More than a year ago, the California Public Utilities Commission revised the state's rules for installing solar modules on rooftops. In its December 2022 decision, the Commission added incentives to combine solar power with batteries, but the new rules also significantly reduced net energy metering (NEM) compensation rates.
According to Energyage's deal comparison tool, new panels can be a serious investment and cost an average of $2.8 per watt, including installation. “For a 5 (kilowatt-hour) system, the amount is approximately $14,004, although prices range from $11,903 to $16,105. According to the federal tax credit, the average price decreases by 30 percent," the website states.
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NEM 2.0 expires in April 2023, so the new NEM payment rates that solar customers receive if their rooftop systems produce more energy than they consume are the only option for new solar systems.
Because current export tariffs, which compensate the solar module owner for excess electricity the modules feed into the grid, are 75 percent lower under the new rules, the bill for new installations has changed.
The investment pays off later, and then it is important to add the battery, which increases the cost of acquisition. Tax credits have certain advantages. But other major incentives have recently expired or are set to expire this year.
Is increasing solar energy useful in this context?
Many owners say no. The number of solar systems will decrease dramatically in 2023.
"Electricity surveys show solar sales under NEM 3.0 down 66 to 83 percent in one year," PV Magazine USA reported in December. "In addition, there have been massive layoffs in the industry." The California Solar and Storage Association, a clean energy trade group, said more than 17,000 solar plants, or 22 percent of all solar jobs, will be lost by 2023.
However, solar experts say installing new modules still helps in some cases.
Faced with this radically changed landscape, the Union-Tribune asked three experts: Is it a good idea to invest heavily in rooftop solar systems?
Experts |:
Their answers, easily worked out in terms of bandwidth and length, refer to consumer solar systems connected to investor-owned energy providers such as San Diego Gas & Electric.
Add solar power under new rules
Question. Should consumers install solar modules today? If so, why?
Teresa: According to (current payment rules) solar doesn't make much sense for most homeowners if their return on capital d. Your savings on bills will be negligible. The advantage lies in energy storage technology. It has become the best advantage to save money. Energy can be stored in the battery until it is needed if electricity rates are at their highest.
The number of variables and considerations when deciding on the right solar and battery system has grown exponentially. The question is no longer "How much electricity should I produce?" But "What time of day do I use it?" The question "What will my future electricity needs be?" ” should be taken into account. For example, buying an electric car, switching to heat pump heating and air conditioning.
Hickey: Savings depend on ROI analysis, length of stay at home, total system costs, payment method and specific solar incentives. Can you afford the acquisition costs? Are you planning to stay at home for a long time? Most homeowners move out after (on average) six years. The estimated payback period for a new solar system is currently about seven years. With increasing backup (battery) system costs and reduced energy costs being returned to SDG&E, the average payback period for the new system is expected to increase to 10-12 years.
Many customers do not have the money to pay for a solar system up front. In addition to the total costs, interest on the purchase of the systems and loan fees must also be added, which in turn increases the profit margin in the case of financing.
The percentage of electricity consumed directly by a household can also affect long-term savings. San Diego has low net rates. if you feed excess solar energy into the grid, only a fraction of your sales value is returned. However, if you install solar, you can reduce grid usage at night and on cloudy days, resulting in greater savings on your electricity bills and a faster return on capital.
Del Chiara. Yes, it still makes sense for most consumers to generate their own electricity with rooftop solar installations. Consumers may wait more patiently for their initial investment to pay off or be willing to contract to purchase electricity from a third-party installer, but savings can still be made by outfitting their home with solar panels. Repair. Indeed, with a solar system on your roof, you can ensure your electricity production for the next 20-30 years.
If you do the math, most consumers will spend $60,000 or more on electric bills over the 20-year life of a solar system. So if you look at it over the long term, it remains an easy investment. And if you sell your home within those 20 years, the solar system will increase the selling price.
I would like to point out that upfront costs are not taken into account if you enter into a power purchase agreement when a third party owns your solar and storage systems.
