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To Go Solar Or Not To Go Solar?
Presented by Greylock Insurance, Sponsored Content
03:37PM / Monday, July 11, 2016
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The Question On Many Berkshire Homeowners' Minds

In a highly unexpected move, the federal government pre-emptively extended the 30 percent investment tax credit for installing a solar PV (photovoltaic) system. This enticing credit was actually due to expire at the end of this year but is now available to homeowners through the end of 2018. While there are approximately 16,000 homes in Massachusetts today that have solar panels, with this exciting news, the number is expected to double in just a few years.

Does the growing popularity of solar and the appealing investment credit mean that you should install solar panels on your home?

Greylock Insurance, your Berkshire neighborhood agency, is here to help you assess this tricky question. To do this, we've enlisted some local experts from the world of real estate, insurance, and public safety and asked them to give their perspective on the pros and cons of going solar. What we found out was that there are a lot more layers to this decision than most homeowners may think.

Greylock Insurance: Solar is touted as being both good for the environment as well as a way for homeowners to save money. Sounds like an attractive proposition for most people. What are your thoughts?

Sandy Carroll, CEO of Berkshire County Board of Realtors: In general, there has been a lot of progress towards achieving both of these goals – environmental responsibility and cost-savings. Today, homeowners can use smart technology to better control their home's internal temperature, electricity usage, and yard irrigation while simultaneously protecting the earth's natural energy and water resources. However, when it comes to roof-installed solar panels, there are questions that the homeowner or buyer should have answered before committing to a lease or purchase. There are many issues beyond what meets the eye in terms of cost savings and good environmental stewardship.

Greylock Insurance: Homeowners rank the federal tax credit, which has now been extended, as one of the most appealing reasons to invest in a solar panel system. What should homeowners know about this credit and how the extension may impact them?

Lori Goodell, assistant vice president, Greylock Insurance:The Federal Investment Tax Credit for a solar PV system has absolutely been a significant factor in driving the growth of the solar industry. Since the tax credit passed in 2006, this incentive has been driving record-breaking investment in solar projects across the U.S., and even more so when it was extended in 2008. With this most recent extension, the solar industry is expecting a huge boom to their market and we are preparing for more Berkshire area homes adding solar panel systems. The extension of the deadline is really good news for homeowners who were considering a solar PV system, but have not yet taken the leap. They now have some breathing room to consider the path they want to take. However, time moves quickly and if they are thinking of going solar, initiating construction sooner than later is a good idea.

Greylock Insurance: Homeowners may wonder what the rush is if they now have until 2018 to install a solar panel system. Can you tell us why the urgency?

Goodell: It's certainly true that in order to qualify for the tax credit, installation does not have to be completed until the end of 2018. But, a solar panel system is a fairly complicated construction project and there are several additional criteria you need to meet to get the investment credit. First, your utility company has to approve connecting the system to the grid. Also, you need to have pre-operating tests that demonstrate the equipment works and you have to prove ownership of the system.

You must also have purchased the system, either outright with cash or through financing; leased equipment is not eligible. Finally, the PV system must be new or being used for the first time; the credit only applies to the "original installation" of the equipment. One other thing that homeowners should understand is that credits are only applicable to residences in the U.S., although it does not have to be your primary home. Finally, I am going to state what I hope is obvious to all homeowners; once you have decided to install a solar PV system, you should talk over the insurance implications with your insurance agent so that you understand the increased homeowners insurance coverage you will need.

Greylock Insurance:For homeowners who are leaning towards installing solar panels, what should they know about buying a system?

Jim Hyatt, vice president, Arbella Insurance Personal Lines: It's no wonder that lots of homeowners are interested in solar energy now with the cost of residential electricity increasing dramatically. We have definitely felt the impact to our wallets here in New England. That's why more and more homeowners are investing in solar, expecting to save up to 25 percent off their energy bills. But buying a solar PV system is not a cheap proposition. The cost will depend on the size of your home and square footage of your roof, but for the average home solar panels could cost $30,000 or more. For some homeowners, the upfront investment will be worth it, particularly if they can take advantage of federal tax credits, state tax credits, and other local rebates. Similar to enhancing your home with a back deck or an updated kitchen, with these types of additions you'll need to increase the amount you insure your home for. In the event of a catastrophe, like fire or severe storm damage, you want your insurance coverage to provide for the cost to rebuild your entire home including replacement of the solar panel system. A call to your insurance agent can ensure that you are properly covered.

Greylock Insurance: Leasing a solar PV system would negate the upfront costs and still deliver energy savings to homeowners. This seems like an even better way to go solar. But are there issues with leasing that a homeowner needs to consider?

Hyatt: Leasing is definitely an interesting option. In addition to avoiding an initial five-figure investment, it's also common for the leasing company to provide the additional insurance required to cover replacement costs of the solar panels. So, the customer does not have to change their homeowner insurance coverage at all.

Couple this with no initial investment, leasing sounds like a great idea to a lot of people. But this type of relationship can get complicated and homeowners should proceed with caution when leasing.
 

Goodell: One downside to leasing a system is that you do not qualify for the federal tax credit. It is true that you may be able to take advantage of Massachusetts state tax credits and any local incentives, but losing out on that 30 percent federal investment tax credit is something homeowners should weigh carefully. There is an excellent Massachusetts homeowner's guide to solar leases, loans, and power purchase agreements (PPAs) that will help you make informed decisions about financing or directly buying your solar panel system.

