When not to Put in a Photovoltaic System

We believe that solar photovoltaic systems can be a great energy solution for most homeowners.  However, they are not the best solution for every homeowner.  In talking to experienced solar contractors they estimate that about 15% of homes are not a good fit for a solar PV system.  There are a number of scenarios where PV systems are impractical or where other uses of your money would get better results.  In order to make a good determination you need to look at both energy generation and energy conservation. 

Here is a list of scenarios where we think putting in a PV system would be ill advised:

1. Poor Insulation -  Many homeowners have homes that are under insulated.  There is no point in creating energy using solar panels only to have that very same energy go out through your roof and be wasted. Energy conservation should always come before energy generation so take care of your home's insulation first before you spend any money on a PV system. Once your home is properly insulated and if you have money left over then you can consider a PV system. Also, it is worth noting that increasingly many states will insist that your home be properly insulated before they will provide rebates for photovoltaic systems. 
2. Old Roof - Also, if your insulation is good but your roof is on its last legs you probably should consider getting the roof done first so there is a good foundation for the solar panels.  If you try to wait a few years and then do your roof then you are going to have to remove all of the solar panels first which can add unnecessary cost.
3. Unavoidable Shade - Solar panels are very durable devices but their performance drops significantly if all or even part of the panel is exposed to direct shade for any length of time.  A competent solar contractor can analyze the location where you are thinking of putting your panels using a device called a solar Pathfinder and can tell you what the impact of shade from trees or other buildings might have.  If trees are the problem you have the option to remove them.  However, sometimes the trees are on a neighbors property and removing them may be more difficult.  If you are in an urban area and shade is being caused by another building the problem is a good bit harder.  Some states have begun enforcing the right of one homeowner not to shade out another homeowner's PV system (a right to light so to speak) so there is some chance you can take legal action to remove whatever is shading your property.  However, these types of lawsuits are relatively new and it might end up being more hassle than it is worth.  Consider using a pole mounted system for holding your solar panels or consider putting the panels on your garage instead of your house.  If these are not options then solar PV might not be the best solution for you.
4. The Payback is Too Long - For some homeowners the payback period for solar energy may be too long.  This is particularly true in those states that do not provide any incentives for solar energy.  If you are not sure if your state provides incentives check out the database at www.dsireusa.org and you can see what incentives they offer.  When all is said and done any investment should make good economic sense.  Solar has its positives and negatives as an investment.  On the negative side is the fact that the current administration is in the process of letting the $3000 federal solar incentive lapse.  However, there is a chance this will either get overturned or brought back by the next administration. On the positive side of the equation there is the fact that both electric rates and home heating fuel costs are going up rapidly which shortens the payback period for solar. Any payback analysis should include some adjustment for the likelihood the energy rates will continue to rise.  Since solar panels last a very long time (25-30 years at minimum) the question is how much will they rise. Most estimates we have seen suggest factoring in an annual rise in energy costs of 6% a year is appropriate in a payback analysis but given the recent dramatic rises in the cost of electricity in the last few years you may want to go with a higher inflation factor.
5. Insufficient Capital - Sometimes people just cannot afford to put in a complete PV system. A full size system can cost between $15,000 and $50,000 depending upon the size of your home and for many people these days that is just too much money to come up with.  One option is to consider getting a loan for the system. A number of states have low interest rate energy loans they can provide to help support the cost of putting in a PV system.  Home equity loans are also an option for those of you who still have equity in your homes given the recent decline in the housing market.  While equity is down so are the interest rates on home equity loans. Also you might want to consider putting in a smaller PV system now and then adding more panels later.  Once you have a basic system installed adding additional panels is relatively easy. We have seen many owners add on to their base system by looking for sales on panels when the opportunity presents itself.  Finally, one option you may want to consider is going with a solar thermal system rather than a PV system.  Solar thermal systems cost far less than a full-sized PV system and can still provide very significant energy savings.  Most cost between $4000 to $6000 and can pay for themselves in just 3-5 years.
6. You Are Planning to Move - This one is just a bit tougher to judge.  The question is, if you are only planning on being in your home a short time will you get a good return on an investment in a PV system.  In other words will the increase in your sales price be equal to or greater than what you spent on the system.  Many experts believe that adding a photovoltaic system to a home will immediately result in a significant increase in home value. However, we have heard other real estate experts tell us that in many markets the investment is resulting in higher home prices. Many of the areas where this appears to be the case, such as Florida and California, are going through one of the worst housing markets in the last 50 years.  Our sense is that in order to be sure it would be a wise move to discuss the investment with real estate agents in your local area.  House prices are a local phenomenon and what might be a good investment in solar in one area might be a bad investment in another.