A Consumer's Guideto Buying aSolar Electric System

A Consumer's Guideto Buying aSolar Electric System

Cover photo: Hawaii’s Mauna Lani Bay Hotel has acresof roof space, making it the perfect host for a photovoltaicsystem. This installation covers 10,000 square feet andgenerates 75 net kilowatts of electricity.(PowerLight Corporation/PIX 06430)

This Consumer’s Guide is based on a state-specific guide written byTom Starrs and Howard Wenger for the California EnergyCommission, which was supported, in part, by the NationalRenewable Energy Laboratory, in Golden, Colorado.

Produced for the U.S Department of Energy1000 Independence Ave., S.W.Washington, D.C. 20585

by the National Renewable Energy Laboratory,a DOE national laboratory.

September 1999

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1

What is a solar electric, or photovoltaic,system?

PV technology converts sunlightdirectly into electricity. It works anytime the sun is shining, but more elec-tricity will be produced when the light is more intense (a sunny day) and isstriking the PV modules directly (whenthe rays of sunlight are perpendicular tothe PV modules). Unlike solar systemsfor heating water, which you might bemore familiar with, PV technology does not use the sun's heat to make elec-tricity. Instead, PV produces electricitydirectly from the electrons freed by theinteraction of sunlight with semicon-ductor materials in the PV cells.

But you don't need to understand thedetailed physics of how PV works tounderstand its appeal: investing in PVallows you to produce your own elec-tricity with no noise, no air pollution,and no moving parts while using aclean, renewable resource. A PV systemwill never run out of fuel, and it won'tincrease our oil imports from overseas.In fact, it may not even contribute to thetrade deficit, because many PV systemcomponents are manufactured in theUnited States. Due to these unique

characteristics, PV technology has beencalled “the ultimate energy source forthe 21st century.”

The basic building block of PV tech-nology is the solar “cell.” PV cells arewired together to produce a PV “mod-ule,” the smallest PV component soldcommercially, and these modules rangein power output from about 10 watts to300 watts. A PV system tied to the utilitygrid consists of one or more PV modulesconnected to an inverter that changesthe system's direct-current (DC) elec-tricity to alternating current (AC), whichis compatible with the utility grid andable to power devices such as lights,appliances, computers, and televisions.You may include batteries in the systemto provide back-up power in case yourutility experiences a power outage.

Before you decide to buy a PV system,you should understand the current statusof the technology:

First, it produces power intermittentlybecause it works only when the sun isshining. This is not a problem for PVsystems connected to the utility grid,because additional electricity you needis automatically delivered to you byyour utility.

Background

Photovoltaic Modules

PV Cell

CustomerLoads or

Utility GridBatteries(optional) Inverter

02512001m

PV System

PV System Components

Are you thinking about buying a PV system for your home or business? If so, this booklet will providebasic information that you need to know. People across the nation are showing increased interest in solarelectric systems for their homes and businesses. These photovoltaic—or PV—systems are reliable,pollution free, and use a renewable source of energy—the sun. Although they are still expensive, theyare becoming more affordable all the time. And remember: The more energy-efficient your house, thegreater the impact of a PV system. Measures such as increased insulation and energy-efficient lighting,appliances, and windows will drastically reduce your home’s use of electricity.

To make PV systems even more affordable, several states are offering financial incentives throughsolar-rebate and other programs. And some utilities offer net metering to make PV systems even moreeconomical. Net metering means that when your PV system generates more power than you need, themeter runs backwards resulting in an even swap for the grid power that you use at other times. Inessence, you receive full retail value for all the power that your PV system generates.

This booklet is designed to guide you through the process of buying a solar electric system. A word ofcaution: This is not a technical guide for designing or installing your system—for that information, werecommend that you consult an experienced PV system designer or system supplier (“PV provider”)who will have detailed technical specifications and other necessary information. A PV system can be asubstantial investment, and as with any investment, careful planning will help ensure that you make theright decisions.

ContentsBackground Page

❑ What is a solar electric, or photovoltaic, system? . . . . . . . . . . . . . . . . . .1❑ Are incentives available to help reduce the cost? . . . . . . . . . . . . . . . . . . .2

Investing in a PV system❑ Why should I buy a PV system? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4❑ Is my home or business a good place for a solar system? . . . . . . . . . . . .4❑ How big should my PV system be, and what features should it have? . . .5❑ How much will my PV system save me? . . . . . . . . . . . . . . . . . . . . . . . . . .6❑ How much does a PV system cost? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8❑ How can I finance the cost of my PV system? . . . . . . . . . . . . . . . . . . . . .8

Selecting a PV installer❑ Who sells and installs PV systems? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9❑ How do I choose among PV providers? . . . . . . . . . . . . . . . . . . . . . . . . . . .9❑ How do I choose among competing bids? . . . . . . . . . . . . . . . . . . . . . . . .10❑ Is the lowest price the “best deal”? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Before connecting a PV system to the grid❑ What about permits? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12❑ What about insurance? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12❑ How do I get an interconnection agreement? . . . . . . . . . . . . . . . . . . . . .12❑ How do I get a net metering agreement? . . . . . . . . . . . . . . . . . . . . . . . . .13❑ What about utility and inspection sign-off? . . . . . . . . . . . . . . . . . . . . . ..14❑ What about warranties? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Getting help . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

1

What is a solar electric, or photovoltaic,system?

PV technology converts sunlightdirectly into electricity. It works anytime the sun is shining, but more elec-tricity will be produced when the light is more intense (a sunny day) and isstriking the PV modules directly (whenthe rays of sunlight are perpendicular tothe PV modules). Unlike solar systemsfor heating water, which you might bemore familiar with, PV technology does not use the sun's heat to make elec-tricity. Instead, PV produces electricitydirectly from the electrons freed by theinteraction of sunlight with semicon-ductor materials in the PV cells.

But you don't need to understand thedetailed physics of how PV works tounderstand its appeal: investing in PVallows you to produce your own elec-tricity with no noise, no air pollution,and no moving parts while using aclean, renewable resource. A PV systemwill never run out of fuel, and it won'tincrease our oil imports from overseas.In fact, it may not even contribute to thetrade deficit, because many PV systemcomponents are manufactured in theUnited States. Due to these unique

characteristics, PV technology has beencalled “the ultimate energy source forthe 21st century.”

The basic building block of PV tech-nology is the solar “cell.” PV cells arewired together to produce a PV “mod-ule,” the smallest PV component soldcommercially, and these modules rangein power output from about 10 watts to300 watts. A PV system tied to the utilitygrid consists of one or more PV modulesconnected to an inverter that changesthe system's direct-current (DC) elec-tricity to alternating current (AC), whichis compatible with the utility grid andable to power devices such as lights,appliances, computers, and televisions.You may include batteries in the systemto provide back-up power in case yourutility experiences a power outage.

Before you decide to buy a PV system,you should understand the current statusof the technology:

First, it produces power intermittentlybecause it works only when the sun isshining. This is not a problem for PVsystems connected to the utility grid,because additional electricity you needis automatically delivered to you byyour utility.

Background

Photovoltaic Modules

PV Cell

CustomerLoads or

Utility GridBatteries(optional) Inverter

02512001m

PV System

PV System Components

Are you thinking about buying a PV system for your home or business? If so, this booklet will providebasic information that you need to know. People across the nation are showing increased interest in solarelectric systems for their homes and businesses. These photovoltaic—or PV—systems are reliable,pollution free, and use a renewable source of energy—the sun. Although they are still expensive, theyare becoming more affordable all the time. And remember: The more energy-efficient your house, thegreater the impact of a PV system. Measures such as increased insulation and energy-efficient lighting,appliances, and windows will drastically reduce your home’s use of electricity.

To make PV systems even more affordable, several states are offering financial incentives throughsolar-rebate and other programs. And some utilities offer net metering to make PV systems even moreeconomical. Net metering means that when your PV system generates more power than you need, themeter runs backwards resulting in an even swap for the grid power that you use at other times. Inessence, you receive full retail value for all the power that your PV system generates.

This booklet is designed to guide you through the process of buying a solar electric system. A word ofcaution: This is not a technical guide for designing or installing your system—for that information, werecommend that you consult an experienced PV system designer or system supplier (“PV provider”)who will have detailed technical specifications and other necessary information. A PV system can be asubstantial investment, and as with any investment, careful planning will help ensure that you make theright decisions.

