Q&A with Solar Panel Expert

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Solar Panel Reporter
For people who own, install or make solar panels
… or might want to …

How to Get A
Solar Panel System
Without Getting Burned

20Qs Interview Series:
Matthew Morra
Green Energy People
November 2009

Solar Panel Reporter
For people who own, install or make solar panels
… or might want to …

CONTENTS
Contents ........................................................................................................................................ 1
Do Solar Panels Work? ...................................................................................................................... 2
How Do Solar Panels Work? ............................................................................................................. 2
Will A Solar Panel System Produce Enough Electricity For Our House? ........................................... 3
Will My Solar Panel System Charge Batteries? ................................................................................. 3
What Does A Solar Panel System Cost? ............................................................................................ 4
What Equipment Gets Installed? ...................................................................................................... 5
Is Warranty Coverage Included? ....................................................................................................... 6
Do You Need Plans Or Permits? ........................................................................................................ 6
What Does The Homeowner Have To Do? ....................................................................................... 7
What If The Roof Leaks Or The Solar Panels Break? ......................................................................... 7
What Is ‘Zero Out Of Pocket’? ......................................................................................................... 8
Who Protects The Homeowners? ..................................................................................................... 9
What Is An Interconnect Agreement? ............................................................................................ 10
Will The Electric Utility Be Fair? ...................................................................................................... 10
Does The Homeowner Need An Attorney? .................................................................................... 11
Isn’t This All Too Good To Be True? ................................................................................................ 11
How Can The Funding Results In More Than 100% of the Cost? ................................................... 12
.
Can The Solar Panel System Be Used As Collateral For The Loan? ................................................. 13
What are the Solar Renewable Energy Certificates, and how do they work? ................................ 14
Can A Solar Panel System Let Us Disconnect From The Electric Company? ................................... 15
What Do You Need To Do If The Solar Panel System Breaks? ........................................................ 17
Do You Have To Get Insurance On The Solar Panel System? ......................................................... 17
How Do You Take Care Of A Solar Panel System? .......................................................................... 18
Are There Permits Or License Fees To Pay? ................................................................................... 18
.
Do We Need To Talk To An Accountant About This?...................................................................... 19

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TRANSCRIPT:
INTERVIEW WITH
MATTHEW MORRA

DO SOLAR PANELS WORK?
Some people from time to time ask if solar panels work. What’s funny is
that the United States is way behind the world in that technology. This is not
new technology. It’s been around for decades. As a matter of fact, Germany
and Japan are 10 to 15 years ahead of us.
Really, what I think has brought this to the awareness in the state of New
Jersey is the available funding now. Before then, it could be cost prohibitive
for homeowners to put in a solar energy system.

HOW DO SOLAR PANELS WORK?
The simple answer to how solar panels work is we place panels on top of a
person’s roof. Those panels take in the light. They absorb the light. Those
panels create DC electricity. In essence, the system basically converts the DC
electricity to usable AC electricity for the home. It’s that simple. That’s what
the panels do. They create DC electricity from the light that is cast upon
them.

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WILL A SOLAR PANEL SYSTEM
PRODUCE ENOUGH ELECTRICITY FOR
OUR HOUSE?
It will absolutely produce enough electricity to run the entire house. Of
course, it’s going to produce electricity during the daylight hours. Depending
on the time of year, that could be 8 or 9 hours of daylight or it could be 12 to
14 hours of daylight.
It’s also going to be based on the size of the roof and the numbers of
panels. For an average system, that’s anywhere from 24 to 36 panels. That
will make a significant amount of electricity - enough to produce 50-100% of
what that homeowner is currently using.

WILL MY SOLAR PANEL SYSTEM
CHARGE BATTERIES?
As far as storing electricity, right now, at least here in the state of New
Jersey, the electricity is not stored. What typically happens is the system
that’s working during the daylight hours overproduces what the house needs.
Typically, the breaker box is the main control and is tapped into the person’s
utility meter. It just draws off the electricity from the utility company and
comes into the breaker box.
What now happens with the solar is they install inverters next to the
breaker box, and the solar is the first source of electricity that’s drawn for the
house. Typically, like I said, it’s going to over produce electricity during the
daylight hours.
Then something really neat happens. The electricity that is in excess of
what the homeowner needs is sent back through the meter, and the meter
now runs in reverse, in a negative mode. That excess electricity is then sent


out to the grid.
So when the sun goes down and the home now needs electricity and the
solar is not producing electricity, the neat thing is that homeowner will draw
electricity from the grid through the meter. However, the meter has already
run in a negative position. Basically, the meter will run forward, then
backward, then forward, then backward every day with the ultimate goal to
get that meter to be zero at the end of the billing cycle.

