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Carol Marks’ monthly electric bill was between $250 and $300 before she had solar panels installed on her home.
Her first bill afterward, in June — one of the hotter months in her home state of Florida — was $45.
“Living in the Sunshine State and the Sunshine City, it seemed like a natural thing to do,” says Marks, co-chairwoman of the sustainability action team of the League of Women Voters of the St. Petersburg Area. “Why not use power that’s available to us that comes from the sun?”
For Marks, the decision to go solar was relatively easy, but how do you decide whether the change makes sense for you?
“Generally, it’s good for consumers and the environment, but everybody’s situation is different,” says Susan Grant, director of consumer protection and privacy at the Consumer Federation of America, an association of nonprofit consumer groups. “It depends on where they live, the design of the home, the installation cost and expected savings.”
How to Save Money Going Solar
One of the biggest advantages of installing residential solar panels is a 30% federal tax credit on the total cost of a system. That means homeowners — but not renters — can subtract the credit from the federal income taxes they owe, in effect reducing the price of their solar purchase by nearly one-third.
Congress authorized the credit through 2019, but it will decline to 26% in 2020 and 22% in 2021 and then disappear. The credit could save the average homeowner $5,000 or more (depending on the size of the system), according to EnergySage, a solar marketplace with a calculator to help estimate savings.
It may seem obvious, but access to sunlight is important. If your roof is deeply shaded by trees, mountains or buildings, solar panels won’t work well. Unsurprisingly, California leads the nation in residential solar capacity, but some of the others in the top 10 may surprise you.
It’s important to have a basic idea of how the panels work as well. Also known as photovoltaic panels, they are mounted on the roof of a house and use sunlight to produce electricity. An important part of any solar system is a box called an inverter, which often is installed in the garage and converts electricity produced by the panels (DC) into the kind that’s required to operate home appliances (AC).
At times, the panels will produce more electricity than is needed to power a home. The extra electricity can be sold back to the power company in an arrangement called net metering. It’s done through a two-way meter installed by the electric company, and it can keep your electric bill low. Duke Energy, which operates in six states, charges a $100 interconnection fee that includes the meter, company spokesman Randy Wheeless says.
The fee can run as high as $300 and often is handled by the installer, who includes it in the total job price, says Emma Rodvien, an operations director for Solar United Neighbors, a co-op that operates in eight states and the District of Columbia.
Do Your Homework
You wouldn’t buy a car without checking out the features, comparing models and knowing the price, would you? Well, much more so with solar panels — which are likely to remain on your roof for at least 25 years.
“It is something that people really need to do their homework on before they decide to invite any company to make a sales pitch, and certainly before they sign up with anybody,” Grant says. “It’s a big commitment.”
Wendy Barsell, executive director of the Florida Solar Energy Industries Association, a trade group, agrees. Her advice applies to consumers in all states.
Ask homeowners who have bought the panels how well they are working. What are the benefits and drawbacks? How long did the installation take? Did the installer do a good job? Was the power company easy to work with? How much money are they saving?
Get referrals from neighbors, coworkers and friends. Search the company on online review sites; some consumers have complained about confusing contracts, misleading sales pitches and poor installation. The North American Board of Certified Energy Practitioners has a list of certified installers, and state groups such as the Florida Solar Energy Industries Association maintain their own lists of preferred companies. You should also check with your state to make sure the contractor is licensed to perform solar installations. Licensed contractors generally must carry insurance, but homeowners should verify that they do.
Get several estimates, ask plenty of questions and don’t be pressured to make a snap decision. We’re talking about an expense that runs an average of $18,840 for a 6 kW system and $31,400 for a 10 kW system, according to EnergySage. “Get proposals from different companies that may have different ideologies, methods, product brands and information on how to make a decision,” Barsell says.
Learn what you need. Systems are sized based on your consumption, the size of the sunny space on your roof and how much you can afford, according to Solar United Neighbors. The bigger the system, the more energy it produces (and the more expensive it is).
Don’t sign a contract unless you understand everything, including your expected return on investment and break-even point. If your electric rates are high, you’ll pay off the cost a lot sooner, according to the Solar Energy Industries Association.
Decide how you’re going to pay for the system — purchase, lease or what’s known as a solar power purchase agreement, in which the consumer buys the power but doesn’t own the system. Consumer Reports advises anyone who can afford it to pay upfront. That eliminates finance charges and allows you to take full advantage of the federal tax credit. Consider bids from smaller installers as well as larger ones, who may be more expensive, a recent government study showed.
If you need to take out a loan, shop at credit unions and banks — some offer dedicated solar-energy loans — before committing to a loan offered through your solar installer. Additional options include a clean-energy mortgage through Fannie Mae. Property Assessment and Clean Energy (PACE) lending programs also are available in more than 20 states. But the Mortgage Bankers Association, among other groups, warn consumers they could lose their homes if they default on payments.
“There’s a lot of issues to consider,” Grant says. “That’s why states are enacting disclosure laws that must be given to the consumer. Solar is a good thing, but it’s complex and people really need to understand what they’re getting into.”
How old is your roof? Solar panels have an expected life span of about 25 years. If your roof is aging or damaged, you may be better off replacing it before you install the panels.
How long do you plan to stay in your home? Although some surveys show that solar panels increase the value of a house, you won’t know until you sell. That’s why some experts say it’s safest to stay put until the panels pay for themselves.
Understand your warranty. Most high-quality panels and system components called power optimizers are warrantied for 25 years, says Garrett Savadel, system designer at Brilliant Harvest, a Sarasota, Florida, solar installation company. Inverters have a warranty of about 12 years (but as little as five years in some cases), although that can be extended to 25 years for an additional fee, he says. A good inverter costs between $2,000 and $7,000 installed, depending on size — $1,000 to $2,000 for the parts alone.
Ask about maintenance. Some companies say the panels must be washed regularly and offer that service for a price. But Savadel says rain usually washes off bird droppings and other routine dirt. Periodic professional cleaning may be necessary in states such as Arizona, New Mexico and California because they are so dry and dusty, he says.
Make sure your homeowners insurance company will insure solar panels. Not all do.
What if the Power Goes Out?
You might think that owning a solar system would ensure 24/7 access to electric power even when the grid goes down from hurricanes or other disasters or accidents. But that’s not the case. In those events, you have to rely on a generator or buy a battery backup for your solar system.
And while the cost of solar panels has dropped more than 70% since 2010, according to the Solar Energy Industries Association, batteries can cost as much as $10,000 to $15,000, including installation, according to Solar United Neighbors. “Adding battery storage to a solar array can increase costs so much that the savings seen on utility bills are negligible,” the group’s website warns.
For those who want the peace of mind and can afford the cost, batteries may be a viable option. They work like this: When the sun is shining, your panels produce electricity that you direct to the battery, where it’s stored until you need it. Unlike a generator, no fuel is needed.
Marks, the Florida retiree, opted for a battery. She and her husband also own an electric car. For them, going green is at least as important as saving money.
“We’re going to keep trying to reduce that carbon footprint and power ourselves,” she says.
- Credits go to the ThePennyHoarder that bring the best electricity blogs nationwide. You can find the full blog at https://www.thepennyhoarder.com/save-money/solar-panels-in-your-home/