So You’re Thinking About Going Solar

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Residential solar panels

Talk of “going solar” seems to be almost everywhere these days. If it’s not your neighbors bragging about their solar panels or a news report about government incentives, it’s popup ads on your phone or even your friendly neighborhood solar panel representative knocking on your door.

Switching to solar, a renewable source of energy that produces almost zero pollution and replaces other sources of energy that contribute to climate change, is one of the positive contributions we, as individuals, can make for the planet and its current and future inhabitants. If altruism is not a sufficient motivation, however, rooftop solar panels offer the promise of significant economic benefits at seemingly little or no cost.  Eventually, you could reduce or eliminate the portion of your utility payment that goes to pay for electricity, and you could finance the project with virtually no out-of-pocket cost.  As one Providence resident put it, the savings that electricity solar panels have provided is “the equivalent of a $2,000 per year tax free dividend on my initial investment.”

Moreover, because of the Biden administration’s Inflation Reduction Act, you could receive even more financial benefits. The Act provides for a tax credit, thousands of dollars of cash in your pocket in an amount equivalent to 30% of the cost of the installation. Here’s how it works.  If solar panel installation costs $15,000, you can deduct 30% of the cost, or $4,500, from your federal income taxes.

Despite all the benefits, both financial and altruistic, only a small number of Providence homeowners have taken advantage of this program and installed solar panels. According to the Rhode Island Office of Energy Resources, and RI Energy, as of April 2023, only 2,113 homeowners in Providence have installed solar panels. (The number for the entire state is 18,723 households.) What is preventing more Providence homeowners from going solar?  For one thing, the process raises some daunting questions:   Would my house support solar panels? How much will it cost?  How much can I save? Are there hidden costs or problems that show up later? [1] How will solar panels affect the resale value of my home?

Understanding the details of going solar and making decisions about how and when to do it can be intimidating.  Fortunately, there are online sources that make the process easier to understand. One online source can even give you a rough estimate of the up-front costs and savings over time specific to your home. Google has created an on-line tool called Project Sunroof, which can be found at https://sunroof.withgoogle.com/ . Just enter your address and within seconds, the site will tell you: a) the estimated upfront cost of installing solar panels on your rooftop, including incentives; b) how much you will save on electricity over twenty years, and c) how many years of usage until your installation will be paid for by your savings on electricity costs. The site also calculates the amount of sunlight your roof will experience in a year, the number of solar panels that could fit on your roof and the wattage those panels can produce. In sum, Project Sunroof can, within seconds and at no cost, answer many of the key questions you may have about whether it is worth it for you to go forward with installing solar panels on your roof.  

A bird on a solar panel

Another excellent resource is the State of Rhode Island’s very readable 30-page guide to solar panel installation prepared by the Rhode Island Office of Energy Resources, which can be found at: https://energy.ri.gov/sites/g/files/xkgbur741/files/documents/solar/Guide-to-Going-Solar.pdf

The guide clearly describes the basics and provides excellent advice about how to arrange for the installation of solar panels on your house. The Guide serves several purposes: 1) it explains the benefits of going solar; 2) it describes, in plain language, some of the process; 3) it advises homeowners to solicit at least three bids for the work before choosing a provider, a common sense approach for any substantial home improvement project.

That said, there are a few things the Guide does not cover that can only be learned by going through the process itself or by talking to someone who has. Hopefully, this article will provide some of that information as well.  There are several lessons I learned from the process of researching and ultimately deciding to install solar panels on my roof.  This is what I wish I had known before I started the process.

Why do Companies Ask Consumers to Sign a Contract Before Getting an Estimate?

First, while it’s always good advice to obtain multiple quotes before embarking on a big job like solar panel installation, obtaining three reliable quotes from reputable providers is not as easy as it seems.  All the companies with whom I spoke told me they could not provide an accurate quote until they had performed a physical inspection of my roof. Second, each asked me to submit to a credit check and to sign a contract before they would agree to send someone to my house for an on-site inspection. That sounded to me like a Catch-22.   Although each company assured me that I could cancel the contract if the assessment did not match my expectations, the language of the contract was not so clear. 

