Electricity is one of the most important things in our lives. That solar panels allows us to collect photons from the skies and drive – literally if it’s an electric vehicle – our modern world is almost magical. In our first article on residential solar, we talked about the structural aspects of a house and how they affect solar output. The next step is to decide what hardware you want to include – solar panels, inverters and racking are the three main components to a system. Solar panels get the most attention, and their amazing price drop has been the greatest driver of solar uptake over the last ten years.

If you’re considering solar, get a quote from multiple contractors at understandsolar.com. If you want feedback on the quote you get – either email me at john @ 9to5mac dot com or send a tweet.

Edward Becquerel discovered the “Photovoltaic Effect” – the process by which materials exposed to light will create small electric currents – in 1839. In 1884 the first solar array was built to test the commercial potential. In 1905 Albert Einstein described how this process worked – via the broader photoelectric effect – eventually winning a Nobel Prize. In the 1950s, Bell Labs produced the first modern solar cell that led shortly to the first viable commercial market – military satellites.

After a lot of investment and research over the past decades, we get to see the same basic technology that powers the International Space Station, keeping astronauts alive, on top of our homes. Great time to be alive.

Today, thanks to Einstein and a lot of other people, your solar panel decision comes down to a few simple choices – how much electricity do you want from your roof and how much up front money do you want to spend? No matter the panels you choose – they will produce energy for decades. SolarCity sees 35 years as the true usable lifetime for standard quality panels (known as Tier 1). Premium manufacturers like SunPower, Kyocera and SolarWorld have products that have been steadily generating electricity for 30 years and more. Any panel in the top ten list by volume is probably a safe investment.

Factor #1 – Efficiency vs Price

The most efficient solar panels in the world, with the most exotic technology, are 46% (see main image in this article). These high efficiency technologies are mostly used in the space program, where efficiency trumps price by many order of magnitudes, and dual axis high concentration photo voltaics (HCPV) . The highest efficiency standard solar panels are 22-24% – however, these aren’t readily available for consumers – mostly by company owned commercial projects. The most efficient product that you and I have access to is SunPower’s 21.5% X Series. The X series can fit 33.5% more wattage in the same space than one of the most manufactured panels globally – the Tier 1 16.1% Trina All Max series. A rough rule of thumb is that 1 sq ft of usable roof space can generate 17 kilowatt hours (kWh) per year at standard efficiency – a SunPower panel can generate 23 kWh/sqft/year. Determine your annual kWh usage on your electricity bill and divide that by a guess on your viable square footage (use PVWatts to get a really good number).

Here’s the rub – to get the highest efficiency product on the market you will pay SunPower 2.5 times the best priced Tier 1 panels on the market. This will increase your solar power system price by 25-33% and it will slow down the time it takes for your system to pay for itself by a couple of years. But again, the benefit is while it might take longer to pay off it will protect you more against the ever rising price of electricity. With the amounts that the price of solar panels have fallen – more and more people are aiming for the higher priced, higher efficiency panels.

Recently, a new player has come onto the scene – the LG Neon2 – while their warranty is no match for the market leader SunPower, they do have a 19% efficiency and a price square in the middle of Tier 1 and SunPower. It’s very difficult to not bring up the Neon2 on a sales call. Recently, SunPower has taken a punch in the nose from competitors like LG and their high-efficiency panels – that tells me a lot of people are considering the alternative.

The end argument for efficiency comes down to a dance between need and price. Does your roof have enough space to produce the electricity you need? If not, is your local financial situation (cost of electricity, incentives, sunlight, your bank account) in good enough shape to pay for the high-efficiency that can get you closer to your energy needs?

Factor #2 – Warranty (in technical terms – Bankability)

There are two aspects of a solar panel warranty – a Power Production Guarantee and a Hardware warranty. The Power Production guarantee gives you protection in case the solar panel ‘degradates’ too quickly (degradation is a result of heat and moisture slower lowering the panel efficiency over time). If your panels aren’t producting at their warranted level – you can get them replaced. The standard solar panel will lose 1-2% in the first year, and then – per the warranty – 0.7% per year (though it is lesser in real life – the warranty gives you a nice floor though).

