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Common Questions About Solar Energy

How Does Solar Energy Work?

Solar PV (Photovoltaics) works by taking the energy from the sun’s rays and converting it into electricity. The sun’s rays contain photons. When these photons hit a solar module, electrons inside of the solar module move and an electrical current is created. This electricity then travels from the solar array to an inverter. The inverter takes the electricity which is in DC form and switches it to AC. Once that switch is made to AC, the electricity is ready for use. From the inverter, the power is fed directly into the main electrical panel and can provide power to the site. If the site demands more power than what is provided by the solar it will pull from the grid. If the sun produces more than the site needs, then that overproduction is put back into the grid for a credit in a process known as Net Metering.

What is Net Metering?

Net Metering is a billing mechanism which allows grid-tied solar producers to put electricity that they do not use from their solar array back into the grid. When the solar produces more power than the site needs, the utility meter spins backward and the account holder will have a credit against future energy use. The solar producer is then billed for their total “net” usage at the end of the month which is the balance between the power pulled from the grid and the power put back into the grid.

What is the Solar Tax Credit?

The Solar Investment Tax Credit (ITC) is a dollar-for-dollar federal tax credit which reduces a person or business’ tax liability based on the amount they have invested in a solar energy project. The residential and commercial ITC are both worth 30% of a solar project’s cost. For example, a $10,000 solar electricity system will be eligible for a $3,000 federal tax credit. Solar projects will be eligible for the 30% tax credit through 2019. After 2019, the ITC goes down to 26% in 2020 and 22% in 2021. After 2021, the residential ITC will drop to zero and the commercial ITC will drop to 10% permanently. Customers that purchase or finance their system through a solar loan are eligible for this incentive.

What is an SREC?

SREC stands for Solar Renewable Energy Certificate and it is a tradable certificate that represents all the clean energy benefits of electricity generated from a solar electric system. Each time a solar electric system generates 1,000 kilowatt-hours (1MWh) of electricity, an SREC is issued which can then be sold or traded through an on-line SREC broker, such as the Flett Exchange, SREC Trader or directly posted on the NJ Clean Energy Website. A grid-connected solar electricity system is eligible to collect SRECs on all energy produced by the system for a 15-year period. The price of an SREC can fluctuate based on the market’s supply and demand as determined by New Jersey’s Renewable Energy Portfolio Standard (RPS). In other words, the utility is required to produced renewable energy, and if they do not produce the amount defined in the RPS, they pay a fine. To avoid paying that fine, they can buy SRECs from solar energy producers to satisfy their requirements. Green Power Energy provides an SREC brokerage program for our customers which can greatly simplify the process by selling the SRECs produced by the solar electricity systems we install.

How Much Does Solar Cost?

The price to purchase a solar panel installation can vary depending on several factors. These factors can include electrical usage of the site, the location of the solar array (i.e. ground mount or roof mount), quality of components, and site constraints. The cost of solar has gone down in recent years. In 2016, the average price of a system from Green Power Energy was $38,000 with an expected Return on Investment (ROI) of approximately 6 years. Most solar customers, however, go solar for $0 down through one of our “Free” solar options. These options allow you to pay nothing up front and still be cash flow positive from day one thanks to the electric savings and the available incentives.

What is Free Solar?

“Free Solar” or “$0 Down Solar,” refers to financing the solar installation through a third-party financer. This option is “free” in the sense that there is no up-front financial obligation. Once a solar agreement is signed, the homeowner will generally not have to pay until one month after the installation is complete. From that point, they are expected to pay monthly for the system throughout the contracted term. In a Solar Lease or Solar PPA, the homeowner should expect to save monthly because their contracted solar price should be less than the price from the utility company. With a Solar Loan, the homeowner will experience utility savings plus available incentives. According to SEIA.org, as of 2013, 90% of solar projects in New Jersey were installed by means of a third-party financing provider. To qualify for “free solar,” the site must be conducive to solar and the site host most pass a credit check.

What is the Difference Between a Solar Lease, Solar PPA, and Solar Loan?

The three types of finance solar options are a Solar Lease, Solar PPA, and Solar loan. A solar lease allows you to pay monthly for your solar array. A solar lease can be as low as $0 down with recurring monthly payments for what is generally a 20 or 25-year contract. Most homeowners can expect to save a considerable amount of money throughout the term of their solar lease since their monthly solar lease payment will in most cases be less than the cost to purchase power from the utility. Many solar leases also have a production guarantee to help ensure these savings. However, with most solar leases, homeowners are not entitled to the SRECs and the Tax Credit. A solar PPA is very similar to a solar lease, except the monthly payment can vary based on the amount of energy produced by the system in a given month. Also known as a Solar Power Purchase Agreement, a PPA allows the homeowner to purchase the power produced by the panels at a fixed kWhr rate. A solar loan is becoming the most popular finance option available. With a solar loan, you pay no money upfront but do make payments over a specified term. In a solar loan, you own the system and are entitled to the SRECs and Tax Credit, making this the most financially attractive option available. For all three types of financing, you must own the home, have a site conducive to solar energy, and pass a credit check.

