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What Are Avoided Cost Rates For Solar Energy Systems?

If you are taking advantage of net metering with your solar system, then “avoided costs” are something that you need to be aware of. These help you determine the value of the solar power that your system generates and what you share with the grid.

This can be a complex topic, so our team at Solar Bear Orlando is here to explain a quick overview of what you need to know and how avoided costs work.

What Are Avoided Costs?

The term “avoided cost rates” was introduced in the solar industry in 1978 by the United States Public Utility Regulatory Act (PURPA).

In layman’s terms, avoided costs are equal to the expense that your utility provider will avoid by not having to generate new power with traditional fossil fuel sources. Avoided costs define the amount that your energy company is required to pay you if your solar system is grid-tied and set up for net metering.

Generally, the factors that influence the avoided costs rate is the wholesale price of electricity which varies widely depending on:

• Time of day
• Season
• Location

Due to the demand for solar energy, the industry has become a lot more competitive, and costs are declining, so solar-avoided cost rates are becoming quite more favorable.

What Impacts Solar Avoided Cost Rates?

Some of the most common factors that affect the value of avoided cost rates for solar customers and utilities include:

#1. Time of Day

Per the time-of-use (TOU) energy rate structure, solar power is more valuable when energy demand is at its peak. For most areas, this means that avoided cost rates are typically the highest on weekday afternoons and during the early evening, especially during hot summer months.

#2. Fuel Prices

Ever-fluctuating fuel prices have a direct impact on avoided cost rates as they directly influence the cost of generating electricity from different sources.

#3. Technology Advancements

Due to demand, the cost of solar and wind power continues to decline due to technological innovations, thus impacting the avoided cost rates.

#4. Regulatory Policies

Regulatory policies set guidelines for compensation mechanisms for renewable energy providers and encourage investment in cleaner energy sources.

#5. Market Conditions

Changes in market trends can influence the availability and pricing of alternative energy sources like solar and can have a big impact on the rate of avoided costs.

Important Note

Avoided costs are calculated differently across the United States, but most utility companies have a predetermined schedule that outlines the avoided costs based on the day, week, and year that energy is shared with the grid.

If you live in an area where your excess solar is paid back to you at avoided-cost rates, we recommend installing solar batteries that can capture excess power. This allows for greater energy independence and maximizes your solar system’s saving potential.

Related Reading > Solar Cost Breakdown: Average Costs for 2024

Contact Solar Bear Orlando

Want to make the most of your solar system? Lean on our team of solar experts at Solar Bear Orlando for efficient solar installations all across Central Florida. We will help you gain control of your home’s energy by harnessing the power of the sun. You might as well, you live in the Sunshine State after all!

Contact us today at (727) 471-7442!

Our Guide To Understanding Series vs Parallel Solar Panel Wiring

When installing and connecting solar panels, two different kinds of wire configurations are common—series and parallel. It is crucial to understand the difference between the two as they are an important component in the efficiency of your solar system.

In this guide, our team at Solar Bear Orlando explains the difference between these configurations, how they work, and which one might be right for your system.

What is a “Series” Configuration?

When solar panels are connected in a series it means that they are linked end to end. The positive terminal of one panel is linked to the following panel’s negative terminal in this arrangement.

Since the current remains the same as that of a single panel, this connection is most often used when there is a need for a higher voltage, especially if the system is grid-tied.

Pros:

• More efficient in low-light conditions
• Can reduce power loss due to a higher voltage rate

Cons:

• The performance is affected by the worst-performing panel in the series. If one panel is not working efficiently, the output of the entire system will be impacted.
• A high-voltage inverter is required

Parallel Configurations

In a parallel setup, solar panels are connected side by side with the positive terminals connected to each other, as well as the negative terminals. This configuration increases the overall current of the system.

Parallel systems are recommended for systems that need higher currents such as battery charging setups and off-grid applications.

Pros:

• Best for charging batteries or off-grid usage

Cons:

• Reduced system efficiency can occur if the panels that are connected are not the same. The stronger panel will overcompensate for weaker panels.
• Installation can be complex and requires more wiring

Power Output

Let’s talk about power output for a moment. The configuration you choose will largely depend on your overall power needs.

• Series connections deliver higher voltage, equalling a greater overall power output.
• Parallel connections offer a higher current and a more consistent power output.

Read More > Our Guide to Basic Solar Panel Specifications

Do You Need to Charge Batteries?

If you are planning to charge solar batteries with your panels, the connection configuration you choose is quite important. The battery charging setup you include will influence your choice.

Which Configuration Should You Choose?

When deciding between series or parallel wiring configurations, it is important to consider your power requirements and the location of your solar system.

The choice depends on:

• Voltage and current needs
• Power output requirements
• Available space
• Component compatibility

If your location is bright and shade-free, a series configuration will likely be more efficient. If trees or buildings obscure your system, a parallel configuration may be optimal.

Also, your electrical system might work better with one configuration over the other. Our technicians at Solar Bear Orlando can help you decide which would be best for your home or business.

Related > How Do I Know if My Solar Panels Are Underperforming?

Go Solar With Solar Bear Orlando

Not sure what kind of wiring configuration you need? That’s ok! Our team at Solar Bear Orlando is here to do all the calculating and deciding for you based on your location’s requirements and needs.

We’ll ensure your system is the right size and configuration for your energy requirements, and we warranty all of our work!

Get started today by calling us for a quote at (727) 471-7442 anywhere in Central Florida today!

