how much does solar power cost by johnmccargo


									                          A Consumer’s Guide

Get Your Power from theSun

Bringing you a prosperous future where energy is clean, abundant, reliable, and affordable
     What is a solar electric or photovoltaic system? . . . . . . . . . . . . . . . .2
     Are incentives available to help reduce the cost? . . . . . . . . . . . . . . . .3
 Investing in a PV system
     Why should you buy a PV system? . . . . . . . . . . . . . . . . . . . . . . . . . . .5
     Is your home or business a good place for a PV system? . . . . . . . . . .5
     How big should your PV system be, and what features
          should it have? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
     How much will you save with your PV system? . . . . . . . . . . . . . . . . .8
     How much does a PV system cost? . . . . . . . . . . . . . . . . . . . . . . . . . . .8
     How can you finance the cost of your PV system? . . . . . . . . . . . . . .9
 Selecting a PV provider
     Who sells and installs PV systems? . . . . . . . . . . . . . . . . . . . . . . . . . .11
     How do you choose among PV providers? . . . . . . . . . . . . . . . . . . . .11
     How do you choose among competing bids? . . . . . . . . . . . . . . . . . .12
     Is the lowest price the “best deal”? . . . . . . . . . . . . . . . . . . . . . . . . . .13
 Before connecting a PV system to the grid
     What should you know about permits? . . . . . . . . . . . . . . . . . . . . . .14
     What should you know about insurance? . . . . . . . . . . . . . . . . . . . .14
     How do you get an interconnection agreement? . . . . . . . . . . . . . . .14
     How do you get a net-metering agreement? . . . . . . . . . . . . . . . . . . .15
     What should you know about utility and inspection sign-off? . . . .16
     What should you know about warranties? . . . . . . . . . . . . . . . . . . . .16
 Getting help . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

     Cover photo: This PV system, integrated into an awning over the
     back porch of a home in California, generates electricity while
     shading the family's outdoor activities. (Courtesy of AstroPower/PIX12345)

     Photo opposite: These PV modules are light and flexible, which
     makes them suitable for roofing shingles.

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

     Get Your Power from theSun
Are you thinking about buying a solar electric system for your home or busi-
ness? If so, this booklet provides some basic information that can help you.
Solar electric systems, which are also called photovoltaic or PV systems,
are reliable and pollution-free. They make use of a renewable source of ener-
gy—the sun. And PV systems for homes and businesses are becoming more
affordable all the time.
PV works best in an energy-efficient building. So, adding insulation and ener-
gy-efficient lighting, appliances, and windows is a good idea, to reduce your
home’s overall electricity use before you install a PV system.
To make PV systems even more affordable, several states offer financial incen-
tives through solar rebates and other programs. Some utilities have net meter-
ing programs, which further enhance the economics of PV. Net metering
means that when your PV system generates more power than you need, the
excess goes to the utility grid and the meter runs backward. This allows you
to receive full retail value for the power that your PV system generates.
This booklet can guide you through the process of buying a solar electric sys-
tem. It is not a technical guide to designing or installing a system—for that
information, we recommend consulting an experienced PV system designer
or supplier.
A PV system can be a substantial investment. As with any investment, careful
planning will help you make the right decisions for your home or business.          Warren Gretz, NREL/PIX06283

What is a solar electric or               technology the U.S. energy source
photovoltaic system?                      of choice for the 21st century.
Photovoltaic (PV) systems convert         The basic building block of PV tech-
sunlight directly to electricity. They    nology is the solar “cell.” Multiple
work any time the sun is shining,         PV cells are connected to form a PV
but more electricity is produced          “module,” the smallest PV compo-
when the sunlight is more intense         nent sold commercially. Modules
and strikes the PV modules directly       range in power output from about
(as when rays of sunlight are perpen-     10 watts to 300 watts. A PV system
dicular to the PV modules). Unlike        connected or “tied” to the utility
solar thermal systems for heating         grid has these components:
water, PV does not use the sun's
heat to make electricity. Instead,        • One or more PV modules, which
electrons freed by the interaction          are connected to an inverter
of sunlight with semiconductor            • The inverter, which converts the
materials in PV cells are captured          system's direct-current (DC) elec-
in an electric current.                     tricity to alternating current (AC)
PV allows you to produce electricity—     • Batteries (optional) to provide
without noise or air pollution—from         energy storage or backup power
a clean, renewable resource. A PV           in case of a power interruption
system never runs out of fuel, and it       or outage on the grid.
won't increase U.S. oil imports. Many
PV system components are manufac-         AC electricity is compatible with
tured right here in the United States.    the utility grid. It powers our lights,
These characteristics could make PV       appliances, computers, and televisions.