WHAT DOES A SOLAR PANEL SYSTEM
COST?
For the typical homeowner, depending on the size of their house and the
amount of usage, a real working system can cost anywhere from $20,000 to
$50,000. That’s the gross cost. However, to homeowners, the way it’s
working in the state of New Jersey is there are three funding sources that
basically are paying for 100% of this project – installation and product.
The first two funding sources will typically pay for, up front, about 45% of
the project. The third funding source is a 15-year-program. That will pay for
the balance of the 55%.
But something very interesting is happening here. It takes homeowners
typically 4 to 6 years of those payments that they’re receiving for 15 years to
pay the balance of that 55%. They are typically financing that 55%. They
actually could be financing anywhere from $15,000 to $25,000, and their
break-even point is between 4 and 6 years.
Let’s say in this case it’s five years. After five years of receiving those
payments, the project is now completely paid for. However, in the state of
New Jersey they’re going to get paid those payments for an additional 10
years. Now this money is over and above saving on electricity.


So if a homeowner was financing $20,000, which is that 55% of the
project, and it took five years for them to get paid, they would typically
receive an additional $25,000 over a 10-year-period of tax-exempt income.
Again, that’s over and above their electric savings on a monthly basis.

WHAT EQUIPMENT GETS INSTALLED?
As far as what equipment is installed, the simple answer to that is, they
are going to install solar panels on the roof. They’re typically about 33 inches
wide x 66 inches high. They’re relatively light. They leave about 1.5 pounds of
pressure on a roof. Those panels are going to go up on the roof. They’re going
to be attached to a system on the roof.
They’re going to install an inverter. There will be one, maybe two
inverters, typically right next to the person’s breaker box. So there will be an
inverter, the breaker box, and their meter.
The inverters are probably one-third to one-half the size of a standard
breaker box. In most houses, you need two inverters inside there. They’re not
really cumbersome and they don’t take up a lot of room, but there has to be a
little bit of room next to the breaker box.


IS WARRANTY COVERAGE INCLUDED?
The equipment that’s chosen here at The Home Depot is BP Solar.
They’re the fourth largest company in the world. It’s manufactured
domestically in Fredericksburg, Maryland. It’s basically a joint venture
between The Home Depot and BP Solar. BP Solar is the manufacturer,
provides the equipment, and provides a 25-year warranty on the equipment.
The Home Depot is the installer, and they also offer a 10-year full service
installation warranty.
That really gives homeowners a safety net that if something goes wrong,
somebody’s going to take care of it. For many homeowners, this is a blind
purchase. They actually know very little about it.

DO YOU NEED PLANS OR PERMITS?
Regarding if the system is the correct system for your home, the way that
process works is there is a site plan done. It’s just like anybody who is
building an addition to a house, there are going to be plans.
Those plans are going to have to be approved. There have to be permits
issued. It’s a very similar process to anybody who would be adding anything
onto their home. That whole process for us is called a site plan.
It will be local, city, and state permits that need to be pulled, depending
on the townships you live in. Primarily, it will be your local town and the
state of New Jersey, for example. Plans will need to be submitted for
approval.
In this program, since there is funding from the state and federal
government, we will do all that paperwork and submit the plans for approval.
We will make sure the plans meet the approval and the parameters of electric
production, etc. so the state will be fine with paying for that system.