Ask: Are certain types of solar installations suitable or more profitable under the new regulations?
Del Chiara. The answer is simple: there is no consumer profile or criteria for a good solar user. The important thing is a south or west roof without shade or a property with space for the property. The more electricity you use, the more you can save with solar, but solar works for all types of consumers. However, the CPUC has recently rated solar more poorly for multi-meter properties, such as apartments, than for single-meter properties, such as single-family homes. Some homes can still use and benefit from solar panels, but unfortunately the Commission has made it much more difficult. This applies to schools, farms, shopping centers and other consumers of multimeters.
Question. Is it better to scale from the start or add more as your needs grow?
Teresa: Our experience shows that homeowners increase their electricity consumption after switching to solar systems. Because now they can afford to run an air conditioner in the summer, upgrade to a heat pump, or buy an electric car because the cost of charging that car at home is a fraction of what it would cost to charge up a gasoline car. . Means of transport:
Del Chiara. The best thing that can be done is to predict the growth of electricity consumption and size the system accordingly for the future. A customer can add up to 150 percent of the electricity used in the past 12 months with a solar system. (150 percent is the rule.) Even though solar systems are modular, that means you can easily add components, like a Lego set, which is cost-effective. As you grow, you may not have the right size inverter, which can cost $5,000 plus installation.
You can also add a battery later for free. However, sometimes a new battery-compatible inverter is required, which may incur additional costs. The short answer is: you can make changes at any time, and with solar power it's relatively simple. But it's much more efficient in terms of time and money if you know exactly what you want from the start and build your solar system accordingly.
However, I sometimes see consumers overthink their decision and this indecision leads to years of delay. Years where they could save hundreds of dollars every year.
Accumulators, accumulators and virtual power plants
Question. Is it possible to do without storage or does that negate the benefits of solar?
Hickey: Storing excess solar energy in storage rather than selling it to SDG&E at a lower cost helps customers get a faster return on their investment. When you store electricity in a battery and use it later, you save the full cost of each kilowatt hour of energy.
Without the battery, if you sell the excess electricity at (current) prices, you only make a few cents per kilowatt hour of electricity. Current policies pay about 75 percent less for excess solar power than before.
Teresa: Today, the optimal solution is solar energy. This is a high initial investment that extends the payback period. However, it offers the homeowner the same energy saving benefits as a modern solar system. The battery can take on additional functions, such as: B. Backup power in the event of grid outages and help create a more resilient California grid through innovative programs such as virtual power plants.
Homeowners using a net metering compensation system have their contracts effective for 20 years from the date the system is installed. The CPUC and some members of the California Legislature are cautiously trying to limit or modify these agreements with landlords. In older systems, owners mostly used the battery as backup power only in case of a power outage.
However, as virtual power plants become more common and stored battery energy becomes more valuable to the grid, customers using earlier offset systems will realize and understand that battery installation can provide them with additional savings compared to pure solar power plants. Also, as B. Utilities If batteries change their pricing structure in terms of time-of-use or TOU under NEM 2.0, they will ultimately make more sense because they will get more value to balance battery usage. units of what is injected for the network. NEM loans.
Del Chiara. If you as a consumer are considering going solar today, under (current) policy, the time to pay for your solar and storage system is less than the time to get started; to pay for a solar system. So it's a better deal if you add a battery. This is due to the high evening rates that batteries avoid. However, the downside is that the initial cost is higher if you add a battery.
While these higher upfront costs will eventually be paid off and are therefore still a valuable investment in your home, many consumers still cannot or are not comfortable financing them. This is why we are currently having so much trouble selling systems. CPUC greatly simplified the consumer experience during the development of NEM 3.0. Just because you make the combined technology (solar + battery) a better deal for the consumer doesn't mean they have an incentive to spend more money. More often than not, expensive items are worth more to the consumer, but if you're middle or working class, you can't always afford to spend more. Hence the decline of our market.
