Courtesy of DOE/NREL

Part 5 – Cost-of-System

Welcome back. The holiday season has past and I’m finally getting some time to continue the series. This is Part 5 in the “PV Solar – Homeowner Analysis” series, comparing the cost of fossil fuel generated electricity used in my home with the cost of electricity generated by a theoretical photovoltaic system. In this segment I’ll go over the component and installation costs along with the Federal and State tax incentives and rebates to come up with a fixed cost for the life of the system.

Component Costs
I’ll be using a retail price for solar modules, 125 Watts and Higher, of $4.30/peak watt for this analysis (for more information concerning the panel pricing see the following article from solarbuzz.com “Solar Module Price Highlights: January 20109″). The size of the system for this analysis, which was calculated in part 1 and revised in part 4 to give a more real-world estimate, is 5.55 kW or 5550 watts of solar panels. Therefore the component price for the solar modules will be approximately (5550 watt x 4.30/watt = 23,865) $23,865. Advertised solar power system packages of this size also include mounts, Wiring, disconnects and the other required small electrical components in the cost.

Inverters for this size of system were priced anywhere from $3600-$4400, using an approximate cost of $4,000.

• Component Cost= $23,865 + $4,000 = $27,865
• Transportation Cost= (2% of component cost) = $558
• State sales Tax (California)= (8.25% of component cost) = $2299
• Total Component Cost= $27,865 + $558 + $2299 = $30,722

Installation Cost
Without an estimate from a licensed contractor the installation cost is only approximate. The actual cost for installation is harder to determine because of all the variables involved, which includes labor, ground versus roof mount, panel configuration, utility service upgrade, roof type, permits and inspections, etc. Therefore, for this analysis I’ve used a fixed cost per module watt of $2.00, which calculates out as (5550 watts x 2.0/watt = 11,100) $11,100.

Total Installed Cost= Total Component Cost + Installation Cost = $30, 722 + $11,100 = $41,822


As I’ve stated before, a battery based system will cost around 20-30% more.


Renewable Energy Rebates and Incentives

• Federal Incentives – Residential Renewable Energy Tax Credit
  A taxpayer may claim a credit of 30% of qualified expenditures for a system that serves a dwelling unit located in the United States and used as a residence by the taxpayer. Expenditures include labor costs for on-site preparation, assembly or original system installation, and for piping or wiring to interconnect a system to the home. If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year. The excess credit can be carried forward until 2016, but it is unclear whether the unused tax credit can be carried forward after then. There is no maximum credit for systems
  placed in service after 2008. The maximum credit is $2,000 for systems placed in service before January 1, 2009.

  Federal Tax Credit= $41,822 x 30% = $12,546

• State Incentives – State Rebate Program (California)
  • Equipment Requirements:
    System components must be on the California Energy Commission’s (CEC) list of eligible equipment.
    Systems must be grid-connected.
    Inverters and modules must each carry a 10-year warranty.
    PV modules must be UL 1703-certified.
    Inverters must be UL 1741-certified, and tested by the Energy Commission.

  
  

  • Installation Requirements:
    Systems must be installed by licensed California solar contractors. An installer certified by NABCEP is recommended.

  California Solar Incentive payments are currently disbursed in one of two ways:

  1. Expected Performance Based Buy-down (EPBB): The applicant receives the entire incentive payment at the time the system is installed, and the payment is based on expected electrical output of the system.
  2. Performance Based Incentive (PBI): The applicant receives a portion of the incentive payment every month over a period of five years, and the payment is based on the actual metered output of the system.

  The California Solar Initiative is structured so that the incentive payments decline as the market grows. Therefore, the incentive step levels decline as more applicants apply for the program. The area of California used in this analysis is currently in step 6 of the program which provides an EPBB payment of only $1.10 per watt.

  State Rebate= $1.10 per watt x 5550 watts = $6105
  
  

• Total Federal & State Incentives= $12,546 + $6105 = $18,651.




• Visit the DSIRE website for more information on State and Federal Incentives.

Courtesy of DOE/NREL

System Cost After Applying Federal Tax Credit and State Rebate= $41,822 – $18,651 = $23,171.

This is the approximate cost of a solar electric system sized to provide the same amount of electricity I now use in my home. In the next and closing post (Part 6) I’ll spread this cost over the estimated life of the system, at least 30 years, and compare it to the amount I’m paying for my electricity (fossil fuel generated). Hopefully this will provide a real-world cost comparison between fossil fuel generated electricity and solar generated electricity. Hopefully this comparison will also indicate how viable PV solar is as a renewable energy source at this time. As I stated before, this is a learning experience and I may be missing some important points, so if you see any errors or omissions, please feel free to share and leave a comment.