ContentsBackground Page

❑ What is a solar electric, or photovoltaic, system? . . . . . . . . . . . . . . . . . .1❑ Are incentives available to help reduce the cost? . . . . . . . . . . . . . . . . . . .2

Investing in a PV system❑ Why should I buy a PV system? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4❑ Is my home or business a good place for a solar system? . . . . . . . . . . . .4❑ How big should my PV system be, and what features should it have? . . .5❑ How much will my PV system save me? . . . . . . . . . . . . . . . . . . . . . . . . . .6❑ How much does a PV system cost? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8❑ How can I finance the cost of my PV system? . . . . . . . . . . . . . . . . . . . . .8

Selecting a PV installer❑ Who sells and installs PV systems? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9❑ How do I choose among PV providers? . . . . . . . . . . . . . . . . . . . . . . . . . . .9❑ How do I choose among competing bids? . . . . . . . . . . . . . . . . . . . . . . . .10❑ Is the lowest price the “best deal”? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Before connecting a PV system to the grid❑ What about permits? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12❑ What about insurance? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12❑ How do I get an interconnection agreement? . . . . . . . . . . . . . . . . . . . . .12❑ How do I get a net metering agreement? . . . . . . . . . . . . . . . . . . . . . . . . .13❑ What about utility and inspection sign-off? . . . . . . . . . . . . . . . . . . . . . ..14❑ What about warranties? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Getting help . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

3

are justified by creating competitive,sustainable market growth. In the UnitedStates, the U.S. Department of Energyhas been involved in a program knownas TEAM-UP, or Technology Experienceto Accelerate Markets in Utility Photo-voltaics. This program has a goal of 50megawatts and has already contractedfor 8 megawatts of grid-connected PV,with supplier buy-downs and consumer

rebates between $2–$4 per watt. Califor-nia's Assembly Bill 1890, for example,began a consumer buy-down programin early 1998.

Residential Energy Rate—Thisnumber is the average retail residentialrate for energy from utilities, in centsper kilowatt-hour (¢/kWh). Check your utility bill for your actual rate.

PV modules were installed by workmen on theNatatorium, the main swimming facility for the 1996Summer Olympic games in Atlanta, Georgia.(Craig Miller Productions/PIX 03500)

2

Second, if you live near existing elec-trical service, PV-generated electricityis usually more expensive than conven-tional utility-supplied electricity.Improved manufacturing has reducedthe cost to less than one percent of what it was in the 1970s, but the cost(amortized over the life of the system) is still about 25 cents per kilowatt-hour.This is about two to five times the retailprice that residents now pay for elec-tricity from their utilities. A solar rebateprogram and net metering can helpmake PV more affordable, but it can'tmatch today's price for electricity fromyour utility.

Finally, unlike electricity purchasedmonth by month from a utility, PVpower comes with a high initial invest-ment and no monthly charge thereafter.This means that buying a PV system islike paying years of electric bills upfront. You'll probably appreciate thereduction in your monthly electric bills,but the initial expense may be signifi-cant. By financing your PV system, youcan spread the cost over many years,and a rebate can also lighten your load.

Are incentives available to help reducethe cost?

Yes, in many states! To get specificinformation, you should call one of thecontacts listed on the Getting Help pageat the end of this booklet. You may alsofind a loose insert in this booklet thatprovides state-by-state information onattributes and incentives, as well as contacts and their phone numbers. This information changes rapidly, andwe attempt to keep it updated regularly.Another excellent source is the NationalDatabase of State Incentives for Renew-able Energy (DSIRE), prepared byNorth Carolina Solar Center, whichcontains information on financial and

regulatory incentives to promote theapplication of renewable energy technologies.

Net Metering—In some 25 states,customers who own PV systems canbenefit from laws and regulations thatrequire “net” electric meter reading. The customer is billed for the “net”electricity purchased from the utilityover the entire billing period—that is,the difference between the electricitycoming from the power grid and the electricity generated by the PV system.Hence, the monthly reading indicatesnet customer usage. Through net meter-ing, the customer obtains the full retailelectricity rate—rather than the muchlower wholesale rate-for kilowatt-hoursof PV-produced electricity sent back tothe utility power grid. The consumerbenefits of net metering are especiallysignificant in areas such as Hawaii andNew York, which have high retail rates.Utilities also benefit because the solar-generated energy often coincides withtheir peak demand.

Property and Sales Tax—Tax incen-tives may include exemption of sales tax on the PV system purchase, exemp-tion of property tax, or state personalincome-tax credits, which provide thegreatest economic benefit to consumersby lowering high capital costs.

The U.S. government also providesfinancial support for PV technologythrough a tax credit for commercial usesof solar energy. This energy investmentcredit provides businesses (but not indi-viduals or utilities) with a 10% tax creditand 5-year accelerated depreciation forthe cost of equipment used to generateelectricity by solar technologies.

Buydown—Rebates and buy-downs,typically based on the power of the sys-tem, help to defray high capital costs and

3

are justified by creating competitive,sustainable market growth. In the UnitedStates, the U.S. Department of Energyhas been involved in a program knownas TEAM-UP, or Technology Experienceto Accelerate Markets in Utility Photo-voltaics. This program has a goal of 50megawatts and has already contractedfor 8 megawatts of grid-connected PV,with supplier buy-downs and consumer

rebates between $2–$4 per watt. Califor-nia's Assembly Bill 1890, for example,began a consumer buy-down programin early 1998.

Residential Energy Rate—Thisnumber is the average retail residentialrate for energy from utilities, in centsper kilowatt-hour (¢/kWh). Check your utility bill for your actual rate.

PV modules were installed by workmen on theNatatorium, the main swimming facility for the 1996Summer Olympic games in Atlanta, Georgia.(Craig Miller Productions/PIX 03500)

2

Second, if you live near existing elec-trical service, PV-generated electricityis usually more expensive than conven-tional utility-supplied electricity.Improved manufacturing has reducedthe cost to less than one percent of what it was in the 1970s, but the cost(amortized over the life of the system) is still about 25 cents per kilowatt-hour.This is about two to five times the retailprice that residents now pay for elec-tricity from their utilities. A solar rebateprogram and net metering can helpmake PV more affordable, but it can'tmatch today's price for electricity fromyour utility.

Finally, unlike electricity purchasedmonth by month from a utility, PVpower comes with a high initial invest-ment and no monthly charge thereafter.This means that buying a PV system islike paying years of electric bills upfront. You'll probably appreciate thereduction in your monthly electric bills,but the initial expense may be signifi-cant. By financing your PV system, youcan spread the cost over many years,and a rebate can also lighten your load.

Are incentives available to help reducethe cost?

Yes, in many states! To get specificinformation, you should call one of thecontacts listed on the Getting Help pageat the end of this booklet. You may alsofind a loose insert in this booklet thatprovides state-by-state information onattributes and incentives, as well as contacts and their phone numbers. This information changes rapidly, andwe attempt to keep it updated regularly.Another excellent source is the NationalDatabase of State Incentives for Renew-able Energy (DSIRE), prepared byNorth Carolina Solar Center, whichcontains information on financial and

regulatory incentives to promote theapplication of renewable energy technologies.

Net Metering—In some 25 states,customers who own PV systems canbenefit from laws and regulations thatrequire “net” electric meter reading. The customer is billed for the “net”electricity purchased from the utilityover the entire billing period—that is,the difference between the electricitycoming from the power grid and the electricity generated by the PV system.Hence, the monthly reading indicatesnet customer usage. Through net meter-ing, the customer obtains the full retailelectricity rate—rather than the muchlower wholesale rate-for kilowatt-hoursof PV-produced electricity sent back tothe utility power grid. The consumerbenefits of net metering are especiallysignificant in areas such as Hawaii andNew York, which have high retail rates.Utilities also benefit because the solar-generated energy often coincides withtheir peak demand.

Property and Sales Tax—Tax incen-tives may include exemption of sales tax on the PV system purchase, exemp-tion of property tax, or state personalincome-tax credits, which provide thegreatest economic benefit to consumersby lowering high capital costs.

The U.S. government also providesfinancial support for PV technologythrough a tax credit for commercial usesof solar energy. This energy investmentcredit provides businesses (but not indi-viduals or utilities) with a 10% tax creditand 5-year accelerated depreciation forthe cost of equipment used to generateelectricity by solar technologies.

Buydown—Rebates and buy-downs,typically based on the power of the sys-tem, help to defray high capital costs and

5

must be unshaded between certain hoursduring certain times of the year. Somestates have laws that establish your rightto protect your solar access through thecreation of a “solar easement.”

Do you have enough area on your roofor property?

The amount of space needed by a PVsystem is based on the physical size ofthe system you purchase. Most residen-tial systems require as little as 50 squarefeet (for a small “starter” system) up toas much as 1,000 square feet. Commer-cial systems are typically even larger. Ifyour location limits the physical size ofyour system, you may want to install a system that uses more-efficient PVmodules. Greater efficiency means thatthe module uses less surface area toconvert sunlight into a given amount of electric power. PV modules are avail-able today in a range of types, and someoffer more efficiency per square footthan do others. The cost per kilowatt ofhigher-efficiency modules is about thesame as low-efficiency modules, so this may not add to your system's price.System sizing is discussed later in thisbooklet and should also be discussedwith your PV provider.

