When installed correctly by a reputable solar company, solar panels will save many Virginia homeowners money on their electricity now and for years to come.
And with good credit, many homeowners can also qualify for solar with no money down through a loan at a competitive rate.
For example, some of our customers have had good luck with home equity line of credit loans (HELOC) from the same bank or credit union that handles their home mortgage. Main Street Solar also offers our own financing that other homeowners find attractive. There are other options for good loans that can help you go solar without a big upfront cost. An experienced solar installer can help you find the one that works best for your situation.
But unfortunately, a few shady solar installation companies are now taking advantage of homeowners’ growing demand for solar with offers for no-money-down solar that sound good…until you look at the details.
Here, I’m going to tell you about one such offer. Then, I’ll look at the details, so you’ll know what to look for if you decide to get a quote for solar from us or any other solar installer in the future.
Paying Too Much for Solar + Energy Efficiency
It may sound good when a solar installer offers to throw in energy efficiency upgrades to your home at the same time they install solar panels.
In fact, when we evaluate their property, we sometimes find easy things that the homeowner can fix to greatly improve their energy efficiency before going solar. If so, we’re happy to share those ideas, since they can help a customer get more value out of their solar installation.
But paying for energy efficiency upgrades to your home doesn’t make sense if those upgrades are overpriced and if they don’t offer much value for the money.
And that’s the problem with one type of solar company that we’ve seen in the past, and that we’re seeing now return to Virginia. Instead of just selling solar panels, they bundle in energy efficiency work along with the solar.
They know it’s attractive for homeowners to pay for it altogether, and to get the whole project covered by the 30% solar federal tax credit. But in this kind of scheme, too often both the solar panels and the home improvements are overpriced. And, to add insult to injury, sometimes both the solar and the other work may be low quality.
However you slice it, the price can be higher and the value may be lower than you’d get by buying the solar panels and the efficiency upgrades separately.
How this Scheme Works
Since it sounds like you’re getting a better deal by buying solar and efficiency work together, the devil is in the details on this type of offer.
As an example of how it works, let me share some figures from a proposal that recently came to our attention. The proposal came from a company doing business in central Virginia but based in another state.
The proposal offered 9.5 kilowatts of total energy savings, split between 5 kilowatts of solar panels and efficiency improvements that were supposed to save enough energy to cover the other 4.5 kilowatts of capacity. The efficiency upgrades involved blowing insulation into the attic and wrapping an insulating blanket around the home’s water heater. Doing all this was supposed to give the homeowner a 30% lower electric bill on average.
The total cost for the solar plus the efficiency work financed over 20 years was $36,000. Using the proceeds of the 30% federal tax credit as a balloon payment near the beginning brought the total down to $30,000, which would be paid in monthly installments of $125 each for the next 20 years.
Added up, that’s a lot of money when you consider what the solar and efficiency work would have cost if you bought each one separately. Here are typical numbers for Virginia:
|5 kW solar array||$15,000|
|Attic insulation + water heater blanket||$2,500|
So, it appears that this proposal with a total cost of $36,000 was charging $18,500 just for financing, which is more than double the value of the work performed. That’s very high compared to other options available today.
And since the home covered by this proposal had an energy demand of about 10 kilowatts, then their electric bill would have been about $150 per month, averaged out over the course of the year.
This means that, if the homeowner had accepted this proposal, they would not have saved any money. Instead, they would have paid more money than before — an extra $50 per month. They’d be stuck with that payment for the next 20 years. Ouch!
Accepting this proposal would have destroyed any savings from solar that this homeowner hoped to get.
Be Skeptical — and Ask about These Issues
Fortunately, the homeowner who got this proposal didn’t accept it. Instead, they went with solar from a local installer and had energy efficiency work done separately, by a company that was more affordable.
If you are thinking of going solar at home, you may encounter this company or a similar one that offers to bundle solar with efficiency upgrades, do it all for no money down, and save you money each month.
The company may send a friendly salesman to your house to present a proposal like this in a glossy folder with attractive photos of happy homeowners who are supposed to be customers of that company (but may in fact just be stock photography models).
If you find yourself in this situation, I would encourage you to be skeptical. Ask to see the breakdown of what everything costs, including financing. If the company’s interest rate looks competitive, then they may be trying to overcharge you for either the solar panels, the insulation, or both.
It’s convenient to get solar and efficiency work altogether…If you really need energy efficiency upgrades, that is. Some homes are already well enough insulated that it’s not worthwhile investing thousands of dollars just to get a small additional energy savings.
A reputable local solar installer can help you find a reputable local contractor to do efficiency upgrades if you need them. But a reputable solar installer won’t try to sell you work on your home that you don’t need.
You can certainly ask any company that wants to sell you efficiency work together with solar to address the issues I’ve raised here. And you can protect yourself even further by selecting a solar installer with a strong record of success and providing real value. Check out this article with “Seven Steps to Choosing A Reputable Solar Installer” to select the right solar installer for you.
Then, when you’re ready to start talking to solar companies, I hope you’ll ask us for a free solar quote. We’ll come by your place around southwest and central Virginia and let you know how much you could save by going solar.
— Andrew Brenner, Main Street Solar