Planning a Home Solar Electric System

There are a number of steps to follow when planning to power your home with solar energy. After choosing which option is best for you to use solar (see step 3), follow the steps afterward that apply to you. Your solar energy installer and local utility company can provide more information on the exact steps you will need to take to power your home with solar energy.

1. Investigate your home's energy efficiency
2. Assess your solar potential and any limitations
3. Assess your options for going solar
4. Estimate your solar electricity needs
5. Obtain bids and site assessments from contractors
6. Understand available financing and incentives
7. Work with your installer and utility to install the system and set up agreements

1. Investigate Your Home's Energy Efficiency

Before starting the process of powering your home with solar energy, homeowners should investigate their energy use and consider potential efficiency upgrades. Homeowners should be well aware of their total electricity usage, and consider low-cost and easy-to-implement efficiency measures before choosing solar. 

Explore the following resources to reduce your electricity use:

• Home energy audits: A home energy audit can help you understand where your home is losing energy and what steps to take to improve the efficiency of your home.
• Appliances and electronics: Use your appliances and electronics more efficiently, or consider investing in highly efficient products.
• Lighting: Switch to energy efficient lighting, such as LED light bulbs.
• Heating and cooling: If you use electricity to heat and cool your home, your heating and cooling needs will significantly affect the amount of solar energy you need. Weatherizing your home and heating and cooling efficiently will reduce the amount of electricity you need to produce with solar.

2. Assess Your Solar Potential

Before deciding on the best way to use solar electricity at home, assess the potential solar energy that can be produced at your address. Because PV technologies use both direct and scattered sunlight to create electricity, the solar resource across the United States is ample for home solar electric systems.

However, the amount of power generated by a solar energy system at a particular site depends on how much of the sun's energy reaches it, and the size of the system itself. 

Several mapping services and tools are available to help you determine your home’s solar energy potential. Some of the services also offer information on the estimated system size, potential costs and savings, and local contractors.

These tools are an excellent starting point and can help you determine whether your home is suitable for solar, and if not, the best path forward for still benefiting from solar. While these tools are helpful, they don't account for all of the variables that need to be considered for your particular system. For that, you will need to work directly with a solar installer who can provide an accurate assessment of your solar potential as well as detailed recommendations, estimates, and equipment expertise.

Consider the following:

• Nearby shade trees. Contractors will also help evaluate shading, but also consider your own or your neighbor's trees that are still growing and could shade your system in the future.
• The age of your roof and how long until it will need to be replaced. If you expect to need a new roof within the next few years, you may want to consider making that improvement before installing solar.
• Neighborhood or homeowner association (HOA) restrictions or approval requirements. Some states now have "solar rights provisions" limiting the ability of HOAs to restrict solar installations or limit solar access. These provisions vary state to state, and by municipality; check into your own HOA covenants and state laws.

3. Assess Your Options for Using Solar

Purchasing and installing a system that you fully own and maintain is no longer the only option if you want to go solar. Even if you rent your home or don't want to purchase a rooftop system, there are many programs will enable you to still benefit from solar electricity.

Below are some of the options available for using solar energy at home; check with local installers and your utility for programs available in your area.

PURCHASING A SOLAR ENERGY SYSTEM

Purchasing a solar energy system with cash or a loan is the best option when you want to maximize the financial benefits of installing solar panels, take advantage of tax credits, and increase the market value of your home, and a solarize program is unavailable or impractical.  

The solar installer will connect the system to the grid, and receive an interconnection permit from the utility.  When the PV system generates more power than the homeowner requires, the customer is often able to sell excess electricity to the grid, and when the homeowner’s electricity needs exceeds the capacity of the system, the home draws energy from the grid as usual. Learn more about grid-connected home energy systems.

Purchasing a solar energy system is a good option if one or more of the following apply to you:

• You want to purchase a solar energy system to install at your home
• You are eligible for state or federal investment tax credits
• You are willing to be responsible for maintenance or repairs (note that most solar energy systems offer warranties, and many installers offer operations and maintenance plans)
• You want to reduce your electricity costs
• You want to sell unused electricity produced by your system back to your utility through a net-metering arrangement
• You want to increase your home’s value
• You have the upfront capital to purchase the system or access to a capital through a lender (note: many banks, utilities, and solar installers offer financing arrangements for solar systems).

