Question: I have an average-size home. How much more will I have to pay for a solar photovoltaic system now that the solar tax credit has been reduced?
Answer: The short answer is $5,000. In 2012 you may have been eligible for $10,000 in state tax credits. In 2013 it is limited to $5,000. For larger systems the reduction number is $10,000-plus.
Q: Should I wait to see what the Legislature does this session before installing solar at my home? Is it possible they will increase the tax credit?
A: There is no need to wait to see what the Legislature will do because a PV (photovoltaic) system is still a solid investment within your control. Investment payback is currently in the five- to six-year range depending on the inflation rate of electricity, and these systems should last well over 25 years. An interest-only loan through a home equity line of credit will net you positive cash flow. Also, if you have cash to pay for a system, the rate of return is many times the interest rate your money earns at the bank. Given these facts, there is no need to wait because there is no way to predict what the Legislature will do.
The Legislature may take some action, but the bottom line is that PV is still a solid investment that makes sense for Hawaii’s people in order to create a future that supports sustainability for future generations. My personal opinion is that uncertainty about the future of tax credits causes a decline in consumer confidence, and the Legislature and governor need to act quickly and decisively on the matter to restore consumer confidence.
Q: Are solar companies offering discounts to help make up for the lost tax credit?
A: Yes. Most companies are still trying to support those interested in the PV systems despite the lost credits. However, these discounts will disappear as time goes by.
Q: With the technology improving, does it make sense to wait a few years and see if solar panels improve?
A: No. The goal is free electricity. If one waited two years and the system was 40 percent paid for in those two years, would any technological improvement be greater than 40 percent? The sooner you purchase a system, the faster the system is paid for, and the overall benefit is lowering the cost of your electric bill no matter how much prices rise. A system purchased today will always be of benefit to the buyer. As a respected relative once said, “What don’t you understand about free?”
Q: What are the most common mistakes consumers make when shopping for a solar system?
A: A common and critical mistake is accepting mediocre advice from sales persons who are not trained in PV design. PV design is a blend of electrical engineering, structural engineering, electrician experience with local inspectors, material selection and manufacturer selection. It takes a team of highly trained personnel to design and review a system sold. The most common mistakes are panels not facing south, shading, roof attachment methods, interconnection methods and wire management. For example, panels on a north-facing roof can be 20 percent less efficient than those placed on a south-facing roof, but tilt kits positioned properly solve this challenge. Consumers may want to ask if the company being considered has an engineering staff.
Consumers should also know if the company that sold the system will be in business long enough to service the system. Ask and understand what that company’s long-range plan is for the next 10 to 20 years. Is there contingency funding? Is there stable recurring income? Is the company diversified? Is there a succession plan? One definitely needs to know that the company they select will be there for them in the long run to service their needs.
