Solar panel leasing considerations

Market experts predict that in 2012 a wider variety of arrangements will be available.  Homeowners should consider comparing lease options before committing to a 25-35 year lease with any particular company.

Generally speaking, a solar panel lease involves installation of an array on your property, while the company itself retains ownership of the panels and equipment.  Because you are not purchasing the panels, solar panel leasing often requires no, or little, money down.  Instead of paying off the cost of a solar array, you pay a monthly fee to the company that owns, maintains and insures the panels.  Such fee is lower than the monthly cost of electricity you would otherwise be paying for.

So what should you consider in comparing solar lease options?

1.  The installers and solar panel manufacturers you will be dealing with through the leasing company

2.  System performance and maintenance guarantees provided under the lease

3.  Dependability of service and reputation of companies with which the leasing company works, based on customer reviews

4.  Degree of flexibility in lease terms – a longer lease with slightly more money down will usually result in more monthly savings than a short lease term with no money down.

5.  Whether the state in which you live has renewable portfolio standards that rewards owners for solar electricity generated by your system (create SREC markets) and, if so, whether you are entitled to ownership of the SRECs after the end of the lease (since they are usually retained by the leasing company through the duration of the lease).

Refer to this overview of factors to consider when comparing lease options for solar panels.

Net Zero Energy House with Solar Panels

This amazing house in Ann Arbor, Michigan (shown to the left) is 110 years old and yet operates without the use of any grid-based electricity.  Its owners decided to install solar panels for a net zero energy house.

While net zero homes (residences that generate all the power required for their operation on site) are becoming more popular, the home above is the oldest net zero energy home in the U.S.

Following extensive refurbishing and retrofitting, the roof is covered in solar panels that generate 12,500 kilowatt-hours (kWh) each year.  Of that, only 10,000 kWh was required to keep things running and the balance was fed back into the grid via net metering.

If you are considering installing solar panels on your home this year, keep in mind that prices are lower than ever – about 50% less than just a few years ago.  In addition, solar tax rebates and other incentives will be phased out in the near future, so act now!

This net zero energy house cost about $47,000 to renovate, saving the owners thousands each year on utility bills.  In addition to rooftop solar panels, additional insulation was installed, along with insulated glass.  Low pressure plumbing minimizes water usage, too.

To learn more about net zero energy houses and how these Michigan homeowners installed solar panels on their 110-year old home, watch this video:

Consider a DIY solar panel kit

For many homeowners, the idea of switching to solar power is daunting from a cost and hassle standpoint.  But if you want to test the waters with renewable energy, why not start with a DIY solar panel kit?

Solar panel kits include everything you need to generate and use solar electricity:  solar panels, an inverter and charge controllers.

Its all in one box, which also contains step-by-step directions to help you install solar panels without hiring and paying for a professional solar installer.  Most people can complete the project in a weekend.

The advantages to going with DIY solar panel kits include: (1) lower cost; (2) flexibility – you can add more panels in the future as needed; and (3) the satisfaction of building your own solar panel array.

On the other hand, disadvantages of solar panels kits are: (1) limited or no warranty or support; (2) may not be permitted to tie into the grid for net metering; and (3) may not be fully eligible for solar tax rebates and incentives.

Have you installed your own DIY solar panel kit?  We’d love to hear your comments about advantages and/or disadvantages of these build-your-own solar kits.

How are your solar panels performing? Find out with an energy monitor smartphone application

Once you have made the investment to install solar panels, you’ll want to maximize their efficiency and output.  If shade, snow or technical issues are reducing the amount of solar electricity generated by the system, you’ll want to know right away.

You can now monitor your residential solar panel system with a smartphone application.  Its a home energy monitor right at your fingertips!  Developed by a solar photovoltaic (PV) manufacturer, SunPower, the Android application provides instant information for customers regarding: (1) energy output of a residential solar panel system, (2) their home’s energy usage (hourly, weekly or monthly) and (3) the ability to compare and share previous data.

Any SunPower customer can access this same information via the company’s website.  But the energy monitor application allows the kind of instantly available information so many of us desire so you can make adjustments to consumption or order repairs to your system, as necessary.

Perhaps the best feature of this new application is you can show off your significant savings via your residential solar panel system to your co-workers and friends — right from the palm of your hand on your smartphone!