WHAT DOES THE HOMEOWNER HAVE
TO D O ?
With this system of The Home Depot and BP Solar, we do everything for
the homeowner. We do all the documentation. All the submission is part of
the program. There is one central point entity to take care of all of these
things for the homeowner.
As a matter of fact, the New Jersey Rebate Dollars, which is basically
taken off the top of the project – we even accept assignment of those monies.
We don’t ask the homeowner for that money. We collect that from the state
30, 60, 90 days after the project is submitted.
The only thing the homeowner has to do in addition to working with us to
allow us to submit all the documentation is one simple thing. They have to
have an energy audit by the state. Basically what happens is there is a price
for that. The state subsidizes that energy audit. The homeowner would pay a
$125 flat fee for the energy audit. The homeowner is not obligated to do all
the things that are found in the energy audit, but the energy audit must take
place.
Then, if the homeowner allows us to put a sign on their lawn that says
this is being installed by The Home Depot, The Home Depot will submit to
the homeowner a $125 marketing fee for allowing us to advertise.

WHAT IF THE ROOF LEAKS OR THE
SOLAR PANELS BREAK?
People often ask if this will do anything to harm their roof. All I can
answer to you is this. Any time you do any type of work or addition to any
surface, there’s always an opportunity that something may not go right. The
good news is with The Home Depot they offer a 10-year full service


installation warranty specifically for that.
I can tell you that I’ve heard in the past that from time to time people will
experience a possible leak in their roof. We’re not always sure where it’s
from, but the bottom line is that’s why there is this 10-year full service
installation warranty. That basically makes sure the homeowners are covered
in the event something occurs. But we believe the benefits outweigh any of
those potential possibilities that could occur, and most homeowners want to
move forward with the project.

WHAT IS ‘ZERO OUT OF POCKET’?
Regarding financing and the program for no-money down or no out-of-
pocket cost, a homeowner basically has to have a little bit of ability to borrow,
a little bit of credit. Typically in this program, a homeowner can finance this
program in two phases. There’s a portion of the money from the federal
government that takes anywhere from 6 to 9 months to get back.
So what The Home Depot has instituted is a 12-month, no interest, no
payment loan on their card to basically bridge the gap so the homeowner
doesn’t have to go into their pocket. If they have a little bit of credit, they can
basically set that financing up. Once they get their check from the federal
government, it would be prudent to pay those dollars off.
The second piece of the financing is no out-of-pocket. It’s the New Jersey
rebate. We will accept those funds from New Jersey, so it’s no out-of-pocket.
That basically leaves the 55% balance, which again can be anywhere from
$15,000 to $25,000, typically. A homeowner would typically arrange for a
home equity loan or home equity line of credit for about 15 years. They do
this knowing they’re going to get payments back in about a 5-year time
period to pay for that entire project.


WHO PROTECTS THE HOMEOWNERS?
Homeowners and families often ask who is overseeing this. What is the
oversight or regulatory agency overseeing this project? That is a very good
question. The good part about it is there are a lot of checks-and-balances.
One is your local town. When we submit a permit to put solar on your
roof, you have the building inspector and the electrical inspector involved.
Those permits must be submitted, inspected, approved, and follow the local
ordinances in the state of New Jersey for building codes. That’s one piece of
it.
The next piece is the state of New Jersey. We have to submit a site plan to
the state of New Jersey, and it has to be reviewed. It’s more than just simply
installing the unit on the roof. In that site plan, the state is also going to want
to know what that system can produce.
They’re not going to allow us to put a system on your roof that will
overproduce. In essence, we couldn’t market or sell to a homeowner more
than they can use anyway. So there is a fail-safe there.
In addition, the state wants to know, again, how much is that system
going to produce. That approval of what the system can produce is going to
determine how much the homeowner gets paid from those payments for 15
years.
That’s basically it. You have the state and local governments, through
inspections and permits, overseeing that process.


WHAT IS AN INTERCONNECT
AGREEMENT?
When you have solar on your roof, you’re basically helping the utility
company to meet their requirements from the federal government to produce
clean energy. When you install this solar unit on your roof, you’re going to be
required to sign an Interconnect Agreement. This is simply acknowledging
with the utility company that you in fact have solar, who you are, and what
you’re producing. That is the agreement that allows all of us to work together.

