Residential solar electric: still too expensive?
FindSolar.com, operated by solar industry interests and the DOE, has a handy Solar Estimator that calculates an estimated cost for a home solar PV system and provides a list of contractors in your area. It uses some curious formulas that I don't quite understand to calculate positive ROI, but it provides some interesting insights.
Some manufacturers also have calculators, including BP Solar USA, Sharp Electronics, and Kyocera Solar. And the PVWatts.org calculator estimates how much solar power you can generate for any given U.S. location based on a number of variables.
Where I live in Tennessee is listed at the high end of "good" on the "solar scale" of available solar energy. But a 3 or 4 kW system that costs $40K or so will only generate about $35 per month worth of electricity. That's a payback of about 95 years!
(Most of the calculators reduce the payback period based on tax deductions if you finance the system with a home equity loan. I don't understand how that works. It seems like the additional interest v. paying cash would make the system cost more over its life, not less. I'm not very good at math, though, so maybe someone can explain that?)
Folks living in Florida (where we lived for a while) can get a much better deal, because a) they get slightly more solar radiation, but more important b) they have a state rebate incentive that will pay for half the system. Plus they require utilities to provide "net metering" (meaning you can sell excess power back to the grid). The payback period is reduced by half or more, but it's still a stretch.
Conclusion: While good for the environment (assuming "green" manufacturing practices), residential solar PV systems are still too expensive and not yet cost effective. Expect this to change, however, as R&D produces better and cheaper solar panels and manufacturing ramps up.
Comments
PV solar
Do not assume "green" manufacturing processes.
The reason PV arrays are so expensive is the ENERGY it takes to produce them.
If you get a 95 year payback, assume you will NEVER EVER make as much energy as it took to produce the arrays. Simple thermodynamics.
Unless you place the arrays in the sunny US Southwest deserts, you are WASTING ENERGY by installing these pseudoenvironmental boondoggles.
Wow, that's surprising.
Wow, that's surprising. Usually, these site "calculators" don't really give you an honest appraisal, because, well ... the truth is that solar power is not an efficient electrical system. It could be, if these very manufacturers would give these units away free, or subsidize them. Apple subsidizes the iPhone. So does Nokia. Thus, everyone has a cellular phone.
Incidentally, any internet calculator that doesn't give you the underlying algorithm that it uses to calculate costs is not to be trusted, for the reasons that you cite. Some fail to include obvious costs, depending on their bias or proximity to money.
Payback
Actually there are conditions where the solar is worth the money:
A. When you need your own supply - that is, local wires are unreliable or the risk to losing the grid is too high. Might still be cheaper to have generator and tank of diesel, but that has it own problems: like maintenance, running out of fuel.
B. You are too far from the grid - if it costs $40K to pull wires to your place, why not get an array? (Might be cheaper to not have electricity - they make nice gas refrigerators (really.) and bright gas lights, you know.)
c. Aesthetics: Can't stand the noise of a generator or a windmill or see the wires?
PV is outdated
Link...
I agree, solar concentrators
I agree, solar concentrators are promising, and often overlooked in the solar PV hype. Doesn't mean we should abandon solar PV R&D, but we should definitely be investing in solar concentrator R&D. We're pretty good at boiling water to generate power!
(P.S. Thanks for the interesting link.)
Apple iPhone
Not to pull this thread too far off track, but the iPhone is not currently subsidized, by anyone. When the iPhone 3G comes out, it will be subsidized by AT&T in the US, not Apple. Apple's making major profit off of the iPhone.
NJ Solar
My parents installed solar panels on the roof of their NJ home several years ago. The received a significant subsidy (between 1/3 to 1/2 the cost of the panels and installation) and can sell power back to the grid. My dad estimates that they will have broken even within 10-15 years.
The $35/month figure you cite seems wrong to me. Maybe electricity is more expensive in NJ than TN and more sunshine down south doesn't make up for it. Moreover, when you look at the monetary benefits, you have to look at the numbers on a monthly basis, not averaged over the year. The price of electricity, your production of electricity from solar and your use of energy all rise in the summer and fall in winter due to air conditioning. Your differential of production minus use changes from month to month, and it is this which you should look at to get a sense of how it helps you.