Solar Panel Efficiency

Over the past 5 years, the price of solar panels has dropped dramatically while efficiency of solar arrays has increased significantly.

Yet, it appears that the renewable energy revolution continues to make life better and cleaner for many of us!  The University of Texas at Austin announced this month that one of its solar researchers has discovered a method to further double solar panel efficiency up to 60%!

Solar panel efficiency can be summarized as follows:  The term refers to the amount of solar energy that is converted to usable electricity after hitting a solar panel.  It does not need to be a bright, sunny day.  All you need is UV (ultraviolet) sunlight, filtered through clouds or even precipitation.  According to a recent article:

An issue with regular photovoltaic panels is that much of the energy delivered by sunlight results in the conversion of “hot” electrons, which are too high-energy to be converted to electricity in silicon and are instead lost as heat. University of Texas Chemistry professor Xiaoyang Zhu and his team discovered that an organic plastic semiconductor could double the number of electrons harvested out of one photon of sunlight.

Solar panel efficiency is currently about 30% for silicon photovoltaic (PV) solar cells.  But solar technology indicates that this figure can at least double, to reach 66% efficiency.

The importance of this discovery is the potential of reaching grid parity – the point at which the cost of purchasing solar electricity is less than the price of fossil-fuel based power.

Grape Solar panels at Costco

If you are into DIY home improvement projects and have considered residential solar panels, it might be time to head to your local Costco warehouse store.  You can now buy solar panels at Costco, the discount warehouse membership retailer.

Grape Solar offers competitively priced solar panels and solar power kits.

If you are a member of Costco, you can purchase home solar panels by Grape Solar either at the warehouse, or online.

These are the products currently offered:

1.  880 Watt Exapandable Grid-tied Solar Kit ($3299), with 4 220-watt solar panels, inverters and roof mounting kit

2.  5060 Watt Grid-Tied Solar Kit ($16,999), including 22 230-watt solar panels, an inverter and roof mounting kit.

3.  3680 Watt Grid-Tied Solar Kit ($12,499), including 16 230-watt solar panels, an inverter and roof mounting kit.

Earlier in 2011, Grape Solar entered into a partnership with Costco to offer solar panels in nine test markets throughout Washington State and Oregon.  Over the year, distribution was expanded into other key markets.  Today, you can buy solar panels at Costco in more than 60 bricks-and-mortar locations in the United States.  Costco.com also offers home solar power kits that include solar panels, inverters and roof rack systems.

If you don’t want to install the home solar panels yourself, you can use the company’s network of over 5,000 installers across the nation for services and customer support.  Don’t forget to save your paperwork to take advantage of solar rebates and other incentives.

Surprisingly, where you live has little to do with solar panel efficiency.  The primary impacts on solar output are from shading.  Solar panels that are shaded by trees, other vegetation or adjacent buildings are generally less able to produce electricity than those that are not shaded.  Even shade on a single panel can affect the overall performance of a solar array.  We recommend that you have a solar professional examine your property before purchasing or leasing solar panels to determine if and where solar panels should be located.

How solar panels work

Other components of a solar array can also affect the production of solar electricity.  Solar inverters convert the direct current that strikes a panel surface into alternating current, which is the power you tap via an electrical outlet.  The angle at which your panels are installed, and their placement on your rooftop, can also help maximize the amount of sunlight that hits the panels.

Improving overall energy efficiency within your home or building will help you save even more money with solar panels.  While solar electricity is free, there are limits to the amount that can be generated by a distributed generation system.  If you use more energy than you produce, you’ll draw on the grid (with a grid-tied system), increasing your power bill.

You can generate solar power even on a cloudy day because UV light is the primary factor required.  However, snow and ice can block sunlight from the solar panels, reducing their efficiency.  There are ways to remove snow on solar panels.  Other than that, minimal maintenance is required for a solar array over its lifetime.

In short, the things that affect how well solar panels work are largely within your control!

Solar leasing saves money

In California, solar leasing is preferred over cash purchases.  That means that property owners are looking for less expensive ways to switch to solar power, without the initial down payment and investment.

