If your Facebook feed looks anything like mine, you’ve probably seen plenty of ads over the years claiming that, if you have a roof that needs replacing, you should call your friendly solar company because they might be able to help you pay for a new one.
In fact, it’s becoming increasingly common for homeowners to ask right out of the gate what the solar company can do about their roof. It often appears to me that the only reason they’re even considering solar is because they need a new roof and don’t have the funds to pay for it.
So what’s the catch? Nothing in life is free after all. In this article I’ll explain how you might qualify for a new roof with solar panels and help you understand whether getting the solar company to pay for your roof replacement is a good idea.
Roof Replacement and Solar Scenarios
Working as I do in New England, where the housing stock is quite old, it’s not at all uncommon to meet a homeowner who wants to go solar but who feels they can’t commit until they have a new roof. This is an obstacle that a solar company has a strong incentive to try and fix since no new roof means no installation.
Broadly speaking there are three likely scenarios when it comes to the condition of the roof for a solar installation:
- The roof is in terrible condition. The solar company comes out for the site survey, takes one look at it and disqualifies it for solar.
- The opposite scenario is when a roof is new. If the shingles have been replaced in the past five-to-ten years, it should be perfectly fine for a solar installation. What’s more, the solar panels will likely extend the lifespan of the roof by protecting it from the weather.
- The third scenario is where things get tricky. This is when the solar company comes out for the site survey, and determines that the roof is okay but the customer has reservations. The homeowner knows that the roof is going to need replacing sooner rather than later and they don’t want to deal with the hassle and cost of having the panels removed when it comes time to replace the roof.
In this case, an important next step is to have a meaningful conversation, first with the solar rep, who will then relay the customer’s roof concerns to the site surveyor.
The Site Survey
Let’s be clear, no solar company can make promises about how much they can help you with a roof replacement until after they’ve completed a thorough site survey. That’s because there may be other issues besides the roof. After all, it’s not unreasonable to assume that, if a house needs a new roof, it might also need an upgraded electric panel. That’s an additional expense that can wipe out a substantial portion of what was initially earmarked for the roof.
For simplicity’s sake, let’s assume that the site surveyor has determined that the house is “clean” (i.e, it needs no upgrades, not even the roof). That’s great news but it still leaves open the customer’s reservations. They want a new roof before going solar, and they want the solar company to help them pay for it.
Is it Really Free?
At this point, we need to address the elephant in the room (or is it the elephant on the roof?) I’ve always had a problem with solar companies promising free roofs in their advertising campaigns because these roof replacements are never really free. That’s why I prefer to use the phrase “help you out with your roof” instead.
There are lots of ways we can do that and there are some very good deals out there for homeowners. But ultimately, if it’s your house, and it’s your roof, at least some of the cost of replacing it will eventually be coming out of your pocket.
New Roof Using a PPA
When it comes to replacing your roof (or any other expensive home upgrades, for that matter), how you’re paying for your solar becomes quite important. Broadly speaking, there are two options when it comes to solar – either sign up for a lease or power purchase agreement with a reputable solar company (TPO) or buy the entire system outright. We go into the pros and cons of each option here.
If you need a new roof, a lease or PPA is often the best way to go. Let’s walk through an example.
- The homeowner is currently paying 40 cents/kWh to the utility company
- The home gets great sun
- The site survey comes back clean, no upgrades necessary, not even the roof
- In spite of this, the homeowner wants a new roof.
- Given how much sun the home gets, the solar company could easily charge 23c/kWh and still make a comfortable profit. This would give the homeowner a 40% discount on what they are currently paying to the utility.
- If the customer still wants that new roof, the solar company can charge 28c/kWh instead of 23c/kWh. This higher rate would give the solar company enough margin that they can cover some (or maybe even all) of the cost of roof placement.
Disclaimer: This is the point where the lawyers make me say that I am not your tax advisor. I am neither certified nor qualified to give you tax advice. Speak to your tax professional for advice on your own situation.
Essentially, what the solar company has offered is a long-term loan that the customer pays back over the life of the PPA. It is interest free, and paid as part of their electricity bill, which is still 30% less than they were paying the utility company.
It’s neither a gift that could potentially be seen as taxable income, nor is it a loan that could affect the homeowner’s debt-to-income ratio. It’s just a power bill that is a nickel more expensive than it might otherwise have been had it not been for the new roof.
As with any loan, the eventual cost of the roof would be higher than if the customer simply replaced it on their own dime prior to adding solar. But for customers who don’t have the funds readily available for a new roof, the solar PPA is a great way to go.
What if You Purchase the Solar Panels?
Homeowners who purchase their solar panels outright will probably save more money in the long run – both on their electricity and their replacement roof.
Where things get a bit tricky is in determining whether the cost af the roof replacement can be rolled into the cost of the solar panel as one single project for the purposes of the 30% Investment Tax Credit.
The IRS is less than clear on the subject. You can check out the IRS form 5695 for some language that implies that the only way to get the 30% tax credit is if the solar array is part of the roof itself – think solar tiles or solar shingles. Another Disclaimer: This is the point where the lawyers make me say that I am not your tax advisor. I am neither certified nor qualified to give you tax advice. Speak to your tax professional for advice on your own situation.
There’s no doubt that the best time to replace your aging roof is before you install the solar panels, but there is no easy answer when it comes to deciding whether or not to get the solar company to help pay for it.
Like most things in solar, it depends on several factors, including how much sun your home gets, what you’re currently paying for electricity, and whether you’re planning on purchasing or leasing your solar panels.
If you’re considering getting solar, you’ll want to weigh all of your options carefully and determine what makes the most financial sense for your particular situation. And remember – if you have any questions about taxes or finances, it’s always best to consult with a tax professional before making any decisions. Good luck!