates or to develop a different rate structure for new systems. Click to view the current percentages for utilities around Washington. (Source: WSU Energy Program)
“Limited-time promotions” in the construction trade are often a red flag that you are in a high-pressure sales meeting. You can always ask for time to think about a decision this big.
Washington state also has a 72-hour cancellation policy for door-to-door sales over $25:
A Federal Trade Commission Regulation gives you the right to a three-business-day “cooling off period” on door-to-door sales of more than $25 (16 CFR 429). This rule also applies to sales made away from the seller’s usual place of business. These include: sales at a “home show” or other exposition; at a seminar held in a hotel banquet room; or at a “sales party” in someone’s home. (Source: WA Office of the Attorney General)
Sleep on it. You should never feel pressured to sign a contract at the table during the sales meeting. You need a chance to process what you’ve been told, compare bids, and ask clarifying questions in order to make an informed decision.