                               Inverter                    Utility

    Home Power/
     Appliances                                                           03529701

                  Residential grid-connected PV system
Special appliances that run directly        Are incentives available to
on DC power are available, but they         help reduce the cost?
can be expensive.
                                            Yes, many states offer incentives.
Before you decide to buy a PV system,       For specific information, call one of
there are some things to consider:          the contacts listed under “Getting
                                            Help” at the end of this booklet.
First, PV produces power intermit-          Another excellent source is the
tently because it works only when           National Database of State Incent-
the sun is shining. This is not a prob-     ives for Renewable Energy (DSIRE).
lem for PV systems connected to the         Prepared by the North Carolina Solar
utility grid, because any additional        Center, this database contains infor-
electricity required is automatically       mation on financial and regulatory
delivered to you by your utility. In        incentives that promote renewable
the case of non-grid, or stand-alone,       energy technologies.
PV systems, batteries can be pur-
chased to store energy for later use.       Net Metering—In more than 35
                                            states, customers who own PV sys-
Second, if you live near existing           tems can benefit from laws and
power lines, PV-generated electricity       regulations that require “net” electric
is usually more expensive than con-         meter reading. The customer is billed
ventional utility-supplied electricity.     for the net electricity purchased from
Although PV now costs less than             the utility over the entire billing
1% of what it did in the 1970s, the         period—that is, the difference
amortized price over the life of the        between the electricity coming from
system is still about 25 cents per          the power grid and the electricity
kilowatt-hour. This is double to            generated by the PV system. Through
quadruple what most people pay for          net metering, the customer obtains
electricity from their utilities. A solar   the full retail electricity rate—rather
rebate program and net metering can         than the much lower wholesale
help make PV more affordable, but           rate—for kilowatt-hours of PV-pro-
they can't match today's price for          duced electricity sent to the utility
utility electricity in most cases.          power grid. The benefits of net
Finally, unlike the electricity you         metering to consumers are especially
purchase monthly from a utility, PV         significant in areas such as Hawaii
power requires a high initial invest-       and New York, which have high
ment. This means that buying a PV           retail electric rates. Utilities also
system is like paying years of electric     benefit because the solar-generated
bills up front. Your monthly electric       energy often coincides with their
bills will go down, but the initial         periods of “peak” demand for
expense of PV may be significant.           electricity.
By financing your PV system, you            Property and Sales Tax—Tax
can spread the cost over many years,        incentives may include a sales tax
and rebates can also lighten your           exemption on the PV system pur-
financial load.                             chase, a property tax exemption,
                                            or state personal income-tax credits,

       PV awnings such as this one in California provide both
                      electricity and shade.

all of which provide an economic           growth. In the United States, the
benefit to consumers by lowering           U.S. Department of Energy has been
high capital costs. The U.S. govern-       involved in a program known as
ment also provides financial support       TEAM-UP, or Technology Experience
for PV technology through a tax            to Accelerate Markets in Utility
credit for commercial uses of solar        Photovoltaics. Through this program,
energy. This energy investment credit      some 80 utilities in 40 states have
provides businesses (but not individ-      installed more than 7 megawatts
uals or utilities) with a 10% tax credit   of grid-connected PV; supplier buy-
and 5-year accelerated depreciation        downs and consumer rebates range
for the cost of equipment used to          between $2 and $4 per watt.
generate solar electricity.
                                           Residential Energy Rate—This
Buy-Down—Rebates and buy-                  is the average retail residential rate
downs, typically based on the rated        for energy from utilities, in cents
power of the system, help to defray        per kilowatt-hour. Check your utility
high capital costs and to create           bill for your actual rate.
competitive, sustainable market