TVA power is cheap down
TVA power is cheap down here, about 8 cents per KWH. What is it up there in NJ?
Most utilities don't allow net metering here (maybe none?), so that's another factor. And there are no incentives here, other than the federal $2000 credit.
Here's my output from the PVWatts calculator:
"Station Identification"
"City:","Knoxville"
"State:","TN"
"Lat (deg N):", 35.82
"Long (deg W):", 83.98
"Elev (m): ", 299
"PV System Specifications"
"DC Rating:"," 4.0 kW"
"DC to AC Derate Factor:"," 0.770"
"AC Rating:"," 3.1 kW"
"Array Type: Fixed Tilt"
"Array Tilt:"," 35.8"
"Array Azimuth:","180.0"
"Energy Specifications"
"Cost of Electricity:"," 8.0 cents/kWh"
"Results"
"Month", "Solar Radiation (kWh/m^2/day)", "AC Energy (kWh)", "Energy Value ($)"
1, 3.23, 307, 24.56
2, 3.94, 332, 26.56
3, 4.83, 439, 35.12
4, 5.34, 460, 36.80
5, 5.29, 457, 36.56
6, 5.57, 454, 36.32
7, 5.57, 468, 37.44
8, 5.33, 448, 35.84
9, 4.96, 409, 32.72
10, 4.91, 434, 34.72
11, 3.65, 313, 25.04
12, 3.22, 299, 23.92
"Year", 4.66, 4821, 385.68
I'd be willing to be a "pioneer" just for environmental reasons, but it's pretty hard to justify taking that big of a hit. Solar water heating appears to be a more cost-effective, so I might look in to that.
Numbers used in calculations
Living in east TN, you do know that the electricity you create with your panels is bought by TVA at 15 cents (not the 8 you show), right? All you do is sign up with them and use a grid connect system (which reduces your costs, as well as inconvenience and danger by eliminating the battery grids older systems required). That rate is guaranteed for 10 years (it may go down after that; then again, it might go up).
Yes, I was aware that TVA
Yes, I was aware that TVA buys back power at 15 cents as part of their "green power switch" program (8 cents is what we pay).
My local utility does not offer this option, or at least they don't seem to know what I'm talking about.
A TVA official told me that net metering is available as part of the "green power switch" program, but I'm wondering if it's only for commercial users and not residential.
I'll have to look into it some more to get a definitive answer.
P.S. Here's the TVA info on
P.S. Here's the TVA info on their "Green Power Switch Generation Partners" program. They say it is available for commercial and residential customers.
Link...
I left a call with my local utility to ask about it again to see if there are any updates.
NJ Solar
Rebates don't reduce the cost, they just shift the cost to someone else - namely the taxpayer. What are your parents' taxes in NJ? Maybe you noticed that the state has a multi-billion dollar budget problem that they are trying to address through layoffs of state workers and - you guessed it - higher taxes.
How do these things stand up
How do these things stand up to hail? I doubt it would still be working around here after five years, and almost certainly would not after ten.
NJ solar I live in NJ and
NJ solar
I live in NJ and the stats are as they are given ....but property taxes are 5 grand a year and up
and the subsidy is also paid by a 2 buck a month charge for all on the grid...74 million a year
and that will get you a spot on the 400 roofs a year they allow you to put up...and you have to pay in advance
which means the rich are being subsidized as usual...
"Most of the calculators
"Most of the calculators reduce the payback period based on tax deductions if you finance the system with a home equity loan. I don't understand how that works. It seems like the additional interest v. paying cash would make the system cost more over its life, not less. I'm not very good at math, though, so maybe someone can explain that?)"
First, the home equity interest produces a tax savings since it can be deductible. Every dollar in interest paid helps to reduce your taxable income at your marginal tax rate (the rate paid on your last dollar earned). So a $100 in interest may produce a tax savings of $30, so you get a net outlay of $70. Your net interest is therefore less, thus your overall outlay is less and you can pay it back sooner.
Second, there's the opportunity cost. By borrowing the money, you can then use the cash for something else such as an investment. So potentially you could get investment income on top of the energy savings and the reduced tax bite. This is why many profitable businesses still borrow despite healthy cash balances and profits. The cost of the loan is less than the money that can be made with the cash used in their normal business activities.
