A grid-tied solar photovoltaic (PV) system is a low-maintenance electricity generator that relies on the ultimate renewable resource – the sun. In years past, families primarily installed solar for environmental reasons. Now, relatively low component costs and financial incentives are enticing families to install solar for economic reasons.
Here's a quick primer ...
How Solar Works
- The image above shows a simple grid-tied PV installation. PV modules can be installed on nearly any type of roof surface. They can also be ground-mounted. When sunlight strikes the modules, the electrons are ‘excited’ and direct current (DC) energy is produced.
- The inverter converts the DC energy to alternating current (AC) that is usable in your home or business.
- The production meter measures the entire energy output of the PV array before it flows into the building’s main electrical panel.
- The energy is used as it is produced when there is demand from the home. Excess energy passes through to the utility grid. The net meter tracks the energy flow between the home and the utility.
Savings and Incentives
- When the household is using the PV energy as it is produced, it is not purchasing electricity from the utility.
- The household receives retail-rate credit for the electricity that flows back into the grid. For PSE and SnoPUD customers that’s about 9 cents per kilowatt-hour (kWh). Excess energy produced on long sunny summer days = low winter utility bills. This is called net metering.
- The household receives an incentive payment for every kWh produced whether the energy is used by the home or not. This is the production or cost recovery incentive and runs through June of 2020. Production payment rates for most utilities are between 15 and 54 cents per kWh, depending on the components used.
- PV systems smaller than 10 kW are exempt from sales tax. PV systems larger than 10 kW receive a 75% sales tax rebate.
- PV system purchasers receive a 30% federal tax credit.
- Some utilities provide additional incentives. SnoPUD pays up to $2,000 for a residential PV system and up to $8,000 for a commercial PV system.
PV system buyers are recovering the cost of their purchase in about 5 years when using Washington-made materials; about 10 years when using out-of-state equipment. Assuming a PV system will only last as long as the 25-year warranty of its modules –an extremely conservative assumption – that system will produce ‘free’ solar electricity for 15 – 20 years.
Low-interest loans are available for PV system purchases. Some rely on home equity. Others are secured by a lien on the PV system itself.
Solar and Home Value
A recent study led by Lawrence Berkeley National Laboratory found that a PV installation adds approximately $4 per watt to a home’s resale value. That’s about $20,000 for a 5 kW system. Homes with PV sell faster too.