Solar Energy Crash Course: What You Need to Know

Most people are interested in the idea of solar energy, but they dismiss the thought of actually installing solar power on their property.

After all, aren't solar panels really expensive? Don't you need to live in a state of constant sunshine for them to even work?

It's true; solar energy used to be a luxury only enjoyed by the very rich or super environmentally-conscious, but thanks to a few well-timed factors these past few years, solar energy has been gaining traction and popularity is rising in neighborhoods just like yours all over the country.

Because the truth is, the best time to buy into solar is right now.

You may have thought solar power was out of your reach, but after today's article, you'll be informed with all the answers you need to make your dreams of solar living a real possibility.

Let's start with the basics.

How Much Do You Know About Solar Energy?

It's hard to believe that this modern, cutting edge form of alternative electricity has been around since the 1800s.

No, that's not a typo.

Solar technology was initially invented because people thought the word's coal sources were going to run out during the Industrial Revolution.

Charles Fritts constructed the first solar cell in the 1880s. Bell Labs iscredited with creating the world'sfirst silicon solar cell in 1954.

The New York Timesproclaimed this milestone on the front page as:

"The beginning of a new era, leading eventually to the realization of one of mankind's most cherished dreams — the harnessing of the almost limitless energy of the sun for the uses of civilization."

The beginning of a new era, leading eventually to the realization of one of mankind's most cherished dreams — the harnessing of the almost limitless energy of the sun for the uses of civilization
The New York Times, ca. 1954

However, solar didn't experience an existence quite this flashy until the hunt for alternative energy sources became a pressing matter decades later during the 1973 oil embargo and1979 energy crisis.

You may remember your local gas station running out of fuel during this time, right?

While solar technology has enjoyed stable growth since then, the process has improved and the parts are now easier and cheaper to produce, especially thanks to foreign competition.

Still, solar energy provides just five-tenths of 1% of the total energy consumed in the United States—which is basically only .50% of all the energy we're using.

Doesn't that percentage seem a little small to you?

Maybe that's because you know how much bigger it should be.

"The potential of solar energy is beyond imagination. The surface of the earth receives 120,000 terawatts of solar radiation (sunlight) – 20,000 times more power than what is needed to supply the entire world."

With potential like that, solar energy is definitely worth looking into.

But how does one start the process?

What Does it Mean to Go Solar?

Going solar means you'll install solar panels on your residential or business property to harness more energy from the sun than you consume from your local electric company.

The majority of solar adopters are still connected to their electric company's power grid. This means they still have power even when their solar panels aren't working, such as at night.

Could you go off-grid if you really wanted to become a self-sustaining energy machine?


But as Chris Doyle of Dividend Solar notes, typical solar installations only provide around 75%–90% of a household's power needs. Since the sun's only out for a few hours, that's the only time your solar panels will be working to capture energy.

When the sun goes down, you'll have to rely on batteries and energy-storing devices, which can be bulky and cumbersome, not to mention expensive.

Staying connected to the power grid is like having the best of both worlds.

How Does Solar Power Actually Work?

The Solar Energy Industries Association (SEIA) explains that there are three main technologies currently used in solar energy systems:

  1. Photovoltaics (PV), which are cells that directly convert light to electricity
  2. Concentrating Solar Power (CSP), which uses reflective material to harness heat from the sun as thermal energy to drive utility-scale electric turbines
  3. Solar Heating and Cooling (SHC), which collect thermal energy to provide hot water and air conditioning

The type of solar that we'll be referring to today will be primarily photovoltaic-based as that's the most common for residential homes.

Here's how solar cells actually work (3D Interactive)

Residential Solar Photovoltaic System

Also known as simply "rooftop solar", this common type of solar panel is made of photovoltaic (PV) cells.

Photovoltaic literally translates to "light" and "electric".

When the sun hits the solar panel, the light photons excite the electrons in the PV cell. Since the cell is also full of silicone, a strong semiconductor, this interaction creates electricity.

