It was just over a decade ago when a former president of this country made a lofty statement on the future of America’s energy needs.
To truly transform our economy, protect our security, and save our planet from the ravages of climate change, we need to ultimately make clean, renewable energy, the profitable kind of energy.
This statement has turned surprisingly prophetic, and is undoubtedly profitable for the solar power industry. In the past ten years alone, this industry has experienced:
- A solid annual growth of 49%, thanks to solar-friendly government policies, rising demand, and falling prices of solar power systems. In fact, prices have fallen by 40% in the majority of American states!
- A consistently growing solar energy landscape, currently producing 81 gigawatts of clean, solar power. This is more than enough to power 15+ million American homes!
Perhaps the premier advantage of the solar power system lies in its versatile adaptability, giving you instant access to renewable solar power. You no longer need an expensive, clunky system to enjoy the benefits of this green energy. It is now effortlessly accessible through multiple paneling technologies, and a host of independent, solar-powered products like solar lighting equipment, chargers and power banks, solar windows and blinds, portable solar power systems for camping and boating, etc.
In this primer, we go below the hood to understand what makes this superior solar power system tick. Enjoy!
PART 1: What is a solar power system?
The term “solar power system” includes any product or technology that runs on energy harnessed from the sun. This is typically self-contained, and universally renewable. This can also be as small a solar-powered night torch, and can also grow to massive proportions like a solar-paneled roof that covers your entire property. Regardless, a solar power system will comprise of the following cohesive components.
Main components of a solar power system
- Photovoltaic cells: They are able to capture direct sunlight as “photons”. They also comprise sandwiched layers of semi-conductor particles, like phosphorous and boron. When a sunlight particle hits such a photovoltaic cell through a photon, it automatically triggers the “electrons” contained within the semiconductor layers. This friction between the photons and electrons of a photovoltaic cell, produces electric energy, measured in “watts” of power. The higher is the energy produced by a solar power system, the wattage accordingly increases.
- Solar panels: A cohesive cluster of photovoltaic cells form a solar panel. The size of the panel is determined by the number of photovoltaic cells in contains. This, in turn, determines the total power generated by the solar panel. A solar panel typically produces 250 to 400 watts of power. For instance, a 1,000 square feet home may need as many as 25 solar panels of 400W each, in order to be self-contained (collectively producing 10 Kilowatts of solar-powered energy).
- Inverter: The electric energy produced by a solar power system is in the form of direct current (DC), more suitable to portable power banks and UPS. However, common electrical appliances like lighting and heating equipment, kitchen, and electronic equipment, etc. run on alternating current (AC). An inverter converts the DC produced by a solar power system into usable AC.
- Battery: A solar power system can only generate solar energy with the availability of direct sunlight. This is great for powering appliances during the day. But what happens when you want to use solar energy at night, perhaps to power a light or a fan in your home? In fact, conventional electricity is more likely to be expensive during the night, as utility companies charge top dollar for these “peak” hours. This is where a battery comes in, to store the harnessed solar power for later use (typically during the night).
- Racking and mounting systems for solar panels: When you see a solar panel—either installed on the roof of a building, or directly on the ground—you will notice it stays in place, despite the wind. This is due to racking and mounting systems that are used to “install” a solar panel on a property. There are also various types of racking and mounting systems to support different forms of solar panel installation (like roof versus ground, etc.).
- Solar accessories: This can vary, depending on the type of the solar power system. Popular ones are listed below.
- Solar charge controller: Once a solar battery is fully charged, based on the voltage it supports, there needs to be a mechanism that stops solar panels from sending more energy to the battery. This comes in the form of a solar charge controller, and is also responsible for protecting the battery from getting “drained” when it is not used. (This can happen in the absence of a solar charge controller, if the electric current reverses direction and flows back to the solar panel.)
- Solar cables: As the name indicates, these are wires to interconnect the various components of a solar power system. They are designed to withstand the high temperatures that run through photovoltaic cells. They are also UV-resistant as they are mostly installed outside buildings (on the roof, or directly on the ground).
- Solar meters: Elaborately designed solar meters are also available in order to measure, monitor, regulate and optimize the energy produced by a solar power system.
Tied to the Grid, or Off the Grid?
A solar power system is designed to be a self-contained source of clean, electric energy. With this, there are various ways in which you can use the system.
- Off-grid solar power system:This system does not connect to any other source of conventional electricity (like utility companies). Off-grid solar power systems are more expensive, as they will rely on solar panels and batteries with a higher wattage capacity, in order to generate adequate solar energy to power all your needs (includes day + night). They are hence more suitable for rural areas with poor grid connectivity, or in areas that experience frequent power shutdowns (due to earthquakes, hurricanes, etc.).
