Solar panels are becoming more affordable and efficient with the advancement of technology. It makes solar a preferred choice for homeowners and businesses to cut their electricity costs. Moreover, it will reduce their carbon footprint.
However, you have to navigate the complex solar contracts for solar panel installation. Solar Medix experts emphasize the importance of understanding these complexities.
Here, we are enlisting 5 essential things you must know before signing any solar contract.
- What Solar Equipment Will Be Used?
- Licenses & Insurance
- Guarantees & Warranties
- Cost Estimation & Leasing Options
- Project Timeline
Before diving deep into the technicalities of Solar Contracts, you should know,
What are Solar Contracts?
A solar contract is a formal agreement between a property owner and a solar company. It outlines the terms and conditions of solar installation, financing, and maintenance. These contracts come in various forms.
Some common forms of solar agreements include direct purchases, leases, and Power Purchase Agreements (PPAs).
Direct Purchase
In this arrangement, the property owner buys the solar panel system, which usually includes financing through loans. Buyers own the system, benefiting from both the energy produced and any available incentives.
Solar Lease
A solar lease allows homeowners to lease solar panels from the provider. They will have to pay a fixed monthly fee for using the system. But, the provider remains the actual owner of the solar system.
Power Purchase Agreement (PPA)
A PPA is very similar to a lease. But, during PPA, homeowners pay for electricity instead of a fixed amount for solar systems. Also, the rate of electricity thus produced is lower than the local utility rate.
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1. What Solar Equipment Will Be Used?
It’s important to consider the type of equipment to be installed while signing a solar panel contract. All the solar panels and their components vary in quality and manufacturing. It has a significant impact on the efficiency and longevity of solar systems.
Solar Panels
Solar panels are the heart of any solar system. You must look for information on the number and type of panels. Also, check other specifications, like their wattage and the manufacturer.
Panels from Bloomberg Tier 1 manufacturers are typically more reliable. They offer robust warranties.
Inverters
Inverters convert the DC electricity generated by the panels into AC electricity. There are various types of inverters, such as string inverters, microinverters, and power optimizers. Each has its pros and cons. But it depends on your energy needs and roof configuration.
Racking Systems
Racking systems are used to mount the panels to your roof or the ground. Read the contract carefully to make sure that it provides high quality, durable racking system. It must be capable of withstanding environmental stresses.
Or you can hire Solar Medix to review your solar contracts and get you the best deal possible.
Ancillary Equipment
Wiring, disconnects, and potentially battery storage systems are included in ancillary equipment. You must check that all the necessary components are provided in the contract.
Review of datasheets or product information for these components is very important. It can give you insights into their performance and reliability.
Also, you will be able to determine if the specific solar system fits into your overall energy goals or not.
2. Licenses & Insurance
It is necessary to check that the company is fully licensed and insured before signing any contract. This step is very critical. It ensures the protection of your property during installation.
Licenses
The requirements for solar installers vary from region to region. You must get information about specific licenses for electrical solar work required by your state or area.
Choosing a company with licensed professionals, such as those certified by the North American Board of Certified Energy Practitioners (NABCEP), is the best option. It ensures that you’re working with trained and qualified individuals.
Insurance
You must make sure that the solar company is providing adequate insurance. This insurance should include general liability insurance and worker compensation. It protects you from potential liabilities. For instance, any accident occurring during solar installation or damage to your property.
Let’s take the example of a homeowner in California. He had to face substantial financial losses as his solar installation company was not insured. A worker fell down and got injured during the installation process. It led to a lawsuit against the homeowner. Proper insurance can help you avoid such situations.
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3. Guarantees & Warranties
It is important to understand the guarantees and warranties in your solar panel contracts. It protects your investment. Also, it ensures the longevity of your system.
Product Warranty
Solar panels typically come with a product warranty. These warranties normally cover defects in materials and workmanship. This warranty usually lasts 10-12 years, with some high-quality panels offering up to 25 years of coverage.
Performance Warranty
This warranty guarantees a certain level of performance over time. It usually ensures a specific percentage of the original output of solar panels after 25 years.