These solar panels are either installed on your home's roof or secured to the ground in certain cases. You want the solar panels to be in an area on your property that receives totally unrestricted access to the sun's rays for the longest part of the day.

The PV cells convert the sun's energy to direct current electricity (DC electricity).

A device called an inverter will take your solar-produced DC electricity and transform it to alternating current electricity (AC electricity), which is the kind that travels to the electrical panel of your house and lets you have power for all your devices.

Each individual cell of the solar panel can only produce 1–2 watts, which is why many cells are usually combined together to create the necessary voltage and amperage required for your property's electrical needs.

Think about this: One megawatt equals one million watts.

And there's been more than "1,460 megawatts of residential solar installations" across the U.S. since 2000.

In 2012 alone, rooftop solar installations reached 488 megawatts, a 62 percent increase over 2011 installations and nearly double the installed capacity added in 2010.
Center for American Progress

"In 2012 alone, rooftop solar installations reached 488 megawatts, a 62 percent increase over 2011 installations and nearly double the installed capacity added in 2010."

Solar energy is on the rise, and there are a few reasons why now's the best time to make the switch.

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How To "Rent Your Roof" And Cut Your Electricity Bill In Half

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Why Now is the Best Time to Switch to Solar

There are three reasons why solar is within your reach today:

  1. Mass production of solar parts in China has flooded the market with cheaper panels that have been lowering overall PV prices.
  2. Several U.S. states have been offering incentives, tax credits, and rebates that discount and help offset solar installation costs, on top of the 30% federal solar Investment Tax Credit ( ITC).
  3. Solar financing companies are removing the large upfront costs of going solar so homeowners start earning discounts on their electric bills without the burden of solar power installation costs.

It's this combination of factors that's been making solar energy more affordable to the homeowners who need it most.

"In just five years, the U.S. PV market—which does not include concentrated solar plants—has witnessed a fourfold expansion, from an estimated $3 billion in 2009 to $13.4 billion."

Let's see where this growth is actually happening.

Who's Making the Switch to Solar?

As the Union of Concerned Scientists notes:

"Solar accounted for an average of 16 percent of new electricity generating capacity installed annually in the U.S. from 2010–2013, and nearly 30 percent in 2013 alone."

Have you ever noticed that the wealthiest of society are always the first to adopt new technology? Think about how expensive first generation iPhones, 3D televisions, or electric cars were, for example.

Solar electricity is kind of the same way.

It used to be too expensive for most people to afford, but now the majority of homeowners making the switch to solar are middle-class Americans.

A Center for American Progress (CAP) study discovered that more solar panels were installed in neighborhoods with a median income between $40,000–$90,000 than any other demographic in Arizona, New Jersey, and California—the three biggest solar markets in the nation.

But that's not to say homeowners in states like Massachusetts and New York aren't catching up.

Solar panels in Massachusetts were installed in middle-class areas 70% of the time; that number is over 80% in New York.

In fact, the most growth occurred in ZIP codes with median incomes ranging from $40,000–$50,000 in California and Arizona, and $30,000–$40,000 in New Jersey.

When you think about, it only makes sense that those in middle-class incomes are looking for ways to save money on their electricity bills. The savings mean more to those who don't have a lot of disposable money to waste on fluctuating electricity bills.

The Rising Costs of Electricity

Everyone dreads the arrival of the electric bill in the mail (or your email inbox)—especially if you have a large family or property.

Your electric bill is probably one of the biggest expenses you have to pay each month (aside from your rent or mortgage) and it keeps getting higher. No matter how many LED light bulbs you install, or how strictly you regulate your thermostat, your bills don't seem to budge, right?

You're not alone. The average U.S. electricity bill can range anywhere from $200 to over $400 every month. This means in just one year, you're probably spending between $2,400 and $4,800 just on electricity bills.

That might explain why it's been so hard to save up for that dream trip to Hawaii!

