Frequently Asked Questions
- What is renewable energy?
- How much energy can I get from solar electricity?
- What size solar power system do I need?
- What is a grid-connected system and net metering? How does It work?
- Is it better to install a grid-tied or off-grid solar energy system?
- If I generate my own electricity, will I be able to avoid future power outages?
- Will my panels still work when it’s cloudy or raining?
- What tax credits and incentives are available for solar energy?
- What is an Energy Project Assessment District (EPAD)?
- What is a solar lease or solar Power Purchase Agreement (PPA)?
- What is a Solar Renewable Energy Credit (SREC)?
- Are there other ways to cut carbon and cost?
- Does my homeowner’s insurance cover my solar system?
- How does installed solar affect the resale value of my house?
- Is using a certified solar installer important?
- What solar-friendly policies have been proposed in Kentucky and how can I support it?
1. What is renewable energy?
Renewable energy is produced from natural resources – such as sunlight, wind, water, and geothermal– which are renewable or naturally replenished. Biogas produced from waste products and landfills is another source of renewable energy. These sources offer an alternative to fossil fuels and diversify the energy supply. The use of these clean energy sources benefits the environment, public health, community resilience, energy independence, and quality of life.
2. How much energy can I get from solar electricity?
Many homes and businesses are able to produce 100% of their electricity needs from solar. Factors in determining if this is possible include site suitability, the building’s energy efficiency and orientation, shading, energy use practices, and how much the building owner wants to spend.
The amount of electricity your solar panels produce each day depends primarily on the amount of solar irradiation that falls on the building, shading obstruction, and the number of hours the sun shines each day. Other factors include the equipment’s efficiency, cable losses, inverter efficiency, losses from dirt or grime on the panels (this is not a big factor in Kentucky), and temperature losses. Solar irradiation varies a lot by season, among states, and among locations within a state.
3. What size solar power system do I need?
The size of system needed depends on how efficient your home is, how much electricity you want to produce, and how much you want to spend on an array. There is no right or wrong answer, because it all depends on how much you want to get out of your system.
A recommended first step before installing solar it to look for ways you can reduce your energy use through energy efficiency. The payback period on energy efficiency improvements is usually short so it is cost-effective to invest here first. The LG&E-KU Web site offers many suggestions and rebates for Saving Energy and Money. With reduced consumption you’ll be able to install a smaller solar system and still meet your electricity needs while also saving money.
To size a system, an installer will evaluate the site for the size of suitable roof or ground space and look at how many kilowatt hours (kWh) of electricity you use on an average per day. You may install a system that meets 50% or 100% of your electricity needs, or somewhere in between. Solar tax credits and other incentives available to you may also factor into the size of system you select. You can also estimate the size system you may need by using a Solar Calculator.
4. What is a grid-connected system and net metering? How does It work?
A grid-connected system is one in which the energy produced by an on-site solar system is fed directly onto the utility grid. Net metering is a service or billing mechanism for an electric consumer that credits the system owner for the electricity added to the grid and these credits are then used to offset the electricity provided by the utility to the customer. These applied credits reduce the electric bil and if the system produces 100% of the electricity the customer uses, the bill is reduced to the minimum monthly charge. If excess electricity is produced the credits above the 100% mark are carried forward and can be used in future months.
The LG&E-KU web site offers more detailed information and forms on Net Metering. Kentucky law currently mandates that utility companies in the state permit net-metering for renewable energy systems including solar, wind, and hydro up to 30 kW. LG&E’s provides information on net metering, interconnection guidelines, and an application form for interconnection and net metering on its web site, from which the information below is given.
Once your renewable energy system is installed, it will have to be inspected by Metro and meet code. LG&E will ask that you sign a net metering contract before installing a net meter at your home or business.
Q: What is net metering?
A: Net metering provides customers with the option of generating their own renewable electricity to power their homes or businesses. Net metering measures the difference between the energy a customer purchases from LG&E/KU and the amount of renewable energy the customer generates using their own solar, wind or other acceptable renewable energy source. LG&E/KU will apply credit toward the customer’s future power needs for any excess power generated.
Q: How does net metering work?
A: With net metering, you use the electricity you generate first, and this reduces the amount you need to purchase from LG&E. If you generate more electricity than your home or business uses, the excess electricity can be fed through your meter and onto the electric grid. At night when the sun is not shining all of your electrical needs are supplied by the grid. The credits that result from excess production carry forward to be used when the sun is not shining or on your next utility bill.
5. Is it better to install a grid-tied or off-grid solar energy system?
While the solar panels themselves work identically in a grid-tied and off-grid system, the method of both storing the solar power and integrating that power into the home’s electrical system have some marked differences between the two. Grid-tied systems sends excess solar production to the grid and the system owner receives credit for the energy produced. Off-grid systems use the same solar panels as grid-tied systems, but they typicllay store the power they produce, usually in batteries.
Grid-tied systems are less expensive to install and can result in lowered electricity bills. However, is there is a power failure you may have no electricity, and they can’t use the solar panels at night so are back to using grid electricity.