What kind of roof do you have, andwhat is its condition?

Some roof types are simpler andcheaper to work with, but a PV systemcan be installed on any type. Typically,composition shingles are easiest towork with, and slate is the most difficult.In any case, an experienced solar installerwill know how to work on all roof typesand can use roofing techniques thateliminate any possibility of leaks. Askyour PV provider how the PV systemaffects your roof warranty.

If your roof is older and needs to bereplaced in the very near future, youmay want to replace it at the time the PV system is installed to avoid the costof removing and reinstalling your PVsystem. Panels often can be integratedinto the roof itself, and some modulesare actually designed as three-tab shin-gles or raised-seam metal roof sections.One benefit of these systems is theirability to offset the cost of roof materials.

How big should my PV system be, andwhat features should it have?

As a starting point, you might considerhow much of your present electricityneeds you would like to meet with yourPV system. For example, suppose that

100 250 500 1,000 2,000 4,000 10,000 100,000

4 30 75 150 300 600 1,200 3,000 30,000

8 15 38 75 150 300 600 1,500 15,000

12 10 25 50 100 200 400 1,000 10,000

16 8 20 40 80 160 320 800 8,000

PV capacity rating (watts)PV moduleefficiency*

(%)

Roof Area Needed in Square Feet (shown in Bold Type)

0251

2002

m

* Although the efficiency (percent of sunlight converted to electricity) varies with the different types of PV modules available today, higher-efficiency modules typically cost more. So, a less-efficient system is not necessarily less cost-effective.

4

Why should I buy a PV system?People decide to buy PV systems for a

variety of reasons. Some want to helppreserve the earth's finite fossil-fuelresources and reduce air pollution.Others would rather spend their moneyon an energy-producing improvement to their property than to send their moneyto a utility. Some people like the securityof reducing the amount of electricity theybuy from their utility, because it makesthem less vulnerable to future increasesin the price of electricity. Finally, somepeople just don't like paying utility billsand appreciate the independence that aPV system provides.

If you plan to build away from estab-lished utility service, you should con-sider the cost of installing a utility lineneeded to provide the utility's energy.Often, the cost of extending conven-tional power to your residence is moreexpensive than the solar option.

Whatever your reason, solar energy iswidely thought to be the energy sourceof choice for the future, and you may be able to take advantage of a state-sponsored program to help make it yourenergy choice for today and tomorrow.

Is my home or business a good placefor a solar system?Can you orient your system for goodperformance?

A well-designed PV system needsclear and unobstructed access to thesun's rays for most or all of the day,throughout the year. You can make aninitial assessment yourself, and if thelocation looks promising, your PVprovider has the tools to trace the sun'spath at your location and determine

whether your home or business canmake use of a PV solar system.

The orientation of your PV system (thecompass direction that your system faces)will affect performance. In the UnitedStates, the sun is always in the southernhalf of the sky and is higher in the sum-mer and lower in the winter. Usually,the best location for a PV system is asouth-facing roof, but roofs that faceeast or west may also be acceptable.Flat roofs also work well for solar sys-tems because the PV modules can bemounted flat on the roof facing the skyor mounted on frames tilted toward thesouth at the optimal angle.

If a rooftop can't be used, your solarmodules can also be placed on theground, either on a fixed mount or a“tracking” mount that follows the sun to orient the PV modules for maximumperformance. Other options (used mostoften in multifamily or commercialapplications) include mounting struc-tures that create covered parking or provide shade as window awnings.

Is your site free from shading by trees,nearby buildings, or other obstructions?

To make the best use of your PV sys-tem, the PV modules must have a clear“view” of the sun for most or all of theday—unobstructed by trees, roof gables,chimneys, buildings, and other featuresof your home and the surrounding land-scape. Note that even though the areawhere a system is mounted may beunshaded during one part of the day, itmay be shaded during another. If this isthe case, then this shading may substan-tially reduce the amount of electricitythat your system will produce. To be eligible for some rebates, your system

Investing in a PV system

5

must be unshaded between certain hoursduring certain times of the year. Somestates have laws that establish your rightto protect your solar access through thecreation of a “solar easement.”

Do you have enough area on your roofor property?

The amount of space needed by a PVsystem is based on the physical size ofthe system you purchase. Most residen-tial systems require as little as 50 squarefeet (for a small “starter” system) up toas much as 1,000 square feet. Commer-cial systems are typically even larger. Ifyour location limits the physical size ofyour system, you may want to install a system that uses more-efficient PVmodules. Greater efficiency means thatthe module uses less surface area toconvert sunlight into a given amount of electric power. PV modules are avail-able today in a range of types, and someoffer more efficiency per square footthan do others. The cost per kilowatt ofhigher-efficiency modules is about thesame as low-efficiency modules, so this may not add to your system's price.System sizing is discussed later in thisbooklet and should also be discussedwith your PV provider.

What kind of roof do you have, andwhat is its condition?

Some roof types are simpler andcheaper to work with, but a PV systemcan be installed on any type. Typically,composition shingles are easiest towork with, and slate is the most difficult.In any case, an experienced solar installerwill know how to work on all roof typesand can use roofing techniques thateliminate any possibility of leaks. Askyour PV provider how the PV systemaffects your roof warranty.

If your roof is older and needs to bereplaced in the very near future, youmay want to replace it at the time the PV system is installed to avoid the costof removing and reinstalling your PVsystem. Panels often can be integratedinto the roof itself, and some modulesare actually designed as three-tab shin-gles or raised-seam metal roof sections.One benefit of these systems is theirability to offset the cost of roof materials.

How big should my PV system be, andwhat features should it have?

As a starting point, you might considerhow much of your present electricityneeds you would like to meet with yourPV system. For example, suppose that

100 250 500 1,000 2,000 4,000 10,000 100,000

4 30 75 150 300 600 1,200 3,000 30,000

8 15 38 75 150 300 600 1,500 15,000

12 10 25 50 100 200 400 1,000 10,000

16 8 20 40 80 160 320 800 8,000

PV capacity rating (watts)PV moduleefficiency*

(%)

Roof Area Needed in Square Feet (shown in Bold Type)

0251

2002

m

* Although the efficiency (percent of sunlight converted to electricity) varies with the different types of PV modules available today, higher-efficiency modules typically cost more. So, a less-efficient system is not necessarily less cost-effective.

4

Why should I buy a PV system?People decide to buy PV systems for a

variety of reasons. Some want to helppreserve the earth's finite fossil-fuelresources and reduce air pollution.Others would rather spend their moneyon an energy-producing improvement to their property than to send their moneyto a utility. Some people like the securityof reducing the amount of electricity theybuy from their utility, because it makesthem less vulnerable to future increasesin the price of electricity. Finally, somepeople just don't like paying utility billsand appreciate the independence that aPV system provides.

If you plan to build away from estab-lished utility service, you should con-sider the cost of installing a utility lineneeded to provide the utility's energy.Often, the cost of extending conven-tional power to your residence is moreexpensive than the solar option.

Whatever your reason, solar energy iswidely thought to be the energy sourceof choice for the future, and you may be able to take advantage of a state-sponsored program to help make it yourenergy choice for today and tomorrow.

Is my home or business a good placefor a solar system?Can you orient your system for goodperformance?

A well-designed PV system needsclear and unobstructed access to thesun's rays for most or all of the day,throughout the year. You can make aninitial assessment yourself, and if thelocation looks promising, your PVprovider has the tools to trace the sun'spath at your location and determine

whether your home or business canmake use of a PV solar system.

The orientation of your PV system (thecompass direction that your system faces)will affect performance. In the UnitedStates, the sun is always in the southernhalf of the sky and is higher in the sum-mer and lower in the winter. Usually,the best location for a PV system is asouth-facing roof, but roofs that faceeast or west may also be acceptable.Flat roofs also work well for solar sys-tems because the PV modules can bemounted flat on the roof facing the skyor mounted on frames tilted toward thesouth at the optimal angle.

If a rooftop can't be used, your solarmodules can also be placed on theground, either on a fixed mount or a“tracking” mount that follows the sun to orient the PV modules for maximumperformance. Other options (used mostoften in multifamily or commercialapplications) include mounting struc-tures that create covered parking or provide shade as window awnings.

Is your site free from shading by trees,nearby buildings, or other obstructions?

To make the best use of your PV sys-tem, the PV modules must have a clear“view” of the sun for most or all of theday—unobstructed by trees, roof gables,chimneys, buildings, and other featuresof your home and the surrounding land-scape. Note that even though the areawhere a system is mounted may beunshaded during one part of the day, itmay be shaded during another. If this isthe case, then this shading may substan-tially reduce the amount of electricitythat your system will produce. To be eligible for some rebates, your system

Investing in a PV system

Calculating Electricity Bill Savings for a Net-Metered PV System

• Determine the system's size in kilowatts (kW). A reasonable range is 1 to 5 kW. This value is the "kW of PV" input for the equations below.

