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Here comes the sun

Are home solar panels for you?

Created date

July 14th, 2016
Home solar panels

Home solar panels

We’ve all heard that there’s no such thing as a free lunch.

But what if there were such a thing as free electricity?

That’s the idea behind solar energy and the increasing popularity of home solar panels. So what’s the catch, and is it really free?

The basics

According to the U.S. Department of Energy (DOE), “enough sunlight hits the earth’s surface in one and a half hours to power the entire world’s electricity consumption for a year.” Solar energy is a renewable energy technology along with resources like wind, geothermal, and hydropower. And now that the technology for harnessing that energy has matured, it’s worth considering for residential use. In fact, the DOE says that the cost of photovoltaic solar panels decreased by roughly 80% between 2008 and 2014. The DOE’s SunShot Initiative aims to make solar power “cost-competitive with fossil fuels by 2020.”

In a residential setting, the solar panels are typically mounted on the roof of the home. These panels are wired into the home’s electrical panel to supplement or, in some cases, provide all of the home’s electric supply. It probably goes without saying, but the more sunlight you get and the more roof space you have, the better your experience is going to be. Homes that are heavily shaded may not be good candidates (although the cooling shade in summer months can still provide energy savings of a different sort).

How it works

Just like with cars, you’ve got two primary options for getting started with solar energy: owning and leasing.

In the first scenario, a homeowner buys the panels outright and pays to have them installed and maintained. This means that the upfront costs can be substantial, but the savings are greater, since the homeowner usually gets all of the energy generated by the system. Owners can still choose whether or not to be connected to the power grid and can collect on any tax credits, incentives, or rebates.

Leased residential systems have exploded in popularity, however, and the setup there differs slightly. Upfront costs are usually far less (occasionally, there’s no money required up front) for consultation and installation, and power rates are often then fixed for the duration of the lease. 

But the result is that the homeowner usually pays a regular leasing fee and does not own the equipment. Instead, the homeowner is paying a lower rate to the solar company in lieu of a utility company, and the solar company benefits from the aforementioned tax credits. Which may still be a good deal, even if the lease payments offset the difference somewhat. But that certainly doesn’t meet our definition of “free.”

Unlike car leases, solar panel leases run much longer, usually 10-20 years. And while the solar company’s upfront costs might be minimal, homeowners may still be on the hook for the cost of replacing older roofing or even shelling out for costlier repairs or reinforcement before the panels can be installed.

From there, things begin to vary widely depending on sunlight, roof size, and the home’s energy usage, so the consultation with the solar company is crucial for putting the system together.

So it’s not “free,” but it still sounds promising, right?

Not so fast, says home appraiser Vince Fromm, of Atlantic Appraisal. If you’re hoping that those solar panels will raise your home’s value, leased systems may not provide the bump you might expect. “The lease is a 20-year lease and the buyer must assume the lease,” he says, “which limits the market for the house.”

What’s more, says Fromm, leased systems are considered personal property and not necessarily a “fixed attribute” of the home, which means that appraisers can’t take the system into account when determining the home’s value as they might with an inground pool or a deck.

And while leased panels may not qualify as a fixed attribute of the home, they’re still a major exterior modification. Depending on where you live, not every homeowner’s association or neighborhood covenant is going to allow them.

Where to find it

One big name in home solar energy right now is SolarCity. That’s thanks to the company’s chairman, Elon Musk, who’s also widely known as the CEO of Tesla Motors and SpaceX, as well as a cofounder of PayPal (which means he’s no stranger to cutting-edge consumer technology companies). But SolarCity is by no means the only player in the game. Other companies have stepped in to act as middlemen, demystifying the process for customers and helping them find local solar companies.


While solar panels are the most visible and obvious form of collecting and using solar energy, other approaches, like passive solar design, are worth considering, especially if you’re leery about the look of all those panels on your roof.