Part 6 – Cost Comparison – Fossil Fuel Generated Electricity VS Solar (PV) Generated Electricity

In the last segment, I calculated an approximate cost for a solar electric system sized to provide the same amount of electricity I now use in my home. In this segment (Part 6), and the last of this series, I spread the cost over the estimated life of the system (30 years), and compare it to the amount I’m currently paying for my electricity (fossil fuel generated). Hopefully this will provide a real-world cost comparison between fossil fuel generated electricity and PV solar generated electricity.

In segment one of this series I determined my total electricity use for the previous year and the cost of that electricity. The electric power use for the year was 8455 kWh at the cost of $1701.12. This is an average monthly use of 704.59 kWh of electricity at a cost of $141.76 per month. In the last segment I determined the cost of the solar electric system and after subtracting the Federal tax credit and State rebate, my cost was determined to be approximately $23,171 ($41,822 – $18,651 = $23,171).

At $23,171 for the system, divided by $1701.12 (cost of my home electricity for previous year), the payback works out to be just under 14 years (excluding the interest you may have to pay on the initial capital cost). This means that the remaining 16 years in the 30-year life of the system would pay out an additional $27,000 for the homeowner.

Although I didn’t take into account the amount of interest on the initial capital cost, that amount would probably be more than offset by the rise in energy cost over the next thirty years. With the proper care and maintenance you could have your own electrical generator in the home for at least the next 30 years. As for required maintenance, you should try to clean the panels at least two times a year, at the end of the rainy season and towards the end of summer because a 10-15% decrease in solar output can be noted when panels are dirty.

The energy cost and consumption for this analysis comes from one years worth of electric bills provided by an average homeowner. The conclusion of this analysis is that the PV solar system would pay for itself in just under 14 years and then provide, basically free power for the remaining life of the system. The payback of 14 years is a long time, but when considered over the life of the system, the remaining 16 years provide an excellent return on the investment.

“Courtesy of DOE/NREL”

Part 3 – PV Panels

As I noted in part one, the object of this analysis is to provide a simple comparison of the cost of the fossil fuel generated electricity used in my home with the cost of electricity generated by a theoretical photovoltaic electric system. In part one we went through the process of sizing a system and in part two we contiued by examing how this type of system would work with the existing utility grid. In this third segment I’ll give a brief overview of photovoltaic modules (solar panels) which make-up a major portion of the system and cost.

A solar panel or solar module (terms are interchangable) is a collection of solar cells wired together in a series/parallel configuration so as to produce a desired voltage and current. The panels are made of aluminum framed glass with the individual cells mounted to the inner surface of the top glass (tempered, low reflective, etc.) with the back of the panel protected by another sheet of glass or glass-like material.

The following ratings, warranties and certifications are provided by the manufacturer and independent testing agencies to provide information about the panels and help the consumer compare apples with apples when shopping for solar panels. Be sure to check the panels specification sheet for this information or have the dealer provide it.

Efficiency Ratings
Most panels today are manufactured using two of the most common types of cell technologies, monocrystalline silicon and polycrystalline silicon. Solar cells manufactured with the lower efficiency material (polycrystalline silicon) result in larger cells and panels than those manufactured with higher efficiency material. The higher the efficiency rating of the module, the more power you’ll get per square inch of panel surface. In other words, the higher the rating the less roof area will be required for installation.

Panel Output (Wattage) Ratings (STC Ratings vs PTC Ratings)
The individual modules are manufactured to provide a specific amount of power output. Manufacturers rate the nominal power output (wattage) using a set of standard testing conditions (STC). The STC rating is the wattage specified on the panel’s nameplate. The independent rating anency, PVUSA, provides the PTC (PVUSA Test Conditions) rating which provides a more realistic or real-world measure of a panel’s output. Because the PTC rating uses more real-world conditions than the STC rating, the PTC rating is lower. A module with a STC rating of 200-watts, for example, may have a PTC rating of only 180-watts. When determining a system’s cost, it’s important to know that the PTC rating is used by California and various other states as the basis for determining system rebates. Ratings are listed as DC (direct current) watts.

Minimum Power Ratings
This is the manufactuer’s guarantee that the panels’ actual power output, out of the box, will not fall below a specified amount. This is sometimes called minimum warranted power and negative tolerance rating. A 200-watt solar panel (STC rated) with a negative tolerance rating of 5% will only be warranted for 190-watts (Minumum warranted power) out of the box.

Certifications
IEC 61215 – This is the international design standard for crystalline silicon modules. Conforming to IEC 61215 only guarantees that a test batch of modules has passed the required tests. It is not a guarantee of a manufacturer’s quality control in production.

UL listing – In terms of solar panels, Underwriters Laboratories tests for various safety considerations. Modules that pass testing are given UL’s “UL 1703″ listing for Flat-Plate Photovoltaic Modules and Panels.

Warranties
Provide some type of guarantee against defective workmanship or materials, which covers failures or problems during a specified period of operation. The remedy may be replacement or repair of the defective product.

Provide a guarantee that the peak watts of a module will not reduce by more than a stated percentage over a certain number of years (limited power guarantee). For example, a manufacturer would warrant its modules to produce no less than 90% of their initial minimum stated power under Standard Test Conditions for a period of 10 years from the date of original purchase, and also to produce no less than 80% of their initial minimum stated power under Standard Test Conditions for a period of 25 years from the date of original purchase.

The life expectancy for newer crystalline panels is anticipated to exceed 40 years with manufacturer warranties varying anywhere from 20-35 years.

