Solar Tour


How Solar Panels Work

Most rooftop solar installations use solar panels, or photovoltaic cells. These panels turn light from the sun into direct current, which passes through an inverter to become alternating current. Alternating current is then supplied directly to the property's electrical system. If the solar panels produce more power than the property is currently using, then it sells that electricity back to the utility through a process called net metering.

There are four basic steps to producing electricity from solar panels.

  1. Light from the sun strikes the solar panels.  In general, the brighter and more direct the sunlight, the more power will be produced.  The best conditions for solar panels are when they face the sun directly and have no shade or other obstructions.
  2. The solar panel converts sunlight into direct current (DC) power.  Most solar panels have two layers of silicon.  Particles of solar energy (photons) strike the top layer of silicon and free electrons from the molecular structure.  These free electrons then move to the lower layer of silicon, where they are carried away by wires.
  3. The inverter converts DC power into AC (alternating current).  Solar panels, like common household batteries, create direct current power.  This means that one wire will have a positive and the other has a negative charge.  Most of our household electronics, however, use alternating current, in which each of the two wires switches rapidly between having a positive and a negative charge.  In order to convert from one form to the other, the electricity is passed through a device called an inverter.  It is a small box that can usually fit right beside the electrical meter on the side of the house.
  4. Solar electricity is fed through the electric meter and into the property.  At this point, the solar panels contribute directly to the electricity that the home uses.  This electricity cannot be stored, so if more is generated by the solar panels than is needed, the power is sold back to the electric utility and the electric meter runs backwards.  This effect is called net metering.

Net metering tends to allow customers to offset their most expensive electricity

Net metering tends to allow customers to offset their most expensive electricity.  Most utilities charge either by the time of use or by a tiered system.  In time of use policies, the more expensive time period is during the day, which happens to be when solar panels generate all of their power.  Under tiered rates, net metering allows customers to sell back electricity from their highest, most expensive tiers first.

Different states have different net metering policies.  In general, the meter will run backwards only as far as it had already run forwards; in other words, it will never go past zero.  Customers should not expect to get a check from the electric utility if they generate more solar energy in a month than the electricity that they use.

Installation: What To Expect

Installing solar panels is usually done in the following steps:

  1. System ordered from manufacturer:  Some dealers hold inventory in a warehouse and others order as new jobs come in.  Ordering panels for a specific job will take longer.  When the system is running smoothly, this lag doesn’t have an effect on your install date as it takes longer to get permits and schedule the install team than it does order materials. The exception is a when there is a shortage of panels available, which has happened off and on over the past few years.
  2. City permits, rebates submitted and approvals complete:  Every city is different when it comes to permits.  Permit fees are generally between $250 and $500 but can be as high as $1,000.  Permit processing times can also vary drastically.  A streamlined process can be measured in days, where a bogged-down system could take months.  This process will not change based on your dealer as it is based on the city you live in.  Applications for state or utility rebates begin once you size and order a system.  The typical turnaround time is 4-6 weeks, and smaller local utilities take slightly longer.
  3. System Engineer on-site verification:  Advanced Solar Electric offers the dealer detailed site imagery, solar analysis results, potential design concepts and feedback directly from the customer.  However, many dealers will want a final site visit after a sales agreement is signed but before installation commences.  The purpose would be to verify the detailed system specifications and ensure there aren’t any non-standard issues that need to be addressed.
  4. Team arrives to install (a fairly standard 5kW DC system takes roughly 2-4 days to install):  The following items are included in a standard install:
    • Penetrating (drilling through) the roof and attaching the racks that secure the panels to the roof, and then sealing around the penetrations
    • Placing the panels on the roof and wiring them together
    • Attaching the inverter and the AC /DC disconnects
    • Wiring the system to the utility meter
  5. Final inspection and the system goes live:  Once the system is installed, an inspector must come out to verify the project has been implemented to code before it can be turned on.  This inspection is typically scheduled for the final day of installation to reduce waiting time before the system can be turned on.
  6. Maintenance:  Maintenance in most areas is a minimal endeavor.  Most residential systems are installed flush against the slope of the roof and rain will clean the panels enough for normal operations.  Otherwise, or in non-rainy areas, simply hosing off of the panels once every 2-3 months is sufficient.  Some companies offer maintenance packages that include periodic cleanings and monitoring of the output to ensure optimal system performance.