Off-grid systems store solar energy in batteries so can use the energy produced from the sun at night or on overcast days. This type of system can work for a period of time even if the power grid is down. The cost however is significantly higher due needing to purchase and maintain the batteries and associated gear.
6. If I generate my own electricity, will I be able to avoid future power outages?
A grid-tied system will go down whenever the grid is down. There is an important reason for this: the power company wants to prevent a back-feed situation, therefore, your solar system should be designed to automatically discount the solar panels from the home’s electrical panel. With electricity flowing both ways (to and from the grid) the power company is concerned that the output of your home’s solar panel system could inadvertently shock a lineman who is working to restore the power during an emergency outage. However, some systems have a built-in switch that enables the system owner to use a small amount of electricity supplied directly from the solar panels to meet basic needs during an outage situation. The installation of a battery backup system will enable the system to store energy for use in blackouts or emergencies and, depending on the size of the battery system, for longer periods.
7. Will my panels still work when it’s cloudy or raining?
Photovoltaic panels can use direct or indirect sunlight to generate power, although they are most effective in direct sunlight especially in the winter.
Solar panels will work even when the light is reflected or partially blocked by clouds. Periodic rains may actually help keep your panels operating efficiently by washing away any dust that accumulates. If you have a net-metered system, the energy generated by your panels during sunny hours will offset energy that you draw from the grid at night and other times such as during rain or snow events when your system isn’t operating at full capacity.
8. What tax credits and incentives are available for solar energy?
The 30 percent federal Investment Tax Credit (ITC) for solar energy systems is available to both residential, commercial and industrial customers until the end of 2018. Industrial and commercial installations may also take advantage of a five year accelerated depreciation schedule. The ITC applies to both photovoltaic and solar heating and cooling systems.
The Kentucky tax credit expired at the end of 2015 and new legislation must be passed for it to be extended and/or expanded. To compare Kentucky policies and incentives with other states, the Database of State Incentives for Renewables & Efficiency(“DSIRE”) has a comprehensive list of solar incentives by state, plus information and maps showing solar policies across the U.S. The Solar Energy Industries Association (SEIA) offers more information on Solar Tax Incentives.
9. What is an Energy Project Assessment District (EPAD)?
EPAD financing allows local governments to provide public or private long term financing in support of on-site renewable energy, energy efficiency and water conservation projects for commercial properties. The financing is then tied to and paid back through the local property tax process. This eliminates the need for upfront investment of capital and if the building is sold the remaining debt passes with the building sale to the new owner.
Energy Project Assessment Districts (EPADs), also known as Property Assessed Clean Energy (PACE), offers an innovative and proven way for commercial property owners to pay for renewable energy, energy efficiency, and water conservation upgrades. EPAD funding is arranged through public or private financing for 100% of a project’s costs, and is repaid through an assessment on the property tax bill over a term of up to 20 years. Participation is totally voluntary and there is no cost to taxpayers.
ePADs can uniquely solve barriers to energy efficiency adoption. They require no up-front cash investment, while long-term financing (up to 20 years) results in immediate positive cash flow, and there is no payoff upon sale because the assessments (and energy savings) are tied to the property. EPAD legislation passed in Kentucky this pass March, but passage of a local EPAD ordinance for Louisville is pending.
10. What is a solar lease or solar Power Purchase Agreement (PPA)?
Leases and PPAs are financing arrangements that help customers use solar while avoiding high up-front capital costs and start saving money on their electrical bills immediately. There are currently no solar leasing companies in Louisville, as leasing is currently not allowed under PSC (Public Service Commission) regulations.
In a lease, a third party installs the system and the customer pays a monthly fee for use of the solar panels. Often the monthly fee paid is less than what the customer would otherwise be paying to the utility company. In a Power Purchase Agreement (PPA), a customer agrees to purchase all the energy from a solar system over a fixed period of time. Leases and PPAs make sense for people who don’t have access to financing, but with available financing options and low interest rates, it saves money in the long run to purchase and finance a system on your own.
11. What is a Solar Renewable Energy Credit (SREC)?
SRECs are transferable credits for producing a given amount of renewable energy that can also generate revenue for solar system owners. They are purchased by entities where states have renewable portfolio standards as a way to demonstrate achievement of energy production goals without physically producing that energy. Your installer can tell what States have an SREC market.
A Solar Renewable Energy Credits (SREC) is a certificate that shows a certain amount of electricity was produced using solar energy. An SREC equals 1,000 kwh of solar energy produced. SRECs are a market mechanism that exists in response to states that have Renewable Energy Portfolio Standard (REPS) legislation with specific requirements for solar energy production. The certificates show that regulated entities are meeting their solar energy production targets.
SRECs are sold on the market and often handled by brokerage firms. System owners can sell the SRECs from the solar energy they produce to recover some of their investment cost. The additional income received from selling SRECs increases the economic value of solar energy and assists with the financing of solar technology.
12. Are there other ways to cut carbon and cost?
The first step to reducing energy consumption, and therefore cutting emissions while saving money, is to implement conservation and energy efficiency measures. Additionally, some minor behavior modifications can have a substantial impact in energy usage.