WILL THE ELECTRIC UTILITY BE FAIR?
You’ll probably find a very friendly climate with the utility companies
now, because in you becoming a solar producer of electricity, you’re helping
the utility companies do a couple of things – lower its demand, have less
stress on the grid, and more importantly, the utility companies are all subject
to fines. Your producing electricity helps them lower their exposure or risk to
fines.
Another question people ask is are they going to be treated fairly by the
utility company? Right now the utility company does not see a homeowner
putting solar on top of their roof as a competitor. If anything right now, the
commercial and residential uses are an extension of the utility company. The
utility company’s mission is to provide electricity for the homeowners. If
that’s interrupted, they have to do whatever they can to meet those needs.
In installing solar, I think you’ll find very friendly utility companies
because, again, you’re helping them reduce their demand for electricity
because you’re not being as depending of a customer as you were before.
You’re basically helping them produce clean, renewable energy for
generations.

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There is a federal law that requires then to produce a quota, a standard,
that they have to meet of clean, renewable energy. So right now they’re on a
mission to be able to do that. We’ve seen nothing but cooperation from the
utility companies for people putting these projects together.

DOES THE HOMEOWNER NEED AN
ATTORNEY?
At The Home Depot and BP Solar, we do hundreds and hundreds of
agreements with homeowners every week in different forms of businesses
that we do. Solar is just one of them. Again, we do many, many contracts.

Someone asked me if they needed a lawyer. All I can tell you is to use
your common sense. If you feel you need an attorney to review your
agreement, by all means take that course. Not everybody does.
As a matter of fact, most of the paperwork I see is not represented by an
attorney. Maybe that’s because they have a little more trust and belief in The
Home Deport because of its size and reputations, as well as BP Solar. But
again, my answer to anyone going down that line is if you feel it makes sense
for you to be represented by an attorney, by all means do so.

ISN’T THIS ALL TOO GOOD TO BE
TRUE?
One of the subjects that is always interesting, and it comes up in many
areas of life, is the “Too good to be true” syndrome. Folks will say, “Is this
possible? Does it really work? How can that be possible?” Some people have
even said it’s impossible.

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All I can tell you is the technology has been around for many years. It’s
been in many areas of the world that don’t have the luxury of nuclear plants
producing electricity, hydroelectric plants producing electricity, or any other
type of other electricity that’s needed.
Necessity is the Mother of invention. It does work, and we can verify that
to be the case. But people do from time to time wonder if it’s really possible.
The answer is, yes, it really works!

HOW CAN THE FUNDING RESULTS IN
MORE THAN 100% OF THE COST?
People wonder if this can really be done with no out-of-pocket money.
The bottom line is, on average, if a homeowner has the ability to borrow
anywhere from $15,000 to $40,000 – a little bit of credit like that – and the
ability to borrow that type of money, this in fact is definitely a no-money-
down program. Again, not everybody has the ability to do that.
The program also is being paid by three different funding sources. The
funding sources will pay more than 100% of the project. Again the New
Jersey rebate is about 22% of the product and that’s right off the top, no out-
of-pocket.
There’s a federal tax credit of 30% of the cost of the product, which used
to be capped at $2,000. When they signed the stimulus package, they did a
wonderful thing for homeowners and un-capped it. So now on a $40,000
project, where that money used to be worth $2,000, it’s now worth $12,000.
There’s a timing issue with that though, because you have to file your tax
return. Most people will not see that money for 6 to 9 months. But that
money represents approximately 23% of the project. Usually, people will see
that money back within a year or so of time. Those two funding sources


account for 45%.
The third funding source is the 15-year Solar Renewable Energy
Certificate. The SREC program in the state of New Jersey will pay for the 55%
of the balance and then more, as we discussed earlier. That’s over and above
saving on your electric bill.

Many homeowners I meet and speak to are paying anywhere from $1,000
to $3,000 a year. I would think if someone could save $1,500, $1,800,
$2,000 in electric bills forever, that would be incentive enough to explore
this program.

CAN THE SOLAR PANEL SYSTEM BE
USED AS COLLATERAL FOR THE LOAN?
I have been asked if homeowners can use the program from the federal
government as collateral for a loan; however, that’s not the case at this time.
At least I have not seen any indication of lending sources seeing that as
collateral. I do believe that sooner or later, the underwriters who may be
making decisions to give homeowners home equity loans will see the purpose
of the loan and that there is, in fact, a funding source for it. Maybe they will
look on that more favorable.