Electricity Pricing: Tiered vs. Time of Use

Utilities generally allow customers to choose between tiered pricing and time-of-use (TOU) plans. Under tiered pricing, a certain amount of power per month can be purchased at a low cost, another amount can be purchased at a slightly higher cost, and so on. Under TOU plans, a utility may offer summer and winter rates, where a certain price is charged during the daytime (the peak) and another at night. A common analogy is that tiered rates are similar to income tax brackets, and TOU policies are like cell phone plans. Fortunately, solar panels concentrate on offsetting the most expensive parts of both types of plans.

Tiered Pricing

The fundamental idea of tiered pricing is that a certain amount of power can be purchased at the least expensive rate, after which certain amounts are available at escalating prices.  This way, customers who use very little electricity pay less per kilowatt hour than do customers who use a lot of electricity.  The two bottom tiers are considered the “baseline” electricity usage – the basic level of electricity that any household would need – and are generally protected from rate increases.  So, if an electric utility increases its prices, those increases happen in the upper tiers. 

Net metering allows the property owner to reduce their electricity bill, starting with the highest priced tiers first

Net metering allows the property owner to reduce their electricity bill, starting with the highest priced tiers first.  The utility will read the electricity meter once a month and allocate the property’s usage into the tiers.  Lower total electricity usage means that less power will be allocated to the most expensive tiers, since the least expensive tier is filled first.  The owner of a solar panel will more rarely extend into the top tiers, the thus impact of utility rate increases over the years will be reduced.

Time Of Use

TOU plans are an option designed to reward off-peak electricity use.  The utility is willing to charge less at off-peak times because it costs less to generate electricity at those times.  (See our section on electricity generation for details.)

Peak times are generally during the weekdays.  This is when businesses are up and running, air conditioning units are at full blast, home appliances are running, and so on.  Fortunately, the time when people use electricity the most – during the day – is when the sun is shining and solar panels are generating electricity.  Like with the tiered system, solar panels address the most expensive parts of the bill in a TOU plan.

Electricity Rate Changes

Utility rates have risen over the years, and as cheap but dirty technology is being replaced by clean energy, we should expect that they will continue to rise. Government regulation keeps the prices from spiraling out of control, but there is no avoiding the fact that energy is becoming more expensive.

Government regulation ensures that utility rates reflect the actual costs of providing the power.  Utility rates are influenced by volatile natural gas prices, carbon emissions regulation, and the costs of developing new power plants and infrastructure.

California has one of the highest average utility rates in the country, and rate increases are currently underway.

Rate changes generally affect the highest price tiers, so a solar panel that protects the property owner from those price levels will reduce the impact of these price increases in the future.


Source: US Energy Information Administration

Reading a Utility Bill

Electricity bills can be complicated and confusing to read, but there are a few important numbers that everyone should know. They are: average daily electricity use, delivery charges, and generation charges. These numbers will help you understand how your electricity use is changing over time and will give some insight into how to minimize the electrical bill.

We usually see higher electricity bills in the summer when people run their air conditioning units

Average Daily Electricity Use

This figure may also be presented as a monthly amount; to convert from monthly to daily, just divide by the number of days in the month.  Energy usage will be reported in kilowatt hours, abbreviated “kWh.”  A kilowatt is 1,000 watts, so one kilowatt hour is the amount of electricity it takes to run ten 100-watt light bulbs for an hour. 

Monthly changes in energy use generally come from different ways of using large home appliances, such as heating or air conditioning, refrigerators, washer/dryers, pool heaters, and so forth.  (Note that the electricity bill won’t cover appliances powered by natural gas, such as a gas stove or water heater.)  In warm areas like Southern California, we usually see higher electricity bills in the summer when people run their air conditioning units.

Generation Charges

Generation charges represent the cost of the electricity that you were delivered.  The kilowatt hours of power will be assigned various prices depending on whether you’re in a TOU or tiered pricing plan.  These charges represent the cost of running a generator to produce the electricity that you used.  The less total energy you use, the lower your generation charge will be.

