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A Know-It-All’s Lexicon To Solar Energy – Know What The Pro’s Do!

Some terms that will guide you while using solar energy

Going solar can be made very easy by using tools to calculate your solar saving and comparing quotes of pre-screened solar installers. With all the terminology used in solar energy, shopping for solar can be very confusing. Below is an index of solar energy terminology to help you understand solar terms and comprehend all the available options.

Terms related to Solar Panel.

  • Azimuth: The position your roof faces. We measure azimuth in degrees, the angle between the roof of the house, and the true north is azimuth.
  • Building-integrated photovoltaic (BIPV): This is also known as a solar shingle. These kinds of solar panels are usually integrated with housing roof tiles instead of placing it on the top of the housing roof.
  • Inverter: This is the part of a solar panel system that changes the electric current into a form which is usable in the home.
  • Kilowatt-hour (kWh): This is the unit for measuring electric current. In 2014, the use of electricity in the average U.S. home was at about 911kWh per month.
  • Off-grid: This is a total disconnection from the electric grid, with no means to connect to utility-generated electricity. Houses that go off grid need to produce most of the electric current on-site.
  • Photovoltaic (PV): A kind of equipment that produces an electric current from sun-lights. Solar panels are photovoltaic equipment.
  • Power rating: This is the theoretical power output that the solar panel produces in its normal conditions. The quality of the solar panel can be rated by the power rating. A lot of solar panels do not have the best possible conditions for more than a few minutes.
  • Solar panel efficiency: It shows how efficiently a solar panel converts sunlight to electric current. The efficiency of most solar panels is about 14-16 percent; the highly rated solar panels are well above 20 percent.
  • Solar-plus-storage: An industrial term used for a solar energy system that involves a battery for storing excess solar energy, unofficially known as solar batteries.
  • Temperature coefficient: This shows how well the solar panel does in high-heat states. High heat does not have a positive effect on the performance of the solar panel just like other electronics.

The Concepts of Solar Pricing and Policy

community solar
  • Community solar: This solar power plant is usually distributed to more than one household, mostly framed as another option to rooftop solar. Also called a solar garden alternatively shared renewable energy plant.
  • Federal investment tax credit (ITC): Normally known as the solar tax credit, the ITC effectively cuts the full price of your solar energy system by 30 percent with a deduction to your federal taxes. It is known as the ultimate monetary incentive for solar in the U.S.
  • Grid Parity: The level at which power produced by solar panels cost less or the same as power from common resources like natural gas. Solar is already a pattern parity in 20 states.
  • Levelized cost of energy (LCOE): This is the cost of each unit of a solar energy system. LCOE is gotten when we divide the out of pocket cost for the system by the calculated total amount of energy the system will create during its lifetime.
  • Net metering: The excess electric current generated by a solar panel is credited to you, then whenever the solar panels do not generate sufficient electricity to meet up the rate of your use. With the net metering, you can efficiently use the electric grid to “save” excess electric current for future use.
  • Property-Accessed Clean Energy (PACE): A unique kind of loan that is paid back through a yearly assessment on your tax belongings bill. PACE financing could be used to connect a solar PV system, alongside other pure energy improvements.
  • Payback period: This is the period of time it takes to pay for the solar energy investment. Seven years is the average time most homeowners are given to pay for the solar investment in the U.S.
  • Performance-based incentive (PBI): This is a monetary reward for solar that pays the homeowner based on the rate of energy generated by the solar system. It is paid based on the rate of electric current produced per kilowatt per hour. A type of PBI is known as the feed-in tariffs.
  • Power purchase agreement (PPA): A binding agreement with the solar company to connect the solar energy to the rooftop of your house, with this solar contract (PPA) you will be paying the solar company per kilowatt-hour amount for the electricity generated by the solar panels.
  • Solar lease: A signed contract by you and the solar company to install the solar panel on the roof. Using a solar lease, when you agree to the contract, you agree to pay a monthly fee to rent the system in exchange for the electric current the solar system gives out.
  • Solar lease escalator: A part of a contract of most leases and PPAs that result in increment or raise in payment rates by a fixed amount per year. A common escalator is 2.9 percent.
  • Solar loan: A credit given by the bank, credit union, or special providers of finance to cover the expenses of buying a solar PV system.
  • Solar renewable energy credit (SREC): SREC is generated alongside every element (unit) of electric current that the solar panel system produces. SREC is sold for more income in some states.
  • Third-party owner (TPO): This lease or PPA, a solar company which is the owner of the solar system. By signing the solar lease or PPA, you agree with the third party owner.
  • Helpful tips to learn more about solar energy terminology and help you understand solar terms and comprehend all the available options.

The Most Valuable Home Improvement Project in The History of The Universe

How I Added $30,000 to The Value of My Home with This FREE Home Improvement Project

Note: This project was essentially “free” because it required no money out of pocket beyond what I was already spending on my home energy costs.