- Grid-tied solar power systems:For areas with adequate grid connectivity, property owners are more likely to stay connected to the grid, as they use their solar power system as an alternate source of energy. This allows you to work with a smaller number of solar panels, and without a battery, thus reducing initial cost. With this, you use solar-powered energy when the sun is shining, and conventional electricity offered by utility companies at other times. You can also scale your solar power system over time based on your finances.
- Net-metered solar power systems:If you wish to optimize the use of your solar power system, especially from an economic standpoint, your best choice would include a net-metered system that is tied to the grid, along with a sufficiently large solar battery for night time use. This includes:
- Solar panels to harvest solar power during the day.
- Solar inverters and controllers to regulate the generated power.
- Solar batteries to store the energy produced for night-time use.
- Net meter.
Here, a net meter is a type of solar meter that allows you to measure the amount of solar energy you send back to the grid. In fact, this is in huge demand in many US states with strong RPS goals (Renewable Power Standard goals). In such a case, the state government may mandate that local utility companies generate a certain percentage of energy, purely through renewable sources. Solar power is mighty popular in this regard, leading to more utility companies “buying” solar power from local residents.
- Produce large amounts of solar power during the day.
- Fill the solar battery to maximum capacity during the day, for night-time usage.
- Return excess solar energy produced back to the grid, for credit from your local utility company.
- Tap into grid-based conventional energy when direct sunlight is not available (at night, or during winter, etc.), or during off-peak hours when conventional electricity rates are low.
As you can imagine, such a system has several variables and cannot be fully automated to a single value all through the year.
For this reason, property owners with large solar power systems make use of several cutting-edge solar accessories—like solar monitors, solar inverters and solar power optimizers, along with drones and IoT-based systems for real-time monitoring and optimization—in order to maintain a system that provides maximum bang for your solar buck. This is where you tap into solar energy when it is produced in plenty, store it for use during peak hours, and also sell any excess energy to utility companies for profit. Perfect!
PART 2: Residential and commercial types of solar power systems
The solar industry is growing by leaps and bounds every year, thus introducing cutting-edge technologies to the public at a rapid pace. So, when you start exploring the profitable world of solar, expect to be bombarded with solar jargon, but in a good way!
Here are some common classification methods used by the solar industry.
- Solar power systems, classified by usage, and deployment:This includes:
- Residential solar power systems, by individual homeowners. The system is designed primarily to meet the needs of the individual home. Again, they can be off the grid, tied to the grid (without battery), or net metered.
- Commercial solar power systems, by businesses, and for commercial buildings. This can also include apartment complexes, restaurants, hospitals, parking lots, etc. These may be bigger in size to address the collective energy needs of multiple businesses within the commercial property, or to address common energy needs (like parking lights, solar fences, etc.).
- Utility-scale solar power systems, ideal for solar farms and owners of large properties. This is where you set up a large-scale solar power system, primarily to sell solar energy to others (residential and commercial), through a PPA(Power Purchase Agreement). In this case, residences and businesses do not have to install a solar power system on their property. Instead, they simply buy solar power generated by your system, much like they buy conventional electricity from a utility company. This type of system, based on that information, needs to be tied into the grid. Also, a typical solar PPA spans across 6 to 25 years in the US, thus ensuring the solar farm has business for this entire duration.
- Solar power systems, classified based on connectivity to conventional electricity grid:This can be grid-tied, off-the-grid, or net-metered. (Described in detail in Part 1, above.)
- Solar power systems, classified based on the availability of storage:This includes:
- Standalone solar power systems, another term for solar power systems that are completely off the grid. As described previously, such a system will rely on solar panels and batteries with a high wattage in order to be completely self-contained.
- Solar power systems with battery backup, for a setup that is tied to the grid, but also has a battery for additional storage. Such a system allows the owner to regulate the use of solar power during peak and off-peak hours. This can also be a part of a net-metered system, to further optimize utilization of solar power.
- Flexible solar systems:Solar power systems were conventionally installed on a property, either on a roof or on the ground, thus restricting their versatility. The rapid growth of the industry has led to the production of flexible solar panels in recent times—both in terms of adaptability and composition. Common examples include:
- Flexible solar panels, ideal for installation on boats, camping equipment, cabins, RVs, etc. thus providing a self-contained, portable solar power system.
- Solar power system kits, also called solar panel kits. As the name suggests, these are just handy and hence smaller-sized crystalline solar panels that you can carry with you, in order to tap into solar energy when you are on the move (during camping, in an off-the-grid cabin, etc.). These types of kits come with additional accessories as required. (This can include solar lights, AC/DC inverter, and charger, small-sized battery, or solar power bank, etc.)
PART 3: How to get a solar power system installed?
We hope that Parts 1 & 2 have demystified the finer workings of a typical solar power system for you. With this, you might be eager to install one on your property, residential or commercial, and start tapping into the enormous benefits of renewable energy. Here are some things to note, before you make your first solar power system investment.