Distribution Charges

Distribution charges represent the cost of the infrastructure that delivered the energy to your home – from the high voltage transmission lines carrying power away from the generator to the poles and wires that deliver electricity to your property.  Distribution charges are usually allotted based on the highest electricity load to your property during the month.  So, if one home runs the pool heater at night and the air conditioning during the day, and the next home runs both at the same time, the second will probably get a higher distribution charge.

Sources of Electricity

Electricity in the United States is generated using coal, natural gas, nuclear reactors, hydroelectric dams, renewable sources, and petroleum, but 90% of power comes from the first three categories. California has very little coal generation and a higher proportion of renewable energy than the national average, but still produces about half of its power from natural gas. Electricity must be generated at the time that it?s needed, so different technologies have the ability to fill different needs.

Power Generation

Electricity is produced in generators, which contain coils of wire that spin between banks of magnets.  The spinning coil induces an electric current, which is then carried out of the generator and transmitted into the electric grid.  The more energy is put into the spinning coil, the more electricity is produced. 

Most generators use steam to turn the coil inside the generator.  Some, such as hydroelectric plants and wind turbines, use mechanical force (from water and wind, respectively) to spin the coil.  Solar panels are unique in that they use silicon wafers to generate electric current instead of a generator.

Coal Power

Coal is the most common fuel for power plants in the United States.  Coal power plants burn coal in order to generate the steam that powers the turbines.  Coal is the least expensive way to produce electricity and has been used since the industrial revolution; however, it is arguably the most environmentally destructive method, as it releases large amounts of greenhouse gasses into the air.  Because coal is so inexpensive, and because electric utilities will purchase inexpensive power whenever they can, most coal power plants run constantly.

Natural Gas

Natural gas is a combustible fuel which, like coal, is used to create steam and run a generator.  Natural gas is more expensive and only produces half as much carbon dioxide as does coal.  Natural gas generators are easy to start and stop, so they tend to be used during periods of peak demand.

Nuclear Power

Nuclear generators use radioactive metals to produce heat, which in turn creates steam to power a generator.  Nuclear power is relatively inexpensive per unit of energy, but it takes an enormous investment in order to build a new plant.  Political issues have also made it difficult for new nuclear power plants to be built.  A nuclear reactor is difficult to turn on and off, so nuclear plants tend to run constantly.

The most common sources of renewable energy are wind, solar, biomass, and geothermal

Hydroelectric

Hydroelectric plants store energy by damming a river; the body of water that collects behind the dam can be released in a controlled way, and the force of the water spilling through the dam turns a turbine in a generator.  Small hydroelectric plants are considered renewable energy resources, although large plants, due to the environmental impact they make on the stream and surrounding land, are not considered renewable. (The cutoff is defined on a state-by-state basis.)  The hydroelectric plant operator can choose when to release the flow of water, so hydroelectric power is typically generated at peak times.

Renewable Energy

The most common sources of renewable energy are wind, solar, biomass, and geothermal.  Wind power is produced by windmills, whereby the wind spins the turbine directly.  Solar energy is generally produced in one of two ways: either through photovoltaics such as rooftop solar panels, which turn sunlight directly into electricity, or through solar thermal plants.  Solar thermal methods concentrate the light of the sun in order to boil water and create steam.  Biomass generation turns biological material (woodchips, animal manure, etc.) into fuel, which is then burned to generate electricity.  Geothermal plants will use the Earth’s internal heat – accessed through hot spots like those found under hot springs – to create steam and power a generator.

Petroleum

In the United States, very little power generation is fueled with petroleum products.  Petroleum plants, typically diesel, are most frequently found in remote areas such as islands.  Diesel power plants tend to be heavy polluters.

CO2 Reduction from Going Solar

Solar panels are one of the cleanest ways to generate electricity, and every watt generated with solar is one watt that is not generated with dirtier technology.

A variety of emissions come from almost every form of electrical energy production – of course, some emit more and others less.  People mostly speak of carbon emissions, which is more specifically carbon dioxide.  Carbon is easy to think about, but emissions we call greenhouse gases include much more: SOX, NOX, CO2, Mercury, and so on.  Environmental policy does specifically account for these other emissions, but for ease of manageability, we use a “carbon equivalents measurement.”