Apparently, companies are responding to the real-world concern that potential customers were ordering multiple site inspections from different companies and then either deciding not to go through with the installation at all or choosing only one company and rejecting the others.  One company told me that the site inspection cost the company about $500 and if the customer did not end up using them for the installation there was no way they could recoup that cost.

At this point I should say a word or two about the process.  Anyone who has seen the 1987 comedy, “Tin Men,” about a bitter rivalry between two aluminum siding salesmen, can imagine what the solar panel installation sales pitch is like.   Unless you find a way to cut it short, it can take one or two hours, much of which is a long windup to explain how much you will save and how little you must put down–somehow without giving you an estimate for how much the project will cost. One way to cut through this is to get the best estimate you can for how many solar panels can be installed on your roof and the estimated cash cost for the installation of that number of panels.  The key variables are the number of panels and the quality of the panels, as measured by the wattage they are expected to generate, and their efficiency and durability, generally over the course of 25 years. A good salesperson should be able to provide that information with a proviso that the number of panels may change after inspection. The inspection should also answer any questions you have about whether your roof, in its current state, can support solar panels.  If there is any question, you might also consider engaging an independent inspector to assess the condition of your roof.

Cash or Finance?

A second variable that may be of interest to many consumers is the finance terms available. The financing options can be confusing, and this is where comparing one bid against another can become head-spinningly complicated.  The sales pitch is very appealing.  Take the amount you are paying monthly for electricity and apply it to the cost of installing solar panels.  Eventually, once the installation is paid off, your electricity costs will be zero or minimal.  If the cost of electricity continues to rise, as it has recently, your savings will be even greater. 

The less obvious aspect of this arrangement is that the financing terms can vary widely and include not only the interest rate, but also various financing fees built into the cost of the project. According to one estimate I received, the total cost of the project could double over time if the consumer chose the lowest interest rate available.  How is that possible? The finance companies can charge an assortment of fees that substantially increase the overall cost of the project. Any consumer choosing this option should be aware that some financing arrangements that result in a low monthly cost extend the payment period way beyond the number of years it would take to zero out electricity costs if the installation were paid for in cash or through a low interest loan with no fees.  Of course, not every consumer can afford to pay for a project of this size out of pocket and not every homeowner may be eligible for a low interest, no fee home equity line of credit.  Regardless of what option best suits the individual customer’s needs, one should closely examine the financing options to understand both the interest rate offered and the amount of fees built into the cost of the project.

How Many Panels Can I Install on My Roof?

I live in an old house with a funky roof.  When I embarked on this project, I was concerned that my roof could not accommodate enough panels to make the installation worthwhile.  What I didn’t realize was that the size, shape, and sun exposure of my roof were not the only factors used to determine the number of panels my roof could accommodate.  Another factor was what my actual electricity usage was for the past 3 years.

It came as a shock to me that while our federal government is offering very generous incentives to go solar, our state government limits just how far we can go. In an apparent attempt to appease the utility companies, Rhode Island lawmakers have agreed that residential solar panels are only permitted to the extent that they meet the customer’s current (meaning the previous three years’) electricity needs.  In other words, while the federal government is offering generous financial incentives to install solar panels, the Rhode Island state government limits the number of solar panels any individual resident can install. Even if you have a large, south-facing roof that could accommodate enough solar panels to generate twice as much electricity as you need, the State of Rhode Island will only allow you to install enough solar panels to cover your current needs.

There is some logic to this policy. Everyone needs electricity but not everyone has the option of generating electricity through their own solar panels. The cost of electricity includes not only the source, that is: solar, wind, coal, or natural gas, but also the infrastructure that delivers electricity to our homes. By going solar, you are replacing the utility’s need to pay for other sources for electricity, but the delivery infrastructure costs are still borne by the utility, and those costs will be passed on to the consumers who are still paying the utility for their electricity. Moreover, let’s not forget that a utility is a for-profit monopoly that answers to its shareholders.

