One can imagine that when the telephone or automobile (or any type of new technology) came out, there were hucksters and frauds taking advantage of the uninformed. Unfortunately, the solar industry is going through these growing pains.
Solar technology is not new — solar panels have been on satellites since the 1950s — but a combination of factors has allowed the solar industry to explode worldwide over the past five years. While annual solar installations in the United States have skyrocketed over 300 percent from five years ago, customer education has lagged behind.
From residential to commercial, we are going solar in droves. An important question remains: Do we know what we are buying or signing up for? This ties into another question: What are solar companies selling?
As a rule, solar companies are selling a quality product at a reasonable price. As with most rules, howeverthere are exceptions. Herein lies the conundrum — the customer’s solar education is being conducted by the salespeople who are selling the product. Further confusion is created by the complex nature of not only the technology, but the finance terms as well. In addition, the education involves an understanding of something that a large segment of the population doesn’t understand — their electric bill. The following list can be used as a helpful guide to understand what is being sold and what questions should be asked.
Service charge: It might have different names, but it’s basically a flat monthly fee for doing business with the utility. This can be as low as $1 for residential. Going solar will not change this cost.
Generation charge: This is the actual cost of the electricity that is used. It can be generated by many entities using various methods, including: nuclear, coal, oil, etc. The cost is charged in increments of kilowatt-hours, or kWh, and can range from $0.06/kWh to $0.40/kWh. Going solar will change the usage and overall cost.
Delivery charge: This is the charge to transport the electricity to your location. This can vary greatly, even within the same utility region. This is also charged in kilowatt-hour increments. Going solar will change the usage and overall cost.
Demand charge: This charge is often misunderstood, and different utilities process it differently. It is used to analyze the maximum amount of wattage that a location needs at any one time during the month. It can be understood as how big the pipe needs to be in order to ensure that the location has enough electricity at its peak demand. This charge varies greatly. Going solar might affect this number, but it’s hard to quantify so it is generally considered a charge that will not change with solar.
Time-of-use billing: In some regions there are different electricity rates for different parts of the day. Solar may affect the cost of this charge, depending on the TOU rates and times. A solar PV system, together with a battery system, might work well to alleviate this charge.
Takeaway: Solar salespeople may identify what a customer is currently paying in a less-than-honest manner. Using this analysis, you should be able to calculate what you’re actually paying just by looking at your bill.