According to the EPA, one 5-kilowatt DC solar system offsets carbon equivalents equal to:

  • 605 gallons of gasoline
  • 11,354 miles driven
  • 12.4 barrels of oil
  • 222 propane cylinders
  • 1.8 tons of recycled waste
  • 1.2 acres of pine forests

Leasing Solar Panels vs. Buying

There are a number of ways to fund your solar project, and which one you choose will be based on your personal financial circumstances, your tolerance for risk, and whether you’re willing to trade some financial benefit for a lower-involvement project.  Our numbers are presented on an after-tax basis.

Personal Circumstances

Access to credit or cash has a significant impact on your decision to go solar. If cash is available, we recommend you look at going solar as an investment much like any other part of your portfolio including real estate, stocks, bonds, etc.  With 15% to above 20% returns, an investment in solar is a great balance against your other investments whose performance is heavily tied to the overall economy.  Solar will provide excellent returns regardless of an economic recession or boon.  Having said that, the following factors will influence which financing options makes the most sense for you.

Cash:  An all cash purchase means that by the time the system goes live, the owner will have paid the dealer the outstanding balance of the system in cash.  The owner retains complete system ownership and rights to all tax credits, renewable energy credits (RECs), etc.  Legislation in the future is expected to make these RECs valuable.

Access to credit or cash has a significant impact on your decision to go solar

Loan:  The loan route allows the homeowner to retain ownership of the system, but use a new or existing mortgage, line of credit, or other loan for the outstanding balance after incentives are accounted for.  In most of California, if your electric bill is around $125 or higher, you can finance solar with no out of pocket or additional annual energy costs.

Lease or PPA:  Residential solar leases or PPA’s are relatively new and available through a select group of dealers, however they offer a packaged bundle of solar and services with no to low cash-down.  This option is extremely attractive if you don’t have sufficient cash or credit available and want an all-inclusive solar solution (maintenance, monitoring, performance guarantees, insurance).  In both of these situations, the other party continues to own the solar panel that is placed on your roof, and you agree to certain terms – either payments to them for the equipment, or payments to them for the electricity it generates.

After Tax Basis
All numbers are presented here on an after-tax basis.  This is to accurately reflect the cash situation that the property owner would experience.

 Cash purchaseLoan
Lease or PPA
Cash available
680+ FICO scoreN/AN/A
Equity available in homeN/AN/A
Want RECs (cash & social value)
Want all-inclusive package

 BenefitsDrawbacks
Cash Purchase
  • Great long-term (5+ year) investment based on 15-20% returns which are not tied to the overall economy
  • Provides the best financial return of all options
  • Provides owner with RECs which may have more value in the future
  • System is owned from beginning, so once payback is achieved, energy produced is essentially free
  • Must have cash available which becomes illiquid until house is sold or money recouped
  • Some dealers provide “service packages” including maintenance or warranty add-ons, but others may charge  a-la-carte or not have options available
Loan
  • If low-cost credit (such as a home equity line of credit or mortgage) is available, loans provide low or no cash down options
  • Typically allow customer to deduct interest on taxes
  • Retain RECs for future use
  • At end of term, system is owned by consumer and paid off in full
  • Paying interest on net system cost
  • Similar issue with “service packages” as cash purchase
Lease or PPA
  • Hassle-free option as lease or PPA provider is benefits from the more power the system provides, therefore they usually include monitoring, performance guarantees, warranty work, and maintenance in the rates you pay
  • Usually offer low or no-cash down option
  • Typically offer buy-out at the end of the 15-18 year term for a pre-specified price
  • Versus
  •  System is not owned by consumer, so it must be purchased at end of term if consumer wants to keep it
  • All costs, implied interest and services incorporated into the kWh or lease payment

 Cash purchaseLoan
Lease or PPA
Gross cost
$37,125$37,125$0
State Rebate & Tax credit$17,760$17,760$0
Upfront cash payment$19,365$0$1000
Monthly payment$0$175$224
1st year Monthly savings$134$2$0
9th year Monthly savings$216$75$103
Payment durationNone15 years18 years
Payback (in years)905
Financial return (IRR)12.4%Infinite37.7%
Value of Project (NPV)$23,556$25,240$13,409
Max Increase in property value$62k at year 12$50k at year 15$24k at year 9
Own systemYesYes

No (optional buyout)

Other
- 10 yrs for entire system / 25 yrs for panels
- Inverter replaced at 15 years