Carroll: And remember, lease contracts have many different terms that affect the future sale of your home. You should investigate if you can move the system to a new home and at what cost. Also, whether future buyers of your home are obligated to assume your contract with the leasing company and if the leasing company has the right to approve the transfer of ownership. Leased solar panels may bind the future buyer to long-range terms and conditions, both financially and physically on the property. And while some contracts have been shown to be fair and balanced, others have terms that are not at all acceptable to some new buyers. 

Greylock Insurance: Can you give homeowners some advice on how to avoid surprises and confusion throughout the leasing process?

Hyatt: First and foremost, it is extremely important for homeowners to carefully read the lease contract and make sure you understand which party – you or the lessor – is responsible for various costs and situations. Should your home and panels be damaged by wind, fire or another similar misfortune, you are going to have to file two claims, one with your home insurance company and one with the solar panel leasing company. Further, in signing the leasing agreement a homeowner is essentially giving the leasing company financial interest in their home. As you can imagine, this makes things complicated if you want to sell your home, get a home equity loan, or get a reverse mortgage. You will not have complete financial control over your own home and the leasing company is going to have authority to approve of your buyer or the refinancing terms. Channel 7 News Boston did a story on this very issue that every homeowner should read if they are considering leasing. It exposes the financial bombshells that can come with leasing, and the issues that, even if you have read and reread your contract terms, you would never know about.

Of course, there's no reason to believe that the lessor won't approve a new buyer or loan terms, but it's yet another step homeowners have to be aware of that could hold up a sale or refinancing.
 

Greylock Insurance: Homeowners who are researching solar PV panels for their home are finding information published on the Internet that indicates there may be some safety concerns. As a Berkshire County fire chief, would you please speak to issues that homeowners should be aware of?

Paul J. Goyette, chief engineer, Adams Fire Department: This is a very timely conversation for me as our station just went through an in-house training on handling homes with solar panels. This by no means makes me an expert, but I can highlight the four major hazards to firefighters, or for that matter, to anyone working on a house with a solar paneled roof.

The No. 1 danger, which is probably not going to surprise anyone, is electrical shock. Solar panel power is stored in batteries that channel a lot of electricity, so hitting one of these panels while on the roof is a significant risk.

The No. 2 issue is related to the additional weight of the solar panels. If a fire starts in an area of the house that is below the roof, like an attic, there is a concern that the roof could collapse because the structure is already weakened by the extra bulk.

No. 3, there is an increased threat to injury because it's easy to trip over the panels, wires or other system-related equipment.

And No. 4, as firefighters, we see a major issue with roof ventilation in case of fire. The best way to ventilate a home on fire is right over the affected area, but if there are solar panels blocking that part of the roof, we have to move to a less effective place to ventilate.
 

Greylock Insurance: Is there anything homeowners should do to prepare for their solar PV installation?
 

Goyette: There are definitely some actions homeowners can take, starting with placing a prominent sign on their property that states that their home has solar PV panels. Panels are not always visible right away, so having clear signage would be beneficial. It's important to include the location of the receptive batteries and the solar panel shutoff.

Otherwise, we may waste precious time searching the basement, the shed, or Johnny's bedroom for this equipment. I also want homeowners to be aware that their solar panels are producing energy even when shut off. During the daytime, the panels pull energy from the sunlight, and at night, they are drawing from street lamps and other lights. So even when the power has been turned off, anyone working on the roof should remain very cautious because it doesn't mean the panels aren't conducting electricity.
 

Greylock Insurance: Once a homeowner has decided to either buy or lease a solar PV system, the next step is generally to find a solar panel installer. What advice do you have for homeowners on how to choose wisely?

Goodell: This can be the most challenging part of your solar buying process, and also the most important. It probably goes without saying that homeowners should only hire the highest caliber technicians. Also, they should definitely not skimp on checking references. Make sure to solicit multiple quotes from solar panel installers who have expertise, licenses and insurance, an established track record, and a great reputation in the market.
 

Greylock Insurance: Are there specific things homeowners should look for in an installer?
 

Goodell: Absolutely. I recommend they look for companies that have at least one professional on their crew that has the North American Board of Certified Energy Practitioners' (NABCEP) Solar PV Installation Professional Certification. This is a highly recognized standard of professional certification for installers. Should a company not have a NABCEP-professional on their crew, please be especially diligent in checking their customer reviews. Solar installers should have all necessary business licenses and insurance policies, which typically include general contracting, electrician, home improvement, or home performance contracting licenses. Installers should also have, at a minimum, general liability insurance. When you've narrowed your search down to your top two or three options, make sure to speak with previous customers about their experience and ask the installer to show you some of the systems they've installed.

All of the experts agree, whatever you do, don't rush your buying decision just to meet a tax incentive deadline. Doing your due diligence is critical, and you should research insurance implications, safety issues, and the environmental and savings impact that a solar panel system may have on your home and your family.

You may be more effective in your decision-making process if you work with a team of advisers – an attorney, real estate agent, insurance company – who can guide you and ensure that you understand all of the information and obligations.

If you would like to set up a consultation with a Greylock Insurance expert, please call 888-200-4445.
 

Lori Goodell
Assistant vice president
Greylock Insurance, a Berkshire County based neighborhood agency with six convenient locations throughout Western Massachusetts

Sandy Carroll
CEO
Berkshire County Board of Realtors Inc. a 500-member strong trade association geared to serving professional real estate licensees in the region

Jim Hyatt
Vice president, personal lines insurance
Arbella Insurance, a regional property and casualty insurance company providing business and personal insurance headquartered in Quincy, Massachusetts

Fire Chief Paul J. Goyette
Adams Fire Department

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