I found this 2016 post in my drafts folder for my blog. Even though some of the info is dated I thought I would publish it with the hope that same may find it useful.
It seems like once a week or so a solar sales rep knocks on our door or calls to let us know that special programs relative to solar exist and they’d like to educate us about them. All we need to do is give them our power usage information and they will arrange to have someone come to our home and let us know how we can take advantage of these programs and eliminate our power bill.
I was doing research for a friend who wanted to add solar to his business. As part of my research I met with 12 vendors (I found 54 in Utah) a number of times between 2015 and 2016. Here’s what I learned that may help if you are interested in solar.
A fair price for a 6.72kW system with 24 black on black panels is about $24,000. Since the fall of 2015 I’ve gotten quotes on solar projects for my home and a cabin we have in Idaho.. On a $ per watt basis (price of the system divided by total watt rating for all panels installed) the quotes ranged from $3.30 to $5.09, a 54% spread. That is a fairly broad range for essentially similar products. This means you could end up paying $36,960 for a similar system or an additional $12,960. For most of us this significant and means that it is worth doing some homework before making a purchase decision (or not).
Items which can significantly add to the cost of a system include (costs indicated are for a 24 panel system):
- Flat roof: $1,000
- Tile roof: $2,400
- Ground mounted system: $5,000
- Pole mounted system: $9,000
Note, if your roof need to be replaced in less than 10 years it may be worth considering replacing it. Some people you can include the full cost of a roof replacement in the cost of the project and thereby have it be part of the federal tax credit. I believe that you should only include the cost of the roof where the panels are located. A professional tax accountant would be able to provide better advice.
Here’s a chart from my research on the cost purchasing and installing residential solar systems. The quotes used were generated between Oct 2015 and Jun 2016. While I don’t list the vendor names they include most of the ones you see on bill boards or other advertising mediums.
As you can see vendors A through G were very close in price (within 5%). Of these 7 there were 3 companies that I really liked. Gardner (www.gardner-energy.com), Intermountain Wind and Solar (www.intermtnwindandsolar.com), and Creative Energies (cesolar.com). They've all been in the business for a long time, were very honest, and had excellent references.
Solar firms offer varying types of financing options plus you can arrange your own or simply pay cash. Your payback timeframe will vary depending on what you do. For the a 6.72KW system this can vary from 12.2 to 16.7 years based on 2016 interest rates and a projected 2.91% annual electricity rate increase.
The chart below shows the varying pay back period depending on financing. The personal property loan is a 10 year 7.5% loan, HELOC A is 3.99% (15 years) and HELOC B is 3.85% (13 years), and the unsecured loan is a 12 year 2.99% vendor financed loan. So why does that have the longest pay back period when is has the lowest interest rate? You are paying a $4.4K price premium on the system for the vendor to finance the system since all other options are given a cash discount.
Note, with increasing competition I imagine prices will drop and become less disparate and of course some vendors will not last.
I found a lot of variability in the claims made by various vendors on factors that affect benefit calculations:
Projected future power cost increases from the utility company. These have ranged from 3% to 8% per year (when in reality they are between 2% and 4%). Here are the actual percentage annual increases I’ve derived from the sources indicated:
Rocky Mountain Power (click here for link to historical data)
|1992 to 2015||2.06%|
|1996 to 2015||2.43%|
|2006 to 2015||4.23%|
US Energy Information Agency (Electricity Data Browser)
|Date Range||Annualized Increase – US||Annualized Increase - UT|
Projected annual power production. I’ve seen them inflated by nearly 15% over what I’ve calculated using the PVWatts website. This is a free site that you can use to determine how much electricity your system will produce by month and how much you could save annually.
If you are trying determine the impact on the resale value of your home Berkeley Labs published a 6 state study in November of 2015 which showed that adding solar to your home can increase the value of your home by between $2.68/W to $4.31/W. You can also use the website PVValue to determine the value of your system. In my case this site showed a value of $1.54W to $1.75W. The difference between this value and Berkeley Lab may simply be because our power is less expensive than the states they used for their study.
According to an appraiser the current standard in Utah is to exclude solar panels from appraisals because of the creative financing/renting used to sell solar panels – because the appraiser doesn’t know the financial agreement the home owner has with solar companies, they have made it the standard to exclude them.. Real estate agents are asked determine rent/owned/financed and write an addendum regarding how the solar panels will be accounted for in the price of the home.
- PVWatts: Use this site to determine how much energy a given system will produce to annually. Use it to validate any quote you receive. If there is a large discrepancy then ask why. In my view the better vendors will provide conservative (lower) estimate because they don’t want unhappy customers. If they are only interested in making an immediate sale then they won’t care about your long-term satisfaction.
- PVValue: Use this site to get an estimate of how much value a given system will add to your home. The result will be given in dollars per watt and is specific to your location. Note, you may need to register for a free account to use the system.
- Berkeley Labs conducted a 6 state study to determine how much value owned solar systems added to homes. The net was that in most cases more value was added to a home than the system cost, if an owner could take advantage of the available tax credits and other incentives. Click here to go to a page the has links to the full report, a summary fact sheet, and presentation as well as a webinar link and an article on the study published in "The Appraisal Journal, Winter 2016
- Berkeley Labs report “Leasing Into the Sun A Mixed Method Analysis of Transactions of Homes with Third Party Owned Solar”
- PDF of presentation I gave at the Highland City Library September of 2016. This presentation provides additional cost in info, return on investment data, and reviews the pros and cons of panel and inverter types. Note, the pay-back chart in this charts uses a 4.23% projected annual electricity rate increase.