Solar 101: Beginner’s Guide to Solar Energy & Panels

Feb 11, 2021 | Solar 101

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So you’re thinking about going solar, but not sure where to start. No worries, you’re not alone. Solar is a big investment and the right system should put money back in your pockets for years to come, not cost you down the line. This beginner’s guide to solar energy & panels will tell you everything you need to know so you can be an informed consumer as you start your research.

How Does Solar Work?

Basically, when you install solar panels, you’re putting a power generator on your roof. There are 2 main components to how the solar system works:

1. The solar panels absorb the sun’s rays and generate energy. Then, this harnessed energy goes into your system’s inverter which converts it into usable energy, AC (alternating current) power. Homes in the US are set up to only run on AC because they are tied into the US electricity grid through the utility company.

2. Next, the electricity is sent to your home’s main electrical panel, which powers your home. Any surplus electricity that you don’t use is then sent to the grid, helping to power your neighborhood with clean energy.

What Happens at Night or When There is No Sun?

When your system is not producing power, you’ll be pulling what your home needs from the utility company, accumulating charges as you did before solar. However, the surplus electricity that you send to the grid during the day will accumulate credits, which can be used to offset these charges. This is known as Net Energy Metering or NEM.

With NEM, instead of paying your electric bills each month, you’ll receive one statement every 12 months in what’s called a True-up Statement.  Any balance owed is due and any credits you still have will reset to $0.

How Much Does Solar Cost?

Although the energy from the sun is free, there is a cost for the equipment and that could vary depending on a few factors. What you pay for your system should be relative to how much electricity you need to produce.

A few factors that affect the overall cost of your system including:

  • What size system you need
  • What type of panels/inverters are used
  • Installation charges, special installation adders
  • And how you plan on paying for your system

All these, in addition to profits/commissions, will determine your overall price. It’s most important for homeowners to be a part of the initial design process in order to make sure you get the best bang for your buck.

Check out this article on How to Get the Best Deal on Your Solar System to get great tips on getting the great pricing

What Size of Solar System Do I Need?

This comes down to how much electricity you want your system to produce and how productive your roof is. Your system’s productivity depends on where you plan on putting your panels and how much sunlight reaches them. South-facing roofs are more productive than East/West facing roofs. It’s important to work with someone you trust so they can help you design the right system for your home.

A good rule of thumb when determining your system’s production target is to shoot for 115% – 120% of your annual usage. Surplus energy that you generate can be sent to the grid for credits. Then, these credits can be used to offset the energy you use at night, which would still come from your utility company.

The charges and credits are reconciled once a year in a statement called a True-up bill. The right system sizing should help you take full advantage of the Renewable Energy Credits and keep your True-up bill close to $0 for years to come.

Do the Types of Panels and Inverters Make a Difference?

Yes, the type of panels and inverters play a significant role in how your system performs initially and over its lifespan. Like most technology, solar panels lose their efficiency over time.

Monocrystalline panels are considered premium panels and are do better over time than polycrystalline panels:

  • More efficient – absorbs more of the sun’s power
  • Lower degradation – annual production drop off
  • Great warranty – should cover performance, parts, and workmanship

Microinverters are a newer technology and offer more advantages over string inverters

  • String inverters are cost-effective but do not do well in shady conditions
  • Microinverters are a little more expensive, but work provides many advantages like remote monitoring.

For more information on different solar inverters, please read our article on How to Choose Solar Inverter for Your Home

Should I Purchase My System Outright, Finance, or Lease My System?

Each option offers its own advantages.

1. Purchasing outright with cash or private financing like through home refinance usually gets you the best price and highest return on investment. You can also take advantage of the Federal Tax Credit

2. When using a solar lender, you can finance your system with $0 out of pocket and low monthly payments.

  • Interest rates range from .99% – 7.99% with terms from 5 years to 25 years.
  • No prepayment penalties
  • Take advantage of the tax credit
  • No Lien on your home

Cons: There’s usually a loan cost (known as a Dealer Fee) that is added to your initial price when you finance.

3. PACE is a government program that allows you to borrow against the equity of your home for Clean Energy Projects. It is a great option for people with low FICO scores but have equity in their home.

4. Leases or PPA is a power purchase agreement that allows you to benefit from the lower cost of solar energy without having to purchase a system. Basically, you rent out your roof space to the solar company, allowing them to install a solar system on your roof. In exchange, you’ll get to purchase the energy at a price much lower than what the utility company charges.

With a PPA, you pay for what you use each month. With a lease, your monthly payment is a fixed amount based on what they estimate the system will produce. The difference in what you pay and what you use is trued up each year.

  • Cons: Usually there is an escalator around 2-3% built, raising your cost each year.
  • Not eligible for the tax credit
  • Can hurt your resale value if you’re planning to sell your home.

If you have any further questions regarding solar or want to speak to someone directly, the solar experts at Purus Energy can answer your questions and make sure you have a thorough understanding of solar energy. Contact us at (925) 281 7370.

Find out if solar is right for you


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