Solar Power Facts
Welcome to Solar Power Facts where you can get no-nonsense insight to help you purchase the best solar power system for your home or business in Campbell.
Solar Economics
Cost of Electricity
- PG&E uses a tiered rate structure – The more you use – the more you pay.
- Historically PG&E electricity pricing used a 5 tier structure. In 2016 they switched to a 3 tier structure. Then, in 2017 switched to a 2 tier structure with a Super User Electric (SUE) Surcharge which is applied to 200% > of baseline usage.
- Under the current tier rate structure, the first and lowest-priced tier is called your Baseline Allowance. Energy used within your Baseline Allowance is billed at the lowest price. Energy used above the Baseline Allowance is considered Tier 2 and is billed at a higher price. If your electricity use exceeds four times the Baseline Allowance during your monthly billing cycle, a High Usage Surcharge is applied.
- California’s electricity rates are among the highest in the nation and rates continue to go up over time.
- Given historical increases an electricity bill at $200 today could be in excess of 800 in 25 years.
Am I a Good Candidate for Solar?
- Do you own your home?
- Is your average monthly electric bill $100 or more?
- Does your roof have minimal shade?
If you answered yes to all 3 of the above questions, adding solar to your home makes good sense.
How Much Does a Solar System Cost?
The more solar panels you get, the more it costs. If you have enough roof space, a good solar installer will size a system for you that will meet your entire electrical usage. Alternatively, you can easily install a smaller system now and add panels later. A twelve panel system will cost as little as $7,000 after the Federal Tax Credit.
How Much Will I Save with Solar?
The more solar panels you get, the more you will save. Your monthly savings are based on your marginal electric rate, which for most people in Silicon Valley is currently $0.34/kwh in the top rate tier. At this rate, each panel will generate about $120 of electricity per year; for twelve panels you will save about $1,400 per year.
What Tax Credits and Rebates Can I Get?
There is a 30% Investment Tax Credit (ITC) that you will get on your system. Basically, if your total costs are $10,000 you get to reduce your annual tax bill (one time) by $3,000. There is a simple one page form that your accountant will fill out. The California Solar Incentive (CSI) program has such a small credit now (Step 10, $0.20/watt) that the paperwork (50+ pages), delays (extra few months) and special requirements (energy audit, special instrumentation) isn’t worth the tiny rebate that you can receive.
Basically, every homeowner who installs a solar electric system or solar hot water system (not a pool heating system) gets a 30% tax credit on the total cost of their system. This tax credit only applies to the owner of the system, not if you have a solar lease or solar PPA. There is no need to file for the ITC if you have a lease or PPA since the corporate entity that owns your system has already collected the tax credit and depreciation benefits – reducing your monthly payments accordingly.
To learn more listen to our podcast on Getting your Solar Investment Tax Credit.
Before you lease or buy solar for your home in Campbell, talk to Cinnamon Energy Systems.
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Finance Options
Should I Lease, Borrow or Pay Cash?
Over the past few years, rooftop solar equipment has become standardized and much more affordable. Since there are no moving parts, rooftop solar systems provide clean, reliable, maintenance-free electricity for 25+ years with negligible maintenance. Although leased systems were very popular when systems were expensive, now that system prices are so low many homeowners realize that their overall economics are much better if they purchase the system outright. With a cash or bank loan purchase, after a four to eight year payback period, customers enjoy the full benefits of free electricity – and are not obligated to continue lease payments for 15+ years. 
The simple graph above shows your cumulative costs for electricity in five scenarios: no solar, leased/Power Purchase Agreement (PPA), Bank Loan, PACE loan, or cash solar purchase. Although the leasing option saves you a little bit of net cash in the first few years, it is very clear that the cash purchase saves much more money over the medium and long term. In this typical 4,000 watt system example, the total electricity costs over 25 years are $70,000; with a leased system the total costs are $63,000; and with a cash purchase the total costs are $33,000. Basically, with today’s low solar prices, leasing is a bad deal.
What are the Best Financing Options?
If you ask your accountant, he or she will probably tell you the best financing option is to pay with cash. For example, with a six year payback, your ROI is 17%. In this example, over the 25 year life of your system on a cash purchase, your payments for the system and electricity will be about $40,000. With a lease or PPA option, over 25 years your costs will be about $65,000 for your lease and electricity payments. Basically, after six years you are way better off by paying cash for your system. If you don’t plan on staying in your house for 15 years you should definitely not lease a system since your termination costs will be the full residual value of the system.
What is a PACE Loan?
PACE stands for Property Assessed Clean Energy. It’s a new loan program that includes your solar loan payments in your annual (or semi-annual) property tax payments. So now you can get solar for Zero Down without having to sign a long-term lease. There are four big advantages to a PACE loan:
- Almost all homeowners with equity in their home and no recent bankruptcies qualify (no specific FICO minimums).
- If you sell your home the remaining payments are automatically passed through to the new property owner (no “gotchas” like a solar lease).
- Interest on your PACE loan is tax deductible, just like a home equity loan.
- The PACE process is easy, there are no fees.
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Selecting a Solar Installation Company
What Should I Consider When Selecting a Solar Installation Company
Following are some practical guidelines to use when selecting a solar installation company.
Consider:
- Years in business – Are they established, experienced and have deep knowledge of the business, industry and technologies.
- Certified, licensed, insured – Make sure the installer is a certified member of the North American Board of Certified Energy Practitioners (NABCEP); carries a valid contractors license (C46 – Solar, or C10 Electrical); and carries adequate insurance.