Important factors to consider, while installing a solar power system on your property
- Building code standards and other mandates governed by your state:
This is the first step before embracing a solar power system installation on your property. Find out how solar-friendly your state is!
In a well-meaning paradox, the states that are most partial to solar, also pass the strongest mandates on to their residents. We’ll use the state of California, arguably one of the most solar-friendly states in the US, to illustrate this fact.
Highlights of solar policy mandated by California:
- All new (residential) constructions post 1st January 2020 are required by state law, to include a solar power system as a primary energy source on their property. With this, experts estimate an average increase of $8,400 for the construction of single-family homes. This can turn into an additional mortgage of $40 per month. At first glance, this seems like a bummer. BUT:
- The state additionally supports its residents in several ways:
- State-wide RPS goal of meeting 100% of energy needs through renewable sources by 2045. This means that if you have a solar system on your property, utility companies are more than likely to buy excess solar energy from you. This also means that it is worthwhile investing in a net-metered system connected to the grid.
- Federal solar credit of 26% on initial solar power system cost can be availed the first year, giving you a big relief on your initial investment. Also, the amount you invest in installing a solar power system on your property is exempted from property tax, thus making it cheaper to go solar in California.
- Do you know that California has the nation’s 7th largest rate, in terms of electricity prices? Yikes? This means that you pay expensive rates for conventional, non-renewable electricity. This also means that the average single-family home saves up to $80 per month on utility bills. When combined with the additional cost of construction (additional $40 for a monthly mortgage), this still leaves you with net savings on $40 per month based on your solar power system. Now, this is an undoubted winner by any factor!
As this example illustrates, understanding the solar policies of your state, especially in terms of building codes, tax rebates, and tax credits, can and should play a big role in determining the type and cost of solar power system you pick for your property. This can also clue you into ingenious ways to make a profit of your solar power system.
- Estimate the solar power system you will need:This can be based on 2 simple things:
- Your average monthly energy bill
- The total power you wish to generate on your property
If initial costs are a concern for you, you can try this friendly solar power system calculator from EnergySage, which estimates a solar power system based on (a) above. It also considers the energy rates in your state of residence, in order to predict a suitable solar power system for your needs.
Further, most states allow residents to pay for their solar power in 3 different ways:
On the other hand, if initial costs are not a concern, you can decide your solar power system based on the power you wish to generate, and hence the savings you wish to accumulate every month. This is further impacted by the factors listed below.
- Buy the system outright, through cash. This results with no interest and is hence the most profitable system with higher savings that span across the lifetime of your solar power system. (Note: Solar panels typically last for 25-30 years!)
- Buy the system, but with a 0-deposit loan. Obviously, a small portion of your profits goes towards paying off the interest on the loan.
- Rent/lease a solar power system, typically through a PPA. This includes minimal investment on your part, and will hence lead to lower savings. However, you still have the monthly savings on your utility bills, as solar-powered electricity is typically cheaper than conventional electricity in the long term.
- Location of your property:This is best discussed with a solar power system contractor, and will be determined by your state, geographical location, surrounding environment (like the presence of tall buildings or trees), and alignment of your roof. Together, they can be used to determine a solar power system that is best suited for producing the maximum amount of solar power all year.
- Budget:Americans are often surprised to realize that budget comes in as the last factor, when considering a new solar power system on your property. This is because there are several tax rebates and credit opportunities provided by the federal and state governments, in order to residents reduce initial installation costs. The solar industry is also thriving in the US, so a resident is bound to find several financing options that do not burn a hole in your pocket. Again, contact your local solar contractor today to find out solar opportunities available for you.
How to build a solar power system? Seven simple steps to install one on your property
- Determine your energy requirements based on a solar power system calculator.
- Initial discussion with local solar contractor.A good solar power system calculator will also bring up several suggestions for local contractors, based on the location of your property. Here, the rule of 3 seems to work best when choosing the right vendor. You can hence begin a conversation with 3 local contractors before you finalize your choice. They will typically need the following information from you before the first inspection.
The contractor’s inspection visit can help you determine the final choice.
- Tentative budget—how much you are willing to spend from your pocket on initial installation costs.
- Any observations on monthly energy needs? For instance, if you have an air-conditioning system in your house that is known to soak up an abundance of power most of the year, your solar contractor needs to know.
- A quick analysis on your property, including geographical location, roof type, space for ground-based solar panels. Here, remember that solar panels can be installed either on an existing roof, or on the ground (recommended if you have space on your property).
- Gaining relevant information from your local solar contractor.Given the information provided in (2) above, your local contractor should be able to help you further understand the following factors:
- Licensing, certification, and affiliations of the contractor. How long have they been in business? And how long will they take for installing a solar power system on your property, starting with the first inspection visit?