You may be surprised by the biggest factor raising your electricity bills. According to the U.S. Energy Information Administration (EIA), when you break down the average American's electric consumption, you'll see that:

  • 41% was for heating our homes
  • 34% was due to appliances
  • 17% was used to heat water
  • 6% went to air conditioning

Energy Consumption by the Average American

There's such a huge difference between turning on the heat and running the air when it comes to your electric bill, but if you live in a cold climate, you may not have the option to cut back on your heating.

The second biggest power zapper is appliances. Though they certainly make your day easier, they do come so at a price.

Duke Energy complied a list of the most common appliance expenses and what they cost people on average every month. Here are a few examples:

  • Clothes dryer: $6.81
  • Leaving your computer on sans Sleep Mode: $8.86
  • Running a standalone fan: $1.77–$5.31
  • Separate freezer: $4.94–$7.97
  • Heater, constant use, in cold space: $88.56
  • Water heater: $21.25
  • Lighting, small home: $7.38
  • Lighting, well-lit large home: $36.90
  • Running a 10-year-old refrigerator: $11.80

Sure, you can take shorter showers, but you still can't live without a water heater. And if you have a large family, keeping a freezer is perfect for those BOGO scores at the supermarket. It's scary how quick these additions add up in electricity costs every month.

On top of these standard expenses, did you know that the cost of electricity actually varies minute-to-minute?

Peak hours of energy consumption are between the afternoon and early evening. Because there's such a high demand for supply, the cost of providing electricity to everyone during these hours rises.

You may not pay for these daily price fluctuations if your pay a seasonal average cost rate with your utilities and power company, but they're certainly built into your price.

This is why so many people are (happily) discovering that the biggest benefit of solar power is saying goodbye to high electric bills.

What Are the Benefits of Going Solar?

There are six huge reasons why people are making the switch to solar:

You Can Save Money on Your Electric Bill

Whatever solar energy your panels create—and you don't use—gets fed back to the electric company's grid.

No, your solar-generated energy is not free—it actually earns you money, or more specifically, credits, with your electric company.

It's called Net Metering.

Basically, your solar panels will be catching lots of rays during the sunniest parts of the day (around midday). But since you probably won't be around to use it (i.e. you have a job, go to school, etc.), that energy will be sent back to the electric company so they can use it during peak hours when they need energy most.

Most residences will enjoy savings of around $100–$200 each month.
Clean Energy Experts

The electric company will buy your energy back at a designated rate and credit this number to your account each month.

When the sun's not out and your solar energy isn't providing power to your home, you'll still have electricity because you're connected to the electric company's power grid. You'll have to pay for this electricity just like you would normally, but now you'll have credits and discounts thanks to the energy your solar power generated.

You'll notice savings on your electricity bill starting from the first day you go solar.

However, the amount of money you'll save is entirely up to the number and size of the solar panels you have installed on your property. Obviously the more kilowatts of solar capacity you have, the bigger your savings will be as you're selling/getting credited for more.

If you have a huge solar setup, you may be able to eliminate your electricity bill completely.

Most residences will enjoy savings of around $100–$200 each month.

Free eBook: Solar Homeowner's Guide (2018)
How To "Rent Your Roof" And Cut Your Electricity Bill In Half

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You May Be Able to Earn Extra Money on the Side

Your electric company will give you a credit for your solar energy, but in some states that rate may be more than what you're being charged for electricity.

Take the Austin Energy Value of Solar Tariff (VOST).

In 2012, Austin Energy became the first utility to give their residential solar electricity users an alternative to net metering by offering a VOST. Essentially, if you want to go solar in Austin Energy's grid service area, they automatically enroll you in the VOST credit system.

You'll pay an electric bill to Austin Energy based on the number of kilowatt-hours you consume like normal and they'll deduct the credits your solar power energy generated from your bill.

Here's the twist: The rate at which Austin Energy buys your solar energy is dependent on an algorithm developed by Clean Power Research. It monetizes the benefits of solar by assessing everything from fuel costs to the price of environmental cleanups.

Between 2006 and 2011, Austin Energy valued solar power between 10.3 cents per kWh to 16.4 cents per kWh.