No matter, these systems still need further improvements in efficiency before they really become cost effective. Or if other fuels continue to increase rapidly in cost.
Not practical in many locations
A full solar house is completely impractical for most people in most locations. The battery farm alone is more hassle that 99% of the population would care to deal with, not to mention even top grade solar houses have to function under fairly extreme electricity rationing.
As for a few panel on the roof to feed back into the grid and cut your bill, maybe...in a few places, like Arizona. I live in San Francisco and we have fog or haze most of the day, most days of the year. I suspect our breakeven here would be about 200 years....
When solar panels become at least twice as efficient and 1/10th the cost, it *might* be worth throwing a few up on the roof. Until then, it's environmental masturbation.
Evergreen Solar
Evergreen Solar, out of Massachussets, sells a much "greener" solar product, and that company expects to be able to produce energy at "grid parity" by about 2012 when they will have two large US based plants pumping out their string ribbon solar product.
Works for me....
I'm curious how you only get $35/month savings from a 3KW system (which costs less than $30K by the same calculator).
3Kilowatts peak gives you at least 20KW-hours per day of electricity, or 600KW-hours/month. At the (cheap) TN rate of 8 cents a KWH, that's $48/month. In the summer you get more, in the winter, less.
Note that Kilowatt is a rate (like miles/hour) and Kilowatt-Hour is a quantity (like miles), and is computed by rate*time.
Now maybe you use less electricity and your total bill IS $35/month, but then you are using a rather extreme low-end case to judge the industry.
In my case I use about 30KWH per day, no A/C, at 11 cents per KWH(and rising now at 10%/year). This gives me a monthly bill of $100. I could make all this go away with a grid-attached system of about 3.5 KW, costing $30K installed after federal tax credits. Disregarding state and local tax credits, home appreciation and insurance against (likely) future price increases, and ignoring interest, my $100/month would pay it off in 25 years.
Now, there IS interest and that $100 monthly bill will be MUCH higher in the future. Still ignoring the rebates, and running this through Excel (a handy tool for simplifying all calculations of this type), I get the following:
At 5% interest on $30K and assuming a mere 6% utility inflation, I get payoff in 269 months, or 22 years.
Assuming 10% utility inflation (the authorized increase over the next 2 years) I get payoff in 196 months, or 16 years.
Reducing the amount financed by $2000 Fed rebate, I get payoff in 187 months.
Subtracting off the $13.5K rebate from the LADWP, and the payoff time drops drastically, to 114 months, or just under 10 years. Even if I change the expected energy inflation rate to equal the finance rate of 5% I still get payoff in 146 months, or 12 years.
And every day the system works after payoff is FREE ELECTRICITY.
Nanosolar
This information doesn't seem to include the technical breakthrough in solar conversion by a company named Nanosolar. This seems to be the jump we've all been waiting for.
Compared to actual data ...
Since I've owned a system here in the sunny Mojave Desert for almost three years now, I decided to check out what the Estimator at findsolar.com predicted for my system and compare to the actual data, which I have carefully recorded. Bottom line, system size, cost, and first-year utility bill savings may be OK, but payback time is way off.
Details:
First off, system size, the Estimator's average prediction for system size for a given performance was 25-30% smaller than actual, although their "high end" estimate was about right. The reasons, as far as I can tell, are:
1) Orientation: my panels are flat, this makes sense given the installation options on my house (and implications for maintenance) along with concerns about wind loading, but it costs about 11% in terms of performance. The Estimator assumes that you will orient your panels to match your latitude. Nice in theory but I don't see it a lot in practice out here. In other places it may be more common.
2) Losses from panel to meter. The estimator assumes you get 71% of what the panel is rated for. In my opinion this is optimistic, most people will see maybe 65%, that explains about another 10% of the discrepancy. The Estimator assumes 25 deg C operation -- if that's panel temperature (I doubt it) it's way off, these things get quite warm -- if that's "ambient", it's still not great; even with perfect ventilation the weighted average in places where's there's lots of sun is maybe 10 C warmer.