• Based on your geographic location, select the energy production factor from the map below for the "kWh/kW-year" input for the equations.

Energy from the PV system = (kW of PV) x (kWh/kW-year) = kWh/yearDivide this number by twelve if you want to determine your monthly energy reduction.

Energy bills savings = (kWh/year) x (Residential Rate)/100 = $/year saved(Residential Rate in this above equation should be in dollars per kWh; for example, a rate of 10 cents per kWh is input as $0.10/kWh.)

For example, a 2-kW system in Denver, CO, at a residential energy rate of $0.07/kWh will save about $266 per year (1,900 kWh/kW-year x $0.07/kWh x 2 kW = $266/year).

7

these issues with your PV provider.Consider asking for a written estimateof the average annual energy productionfrom the PV system. However, youshould realize that even if an estimate is accurate for an average year, actualelectricity production will fluctuatefrom year to year due to natural varia-tions in weather and climate.

If your utility does not offer net meter-ing, you can still use the calculation box

to determine the amount of electricityyour system will produce. But deter-mining its value is much trickierbecause your excess electricity will notbe worth as much as the electricity youactually use. You may earn only 2 centsper kilowatt-hour—or less than half ofthe retail rate—for your excess power.PV systems produce most of their elec-tricity during the middle of the day whenresidential electric loads tend to be small.

NOTE: The uncertainty of the contoured values isgenerally ±10%; in mountainous and other areas of complex terrain, the uncertainty may be higher.

12001300

14001500

160017001800

19002000

19002000

2100

2000

1900

18001700

1800

1700

1700

1600

1600

150016001600

150017001700

16001500

1400

1000

1200

17321881

1913

15751000

1000

900

1100

1100

2100

6

you would like to meet 50 percent ofyour electricity needs with your PV system. You could work with your PVprovider to examine past electric billsand determine the size of the PV system needed to achieve that goal.

You can contact your utility and requestthe total electricity usage, measured inkilowatt-hours, for your household orbusiness over the last 12 months (orconsult your electric bills if you savethem). Ask your PV provider how muchyour new PV system will produce on anannual basis (also measured in kilowatt-hours) and compare that number to yourannual electricity demand to get an ideaof how much you will save. In the nextsection, we'll provide more informationon estimating how much you will save.

Some solar rebate programs are“capped” at a certain dollar amount.Therefore, a solar system that matchesthis cap will maximize the benefit ofthe solar rebate.

To qualify for “net metering” in someservice territories, your PV system musthave a peak generating capacity of notmore than typically 10 kilowatts (10,000watts), although this peak may differfrom state to state. Also, utilities mayhave different provisions for buyingexcess electricity produced by your system on an annual basis (see the sec-tion on net metering for more detail).Finally, customers eligible for netmetering may vary from utility to util-ity; for example, net metering may beallowed for residential customers only,commercial customers only, or both.

One optional feature you might con-sider is a battery system to provide back-up power in case of a utility poweroutage. Batteries add value to your system, but at an increased price.

As you size your system, you shouldconsider the “economies of scale” thatcan decrease the cost per kilowatt-houras you increase the size of the system.For example, many inverters are sizedfor systems up to 5 kilowatts, and ifyour PV array is smaller (say 3 kilo-watts), you may still end up buying thesame inverter. Labor costs for a smallsystem may be nearly as much as thosefor a large system. Therefore, it's worthremembering that your PV provider islikely to offer you a better price to installa 2-kilowatt system all at once, than toinstall a 1-kilowatt this year and anothersimilar system next year-because multi-ple orders and multiple site visits aremore expensive.

How much will my PV system save me?The value of your PV system's elec-

tricity will depend on how much youpay your utility for electricity and howmuch your utility will pay you for anyexcess that you generate. If your utilityoffers net metering (and so pays the fullretail price for your excess electricity),your calculation may be fairly easybecause you and your utility will eachpay the same price for each other's elec-tricity. You can use the calculation boxto roughly approximate how much elec-tricity your PV system will produce andhow much that electricity will be worth.Keep in mind that actual energy produc-tion from your PV system will vary byup to 20 percent from these figures,depending on your geographic location,the angle and orientation of your sys-tem, the quality of the components ofyour system, and the quality of theinstallation. Also keep in mind that youmay not get full retail value for excesselectricity produced by your system onan annual basis, even if your utility doesoffer net metering. Be sure to discuss

Calculating Electricity Bill Savings for a Net-Metered PV System

• Determine the system's size in kilowatts (kW). A reasonable range is 1 to 5 kW. This value is the "kW of PV" input for the equations below.

• Based on your geographic location, select the energy production factor from the map below for the "kWh/kW-year" input for the equations.

Energy from the PV system = (kW of PV) x (kWh/kW-year) = kWh/yearDivide this number by twelve if you want to determine your monthly energy reduction.

Energy bills savings = (kWh/year) x (Residential Rate)/100 = $/year saved(Residential Rate in this above equation should be in dollars per kWh; for example, a rate of 10 cents per kWh is input as $0.10/kWh.)

For example, a 2-kW system in Denver, CO, at a residential energy rate of $0.07/kWh will save about $266 per year (1,900 kWh/kW-year x $0.07/kWh x 2 kW = $266/year).

7

these issues with your PV provider.Consider asking for a written estimateof the average annual energy productionfrom the PV system. However, youshould realize that even if an estimate is accurate for an average year, actualelectricity production will fluctuatefrom year to year due to natural varia-tions in weather and climate.

If your utility does not offer net meter-ing, you can still use the calculation box

to determine the amount of electricityyour system will produce. But deter-mining its value is much trickierbecause your excess electricity will notbe worth as much as the electricity youactually use. You may earn only 2 centsper kilowatt-hour—or less than half ofthe retail rate—for your excess power.PV systems produce most of their elec-tricity during the middle of the day whenresidential electric loads tend to be small.

NOTE: The uncertainty of the contoured values isgenerally ±10%; in mountainous and other areas of complex terrain, the uncertainty may be higher.

12001300

14001500

160017001800

19002000

19002000

2100

2000

1900

18001700

1800

1700

1700

1600

1600

150016001600

150017001700

16001500

1400

1000

1200

17321881

1913

15751000

1000

900

1100

1100

2100

6

you would like to meet 50 percent ofyour electricity needs with your PV system. You could work with your PVprovider to examine past electric billsand determine the size of the PV system needed to achieve that goal.

You can contact your utility and requestthe total electricity usage, measured inkilowatt-hours, for your household orbusiness over the last 12 months (orconsult your electric bills if you savethem). Ask your PV provider how muchyour new PV system will produce on anannual basis (also measured in kilowatt-hours) and compare that number to yourannual electricity demand to get an ideaof how much you will save. In the nextsection, we'll provide more informationon estimating how much you will save.

Some solar rebate programs are“capped” at a certain dollar amount.Therefore, a solar system that matchesthis cap will maximize the benefit ofthe solar rebate.

To qualify for “net metering” in someservice territories, your PV system musthave a peak generating capacity of notmore than typically 10 kilowatts (10,000watts), although this peak may differfrom state to state. Also, utilities mayhave different provisions for buyingexcess electricity produced by your system on an annual basis (see the sec-tion on net metering for more detail).Finally, customers eligible for netmetering may vary from utility to util-ity; for example, net metering may beallowed for residential customers only,commercial customers only, or both.

One optional feature you might con-sider is a battery system to provide back-up power in case of a utility poweroutage. Batteries add value to your system, but at an increased price.

As you size your system, you shouldconsider the “economies of scale” thatcan decrease the cost per kilowatt-houras you increase the size of the system.For example, many inverters are sizedfor systems up to 5 kilowatts, and ifyour PV array is smaller (say 3 kilo-watts), you may still end up buying thesame inverter. Labor costs for a smallsystem may be nearly as much as thosefor a large system. Therefore, it's worthremembering that your PV provider islikely to offer you a better price to installa 2-kilowatt system all at once, than toinstall a 1-kilowatt this year and anothersimilar system next year-because multi-ple orders and multiple site visits aremore expensive.

How much will my PV system save me?The value of your PV system's elec-

tricity will depend on how much youpay your utility for electricity and howmuch your utility will pay you for anyexcess that you generate. If your utilityoffers net metering (and so pays the fullretail price for your excess electricity),your calculation may be fairly easybecause you and your utility will eachpay the same price for each other's elec-tricity. You can use the calculation boxto roughly approximate how much elec-tricity your PV system will produce andhow much that electricity will be worth.Keep in mind that actual energy produc-tion from your PV system will vary byup to 20 percent from these figures,depending on your geographic location,the angle and orientation of your sys-tem, the quality of the components ofyour system, and the quality of theinstallation. Also keep in mind that youmay not get full retail value for excesselectricity produced by your system onan annual basis, even if your utility doesoffer net metering. Be sure to discuss

9

Who sells and installs PV systems?In some locations, finding a PV pro-

vider can be as simple as picking up thetelephone directory and looking under“Solar Energy Equipment and Systems—Dealers.” Be aware, however, that manyof those listings are for solar water-heat-ing companies. Many of these compa-nies may not be experienced in PVsystem design or installation. Similarly,many electrical contractors, althoughproficient in typical electrical contract-ing work, may not have expertise in PVor with residential roof-mounting tech-niques. How do you identify solar elec-tric system providers? Here are severalsuggestions.