10/25 warranty
$3000 for inverter

10/25 warranty
$3000 for inverter

All included for 18 year term

Assumptions  for financing comparison matrix:

  • Total cost is $7.50 per DC Watt
  • EPBB election on CSI at Step 3
  • Newport Beach - based site with no shading issues
  • Array installed at a 17° angle, facing 225° SW, at 4.5” stand-off
  • SunPower 225B Panels and a SMA6000SB (240V) inverter
  • Economic inflation of 3.5%
  • Utility rate inflation of 6.5%
  • Loan interest rate of 6.5% available from a HELOC
  • $3000 down for lease or PPA option
  • Discount rate at 5.0%

Solar Finance 101

Financing options are simple, but not easy.  These decisions involve an understanding of the time value of money.  In the following section, we discuss financial metrics such as NPV, IRR, and payback period.  The goal is to make it clear why one option might be better than another – and how much better it is.

The Time Value of Money

We have to start with one of the core principals of finance: A dollar today is worth more than a dollar tomorrow

Having a dollar today is worth more, because you could invest it today (in a savings account, for instance) and have a little bit more than a dollar tomorrow.  So, just one dollar tomorrow is worth less to you than one dollar today.

Discount Rate

The discount rate is essentially an interest rate that describes how much less a dollar is worth tomorrow than it is worth today.  Higher discount rates should be applied to riskier projects, since similarly risky outcomes demand higher rates of return in financial markets.

Measurement Tools in Solar Installations

There are three numbers that are frequently used to evaluate financial propositions such as solar panels: NPV, IRR, and payback period.  All three take into account the cash invested and received every year the project or investment exists (these are the “cash flows”).

Net Present Value (NPV):  NPV is the total value of an investment. It uses a discount rate to bring all dollars saved or earned over the life of the system back to today’s dollars. The discount rate reflects the risk of a project and the potential return of safe alternative investments you could also make.  To find the NPV, apply the discount rate to every year’s cash flow (using negative amounts for what is paid out and positive amounts for what is received in) and total them all up.  If the NPV is positive, it’s a financially positive thing to do; the size of the NPV corresponds to how good (or bad) the prospect is.  On pure financial terms, someone should be very excited about a project with an NPV of $10,000, they should be somewhat excited about an NPV of $100, and they should not do a project with a negative NPV.

Economists feel that NPV is the best method to evaluate projects, but IRR and payback period are often used because they are much easier to envision and calculate.

If the NPV is positive, it?s a financially positive thing to do; the size of the NPV corresponds to how good (or bad) the prospect is

Internal Rate of Return (IRR) or Annual Return:  The IRR is the discount rate that would make a project have an NPV of zero.  It takes into account the compounding effects of an investment, whereby interest is earned on the interest from previous years.  This number is often referred to as the Annual Return or the CAGR (compound annual growth rate.)  The IRR helps make decisions because if it is greater than one’s discount rate, then the project is worthwhile; if it is lower than the individual’s discount rate, then that individual would make more money by investing the cash instead.

Payback Period

Payback calculates the amount of time it takes to earn back the cash you invested up-front. This uses a simple calculation to find what year it is that the total cash paid equals or is exceeded by the total cash received.  What it doesn’t mention is how much is made after the investment has paid back, nor does it consider the time value of money or the riskiness of the venture.

Issues with Measurements

Advanced Solar Electric addresses a number of issues that come up when measuring the value of solar installations.  It is important to understand all three measures because each one on its own has flaws.

    • NPV uses a discount rate that is difficult to measure and that has a major impact on the final value.  In other words, the result is highly sensitive to the discount rate assumption.
    • IRR is problematic because it assigns a single “interest rate” for all years, regardless of the actual market conditions. In actuality the risk-free rates can change drastically over time.  It is also difficult to compare IRR when paying all cash versus financing part or all of the system because the debt on the investment provides a skewed set of cash flows.
    • Payback: is misleading when comparing across different financing methods. If you pay with all cash your payback could be 5-10 years, but if you only put $1000 down in a lease your payback could be less than 2 years even though the NPV and IRR will be higher with the cash purchase.  If you finance the entire purchase and are cash flow positive from day 1, your payback period is 0. Lastly, Payback only counts the time to recover initial costs and doesn’t account for the substantial savings after payback is reached. The problems as addressed by using all three measurements to evaluate a system and are all calculated for you in a comparison matrix that Advanced Solar Electric produces once all the bids are collected. 