- Recommendations to initial lower costs, including clarity on solar tax rebates and credits in your state.
- Various financing options available in your state, including profitable PPAs where you can rent/lease a system without buying it upfront.
- Details of warranty/guarantee of the solar power system, including a projection of yearly savings spanning across its lifetime.
- Next steps, leading to initial inspection visit by the contractor. In some cases, they may also be accompanied by a city engineer to understand building codes in your locality.
- First inspection visit by local solar contractor.Some solar contractors offer a free inspection before they charge. If so, you can consider more than one contractor at this point. If not, the points you have uncovered in (3) above should help you finalize your solar contractor. Regardless, the first inspection from the contractor should officially finalize the kind of solar power system that is ideal for your needs. This also needs to include a sign-off from city engineers indicating your property is up to code, and hence ready for a solar power system installation. Finally, the solar contractor should also warn you of any prior work required, in order to facilitate a solar power system installation (like re-roofing, clearing of yard or debris for ground-based panels, etc.).
Note: The permits required for the installation of a solar power system vary based on the type of setup. For instance, ground-mounted solar panels may require permits than roof-mounted panels. If you expect to install a higher number of panels on your property, like a solar farm, you may also need to ensure that the by-laws of your state allow for solar farms on your property. Also, the costs for permits vary based on type. Don’t forget to check these details off your list during the first inspection visit of your solar contractor!
- Finalization of solar power system.This is where your chosen contractor officially signs off on expected costs (based on a quote), type of installation (roof or ground), total power generated by the system, solar accessories needed to optimize maintenance (if any), and any other permits required to take the process forward. Based on this, you finalize the order to your local solar contractor.
- Installation of solar power system.
The installation of a solar power system on your property can take anywhere from 1–7 days, depending on the availability of contractors, permits, and materials required. For a roof-based solar panel system, this can include preparation of your roof, re-wiring and upgrade, installation of solar panels and accessories, and final connection to the power panel of your property. Only when this is complete will solar power get generated and used on your environment-friendly property.
- Connection to the grid, as required.This step is not required for off-the-grid systems. But if you decide to stay on the grid, consider net-metering to optimize monthly savings. Your solar power installation is successfully installed when a city engineer connects your setup to the grid, and signs off on successful installation.
PART 4: Going under the hood of a solar power calculator
What factors affect the calculation of the final solar power system on your property? Some common ones include:
- Average energy consumption during the year. For instance, the national average assumes that residences consume about 10,000 kilowatts of power during the year. If you consider the typical 250-watt panel, a good-sized property may need as many as 34 solar panels to meet this number. (This also varies based on efficiency of panel. Higher efficiency panels are also costlier.)
- Average electrical appliances used through the year. Again, the national average may consider one mid-sized refrigerator. If you have an additional refrigerator along with heated flooring, your energy needs can be significantly higher.
- Cost of solar power system in your state.This is a very dynamic number, and varies significantly across states. In fact, a typical 6-kilowatt system—typically used across many US homes—can cost anywhere between $14,000 to $19,000 depending on your locality.
- Space available for solar panel installation on your property.The more space you have, the more panels you can install. On the other hand, space constraints may also lead you to invest in high-efficiency panels, which are also pricier.
- Is this solar power system for home adequate? The best way to figure this out is to go through your electricity bills for the past year. This can help you understand your average energy needs (in terms of kilowatts per year), monthly utility bills, and projected savings based on the solar power system. Also remember that your local contractor can better help you understand subtle factors that will impact solar power generation, on your property. This can include the tilt of your roof, availability of direct sunlight across seasons through the year, any blockages that need to be addressed (like surrounding trees), etc.
Note: Installation of solar power systems requires expertise and experience in order to deliver a hassle-free experience. Use the power of 3 before you finalize your local solar contractor…
- Tip 1: Contact at least 3 top local vendors and compare their quotes before you make your choice.
- Tip 2: Follow up on online reviews of your chosen vendor before signing the dotted line.
- Tip 3: Solar power is now accessible directly through solar products, without any fussy installations. Stay updated on the latest solar technologies through Renogy and Urban Grid Solar.
In closing, the solar industry is strategically placed for growth in the majority of US states. A significant portion of this growth will be contributed by residential and commercial solar power systems. For this, both federal and state government policies support residents with solar tax rebates and credits, along with resident-friendly pricing for solar investments.
Is a solar power system still expensive in the US? Not necessarily, as they do vary based on state policies. Is this a must-have to garner long-term savings and create an environment-friendly future for our children? Absolutely. It is hence no longer a question of IF you want to invest in solar, but WHEN you want to invest in solar. All in all, the future of the solar industry in the US continues to look exceptionally bright!