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June 14, 2004

Solar Photovoltaics in California

Clayton Cramer is unimpressed by the economics of solar photovoltaics, and expresses displeasure with CA State Senator Kevin Murray's proposal to force CA builders to provide solar systems in new housing. I can't disagree about the legislation -- force sucks. But I can disagree with Clayton regarding the economics.

I recently helped a friend work out the economics of adding a solar photovoltaic system to the roof of his detached garage in Santa Monica, CA. The system was installed in April and is now turning out power. The numbers are much as expected and indcate a payback term of 10-15 years depending on future interest and utility rates (less if you factor in an amount for personal satisfaction).

The numbers go like this:

  • Raw cost of project: $28,000
  • Edison rebate: $12,000
  • Tax benefit: $3,000
  • Net cost: $13,000


  • Solar panel area: 23 panels for approximately 23 square meters
  • Energy produced daily (May average): 21KWH
  • Daily energy consumption (May average): 20KWH
  • Electricity cost: $0.14/KWH - $0.20/KWH depending on tier.
Since the energy is produced during daylight hours, which are peak demand periods due to business needs, but the home consumption is mostly in the low-demand evening periods, Edison happily pays a rebate of nearly half the construction cost for this peak-power production facility. During the day, there is a net power outflow to the grid, and at night the net flow reverses, with the difference settled by check each month, depending on the meter reading. There are no batteries involved.

Now, let's assume that the May average is high for an annual average, and just take 18KWH as a true daily average. Even though energy costs will likely rise faster than any possible return on the invested capital, we'll ignore both factors, and treat the payback as a straight-line function. We'll also assume that the average cost of power is the first-tier $0.14/KWH.

18KWH/day * 365 days/year * $0.14/KWH = $920/year saved in energy bills. This gives a straight-line constant cost repayment period of 14 years. If energy costs rise faster than the lost interest on the money (d'oh!) the repayment term will be faster. This installation is guaranteed for 30 years.

While this may be expensive, it is not insane economics. At least not in the sunny Southwest. Any future additions I make to my own house will have solar as a feature. I'd be nuts not to.

Posted by Kevin Murphy at June 14, 2004 05:23 PM | TrackBack
Comments

At the very least - residential building codes in california should be updated to insure that the addition of after market power inverters can be added easily by the average homeowner. The Utility Box standard could easiliy be updated to ensure that the average homeowner could add any number of systems when they become more attractive to the overall market. Just as there is a standard today that says homes will be based on a 280 amp standard, ensureing that utility drop boxes are built to add on inverters with ease.

We dont yet know what the market will provide in terms of photovoltaic systems, but we do know the route of any homes electrical set up is going to be the same no matter what. If all new homes were mandated to have facilities for inverters, then future additions of photovoltaics, windmills, monkey powered pedal generators and so on would be as easy as possible.

In fact, done properly, all homes would be able to use their car as a small generator onto their homes in cases of extreme emergency. ( automatics only , of course...)

my guess is that doing this would add about 750 on to the cost of all new homes. This is roughly equivalent to the addition of the water meters that have also been mandated " for the greater good".

Posted by: Frank Martin at June 14, 2004 06:18 PM


The optimal orientation for total yearly power is due south at an angle equal to the latitude (fixed panels). This results in the quickest return for your friend. I helped install a 5KW system a couple of years ago and that's what we did.

However: if SCE wishes to maximize power in the late afternoon - when power usage peaks - then the optimal orientation would be more towards the southwest with a steeper (low sun) angle. I haven't seen any suggestions to that effect, but it seems logical, and in Edisons (or the states) interest to offset the losses a home solar producer would suffer in such a case.

Carried a step further, a small battery bank capable of supply 1-2KW back into the grid for a couple of hours in the early evening would also be in Edisons interest...

Posted by: ed at June 14, 2004 10:26 PM

Well, actually, the system is slightly depressed to get a bit more power in the winter at the cost of some in the summer. This wasn't done at Edison's request, but at my friend's. I'm not sure what control Edison has over placement. Probably none.

The installation is on the flat roof of a building facing almost exactly SW. It's turned a bit more south, but there's an adjacent building to the east preventing early morning sun in the winter, so there's several trade-offs.

Edison pays per peak watt. I'm not sure if that's "as installed" or as rated. I think the rebate is currently $4.50/peak watt -- it changes from time to time according to a tariff.

Posted by: Kevin Murphy at June 15, 2004 12:23 AM