Investing in a PV system
Why should you buy a PV                   location looks promising, your PV
system?                                   provider can determine whether your
                                          home or business can effectively use
People decide to buy PV systems for
                                          a PV system.
a variety of reasons. Some people
want to help preserve the Earth's         The orientation of your PV system
finite fossil-fuel resources and reduce   (the compass direction that your sys-
air pollution. Others want to invest      tem faces) affects its performance. In
in an energy-producing improve-           the United States, the sun is always
ment to their property. Some people       in the southern half of the sky but is
like the security of reducing the         higher in the summer and lower in
amount of electricity they buy from       the winter. Usually, the best location
their utility because it makes them       for a PV system is a south-facing
less vulnerable to future price           roof, but roofs that face east or west
increases. And some people just           may also be acceptable. Flat roofs
appreciate the independence that          also work well for solar electric sys-
a PV system provides.                     tems, because PV modules can be
                                          mounted flat on the roof facing the
If you plan to build a home away
                                          sky or bolted on frames tilted toward
from an established utility service,
                                          the south at an optimal angle. They
inquire about the cost of installing
                                          can also be attached directly to the
a utility line. Often, the cost of
                                          roof as “PV shingles.”
extending conventional power to
your residence is higher than the         If a rooftop can't be used, your solar
cost of a solar option.                   modules can also be placed on the
                                          ground, either on a fixed mount or
Whatever your reason, solar energy
                                          a “tracking” mount that follows the
is widely thought to be the energy
                                          sun to orient the PV modules. Other
source of choice for the future, and
                                          options (often used in multifamily
you may be able to take advantage
                                          or commercial applications) include
of a state-sponsored program to help
                                          mounting structures that create cov-
make it your energy choice for today
                                          ered parking, or that provide shade
and tomorrow.
                                          as window awnings.
Is your home or business a                Is your site free from shading by
good place for a PV system?               trees, nearby buildings, or other
Can you locate your system                obstructions?
so it works well?                         To make the best use of your PV sys-
A well-designed PV system needs           tem, the PV modules must have a
clear and unobstructed access to the      clear “view” of the sun for most or
sun's rays for most or all of the day,    all of the day—unobstructed by trees,
throughout the year. You can make         roof gables, chimneys, buildings, and
an initial assessment yourself. If the    other features of your home and the

surrounding landscape. Some poten-         cost more. System sizing, discussed
tial sites for your PV system may          later in this booklet, should also be
be bright and sunny during certain         discussed with your PV provider.
times of the day, but shaded during
other times. Such shading may sub-         What kind of roof do you have,
stantially reduce the amount of elec-      and what is its condition?
tricity that your system will produce.     Some types of roofs are simpler and
To be eligible for some rebates, your      cheaper to work with, but a PV sys-
system must be unshaded between            tem can be installed on any type.
certain hours during certain times of      Typically, roofs with composition
the year. Some states have laws that       shingles are the easiest to work with,
establish your right to protect your       and those with slate are the most
solar access through the creation of       difficult. In any case, an experienced
a “solar easement.” Your PV provider       solar installer will know how to
can help you determine whether             work on all types and can use roof-
your site is suitable for a solar          ing techniques that eliminate any
electric system.                           possibility of leaks. Ask your PV
                                           provider how the PV system affects
Does your roof or property                 your roof warranty.
contain a large enough area
for the PV system?                         If your roof is older and needs to be
The amount of space that a PV              replaced in the near future, you may
system needs depends on the size           want to replace it at the time the PV
of the system you purchase. Some           system is installed to avoid the cost
residential systems require as little      of removing and reinstalling your
as 50 square feet (for a small “starter”   PV system. PV panels often can be
system), but others could need as          integrated into the roof itself, and
much as 1,000 square feet.                 some modules are actually designed
Commercial systems are typically           as three-tab shingles or raised-seam
even larger. If your location limits       metal roof sections. One benefit of
the size of your system, you may           these systems is their ability to offset
want to install one that uses more         the cost of roof materials.
efficient PV modules. Greater effi-
ciency means that the module needs
                                           How big should your PV
less surface area to convert sunlight      system be, and what features
into a given amount of electric            should it have?
power. PV modules are available            To begin, consider what portion of
in a range of types, and some offer        your current electricity needs you
more efficiency per square foot            would like your PV system to meet.
than others do (see table on the           For example, suppose that you would
next page). Although the efficiency        like to meet 50% of your electricity
(percent of sunlight converted to          needs with your PV system. You
electricity) varies with the different     could work with your PV provider
types of PV modules available today,       to examine past electric bills and
higher efficiency modules typically

determine the size of the PV system                     produced by your system on an
needed to achieve that goal.                            annual basis (see the section on net
                                                        metering). Finally, customers eligible
You can contact your utility and                        for net metering vary from utility to
request the total electricity usage,                    utility; for example, net metering
measured in kilowatt-hours, for your                    could be allowed for residential cus-
household or business over the past                     tomers only, commercial customers
12 months (or consult your electric                     only, or both.
bills if you save them). Ask your PV
provider how much your new PV                           One optional feature to consider is
system will produce per year (also                      a battery system to provide energy
measured in kilowatt-hours) and                         storage (for stand-alone systems) or
compare that number to your annual                      backup power in case of a utility
electricity usage (called demand) to                    power outage (for grid-connected
get an idea of how much you will                        systems). Batteries add value to your
save. In the next section, we'll pro-                   system, but at an increased price.
vide more information on estimating
how much you will save.                                 As a rule, the cost per kilowatt-hour
                                                        goes down as you increase the size
Some solar rebate programs are                          of the system. For example, many
capped at a certain dollar amount.                      inverters are sized for systems up to
Therefore, a solar electric system                      5 kilowatts, so even if your PV array
that matches this cap maximizes                         is smaller (say, 3 kilowatts), you may
the benefit of the solar rebate.                        have to buy the same size of inverter.
                                                        Labor costs for a small system may
To qualify for net metering in some                     be nearly as much as those for a large
service territories, your PV system                     system, so you are likely to get a bet-
must have a peak generating capacity                    ter price for installing a 2-kilowatt
that is typically not more 10 kilo-                     system all at once, rather than
watts (10,000 watts), although this                     installing 1 kilowatt each year for
peak may differ from state to state.                    two years.
Also, utilities have different provi-
sions for buying excess electricity

