What You Should Know About Residential Solar Systems

Factors to Consider

Deciding to install a photovoltaic system (PV) at your residence is a big decision. Before investing in a solar system at your home, consider a variety of factors: local building codes, availability of sunlight, costs, potential cost savings and system maintenance.

TEP’s Solar Analysis tool can help customers determine if installing a PV system makes sense for them. The tool helps you evaluate all of your solar options – whether to rent or own – so that you can determine if a PV system will meet your financial and sustainable goals. This tool estimates the upfront and long-term costs, the size of the system needed and the payback period for your residence.

Payback Period

The actual payback period for investing in a PV system depends on your energy usage, system size, PV technology, tax credits available, installed system cost, and electric rate changes, among other factors. Any payback projection should reflect TEP's history of stable electric rates, which have increased less than 1 percent per year, on average, over the past two decades.

Use TEP’s Solar Analysis tool to estimate your payback period or follow these steps:

1. Calculate your system cost after any federal and state tax credits. Check with a tax professional to verify if you are eligible for these credits.
2. Estimate the amount of electricity your system will produce, which is the amount of energy you won’t buy from TEP. This estimate is calculated by multiplying your system size in kilowatts by 1,900.
3. Multiply your annual system production by your electricity rate. This is your annual savings.
4. Divide your system cost – calculated in step 1 – by your annual savings – calculated in step 3 to get the number of years for your payback period.

Choosing a Solar Company

It is critical for customers to choose an experienced, reputable solar company that will meet their needs and expectations. Here are some helpful tips for selecting a solar company:

• Only hire a licensed contractor qualified to do the project. Solar installers must be licensed by the Arizona Registrar of Contractors (AZROC) and possess an Arizona business license that is active and in good standing.
• Verify the company’s license status by calling 877-692-9762 or visiting the AZROC website.
• Check to see if the installer is bonded and insured and ask for proof.
• Use a local installer, if possible. Tucson area installers are familiar with TEP’s requirements and the application process to help ensure project approval and a successful installation.
• Obtain detailed proposals and estimates from several installers and meet with each of them. Prices, project specifications and warranties vary significantly. Compare each of the proposals to make sure the system will meet your goals and expectations.
• Check references. Request at least three (3) references from customers whose projects are similar to yours. Consider the company’s experience and find out if they have any unresolved complaints, judgments or liens. Check their Better Business Bureau
• Get everything in writing. Any material changes to the system design, performance, equipment or estimate should be documented in writing.

Read all documents carefully before signing. You need to understand the terms and conditions before you sign. This helps prevents disagreements during and after installation. TEP advises against signing an agreement or making payments on leased systems until a DG meter is installed and a Permission to Operate is issued.

Questions to ask solar companies:

• Are you licensed, insured and bonded? Can you provide proof?
• How many other PV systems have you installed that are similar to mine?
• Can you provide several references?
• How much energy will my system produce?
• What will be my cost savings by having solar and what is the estimated payback period?
• What are the benefits of purchasing rather than leasing?
• Can the contract be renegotiated and under what circumstances?
• Is the contract transferrable to new owners if we sell our home?
• How long will the equipment last before it needs to be replaced?
• What are the warranties on the equipment, and can I purchase extended warranties?
• Should the age and condition of my roof affect my decision?

Selecting a TOU Pricing Plan

Solar customers may choose from any of our time-of-use (TOU) pricing plans. These plans can reduce your energy bills if you avoid using a lot of energy or operating several large appliances during times of peak demand. For the greatest cost savings, learn to shift your energy usage to off-peak hours, such as mid-day or later in the evening. Customers on TOU plans should reduce energy usage from 3-7 p.m. during the summer and from 6-9 a.m. and 6-9 p.m. in the winter.

Customers with PV systems sometimes make the mistake of actually using more energy and could see their TEP bills increase. It is important to remain as energy efficient as possible and continue to make energy-saving upgrades even after a PV system is installed to keep energy costs low.

Billing & Credits

Even after you install your PV system, you will still be connected to TEP’s grid and will rely on us to provide safe, reliable power when the sun isn’t shining and your system isn’t generating electricity. Even if you have stored energy from a battery system, it may not meet your power needs. That means you will still get a bill from TEP every month, although it should be lower if you keep your energy usage in check.

All TEP customers, including those with solar systems, have monthly service charges that cover our costs associated with operating and maintaining our electrical grid.