The battery adds about $15,000 to $25,000 to solar costs. That's a big increase in the upfront payment, but the federal tax credit reduces it by 30 percent if you owe enough tax.
H. What is a virtual power plant?
Teresa: Virtual power plant programs create an income stream for homeowners through battery-stored energy. Currently, about 400 owners participate in the program. They all get some money for using the battery, but it will become an increasingly important component of power generation, storage and management.
To get the best deal
H. What can a consumer do to get the best deal on a solar system? Do companies ever offer promotions? Will the panels sell?
Teresa: All solar companies offer promotions from time to time. The best time to invest in a solar control system is generally the "off-season" - late summer and winter - as demand drops and contractors try to hire staff. If we wait until summer, when homeowners expect higher energy bills, demand is usually very high.
Hickey: It is recommended to install solar modules in the year when the customer's tax burden is high. Learn about current incentives at the federal, state and local levels. The federal tax credit, or investment tax credit (ITC), is currently 30% through 2034 (note: new roof costs not included). This federal incentive covers the cost of panels, wiring, inverters and storage solutions. There will also be a tax break for adding a storage solution next year. Excess tax credits will not be refunded. Also (note), this is not a federal deduction, but a tax deduction payable in the year of installation. So if the tax payable is low, this will not really be an incentive.
H. What criteria or diagnostic questions can be asked of contractors and when evaluating bids?
Del Chiara. First, check that they are properly licensed and make sure there are no complaints or lawsuits against the contractor with the contractor's state licensing agency. The next litmus test is to find out if you are a member of a professional association such as the California Solar and Storage Association. The best companies in any industry are those that value the input and quality control of their sales teams. Ultimately, the best decisions are informed decisions based on personal interactions. Almost everything can be found online these days, so I would like to warn consumers about too many random but angry reviews online. The products themselves have a very low failure rate, come with a long warranty period, and all California contractors are required to provide a 10-year warranty on their installation work.
Teresa: (warning sign) is when the owner's consumption data is not actually analyzed. If they don't, they're not providing the owner with a system that actually adds value.
H. What are some common mistakes people make when buying solar panels?
DEL Chiara: The biggest mistake is not getting three competitive bids from properly licensed and knowledgeable contractors. The second important point is to check the current state of your electrical junction box. Many older homes require a service panel upgrade before adding solar and storage systems.
Investments in energy efficiency measures are also important, as unused electricity is the cheapest. But the other side of the coin also applies: imagine the addition of an electric car, an electric stove or a heat pump in the near future. It's more difficult, but not impossible, to scale your system after it's built.
Teresa: Homeowners generally do not pay attention to the condition of the roof on which the solar system is installed. If the roof is already old and worn out, it will need to be replaced within the 25 year life of the solar system. It's best to upgrade the roof before the panels are installed, so you're less likely to have to temporarily remove and reinstall those panels to make room for a new roof in a few years.
H. Is there anything else worth considering for consumers?
Del Cira. In today's uncertain government insurance market, it may be a good idea to consider purchasing additional solar insurance. This gives you peace of mind knowing that you will be taken care of even if the contractor goes out of business. Additionally, I strongly encourage all consumers to consult the Solar Rights Alliance, a non-profit advocacy group dedicated to protecting solar consumers.
Hickey: At the state level, California has previously offered many solar incentives, but most of the programs ended in 2023. As we currently understand it, the only remaining incentive at the state level is the solar property tax exemption, which expires after 2024. After 2024 (unless staff makes legislative changes), an additional solar system will increase the home's value and result in a reassessment of property tax status.
California also has a program for underserved communities, Sunny Single Family Homes, or Dac-SASH. It is only available for certain communities. Another incentive program in California is the Self-Generation Incentive Program (SGIP), which allocates power to storage but not solar panels. SGIP has a "residential storage share" for low-income households, medically vulnerable households and fire-prone communities.
Staff writer Rob Nikolevsky contributed to this report.
