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How do solar panels work?

Sunmetrix is full of very useful information for homeowners who are interested in solar power. Here is a gentle introduction to each key aspect with links for in-depth information.

Top factors determining solar energy potential

A vision of the future: a solar home and an electric car
A vision of the future: a solar home and an electric car

First, you might be wondering how solar energy works. One of the most confusing things about solar energy is the mysterious link between the installed power and the actual energy output. To put it another way, if you put a 200-watt solar panel on your roof how many watt-hours of electricity would you produce in a day or throughout the whole year? It is very important to understand that the performance of solar panels is location specific. The same 200-watt panel will produce very different amounts of energy if we install it in Seattle, WA or in Phoenix, AZ. But the real question is: what causes this difference and how can we set realistic expectations about our solar energy potential? The top factors determining solar energy potential are: latitude; cloud cover and aerosols; elevation; and shading and obstructions.

Advantages of solar energy

If you are considering solar energy for your home, you will be happy to know that there are many advantages (and a few disadvantages), whether you are motivated by saving money or helping the environment. In addition to helping fight climate change, one of the most relevant benefits of solar is the cost certainty that comes with locking in your electricity rate for a very long time (20-25 years on average), as utility bills have been rising almost everywhere over the past decade. In locations where the cost of electricity from the utility is greater than the cost of solar electricity (known as grid parity), homeowners will save money by going solar. Furthermore, solar installations increase the value of a home.

Embracing solar power is much easier than you think
Embracing solar power is much easier than you think

What is the cost of solar energy?

Installing solar panels is a big investment: make sure that the price is right
Installing solar panels is a big investment: make sure that the price is right

Understanding how incoming solar radiation is transformed into useful electricity can be a challenge by itself, but understanding the economics of solar can be even more daunting. There are two terms that you should become familiar with: levelized cost of energy (LCOE) and cost per watt. The term "levelized" refers to making an apples-to-apples comparison of different sources of energy by including all relevant costs, as well as the expected lifetime of the energy investment. All other things being equal, the more sun a location receives, the lower the levelized cost of solar energy. Cost per watt, on the other hand, is nothing but a handy way to "normalize" the total cost of installation. For example, if the cost of installation for a 5 kW (i.e., 5,000 watt) solar pv system is $20,000, then the cost per watt of this system is $20,000 divided by 5,000 watts: $4 per watt. Cost per watt is not dependent on the amount of sun a location receives.

Equipment considerations when going solar

There are a few key components for every solar installation: solar panels, inverter, racking system, monitoring system and increasingly, battery storage system. For most homeowners, the best option is to find a trusted installer and get their recommendation for your particular situation. Here are some specific issues to keep in mind:

Choosing the right solar equipment for your home is not always easy, but we're here to help!
Choosing the right solar equipment for your home is not always easy, but we're here to help!

Financing your solar panels

The way you finance your solar installation determines the return on your investment
The way you finance your solar installation determines the return on your investment

For most property owners, “going solar” is a complex decision. From the brand of the solar panels to the track record of installers, from the structural impact on the roof to esthetic considerations, there are many factors that shape the final decision. However, one factor is more likely to trump all others: economic return. Despite plummeting solar panel prices, a complete solar energy system still comes with a hefty price tag. In fact, investing in solar energy can be seen as the second most expensive purchase of a household, comparable to a car purchase. As with many things in life, too much choice complicates things when it comes to the best strategy for installing solar panels at your home or business. It’s important to understand your financing options: full ownership through a purchase, with or without a solar loan, a solar lease, or a Power Purchase Agreement (PPA).

The best way to go solar

Installing solar panels for your home is a big decision that takes careful planning and research. Done properly, it is an investment that keeps giving, for 20-25 years on average. So what steps should you take?
  1. Use Sunmetrix Discover to assess your solar potential. By understanding how solar energy varies from place to place, you can assess whether your system will lead to payoffs in the long run. Want more detail? You can take a solar energy test drive with Sunmetrix GO (for North America) and directly compare your electricity consumption to the electricity you would produce with solar panels, with near real-time data solar data.
  2. Consider your options. How much capacity do you need? If you have a big home (and a big roof) you may be looking for a larger than average residential system, whereas if you have a small home and you consume a relatively small amount of electricity, you may only need a low capacity system. Read up on the technical considerations listed above and use the Sunmetrix Solar Panel Calculator to play around with solar home specifications and see the effects.
  3. Learn what financial incentives are available to you. If you live in the U.S., the greatest savings comes with the federal investment tax credit of 30%. But there could be additional solar tax credits, rebates and incentives available in your state or province. Moreover, you can benefit from our Solar Cashback Program, where we pay you when you go solar.
  4. Use the Sunmetrix Buy or Lease Calculator to help you determine the best way to finance your solar system and maximize your return on investment.
  5. Find highly-rated installers in your area and request quotes. We recommend getting more than one quote, and we can help you get multiple quotes by using our “Help me get the best quotes” button.

Going solar is one of the best investments you can make for the future of your family...and our planet.
Going solar is one of the best investments you can make for your home...and our planet.

Need more information? Check out our free solar guide today!

I highly appreciate your efforts in issuing this guide. It's a very useful and educational tool for those willing to learn and understand the solar energy industry.

Basil T.

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