Many news outlets have extensively covered the advantages of solar energy, and there are plenty. But very few things in life come with zero downside. Although the cost of solar energy has fallen dramatically in recent years and the technology has advanced, some disadvantages of solar energy exist. Here are four worth considering:
1. Some Solar Installers Sell One-Size-Fits-All Systems
It is relatively common for some solar companies to install nearly the same solar equipment on almost every job, regardless of the circumstances. Unfortunately, not all homes are created equal from a solar energy perspective, and customizing an installation can be important.
Some homes have shaded roofs, and others don’t have a south-facing roof surface. Other homes have dormers and skylights that decrease the available space for solar panels. Solar technology is rapidly maturing, and not all installers are keeping up with cutting-edge technologies. Applying some of the latest solar technologies can help boost solar production, increase the total percentage of household electricity coming from solar, or promote solar output in cloudy weather.
Conducting independent research on solar energy and getting multiple bids for a home solar installation are two ways to help find the best technology and solar installer for your property. UnderstandSolar is a free service that links solar shoppers to top-rated solar installers for personalized solar estimates.
2. Net Metering and Electricity Rate Design Impact Solar Economics
Another one of the disadvantages of solar energy is that it is difficult to calculate precisely the payback period of installing a solar system. This is because future energy rates and net-metering laws could change over time and are not set in stone.
“With more and more utilities re-evaluating net-metering rules and rate design, the residential solar economic outlook can no longer depend on a static policy landscape like the one that helped encourage the nearly 1 million homeowners who now have rooftop solar,” said Cory Honeyman, senior GTM Research analyst. “Looking ahead, it is no longer a question of if but rather when and to what extent rate structures and net-metering rules will be revised.”
The state of net-metering laws and other solar incentives in Maine are currently up in the air and highlight this concern. The Maine Public Utilities Commission ruled in January that net-metering benefits will decline over time except for existing solar system owners who are grandfathered in for 15 years. Meanwhile, there is a bill to expand solar incentives in Maine. The economics of a solar system are up in the air right now, making it difficult to assess projects accurately on their financial merit.
3. Solar Is Not Economical in All States
Although installing a solar system may be a wise financial investment in California, Massachusetts, New Jersey and Hawaii, the same isn’t true in other states. Solar shoppers in Washington, West Virginia, Oklahoma and North Dakota won’t be as pleased when they crunch the numbers.
The economics of buying a residential solar system vary widely by state, according to GTM Research. Although the solar resource of an area is a factor, there are numerous factors to take into account. Current net-metering rules, electricity rate design and incentives are all very important.
“To date, the residential solar market’s growth has primarily come from a handful of states where favorable rate structures and net-metering rules have set high, predictable ceilings on savings due to solar,” said Honeyman.
4. Solar Leases May Scare Off Home Buyers
Solar leases and power purchase agreements (PPAs) became very popular several years ago. It allowed homeowners to go solar for as little as no money down and start producing solar energy on their properties. The homeowners still saw much of the solar savings but didn’t get to claim the solar tax credit.
There was a recent study by Lawrence Berkeley National Laboratory of homes sold in Southern California with solar leases and PPAs. Although most survey participants reported no impact on the home sale value from the solar lease agreement, 20 percent said they did have potential buyers who were scared off because of the solar lease.
Solar leases and PPAs are declining in popularity with solar shoppers. There are now more solar financing options available than ever before, making owning a solar system more attractive than leasing to many homeowners.
Now that solar energy has proven itself as a low-risk, high-return investment in many states, it has gotten much easier to secure financing for a residential solar system. There are even low-interest loans that allow homeowners to install a solar system with no money down, removing the up-front cost of going solar. As solar financing options become more plentiful, PPAs and solar leases are becoming less attractive to solar shoppers.
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