While there may be some logic to this policy, Rhode Island state law is limiting the pace at which society switches its energy sources to non-polluting, renewable sources even at a time when the federal government is subsidizing that conversion.  There should be a more enlightened policy that allows the maximum use of solar energy while fairly spreading the cost of the distribution infrastructure.

Until there is some legislative change, Rhode Islanders are limited in how much solar power they can generate by the physical limitations of their homes and their most recent electricity usage. There are currently bills pending in the Rhode Island Legislature that address this issue and would lift the cap on the number of solar panels a homeowner can install.[2]

Solar Panels and Resale Value

Some homeowners are concerned about how rooftop solar panels will affect the resale value of their homes. We spoke with one real estate broker specializing in home sales on the East Side of Providence. According to her, the presence or absence of solar panels should not be a significant factor in a resale. The cost of most homes in that neighborhood is in the high six figures and greater, and the cost of installing solar panels or removing solar panels is just not significant enough when compared with the overall sales price.  That calculation may change in neighborhoods where the median sales price is much lower.

What about Renters? Can Renters Go Solar too?

All the above information is relevant to Providence residents who own their own homes.  What about the tens of thousands of renters in Providence? Is there a way for them to go solar? According to the Rhode Island Office of Energy Resources, Rhode Island has programs that enable renters to access solar energy as well.  Such projects involve so-called “community solar projects.”

“A community solar project is a large solar farm shared by more than one household. Its primary purpose is to allow members of a community the opportunity to share the benefits of solar power even if they cannot install solar panels on their roof or property. Program participants benefit from the electricity generated by the community solar farm, which costs less than the price they would ordinarily pay for electricity.  Through community solar programs, renters, homeowners, municipalities, and non-profits can participate in clean energy projects and save money on their monthly electricity bill. Community Solar in RI usually guarantees energy savings of around 10%.” More information about the Community Solar Marketplace is available at: https://risolarmarketplace.com/

Conclusion

One final word of caution. Many Rhode Islanders are in the process of installing solar panels on their homes. While that is good for them and good for the planet, it could mean longer wait times for individual consumers. Part of the wait time is due to the limited supply of solar panels and part is because the relevant utility must sign off on each installation before it can be connected to the grid. Anyone deciding to install solar panels now should start the process as soon as possible because it may be a matter of months before you can begin experiencing the benefits of going solar.

In sum, everyone who is able should consider solar panels along with other forms of renewable energy.  While it requires a certain investment of time, energy and attention to understand your options, and a certain amount of patience to listen to and understand the sales pitches of the various providers on the market, at the end of the day, it will probably be worth it for your pocketbook and, certainly for the planet and current and future generations to go solar.


[1] https://turnto10.com/i-team/solar-panel-installation-nightmare-west-warwick-rhode-island-homeowner-new-roof-contract-financing-company-rainwater-damage-insurance-office-of-energy-resources

[2] https://ecori.org/proposed-legislation-would-bolster-renewable-energy-protect-core-forests/ (“Lawmakers are also seeking to expand the caps on the regular net metering program through legislation (S0506). While the regular program allows homeowners and businesses to install solar panels on their roofs, how large the installation can be is dependent entirely on a three-year average of electricity consumption.”) SO506 is sponsored by Senators Valverde, DiMario, Murray, Miller, DiPalma, Pearson, Euer, Tikoian, Ujifusa, and Gallo. If you support the expansion expanding the number of solar panels you can install on your roof then let these representatives and others know that you support this bill.

Ira Belkin is a retired lawyer and professor.  He worked at the Ford Foundation in Beijing working to support Chinese institutions building the legal system there.  Now, he is a Board member of The Providence Eye and is focusing on issues closer to home.