Check the Directory of the U.S. Photo-voltaics Industry, which is posted at thefollowing Web address: http://www.eren.doe.gov/pv/pvdirectory.html

• Contact the Solar Energy Industries Association for a list of solar service providers (202-383-2600).

• Contact your utility company to see which vendors it might recommend.

• Conduct a search on the Internet.

Unless you are skilled in PV installa-tion, you should consider hiring a rep-utable professional contractor withexperience in installing PV systems.

How do I choose among PV providers?Compile a list of prospective PV

providers. You might first considerthose closest to you, because the con-tractor's travel costs might add to yoursystem price. Next, contact theseproviders and find out what productsand services they offer. The following

questions may give you a good sense oftheir capabilities:

Has the company installed grid-connected PV systems? If not, has itinstalled grid-independent PV systems?

Experience installing grid-connectedsystems is valuable because some ele-ments of the installation—particularlyinterconnection with the local utility—are unique to these systems. Becausegrid-connected systems are relativelyuncommon, most contractors with PVexperience have worked only on sys-tems such as those that power remotecabins far from the nearest utility line.This means they have experience withall aspects of PV system installationexcept the connection with the utilitygrid. Although grid-connection work is different from “off-grid” work, acompetent company with PV experi-ence should not be eliminated justbecause it has not installed grid-con-nected PV systems in the past. In fact,experience with off-grid systems isvaluable because grid-independent systems are more technically compli-cated than grid-tied systems.

How many years of experience does thecompany have installing PV systems?

This issue speaks for itself:A companyor contractor that has been in business along time has demonstrated an ability to work with customers and to competeeffectively with other firms.

Is the company properly licensed?

PV systems should installed by anappropriately licensed contractor. Thisusually means that either the installer or a subcontractor has an electrical contractor's license. Your State Elec-

Selecting a PV installer

8

If net metering is not offered by yourutility, you may want to size your sys-tem to avoid generating electricity significantly beyond your actual needs.

How much does a PV system cost?There is no single answer, but keep in

mind that a solar rebate and other incen-tives may reduce the cost. Your system'sprice will depend on a number of factors,including whether the home is underconstruction or whether the PV is inte-grated into the roof or mounted on topof an existing roof. The price also variesdepending on the PV system rating,manufacturer, retailer, and installer.

The size of your system may be themost significant factor in any equationmeasuring your costs against your bene-fits. Small, single PV-panel systemswith built-in inverters that produceabout 75 watts may cost around $900installed, or $12 per watt. These smallsystems will offset only a small fractionof your electricity bill. A 2-kilowatt sys-tem that will offset the needs of a veryenergy-efficient home may cost $16,000to $20,000 installed, or $8 to $10 perwatt. At the high end, a 5-kilowatt sys-tem that will completely offset theenergy needs of many conventionalhomes may cost $30,000 to $40,000installed, or $6 to $8 per watt. Theseprices, of course, are just rough esti-mates, and your costs will depend onyour system's configuration, yourequipment options, and other factors.Your local PV providers can provideyou with estimates or bids.

How can I finance the cost of my PVsystem?

There is nothing magical about financ-ing the cost of purchasing and installingyour PV system. Although there aresome special programs available for

financing solar and other renewable-energy investments, most of the optionswill be familiar to you.

The best way to finance PV systemsfor homes is through a mortgage loan.Mortgage financing options includeyour primary mortgage, a second mort-gage such as a U.S. Department ofHousing and Urban Development(HUD) Title 1 loan, or a home-equityloan that is secured by your property.There are two advantages to mortgagefinancing. First, mortgage financingusually provides longer terms and lowerinterest rates than other loans such asconventional bank loans. Second, theinterest paid on a mortgage loan is gen-erally deductible on your federal taxes(subject to certain conditions). If youbuy the PV system at the same time thatyou build, buy, or refinance the houseon which the PV system will be installed,adding the cost of the PV system to yourmortgage loan is likely to be relativelysimple and may avoid additional loanapplication forms or fees.

If mortgage financing is not available,look for other sources of financing, suchas conventional bank loans. Rememberto look for the best possible combinationof low rate and long term. This will allowyou to amortize your PV system as inex-pensively as possible. Because your PVsystem is a long-term investment, theterms and conditions of your PV financ-ing are likely to be the most importantfactor in determining the effective priceof your PV-generated power.

PV systems purchased for businessapplications are probably best financedthrough a company's existing sources of funds for capital purchases—usuallySmall Business Administration loans orconventional bank loans.

9

Who sells and installs PV systems?In some locations, finding a PV pro-

vider can be as simple as picking up thetelephone directory and looking under“Solar Energy Equipment and Systems—Dealers.” Be aware, however, that manyof those listings are for solar water-heat-ing companies. Many of these compa-nies may not be experienced in PVsystem design or installation. Similarly,many electrical contractors, althoughproficient in typical electrical contract-ing work, may not have expertise in PVor with residential roof-mounting tech-niques. How do you identify solar elec-tric system providers? Here are severalsuggestions.

Check the Directory of the U.S. Photo-voltaics Industry, which is posted at thefollowing Web address: http://www.eren.doe.gov/pv/pvdirectory.html

• Contact the Solar Energy Industries Association for a list of solar service providers (202-383-2600).

• Contact your utility company to see which vendors it might recommend.

• Conduct a search on the Internet.

Unless you are skilled in PV installa-tion, you should consider hiring a rep-utable professional contractor withexperience in installing PV systems.

How do I choose among PV providers?Compile a list of prospective PV

providers. You might first considerthose closest to you, because the con-tractor's travel costs might add to yoursystem price. Next, contact theseproviders and find out what productsand services they offer. The following

questions may give you a good sense oftheir capabilities:

Has the company installed grid-connected PV systems? If not, has itinstalled grid-independent PV systems?

Experience installing grid-connectedsystems is valuable because some ele-ments of the installation—particularlyinterconnection with the local utility—are unique to these systems. Becausegrid-connected systems are relativelyuncommon, most contractors with PVexperience have worked only on sys-tems such as those that power remotecabins far from the nearest utility line.This means they have experience withall aspects of PV system installationexcept the connection with the utilitygrid. Although grid-connection work is different from “off-grid” work, acompetent company with PV experi-ence should not be eliminated justbecause it has not installed grid-con-nected PV systems in the past. In fact,experience with off-grid systems isvaluable because grid-independent systems are more technically compli-cated than grid-tied systems.

How many years of experience does thecompany have installing PV systems?

This issue speaks for itself:A companyor contractor that has been in business along time has demonstrated an ability to work with customers and to competeeffectively with other firms.

Is the company properly licensed?

PV systems should installed by anappropriately licensed contractor. Thisusually means that either the installer or a subcontractor has an electrical contractor's license. Your State Elec-

Selecting a PV installer

8

If net metering is not offered by yourutility, you may want to size your sys-tem to avoid generating electricity significantly beyond your actual needs.

How much does a PV system cost?There is no single answer, but keep in

mind that a solar rebate and other incen-tives may reduce the cost. Your system'sprice will depend on a number of factors,including whether the home is underconstruction or whether the PV is inte-grated into the roof or mounted on topof an existing roof. The price also variesdepending on the PV system rating,manufacturer, retailer, and installer.

The size of your system may be themost significant factor in any equationmeasuring your costs against your bene-fits. Small, single PV-panel systemswith built-in inverters that produceabout 75 watts may cost around $900installed, or $12 per watt. These smallsystems will offset only a small fractionof your electricity bill. A 2-kilowatt sys-tem that will offset the needs of a veryenergy-efficient home may cost $16,000to $20,000 installed, or $8 to $10 perwatt. At the high end, a 5-kilowatt sys-tem that will completely offset theenergy needs of many conventionalhomes may cost $30,000 to $40,000installed, or $6 to $8 per watt. Theseprices, of course, are just rough esti-mates, and your costs will depend onyour system's configuration, yourequipment options, and other factors.Your local PV providers can provideyou with estimates or bids.

How can I finance the cost of my PVsystem?

There is nothing magical about financ-ing the cost of purchasing and installingyour PV system. Although there aresome special programs available for

financing solar and other renewable-energy investments, most of the optionswill be familiar to you.

