What You Need to Know About Solar

Are you considering purchasing solar for your home or perhaps in the process of buying a home that already has solar or batteries installed? Sunny Coronado seems like the perfect place to take advantage of our average 266 annual days of sun. There is a lot to consider, and not all solar installations are created equally so let’s dive in!

Net Metering

What you really need to understand at a high level is that the cost savings benefits of solar have changed over the years and two homes sitting side by side with the same number of panels may offer dramatically different benefits depending on when the system was installed. Net metering is the billing structure that provides a homeowner with billing credits if their solar system produces more energy than the homeowner uses. If you installed a solar system prior to April 15, 2023, you are on either NEM 1 or NEM 2 which provide these credits through your bill and offset the cost of your usage. NEM 1 and 2 systems were typically sold with the idea that you would be paying yourself back within about 7 years with all the saved electricity costs. After April 2023, the structure changed and homeowners receive much lower credits than before. Under NEM 3, you may be selling excess electricity to the grid for relatively little during the day, only to buy electricity back at much higher retail rates after the sun sets. Therefore, systems installed after spring of 2023, should strongly consider adding battery storage as an additional component to their system

Batteries

Batteries used to be viewed as blackout prevention tools but that has largely evolved. Now batteries are needed to draw power during high-cost peak-hour uses so that an owner can avoid paying the most expensive electricity charges during the day. The battery is charged with excess solar generation instead of selling it back to the grid cheaply, then that stored energy can be used when rates are high effectively creating a rate arbitrage. I have seen payback estimates ranging widely, with some approaching 15 years depending on system size, financing costs, household energy use and EV ownership. Even so, you are ultimately paying yourself back vs. the utility company and if rates increase over time (which they will), your cost savings will increase. One added benefit of a newer system is that you will benefit from newer technology compared to the less efficient panels of the past.

What to consider

Ultimately, owned solar and battery storage can be viewed as valuable features for a home that are worthy of consideration for energy and cost efficiencies in an increasingly expensive world. If you are purchasing a home with solar already installed, conduct a solar inspection and ask the Seller which NEM contract they are on. Buyers should also determine whether the system is owned, financed, or leased. If you are purchasing solar today, be mindful of the company you choose to install your system too. During the tax credit years, solar was in such high demand that solar companies were popping up everywhere. Many of those installers have had to close their doors with the decrease in demand. And while there are still some tax incentives available, the structure has changed slightly and it’s important to make sure you work with a reputable and stable installer.

Jim Nelson has been selling real estate in Coronado for 16 years and is consistently ranked within the top 100 agents across San Diego County. Have a question about real estate? Submit them to jameshnelson@gmail.com and your question could be the subject of a future article.