Shopping for best Value in Solar in a Buyer’s Market – Q4 2016
Just when you thought solar couldn’t be any more affordable, oversupply of solar modules from China after that country’s June 2016 drop in it’s feed-in tariff have led to as much as 50% declines in the spot price of modules on the US wholesale distribution market. Market experts predict that this latest over-supply and low-demand fluctuation will stick as prices will likely stay lower. With the solar module itself representing on average only 20% of the total turnkey upfront installation costs of having a local contractor install a solar energy system on a residential roof the key consideration for consumers turns to quality of design, quality of installation, quality of equipment and quality of any warranty service provided by the installer. In fact as long as the module is a so-called “tier-one” module, the solar inverter, the heart of a grid-interactive distributed solar energy system, in my opinion becomes the key product to select – not the solar module. Having joined the solar industry in 2007, installing my first solar energy system in Missouri in 2008, now a NABCEP certified professional for over 5 years and vice-president of projects and quality assurance with a nationally ranked top solar contractor, Missouri Solar Applications, I draw on a mixture of experience and system monitoring data in formulating my opinion.
Solar energy systems represent an alternative to large centralized power plants that deliver electricity over miles of transmission lines. With FREE fuel cost (even the IRS has not figured out a way to tax sunshine yet! , to compare the value of solar electricity from an array mounted on the roof of your home to your traditional utility electricity bill you must think in terms of what is referred to in the world of finance as life cycle analysis. In this case the typical lifetime period for comparison is 25 years. By no coincidence the standard equipment guarantees on solar modules from the manufacturer is 25 years. By taking your current electric bill times 25 years, one can see where the opportunity for significant savings comes in to play. In addition for most solar consumers, the comfort of energy security in knowing that the home is capable of producing a portion if not all of its electricity needs provides extra value especially when considering what is likely to happen to your current electric bill over the course of 25 years. For example, in 5 out of the 8 years from 2007-2014, Missouri customers of Kansas City Power & Light experienced annual rate increases from 5.3% in 2011 to 16.2% in 2009.
So what could go wrong with this picture? Well, 25 years is a long time and in addition to the upfront capital expense of installing the equipment and placing it into operation the homeowner now accepts the risk of whether the solar system will not only work well but continue to work for 25 years. In terms of life cycle analysis this is referred to as repair and/or replacement costs of operating a solar system. But I have already stated that the solar modules come with performance guarantees of 25 years so what could possibly go wrong? The answer lies in the fact that even more significant to the operation and performance of a utility grid interactive solar energy system is the solar inverter. Often overlooked, the solar inverter also represents approximately 20% of the upfront installation costs of residential solar. The primary job of the solar inverter is to take the electricity produced by the solar modules on the roof of the home (Direct Current) and match it with the utility’s power produced by generators in the power plant (Alternating Current). While by typical standards of the electronics industry the solar inverter is incredibly robust, the industry standard for a manufacturer’s warranty has only recently been extended from 10 years to 25 years. In fact many solar inverters on the market come with a standard 10 year warranty which can be extended to 20 or 25 years at additional cost.
In my experience, out of approximately 300 installations spread throughout the state I have replaced solar modules at one installation to date and in this case it was due to built in AC “micro” inverters that failed in the modules that were a new attempt to combine small inverters in the back of the solar module by a company that later went bankrupt as well. With inverters my experience has been mixed. Partly, I believe, this is due to the rapid evolution of the solar inverter. Compared to when I first entered the industry the solar inverter has gone from having a large transformer in the back to transformerless. From low frequency to high frequency H-bridge circuit design and from no on board remote monitoring to built in monitoring for free. So my visibility only extends to the number of phone calls I receive at my office and to the dashboards I monitor on the computer screens when proactively checking for performance issues. In recent years my company settled into working with two manufacturers – Fronius and SolarEdge partly due to the quality of the products but also partly due to innovative features offered by the companies that no other manufacturer offered. For example, Fronius offers factory service certification for my field technicians in which program we participate allowing us to more quickly diagnose, fix or replace failing circuit boards or parts within the inverter without having to take the time to send it back to the factory for repair. In the case of SolarEdge, unlike AC micro-inverters that attempt to convert the DC power of the solar module to AC behind every module on the roof (yes, think about all those points of potential failure up on the roof), SolarEdge by design provides all the enhanced features of module optimization that a micro-inverter offers but none of the maintenance failure risk of converting DC to AC underneath the module on the roof.
My recommendation for the homeowner considering solar is to start by picking your solar inverter. With current costs for residential homeowners I currently lead by offering SolarEdge inverters. For small commercial (at the time of this article, the Missouri market only allows up to 100kW of nameplate solar to be grid tied) I lead with Fronius inverters. In both cases it is due to the features of the inverters and the price point versus performance that is appropriate to the application. Most home installations are less than 10kW with anywhere from 8 to 40 modules. In this case having the visibility of monitoring the output of each module, the safety of low DC voltage on the roof and self-consumption monitoring with the option of adding back up battery storage such as the Tesla PowerWall makes SolarEdge extremely attractive for the price. In recent years I have successfully built solar systems for homeowners on a budget with the main SolarEdge wall unit “over-sized” allowing them to add solar modules for a very modest cost later when funds allow or when their usage needs have increased. On the commercial side, Fronius also plans to launch it’s line of “hybrid” inverters which will have built in grid service capability for regions of the country that are already offering incentives in exchange for the benefits solar and back-up battery storage provides to the grid in terms of stabilization of voltage, frequency, harmonics, etc. The granularity, adaptability and serviceability of the Fronius line of inverters has yielded good results for my commercial installations.
In closing, with equipment and material now representing less than half of the upfront cost of going solar the consumer is wise to truly research the background of the company installing the solar. As often as not, issues with the performance are related to poor design and poor installation as to failure of the equipment itself. I recently experienced a perplexing situation with a solar system that had performed extremely well for over 8 months from February to October of 2016. In the end I had to chalk up the issue to a ground wire that was misplaced preventing proper seating of the inverter into its rack. To find a qualified installer look up their credentials on NABCEP.org, check if they are members of any professional association. Make sure they are licensed and insured and of course check references, online reviews and their Better Business Bureau rating. As all consumers know there are fly by night operations out to make a quick buck and disappear of which every buyer needs to beware. If designed well, using quality components that are installed properly, a solar electric system should produce well according to the manufacturer’s guarantee well beyond 25 years. Next year marks the tenth anniversary of my company’s fleet of installed solar electric systems here in Missouri. Although I am always on the look out for talent and we are currently hiring, I fully expect to remain the only part time service technician employed by Missouri Solar Applications in 2017 as our solar systems remain maintenance free and the financial cost of successfully owning and operating a solar energy system at your property reaches an all time low (much less than what you are currently paying your utility)!
Jeffrey Owens Vice-President, Missouri Solar Applications NABCEP PV Installation Professional# 051112-137