The best way to finance PV systemsfor homes is through a mortgage loan.Mortgage financing options includeyour primary mortgage, a second mort-gage such as a U.S. Department ofHousing and Urban Development(HUD) Title 1 loan, or a home-equityloan that is secured by your property.There are two advantages to mortgagefinancing. First, mortgage financingusually provides longer terms and lowerinterest rates than other loans such asconventional bank loans. Second, theinterest paid on a mortgage loan is gen-erally deductible on your federal taxes(subject to certain conditions). If youbuy the PV system at the same time thatyou build, buy, or refinance the houseon which the PV system will be installed,adding the cost of the PV system to yourmortgage loan is likely to be relativelysimple and may avoid additional loanapplication forms or fees.

If mortgage financing is not available,look for other sources of financing, suchas conventional bank loans. Rememberto look for the best possible combinationof low rate and long term. This will allowyou to amortize your PV system as inex-pensively as possible. Because your PVsystem is a long-term investment, theterms and conditions of your PV financ-ing are likely to be the most importantfactor in determining the effective priceof your PV-generated power.

PV systems purchased for businessapplications are probably best financedthrough a company's existing sources of funds for capital purchases—usuallySmall Business Administration loans orconventional bank loans.

10

trical Board can tell you if a contractorhas a valid electrician's license. Localbuilding departments also may requirethat the installer have a general contrac-tor's license. Consumers should call thecity and county in which they live foradditional information on licensing.

A solar rebate program may requirethat, in addition to being properlylicensed, installers must demonstratethat they possess special knowledgeabout installing PV systems. This spe-cial knowledge may be demonstrated in one of the following ways:

• Possession of a solar contractor spe-cialty license, issued by a local build-ing jurisdiction, that recognizes—through testing or other means-specialknowledge of PV systems.

• Certification in PV systems by a groupsuch as the state chapter of SEIA.

• A letter from the manufacturer of the PV system stating that the installer has experience and/or training neces-sary to install the system properly.

Does the company have any pending oractive judgements or liens against it?

As with any project that requires acontractor, due diligence is recom-mended. Your State Electrical Boardcan tell you about any judgments orcomplaints against a state-licensed electrician. Consumers should call thecity and county in which they live foradditional information on how to checkup on contractors. The Better BusinessBureau is another source of informationon contractors.

How do I choose among competing bids?If you have decided to get more than

one bid for the installation of your PVsystem (and it's generally a good idea todo so), you should take steps to ensure

that all of the bids you receive are madeon the same basis. For example, com-paring a bid for a system mounted onthe ground against another bid for arooftop system is like comparing applesto oranges. Similarly, different types ofPV modules generate more electricityper square foot than others. Bids shouldclearly state the maximum generatingcapacity of the system (measured inwatts or kilowatts). If possible, have the bids specify the system capacity in“AC watts” under a standard set of testconditions, or specify the output of thesystem at the inverter.

You may want to obtain some estimateof the amount of energy that the systemwill produce on an annual basis (mea-sured in kilowatt-hours). Because theamount of energy depends on the amountof sunlight—which varies by location,season, and year to year—it is unrealisticto expect a specific figure. A range of±20% is more realistic. Bids also shouldinclude the total cost of getting the PVsystem up and running, including hard-ware, installation, connection to thegrid, permitting, sales tax, and warranty.

Your warranty is a very important fac-tor for evaluating bids. A solar rebateprogram may require that systems becovered by, say, a two-year parts-and-labor written installation warranty, inaddition to any manufacturers' war-ranties on specific components. Theinstaller may offer longer warranties.Also ask yourself, “Will this companystand behind the full-system warrantyfor the next two years?”

Is the lowest price the “best deal”?It might not be. Often, you get what

you pay for. Remember that a PV com-pany is a business just like any other,with overhead and operating expenses

11

that must be covered. It's always possiblethat a low price could be a sign of inex-perience. Companies that plan to stay in business must charge enough for

their products and services to covertheir costs, plus a fair profit margin.Therefore, price should not be your only consideration.

This manufactured home, designed by FIRST, Inc.,was assembled at the site with all features inplace to accommodate the PV system.(FIRST, Inc./PIX 03612)

10

trical Board can tell you if a contractorhas a valid electrician's license. Localbuilding departments also may requirethat the installer have a general contrac-tor's license. Consumers should call thecity and county in which they live foradditional information on licensing.

A solar rebate program may requirethat, in addition to being properlylicensed, installers must demonstratethat they possess special knowledgeabout installing PV systems. This spe-cial knowledge may be demonstrated in one of the following ways:

• Possession of a solar contractor spe-cialty license, issued by a local build-ing jurisdiction, that recognizes—through testing or other means-specialknowledge of PV systems.

• Certification in PV systems by a groupsuch as the state chapter of SEIA.

• A letter from the manufacturer of the PV system stating that the installer has experience and/or training neces-sary to install the system properly.

Does the company have any pending oractive judgements or liens against it?

As with any project that requires acontractor, due diligence is recom-mended. Your State Electrical Boardcan tell you about any judgments orcomplaints against a state-licensed electrician. Consumers should call thecity and county in which they live foradditional information on how to checkup on contractors. The Better BusinessBureau is another source of informationon contractors.

How do I choose among competing bids?If you have decided to get more than

one bid for the installation of your PVsystem (and it's generally a good idea todo so), you should take steps to ensure

that all of the bids you receive are madeon the same basis. For example, com-paring a bid for a system mounted onthe ground against another bid for arooftop system is like comparing applesto oranges. Similarly, different types ofPV modules generate more electricityper square foot than others. Bids shouldclearly state the maximum generatingcapacity of the system (measured inwatts or kilowatts). If possible, have the bids specify the system capacity in“AC watts” under a standard set of testconditions, or specify the output of thesystem at the inverter.

You may want to obtain some estimateof the amount of energy that the systemwill produce on an annual basis (mea-sured in kilowatt-hours). Because theamount of energy depends on the amountof sunlight—which varies by location,season, and year to year—it is unrealisticto expect a specific figure. A range of±20% is more realistic. Bids also shouldinclude the total cost of getting the PVsystem up and running, including hard-ware, installation, connection to thegrid, permitting, sales tax, and warranty.

Your warranty is a very important fac-tor for evaluating bids. A solar rebateprogram may require that systems becovered by, say, a two-year parts-and-labor written installation warranty, inaddition to any manufacturers' war-ranties on specific components. Theinstaller may offer longer warranties.Also ask yourself, “Will this companystand behind the full-system warrantyfor the next two years?”

Is the lowest price the “best deal”?It might not be. Often, you get what

you pay for. Remember that a PV com-pany is a business just like any other,with overhead and operating expenses

11

that must be covered. It's always possiblethat a low price could be a sign of inex-perience. Companies that plan to stay in business must charge enough for

their products and services to covertheir costs, plus a fair profit margin.Therefore, price should not be your only consideration.

This manufactured home, designed by FIRST, Inc.,was assembled at the site with all features inplace to accommodate the PV system.(FIRST, Inc./PIX 03612)

13

obligation to obtain permits and insur-ance, maintain the system in goodworking order, and operate it safely.The purchase and sale agreement specifies the metering arrangements,the payment for any excess generation,and any other related issues.

The language in these contractsshould be simple, straightforward, andeasy to understand. If you are unclearabout your obligations under theseagreements, you should contact the util-ity or your electrical service providerfor clarification. If your questions arenot adequately addressed, contact oneof the groups under Getting Help at theend of this booklet.

National standards for utility inter-connection of PV systems are quicklybeing adopted by many local utilities.The most important of these standardsfocuses on inverters. Traditionally,inverters simply converted the DC elec-tricity generated by PV modules intothe AC electricity used in our homes.More recently, inverters have evolvedinto remarkably sophisticated devicesto manage and condition power. Manynew inverters contain all the protectiverelays, disconnects, and other compo-nents necessary to meet the most strin-gent national standards. Two of thesestandards are particularly relevant:

• Institute of Electrical and Electronic Engineers, P929: Recommended Practice for Utility Interface of Photovoltaic Systems. Institute of Electrical and Electronic Engineers,Inc., New York, NY (1998).

• Underwriters Laboratories, UL Subject1741: Standard for Static Inverters and Charge Controllers for Use in Photovoltaic Power Systems (First Edition). Underwriters Laboratories,Inc., Northbrook, IL (December 1997).

You don’t need to fully understandthese standards, but your PV providerand utility should. It is your obligationto ensure that your PV provider usesequipment that complies with the rele-vant standards, so be sure to discussthis issue.

How do I get a net-metering agreement?

Some utilities offer customers withPV systems the option to “net meter”the excess power generated by the PVsystem. This means that when the PVsystem generates more power than thehousehold can use, the utility pays thefull retail price for this power in an even swap as the electric meter spinsbackward.

