Should you oversize your solar system?

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Oversized solar system.

If you're looking into installing solar, one of the biggest questions will be what size your panel system should be. It's common practice to install enough panels to cover as close to 100 percent of your electricity needs as possible, as this is how you'll maximize your savings. But is there any benefit to sizing your solar panel system to generate more electricity than you currently need? For most people, the answer is no, but there are certain situations where it's a good idea to install a larger system than you currently need. Read on to learn why you should and should not oversize your solar panel system.

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Oversizing a solar panel system will not reap large benefits for most people, especially if you're not utilizing the extra electricity your system generates. Here are some of the top reasons you shouldn't add more panels than you need.

Utilities won't pay you extra for your extra electricity

Most utility companies offer net metering. With net metering, your utility company will credit your bill for any excess electricity generated from your solar energy system. While a larger system might mean more net metering credits on your account, you aren't going to realize the benefit of those credits unless you're using them down the line. If you're not using the credits, they'll either exist as an ongoing credit on your bill or expire after a certain time. The specifics of how long you'll get to keep net metering credits depends on your utility company's policy.

A common misconception is that utilities will pay you for excess electricity from your solar panel system. However, most utility companies will not pay people for net metering credits. In the rare instance that your utility will buy out your extra net metering credits, the rate they will pay for them will be substantially lower than what you initially received for the net metering credit (typically retail price).

Ultimately, the additional upfront cost of installing an oversized solar panel system will not be worth it if you cannot use that extra electricity. The added cost will only extend your payback period for going solar.

Your solar panel system will cost more upfront

Larger solar panel systems are going to cost more upfront. This is because larger systems typically require more panels, potentially a larger inverter, additional racking, and more labor from your installer. The added cost will depend on how many watts you add to your solar panel system. Still, it isn't worth it if you're not using all the electricity being generated.

Difficult interconnection process

When you apply to connect your solar panel system to the grid, utilities will review your past electricity consumption to see if the system is sized appropriately. Utilities nationwide often deny interconnection requests when the system is much larger than your usage history indicates you need.

Some utility companies will be stricter about allowing oversized systems than others and may make an exception if you plan on oversizing for a logical reason. Always check with an installer to see if your utility allows oversizing, and if so, to what extent.

Additional incentives may not be worth the added cost

If you install a larger system and pay more, you'll likely be eligible for higher upfront incentives. Most rebates and tax credits are either calculated as a percentage of your total cost or based on the size of your system. That being said, some of these incentives also cap the total amount you can claim. For example, New York has a 25% state tax credit capped at $5,000. At a certain point, even if you're installing more panels and paying a higher cost, you won't receive higher incentive amounts. Even for incentives that aren't capped (such as the 26% Federal ITC), the added cost of installing more panels won't be worth the additional incentive amount.

Alternatively, there are some performance-based incentives (PBIs) where your incentive amount directly correlates to how much electricity you produce. For example, in states with solar renewable energy certificates (SRECs), you will earn more SREC income with a larger system because you will generate more kWh and certificates. At that point, it becomes a question of whether the added SREC value is more than the additional upfront cost of more panels. For the majority of current SREC markets, the answer is no.

For most customers, oversizing a solar panel system isn't worth the added cost and complications. That said, there are some cases when you'd want to oversize your system beforehand.

Purchasing an electric vehicle

If you plan to purchase an electric vehicle in the near future, it's a good idea to install a larger solar panel system to use the sun's power to charge your commute. The number of solar panels you would need to add to your system will depend on several factors, including the type of EV, how much electricity it will use, and how often you will drive it. You can always work with an experienced solar installer to determine the extra amount of electricity your EV will need and how many additional panels will require for your specific system.

Transitioning to electric appliances

If you're going solar and have some old appliances in your house, it's a great time to consider transitioning to new efficient, electric appliances and energizing them with additional solar panels. You can shift away from traditional fuel sources and instead use solar panels to power a new air conditioning system, air source heat pumps, refrigerators, and more. Adding a hot tub or heating a pool are other common reasons for needing more electricity down the road. Adding more solar panels in anticipation of these upgrades can avoid an add-on solar project.

Additions to your home

Another reason to install more panels than you currently need is if you're planning new additions to your home. This means adding more people to your home or expanding your living space with new additions like a garage, sunroom, or finished basement. The larger your home gets in terms of square footage and people, the more electricity you will likely use. By installing more solar panels upfront, you can be ready for this increase and usage and continue to save as much money as possible on your electricity bills.

Whether you want to oversize your solar panel system, you can use the EnergySage Marketplace to receive free quotes for installing solar on your home or business. If you're contemplating installing more panels than you need, note it on your account and why you're looking to oversize your system so that installers can propose the best solar solution for your property.

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