The second warranty is your hardware warranty – and in the solar industry there is a strange separation between performance and hardware warranties (unless of course – drum roll please – you are SunPower). While your panel might be warranted to produce for 25 years above 80% – the actual solar panel, the hardware, is generally warranted for only 10-12 years. That means – if the structure of the panel breaks down in year 13, then the panel production warranty is not covering you. Personally, I’ve never dealt with a solar panel outside of its hardware warranty – it seems if the panel makes it through the first couple of years it’ll run forever.

One question I get a lot is whether or not a solar panel can deal with hail. Daniel Richardson at Canadian Solar was nice enough to provide me this great technical chart for a customer’s insurance company recently. The basics are – normal hail moving at average speeds can strike your panel and not cause significant damage. If a freak storm occurs and the hail is greater than 1.75″ – first off stay inside please – and secondly, your panels will then hopefully be covered by your house warranty.

Of course, if you build a solar power system at Harbor Blue seafood in New Bedford, on the waterfront, the seagulls will drop quahogs on your panels to crack them open and get to the wonderful meat inside. Since these quahogs are often times far larger and heavier than hail – your warranty will not cover this. However, since solar panels these days are less than 1/3 the price of an overall system and since you usually only lose a few panels – it isn’t a big issue to spend a few hundred bucks on a panel plus a hundred on the labor.

The reality of solar panel warranties – is that you won’t care about the warranty if you buy any of the top tier products. If you attempt to save $0.15/W by buying a non-name brand solar panel, I can’t guarantee you anything – they will probably work just fine for a very long time, however, the chance is a slight bit lower.

Big time buyers like SolarCity, who have the resources and the buying power to measure performance and then push manufacturers, are helping solar panels extend their lifetimes far greater than 25 years – arguably, your solar panels will last 35 years before they fall below 80% of their initial production level. Higher-end products like SunPower (PDF) and Kyocera have shown that some of their panels will last 50+ years before degradation (lowering levels of efficiency) drops output below 80%.

Factor 3 – All the other things

The first ‘other thing’ to consider is whether you should wait for the latest and greatest technology that is just around the corner. Generally, the answer is No because the incentives that are in place often time disappear and are always getting lesser. And since most people are buying solar because it makes financial sense, you want to pay attention to your local market’s incentives to find out if there are any pending changes. If the changes seem big – like incentives are about to go away – make your move.

However, incentives go down because the cost of solar is going down. For instance, in Massachusetts the state level incentive (SRECs) fall 5% a year – residential solar power is also falling at least 5% a year. At first glance – wait as long as you can! This is almost a great idea if it weren’t for the SREC cap at 1,600MW that is getting hit a lot more often than the program designers expected. Make your judgment here.

The next ‘other’ to consider are fundamental technology shifts. The reality is that this doesn’t happen very often – however – it does happen, and we just might be in the midst of a heavy shift in the residential marketplace. First off, high-efficiency solar panels like the aforementioned LG Neon2s have changed the pricing game on the efficiency high end. Also, and this is definitely a wait and see, SolarCity is saying that they’re going to release a 21.8% efficiency ‘solar roof’ type product, which could be a “solar-shingle”. Personally, if a solar shingle product – directly integrated in the building (BIPV – building integrated photovoltaics) at time of construction or when re-doing your roof – was available at a decent price with a high amount of efficiency, I would be waiting on it. Allowing me to use 100% of my roof for solar power – versus the 50-80% that regular solar panels are able to use – would be a great benefit.

For those who care about aesthetics more so – this product will also be a great one. But – don’t hold your breath as other large companies have tried this path and failed. Maybe Elon’s magic pixie dust can make something happen.

We’re lucky to be in a time where we have the choice to generate our own electricity from our homes that is clean and can last for decades. This technology will continue to improve, prices will fall and sometime in the near future we’ll look back and wonder how society got along without it… but it does take many millions of us to buy today in order to invest in tomorrow.

Image sources: Solar panel efficiency progression chart by NREL and the first solar array installed on a New York City rooftop by Charles Fritts.

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