A professional solar panel installation is typically around 10% of total solar system costs – there`s potentially a lot of money to be saved if you install the solar system on your own. This article will cover the benefits and drawbacks of do-it-yourself solar panel installation. Can I really install solar panels without professional help?
The more you can do yourself, the less expensive. However, we generally recommend hiring a certified professional to do the wiring and metering even with planning.Remember that connecting a solar system to the grid is no joke and can lead to serious injuries or even death. Only a certified installer with state license is legally allowed to do so. Depending on the complexity of your solar system, where you live, and what regulations and policies apply, you will likely need your solar panel installation certified. Without a certification, it can be problematic to use the feed-in tariff and take advantage of financial incentives.
What about DIY plug and play solar panel kits?
In the last couple of years, a handful of solar companies have introduced plug and play solar panel kits on the market. These solar panels go into 120V power outlets, just like a home appliance, and there`s no need for a professional installer.
You get what you pay for
The biggest reason most people opt for DIY solar is cost – a professionally-installed system can cost 10-20% more. But overall cost-savings may be eaten up with other concerns. Your whole-house solar project must be completed according to the National Electric Code, and pass state (and/or local) electrical inspections. If you’re not familiar with these codes, it’s easy to make a mistake which will require an adjustment. Those can be costly.
Don’t try to save money by buying cheap panels – the financial benefits of your system is inherent on the quality of your panels. Instead of going out to purchase the cheapest thing on the market, compare several local contractor’s prices. Average pricing state-by-state varies, too. Do your research, ask questions, and get multiple quotes. This research alone can save you 10-20% and may present you with more options than you are able to get on your own.
Another mistake people can make when buying cheap solar panels is thinking a contractor to install these panels can be easily found. In most cases, solar installation contractors will only install the equipment they have worked with in the past. Instead of shopping around for a solar installer to install the panels you purchased, it’s better to compare solar installers’ recommendations for equipment.
Local utilities and regional power authorities are investing increasing resources to solar power generation. Both private and government-owned utility companies can leverage the recently-extended federal tax credits to encourage additional investments in renewable energy by their individual customers. As solar power generation increases on the large scale, prices for equipment will be driven down further, making it more feasible for a homeowner to invest in solar installations on their homes.
The Investment Tax Credit (ITC) is currently a 30 percent federal tax credit claimed against the tax liability of residential (Section 25D) and commercial and utility (Section 48) investors in solar energy property. The Section 25D residential ITC allows the homeowner to apply the credit to his/her personal income taxes. This credit is used when homeowners purchase solar systems outright and have them installed on their homes. In the case of the Section 48 credit, the business that installs, develops and/or finances the project claims the credit.
The residential and commercial solar ITC has helped annual solar installation grow by over 1,600 percent since the ITC was implemented in 2006 – a compound annual growth rate of 76 percent.
In 2015, the Omnibus Appropriations Act (P.L. 114-113) included a multi-year extension and phasedown of the residential and commercial ITC and changed the previous “placed-in-service” standard for qualification for the credit to a “beginning of construction” standard for projects completed by the end of 2023.
In December 2017, Congress passed the Tax Cuts and Jobs Act (TCJA), a comprehensive tax reform bill that modified many aspects of the U.S. tax code. The commercial and residential ITC (as amended by the 2015 Act) were maintained under this legislation.
The long-term extension of the ITC through 2021 provides market certainty for companies to develop long-term investments that drive competition and technological innovation, which in turn, lowers costs for consumers.
Solar Renewable Energy Credits (SRECs)
In some states, you can earn and sell credits for the electricity your solar system produces. In certain states homeowners receive Solar Renewable Energy Certificates or Credits (SRECs) for generating solar electricity. They can sell or participate in SREC trade in their local SREC market.
1 SREC = 1,000 kilowatt-hours (kWh) of solar electricity
Price of the Solar Alternative Compliance Payment (SACP)
The SACP is the price electricity suppliers, such as utility companies, must pay if they don’t meet their renewable energy targets. Renewable energy targets are set by the state’s Renewables Portfolio Standard (RPS). RPS programs require electricity suppliers to get a certain portion of their energy from renewable sources.
Because homeowners can sell their SRECs for additional income, SRECs help lower the net cost of going solar
How does Tax Credit Work?
A tax credit is a dollar-for-dollar reduction in the income taxes that a person or company claiming the credit would otherwise pay the federal government. The ITC is based on the amount of investment in solar property. Both the residential and commercial ITC are equal to 30 percent of the basis that is invested in eligible property which have commence construction through 2019. The ITC then steps down to 26 percent for projects that begin construction in 2020 and 22 percent for projects that begin in 2021. After 2021, the residential credit will drop to zero while the commercial and utility credit will drop to a permanent 10 percent.
Commercial and utility projects which have commenced construction before December 31, 2021 may still qualify for the 30, 26 or 22 percent ITC if they are placed in service before December 31, 2023. The IRS issued guidance (Notice 2018-59) on June 22, 2018 that explains the requirements that a taxpayer must meet to establish that construction of a qualified solar facility has begun for purposes of claiming the ITC. for further details on the requirements set forth in the guidance.
In December 2018, Congress passed the Tax Cuts and Jobs Act, a comprehensive tax reform bill that modified many aspects of the U.S. tax code. The commercial and residential ITC were maintained under this legislation.