         Roof Area Needed in Square Feet (shown in Bold Type)
  PV Module
 Efficiency (%)                             PV Capacity Rating (Watts)
                          100         250        500      1,000      2,000       4,000       10,000
           4                30         75        150        300        600      1,200         3,000
           8                15         38          75       150        300         600        1,500
          12                10         25          50       100        200         400        1,000
          16                  8        20          40         80       160         320           800
 For example, to generate 2,000 watts from a 12%-efficient system, you need 200 square feet of roof area.

How much will you save                   electricity will not be worth as much
with your PV system?                     as the electricity you actually use.
                                         You may earn only 2 cents per
The value of your PV system's elec-
                                         kilowatt-hour—or less than half the
tricity depends on how much you
                                         retail rate—for your excess power.
pay for electricity now and how
much your utility will pay you for       PV systems produce most of their
any excess power that you generate.      electricity during the middle of the
If your utility offers net metering      day, when residential electric loads
(and so pays the full retail price for   tend to be small. If your utility does
your excess electricity), you and your   not offer net metering, you may
utility will pay the same price for      want to size your system to avoid
each other's electricity. You can use    generating electricity significantly
the calculation box on the next page     beyond your actual needs.
to roughly estimate how much elec-
tricity your PV system will produce      How much does a PV
and how much that electricity will       system cost?
be worth. Actual energy production
                                         No single answer applies in every
from your PV system will vary by up
                                         case. But a solar rebate and other
to 20% from these figures, depending
                                         incentives can always reduce the
on your geographic location, the
                                         cost. Your price depends on a num-
angle and orientation of your system,
                                         ber of factors, including whether
the quality of the components, and
                                         your home is under construction and
the quality of the installation.
                                         whether PV is integrated into the
Also, you may not get full retail        roof or mounted on top of an exist-
value for excess electricity produced    ing roof. The price also depends on
by your system on an annual basis,       the PV system rating, manufacturer,
even if your utility does offer net      retailer, and installer.
metering. Be sure to discuss these
                                         The size of your system may be the
issues with your PV provider. Request
                                         most significant factor in any meas-
a written estimate of the average
                                         urement of costs versus benefits.
annual energy production from the
                                         Small, single-PV-panel systems with
PV system. However, even if an esti-
                                         built-in inverters that produce about
mate is accurate for an average year,
                                         75 watts may cost around $900
actual electricity production will
                                         installed, or $12 per watt. These
fluctuate from year to year because
                                         small systems offset only a small
of natural variations in weather
                                         fraction of your electricity bill. A
and climate.
                                         2-kilowatt system that meets nearly
If your utility does not offer net       all the needs of a very energy-
metering, you can still use the calcu-   efficient home could cost $16,000
lation box to determine the amount       to $20,000 installed, or $8 to $10 per
of electricity your system will          watt. At the high end, a 5-kilowatt
produce. However, this is not as         system that completely meets the
straightforward, because the excess      energy needs of many conventional

 Calculating Electricity Bill Savings for a Net-Metered PV System
 • Determine the system's size in kilowatts (kW). A reasonable range is from
   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/year
 Divide this number by 12 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.

                                                         Note: The uncertainty of the
                                                         contoured values is generally ±10%.
                                                         In mountainous and other areas of
                                                         complex terrain, the uncertainty may
                                                         be higher.

homes can cost $30,000 to $40,000           How can you finance the cost
installed, or $6 to $8 per watt. These      of your PV system?
prices are rough estimates; your
                                            When it comes to financing the cost
costs depend on your system's con-
                                            of purchasing and installing your
figuration, your equipment options,
                                            PV system, there are some special
and other factors. Your local PV
                                            programs particular to financing
providers can give you more accurate
                                            solar and other renewable energy
estimates or bids.