So, overall, not bad for sizing the system, but you'd be wise to consider that the odds of your house offering a "perfect" location are likely to be small, and adjust the estimator's results accordingly.
As for economics, savings were calculated OK, but payback times are not realistic.
The assumed rate is about right, and (once sized properly), my actual utility bill savings were pretty close to the center of their predicted range. The things to watch out for, though, are:
1) they assumed a 3.8% annual increase in electric rates. If you're way up in the upper tier of California's rate system, that may be OK, but EIA's estimate for average electricity costs through 2030 shows no increase (in real dollars), thus maybe 2.5% a year (in nominal dollars). This makes a big difference in payback time.
2) they seem to take the added value of your house as an immediate gain, and appear to count it forever. This is wrong, in my opinion, because solar systems depreciate like anything else. Given the rapid advances in PV technology, a system that's 15 or 20 years old probably won't be worth much by then, so in payback calculations it should no longer count.
3) System degradation. They don't talk about it, but it's usually assumed that a PV system's output will decrease by about 1% per year as the panels age. (So far, I've seen about 0.8% per year decline). Thus, even if your electricity bill goes up by 2.5% per year, your savings will only go up by 1.5% per year, and this too makes a big difference in payback.
Lastly, in response to the hail question, the panels I bought were rated for up to 1" hail. Hopefully my system will never be tested in this way; I'd worry about how many years that rating would last, but I have no expertise in that area.
Where Are The Carbon Offset Companies
I checked these prices about 6 months ago and the cost is simply prohibitive for average Americans in most of the nation.
Where are the carbon offset companies -- paying to install solar on every school and home would have a huge, long lasting impact on the every aspect of America!
How about it Mr. Gore, you have the company that could start this ball rolling.
DKK
Where are the carbon offset
Where are the carbon offset companies
Good question.
Energy security = my excuse to by neat gadgets.
I'm interested in solar power to ensure I have juice when I want it. It is not out of the realm of possibility that government will continue to hamper the growth of power generation and distribution grids to the point where brown outs or rolling blackouts become common in some parts of the country. So, betting on incompetence in government, I plan to get a nice solar package of some sort to keep the computer and air conditioning running.
Of course, things may work out and we will have ample supply, but solar panels or concentrators are just freakin' cool and I would love to have a setup. I have always been a sucker for gadgets, I just wish they weren't so dang expensive.
Oh, I also am curious about how these system fair under hail. They can't pay for themselves if they get clobbered in a hail storm.
The economic viability of a
The economic viability of a PV system varies widely depending on your location and utility rates. Where I live, SoCal Edison charges around $0.43/kwh for my last several hundred kwh of usage per month. (First kwh is only $0.11 for monk-like usage) They allow net metering (meter goes backwards during time of low electricity use), so there is no battery system necessary. My 3.2kw system cost around $32K before various tax rebates and $20K after tax rebates. It ends up knocking off around $2200 per year off the bill, more in the summer months with longer days and less in winter. Panels are warrantied for 20 years. The inverter (~$3.5K of the total cost) for 10 years. In theory, the panels should last indefinitely as there are no moving parts. It should result in around a 10% rate of return (after tax) if the equipment lasts. This retern gets better as utility rates rise and gets worse if the system breaks.
Orentation matters. Mine are on a south facing roof where they belong.
Electricity, especially coal fired generation in the SE and Midwest, is much cheaper than nat gas generation, so PV does not pencil out in those areas with coal based rates and will not unless it gets vastly less expensive or more efficient.
To the poster in SF: SF gets more sunny days than you think depending on where you live. The west side of the city is quite foggy, but the east side gets more clear days than San Diego. It does not matter that its colder.
UPDATE
I heard back from my local utility, and they said they are participating in the TVA Green Power Switch Generating Partners program.
They have just finished working with a customer on the first grid-connected solar PV installation in our area, and they have everything in place for net metering to sell power back to the grid for 15 cents per KwH.
They said the customer spent about $33K on the system, and (being an older gentleman) he doesn't expect payback in his lifetime but he did it for environmental reasons. They are still working out a few bugs before puttting it online.
The customer got a $500 rebate from TVA, and the $2000 federal tax credit.
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