How Hiring a Local Solar Contractor Can Save You Money on Your Solar Project
By sourcing equipment from a distributor and hiring a local solar contractor to install your system, you can potentially save thousands on your solar project. This article explains how much you can expect to save by managing your own solar project and outlines the steps you need to take to get it done.
There’s no doubt that going solar is less expensive than buying power from the utility over the long run. But the upfront costs for solar equipment and labor is a hurdle that gives many Americans pause as they consider whether to make the switch to solar.
National turnkey solar installers bid the cost of installation based on the total number of kilowatts the solar electric system will generate. A recent industry report estimates national installers charge right around 3/watt on average for a full-service solar installation.
That works out to a 20,700 bid for a 6.9 kW (6900-watt) system, which would be enough to cover the energy usage of the average American household.
Though many studies prove solar pays for itself, shelling out 20 grand up-front is still a tough decision to make. So naturally, people ask: “is there a way to get this done for less money?”
The simple answer is that you can save a significant chunk of money if you are willing to manage part or all of the project yourself. Hiring a local solar contractor to install your system can save around 20% compared to the average quote from a turnkey provider. If you’re comfortable installing the system yourself, it’s possible to go solar for half of what you’d spend with a large turnkey provider.
In this article, we’re going to explain how you can save money on your solar project by sourcing the equipment directly from a supplier and present two approaches to installing your system: doing it yourself or hiring a local solar contractor to install it for you.
In each case, we’ll outline a step-by-step overview of the project timeline and do the math to show you exactly how much money you stand to save by managing your project yourself.
Note: Before we go any further, we should point out that we are a solar equipment supplier. So naturally we’re not free from bias on this topic. We have made every attempt to present this information in a neutral way, providing sources where possible to back up the data presented in this article so you can make an informed decision.
How much can I save by hiring a local solar contractor?
It depends on your household energy usage, as well as how much effort and involvement you want to put into on your project.
If you are willing to act as the project manager for your installation, including sourcing the equipment and soliciting bids from local contractors, you could stand to save thousands of dollars on a typical installation.
(For a detailed account of this process, check out our customer’s Reddit post about their experience working with us – complete with pictures, cost breakdowns and insider advice.)
Here is a cost breakdown for three different approaches to going solar:
- Full-service installation from national installer (Turnkey): 3 per watt (source)
- Source equipment and manage the project yourself (Hire a Contractor): 5000.10 to 5000.65 per watt
- Source equipment and install the system yourself (DIY): 450.35 to 450.65 per watt (source)
Here’s how that would break out for an average-sized system:
Don’t want to do any solar installation labor yourself? No problem, you can still save some serious cash.
For the average American home, you can save more than 4,000 on your solar project if you are willing to source your own equipment and hire a local solar contractor.
Don’t forget the Federal Tax Credit and your state and Local rebates for additional savings.
Interested? Here’s the work you’ll have to take into your own hands if you want to take this approach.
What steps do I need to take to manage my own solar project?
Here’s a step-by-step list of project milestones you will need to complete to go solar. These tasks would typically be managed by a full-service solar provider, but you can easily take them into your own hands with a bit of research and planning.
Estimate your energy needs.
Use Unbound Solar’s cost calculator to see what size system you need to offset your energy usage. The size will depend on unique factors like your energy consumption and sun exposure, so it’s important to get a recommendation that is tailored to your needs.
Work with Unbound Solar to select the right system components for your unique needs.
Spend some time looking through our buying guides and resources (like the video above) to pick out the products you like. We’ve put together pre-assembled grid-tied packages to take the guesswork out of sizing and compatibility.
We recommend checking out our Crash Course to get acquainted with the basics, or take a deep dive into our extensive DIY Solar Workshop for a more extensive step-by-step guide to installing your own system.
Manage My Project
I want to manage the project myself by sourcing the best equipment and hiring a local contractor to install it. Take me to the 1-hour Crash Course.
- Learn what questions to ask to ensure you get a great deal.
- Watch videos on basic solar concepts and read our free Buying Guides to pick the best components.
- Ideal for people who want to learn the fundamentals before hiring a local solar contractor.