Excess Energy Credits

Once your PV system is installed, TEP will replace your existing meter with billing and production meters to measure your energy usage and the amount of energy your system exports to our grid. The excess energy and credits will appear as “KBH” – kilowatt banked hours – on your monthly TEP bill.

The buyback rate for excess, unused energy is specified in TEP’s Rider-14 Resource Comparison Proxy (RCP) Export Rate. Customers’ bill credit is based on the RCP rate in effect when their interconnection application was submitted. This rate is fixed for 10 years.

After the initial 10-year period, the bill credit is based on the current export purchase rate, and may change from year to year. The RCP rate for new applications received before Oct. 1, 2022, is adjusted each year.

Each month if the customer’s RCP credit balance exceeds their TEP bill for electricity, the credit is applied to their next month’s bill. In October of each year, TEP will pay the customer any remaining RCP credits if the balance is more than $10.

Customers with grandfathered rates for PV systems installed before 2018 should refer to TEP’s Rider – 4 Net Metering for Certain Partial Requirements Service (NM-PRS).

Power Outages

If a power outage occurs, your PV system is required to shut down automatically for safety reasons. This prevents excess energy generated by your system from flowing back to our circuits while our crews are repairing equipment, which must be de-energized to prevent an electrical hazard.

Your system will not generate energy during a power outage unless you have a PV system with a battery storage system. Once power is restored, you can resume operation of your PV system, which may require a manual reset.

Maintenance & Repairs

If your system requires maintenance or repairs, contact your solar company. If the existing DG meter needs to be pulled for repairs, a DG clearance from your Authority Having Jurisdiction (AHJ) will most likely be required. If the inverter(s) or modules are being replaced an application will need to be submitted to TEP.

Working with TEP

TEP’s role is to assist installers and customers through every step of the application and approval process and ensure that projects meet all safety and electrical requirements. At different stages of the application process, customers and your installers may work with up to four different departments at TEP: Energy Programs, Energy Services (engineering), Design Services and Metering.

Customers and installers can expect regular communications from TEP to help keep projects on track. Customers can do their part to advance their project and prevent delays by providing TEP with their correct address and email address, signing the Interconnection Agreement in a timely manner and ensuring there are no access issues – such as pets in the yard or locked gates – at their home.

TEP will review the Notice of Completion submitted by the installer once installation is complete and, if approved, the project will be released to TEP Metering for a meter exchange. Once TEP issues a Permission to Operate, the installer may energize the PV system.

Steps to Installing a Residential Solar System

1. The solar company completes and submits the Interconnection Application and required documents to TEP on their customer’s behalf.
2. TEP conducts an administrative review of the application and documents within 7 days of receipt to ensure they comply with program requirements.
3. TEP completes an Interconnection Review of the project’s technical specifications within 14 days and notifies the customer and installer if the project is approved or needs corrections. For PV systems greater than 20 kWac, TEP has 21 days to complete its Interconnection Review.
4. The solar company pick-ups TEP-supplied equipment and materials for the project from our designated vendor.
5. The solar company installs the equipment and then notifies TEP when the installation is complete by submitting electronically a Notice of Installation Completion (NIC) along with “as-built” photos of the project. TEP may require a system inspection.
6. TEP reviews the NIC and coordinates with our Metering Department to install billing and solar production meters and complete a revenue meter exchange.
7. Upon receiving Permission to Operate from TEP, the solar company may energize the customer’s PV system.

Your Installer’s Role & Responsibilities

Solar companies are responsible for designing a PV system tailored to the customer’s home and energy needs, and calculating its size, configuration and energy production. The installer should provide a detailed cost estimate, the manufacturer and model numbers for your equipment and a project timeline.

The installer will complete and submit the Interconnection Application and project drawings to TEP on your behalf, obtain the necessary permits, schedule inspections and secure the required approvals. They’ll also need to contact TEP if there are any major modifications to a project.  Installers must adhere to TEP’s Distributed Generation Interconnection Requirements and our Electrical Requirements.

If a power kills is needed for installation, the installer needs to schedule this with TEP Design Services and notify the customer of that appointment.

When a PV system is completed, the installer must submit a Notice of Completion with TEP along with “as-built” photos of the PV system. After TEP installs new billing and production meters and issues a Permission to Operate, the installer will complete a walk-through with the customer and energize the system.

Changes to your PV System after Installation

Customers who want to expand their system by adding an inverter or more modules need to have their installer submit an application to TEP. They will keep their initial net metering rate for the duration of the 20-year contact if the addition to a grandfathered system does not require utility distribution upgrades.

Customers with an RCP rate can find more information about expanding their system and retaining their original rate.