Image source: Canva.com
Congratulations on taking the initial step towards embracing solar energy by receiving a solar proposal from an installer! Now that you hold this proposal, it’s imperative to ensure that you’re making the best decision for your unique needs. Confidence in your choice stems from understanding, which is gained by asking questions and seeking clarification.
Key Factors to Evaluate in Your Solar Proposal
Comprehensive system cost before incentives
This should encompass the entire “turn key” cost, covering design and permitting. Adjustments to the proposed solar array size can tailor the system to fit your budget or desired energy production level.
Understanding your solar array’s size
It’s essential to grasp the total power capacity in kilowatts (kW). Knowing the number of modules and their wattage enables accurate calculation of the system size.
Meeting your energy consumption requirements
Evaluate if the proposed system aligns with your annual electricity consumption. Compare kWh estimates from different installers for systems of similar size to ensure accuracy.
Determining your system’s dollar per watt cost ($/W)
Calculating this figure facilitates easy comparison with average prices in the area, aiding in determining the return on investment.
Verifying electricity cost and escalation assumptions
Confirm the assumed utility cost per kWh and the rate of escalation. Ensure these assumptions align with reality to accurately predict energy savings.
Assessing financing terms and total cost
When considering solar financing options, it’s crucial to understand the terms of the loan or financing agreement thoroughly. Calculate the total cost of the system over the loan term, factoring in interest rates, fees, and any additional charges. Then, compare this total cost with the upfront cost for cash purchase to determine the most financially beneficial option. Understanding the overpayment on the loan allows you to make an informed decision that aligns with your budget and long-term financial goals.
Additionally, pay close attention to:
- Estimated savings over the system’s lifespan and the underlying assumptions.
- Details of equipment warranties, including the make and model of panels and inverters.
- Contract specifics, such as workmanship warranties and the procedure for handling roof leak claims.
- Timeline for permitting, installation, and interconnection.
- Accommodation of aesthetic concerns regarding the array’s appearance.
- Availability and associated costs of system monitoring.
- Milestone payments, permit fees, and approvals from homeowner’s associations.
- Available financing options and inquiries regarding leases or power purchase agreements.
- Company experience and qualifications, including licensing, NABCEP certification, and customer reviews.
So, you’re serious about installing solar panels and switching to renewable energy. While there are many potential advantages, it’s important to carefully consider your options. Don’t let the complexity of solar proposals overwhelm you and deter you from going solar.
Although each solar company will have its own unique proposal, there are several key pieces of information that should be consistent across all proposals. Understanding how to compare these proposals in the right context will help you make an informed decision, ensuring the greatest long-term value, a headache-free experience, and the best home solar system available.
Comparing Your Solar Proposals
Here are eight crucial items you need to understand when reviewing and comparing your solar proposals.
1. Size and Location of the Solar Energy System
Your solar energy system’s size is determined by your energy consumption and the number of panels needed to meet your energy demands. Your solar proposal will specify the system size in kilowatts (kW) for residential systems and in megawatts (MW) for larger commercial or utility-scale systems.
The proposal should also include an aerial image or rendering of your property with the solar panels overlaid, giving you a clear idea of what your property will look like once the system is installed.
2. Solar Energy Generation Estimates and Assumptions
Your proposal will include an estimated energy production. For example, Positive Energy Solar provides a Year 1 estimated production and guarantees it within a certain percentage.
It’s important that these estimates properly account for factors like shading from trees, accurate sun-hours based on azimuth and tilt, and correct solar panel efficiency and degradation. Any reputable solar company should have these calculations well-refined, but you can always ask what assumptions and methods were used to ensure accuracy.
3. Components of the Solar Energy System
Your proposal should include a detailed list of components. This list should specify the quantity, brand, wattage, and model of the solar panels, as well as the quantity, brand, and model of the inverters. If a solar company does not clearly state this information, it may be a red flag. Knowing exactly what equipment you will be receiving is crucial for evaluating long-term performance and warranty coverage.
4. Warranties and Guarantees
Understanding the various warranties that cover your solar panels and inverters is crucial when evaluating solar company proposals. Here are the key types of warranties to consider:
- Performance/Degradation Warranty: This warranty, offered by the solar panel manufacturer, guarantees the level of power the panel will produce over time. For example, a panel with an 80% performance warranty at 25 years means it is guaranteed to produce at least 80% of its original power output after 25 years. A higher performance warranty percentage means less degradation and better long-term performance.
