Rosie on the House: Installing solar on your house worth questioning

February 12, 2014 by  
Filed under Solar Energy Tips

Beginning this year, homeowners who install solar electric panels will pay a new monthly fee for plugging into the electric grid of Arizona Public Service. The fee, based on the capacity of the home’s solar system, will probably cost homeowners from $3 to $6 a month.

This fee was the first of its kind ever in the United States and the fight that went on in our state attracted national attention. That’s because our solar industry is second only to California’s in America. Almost 300 solar companies are at work in Arizona. Almost 20,000 APS homeowners have solar panels.

But the fee doesn’t sound like much, does it? After all, APS had sought a levy of as much as $50 a month. But solar companies say that even this fairly small fee will make solar electricity a harder sell for homeowners. Currently, solar customers pay an average of about $70 a month to the utility, according to APS. Before installing solar, of course, their bills were higher.

APS fought for the change because it said solar homeowners, compared with non-solar homes, were not paying enough to support the electrical grid that they use as needed.

Since the fee, approved last November, only applies to solar panels installed since Dec. 31, 2013, many homeowners raced to buy solar before the deadline so they could be grandfathered in.

“December was a record month for us,” says Dan King, owner of Harmon Solar. “But January dropped way off.” Still, King believes that the industry can bounce back by making some slight changes.

“While this fixed fee will cut into the economics of residential solar, for many homeowners it will still make financial sense to go solar,” according to Stefan Linder, an analyst with Bloomberg New Energy Finance quoted online in Businessweek.

Perhaps you’ve been thinking about solar electricity for your home. Does it still make sense?

Here are some factors to think about:

– Try to calculate what your savings might be — Some solar industry associations say a rooftop solar system saves the average homeowner about $5 to $10 a month after making a lease payment; others say it can be almost $20 a month.

One major Arizona utility, the Salt River Project (SRP), says that its customers who install solar on a leasing basis net an average of about $9 a month because they have lower bills but also have lease or loan payments to make. So the new fee, however small, could have an impact on some solar customers. King says that hardest hit will be homeowners who write a check every month for a lease payment.

Those who buy equipment outright or who have leases that are all or partially prepaid can net a lot more each month, but obviously they need to pay themselves back for their investment with any savings from utility bills.

– Check contracts carefully — More and more solar systems are sold with leases all the time. Right now, among SRP customers installing solar, 80 percent have leases rather than purchasing outright.

As with any contract, whether you lease or buy, read the fine print. Watch for increases in the interest rate over the years that might be built into your lease and think about the length of the lease. Some leases last 20 years, which is about the useful life of your equipment. Some advantages of a lease include a guarantee specifying how much energy your panels will produce as well as warranties for parts and service. If you sell your house, the new buyers can qualify for the lease just as they would for a home loan.

Before you sign a contract, check out the contractor with the Arizona Registrar of Contractors; make sure they are licensed, bonded and insured and have no outstanding complaints from homeowners. You also want to find out how much experience your contractor has and the length of time the company has been in business in Arizona.

– What is happening to prices for solar? — To help consumers, King believes that manufacturers and installers may have to make up for extra fees that utilities might charge. Some solar companies might even offer plans that pay the new fee for APS customers for a few years. Meanwhile, solar companies are facing inflation in their costs for both equipment and wages over the past year that has increased the cost of installation.

– Net metering is unchanged so far — The net metering process was not affected by the Corporation Commission’s decision in November to allow APS to charge the new fee. Under net metering, if the energy produced by your solar system is greater than what you use in a given month, the excess energy produced is carried forward and credited to your account.

– What utility company do you have? — Generally, the economics of solar work better when you live in a utility that charges more for energy. The cheaper your electric rates are, the less cost efficient that solar electricity might be. On the other hand, the general cost of electricity is continuing to go up everywhere. When it does, those with solar panels will feel less of an impact.

– Will utilities seek more new fees for solar users? — APS has indicated that it will continue to advocate more changes in incentives for solar homeowners.

Tucson Electric Power has indicated that it might make changes. SRP may do so as well — although it is not governed by the regulations of the Arizona Corporation Commission.

So homeowners might find it worthwhile to buy before more levies come along and before federal or state tax breaks disappear.

Scott Harelson, media spokesperson with SRP, told us that “as solar technology becomes more affordable, performance-based incentives, tax incentives and the like will naturally decline over time. This is true at SRP — our incentives have been declining over recent years — and throughout the industry.”

Thinking of remodeling your home? Why not make a list of repairs and remodels to take on for this year?


For more do-it-yourself tips, go to An Arizona home building and remodeling industry expert for 25 years, Rosie Romero is the host of the syndicated Saturday morning Rosie on the House radio program heard locally in Phoenix on KTAR-FM (92.3) from 8-11 a.m. Consult our website for other listings. Call 888-767-4348.

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