COMMUNITY OR SHARED SOLAR

Almost half of all U.S. households are unable to host a rooftop solar system because they rent or have inadequate roof space. If you’re unable to host a rooftop system, another option is to invest in a community or shared solar program. These programs enable a group of participants to pool their purchasing power to buy solar into a solar system at a level that fits their needs and budget. The system can be on- or off-site and may be owned by utilities, a solar developer, non-profit entities, or multiple community members.

Consider community solar if one or more of the following apply to you:

• You are unable or do not want to install solar at your home or property
• You are unable to claim state or federal investment tax credits
• You do not want to be responsible for maintenance or repairs

SOLAR LEASES

If you lease a solar energy system, you are able to use the power it produces, but someone else—a third party—owns the PV system equipment. The consumer then pays to lease the equipment. Solar leases often involve limited upfront investment and fixed monthly payments over a set period of time.  Under a leasing arrangement, homeowners typically pay the developer a flat monthly fee for the equipment that is based on the estimated amount of electricity that the system will produce. This amount is often less expensive than their original electricity bill.

Solar leases are a good option if one or more of the following apply to you:

• You want to install solar at your home, but you are unable or do not want to purchase a solar energy system
• You are ineligible for state or federal investment tax credits
• You do not want to be responsible for maintenance or repairs
• You want to reduce your electricity costs
• You want to sell unused electricity produced by your system back to your utility through a net-metering arrangement.

POWER PURCHASE AGREEMENTS (PPA)

PPAs allow consumers to host solar energy systems owned by solar companies and purchase back the electricity generated. This is a financial agreement where a developer arranges for the design, permitting, financing, and installation on a consumer's property at little to no upfront cost. The host consumer agrees to purchase the power generated by the system at a set price per kilowatt-hour of electricity produced over the life of the system. The purchase price of solar electricity is often lower than the local utility’s retail rate.

PPAs are a good option if one or more of the following apply to you:

• You want to install solar at your home, but you are unable or do not want to purchase a solar energy system
• You are ineligible for state or federal investment tax credits
• You do not want to be responsible for maintenance or repairs
• You want to reduce your electricity costs
• You want to sell unused electricity produced by your system back to your utility through a net-metering arrangement   
• You are interested in procuring solar at a limited up-front cost.

SOLARIZE PROGRAMS

One of the most efficient ways for communities to go solar is through a Solarize program. Solarize programs allow a locally organized group of homeowners and businesses to pool their purchasing power to competitively select an installer and negotiate reduced rates. This bulk purchase enables more people to go solar because the group model makes the process easier, increases demand for solar, and also lowers installation costs.

Solarize programs are a good option if one or more of the following apply to you:

• A Solarize program is available in your area
• You want to purchase a solar energy system to install at your home
• You are eligible for state or federal investment tax credits
• You are willing to be responsible for maintenance or repairs (note that most solar energy systems offer warranties, and many installers offer operations and maintenance plans)
• You want to reduce your electricity costs and sell unused electricity produced by your system back to your utility through a net-metering arrangement
• You want to increase the value of your home.

4. Estimate Your Solar Electricity Needs

To help your contractor to provide recommendations for your system’s type and size, gather information about your home and electricity use.

• Review electricity bills to determine annual electricity needs. Your usage will be shown in kilowatt-hours (kWh). Review each month of the year; you may use more electricity in some months than others (e.g., if you run the air conditioner in the summer). Some utilities offer tools that can help with this review.

• Consider any planned changes. If you will be purchasing an electric vehicle or are planning a home addition, your electricity needs may increase. If you are continuing to make significant changes to improve your home's energy efficiency, you may need less electricity than you used in the past.

5. Obtain Bids and Site Assessments from Solar Installers

When researching installers, be sure to find qualified and insured professionals with the proper certification—the solar industry standard certification is from the North American Board of Certified Energy Practitioners. You can also ask friends and family members who have recently gone solar for references and check online resources for reviews. Before you make any commitments, ask for proof of licensure before working with an installer.