The ABC’s of Going Solar
Solar modules convert sunlight into electricity measured in kilowatt-hours (kWh). You either consume the solar electricity or, if it exceeds your immediate needs, feed it into the electric grid.
Your system size is commonly expressed in kilowatts (kW), which represents the maximum direct current (DC) capacity of the system or array. This is simply the product of the number of modules times the module’s nameplate power rating. For example, 20 modules, each rated at 300 watts, would comprise a 6 kW array.
Your system’s yield, the amount of electricity it will generate throughout the day, will depend on the specifications of your system such as the array’s tilt, orientation (north, south, east, west), shading, DC-AC conversion ratio, and other unique factors. The TXSES and Department of Energy websites offer additional basic solar details.
Your utility governs how your solar system affects your electric bill, and policies vary widely across the state. Some utilities have a net metering policy, where your monthly solar production offsets your total energy consumption, and you pay only for the remainder, or “net” energy use. Other utilities may compensate for unused electricity sent back to the grid at a rate lower than the retail rate, or may offer no compensation at all. Austin Energy has adopted a “Value of Solar” rate, where all of your solar energy is credited to your bill at a pre-set rate, offsetting your electric consumption charges. Check with your electric utility to learn how their solar rate works. You can also learn more about solar policies at DSIRE.
The Federal Investment Tax Credit (ITC) allows eligible homeowners who purchase solar energy systems to claim an income tax credit up to 30 percent of the installed cost. The ITC is available until the end of 2021, though it will ramp down starting in 2019. Some utilities and municipalities offer additional solar incentives and The Department of Energy and DSIRE websites offer more information on incentives, as may your electric utility and city government websites.
What Exactly Are You Buying?
The main components of a solar system consist of the solar modules (also called panels), the racking that attaches the modules to your roof or the ground, the cabling to your electric service panel, and one or more solar inverters that convert DC electricity from the modules to AC electricity used in buildings. Various manufacturers make these components and they may carry different warranties, which generally run from 10 to 25 years. Be sure to understand your warranties for both installer workmanship and major components. What do they cover, and who pays the labor cost to replace a failed component covered under warranty?
Solar is a big investment no matter what equipment you buy or how you pay for it. As with any business, solar installers are not created equal, and you will need to do some research to find the one that is right for you. You may choose to search the internet, consult Yelp and the Better Business Bureau (BBB), or websites such as Solar Reviews for consumer intelligence on installers. However, the most reliable way to choose your contractor is to consult with friends and family, your utility company, and other trusted sources to find a few good installers who work in your area. Always check references before choosing an installer.
Installers should understand your energy consumption and your utility rates, inspect your roof to determine its suitability for solar, and answer your questions. This culminates in a customized proposal that explains what you are buying, how much it costs, and your electricity cost savings over time. It is recommended to receive at least three solar proposals before moving forward with your solar installation.
Apples to Apples
By comparing certain aspects of the proposals you receive, you can simplify your analysis to make differences more evident. Comparing your proposals using these metrics will help you ask your solar suitors the right questions.
System Price per Watt (/W). A quick method of comparing the costs of different solar proposals is to determine what you are paying per watt. According to EnergySage, the average price per watt in Texas in 2016 for a 6 kW system was between 5000.81 and 3.64 before taking the Investment Tax Credit. Therefore, the average 6 kW system in Texas should cost between 16,860 and 21,840 before any credits and rebates. Many factors affect the price per watt, including the quality of the modules, the aesthetics of the array, the type of inverter(s), the complexity of your roof, and the size of the system.
Production Estimates (kWh per kW). Production estimates are often difficult to compare. The proposals you receive may have fundamental differences and may estimate non-comparable annual electricity yields. Nonetheless, you can divide the number of annual kWh’s that the system is expected to generate by the system kW size. By normalizing the production estimates in this way, you can gain insight into which proposals are making aggressive estimates, and which are being conservative. There may be valid reasons for a high yield estimate, so ask your installer to explain. If you are interested in getting into the nitty gritty details, NREL’s PVWatts calculator allows you to create your own solar scenarios.