Currently, the VOST has been set to a fixed 12.8 cents per kWh, which is still higher than what you as a customer would pay per kWh of consumption. Recent rates for consumption are between 3.3 cents and 11.4 cents per kWh.

So even on the high end of 11.4 cents, you're still earning 1.4 cents more than you're spending per kWh when you sell energy at 12.6 cents per kWh.

You can see why solar supporters are eager to get this kind of credit adopted nationwide.

The bigger your solar power setup, and the smaller your energy consumption, the higher your earnings.

You'll Increase the Value of Your Property

Since the solar on your property saves money on your electricity bills and provides an environmentally friendly option for electricity, you can be sure you'll see a return on your investment when it comes time to sell your home or property.

For every $1,000 that has been saved in annual electric costs, your home's value rises $20,000.
U.S. Department of Housing and Urban Development

The U.S. Department of Housing and Urban Development says, "For every $1,000 that has been saved in annual electric costs, your home's value rises $20,000."

An annual savings of $1,000 means a monthly savings of just $83! You already know you'll be saving more than that by now.

Plus, according to A Homebuilder's Guide to Going Solar , "Solar homes sell at up to twice the rate of their conventional counterparts."

If you had to choose between two houses in your budget and one had solar panels, wouldn't that make you just a bit more interested in one house over the other?

As quoted from Rik DeGunther's Solar Power Your Home For Dummies :

"It's encouraging to know that you're doing your fair share to mitigate global warming. It's comforting to know your future is more secure. And let's face it: Solar power is cool. When you put panels on your roof, people notice, and they'll be nicer to you. Well, maybe …"

You'll Be Saving the Planet

While all of the financial benefits of switching to solar matter a great deal for your wallet, there's also the fact that installing solar energy on your property will help clean up our planet.

After all, we're all going to have to address the very real issues that are occurring to the environment as a result of climate change. The transition to clean energy has never been more pressing.

If the majority of home and business property owners switched to solar power, we'd all enjoy:

  • Longer lifespans, better health
  • Cleaner air, soil, and water
  • Less dependence on foreign fuels
  • Reduced greenhouse gas emissions responsible for climate change

Not only is solar energy greenhouse gas and emission-free, just one-megawatt hour also offsets between .75–1 tonne of carbon dioxide in the world.

Plus, solar energy is way safer than digging for oil since it never has to to be pumped out of deep oil rigs in the ocean or transported in huge barges. Two natural disasters spring to mind: Exxon Valdez oil spill and the BP Deepwater Horizon oil spill.

Solar energy produces zero water or air pollution, plus the panels don't even make noise so they emit no noise pollution, either.

Solar is a Renewable Resource

Unlike coal or fossil fuels, we're never going to run out of solar energy because it all comes from the sun.

Check out this quote from Jim Ollhoff's book Solar Power:

"Another big advantage of solar power is that the power source is free. While oil must be drilled, and coal and uranium must be mined, the source for solar power is simply sunlight. And unlike fossil fuels, the costs of solar energy never rise."

NASA says we have about 6.5 billion years to use the sun's energy before it runs out. Whereas some estimate that our fossil fuel reserves may be depleted by 2052, and our coal stores by 2088.

We'll never run out of solar energy—it's a sustainable, renewable, and one of the cleanest natural sources of energy.

As this quote from David S. Findley, author of Solar Power for Your Home, puts it:

"The sun provides more energy in one hour than all humanity uses, in all forms, in a single year. Sunlight can provide us with its own resolution to our energy problems. The only transformation required is for humanity to reduce, or end, consumption of stored solar (as fossil fuels) and, in its place, use freely available ‘fresh' solar."

You'll Create More Green Jobs

In 2013, the solar industry generated the most clean energy jobs with 143,000 in the U.S. alone. What's even better is that these jobs are all onshore and cannot be outsourced.

Rhone Resch, SEIA president and chief executive officer, said: "Today the U.S. solar industry has more employees than tech giants Google, Apple, Facebook and Twitter combined."