There are also online tools that can help you easily find and compare solar installers. Obtain at least three bids for the PV system installation and make sure the bids are based on the same characteristics and metrics to enable comparison shopping.

When interviewing installers, consider asking the following questions:

• Is your company familiar with local permitting and interconnection processes? Often obtaining building permits and receiving permission to interconnect can be long and tedious processes.  Ensure that the installer is familiar with these local processes will ensure that your system is installed and connected in a prompt manner.
• Can the company provide references from other customers in your area? Talk to other customers in the area to learn about any challenges they faced and how the company helped resolve them.
• Is the company properly licensed or certified? PV systems should be installed by an appropriately licensed installer. This usually means that either the installer or a subcontractor has an electrical contractor's license. Your state electrical board can tell you whether a contractor has a valid electrician's license. Local building departments might also require that the installer have a general contractor's license. Call the city or county where you live for additional information on licensing. Additionally, solarize programs may require you to work with a specific installer to receive the discounted system price.
• What is the warranty for this system like? Who ensures the operation and maintenance of the system?  Most solar equipment is backed by an industry standard warranty (often 20 years for solar panels and 10 years for inverters). Ensuring that system is backed by a strong warranty is often an indication that installer is using quality equipment.  Similarly, the homeowner should establish whose responsibility it is to properly maintain and repair the system.  Most lease and PPA arrangements will require the installer to provide system maintenance, and many installers offer competitive O&M plans for host owned systems.
• Does the company have any pending or active judgments or liens against it? As with any project that requires a contractor, due diligence is recommended. Your state electrical board can tell you about any judgments or complaints against a state-licensed electrician. Consumers should call the city and county where they live for information on how to evaluate contractors. The Better Business Bureau is another source of information.

Bids should clearly state the maximum generating capacity of the system—measured in Watts (W) or kilowatts (kW). Also request an estimate of the amount of energy that the system will produce on an annual or monthly basis (measured in kilowatt-hours). This figure is most useful for comparison with your existing utility bills.

Bids also should include the total cost of getting the PV system up and running, including hardware, installation, connection to the grid, permitting, sales tax, and warranty. A cost/watt, and estimated cost/kWh are the most useful metrics for comparing prices across different installers, as installers may use different equipment or offer quotes for systems of different sizes.

6. Understand Available Financing and Incentives

Solar PV systems installed in 2020 and 2021 are eligible for a 26% tax credit. In August 2022, Congress passed an extension of the ITC, raising it to 30% for the installation of which was between 2022-2032. (Systems installed on or before December 31, 2019 were also eligible for a 30% tax credit.) It will decrease to 26% for systems installed in 2033 and to 22% for systems installed in 2034. The tax credit expires starting in 2035 unless Congress renews it. There is no maximum amount that can be claimed.

If you opt for a solar lease or power-purchase agreement, remember that you will not be eligible for this tax benefit, since you will not own the solar energy system.

You can search for additional state, local, or utility incentives on the Database of State Incentives for Renewables and Efficiency (DSIRE).

In addition to incentives, be sure to explore all of the available solar financing options. Every situation is different, and what is best for your property depends on a wide range of factors. The Clean Energy States Alliance guide helps homeowners understand their options, explaining the advantages and disadvantages of each. Also visit the Homeowner’s Guide to Going Solar for more financing options.

7. Work with Your Installer and Utility

If you decide to install a solar energy system, your installer should be able to help you complete the necessary permitting and steps.

Your installer will determine the appropriate size for your system. The size will be based on your electricity needs (determined in step 4) as well as the following:

• The site's solar resource or available sunlight
• The system's orientation and tilt
• The system's efficiency at converting sunlight to electricity
• Other electricity sources, like a utility, a wind turbine, or a fossil fuel generator.

Your installer will also ensure that all equipment is installed correctly and oriented and tilted in such a way to maximize the daily and seasonal solar energy received and produced by your system.

Be sure you understand how billing and net metering will work, as well as any additional utility fees you will need to pay.

Information in this article provided by the U.S. Department of Energy’s Office of Energy Efficiency & Renewable Energy. Visit Energy.gov for additional resources.