Getting solar quotes? Here’s how to read your proposal
Getting solar quotes from a contractor is one of the first steps when investing in renewable energy. The estimate should tell you about all of the important aspects of your system, including cost, estimated energy production and return on investment.
But not every quote is made the same. Some installers may choose to highlight different information or use different terminology. That can make comparing solar quotes difficult.
Ultimately, a solar estimate is meant to give you a sense of how your system will perform and what it will cost to install.
In this blog, we’ll discuss how to read estimates from solar installers and what information to look for.
Kilowatts, kilowatt-hours, tax credits, irradiance – there’s a lot of lingo that solar installers use when discussing their craft. And chances are, your proposal will include a lot of this information as well.
But not everybody is an expert when it comes to solar. So here’s a quick guide to some of the most important terms to pay attention to when reading a solar estimate.
- Kilowatt: Often expressed as kW, this is the nameplate rating of your solar system. If you have 10 400-watt panels, you have a 4,000-watt system, or simply 4 kW. This will be important for comparing quotes from different installers.
- Kilowatt-hours: This is a unit of energy. Your power bill is based on how much energy you use, and your system will produce a certain amount of energy to offset that. Your estimate should tell you how much the system will produce during a given timeframe, usually over the course of a year.
- Price per watt: This is probably the most useful metric for comparing solar estimates. This simply takes the system’s price divided by its rated wattage. If a 10 kW system costs $30,000, it has a $3.00 price per watt. Typically, larger systems have a lower price per watt because labor, permitting and other costs are spread out over a larger system. Make sure you’re using the price per watt before any incentives are applied.
- ROI: This will tell you how long the installer anticipates it will take for the system to pay for itself. Every kWh the system produces has a monetary value, and eventually it should produce enough energy to cover the initial bill. We’re often predicting 12-15 years before that occurs.
This seems like a no-brainer, but we’ve seen proposals that make it hard to discern how much the system will cost to install. The cash price, or the price before any incentives or financing is taken into account should be easy to determine from the proposal.
Your proposal should also include information about what kind of tax credit you can expect with your system. For the foreseeable future, the tax credit is 30% of installation costs.
Finally, your proposal may include information about financing the system’s installation. Be sure to check into the terms of the loan to see if it makes sense for you.
Ideally, your proposal will include an image of what your roof or yard will look like with the solar panels installed. It’s important to examine this image for a couple of reasons.
Installers sometimes design their systems to use every square inch of the roof. But that’s not always the most efficient use of space. Remember, solar is an investment, and putting panels in a shaded spot or on the north side of the roof is probably not a great use of your money.
Moreover, Minnesota law requires solar installers to leave room for walkways on the sides of arrays and at the ridge of the roof. If the installer didn’t account for that, there may be problems down the line.
Examine production figures
Like I mentioned above, solar quotes should tell you how much energy your system will produce. You’re likely not a solar expert, but you can do some double-checking of these figures with some quick math.
Typically, we say solar panels tilted just right and pointed directly south will produce about 1,200 kWh annually for every kW that the system is rated. So if you have a 4 kW system, then it should ideally produce 4,800 kWh over the year.
Shade and panel orientation will affect that figure, but you should start asking questions if the kWh is way higher than the kW figure. That’s a sign that the installer is overestimating the production.
Also, this is a good time to review your own bill to see how much energy you use over the course of the year. It’s probably not necessary for your solar system to produce twice as much energy as you use, so be wary of installers that are trying to sell an oversized system.
Many people are concerned with their system’s estimated ROI. But admittedly, it’s a hard thing to predict because it requires a certain amount of educated guessing about what will happen with electricity rates.
Solar systems are often warrantied to last 25 years. A lot can happen in that time, which makes any ROI estimate just that – an estimate.
Solar quotes will often include a prediction of how long it will take for the system to pay for itself. As part of that estimate, installers will factor in a certain amount of utility rate inflation into their ROI calculations. Our estimates are based on a 3% annual utility rate inflation. Higher inflation rates result in shorter ROI timelines because the energy produced by your panels becomes more valuable.
If the estimate you’re reading doesn’t include it, be sure to ask your installer about their estimated utility rate inflation will be. That will have a big impact on the estimated financial benefits of your system.
While you’re probably not up-to-speed on all of the solar equipment brands, it’s helpful for the contractor to know your goals and desires. If you want panels with a black frame assembled in North America, the installer should know which panels to choose from.
Moreover, it’s good to know what kind of warranty covers your panels and inverter.
Hopefully the installer included information about the equipment they plan to install. That should allow you to look up the manufacturer’s warranty if they didn’t already include it in the proposal.
Before making a big investment like solar, you’ll probably want to know a bit about the contractor you’re hiring.
Our solar quotes, for instance, include information about how long we’ve been in business, our licenses, solar industry certifications, workmanship warranty and online reviews. Don’t be afraid to ask questions about an installers qualifications or experience!
Adding solar panels to your home or business is a big decision – one that requires gathering a lot of information. A solar sales proposal should help you answer some the biggest questions you’ll have.
Now that you’ve learned the basics, you’ll better understand what going solar can mean for you!
Read more from Northland’s solar energy experts:
- Solar panel warranty: How to protect your investment
- Getting solar quotes? Here’s how to read your proposal
- Solar tax credits and you: What’s in the new climate change bill
- Designing a new home with solar panels: A guide to maximizing your system
- Is my roof good for solar? Find out here