                                                                                 Schott Applied Power Corp./PIX08808
 This 20-kilowatt PV system produces electricity for the common
    areas of a shopping center in Cambridge, Massachusetts.

investments. But most of the             relatively simple. It is also one way
options will be familiar to you.         to avoid additional loan application
                                         forms and fees.
The best way to finance PV systems
for homes is through a mortgage          If mortgage financing is not avail-
loan. Mortgage financing options         able, look for other sources of fin-
include your primary mortgage; a         ancing, such as conventional bank
second mortgage, such as a U.S.          loans. Seek the best possible combi-
Department of Housing and Urban          nation of low rate and long term.
Development (HUD) Title 1 loan; or       This allows you to amortize your PV
a home-equity loan that is secured       system as inexpensively as possible.
by your property. There are two          Because your PV system is a long-
advantages to mortgage financing.        term investment, the terms and
First, mortgage financing usually pro-   conditions of your financing are
vides longer terms and lower interest    likely to be the most important
rates than other loans, such as con-     factor in determining the effective
ventional bank loans. Second, the        price of your PV-generated power.
interest paid on a mortgage loan is
generally deductible on your federal     PV systems for businesses are proba-
taxes (subject to certain conditions).   bly best financed through a compa-
If you buy the PV system for your        ny's existing sources of funds for
home at the same time that you           capital purchases—such as Small
build, buy, or refinance the home,       Business Administration loans or
adding the cost of the PV system to      conventional bank loans.
your mortgage loan is likely to be

Selecting a PV provider
Who sells and installs PV                  should have the lowest travel costs).
systems?                                   Contact these providers and find out
                                           what products and services they offer.
In some areas, finding a PV provider
                                           The following questions may give you
can be as simple as picking up the
                                           a good sense of their capabilities:
telephone directory and looking
under “Solar Energy Equipment and          Has the company installed grid-
Systems—Dealers.” However, many            connected PV systems? If not,
of the listings are solar water-heating    has it installed grid-independent
companies and many companies               (or stand-alone) PV systems?
might not be experienced in PV sys-
tem design or installation. Similarly,     Experience in installing grid-
many electrical contractors, although      connected systems is valuable
proficient in typical electrical con-      because some elements of the instal-
tracting work, might not have expert-      lation—particularly interconnection
ise in PV or residential roof-mounting     with the local utility—are unique
techniques. How do you identify solar      to these systems. Because grid-
electric system providers? Here are        connected systems are relatively
several suggestions.                       uncommon, however, most contrac-
                                           tors with PV experience have worked
• Check the Source Guide for renew-        only on stand-alone systems. So,
  able energy businesses (including        they have experience with all aspects
  PV) by name, product type, business      of PV system installation except
  type, and location: http://energy.       connection with the utility grid.             However, a competent company
                                           with PV experience should not be
• Contact the Solar Energy Industries
                                           eliminated just because it has not
  Association (SEIA) at 202-628-7745
                                           yet installed grid-connected PV.
  for a list of solar service providers.
                                           Experience with off-grid systems is
• Contact your utility company             valuable, because grid-independent
  to see which vendors it might            systems are more technically com-
  recommend.                               plex than grid-tied systems.
• Conduct a search on the Internet.        How many years of experience
Reputable, professional contractors        does the company have installing
with experience in PV systems are          PV systems?
the best choice for the actual             This issue speaks for itself: A contrac-
installation.                              tor who has been in business a long
                                           time probably understands how to
How do you choose among                    work with customers and to compete
PV providers?                              effectively with other firms.
Compile a list of prospective PV
providers. (Those closest to you