When I decided to invest in a PV (photo-voltaic, otherwise known as “solar”) system for our home last spring (2018), it wasn’t because I needed to increase the value of my home.

And it surely wasn’t because I was looking for a fun home improvement project to work on.

Quite the opposite, I’m a man with little to no extra time on my hands, and very little patience to try new projects that will no doubt end up in misery and regret, taking me twice as long as it would take a pro, and probably just as much money.

Bottom Line

For those wanting the bottom line evidence, click here to read details on home valuation before solar vs. after solar, one year later.

A Personal Choice

I decided to invest in solar, like many, because it made great financial sense. Even though it may take up to a decade for the amount I would pay the utility anyway, to add up to what I’ll have invested in my solar system, it still made sense, because eventually, I would be “free” and clear of paying for (investing in) someone else’s infrastructure. After the loan is paid for, I expect my energy costs from the utility to be close to zero, probably until 30 years from now when I may eventually need an upgrade.

I was able to pay for my system slowly over time with no down payment beyond what I opted to pay from the bonus tax credit I would be qualified for, and receiving about a year later in April 2019.

A Huge Incentive

In 2018, I had started a new job and was making a decent salary. Even with the income tax deductions of children, children’s private schooling, and a few minor business write-offs and charitable giving, I learned from my tax advisor that I might still qualify to receive all of my 30% solar energy incentive tax credit (ITC), even though my income was well below $100,000 and I was the single income provider for my family.

solar tax credit
The Federal Solar Tax Credit (also known as the Investment Tax Credit or ITC) incentive

This meant a refund, just for the Solar ITC, that is equivalent to 30% of the total price of my system. It’s essentially like working a few months with tax-free, and investing in an asset for my home at a discount.

Because the solar company had great financing and a program where they would allow up to a year and a half (18 months) from the time the system was installed for me to make a down payment using the “free” ITC money, I was able to start off with a really low monthly payment, and keep that monthly payment low for the entire term of the loan as long as I paid the ITC back into the loan (or the monthly amount would adjust upwards at month 19).

And even if I didn’t qualify for the full 30% ITC this year, I could apply any remaining balance forward onto next year’s income tax return, and the following three years after that if needed. There was a high probability I would qualify for most of it even before the rollover period expires.

Caveats

As potential sellers of our homes, it’s important to consider where the value is in the mind of a prospective buyer. Not all buyers will want solar on their home. Certainly, the neighborhood, curb appeal, schools, floor plan, cleanliness of the home, and layout of the property are all very important factors. Something else to consider in the 21st century is the cost of utilities and property taxes which all factor into affordability measures (and seem to be ever-increasing).

And no, adding a system won’t increase your property taxes. Section 73 of the California Revenue and Taxation Code allows a property tax exclusion for solar energy systems installed before December 31, 2024. (https://www.energy.gov/savings/property-tax-exclusion-solar-energy-systems)

Conclusion

Now that I “own” my power with an attractive, high-performing solar energy system, and have a low and steady (never increasing) monthly energy payment (solar loan), I’m confident my home is more valuable than if it did not have solar.

Do your research and decide for yourself if an investment into your own energy-producing asset is right for you.

Some Additional Facts and Resources to Consider

According to Zillow.com, the estimated value of my home in Redding, CA increased from $473,700 in March 2018 (when solar was installed) to $562,804 in March 2019 – an annual increase of 16% (about $90,000). This was in a local market that suffered the worst October on record since 2011, and a year that saw the average home across the U.S. increase in value by only 4.4% (https://www.reddinghomes.com/blog/4-reasons-buy-home-spring/).

Solar Energy System Increased Home Value Beyond Normal Market Increases

A steep increase was recorded in the Zillow Estimate (Zestimate – Value Tracker) soon after installing the solar system. This may have been primarily due to the fact that home prices typically go up in spring and summer because of more sales on account of better weather.

I am highly confident though, that even if I sold my home the day after installing my system, the home would have sold for more money, even close to what the added system cost was.

More Evidence, Solar Adds and Retains Value

Here is a study conducted by a group of economists on solar system value and home prices in San Diego and Sacramento counties from 2003-2010 (including the real estate recession years). The result: on average, homeowners in California recovered 97% of their system costs–and that’s not even factoring the annual energy savings. (https://www.forbes.com/sites/ashleaebeling/2011/08/01/how-much-do-solar-panels-boost-home-sale-prices/#276153fb11f2)

Lawrence Berkeley National Lab (LBL) conducted a study that concluded homes in California with a system size of 5KW should add $20,000 in extra value to a home and a 10KW size system would add $40,000 in value. (https://emp.lbl.gov/publications/selling-sun-price-premium-analysis)

More on Solar Savings here.

SOLAR TAX CREDIT – What You Should Know About The Federal Incentive Tax Credit For 2019

In 2015, solar companies and homeowners using solar power were relieved when the federal spending bill of 2016 was approved by the legislature, and a tax credit for solar power given renewed life.