Calculating Discount Rates for Solar Purchases

The discount rate is the answer to the question, how much more is a dollar today worth than a dollar later? The answer depends on how much your dollar today would grow if you invested it. The rate that it would grow depends on interest rates and whether you would invest it in safe bonds or riskier stocks; plenty of even riskier investments exist as well. Everybody has their own unique discount rate depending on how they invest and use their money. Let’s use 6% per year for now.

If you invested $1.00 today and it grew at 6% per year, you would have $1.06 in one year. In the same way, if you had $0.94 today, you would have $1.00 after growing it at 6% for one year. This means that if your discount rate is 6%, one dollar next year is worth $0.94 in today’s dollars.

The higher your discount rate, the less one dollar next year is worth to you. For example, if your discount rate is 10%, then one dollar next year is worth $0.91 today.

Another way of thinking about this is, if someone offers you something that generates one dollar next year and your discount rate is 6%, you should only pay $0.94 for it today. If they wanted to charge you $0.95, you would be better off investing that money at 6% instead of buying their device, because you would have $1.01 in one year.

Every year that goes by, the annual discount rate is applied again, just like an interest rate would be. One dollar invested today grows at 6% to $1.06 next year, $1.12 in the second year, $1.19 in the third, and so forth.

Three good benchmarks to keep in mind are treasury bills, bonds, and stocks.

Everybody has their own discount rate. People who would invest in very safe things – for instance, a retired person who needs a guaranteed cash flow – use low discount rates because the safe investments they tend to make have low rates of return. It’s appropriate to use a higher discount rate for riskier investments, since in the market, high risk is associated with high potential gains.

Three good benchmarks to keep in mind are treasury bills, bonds, and stocks. Treasury bills are backed by the US government and are considered the ultimate safe investment. Bonds are less safe, and stocks are the most risky. Broadly, treasuries tend to return around 3%, bonds around 6%, and stocks around 10%, in pre-tax terms. These numbers change from year to year, especially the riskier investments.

Most investment returns are reported in pre-tax terms, meaning that if we say stocks return 10% per year, that means that the actual value of the stocks themselves increased by 10%. However, it’s important to remember that we receive the value of investments in after tax dollars. So if we invest $100 at 8% and end up with $108, we will pay taxes on the $8 that were created.

Federal Tax Credits and State Rebates

There are state and federal programs in place to offset the cost of going solar.  The federal government offers a tax credit of 30% of the system cost.  State rebates focus on the amount of power the system could produce, either as a single upfront payment or based on the metered production amount.

Federal Tax Credit

All residential and commercial systems are eligible for a 30% tax credit that offsets the individual income taxes that are owed. [1]

    • A 30% tax credit is available to owners of solar systems (note: the system owner is not the homeowner under a  lease or PPA)
    • Unused credits may be carried forward for 1 year
    • Credits can be used to offset the Alternative Minimum Tax (AMT)
    • This credit will not effect on property taxes
    • The program expires at the end of 2016

State Rebates through the California Solar Initiative (CSI)

Solar system owners in California can choose to receive either the Expected Performance Based Buydown (EPBB) or the Performance Based Incentive (PBI) through the California Solar Initiative.

The EPBB is a one-time payment made after the system is fully installed

The EPBB is a one-time payment made after the system is fully installed and based on the estimated production of the system.  It incorporates the individual circumstances of location, panel efficiency, orientation, tilt of the array, etc.

The Performance-based Incentive (PBI) pays the system owner for every kWh produced, paid once a month for five years.

Most homeowners select EPBB because it offers an immediate reduction to up-front cost; however, if the system is under 50 kW (30 kW after 2010) one has the choice of selecting a PBI.  Systems over 50kW are only eligible for PBI payments.  Advanced Solar Electric has calculated that a PBI in California tends to provide a 12% premium over EPBB. 