Is the company properly licensed?        can tell you about any judgments or
PV systems should be installed by        complaints against a state-licensed
an appropriately licensed contractor.    electrician. Consumers should call
This usually means that either the       the city and county they live in for
installer or a subcontractor has an      information on how to evaluate con-
electrical contractor's license. Your    tractors. The Better Business Bureau
State Electrical Board can tell you      is another source of information.
whether a contractor has a valid
electrician's license. Local building    How do you choose among
departments might also require that      competing bids?
the installer have a general contrac-    If you decide to get more than one
tor's license. Call the city or county   bid for the installation of your PV
you live in for additional informa-      system (always a good idea), make
tion on licensing.                       sure that all bids are made on the
                                         same basis. For example, a bid for a
A solar rebate program may require
                                         system mounted on the ground is
that, in addition to being properly
                                         usually very different from another
licensed, installers must demonstrate
                                         bid for a rooftop system.
that they have special knowledge
about installing PV systems. This spe-   Similarly, some PV modules generate
cial knowledge may be demonstrated       more electricity per square foot than
in one of the following ways:            others. Bids should clearly state the
                                         maximum generating capacity of the
• Possession of a solar contractor
                                         system (measured in watts or kilo-
  specialty license, issued by a local
                                         watts). If possible, have the bids spec-
  building jurisdiction, that recog-
                                         ify the system capacity in “AC watts”
  nizes—through testing or other
                                         under a standard set of test condi-
  means—special knowledge of PV
                                         tions, or specify the output of the
                                         system at the inverter.
• Certification in PV systems by a
                                         Also request an estimate of the
  group such as the state chapter
                                         amount of energy that the system
  of SEIA
                                         will produce on an annual basis
• A letter from the PV system manu-      (measured in kilowatt-hours).
  facturer stating that the installer    Because the amount of energy
  has the experience and training        depends on the amount of sun-
  needed to install the system           light—which varies by location, sea-
  properly.                              son, and year to year—it’s unlikely
                                         the contractor will quote a specific
Does the company have any                figure, but a range of ±20% is realis-
pending or active judgments              tic. Bids also should include the total
or liens against it?                     cost of getting the PV system up and
As with any project that requires a      running, including hardware, instal-
contractor, due diligence is recom-      lation, connection to the grid, per-
mended. Your state electrical board      mitting, sales tax, and warranty.

Your warranty is a very important
factor for evaluating bids. A solar
rebate program may require that
systems be covered by a two-year
parts-and-labor written installation
warranty, for example, in addition
to any manufacturers' warranties on
specific components. The installer
may offer longer warranties. Also, ask
yourself, “Will this company stand
behind the full-system warranty for
the next two years?”

Is the lowest price the “best
It might not be. You generally get
what you pay for, and it's possible
that a low price could be a sign of
inexperience. Companies that plan
to stay in business must charge
enough for their products and             A home in the woods of New

                                                                        Alan Ford/PIX09507
services to cover their costs, plus a    Hampshire had too much shade
fair profit margin. Therefore, price       to use PV on the roof. The
should not be the only considera-
                                            solution was installing a
tion, and quality should probably
rank high on the list.                       freestanding PV array.

Before connecting a PV system to the grid
What should you know about                  rely on Article 690 for guidance in
permits?                                    determining whether your PV system
                                            has been properly designed and
If you live where a homeowners asso-
                                            installed. If you are one of the first
ciation must approve a solar electric
                                            people in your community to install
system, you or your PV provider may
                                            a grid-connected PV system, your
need to submit your plans. You’ll
                                            local building department may not
need approval before you begin
                                            have experience in approving one
installing your PV system. However,
                                            of these systems. If this is the case,
some state laws stipulate that you
                                            you and your PV provider can speed
have the right to install a solar
                                            the process by working closely with
electric system on your home.
                                            building officials to bring them up
You will probably need to obtain per-       to speed on the technology.
mits from your city or county building
department. These include a building        What should you know about
permit, an electrical permit, or both.      insurance?
Typically, your PV provider will take       For grid-connected PV systems, your
care of this, rolling the price of the      electric utility will require that you
permits into the overall system price.      enter into an interconnection agree-
However, in some cases, your PV             ment (see also the next section).
provider may not know how much              Usually, these agreements set forth the
time or money will be involved in           minimum insurance requirements to
“pulling” a permit. If so, this task        keep in force. If you are buying a PV
may be priced on a time-and-materi-         system for your home, your standard
als basis, particularly if additional       homeowner’s insurance policy is
drawings or calculations must be            usually adequate to meet the utility’s
provided to the permitting agency.          requirements. However, if insurance
In any case, make sure the permit-          coverage becomes an issue, contact
ting costs and responsibilities are         one of the groups listed in the Getting
addressed at the start with your PV         Help section.
provider before installation begins.
                                            How do you get an
Code requirements for PV systems            interconnection agreement?
vary somewhat from one jurisdiction
                                            Connecting your PV system to the
to the next, but most are based on
                                            utility grid will require an intercon-
the National Electrical Code (NEC).
                                            nection agreement and a purchase
Article 690 in the NEC spells out
                                            and sale agreement. Federal law and
requirements for designing and
                                            some state public utility commission
installing safe, reliable, code-compliant
                                            regulations require utilities to supply
PV systems. Because most local
                                            you with an interconnection agree-
requirements are based on the NEC,
                                            ment. Some utilities have developed
your building inspector is likely to