These green jobs are not on the manufacturing side of solar technology, which would only create employees, but on the service and installation end to create employees and business owners.

Today the U.S. solar industry has more employees than tech giants Google, Apple, Facebook and Twitter combined.
Rhone Resch, SEIA President and CEO

As Sramana Mitra writes for Forbes:

"The most desirable scenario for the U.S. would be if component costs for solar cells are driven down as far as possible through offshore manufacturing in China and elsewhere.

"Adoption of solar in residential and commercial buildings would go up dramatically as a result of the newly affordable cost structure…. There could be thousands of small businesses doing solar installations all over the country, creating jobs and generating revenue and profits [onshore]."

Seems like that's exactly what's happening now.

If these benefits sound like the kind of trade-off you'd be willing to make, let's talk about the numbers.

How Much Does Solar Power Cost?

Solar electricity isn't a one-size-fits-all kind of installation; it's completely customizable to your property. Solar panel pricing is based on how large you want your setup to be, your property's location, and where you want your solar panels to go.

You can start off small with a few panels and scale upwards to have as many as you'd like. You may have to experiment to see what works for your energy usage.

The U.S. Office of Energy Efficiency and Renewable Energy says that "the average cost of solar PV panels has dropped more than 60% and the cost of a solar electric system has dropped by about 50%."

According to the Times Money section, a typical solar power system costs "$10,000 to $30,000 [depending on the size of the system required] after the federal tax credit."

Keep in mind that the credit the Times is referring to is a 30% tax credit for residential and commercial properties, but it's set to expire at the end of 2016.

The average cost of solar PV panels has dropped more than 60% and the cost of a solar electric system has dropped by about 50%.
The U.S. Office of Energy Efficiency and Renewable Energy

Check out the Database of State Incentives for Renewable Energy to see which solar/renewable energy incentives your state is offering to go solar. You may qualify for even more discounts to drop the cost of materials and installation even more.

Over 48 states have solar or renewable energy incentives ranging from a minimum of 30% of the cost of your installation to as much as 85% of the costs!

But even so, what if you don't have that kind of cash just sitting around and you really want to go solar?

Solar Power Payment Options

Would you be surprised to learn that you can pay zero upfront costs of going solar, while still reaping the benefits of going green?

The popularity of solar has created a demand for affordable solar installation options that you can take advantage of right now, such as:

Solar Leasing

Similar to leasing a car, you'll pay a very minimal fee upfront (if any) and a third party company will install solar panels on your property for you.

You won't own the solar panels—you'll pay a monthly fee to the solar company to use them.

In return, you'll save a preset discount price on your electricity every month. Jonathan Bass of solar installation firm SolarCity says these savings can amount to anywhere between 10%–20% in savings, which can account for between $20–$40 off each electricity bill.

Going with a solar lease will make you ineligible for tax credits or rebates since you won't need help paying down the cost of parts and installation. But you may have the option to purchase your solar system at the end of your lease.

Solar Loans

Solar loans are relatively newer than solar leases, but offer similar benefits.

First, you don't have to put any money down, just like with a solar lease.

However, unlike solar leasing, you'll actually own the solar power system installed on your property so you'll be eligible for tax incentives and rebates. You're just financing the initial investment.

Even after factoring in loan payments for your solar—which range in the neighborhood of 3%–6.5% for a 10–20 year loan—you'll still be slicing your electric bill by 40%–60%, which is a savings of $40–$120 every month.

Free eBook: Solar Homeowner's Guide (2018)
How To "Rent Your Roof" And Cut Your Electricity Bill In Half

Your information is 100% secure with us and we will never share it with anyone.

What You Should Know Before You Go Solar

You Can Use Solar Power Almost Anywhere

If you think you need to live in an area that gets sun 24/7, 365 days a year, think again.

As Germany, the leading country in solar energy, has proven, you don't need lots of warm weather and sunshine to make solar energy work for you. The sunniest parts of Germany only get about the same amount of sunny hours as Alaska.