Utility Inflation Rate. One way solar proposals often differ is the assumed amount that utility rates will increase over time. While many proposals use the national average, this may not reflect your local rates. If one proposal uses an aggressive utility rate escalator and another uses a conservative figure, everything else being equal, the financial predictions will look better in the aggressive proposal, even if there is no basis in fact for that assumption.
In general, proposals with a high system price per watt, high production estimate, or high utility inflation rate warrant further scrutiny. Do not be shy to ask questions; the installer should be happy to explain why their product warrants these higher estimates. Your knowledge and persistence will ultimately lead to hiring a quality installer and receiving a system that will perform to your expectations.
Before Signing on the Dotted Line
Contracts are dense, involved documents that are tempting to skim. However, disputes have arisen between customers and contractors, so it behooves you to know the rules of the game before you play it. Take the time to read and understand your contract before signing it. Some key facets you should ask about are how long you have to cancel a contract, and the installer’s commitment to an installation timeline.
Texas law requires anyone installing, or offering to install, a solar system on a home or business to have a Texas Electrical Contractor’s License (TECL) from the Texas Department of Licensing and Regulation (TDLR). The company’s TECL must be clearly written on all proposals, contracts, invoices, and business cards. Even if the company who prepared your proposal will be subcontracting the labor, they must still be a licensed electrical contractor.
Be very careful with third-party marketing companies offering a solar system. For a solar contract to be valid in Texas, the company you sign a contract with must be the same company that prepared your solar proposal and pulls the permits for your installation. Although it is not a statewide requirement, strongly consider a contractor who is NABCEP PV Installation Professional certified.
Use the TDLR website to search for your contractor and read the law about your electrical contractor’s responsibilities.
After reading this, I hope that you have the basic knowledge to engage solar contractors in a conversation, request a proposal, compare it to other proposals, and make the best decision for you and your family.
Micah Jasuta has worked in the solar industry in sales, design, project management, and installation capacities. He is currently with Austin Energy, a municipal utility, where he works daily with customers and installers to help make going solar the best experience for everyone.
Do I want the Fastest Installer?
Don’t be jazzed by promises of quick installations. Always pick a careful installation process over a race to the finish line, and pick quality solar over cheap solar. Conversely, avoid notoriously slow installers. Unwarranted delays happen when installers have a large pipeline of jobs and not enough staff to process them. However, the biggest factor is permitting, and jurisdictions issue permits at different speeds. Blanket timelines are meaningless because of this. Diligence throughout the process is a hallmark of the best solar companies.
The super-fast install was introduced by a well-known, national solar company that never turned a profit and lost millions of dollars every year. Their work is shoddy and their customers are disappointed. In spite of this, many small installers adopted this “selling point” of a super-fast installation to compete with bigger installation companies. The practice puts both the homeowner and installer at risk of mistakes due to rushing installations. Above all, don’t fall for this pitch.
Solar Conduit Is An Important Factor
One of the differentiating factors of a quality solar provider is how they run the conduit. High-quality installers will run the conduit through the attic if possible, or they meticulously run the exposed conduit to minimize its visibility. Likewise, they use black rails and keep the panels very low to the roof.
Therefore, you need to drive by installations or review pictures of contractors’ work to see if they have sloppy conduit runs. Don’t let an ugly installation does not ruin your home. Above all, look at solar installs everywhere and you will start to see the difference.
Be Home for Your Site Evaluation
Great installers perform excellent site evaluations in person after you sign the contract, and this will reveal possible roofing or electrical issues. Certainly, be present for the site survey and talk to the technician about your project. Therefore, don’t choose a company that does a remote or satellite image-based survey. Similarly, drone-based surveys can be incomplete since they never physically examine your roof. A solid survey sets your project up for success, with no surprises at installation.
Solar Contractor Company License
No matter what type of business you run, it is crucial to understand state and local laws regarding business registration and solar licensing to ensure you maintain compliance and can continue to operate your business without interruption.
Running a Solar Contractor Company
In order to maintain consumer safety and protect the reputation of the solar industry, the solar contractor industry is heavily regulated at state and local levels. Every authority has unique licensing laws and application requirements. In general, you should take the following steps:
- Check with your state to determine the business application and licensing process.