simplified, standardized interconnec-       Practice for Utility Interface of
tion agreements for small-scale PV          Photovoltaic Systems. Institute of
systems.                                    Electrical and Electronic Engineers,
                                            Inc., New York, NY (1998).
The interconnection agreement speci-
fies the terms and conditions under        • Underwriters Laboratories, UL
which your system will be connected          Subject 1741: Standard for Static
to the utility grid. These include your      Inverters and Charge Controllers for
obligation to obtain permits and insur-      Use in Photovoltaic Power Systems
ance, maintain the system in good            (First Edition). Underwriters
working order, and operate it safely.        Laboratories, Inc., Northbrook, IL
The purchase and sale agreement spec-        (December 1997).
ifies the metering arrangements, the
                                           You don’t need to fully understand
payment for any excess generation,
                                           these standards, but your PV provider
and any other related issues.
                                           and utility should. It is your obliga-
The language in these contracts            tion to make sure that your PV
should be simple, straightforward,         provider uses equipment that com-
and easy to understand. If you are         plies with the relevant standards,
unclear about your obligations under       however, so be sure to discuss this
these agreements, contact the utility      issue.
or your electrical service provider for
clarification. If your questions are       How do you get a net-
not answered adequately, contact           metering agreement?
one of the groups in the Getting           Some utilities offer customers with
Help section.                              PV systems the option to net meter
National standards for utility inter-      the excess power generated by the
connection of PV systems are being         PV system. As noted, this means that
adopted by many local utilities. The       when the PV system generates more
most important of these standards          power than the household can use,
focuses on inverters. Traditionally,       the utility pays the full retail price
inverters simply converted the DC          for this power in an even swap as the
electricity generated by PV modules        electric meter spins backward, and
to the AC electricity we use in our        your PV power goes into the grid.
homes. More recently, inverters have       Net metering allows eligible cus-
evolved into remarkably sophisticat-       tomers with PV systems to connect
ed devices to manage and condition         to the grid with their existing single
power. Many new inverters contain          meter. Almost all standard utility
all the protective relays, disconnects,    meters can measure the flow of
and other components necessary to          energy in either direction. The meter
meet the most stringent national           spins forward when electricity is
standards. Two of these standards are      flowing from the utility into the
particularly relevant:                     building and spins backward when
• Institute of Electrical and Electronic   power is flowing from the building
  Engineers, P929: Recommended             to the utility.

For example, in one utility program,         the system size, because you may want
customers are billed monthly for the         to limit generating excess electricity.
“net” energy consumed. If the cus-           Such a “dual metering” arrangement is
tomer’s net consumption is negative          the norm for industrial customers who
in any month (i.e., the PV system            generate their own power.
produces more energy than the cus-
tomer uses), the balance is credited         What should you know about
to subsequent months. Once a year,           utility and inspection sign-off?
on the anniversary of the effective          After your new PV system is
date of the interconnection agree-           installed, it must be inspected and
ment, the utility pays the customer          “signed off” by the local permitting
for any negative balance at its whole-       agency (usually a building or electri-
sale or “avoided cost” for energy,           cal inspector) and most likely by
which may be quite small, perhaps            the electric utility with which you
less than 2 cents per kilowatt-hour.         entered into an interconnection
Net metering allows customers to get         agreement. Inspectors may require
more value from the energy they              your PV provider to make corrections
generate. It also simplifies both the        (which is fairly common in the con-
metering process (by eliminating the         struction business). A copy of the
need for a second meter) and the             building permit showing the final
accounting process (by eliminating           inspection sign-off may be required
the need for monthly payments from           to qualify for a solar rebate program.
your utility). Be sure to ask your
utility about its policy regarding           What should you know about
net metering.                                warranties?
Under the federal Public Utility             Warranties are key to ensuring that
Regulatory Policies Act (PURPA), utili-      your PV system will be repaired if
ties must allow you to interconnect          something should malfunction dur-
your PV system. They must also buy           ing the warranty period. PV systems
any excess electricity you generate,         eligible for some solar rebate pro-
beyond what you use in your home or          grams must carry a full (not “limit-
business. If your utility does not offer     ed”) two-year warranty, in addition
net metering, it will probably require       to any manufacturers’ warranties on
you to use two meters: one to measure        specific components. This warranty
the flow of electricity into the build-      should cover all parts and labor,
ing, the other to measure the flow of        including the cost of removing any
electricity out of the building. If net      defective component, shipping it to
metering is not available, the utility       the manufacturer, and reinstalling
will pay you only a wholesale rate for       the component after it is repaired
your excess electricity. This provides a     or replaced. The rebate program’s
strong incentive to use all the electrici-   two-year warranty requirement
ty you generate so that it offsets elec-     supersedes any other warranty
tricity you would otherwise have to          limitations. In other words, even if
purchase at the higher retail rate. This     the manufacturer’s warranty on a
may be a factor in how you optimize          particular component is less than