Even when the weather's rainy and cloudy, your solar panels still capture energy from the sun that you can't see.

Have you ever needed sunglasses on a snowy day? Or get sunburned when the sky was overcast? Those are the types of rays your solar panels will still be capturing.

There's a good chance that solar power will work for your property even if you just get partial sunlight. The biggest issues are usually buildings or trees blocking the sun's access to your panels.

If you live in a snowy climate, you don't have to worry about snow collecting on the panels. Most are installed at a downward angle as to give the snow a gentle push off. Once the sun heats up the panels, the snow will just slide away.

Solar is Easy to Maintain

Solar panels don't have a bunch of moving parts that can break off during normal usage, they tend to stick around for a long time without needing any assistance or maintenance.

They're probably going to be the most self-sufficient "appliance" on your property.

As long as you keep the panels free of dirt like dust, pollen, leaves, and bird droppings, you should only need to rinse them off once or twice a year. If you live in a rainy climate, your panels should be squeaky clean.

If you're worried about maintaining your solar panels, some solar energy installers will also attach a meter to monitor your system to make sure it's always running smoothly. It will track your system's energy output and alert you if any problems or abnormalities are reported back.

You Will See a Return on Your Investment with Solar

Your solar energy system will start generating a return on your installation investment starting from day one.

Let's say your pre-tax solar panel installation cost $10,000, to use an easy number. The federal tax credit entitles you to 30%; assuming you put your credit towards the cost, you'd bring the total cost of parts and installation to $7,000.

You will probably also qualify for rebates and state credits, dropping the cost of your installation to $5,000, let's say.

If you're saving $200 in electricity every month, you will save $2,400 the first year of using solar power; $4,800 after the second year; and $7,200 in three years.

Considering that you only had to pay $5,000 for the unit, you could theoretically have it paid off in under three years.

Now, calculations like this are totally possible, but most property owners spend a bit more on their setups and take anywhere from five to ten years to pay it off with their electricity savings.

But ten years is no time to pay off an investment that does so much in the short and long term for your property.

Solar energy is an investment worth making; it even makes sense to someone who lived almost 100 years ago…

Was Thomas Edison a Solar Energy Visionary?

We are like tenant farmers chopping down the fence around our house for fuel when we should be using Nature's inexhaustible sources of energy — sun, wind and tide… I'd put my money on the sun and solar energy. What a source of power! I hope we don't have to wait until oil and coal run out before we tackle that.
Thomas Edison

Thomas Edison—great American inventor with over 1,903 U.S. patents in his name including a practical electric light bulb, the first electricity distribution system, and the motion picture camera—may have been a fan of solar energy before he even knew it existed.

According to James Newton's book, Uncommon Friends: Life with Thomas Edison, Henry Ford, Harvey Firestone, Alexis Carrel & Charles Lindbergh, Edison and Henry Ford struck up a particularly interesting conversation in 1931 about the future of energy sources.

Edison said:

"We are like tenant farmers chopping down the fence around our house for fuel when we should be using Nature's inexhaustible sources of energy — sun, wind and tide… I'd put my money on the sun and solar energy. What a source of power! I hope we don't have to wait until oil and coal run out before we tackle that."

Maybe someone should add "psychic" to Edison's list of job titles on his Wikipedia page.

As you can see, the reasons for going solar have never been better than they are right now.

The price of parts and installation for your solar energy system are the lowest they've ever been thanks to mass production in China. But this won't continue; as the surplus gets sold off at rock-bottom prices, manufacturing will slow and prices will stabilize soon.

Plus, the U.S. Solar Investment Tax Credit—which entitles you to 30% off—expires at the end of 2016, so the time to take advantage of that is today.

Of course, you don't need to miss out on the solar revolution thanks to solar leasing and loan options that let you put zero money down so you can start enjoying smaller electricity bills as soon as day one.

Now that you know the solar energy revolution is here, what are you waiting for?

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