Module Pricing
Panel prices for polycrystalline and monocrystalline have continued to delcine to the $2.50/watt and $2.75/watt range respectively. Module price greatly effects the cost of the solar system, as they encompasses approximtely 50-60% of the total installed cost (pretax cost). For more details concerning panel pricing see the following article from solarbuzz.com “Solar Module Price Highlights: November 2009″.

Although the present economic conditions are not that great, this is good news for consumers who have the money to buy modules now.

Okay, we’ve covered what you should know when comparing solar modules and found out that they make up approximately 50-60% of the installed cost of the solar system. In the next post I’ll cover the remaining elements making up a grid tied solar electric system and and begin pricing the system sized in part one. As I stated before, this is a learning experience and I know I may have moved along too fast at times, so if you see any errors or omissions, please feel free to share and leave a comment.

Recommended Sites and Articles

• solarbuzz.com
• greeneconomypost.com “A Cloud Over Solar In 2009; What are the Near Term Prospects for the Solar PV Sector?”
• solar.calfinder.com “Solar Panel Ratings Breakdown”

“Courtesy of DOE/NREL”

Part 1 – Sizing Your System

In my last post I questioned the affordability of renewable energy and the homeowners’ place in the energy market. By becoming the producer as well as the consumer, the homeowner has found a place in the market and helps make renewables more affordable. This will begin a series of posts where I compare the cost of fossil fuel to renewables. The objective of this analysis is to determine whether a renewable energy alternative such as solar, can be as affordable as the fossil fuel generated electricity transmitted to my home. The renewable energy alternative for this analysis is a hypothetical photovoltaic (PV) solar system installed in my home.

I’ll begin by trying to determine the size of the solar powered system I want install. Note, the size of the system isn’t determined by the size of the home, but rather by the amount of electricity that is consumed in kilowatt hours and how much of that consumption I would like to eliminate. I’ve decided to size the system to produce approximately the same amount of electricity I consumed last year. I used my monthly energy statements to determine the actual electricity use for the year. The use includes lighting, cooling, dishwasher, oven, refrigerator, freezer, the washer in laundry room, and all plugins (computers, televisions, etc.). I excluded the use of natural gas which includes heating, water heater, clothes dryer and stove top.

Electricity use is usually billed in kilowatt hours (kWh, W h): 1 kW·h = 1000 W·h, which is a unit of energy equal to 3,600,000 joules. My total electricity use for the year was 8455 kWh, this is an average use of 704.59 kWh/month. What I want to determine now is the amount of power the system needs produce per day to eliminate my electricity bill. To do this I’ll divide the average monthly electricity usage by 30 days (704.59 kWh/30 = 23.49kWh), which tells me the system needs to produce at least 23.49 kWh per day to eliminate the bill.

“Courtesy of DOE/NREL”
Next I need to determine the average number of hours of full sunlight that is available, in this area, on a daily basis. To do this I’ll use a Solar Insolation Map which shows the average daily solar radiation in kWh/m2/day (Collector Orientation: Flat Plate Tilted South at Latitude). Sun hours are the average number of hours per day of usable solar radiation. In 1 hour under ideal conditions, 1 square meter receives the equivalent of approximately 1 kWh of solar energy. The map shows that my area receives approximately 5-6 hours of optimal sunlight per day. This means, on average, I have 5.5 hours during the day to produce the 23.49 kWh of power, needed to eliminate the electric bill.

To determine the size of the system I need to purchase, the amount of power needed per day is divided by the number of sun hours (23.49kWh/5.5 h = 4.271 kW). The calculation shows I’ll need at least a 4.271 kW system (1 kW = 1000 watt hour = 1000 W) which is the same as a 4271 W system. Due to module and inverter inefficiencies along with other power losses, the calculated system size of 4.271 kW is multiplied by a factor of 1.2 to give a more real-world estimate (4.271 kW x 1.2 = 5.13 kW) of 5.13 kW.

Ok, now that I have determined that I need a system approximately 5.13 kW in size, I will need to price out various options to come up with a cost. In my next post I’ll pick up from here and start the process of pricing the system.

This is a learning experience for me, so if you see any error or omissions, please share and leave a comment.

How much is the homeowner willing to pay for energy produced from renewable sources? If utilities are required to increase the percentage of their energy that is produced by renewables, will this take a bigger chunk of your paycheck? Will subsidies, in the form of state, local, utility, and federal tax incentives and rebates provide the fuel for the renewable engine. Is the discount of 40% to 50%, provided by the tax and rebate incentives, a large enough enticement for the typical homeowner to purchase a renewable system? Can the homeowner compete in this market?

The homeowner will most likely have to pay what ever it costs and it will take a bigger chunk of your paycheck. Electricity commercially generated from wind costs 50% more then that produced from coal, and solar costs at least twice as much as the wind energy. Purchasing renewable energy from the utility company now, is simply going to cost you more than that produced from fossil fuels. Even if carbon credits raise the cost of fossil fuel generated electricity above the cost of renewable generated electricity, the consumer is still paying more. The good news is, the homeowner does have some control in this market! By having your own renewable energy system (solar, wind, geothermal, etc.) installed in the home, the homeowner can control the cost of energy they use now and in the future. The homeowner can reduce the uncertainty of the raising cost of energy to a fixed cost over the life of the system.

Giving the homeowner a place in the energy market as a producer as well as the consumer helps achieve the goal of affordable renewables. In the next post I’ll run a simple analysis comparing the cost of the fossil fuel generated electricity used in my home with the theoretical cost of electricity produced by a photovoltaic solar system. This will obviously require a long term investment paid back over a period of years. But as noted above, the tax and rebate incentives now provide an excellent window of opportunity to make this investment more affordable.

How to make renewables more affordable? Do you have any information you’d like to share? Send me a post.