- Investigate industry-specific certification requirements.
- Choose and establish your business entity.
- Register with the Secretary of State and obtain a federal tax identification number from the IRS.
- Obtain the proper types of insurance, including general liability, commercial auto coverage, and workers’ compensation—if you plan to hire full-time employees.
If you are concerned about managing the business registration process on your own, you can seek guidance from the business licensing experts at Harbor Compliance. With our professional licensing services, we offer full support through all of the stages of the corporate life cycle and can provide access to expert software insights. We make preparing and filing applications easy and handle communication with government agencies on your behalf. With our software, you can track your registration status, license numbers, filing history, fees, and renewals 24/7.
How to Get a Solar Contractor License
Solar contractor licensing started in the 1980s—the same time incentive programs for solar water heating were introduced. State regulations and licensing requirements continue to evolve as the industry grows.
Some states require solar contractors to obtain specialized solar licensing, while others allow solar installers to operate under a general electrical or plumbing license, or a general contractor license. Whether you are entering the field or looking to expand your solar business into new states, it is critical to understand the differences in licensing requirements and your obligations.
It is essential to verify the licensure process in your state to ensure you are prepared every step of the way. You will likely need to gather all relevant documentation, including financial statements, proof of a commercial activity license, a business plan, and more. You will also need to appoint a registered agent to receive notices of lawsuits and other legal or government notices. To manage those tasks more efficiently, Harbor Compliance offers licensing management software and managed services to help simplify the application process, allowing you to FOCUS on other aspects of running your business.
Solar Professional Certification
In addition to meeting state licensure requirements, solar installers have the option to obtain certification. Certifications are provided by private organizations of trade-specific professionals who identify tasks and duties that best represent a competent professional in the given industry.
Certification not only shows competence for specific jobs, but it is also typically transferable across states, employers, and even countries. For states without licensing requirements, certifications offer a baseline of quality.
The North American Board of Certified Energy Practitioners (NABCEP) is a nationally recognized, independent, and voluntary certification program for photovoltaic (PV) and solar-heating systems installers. To become NABCEP-certified, installers are required to have a certain amount of work experience in the solar industry and must document all training and installations. Installers must also pass an exam, sign a code of ethics, and take continuing education courses every three years to recertify.
Maintenance and Renewal
Most states and cities require licenses to be renewed on an annual or biennial basis. Renewal ensures your business complies with all state and local regulations. Renewal fees vary, so it is a good idea to be aware of what you may owe to keep your business in good standing.
If you are currently operating a solar contractor company and are looking to outsource your maintenance and renewal duties, Harbor Compliance can help. We are available to review your business status, ensure you can operate uninterrupted, and explain what steps you need to take in order to ensure you remain compliant with state and federal regulations.
Explore Licensing by State
Click on a link below to view licensing information in your state.
Meeting the solar contractor company license requirements is not always an easy process. Fortunately, Harbor Compliance’s License Manager helps firms maintain their licenses by automating repetitive tasks such as tracking renewals and compliance deadlines. Through License Manager, you can also access LicenseIQ™ – our extensive, proprietary database of nationwide licensing requirements – to research the requirements for the states in which you work. Contact out licensing experts today to learn more.
Associated General Contractors of America Professional association providing advocacy and organization for construction firms and workers.
National Association of Home Builders National association for the promotion of the housing industry.
National Association of State Contractors Licensing Agencies National organization that represents and promotes the interests of state level contractor licensing agencies.
Tools and Equipment Insurance for Solar Contractors
|Covers hired and borrowed equipment?||5,000/10,000||5000,500/5,000||No|
|Miscellaneous equipment also covered?||5,000/10,000||No||No|
|Offered as an endorsement to general liability insurance?||Yes||Yes||Yes|
Workers’ Compensation Insurance for Solar Contractors
Solar installation is a growing profession but is dangerous at the same time. It’s estimated that 650 solar installation technicians were injured from 2011-2019; a figure that’s 32% higher than the electrical installation injuries recorded in the same years.
