Solar panels are made up of a collection of silicon solar cells that produce DC voltage and current (electric power or Watts) when exposed to light. Several solar panels are connected together to produce higher voltage and current. The DC power that the panels produce is connected to a device called an inverter. The inverter converts the DC power to AC, which is what our household uses. There is a small loss of power in the conversion from DC to AC so when discussing the size or cost of a system, it is always expressed in terms of AC Watts. The inverter is connected to the utility power grid at your main circuit breaker panel. If the utility turns off the power in your neighborhood, your system will automatically shut down until the utility power is restored. This is a safety feature of all grid connected systems.

Unlike most things you purchase, the price per unit of electricity goes up when you purchase more of it each month. This is similar to tax brackets where people that earn more money pay a higher percentage of their income to the Internal Revenue Service. If you take a close look at your electric bill, you will see that you are allocated approximately 350 kilo-Watt hours (kWh) of baseline electricity at the beginning of the month. The baseline electricity is relatively inexpensive and called Tier 1. Tier 2 is also relatively inexpensive and is approximately 100 kWh. But very few people use only that small amount of electricity. Tier 3 is dramatically more expensive than Tier 2, and Tier 4 is even more expensive. Tier 3 starts at approximately $60 of usage each month and Tier 4 starts at around $140. In general, people that are primarily concerned with the financial benefits of solar electric power invest in a system that offsets all of their more expensive Tier 3, Tier 4 and higher tier usage. People that are also concerned about their carbon footprint invest in a system that offsets Tier 2 and part of Tier 1.

The solar power system produces its maximum power output on bright sunny days. On overcast days it produces less but it still produces quite a bit of power. When the system produces more power than is used in the house, the excess electricity is deposited into the utility electric power grid. During these periods of time, your electric meter actually turns backward. At night when the system produces no electricity, all of your power comes from the grid and your meter turns forward. As a result, your meter not only keeps track of how much electricity you use, but also how much excess you produce. So your meter is like your bank account statement that keeps track of your balance when you make deposits and withdrawals. This is called Net Metering. During sunny summer months with longer days, your electric bill may be very low because your system is producing at peak efficiency. During winter months the days are shorter and your bill will typically be higher. With a properly sized system, your average monthly bill will be a predictable and quite low amount. As a result, most people opt in for annual billing when they invest in a solar power system. You will still get a monthly statement showing net usage.

Most people want to know what a solar power system will cost for their size home. Solar power systems are sized based on how much electricity you use on average per month, not the size of your home. You also have to consider whether your usage is about to change. You may have a growing family or you may have kids leaving for college. You may have some energy wasting appliances that you plan to replace. By examining your last 12 months of usage and considering energy efficiency changes and other factors affecting your future usage, the proper system size can be quickly and easily determined during a solar consultation. Solar electric power systems are sized and priced based on the number of the AC Watts that they produce. According to the California Center for Sustainable Energy (http://energycenter.org/), the price per AC Watt is typically $5 to $6 for residential systems. The price varies with the size of the system and factors such type of roofing material if placed on the roof, or trenching costs for running wires underground to reach a ground rack.

Roughly 40% of the system cost is paid for through state and federal incentives. In some areas, the incentives are higher. The state incentive is a rebate that is paid approximately 4 to 6 weeks after the system is switched on. Current rebate levels are always changing. The funds for each step have been allocated and when all the funds of a Step are paid out, the rebate amount of the next Step is lower. To see an up-to-date chart of the rebates in your area, visit http://www.csi-trigger.com/. Note that San Diego’s SDG&E is labeled CCSE in the chart. The federal incentive is a 30% tax credit of the amount paid for the system after the state rebate has been deducted. There is no limit on the total dollar amount of the tax credit. A tax credit is a dollar for dollar tax deduction when you pay your taxes on April 15th. If your tax credit exceeds the amount of federal tax you paid during the year, you can carry forward the unused portion of the tax credit into future years.

An important financial consideration is how long it will take to recover the initial cost of the system through savings on your electric bill. One factor to consider is that electricity prices in our area have historically increased at an average annual rate of 6.7% over the past 30 years. As a result, the amount you pay for electricity each month will typically go up each year even if your usage does not go up. When these factors are taken into consideration, the payback period is typically 4 to 6 years. Once the system cost is recovered, it produces free electricity for the rest of its life (estimated at 25 years). A common annual rate of return on the initial investment is over 20% – that’s an ROI that is very hard to find in other types of investments.

The next thing to consider is where to place the system on your property or home. If you have a large lot, a ground rack is a good choice. If your lot space is limited, then placing the system on your roof is a good choice. A south facing exposure is ideal and west facing also works well. East facing is less efficient along the coast because of morning overcast conditions while the sun is to the east and may require a slightly larger system. The amount of space needed is based on the size of the system and the type of solar panels used. Some solar panels produce less electricity per square foot and are less expensive. Higher density panels cost more but can reduce the system size to fit space-constrained application. Shade from trees, poles, your home, or your chimney if the system is on the roof is an important factor. Shade interferes with the production of electricity and needs to be taken into consideration when determining the location of the solar panels.

Residential solar power systems produce excess power that is fed back into the electricity grid. This turns the meter backwards so that you get a credit (see Net Metering above). Net metering is different from producing so much electricity that you actually produce more than you use. Feed-in tariffs are policies that govern whether or not a utility can or must purchase excess electricity produced by a residence. At this time, there are no residential feed-in tariffs in Southern California.

Solar panels come with a production warranty that is typically 25 years. The production warranty typically specifies that the performance of the panel cannot degrade more that 20% over 25 years. Inverters come with a service warranty that is typically 10 years. The inverters typically operate for 15 years and are then replaced. The solar contractor labor and workmanship warranty is required to be 10 years by the California Solar Initiative.

There are no moving parts so there is very little maintenance. As dust and debris collect on the panels over time, they can cause a reduction in the amount of sunlight that gets through to the solar cells. Simply spraying water from a hose to loosen and remove the debris is all that is required.

Grid-tied inverters are required to automatically shut down in the event of a utility grid power outage. This is a safety feature to prevent power from being fed into the grid if the grid is shut of for maintenance reasons.