Net metering allows eligible cus-tomers with PV systems to connect tothe grid with their existing single meter.Almost all standard utility meters areable to measure the flow of energy ineither direction. The meter spins for-ward when electricity is flowing fromthe utility into the building and spinsbackward when power is flowing fromthe building to the utility. For example,in one utility program, customers arebilled monthly for the “net” energy consumed. If the customer’s net con-sumption is negative in any month (i.e., the PV system produces moreenergy than the customer uses), the balance is credited to subsequentmonths. Once a year, on the anniversaryof the effective date of the interconnec-tion agreement, the utility will pay thecustomer for any negative balance at itswholesale or “avoided cost” for energy,which may be quite small, perhaps lessthan 2 cents per kilowatt-hour.

Net metering allows customers to getmore value from the energy they gener-ate. It also simplifies both the metering

12

What about permits?If you live in a community in which

a homeowners association requiresapproval for a solar system, you or yourPV provider may need to submit yourplans. Gain approval from your home-owners association before you begininstalling your PV system. Under thelaw in some states, you have the right to install a solar system on your home.

Most likely, you will need to obtainpermits from your city or county build-ing department. You will probably needa building permit, an electrical permit,or both before installing a PV system.Typically, your PV provider will takecare of this, rolling the price of the per-mits into the overall system price. How-ever, in some cases, your PV providermay not know how much time or moneywill be involved in “pulling” a permit. If so, this task may be priced on a time-and-materials basis, particularly if addi-tional drawings or calculations must beprovided to the permitting agency. In anycase, make sure the permitting costs andresponsibilities are addressed at the startwith your PV provider.

Code requirements for PV systemsvary somewhat from one jurisdiction to the next, but most requirements arebased on the National Electrical Code(NEC). The NEC has a special section,Article 690, that carefully spells outrequirements for designing and instal-ling safe, reliable, code-compliant PVsystems. Because most local require-ments are based on the NEC, yourbuilding inspector is likely to rely onArticle 690 for guidance in determiningwhether your PV system has been prop-erly designed and installed. If you are

among the first people in your commu-nity to install a grid-connected PV sys-tem, your local building departmentmay not have approved one of these systems. If this is the case, you and your PV provider can speed the processby working closely and cooperativelywith your local building officials to help educate them about the technol-ogy and its characteristics.

What about insurance?Your electric utility will require you

to enter into an interconnection agree-ment, described more fully in the nextsection. Usually, these agreements setforth minimum insurance requirementsthat you must keep in force. If you arebuying a PV system for your home,your standard homeowner’s insurancepolicy is usually adequate to meet theutility’s requirements. However, ifinsurance coverage becomes an issue,contact one of the groups under GettingHelp at the end of this booklet.

How do I get an interconnection agreement?

Connecting your PV system to theutility grid will require you to enter intoan interconnection agreement and a purchase and sale agreement. Federallaw and perhaps your state’s public utility commission regulations requireutilities to supply you with an intercon-nection agreement. Some utilities havedeveloped simplified, standardizedinterconnection agreements for small-scale PV systems.

The interconnection agreement speci-fies the terms and conditions under whichyour system will be connected to theutility grid. These will include your

Before connecting a PV system to the grid

13

obligation to obtain permits and insur-ance, maintain the system in goodworking order, and operate it safely.The purchase and sale agreement specifies the metering arrangements,the payment for any excess generation,and any other related issues.

The language in these contractsshould be simple, straightforward, andeasy to understand. If you are unclearabout your obligations under theseagreements, you should contact the util-ity or your electrical service providerfor clarification. If your questions arenot adequately addressed, contact oneof the groups under Getting Help at theend of this booklet.

National standards for utility inter-connection of PV systems are quicklybeing adopted by many local utilities.The most important of these standardsfocuses on inverters. Traditionally,inverters simply converted the DC elec-tricity generated by PV modules intothe AC electricity used in our homes.More recently, inverters have evolvedinto remarkably sophisticated devicesto manage and condition power. Manynew inverters contain all the protectiverelays, disconnects, and other compo-nents necessary to meet the most strin-gent national standards. Two of thesestandards are particularly relevant:

• Institute of Electrical and Electronic Engineers, P929: Recommended Practice for Utility Interface of Photovoltaic Systems. Institute of Electrical and Electronic Engineers,Inc., New York, NY (1998).

• Underwriters Laboratories, UL Subject1741: Standard for Static Inverters and Charge Controllers for Use in Photovoltaic Power Systems (First Edition). Underwriters Laboratories,Inc., Northbrook, IL (December 1997).

You don’t need to fully understandthese standards, but your PV providerand utility should. It is your obligationto ensure that your PV provider usesequipment that complies with the rele-vant standards, so be sure to discussthis issue.

How do I get a net-metering agreement?

Some utilities offer customers withPV systems the option to “net meter”the excess power generated by the PVsystem. This means that when the PVsystem generates more power than thehousehold can use, the utility pays thefull retail price for this power in an even swap as the electric meter spinsbackward.

Net metering allows eligible cus-tomers with PV systems to connect tothe grid with their existing single meter.Almost all standard utility meters areable to measure the flow of energy ineither direction. The meter spins for-ward when electricity is flowing fromthe utility into the building and spinsbackward when power is flowing fromthe building to the utility. For example,in one utility program, customers arebilled monthly for the “net” energy consumed. If the customer’s net con-sumption is negative in any month (i.e., the PV system produces moreenergy than the customer uses), the balance is credited to subsequentmonths. Once a year, on the anniversaryof the effective date of the interconnec-tion agreement, the utility will pay thecustomer for any negative balance at itswholesale or “avoided cost” for energy,which may be quite small, perhaps lessthan 2 cents per kilowatt-hour.

Net metering allows customers to getmore value from the energy they gener-ate. It also simplifies both the metering

12

What about permits?If you live in a community in which

a homeowners association requiresapproval for a solar system, you or yourPV provider may need to submit yourplans. Gain approval from your home-owners association before you begininstalling your PV system. Under thelaw in some states, you have the right to install a solar system on your home.

Most likely, you will need to obtainpermits from your city or county build-ing department. You will probably needa building permit, an electrical permit,or both before installing a PV system.Typically, your PV provider will takecare of this, rolling the price of the per-mits into the overall system price. How-ever, in some cases, your PV providermay not know how much time or moneywill be involved in “pulling” a permit. If so, this task may be priced on a time-and-materials basis, particularly if addi-tional drawings or calculations must beprovided to the permitting agency. In anycase, make sure the permitting costs andresponsibilities are addressed at the startwith your PV provider.

Code requirements for PV systemsvary somewhat from one jurisdiction to the next, but most requirements arebased on the National Electrical Code(NEC). The NEC has a special section,Article 690, that carefully spells outrequirements for designing and instal-ling safe, reliable, code-compliant PVsystems. Because most local require-ments are based on the NEC, yourbuilding inspector is likely to rely onArticle 690 for guidance in determiningwhether your PV system has been prop-erly designed and installed. If you are

among the first people in your commu-nity to install a grid-connected PV sys-tem, your local building departmentmay not have approved one of these systems. If this is the case, you and your PV provider can speed the processby working closely and cooperativelywith your local building officials to help educate them about the technol-ogy and its characteristics.

What about insurance?Your electric utility will require you

to enter into an interconnection agree-ment, described more fully in the nextsection. Usually, these agreements setforth minimum insurance requirementsthat you must keep in force. If you arebuying a PV system for your home,your standard homeowner’s insurancepolicy is usually adequate to meet theutility’s requirements. However, ifinsurance coverage becomes an issue,contact one of the groups under GettingHelp at the end of this booklet.

How do I get an interconnection agreement?

Connecting your PV system to theutility grid will require you to enter intoan interconnection agreement and a purchase and sale agreement. Federallaw and perhaps your state’s public utility commission regulations requireutilities to supply you with an intercon-nection agreement. Some utilities havedeveloped simplified, standardizedinterconnection agreements for small-scale PV systems.

The interconnection agreement speci-fies the terms and conditions under whichyour system will be connected to theutility grid. These will include your

Before connecting a PV system to the grid

15

documentation that specifies informationon system and component warrantycoverage and claims procedures. Toavoid any later misunderstandings, be

sure to read the warranty carefully andreview the terms and conditions withyour retailer.

These amorphous silicon modules are fabricatedon a light, flexible substrate, making themsuitable for roofing shingles. (Warren Gretz, NREL/PIX06283)

14

process (by eliminating the need for asecond meter) and the accountingprocess (by eliminating the need formonthly payments from your utility).Be sure to ask your utility about its policy regarding net metering.

Under the federal Public Utility Regu-latory Policies Act (PURPA), utilitiesmust allow you to interconnect your PV system, and they must also buy anyexcess electricity you generate (beyondwhat you use in your home or business).If your utility does not offer net meter-ing, it will probably require you to usetwo meters: one to measure the flow ofelectricity into the building, the other to measure the flow of electricity out ofthe building. If net metering is not avail-able, the utility will only pay you awholesale rate for your excess electric-ity. In this case, you will have a strongincentive to use all the electricity yougenerate so that it offsets electricity you would otherwise have to purchaseat the retail rate. This may be a factor in how you optimize your system size,because you may want to limit theexcess electricity you generate. This“dual metering” arrangement is thenorm for industrial customers who generate their own power.

