How Does Solar Power Work?
I’m really interested in solar, but I don’t know anything about it. Can you tell me how does solar power really work?
In general, sunlight hits your solar array, and the solar power system turns that sunlight into electricity for your use in your home or commercial building. More specifically, the sunlight causes the solar modules to generate DC electricity (the type in batteries) which is then converted to AC electricity (the type in most houses and on the grid).
That solar conversion of the sunlight can happen in small inverters under the array, or in a single inverter on a wall of your house. Once it is converted to AC, the power is usually routed to a disconnect and then to the electrical system of your house, typically via a breaker in your main electrical panel. Larger systems and battery systems can require different methods of connecting to your electrical service. We’ll figure out the most appropriate interconnection method for your particular electrical service.
Net Metering is the term used to describe how the utility credits you for your solar production that goes back to the grid. Any time your solar system is producing more power than your house is using, kWh’s will flow back to the grid and be recorded on your bi-directional net meter. This meter will replace your normal utility meter after your system has been installed and inspected. Any kWh credits that accumulate in excess of your usage in a particular month will be “banked” for offsetting later electrical bills. For each kWh that goes to the grid, you are credited with a kWh to use later.
Even though these kWh credits roll over month to month, your kWh account is zeroed out once per year on March 31. Therefore, there is no incentive to produce more power than you use in a year. You will not get credit for that production. That is why it is important for us to have a good estimate of yearly electrical usage.
What are some of the finacncial incentives for solar power?
One financial incentive to help with the cost of your solar system is the federal tax credit, also known as the ITC or Investment Tax Credit. This allows you to deduct 30% of the cost of your solar system from Federal income taxes that you owe. You claim this on your income taxes for the tax year in which your solar PV system becomes operational. You must have tax liability to take advantage of this incentive. It is not a direct payment type of credit. The tax credit falls to 22% in 2032, and then 0% in 2034 for residential systems and 10% for commercial systems. (will need to be updated if legislation passes)
Another financial incentive is the WA state sales tax exemption. There is no sales tax charged on any portion of your solar installation.
Net Metering can also be considered an incentive. The financial projections we make are based on the assumption that the current net metering law continues for the life of the system, and that all excess energy generated by the system is credited at the retail rate by the utility. Be aware that this law can change, and utilities, once they reach a certain level of net metered systems, can choose to alter their net metering policy. Historically when utilities have reached this “floor” some utilities have chosen to offer net metering, and some have not. Most continue to honor their net metering agreements with customers that already have solar. Please be advised that future changes to net metering are possible and could affect your solar savings and financial results.
So, as your solar generated kWh’s offset the kWh’s you previously purchased from the utility, your electric bill is reduced. Even if you offset all of your electrical usage with solar, there would still be the monthly service fee to pay the utility. In some cases, these savings can cover the cost of your solar system and then some. If this is the case, you will save money in the long run, and solar power will cost you less than utility power.
In other cases, the savings will not cover the cost of the system, and solar will not save you money in the long run. Solar could cost more than utility power. Some factors that affect this equation are: roof tilt, roof azimuth, amount of shade, how difficult it is to get wires from the array to your electrical service, kWh cost of your electricity, how big the utility service fee is, size of your solar array, permit costs in your area, whether you can take advantage of the tax credit, roof type and roof age. We will take all these factors into account, using our design software, and give you the best production and savings information possible, so you can make an informed decision.