- Product/Equipment Warranty: This covers manufacturing defects, premature wear, and catastrophic failures of the solar panels and inverters. Pay attention to what is covered, the duration of the warranty, and any limitations on labor or shipping costs for replacements.
- Additional/Extended Warranties: Some companies offer extended warranties that cover additional items not included in the standard manufacturer warranties, such as labor and shipping fees for replacements beyond the initial warranty period. Ensure that any extended warranty is underwritten by a reputable organization.
- Inverter Lifespan and Warranty: Inverters, crucial for converting solar energy into usable electricity, typically come with warranties ranging from 10 to 25 years. String inverters generally have shorter warranties compared to microinverters, which often align with solar panel warranties. Factor in potential replacement costs for inverters not covered under warranty, especially with string inverters that may need replacement within 10-15 years.
It’s essential to review these warranty details in writing before committing to any solar installation agreement to ensure you receive the best long-term value and protection for your solar energy system.
5. Project Scope and Service
The term “solar company” can encompass various levels of service, from sales-focused firms that outsource installation to full-service contractors handling every aspect of your solar project. In the solar industry, there’s a trend towards sales companies that subcontract installation and project management.
When evaluating solar proposals, clarify who will perform the installation and inquire about future servicing. Some companies lack a dedicated service department, and outsourcing installation may complicate after-sale support. It’s crucial to choose a company that can manage installation, maintenance, and troubleshooting to ensure ongoing system reliability and minimize future costs.
6. Solar Investment Analysis and Financial Projections
Your proposal should provide a detailed summary of costs and incentives. This includes the total system cost (cash price), the federal tax credit amount, potential tax savings from depreciation (if applicable, typically for businesses), state and local incentives, and the net cost after incentives. It’s advisable to consult with a tax professional to understand how these incentives apply to your specific tax situation, as they require an appropriate taxable liability to benefit.
Additionally, it’s important to scrutinize the financial assumptions used in the proposal. Some quotes may inflate annual utility rate increases, which can mislead you about potential savings. Installers using conservative estimates of 4-5% for utility rate increases provide a more accurate assessment. Similarly, consider how the system’s energy production will change over time due to degradation and warranty terms, which significantly impact long-term energy output.
While exact financial benefits are challenging to predict, using conservative and realistic numbers in the proposal can provide a more accurate picture of your solar investment’s potential benefits.
7. Financing Considerations and Potential Fees
The method of financing your solar system is a critical aspect of your decision-making process, yet it often leaves customers with uncertainties. While cash purchases typically offer the highest return on investment (ROI), they may not be feasible for everyone considering solar panel installation.
Traditional solar lenders often impose fees that are integrated into the contractor’s pricing structure (and therefore $/Watt). The interest rate affects your total expenditure over the loan term, similar to a mortgage, and should align with your priorities. Opting for a lower monthly payment might seem attractive but could result in a higher overall cost in the long run.
8. Company Background and Integrity
It’s crucial to thoroughly research the company you choose to do business with—information that typically isn’t included in the solar proposal itself. Before committing, take time to investigate and ask questions about their operations.
Consider how long the company has been installing solar panels in your area. Knowledge of local solar policies, city regulations, utility interconnections, HOA rules, and building codes specific to your region ensures a more accurate proposal and minimizes surprises during installation. Neglecting necessary upgrades, like a service panel upgrade, can lead to unexpected costs.
Beyond technical expertise, learn about the company’s values. Are they a full-service provider or primarily a sales firm? Do they prioritize fair employee compensation and community involvement? Assess whether they align with your values and if they provide accessible customer support.
Armed with this insight and using a solar comparison tool, you can confidently select a solar contractor that meets your needs and expectations.
We strongly recommend obtaining multiple proposals to compare pricing, warranties, and other factors. This approach enables informed decision-making tailored to your specific requirements.
Ready to harness the power of the sun for your home? Try out our solar calculator on SolarWiki today and discover how much you could save! Take the first step towards a brighter, more sustainable future. Calculate your potential savings now!