What about utility and inspection sign-off?

After your new PV system is installed,it must be inspected and “signed off” bythe local permitting agency (usually abuilding or electrical inspector) andmost likely by the electric utility withwhich you entered into an interconnec-tion agreement. Inspectors may possi-bly require your PV provider to makecorrections, but don’t be alarmed—thisis fairly common in the constructionbusiness. A copy of the building permit

showing final inspection sign-off maybe required to qualify for a solar rebateprogram.

What about warranties?Warranties are key to ensuring that

your PV system will be repaired ifsomething should malfunction duringthe warranty period. PV systems eligiblefor some solar rebate programs mustcarry a full (not “limited”) two-yearwarranty, in addition to any manufac-turers’ warranties on specific compo-nents. This warranty should cover allparts and labor, including the cost ofremoving any defective component,shipping it to the manufacturer, andreinstalling the component after it isrepaired or replaced. The rebate pro-gram’s two-year warranty requirementsupercedes any other warranty limita-tions. In other words, even if the manu-facturer’s own warranty on a particularcomponent is less than two years, thesystem vendor must still provide youwith a two-year warranty. Similarly,even if the manufacturer’s warranty is a limited warranty that does not includethe cost of removing, shipping, andreinstalling defective components, thesystem vendor must cover these costs if the retailer also installed the system.

Be sure you know who is responsiblefor honoring the various warranties asso-ciated with your system—the installer,the dealer, or the manufacturer. The vendor should disclose the warrantyresponsibility of each party. Know thefinancial arrangements, such as contrac-tor's bonds, that assure the warranty willbe honored. Remember, a warranty doesnot guarantee that the company willremain in business. Get a clear under-standing of whom you should contact if there is a problem. Under some solarrebate programs, vendors must provide

15

documentation that specifies informationon system and component warrantycoverage and claims procedures. Toavoid any later misunderstandings, be

sure to read the warranty carefully andreview the terms and conditions withyour retailer.

These amorphous silicon modules are fabricatedon a light, flexible substrate, making themsuitable for roofing shingles. (Warren Gretz, NREL/PIX06283)

14

process (by eliminating the need for asecond meter) and the accountingprocess (by eliminating the need formonthly payments from your utility).Be sure to ask your utility about its policy regarding net metering.

Under the federal Public Utility Regu-latory Policies Act (PURPA), utilitiesmust allow you to interconnect your PV system, and they must also buy anyexcess electricity you generate (beyondwhat you use in your home or business).If your utility does not offer net meter-ing, it will probably require you to usetwo meters: one to measure the flow ofelectricity into the building, the other to measure the flow of electricity out ofthe building. If net metering is not avail-able, the utility will only pay you awholesale rate for your excess electric-ity. In this case, you will have a strongincentive to use all the electricity yougenerate so that it offsets electricity you would otherwise have to purchaseat the retail rate. This may be a factor in how you optimize your system size,because you may want to limit theexcess electricity you generate. This“dual metering” arrangement is thenorm for industrial customers who generate their own power.

What about utility and inspection sign-off?

After your new PV system is installed,it must be inspected and “signed off” bythe local permitting agency (usually abuilding or electrical inspector) andmost likely by the electric utility withwhich you entered into an interconnec-tion agreement. Inspectors may possi-bly require your PV provider to makecorrections, but don’t be alarmed—thisis fairly common in the constructionbusiness. A copy of the building permit

showing final inspection sign-off maybe required to qualify for a solar rebateprogram.

What about warranties?Warranties are key to ensuring that

your PV system will be repaired ifsomething should malfunction duringthe warranty period. PV systems eligiblefor some solar rebate programs mustcarry a full (not “limited”) two-yearwarranty, in addition to any manufac-turers’ warranties on specific compo-nents. This warranty should cover allparts and labor, including the cost ofremoving any defective component,shipping it to the manufacturer, andreinstalling the component after it isrepaired or replaced. The rebate pro-gram’s two-year warranty requirementsupercedes any other warranty limita-tions. In other words, even if the manu-facturer’s own warranty on a particularcomponent is less than two years, thesystem vendor must still provide youwith a two-year warranty. Similarly,even if the manufacturer’s warranty is a limited warranty that does not includethe cost of removing, shipping, andreinstalling defective components, thesystem vendor must cover these costs if the retailer also installed the system.

Be sure you know who is responsiblefor honoring the various warranties asso-ciated with your system—the installer,the dealer, or the manufacturer. The vendor should disclose the warrantyresponsibility of each party. Know thefinancial arrangements, such as contrac-tor's bonds, that assure the warranty willbe honored. Remember, a warranty doesnot guarantee that the company willremain in business. Get a clear under-standing of whom you should contact if there is a problem. Under some solarrebate programs, vendors must provide

17

Getting helpTo get more information on solar electric systems, please contact:

National Association of State Energy Officials (NASEO)1414 Prince StreetSuite 200Alexandria, Virginia 22314Phone: (703) 299-8800Fax: (703) 299-6208http://www.naseo.org/Members/statewebs.htm

Check the above Web site to find the contact for your state energy office, which typically promotes the development and use of renewable-energy resources in your state. They may offer technical assistance, sponsor workshops and forums,and provide general information to resident energy consumers on renewable-energy resources and applications.

National Association of Regulatory Utility Commissioners (NARUC)1100 Pennsylvania Avenue NWSuite 603P. O. Box 684 Washington, D.C. 20044-0684 Phone: (202) 898-2200Fax: (202) 898-2213http://www.naruc.org

The above Web site has a listing of state Public Utility Commissions that you maycontact.

Solar Energy Industries Association (SEIA)122 C Street, NW4th FloorWashington, DC 20001-2109Fax: (202) 363-2670http://www.seia.org

The Solar Energy Industries Association is the national trade association of the solarindustry. Many states have a state chapter of the national SEIA organization, whichcan be checked on the above Web site.

Other Web Sites to Checkwww.nrel.gov/ncpv National Center for Photovoltaics

www.eren.doe.gov/millionroofs Million Solar Roofs

www-solar.mck.ncsu.edu/dsire.htm Database of State Incentives for Renewable Energy (DSIRE)

Printed with a renewable-source ink on paper containing at least 50% wastepaper, including 20% postconsumer waste.

16

17

Getting helpTo get more information on solar electric systems, please contact:

National Association of State Energy Officials (NASEO)1414 Prince StreetSuite 200Alexandria, Virginia 22314Phone: (703) 299-8800Fax: (703) 299-6208http://www.naseo.org/Members/statewebs.htm

Check the above Web site to find the contact for your state energy office, which typically promotes the development and use of renewable-energy resources in your state. They may offer technical assistance, sponsor workshops and forums,and provide general information to resident energy consumers on renewable-energy resources and applications.

National Association of Regulatory Utility Commissioners (NARUC)1100 Pennsylvania Avenue NWSuite 603P. O. Box 684 Washington, D.C. 20044-0684 Phone: (202) 898-2200Fax: (202) 898-2213http://www.naruc.org

The above Web site has a listing of state Public Utility Commissions that you maycontact.

Solar Energy Industries Association (SEIA)122 C Street, NW4th FloorWashington, DC 20001-2109Fax: (202) 363-2670http://www.seia.org

The Solar Energy Industries Association is the national trade association of the solarindustry. Many states have a state chapter of the national SEIA organization, whichcan be checked on the above Web site.

Other Web Sites to Checkwww.nrel.gov/ncpv National Center for Photovoltaics

www.eren.doe.gov/millionroofs Million Solar Roofs

www-solar.mck.ncsu.edu/dsire.htm Database of State Incentives for Renewable Energy (DSIRE)

Printed with a renewable-source ink on paper containing at least 50% wastepaper, including 20% postconsumer waste.

16

A Consumer's Guideto Buying aSolar Electric System

A Consumer's Guideto Buying aSolar Electric System

Cover photo: Hawaii’s Mauna Lani Bay Hotel has acresof roof space, making it the perfect host for a photovoltaicsystem. This installation covers 10,000 square feet andgenerates 75 net kilowatts of electricity.(PowerLight Corporation/PIX 06430)

This Consumer’s Guide is based on a state-specific guide written byTom Starrs and Howard Wenger for the California EnergyCommission, which was supported, in part, by the NationalRenewable Energy Laboratory, in Golden, Colorado.

Produced for the U.S Department of Energy1000 Independence Ave., S.W.Washington, D.C. 20585

by the National Renewable Energy Laboratory,a DOE national laboratory.

September 1999

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