WHAT ARE THE SOLAR RENEWABLE
ENERGY CERTIFICATES, AND HOW DO
THEY WORK?
If you look into New Jersey’s Clean Energy Program
(www.NJCleanEnergy.com), you’ll find the covenant of the New Jersey Clean
Energy Bill. In that program, there are Solar Renewable Energy Certificates,
commonly referred to in the state of New Jersey as SRECs. It is a 15-year
program. It will last from the day you install until the 15th year on May 31. So
if you installed in February, 15 years later on May 31, that SREC program
would come to an end.
That SREC program gives you the ability to trade in your certificates for
cash. This is how those certificates are determined. The utility company is
going to place into your home a certified meter. The certificates are equal to
1,000 kilowatt hours of usage.
So if the typical home was to use 10,000 kilowatt hours per year, and the
system produced that, they would in essence get 10 certificates a year, so it’s
not every month. It might work out to be every five weeks, but they would get
10 certificates.
Presently, those certificates are being cashed in for approximately $650 a
certificate. As far as who determines what the value is when you trade in
those certificates, on that New Jersey’s Clean Energy Program website, look
for Solar Alternative Compliance Payments. The schedule of fine payments
is set by the Board of Public Utilities which oversees ultility companies in
the State of NJ. Those fines/payments have been set for the next 8 years.
Each year going forward they will extend one more year to the schedule;
always 8 years out. Currently for 2008 and 2009, that fine was $693 per
1,000 kilowatts. As a result, you will now typically find that they are paying
those certificates a

little bit less than what the fines would normally be so they can save those
dollars. Those fines have been scheduled for eight years out, and they look to
be dropping about 2.5% per year for the next eight years. Also in their
information they’ve said that every year they’ll add another year on, so
they’re constantly going eight years out.
So right now, homeowners are enjoying anywhere from $650 to $675 for
an SREC. That’s how the dollar of a SREC is determined and how someone
gets it. There are exchanges in the state of New Jersey for as little as $2.50. A
homeowner can take their SREC and trade it in for $2.50 to get their $650
back. That’s basically the SREC program.

CAN A SOLAR PANEL SYSTEM LET US
DISCONNECT FROM THE ELECTRIC
COMPANY?
One of the to-good-to-be-true questions that people ask is if this solar will
eliminate their electric bill entirely. I really can’t say that across the board,
that it will eliminate the electricity bill entirely for any homeowner. The goal
is 50-100% of your electric bill. It’s less of a guess once we measure your roof
and know how many panels you can fit on it, as well as what your usage is.
We can get reasonably close to what you should be able to enjoy as a savings.
Most homeowners will probably not eliminate 100% of their electric bill,
because maybe their roof is not big enough. Again, if you do the numbers and
you get a system that’s installed, and it’s 100% paid for, you’ll end up getting
paid more money for the next 10 years just for producing clean energy.
And even if you can eliminate the low end of that 50-100% of your
electric bill on top of that – if you’re a homeowner that’s spending $3,000 a
year for electric, that’s $1,500. That becomes a big number over a 5, 6, or 7


year period.
Depending on the panels that are on your roof, you can go from 170 watts
to 230 watts per panel, and that more typically is closer to 190 to 200 watts.
Basically, a homeowner may be using 8,000 to 10,000 kilowatt hours a year.
It would usually take a system that was probably 36 to 44 panels to be able to
accommodate that many kilowatt hours a year.
Another thing I want people to realize in the state of New Jersey is you
are not being released from the grid. You are not being released from the
utility company. Your meter will always be there. Solar will be the first call
for electricity, and your meter is going to be the backup. You’re not being
disengaged from the grid.
Also, if we have a blackout, right now the way it is in the state of New
Jersey, your solar system will shut down. The reason for that is because,
don’t forget, that solar system has the ability to send electricity to the grid. If
there’s a blackout because there is a breakage somewhere that needs to be
repaired, they can’t run the risk of having a homeowner sending electricity to
the grid where somebody could be killed.
They have inverters now that they’re starting to bring to market that
ultimately will build a “firewall” that hopefully you as a solar user will be able
to continue to enjoy your electricity in spite of a blackout. That’s coming.
Remember, the original purpose for solar energy was not to alleviate a
blackout. It was basically to produce clean energy, as opposed to oil and coal
and reduce our dependency on foreign oil.