How Long Does a Solar Installation Take?

With Green Power Energy, your solar installation is a turnkey package. We handle the permitting with the township, and the approvals with the utility company. Generally, the time frame between sign up and installation is 12-16 weeks. This allows for time to engineer the system, submit for approvals, obtain approvals, and procure equipment. The actual installation will only take a few days. Be aware, it may take a few weeks after installation before you are issued your formal “Approval to Operate” from the utility company.

What Is the Lifetime of a Solar Installation?

Most solar equipment is warrantied for 20 + years. We expect the solar arrays we are installing today to be viable energy producers for 20 years. Inverters may need to be replaced between years 12-20, but this cost is minimal compared to all the other system components. A roof mounted solar array will extend the life of a roof, however, if the roof is already older than 15 years old we recommend reroofing beforehand.

What is a Solar Inverter?

A solar inverter takes the DC current produced by the solar panels and coverts it to usable AC power. Common inverter types include, Central Inverters (aka String Inverters), Microinverters, and Power Optimizers. A Central Inverter system is comprised of one or more inverters which can be located on the inside or outside of the site. This device switches the power produced by the panels from DC to AC at a centralized location. A Central Inverter system is considered optimized when each module, or in some case every other module, is equipped with an optimizer which regulates voltage and gives the panel the ability to perform individually from the rest. This separation in performance is also seen in a microinverter system. With a microinverter system, the inverter is located underneath every solar module. The stand-alone ability of this arrangement can add efficiency to the system by allowing peak performance in shaded or less optimal solar sites. In addition, it can also have benefits in case of module failure. In a microinverter system, if one module is down or experiencing shading, the rest of the solar array can still operate at peak performance.

What Happens When my Power Goes Out?

In order for the solar to operate and for the inverter to turn on, power must be detected from the solar array as well as the grid. This means that in the case of grid outage, the solar inverter and your solar array will shut down. This serves as a safety precaution. As your system can back feed to the grid, a live system can pose a hazard to utility workers down the line from your system. There are some inverters on the market that have a plug-in feature which allows you to use a small amount of power from the system while the sun is shining. The only way to have full power during an outage is to invest in a battery backup system which are available for sale from Green Power Energy and are becoming more and more cost effective and efficient each year.

How is Solar Attached to My House?

Solar modules are mounted on top of solar rails which run across the roof as the mounting system for the solar array. The solar rails will have several penetration points throughout their span which connect directly to the rafters of the home. Before receiving the approval to build from the township, we must submit an architectural letter with our permits proving the structure’s integrity. This letter shows that the roof can not only withstand the weight of the solar modules, but also the weight of panels in hurricane force winds and under extreme snow loads. The penetrations into the roof are protected by a flashing mechanism which is guaranteed to protect against leaks. Solar panels will extend the life of the roof and Green Power Energy goes one step further by installing “pest guards” around all our solar arrays to insure the space in between the roof and solar modules is clear from any critters. The space between the solar modules and the roof is approximately four inches.

Will Solar Increase My Property Taxes?

In New Jersey, solar is exempt from a property tax increase. Also in New Jersey, solar is exempt from any sales tax.

What is The Return on Investment (ROI) of Solar?

In New Jersey, with SRECs, the Solar Tax Credit, and utility savings, the average return on investment for a residential solar array is just 6 years. For example, a $20,000, 6 kW Solar Array may produce 8,000 kWhrs of solar per year. The net cost of a $20,000 system after taxes is $14,000. After that, at .18 cents per kWhr from the utility, this system will produce $1,440 of electricity per year, and at $200 per SREC, produce $1,600 in SREC income. This results in a 5.5-year ROI. Commercial Solar will have an even quicker ROI due to the Depreciation schedule available to many building owners.

Why Should I Go Solar?

Going solar creates a great investment and revenue stream on your home and also has positive environmental implications. Going solar will provide a strong ROI for those looking for an investment, and can even provide monthly cash savings for those who finance. By going solar, you are creating clean power on your own property and reducing the need for electricity from power plants powered by fossil fuels. A solar array that produces 5,000 kWhrs annually will save the equivalent of 1.875 tons of coal from being burned each year.

What Happens When I Sell My Home?

When you own the system outright, the system can stay on the house and become the property of the new homeowner. You also can remove the components and ship them to your new location, although that may prove to be more trouble than it’s worth. You can also retain the SRECS produced by the system even after you move since the SREC account is in your name. Some homeowners will leave the SRECs with the new homeowner and others will keep them for themselves. Most solar leases are completely transferable over to the new homeowner. Most loans are also transferable over to the new homeowner but not all are. Be sure to verify what the process of transfer of ownership is with your financed solar array.

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