Inverter Warranty
Inverters generally have shorter warranties than panels. Their warranties typically range between 5 and 10 years. Sometimes manufacturers offer extended warranties for an additional cost.
Installation Warranty
Some solar panel installers provide a warranty on their workmanship. It covers issues like improper installation affecting system performance. The length of these warranties can vary from 1 to 10 years.
Energy Production Guarantee
Some contracts include a guarantee of a certain amount of electricity production annually. The installer might compensate you for the lost energy production in the case of an underperforming system.
4. Cost Estimation & Leasing Options
The financial aspect of solar power contracts can be complex. It involves multiple components and payment options.
Here’s the list of things to consider, compiled by experts at Solar Medix:
Upfront Costs
The upfront cost includes the cost of the panels, inverter, and installation. Some contracts bundle all these things into one price. While some installers itemize each component separately.
Financing Options
If you cannot make an upfront payment at once, consider other financing options. Solar loans can help distribute costs on a monthly basis, making it easy to pay. It can often provide the added benefit of lower monthly utility bills. It also offsets the loan payment.
Leasing Options
As we already mentioned, solar leases and PPAs are the best way to install solar panels with little to no upfront cost. But you will be making regular payments to the provider. Also, you do not own the system in this case.
Tax Credits and Incentives
Federal and state incentives are an excellent way to lower your solar system cost. The Federal Investment Tax Credit (ITC) helps homeowners deduct up to 26% of the installation cost from their federal taxes (as of 2024).
Some states and municipalities are offering additional rebates or incentives as well. For instance, the NY-Sun Initiative provides significant rebates to reduce the initial cost of solar installations in New York. It makes solar energy more accessible to homeowners.
5. Project Timeline
The timeline for a solar panel installation project can vary based on several factors. These factors include permitting, installation, and utility interconnection.
Here is a general outline to help you understand:
Permitting
It can often take a few weeks to a few months to get the necessary permits from the authorities. It depends on the complexity of the project and local regulations as well.
Installation
Usually, the installation of a residential solar panel takes a maximum of 1-3 days. The larger or more complex the solar system, the more time will be spent on its installation.
Interconnection
Your system needs to be connected to the electric grid after installation. This will need approval from your local utility. It can sometimes take several weeks.
Total Time
The entire process, from the time of signing the contract to having an operational system, can take almost 2 to 6 months.
Get Expert Solar Contract Review with Solar Medix
Navigating a solar panel contract can be very difficult. It involves a lot of technical jargon and financial details. At Solar Medix, we offer comprehensive solar contract review services. It will help you make informed decisions.
Why Choose Solar Medix for Solar Contract Review?
- Expertise: Our team of professionals has extensive experience spanning over 17 years in the solar industry. It guarantees that no detail is overlooked in your contract.
- Transparency: We provide clear and concise explanations of all contract terms. It will help you understand exactly what you’re signing up for.
- Protection: We look out for your best interests. We will help you identify any potential red flags or unfavorable terms affecting your investment.
Don’t let the complexities of solar contracts stop you from making a sustainable choice for your home. Contact Solar Medix today for a thorough contract review. Let’s start a journey towards clean, renewable energy with confidence.
Frequently Asked Questions (FAQs)
No, but it is better to have a basic understanding of the key terms and components. However, preferably, you should hire a professional service like Solar Medix. It will ensure all details are thoroughly reviewed.
A solar lease allows you to use solar power without owning a system. A firm will install a solar system on your property and charge you a monthly cost that substitutes for your utility electricity bill.
A power purchase agreement (PPA) is a long-term contract between solar energy buyers and suppliers. It defines the price suppliers receive for every MWh of renewable energy generated.
Solar contracts can be legally enforced by a court. When parties engage in a solar contract, it becomes binding if properly performed and followed by both sides.
Yes, you may terminate your solar panel contract. However, the cancellation terms and restrictions may vary depending on the individual contract and the solar provider involved. There are three effective ways to end or terminate a solar panel lease.