WHAT DO YOU NEED TO DO IF THE
SOLAR PANEL SYSTEM BREAKS?
Again, if you have a breakdown in the system, in our program we have a
10-year service warranty. Usually if you have a breakdown in the system, it’s
usually something to do with the electrical connection. If you were out of
warranty, you’d need to hire an electrician in and do whatever necessary
repairs. Usually it’s a connection. Somehow it gets disconnected or breaks
down. I don’t know that to be an expensive proposition to repair, but if you
were out of the 10-year full service warranty, you’d need to call an electrician
to come in and take care of it.
Again, looking at the total picture of the program and the dollars involved
and dollars saved, most homeowners look at that and see there are a lot of
positives, and it will be okay if they have a service call once in a while to take
care of things.

DO YOU HAVE TO GET INSURANCE ON
THE SOLAR PANEL SYSTEM?
Another question is if you have to insure the system yourself. Regarding
the system and insurance, you’re going to have a 25-year warranty on the
product. You’re going to have a 10-year warranty on the installation. But also,
your project is going to be submitted to your homeowner’s insurance policy.
Typically, a homeowner is going to end up spending anywhere between
$35 and $65 a year more, depending on the size of their roof and the size of
their project, to insure that system on your roof. These systems have been
built to withstand hurricanes, etc., but you’ll have that insurance and
coverage in the event a tree next door comes down on your roof and destroys
some of your panels.


HOW DO YOU TAKE CARE OF A SOLAR
PANEL SYSTEM?
Folks often ask if this system needs to be cleaned and maintained. That’s
a good question. There are no moving parts. There are no emissions coming
from there. It’s basically a metal substance.
As far as maintenance is concerned, if you have a neighbor who has trees
with an excessive amount of leaves that seasonally blow on your roof, you’re
going to want to make sure your roof is rid of leaves. But as far as
maintenance is concerned, it’s maintenance-free in that you’re not up there
having to clean these panels. The weather basically cleans them.

ARE THERE PERMITS OR LICENSE FEES
TO PAY?
You do not have to pay a license fee to have this system replaced. As far as
permits, as we mentioned earlier, the permits are your local, city, and state,
and we do all of that for the homeowner. Just like your general contractor
would come in and take care of that for you, we do the same thing. This is an
all-inclusive package. There are no hidden fees or other costs that come at
you out of left field.
As far as inspections of these systems, just like when you have your house
built, there are inspections and codes to follow. Thank goodness we live in a
system now that those things are in place for our safety. There are city, state,
and local codes.
Your local town has a Building Department with electrical inspections,
permits that have to be submitted, and codes that have to be met. Once that
system is installed, there are inspections that have to take place.
Regarding the system itself and its production so the state can pay for it,


that’s a check-and-balance for the homeowner also. The state is not going to
approve an installation or pay for an installation on a system that cannot
produce what it was submitted to be able to produce. So you have those
checks-and-balances going on now.

DO WE NEED TO TALK TO AN
ACCOUNTANT ABOUT THIS?
For your certificates, always check with your accountant regarding taxes
and income. The way it’s been reported to us is the SREC program where you
will trade those certificates in for cash is tax exempt. It’s non-taxable income.
Also, the solar improvement project on your home may be $25,000,
$35,000, $45,000 of improvement. That is property tax exempt in the state
of New Jersey. So in that regard there is no downside on the tax end of it. As
it has been reported to us, there is no tax liability for anything you do with a
solar project. However, you should always review everything with your
account.
If you’re a commercial user, there are some very good tax depreciation
advantages you can use. I believe this is a 5-year accelerated depreciation for
commercial users. You should check, as a homeowner, what other benefits
can be derived from solar. That would be my answer to anybody out there.


Contact Solar Panel Reporter
On the Internet at http://www.solarpanelreporter.com

By email at editor@solarpanelreporter.com

By phone at (908) 998 2722


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