The California Solar Initiative was funded in California in 1998 and is now the official state incentive program for investor-owned utilities, namely SCE, PG&E, and SDG&E.   CSI has a 2007-2016 budget of $2.2 billion, of which $1.7 billion is for direct investment in projects targeting a goal of 1,750 MW.  This program is funded through rate-payers, so it will not be affected  by the ups and downs of California’s budget and budgeting process. [2]  As additional solar is installed, the incentives reduce over 10 steps and eventually phase-out completely. Step 1 is $3.50 EPBB or $0.60/kWh PBI. The current status and incentives is available on CSI Trigger Tracker

Other State Incentives

Municipal utilities such as the LA Department of Water and Power often have their own incentive programs.  Advanced Solar Electric will determine the appropriate incentive levels for you based on your property’s location.


Solar Bill of Rights

Laws in California prohibit local governments such as homeowners associations from opposing or banning solar panels on homes.  These laws are generally referred to as the Solar Bill of Rights.

The Solar Bill of Rights

The Solar Bill of Rights (SBR) provides three main defenses against entities opposing a homeowner’s ability to go solar:

  • A regulation governing a solar installation cannot increase the cost by more than $2,000
  • A regulation governing a solar installation cannot decrease the effectiveness by more than 20%
  • Regulations cannot prohibit solar on health and safety grounds without those claims being documented and validated

This means that if a Homeowner’s Association prohibits all solar panels, they are probably in violation of the law.  They can insist that certain measures be taken, such as a different type of installation that is less visible to the street, but only if those changes do not increase the cost by $2,000 or decrease the effectiveness by 20%.

The Solar Bill of Rights (SBR) provides three main defenses against entities opposing a homeowner's ability to go solar

Even though the SBR is written into law, remember that you’re dealing with your neighbors in these interactions.  Oftentimes, a harmonious compromise can be worked out without resorting to legal actions.  Make sure that you try to resolve conflicts with the other parties outside of court before you resort to legal action.

Example Scenarios

Q:  My HOA is insisting that I install a lattice around the flat part of my roof so that my solar panels are not visible from the street.  It would cost $1,500 to erect the lattice.  Can they do this?

A:  If this request is founded in the HOA agreement that you signed, then they probably have the grounds to enforce this restriction.  This is only because the lattice costs $1,500.  According to the Solar Bill of Rights, if it would cost you $2,000 or more, the HOA’s demand would probably not stand up in a court of law.  This is also assuming that the lattice doesn’t cast a shadow on the solar panels – if it would decrease the panels’ output by 20% or more, then the restriction would be in violation of the Solar Bill of Rights.

Q:  My town prohibits all solar panels, period.  What can I do about this?

A:  This probably violates the SBR.  A stakeholder such as a homeowner, community group, HOA, solar dealer, or nonprofit advocate would have grounds to file a petition against the city, either in local or state court.  You may find, however, that presenting with the town council with the SBR is a quicker way to achieve your goals than to get involved in legal action – they may choose to change the regulations once they’re informed of the issues.  We suggest that you contact a lawyer before pursuing any legal action.

Q:  I’d like to have solar panels on my entire shed, but my neighbor’s windows face my shed and she is complaining to the HOA.  The HOA is asking that I only put up half as much solar paneling.  Do I have to comply?

A:  If you put up half as many solar panels, then the installation would only produce half as much power.  This is beyond the 20% legal limit at which an HOA’s policies can affect solar system performance.  So, in all likelihood, you would win a legal battle over your right to install the full system.  Rather than take it to court, however, you may be able to find a compromise – maybe you can work with your neighbor to plant some trees between your properties.  (Just make sure they don’t cast shadows on your solar panels!)

The Specifics

The Solar Bill of Rights includes:

  • California Civil Code Sections 714 and 714.1
  • California Civil Code Section 801
  • California Civil Code Section 801.5
  • California Government Code Section 65850.5
  • California Health and Safety Code Section 17959.1
  • California Government Code Section 66475.3
  • California Government Code Section 66473.1

Disclaimer:
Before challenging a HOA or any other local government, you should seek legal counsel.  The material on this site is only intended for informational purposes and is not a source of legal opinions.  Please do not rely solely upon this website for legal advice.  We make every effort to ensure that this website is current and accurate, but the law may change at any time, and therefore, it is important that you contact a lawyer if you have a legal issue.


Source: http://www.sandiego.edu/epic/publications/documents/070123_RightsActPaperFINAL.pdf