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Solar Property Buy/Sell Cheat Sheet
You’re buy or selling a home and it includes a solar energy system. You have no idea how it works or even if it’s working. We can help! Check out our Services page for information on inspections (more below).
This cheat sheet will help you identify and navigate the key options, benefits, and risks so you can ask intelligent questions and give useful answers and close your deal.
What is it? Common Technology types
- Solar electricity, aka photovoltaic technology
- Converts solar energy into electricity
- The term ‘solar panel’ most commonly means solar electric panels that generate electricity
- Solar thermal
- Converts solar energy into heat
- Includes flat plate and evacuated tube collectors for domestic hot water and plastic solar pool heating collectors
- This is older, less common technology. We’re familiar with these, too, but we’re not going to discuss them here; call us for assistance
- Battery storage
- Also known as Energy Storage Systems (ESS)
- There are many different battery chemistries, but the main ones you’ll see are lead acid chemistry and lithium chemistry; each has multiple variants with unique advantages and disadvantages
What does it do? Grid Connection Type
- FIT or MicroFIT
- From 2009 through 2017 the Ontario FIT and MicroFIT programs offered contracts for generating clean energy, paying a premium price for it
- 100% of generated energy is pushed back into the grid at a premium price
- These systems have their own utility meter, so there will be at least 2 meters on the building
- Net Meter
- Energy from a net meter system is used in the building *first*
- Excess energy is pushed to the grid and ends up as a credit on the electricity bill, applied against electricity consumed from the grid
- This does NOT require a 2nd utility meter; one meter measures electricity flowing in both directions
- Energy delivered to and received from the grid is recorded on the electricity bill
- Off grid
- No connection to utility grid
- Entirely self-contained
- Includes batteries and probably a fossil fuel generator
Why do I care? Primary Benefits
- Income
- FIT and MicroFIT projects generate income and will do so until 2030 through 2037, depending on the contract date
- Income depends on the contract; early contracts paid higher rates and can be lucrative
- Cost reduction and stabilization
- Net Meter projects offset the cost of electricity ie reduce electricity bills
- Net Meter projects insulate owners from electrical price increases
- The higher the price of electricity, the higher the benefit
- Backup power (for systems with batteries)
- Protection from grid outages
- Whole home backup or partial home backup
- Independence
- Off grid homes rely entirely on the solar energy system for electricity
There are many other clean energy benefits that are no less important, but are less tangible. Here is a short list.
Common Risks and Issues
- Solar array damage from weather or pests
- Poor performance / low generation
- Insufficient or improper maintenance
- Ingress of weather or pests into electrical boxes or other outdoor equipment
- Poor or DIY installation, unsafe wiring, poor roof penetrations (possible leaks), improperly located equipment
- No ESA inspection, no structural evaluation, no building permit
- Additional costs when re-roofing: the solar array must be removed, the house re-roofed, then the solar array is re-installed
- Denial of insurance coverage
Risk mitigation
Your best tool for managing expectations in a deal is to arrange for a professional preventative (PM) maintenance inspection, a specialty inspection by an expert to uncover any issues and provide a detailed assessment report. Inspection are easy and inexpensive and will identify a range of potential issues; more comprehensive inspections are available, depending on the needs of your clients.
Ownership transfer
FIT and MicroFIT system ownership will need to be transferred to the Buyer. This must be done by the Seller. Most real estate lawyers are familiar with the process.
Alternatively, the Seller can strike a contract with the Buyer to retain ownership of the solar energy system and the resulting benefits. This is entirely discretionary. If the ownership is NOT transferred by the Seller, the Seller will continue to receive all income.
3rd party ownership Some FIT/MicroFIT projects are owned by a party other than the property owner. The property owner has a contract with the 3rd party owner for access to the roof. Be sure to engage your lawyer on this additonal contract transfer requirement.
Net meter systems include a Connection Agreement with the local distribution company. This should be addressed when the electricity account changes owners. The Buyer will see the details on their first electricity bill; the Seller should confirm the transfer so they are no longer liable for the connection agreement.
Off grid systems are simply part of the property and no particular transfer steps need be taken.