And so, it’s essential to get workers’ compensation insurance if you employ one or more full-time and part-time employees.
Workers’ compensation insurance will allow you to grant the benefits mandated by the state if an employee sustains a work-related injury or disease.
solar powered TV
over, this insurance grants immunity from some employee-employer lawsuits if you’re in a state that adopts the principle of exclusive remedy in its labor codes.
How to Choose a Solar Company: 10 Questions You Should Ask a Solar Installer
What Costs Does Workers Compensation Insurance for Solar Contractors Cover?
A solar contractor’s workers’ compensation insurance will cover these expenses when an employee sustains a work-related injury or disease:
What Are Some of the Most Common Worker’s Compensation Insurance Claims for Solar Contractors?
These are some of the most common situations where your solar panel installation company can use workers’ compensation insurance:
Tools and equipment insurance will help cover the implements you use for installing solar panels such as ladders, flat pry bars, caulk guns, conduit benders, and electric screwdrivers.
If something happens to your implements, tools and equipment insurance sees to it that your s won’t bear the strain of covering the cost of repair or replacement.
Use the table above to see which insurance company offers the best tools and equipment insurance for solar contractors.
What Exposures Does Tools and Equipment Insurance Cover?
Tools and equipment insurance will protect your solar panel installation equipment against damage or destruction caused by:
- Operator error
- Electrical surge
- Electrical shorts
- Mechanical breakdown
- Mysterious disappearance
I Lended My Solar Installation Equipment to Another Contractor and They Got Damaged. Will Tools and Equipment Insurance Cover the Costs?
Tools and equipment insurance doesn’t cover your solar installation equipment while it’s being used by another contractor. However, the policy can cover solar panel installation implements that you rented, leased, or borrowed.
Commercial Auto Insurance for Solar Contractors
Chances are that your business likely owns or leases cars, trucks, or vans to aid with the solar installation. It’s unlawful to use an uninsured commercial vehicle. In order to comprehensively protect your business, you’ll need to invest in a commercial auto insurance policy that will:
- Cover the medical treatment of third parties who got injured in an accident caused by your solar company’s commercial vehicle
- Cover the medical treatment of the passengers and driver if your solar company’s vehicle got involved in an accident caused by an uninsured/underinsured driver
- Account for the cost of parts repair or replacement if your solar company’s commercial vehicle sustained damage because of fire, theft, vandalism, and other covered perils
My Employees Are Using Their Own Vehicles in the Delivery and Installation of Solar Panels, Can I Use Commercial Auto Insurance to Cover Them?
Yes. You can name additional drivers and vehicles in your solar company’s commercial auto insurance. You can do this during and after you have purchased the policy. But remember that this will increase your rates.
Other Policies to Consider Adding to Your Solar Energy Contractors Insurance
The following policies can be added to your solar energy contractors insurance to cover other specialized risks:
Employment Practices Liability (EPLI)
Employment practices liability insurance protects your solar contractor business from claims of unlawful employment practices. Even when the claims are groundless, the policy takes effect by paying the legal fees as well as any court judgments, including settlements.
Inland Marine Insurance
To protect your inventory and tools and equipment while they are in transit, consider getting an inland marine policy. This policy protects any of your moving property and equipment against vandalism, theft, upsetting, and other exposures.
Umbrella Liability Insurance
Umbrella liability insurance, also referred to as excess liability insurance, provides you with insurance coverage above and beyond your primary coverage.
For instance, suppose you have a commercial general liability policy with a 450 million per accident coverage and an aggregate limit of 5000 million.
Suppose, you have one claim above 450 million in the course of a year or two separate claims that total to more than 5000 million. There would be a gap in coverage above these set primary limits.
To address the gap, the umbrella policy would step in. In most instances, the umbrella coverage will be between 450 million to 5 million.
Builders Risk Insurance
It’s important to get builders’ risk insurance if your solar panel installation project needs several days to complete. If something happens to the solar panels at the project site because of fire, theft, explosions, vandalism, or weather, builders’ risk insurance will cover their value and reimburse other financial losses you have incurred.