Solar panel leases offered by companies like SunRun allow people to enjoy the cost savings and other benefits of solar electricity without purchasing, owning or maintaining a solar array.  Through a solar lease, property owners purchase the power generated by panels installed, owned and maintained by a solar company, at a lower monthly cost than electric utility bills.

As announced by SunRun and PV Solar Report, third-party-owned solar eclipsed cash purchase as the preferred way to go solar in California, representing about 59 percent of California’s home solar market in the third quarter of 201, and 51 percent of the market year to date.

According to SunRun President Lynn Jurich:

“In 2007 we introduced a way for homeowners to put solar panels on their roofs without having to spend $35,000 to buy and maintain the equipment.  Families love it because they can lock in low rates for clean energy and start saving money right away.  It’s great to see it finally get to a point where more families know this service is available, and to see them choose it over other options.”

While solar growth has increased in 2011, statistics in the PV Solar Report show that 3rd-party-owned solar grew by 67% in the third quarter of 2011, generating an additional $157 million in growth for the state of California.  The increase in solar cash purchases was only about 17%.

SunRun’s solar lease program for residential solar was created in 2007 and grew at about 200%  in 2010.  Stephen Torres, founder and managing director of PV Solar Report comments:

“The message is clear that California homeowners are adopting 3rd-party-owned systems because access to solar power is better than ownership of panels.  Business models like SunRun’s are not only allowing families to switch to solar without the high upfront cost of a cash purchase, but also helping local economies increase revenue and create jobs.  We’re excited to see the growth trend continue.”

What are your thoughts on solar leasing, compared to cash purchases of solar panels?  Do you own solar panels?  Lease a solar system?  Please let us know in the comments below.

Before you install solar panels, consider these factors

It is very helpful to hire a knowledgeable solar panel installer.  But, to avoid paying extra for things you may not need, here’s how to compare solar panels for installation.

When you do a search for residential solar panels on the Internet, there are several factors that help you compare solar panels: (1) cost; (2) efficiency;  (3) amount of energy conserved; and (4) the estimated life of the solar power system.

Cost is directly related to solar panel efficiency.  The more efficient (i.e., the more sunlight a panel can convert) the less expensive relying on solar power will be.  As of the date of this posting, the average solar panel efficiency is between 13-18%.  That means that solar panels result may result in more cost savings than solar thermal installations.  Don’t forget to think about the annual decline in solar panel efficiency, which is often represented in panel warranties.

PV (photovoltaic) solar panels are pretty much the norm for residential and small business installations.   Solar technology is continuing to improve for these products.  As noted in a related post:

Polycrystalline cells are cheaper to produce, but since they require connecting numerous silicon cells, are less efficient in converting sunlight to electricity than a single crystalline cell. Visually, it’s usually easy to tell them apart. With the exception of Sharp, SolarWorld and Trina brands, monocrystalline panels are black, while polycrystalline panels are blue.

Comparing “cost per PTC” figures is the best way to determine which solar panel offers the most efficiency at the best price. Keep in mind that each solar panel costs about $400-700, and the cost-per-PTC prices ranges from $2.50 to $4.50.  Once you determine the number of solar panels needed, its easier to compare costs for installation.

Don’t forget that there are a lot of solar companies that install panels these days.  You don’t have to do with the first name you read.  Make sure that your solar contractor knows your area and other options.

What is the expected performance of solar panels?

The performance of solar panels is pretty consistent over the decades they are expected to last, however.  Solar panel manufacturers and the solar industry in general expect the greatest decline in the first year: approximately 2-3%.  After that, a very small degradation rates of half a percent (0.5%) each year may occur.

Warranty information provided by solar manufacturers is helpful information to assess solar panel efficiency.  Solar output warranties use an industry standard of 90% output in the 10th year of usage.  By the 25th year, solar manufacturers guarantee at least 80% solar panel efficiency.

Warranties and guarantees, of course, are more conservative than the actual performance of solar panels.  Manufacturers are using a “worst case scenario” in predicting solar output declines over the years.

Actual solar panel efficiency of the installations on your property could be much higher.  Consider the fact that very little (if any) maintenance of solar panels is required.  This is because the panels do not include any moving parts, and they have been designed to withstand extreme weather conditions.

This means that an investment in solar power is probably even more sound than you’ll read in warranty information!