Solar Terms 101 – Solar Power vs. Solar Energy

It’s a bright new day in the world of renewable energy, especially when it comes to harnessing the sun’s powerful rays. But amidst the buzz around solar power and energy, there seems to be some confusion surrounding what these terms truly mean. If you find yourself unsure about the sun-powered dialogue, you’re not alone. Let’s demystify the jargon and outline the distinctions between two of the most pivotal concepts in solar technology: solar power vs. solar energy.

Understanding Solar Energy—What It Is and How It Works

At its core, solar energy is radiant heat and light from the sun, which has been harnessed since ancient times using a range of evolving technologies. The supply is virtually limitless and, unlike fossil fuels, it’s both renewable and clean. When light hits a photovoltaic (PV) cell or a solar thermal collector, it gets converted into electricity or heat, powering everything from homes to electric cars.

Solar energy systems can be broadly categorized into two main types:

• Photovoltaic Solar Power (PV): Uses solar panels made up of arrays of cells that convert sunlight directly into electricity.
• Concentrating Solar Power (CSP): Uses mirrors to concentrate the energy from the sun to create heat, usually to drive a steam turbine and produce electricity.

Solar Power—The Practical Application of Solar Energy

Solar power is the end product of converting solar energy into a usable form. This is the part where all those photovoltaic panels on rooftops and solar farms come into play. However, it’s important to note that solar power can refer to the direct generation of electricity through PV systems, known as “solar panel electricity,” or through CSP systems, known as solar thermal electricity (STE).

The process involves several stages, from the sunlight absorption to the final grid connection, where electricity can be used to power appliances or sold back to utility companies through programs like net metering. Solar power has become a go-to solution for individuals looking to reduce their carbon footprint and for governments aiming to meet renewable energy targets.

Making the Switch to Solar—What It Means for You

Understanding the distinction between solar power and energy is not only a point of knowledge but could also be the first step towards adopting a greener and more sustainable lifestyle. The decision to harness solar energy through power systems is a dynamic way to contribute to environmental conservation and take control of your energy consumption.

If you’re considering making the switch to solar, it’s essential to partner with a trusted, experienced provider who can guide you through the process. Reach out to Solar Bear of Tampa today at (727) 471-7442 and step confidently into the future with solar!

Here’s How to Claim the Solar Tax Credit on Form 5695

Exploring the world of solar energy brings its own set of rewards, not least of which is the Residential Clean Energy Credit, more commonly known as the Solar Tax Credit. This federal incentive not only sweetens the deal for homeowners making the switch to solar but also offers a tangible return on investment come tax season. But how do you claim the Solar Tax Credit for yourself? Here’s how you can claim every dollar you’re entitled to.

What is IRS Form 5695?

IRS Form 5695 serves as your golden ticket to claiming the Solar Tax Credit on your tax return. It’s the official document for reporting the installation of solar panels and other qualifying energy-efficient improvements to your home.

Think of the IRS Form 5695 as the bridge connecting your eco-friendly efforts to potential tax savings. The form delves into the specifics of “Residential Energy Credits,” allowing homeowners to calculate and claim non-refundable credit for eligible energy-efficient home renovations.

The Solar Tax Credit

The Solar Tax Credit can significantly reduce your federal tax liability. For the year 2024, the credit is calculated at 30% of the total cost of your solar energy system, including installation.

This dollar-for-dollar tax reduction typically provides a substantial decrease in the taxes you owe, possibly leading to a refund. To qualify, your solar energy system must be in service within the tax year in question, and yes, you need to complete IRS Form 5695 to stake your claim.

A Step-by-Step Guide to Claiming Your Solar Tax Credit

The journey to claim your Solar Tax Credit is a meticulous one, requiring a careful walkthrough of Form 5695:

Step 1 – Calculating Your Solar System’s Total Cost

Start by jotting down the gross total spent on your solar power system. Remember, this is before subtracting any state tax credits or rebates you’ve received.

Step 2 – Adding Other Energy-Efficient Improvements

Got more green upgrades? Add the costs of any additional energy-efficient improvements to lines 2 through 4. This could be anything from a solar water heater to a small wind turbine.

Step 3 – Working Out Your Tax Credit

Multiply the total from line 5 by 30% to find out the size of the tax credit pie you’re eligible for. This figure goes on line 6.

Step 4 – Entering Your Tax Credit Value

If you don’t have any carryover from fuel cells or previous years, place the value from line 6 on line 13.

Step 5 – Assessing Your Tax Liability

Now, figure out if you have sufficient tax liability from your taxable income to see if you’re eligible for the full 30% tax credit.

Step 6 – Finding Your Maximum Claim

Flip to page 4 and fill out the worksheet to see the maximum tax credit you can claim. This includes all the other credits you qualify for—anything from being a first-time homeowner to buying an electric vehicle.

Step 7 – Finalizing Your Claim Amount

Put the result of line 6 on line 14. Then, compare the values of lines 13 and 14. The smaller value is what you can claim this year. Put that value on line 15.

Step 8 – Calculating Carry-Over Credit

If your tax liability (from Step 5) is less than your tax credits, you can carry the difference over to the next year. You can calculate the amount for next year’s taxes by subtracting the value on line 15 from line 13, then entering the result on line 16.

Step 9 – Bringing It Home on Form 1040

The value on line 15 is what the IRS will deduct from your taxes this year. Make sure this number lands on line 5 of Schedule 3 on Form 1040.

Make the Switch to Solar With Confidence!

Have questions about solar energy or need guidance on making your home more energy-efficient? Solar Bear of Tampa is at your service. Our expertise isn’t just in harnessing the power of the sun—it extends to helping you understand the benefits that come with it, including the Solar Tax Credit. Call us today at (727) 471-7442 to learn more!