Solar panels keep getting cheaper, but price isn’t the only consideration when it comes to buying solar panels for your home.
As a modern technology, the rapid evolution of solar is more similar to your smartphone than to mature energy technologies that solar competes with, such as gas turbines or coal powered steam plants. If you’re a homeowner who is contemplating putting solar panels on your roof or backyard, you might be a little overwhelmed with the technical terminology and all of the choices available.
Fear not: The Solar Nerd provides a gentle yet thorough introduction to home solar. This article in particular will cover the latest technology and market developments in home solar to watch out for in 2020.
Solar panel efficiency refers to the percentage of sunlight that a solar panel converts into electricity. High efficiency is desirable because it means that you can generate more power with fewer panels.
According to Lawrence Berkeley National Laboratory (LBNL), the efficiency of installed solar panels has improved by 44% since 2002:
Module efficiency levels have risen considerably over time, from a median of 12.7% in 2002 to 18.4% in 2018... These gains have been particularly pronounced over the past several years, with median efficiencies climbing by roughly one percentage point in both 2017 and again in 2018. Those recent gains reflect a correspondingly sharp increase in the share of mono- crystalline modules, from 40% of the sample in 2016 to almost 90% in 2018
The LBNL study looks at the efficiency of panels that are installed in the real world, not just the best technology available in the lab. For example, solar panels for the home market might range between 16% to 23% efficiency, but for critical applications such as space satellites in orbit, solar cells with efficiencies as high as 46% are used. Super-efficient solar cells like that are extremely expensive, so you won’t see those on your rooftop anytime soon.
But still, homeowners are benefiting from the trickle down effects of both better technology and lower prices. Those efficiency gains are not just about technology breakthroughs, but falling costs as well. This is one reason why more homeowners are choosing monocrystalline solar panels over polycrystalline. Even though monocrystalline technology is decades old, the continuing decline in price means that its become affordable enough to be the first choice for many solar homeowners.
There are some other technologies that are reaching the mass market, driving down prices and making them more affordable to you and your neighbors. These include PERC cells, hetereojunction cells that combine crystalline and thin-film silicon, half-cut cells that improve performance in the shade, and bifacial solar panels that capture energy from both the front and rear of the panel.
If you live in Northern hermisphere (eg. the United States) and as long as there are no trees or buildings obstructing the view, solar panels will generate the most electricity if you point them directly south, because that’s where our neighborhood star (ie. the Sun) spends most of its time.
However, generating the maximum electricity isn’t necessarily the same as generating the most valuable electricity.
The pattern of daily electricity usage means that our electric grid is under more stress during some parts of the day than at other times. Usually, the early evening in summer when it’s still hot but people are returning home and firing up all their appliances is when the grid is under the greatest strain.
Time-of-use (TOU) billing is becoming more common because of this, and in California new solar homeowners are required to have a TOU plan. These plans make electricity more expensive in the early evening, with the goal of encouraging people to use less electricity and reduce the strain on the electric grid. While TOU could make your monthly electric bill higher, it can also benefit solar homeowners who plan for it.
If you have a TOU plan, it’s often sensible to point your solar panels west, because that’s where the sun is in the evening. If you do that, you’ll generate more electricity in the evening when it’s expensive. You might even generate more energy than you need. If so, your extra electricity will get sent into the grid, and you’ll get a credit on your bill at the higher peak time rates.
According to Berkeley Lab, more and more homes are choosing different panel orientations:
Panel orientation has become more varied over time, with 57% of systems installed in 2018 facing the south, 23% to the west, and most of the remainder to the east.
This can be a little complicated to understand, so we wrote a whole article that goes into the nitty gritty details. Bottom line: TOU rates are now mandatory for new solar homes in California, and utilities in other states may be following suit. Read our article to learn more.
With the suddenly rapid growth of electric cars - they’re expected to be nearly 60% of passenger vehicle sales in 20 years - the cost of batteries has been dropping in price and will continue to get cheaper.
Electric cars and home solar batteries use the same type of chemistry: lithium ion. This is also the same type of battery in your laptop and smartphone. This means that the same market forces that are helping to make electric cars cheaper are also reducing the cost of home batteries.
While most solar homes don’t integrate a battery system, that’s starting to change. Falling cost is one factor, but increasing need is another, especially for residents of California who became familiar with scheduled blackouts in PG&E’s service area.
Extreme weather events like wildfires are becoming increasingly common, and PG&E has been trying to cope with the fires by shutting down power lines when there’s a risk that power lines can fail during windstorms and trigger a fire.
When you pair battery backup with a home solar panel system, you could theoretically stay off the grid indefinitely: the solar panels can be used to charge your battery bank, which can be used to provide emergency power. Note that in most cases, the battery will be wired to power only select circuits in your home. This means that you’ll still need to curtail your energy use (ie. you won’t be able to run your central air conditioner at full blast), but important appliances like your refrigeration and lights can continue to work.