The bill which was passed into law on December 18, 2015, contained the extension of the tax credit of this energy incentive for 5-years, thus making solar powered energy more accessible for every American citizen.

Are you skeptical on the impact that this will have on you? Contact Us

Meaning of Solar Tax Credit 

With the Federal Investment Tax Credit (ITC), 30% of the amount spent to install a solar system, is subtracted from your federal levy. This solar tax credit has no specific value and is applicable to both private and public systems. 

In 2019, the average amount a Next Level solar customer may save from the installation of a solar powered system is more than $5,000 due to this benefit.

Impact of the Federal Solar Tax Credit Extension on the Energy Industry 

The Federal Investment Tax Credit (ITC), established in 2005 by the Energy Policy Act, was to expire by 2007. But, due to several extensions, the expiration was pushed to 2016, then the industry’s experts suggested that the solar industry may fully mature if not extended by another 5-years. 

With the spending bill passed into law in December 2015, homeowners can now access the credit until 2022.

Solar Incentive Tax Credit (ITC)
Solar Incentive Tax Credit (ITC)

Here is the breakdown: 

2016 – 2019: This ITC is placed at 30% of the cost of the Solar system to go live. It means that solar systems can still be purchased at a discounted price in 2017.

2020: 26% of the cost of solar systems may be deducted from the levies of new private and public solar system owners. 

2021: 22% of the total cost of this system may be subtracted from the taxes of new private and public solar system owners. 

2022+: 10% of the cost of solar systems may be deducted from the taxes of new public solar energy system owners starting in 2022 an on. This is not applicable to residential solar energy systems.

Are You Qualified for This Solar Tax Credit? 

You can only be qualified for the solar tax credit if you own (or purchase, not lease) a solar powered system. If your tax liability is not enough to claim the full credit in a year, the leftover credits can be rolled over for future use, up to three years forward. Unused commercial credits can be carried forward for up to 20 years. 

One thing you must know is that, by signing a lease (or PPA) with a solar installer, you cannot claim ownership of the solar system, neither will you receive the tax credit for it.

How To Claim The Solar Tax Credit 

The solar tax credit can be claimed by filing your annual federal levy returns. However, you must inform your accountant of your new solar system in the previous year, or you can use Next Level Energy’s guide (coming soon) to claim your Solar Investment Tax Credit if you’re filing an individual tax return. 

Solar Tax Credit

Why Solar? – These 6 Reasons May Convince You To Go Solar

There are lots of benefits attached to going solar. Among its numerous advantages, the top reasons why you should consider going solar is energy costs reduction and environmental improvement. A lot of people know fully well that solar is a great option for your home efficiency upgrade as it improves property value.

Whatever could be your reason for going solar, maybe it’s personal, environmental, or economic related, we are presenting you this ample list of solar power benefits.

Relax and prepare your mind as we take you through this top six reasons why you should consider solar energy in your home today.

These 6 reasons should convince you to go Solar

1. Your electric bills get reduced drastically if not completely eliminated.

It doesn’t matter if you’re a homeowner, business, or nonprofit, just your electricity bill could sum up your largest monthly expenses. If you have a solar panel system, you can produce free power for your system’s entire 25+ year life cycle. Solar will help you save a lot of money with a significant reduction in your utility bills either you produce 100 percent of the energy you consume or not.

2. Receive a great return on your investment

One of the best ways to invest is solar. Solar panels aren’t in any form an expense. The returns you get from investing in solar is transcendent to other traditional investments like bonds and stocks.   Average American homeowners can now procure their own solar panel systems by paying off in seven to eight years. Sounds good right? not just that, they also get to receive a minimum of 20 percent ROI. This is all thanks to substantial electricity bill savings.

cost effective solar panels
3. Protection against rising energy costs

With the use of solar panels, you hedge utility prices. This is no doubt one of its laudable benefits. In few years back, residential electricity prices often increase on an average of three percent annually. When you invest in solar now, you have the ability to set your electricity rate and stay protected against unexpected increments in electricity costs. Either you are a homeowner or business with an uncertain cash flow, solar helps you manage your expenses judiciously with a better forecast.

 4. Jobs creation and assist your local economy

In accordance with The Solar Foundation, the solar industry has served as an icon of job creation in the US at an incredibly immense rate by representing 1.2 percent of all jobs in the country. This outgrowth is likely to continue. Jobs that are solar-related pay higher and can’t be outsourced. They are substantial contributors to the United States economy.

5. Increment of property value.

Diverse studies reveal that homes that are furnished with solar energy systems have higher property values which help them sell faster and richly than homes with no solar. A home that is installed with solar gains attraction, consideration and recommendation from appraisers. With the advent of more knowledge about solar, homebuyers are more interested in properties equipped with solar panel systems, thus, increasing the demand rate of such houses.

6. Protect the environment

The best way to reduce your carbon footprint is through solar. 38 percent of all carbon emissions in the United States comes from buildings. This simply illustrates that the number of carbon emissions can reduce significantly when people go solar.