- References, reviews & reputation – Anytime you hire a contractor, research reviews on Yelp and Nextdoor, and always ask for references that you can call to discuss the experience.
- Products that look best on your home – If aesthetics of your home is important, always find out what the product will look like before you sign a contract. Large racking structures used to mount panels on your roof and shinny metallic panel frames may detract from your home’s appeal.
- Workmanship & product warranties – Ask for product and workmanship warranties before you sign.
- Experience with permitting from your jurisdiction – Contractors that may not be local to your community probably have little experience with the nuances of permitting and getting approvals from within your local jurisdiction.This can cause costly delays so always ensure the contractor has significant experience in your area.
Avoid:
- Selecting on price alone – As with any home improvement project, selecting a contractor on price alone is not a best strategy.
- Hard sell tactics – Unfortunately, the solar business has become very competitive and not all companies are focused on delivering a solution that meets your needs. Best to find a company that will take the time to learn about your objectives, take the time to explain options and work with you to ensure the best results for your needs.
- $0 Down offers – While the opportunity to go solar with a zero-down offer can be compelling, typically, companies offering zero-down solar offsets the cost in the price of system which impacts your return on investment. Consider all purchase options before you commit.
- Companies using sub-contractors – Some solar companies will sell you a system, then find a sub-contractor to install the solution. Always best to ensure the installation company you are working with is directly responsible for the work they do, does not use sub-contractors and will be around to service the system and honor warranties should you need them.
- Bids that do not specify products to be installed – Some installation companies will specify a total system size but not provide specific details on the products (panels, inverters, etc.) that will be installed. They do so to allow themselves maximum flexibility in delivering a generic solution with whatever products are in their inventory at the time the installation commences. Solar installation bids should absolutely specify the products that will be installed.
- New installation companies – With the increase in demand for solar, many new companies have started selling and installing solar. Always best to choose an established company that has significant experience to ensure they will provide you with the best solution, deliver a flawless installation, and be in business after your initial purchase.
Battery Storage Solutions
Should I Consider Purchasing a Battery Storage Solution?
We began installing battery storage systems in 2001. These early systems used lead acid batteries and required regular maintenance. As a result, historically it has been more cost effective to install a generator for battery backup. However, with new battery systems currently on the market from companies such as Enphase, SolarEdge, and Tesla — homeowners have good options for silent and clean battery storage. Even though off-grid battery storage systems have been available for years, we are at the very early stages of grid-tied solar combined with battery storage. From a hardware standpoint, battery storage costs are plummeting, and new inverters/charge controllers are being developed. Perhaps more importantly, software that will efficiently interact with solar, batteries, the grid and your home energy consumption still has limited functionality. For more about the practicalities of home battery storage, call Cinnamon Energy Systems if you are interested in a battery storage system to go along with your home solar installation. We will give you the straight scoop about battery storage, and take care of your entire system, including a critical loads subpanel, system design, solar integration, installation and monitoring. For more on battery storage systems, listen to our blog post on What Home Owners Need To Know About Battery Storage Systems.
Choosing the Right System
How Many Solar Panels Do I Need?
It may seem counter-intuitive, but you can have too many solar panels on your roof. With conventional net metering, your utility will not reimburse you at the end of the year if you produce more power than you consume. The number of panels you need is based on two factors:
1) The available space on your roof and;
2) The size of your electric bill.
A good installer will not take advantage of you by installing modules where there is a lot of shade or a poor north-facing orientation on a steep roof. Along the same lines, your installer should analyze your current electric bill and recommend the number of solar panels that will get you close to a zero bill.
Once you know these two boundary conditions – the number of panels that fit on your roof and the number of panels that you need to zero out your bill – you can see what size system fits in with your budget and method of financing. At the same time your installer should step you through the options for different levels of solar panel efficiency, module electronics (optimizers or microinverters), and changes in your future use of electricity (such as an EV or energy conservation measures). For more about determining the optimum size of your solar power system, listen to our podcast on How Many Solar Panels Do I Need?
Calculate Your Solar Savings
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What Should I Consider When Selecting a Solar Power System?
Like many large purchases, there are a variety of choices available in the market. One size and manufacturer definitely does not fit everyone’s energy, budget and aesthetic needs — and this challenge especially applies to rooftop solar because there are so many solar panels, inverters and mounting systems available. Many solar installation companies will offer you one solution, but being informed about the options available to you can help you make the right purchase and also help you understand which Installation companies are quoting you a solution that is best for your objectives.. Since 2001 we have been evaluating and installing this equipment, and have put together a combination of equipment that we categorize as a “Good – Better – Best” range of products that will help you in selecting a solar power system that is ideal for your specific needs. To get the right system that is best for your home or business, visit Cinnamon Energy Systems to learn more about Selecting a Solar Power System that’s Right for You, and be sure to check our our podcast on Which Solar Panels Should I Buy.
Solar Power System Maintenance
What is Required to Maintain a Solar Power System?
Almost all solar panels sold in the U.S. carry a 25 year warranty, most inverters are guaranteed for 10 to 25 years, and as long as you get occasional heavy rain your panels do not need regular cleaning. So if you are thinking about solar for your home, the most important considerations – besides price – are the quality and reliability of the installation itself. With these factors in mind, check out our blog post Ten Tips For 25 Years Of Trouble Free Solar Power where we detail critical factors for 25 years of trouble free solar power.