Conservation and energy efficiency (EE) upgrades also cut carbon emissions and energy costs, and have the quickest payback period. Energy efficiency improvements include changing incandescent for CFL or LED lights, double or triple pane replacement windows, added insulation in the walls and ceiling, sealing of air leaks around windows and doors, ceiling fans, etc.
Changes in personal energy use practices that can reduce energy consumption include turning off lights, turning down the thermostat and hot water temperature, drying clothes outdoors when possible, or using appliances during non-peak hours. LG&E-KU offers an energy audit program and \us incentive rebates for when EE improvements are made.
“Net zero” energy homes are another way to cut carbon and costs. These homes are designed to require almost no energy input through the use of super-insulated walls and roof, a tightly sealed building envelopes, double or triple glazed windows, and passive home design. ‘Net zero” energy homes cut energy use by 60 to 90%. They were first designed in Europe but are increasingly being built in America, including by Habitat for Humanity. You can find more information about net zero homes at the Passivhaus Institut and Passive House Institute US (PHIUS).
13. Does my homeowner’s insurance cover my solar system?
Usually, yes! But check with your insurance company, and keep in mind most panels and other hardware carry warranties measured in decades.
Many insurance companies will provide coverage for a solar system at a slightly higher annual cost to cover the additional cost for the solar system added to the value of the home. It is advisable to check with your insurance company prior to deciding to install solar. Keep in mind that solar panels are typically warranted by the manufacturer for 20-25 years, and the inverter(s) for 10 years, and in both instances are likely to last far longer than the warranty.
14. How does installed solar affect the resale value of my house?
Installed solar actually adds value to your home! Buyers are often willing to pay a premium for homes with installed solar, proving its value as an investment tool.
Several studies have been conducted regarding the value of photovoltaic systems on homes. Most recently, a 2015 study from Berkeley Lab shows that homeowners across the country have been willing to pay a premium of about $15,000 for a home with an average-sized solar array. Previous Berkeley Lab studies in 2011 and 2013 showed that 1,750 California homes found clear evidence that solar homes sell at a premium. The researchers found a strong correlation between premium size and PV system size, and a weak correlation between premium size and system age. A home with a new 5 KW system, on average, sold for nearly $40,000 more than similar homes with no PV installed. This is well above the replacement cost of the system and the system’s capacity to produce income.
Together these studies paint a clear picture: while market factors like electricity rate and system price may impact the size and extent of the premium, solar homes can be expected to sell for more than homes without PV. Studies in Colorado also show evidence that they sell more quickly. [Source: Energy.gov, Solar Energy Resources for Homebuilders]
15. Is using a certified solar installer important?
Using a certified solar installer is a way to ensure that the installation is being done by someone who has an understanding of the National Electrical Code and knows how to properly design and install solar arrays. Working with a licensed electrician who is also trained to install solar is another option.
What distinguishes qualified and unqualified installers is the skills learned through specialized solar training and the application of that training toward actual successful solar projects. The final hookup must be completed by a licensed electrician. This free Checklist for interviewing solar installers helps insure you’ve covered all the bases.
NABCEP (North American Board of Certified Energy Practitioners) is the most well-established and widely-recognized certification for North American solar professionals. Using a NABCEP certified installer was requirement for claiming the Kentucky solar tax credit. Other organizations that offer solar training include Solar Energy International, Midwest Renewable Energy Association, ONtility, Solar Living Institute, Solar Training School, and others.
16. What solar-friendly policies have been proposed in Kentucky and how can I support it?
EPAD, net metering, and state tax credits all exist at the state level, but ePAD needs local support for further implementation, net metering needs a higher cap, and the state tax credit needs to be renewed.
Success: A bipartisan Energy Project Assessment District Act (HB 100), was passed in the 2015 legislative session, creating a mechanism for local governments to finance commercial renewable energy, energy efficiency, and water conservation projects. Public or private financing is used and tied to and paid back through property taxes. This eliminates the need for upfront capital investment or payoff if the building is sold since the debt (and energy savings) passes to the new building owner.
Other important legislative initiatives are pending or soon to expire:
Kentucky currently has a mandatory net metering requirement for up to 30 kW installations. Legislation to expand this net metering requirement from the current cap to 1000 kW or higher has been discussed and a new bill was unsuccessful in the 2016 legislative session.
The existing state tax credit for energy efficiency and renewable energy for residential ($500) and commercial ($1,000) expired on December 31, 2015. Legislation to extend and expand the tax credits through 2023 was unsuccessful in the 2016 legislative session.
A Clean Energy Opportunity Act (HB 229) has been introduced in each of the past five legislative sessions. Key components include a Renewable and Energy Efficiency Portfolio Standard (REEPS), that would require regulated electric utilities in KY to get an increasing share of their electricity from clean, renewable sources and energy efficiency programs, and a Feed In Tariff (FIT), that would set a guaranteed rate for renewable energy producers. A study found that the two policies would create 28,000 new jobs in Kentucky over the next 10 years.