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Economics of Solar

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  • This page answers common questions: how to size the system, how does it affect home insurance, should I finance, is it really economical?

    How to size the system​

    Look at how much power you consumed from your electrical bill over the last year, it will usually be in kWh/month. Divide that by the number of days in the month to get your kWh/day usage. For example math in this post, we'll say you use 50 kWh/d in July.

    From this link you can get an insolation number. For this example we'll use Plano
    Texas with south facing panels and the values are shown to the right.

    To calculate the needed array size divide your kWh/d usage by the the insolation
    number. Let's say your highest kWh/d is July when the insolation is 6.56, then
    50 ÷ 6.56 = 7.6 kW solar array.

    You'd want to run the values for each of the months against your monthly bill
    values.

    Now here's the tricky part. With net-metering you get a credit when you over-produce.
    So, the biggest array you want is one that zeroes out your costs over the year.
    1593525470645-png.16560

    Warranty & Home insurance​

    Call your insurance company, it might depend on the array size. For example in the Florida Keys the net-metering agreement doesn't even require insurance unless the array in over 10 kW.

    Warranty depends on the equipment, everyone vendor can be different. Enphase probably has one of the best at 25 years on the microinverters. Solar panels are typically 25 years. Off grid inverters 5 years.

    Should I finance the system?​

    As usual, it's always better to buy outright, but that isn't always an option for some. Many locations offer incentive programs that offer low-rate loans that could be worth investigating.

    Are batteries worth it?​

    Usually, batteries will break the budget with their current prices. One possible exception is where the local utility has time-of-use rates.

    But, many feel they are warranted to survive a power outages and they are a lot quieter than fuel generators. If a fuel-based generator is right for you, see if natural gas is available as there's no fuel to lug around.

    Is solar economical?​

    Install it this year and there's a 26% federal tax incentive you can take off the total costs. There may also be state and local incentives.

    If your city has net-metering the chances are excellent this will save you money as long as you stay away from batteries. Commercial battery systems are great to deal with power outages, but you won't recover your costs. You might also be interested in the free software tool SAM which lets you do a complete economic analysis and play around with all sorts of variables.

    PV Solar systems, fully installed, average around $3/watt depending on where you live. See What should you pay for a Solar Installation? If you're at all handy you can do it yourself. If you're "somewhat" handy ...get a company to professionally install a small system, then add to it later. With systems like Enphase's microinverters you can start really small to put a toe in the water, then expand the system later without having to worry about the system design or fork-lifting other components.

    The Math
    So, what do you pay for power? Let's say it's on the cheaper side of $0.10/kWh. Let's further say from your power calculations above that a 6 kW array was what you wanted (so perhaps in winter you make excess power and get a credit that pays for your higher summer usage).

    In this example let's use 300W panels, 6000W / 300W/panel = 20 300W solar panels. If you were thinking DIY you can get panels new for ~$200 and are if using Enphase microinverters at $150. So, 20 x ($200 + $150) = $7000. Then you'd add in the mounting costs, and anything else.

    If you hire someone to do it, labor is a big part of the cost. So, at $3/w not going DIY is a worst-case scenario. 6,000W x $3/W = $18,000. With just the 2020 federal tax credit that's $13,320.

    The hypothetical 6 kW array will generate about 6 kW x 5.6 insolation x 365 d/yr = 12,264 kWh.

    Assuming the cost of electricity is $0.10 kWh that's a value of $1,226.40/year. If the system cost $13,320 then it pays for itself in under 11 years with out worst cost numbers and lasts 25 years. That's a bit simplified as the average inflation rate of electricity is 1.45%, so the payback would be quicker.

    A lot of folks would argue they could invest that money and do far better. But how to invest money is of course up to you.

    Property Values
    Finally, there are other credits often overlooked such as how much will it increase the resale value of your house? If you go DIY, neatness really counts here. Current estimates are that it will increase the value of your house by 3.74%. So, on a $250,000 home it's like a $9,000 credit.

    But be aware that if you have leased solar, it might be very hard to sell your house.[/HEADING]
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