two years, the system vendor must           Know the financial arrangements,
provide you with a two-year warran-         such as contractor's bonds, that
ty. Similarly, even if the manufactur-      ensure the warranty will be honored.
er’s warranty is a limited warranty         (A warranty does not guarantee that
that does not include the cost of           the company will remain in busi-
removing, shipping, and reinstalling        ness). Find out whom to contact
defective components, the system            if there is a problem. Under some
vendor must cover these costs if            solar rebate programs, vendors must
the retailer/vendor also installed          provide documentation on system
the system.                                 and component warranty coverage
                                            and claims procedures. To avoid any
Be sure you know who is responsible         later misunderstandings, be sure to
for honoring the various warranties         read the warranty carefully and
associated with your system—the             review the terms and conditions
installer, the dealer, or the manufac-      with your retailer/vendor.
turer. The vendor should disclose the
warranty responsibility of each party.

Getting Help
For more information on solar electric      This Web site has a listing of state
systems, please contact:                    Public Utility Commissions that you
National Association of State Energy        may contact.
Officials (NASEO)                           Solar Energy Industries Association (SEIA)
1414 Prince Street                          1616 H Street, N.W., Suite 800
Suite 200                                   Washington, DC 20006
Alexandria, Virginia 22314                  Phone: 202-628-7745 • Fax: 202-628-7779
Phone: 703-299-8800 • Fax: 703-299-6208            The Solar Energy Industries Association
Check the above Web site to find the        is the national trade association of the
contact for your state energy office,       solar industry. Many states have a state
which typically promotes the develop-       chapter of the national SEIA organiza-
ment and use of renewable energy            tion, which can be found on SEIA’s
resources in your state. The office might   Web site.
offer technical assistance, sponsor work-
shops and forums, and provide general       Other helpful Web sites
information to resident energy con-         Solar Energy Technologies Program:
sumers on renewable energy resources
and applications.
                                            National Center for Photovoltaics:
National Association of Regulatory and
Utility Commissioners (NARUC)
1101 Vermont, N.W.                          Million Solar Roofs: www.millionsolar-
Suite 200                         
Washington, DC 20005                        Database of State Incentives for
Phone: 202-898-2200 • Fax: 202-898-2213     Renewable Energy (DSIRE):                     

About the Office of Energy Efficiency and Renewable Energy
A Strong Energy Portfolio for a Strong America
Energy efficiency and clean, renewable energy will mean a stronger economy, a
cleaner environment, and greater energy independence for America. By investing in
technology breakthroughs today, our nation can look forward to a more resilient
economy and secure future.

Far-reaching technology changes will be essential to America's energy future.
Working with a wide array of state, community, industry, and university partners,
the U.S. Department of Energy's Office of Energy Efficiency and Renewable Energy
invests in a portfolio of energy technologies that will:

• Conserve energy in the residential, commercial, industrial, government, and transporta-
  tion sectors
• Increase and diversify energy supply, with a focus on renewable domestic sources
• Upgrade our national energy infrastructure
• Facilitate the emergence of hydrogen technologies as vital new "energy carriers."

The Opportunities
Biomass Program—Using domestic, plant-derived resources to meet our fuel,
power, and chemical needs
Building Technologies Program—Homes, schools, and businesses that use less
energy, cost less to operate, and, ultimately, generate as much power as they use
Distributed Energy & Electric Reliability Program—A more reliable energy
infrastructure and reduced need for new power plants
Federal Energy Management Program—Leading by example, saving energy
and taxpayer dollars in federal facilities
FreedomCAR & Vehicle Technologies Program—Less dependence on foreign
oil, and eventual transition to an emissions-free, petroleum-free vehicle
Geothermal Technologies Program—Tapping the Earth's energy to meet
our heat and power needs
Hydrogen, Fuel Cells & Infrastructure Technologies Program—Paving the
way toward a hydrogen economy and net-zero carbon energy future
Industrial Technologies Program—Boosting the productivity and competitiveness
of U.S. industry through improvements in energy and environmental performance
Solar Energy Technology Program—Utilizing the sun's natural energy to
generate electricity and provide water and space heating
Weatherization & Intergovernmental Program—Accelerating the use of today's
best energy-efficient and renewable technologies in homes, communities, and businesses
Wind & Hydropower Technologies Program—Harnessing America's abundant
natural resources for clean power generation

To learn more, visit

The National Renewable Energy Laboratory,
a DOE national laboratory, produced this Consumer’s Guide for:

U.S. Department of Energy
Office of Energy Efficiency and Renewable Energy
1000 Independence Avenue, S.W.
Washington, D.C. 20585

December 2003 • DOE/GO-102003-1844

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