According to the LBNL, only a small percentage of solar homes have batteries - up to 5% - but it’s generally becoming more popular, especially in some regions like California and Hawaii.
Solar leases and power purchase agreements are types of financing agreements that let a homeowner get a solar panel system installed on their home for free. Under this type of agreement, the homeowner doesn’t own the solar panels - the company does. You get to use the solar electricity and pay the company a monthly fee for this. To learn more, you can read The Solar Nerd guide to solar financing.
Most of the time, the cost you pay to the solar company is less than you would pay to your regular utility company, but there have been cases where customers have actually seen their electricity rates go up. That’s bad, obviously. While people who install solar panels are generally interested in helping the enviroment, most people also expect to see a financial benefit as well.
These lease and PPA agreements are usually offered by a few large national solar installers, such as Vivint Solar and SunRun. You can read our overview of both companies, but one thing that’s common among customers is that people are often surprised by the fine print of the financing agreement, which often specify an annual escalator in the rate paid. A typical escalator rate is 2.9%. That’s often higher than the rate increases you might experience with your utility company.
This means that while a leased solar panel system might give you cheaper electricity today, it might be more expensive that grid electricity in 5 or 10 years from now.
Don’t just take our word for it: check out the Better Business Bureau, where you can read many complaints about both these companies.
It seems like customers are coming around too, according to the LBNL:
Third-party ownership (TPO) has declined in recent years, dropping to 38% of residential, 14% of small non-residential, and 34% of large non-residential systems in the 2018 sample.
As you can see in the graph below, interest in these agreements has dropped from a high point a few years ago:
When you use The Solar Nerd to request quotes on a home solar installation, we never refer you to large national companies that push leases and PPAs on customers. Instead, we prefer smaller local or regional companies that primarily sell solar systems.
In a home solar system, the inverter is the component that does the important job of converting direct current (DC) power from your solar panels into alternating current (AC) power that your house can use.
Read our guide to solar inverters if you want a deep-dive into this topic, but there are basically two categories of inverters: central inverters that handle the output for all of the solar panels in an array, and microinverters or power optimizers that each handle the output for one solar panel.
This means that if you have a microinverter or power optimizer-based system and you have 20 solar panels, you’ll have one component attached to each panel that handles the inverter duty.
Microinverters and power optimizers work slightly differently. A microinverter is a complete device that does all of the inversion work, while a power optimizer handles part of the job, and sends DC power to a central unit that does the actual DC-to-AC conversion.
While both work differently, they have similar advantages. A conventional central inverter can have trouble handling situations where only part of your solar array is covered in shade. When that happens, you can suffer a power loss across the entire array, not just the shaded areas.
Microinverters and power optimizers, on the other hand, handle this situation much better. With this type of system, the solar panels that are still receiving sunlight will continue to generate power. They aren’t negatively affected by nearby panels that are shaded.
Why would a homeowner need this? Some shading situations are obvious, like trees and neighboring buildings. But others aren’t - fallen leaves, bird poop, and even your own chimney during parts of the day can cast enough shade to affect the output of your system.
Microinverters and power optimizers are hugely popular in the residential market, accounting for 85% of residential installations. In contrast, large-scale commercial systems (which tend to be installed in open areas) use microinverter-type systems only 22% of the time.
For the homeowner, this is good news, because the popularity of these systems drives down the price and allows companies to continue iterating and improving on their products. As far as microinverters go, Enphase is by far the dominant company in the market. You can read our overview of Enphase microinverters to learn about their product lineup.
Solar panels and equipment continue to get cheaper all the time. Since 2010, the price of solar cells has dropped by 89%. Bloomberg New Energy Finance predicts that prices will continue downward, dropping by another 34% by 2030.
For homeowners, this is great news because while the price of solar hardware is dropping, the US federal government is starting to reduce its tax incentives. The federal tax credit for residential solar has been reduced to 26% in 2020 (from 30% the year before) and its scheduled to disappear completely after 2022.
The drop in hardware cost offsets this partially, but a majority of home solar costs are what are known as soft costs: labor, sales and marketing costs, company overhead and profits, and permitting. Those costs aren’t dropping as fast as on the hardware side.
This means that a home solar system installed after 2022 could be slightly more expensive than one today, because the federal tax credits are probably greater than price declines the expected over the next couple years. That’s not set in stone, however: the next federal administration could be more solar-friendly and work to renew the tax credit. Let’s hope that happens.
Many of the facts and figured used in this article come from an annual report called Tracking the Sun published by the Lawrence Berkeley National Laboratory. You can check out the report yourself to learn more in depth.