PHOTOVOLTAICS

Photovoltaics, commonly called PV for short, is a solar energy technology that utilizes certain properties of semiconductors to turn solar radiation into electricity. Photovoltaic systems are typically composed of wafers made of crystalline silicon. These solar cells are then combined to form a module or solar panel. These panels are then combined to form an array of panels to complete the system. Photons, the fundamental particles of light, strike the solar cells and initiate a process that causes a small electrical direct current (DC) to form. When the current of each cell in the whole array is combined an appreciable amount of electrical power is produced with no moving parts, noise, or pollutants. Electrical components such as inverters and charge controllers then condition the DC power from the array and either direct it to DC loads (appliances and lights) as found in some off grid applications or convert it to AC power for AC loads, the most common application.

Advantages. PV electricity typically displaces some form of fossil fuel power generation. If the latter is very expensive, such as to a rancher's well pump or a home in a remote location, then a PV system could save a lot of money. There is also the "green" energy aspect. Photovoltaics is environmentally friendly, producing energy without noise or pollutants. For many, a PV system makes a statement about protecting the environment and conserving our nonrenewable resources. Also, since PV systems have no moving parts, they are very reliable and estimated to last at least 30 years. This means very little maintenance will be needed. There is also the matter of energy independence. Because of power outages, a few who supplement their grid-tie electricity with PV opt for a hybrid small battery system where critical appliances such as refrigerators continue to run; and, of course, any stand-alone systems or off grid homes have no vulnerability to power outages whatsoever. Photovoltaic produced energy is also a hedge against rising utility rates. The DOE states that Colorado electricity rates increased 24% over a 4 year period prior to the recession, about 5% compounded annually.

Disadvantages. Currently the most significant disadvantage is the initial cost. PV systems also require a fairly large area to produce significant quantities of power. If its an off-grid home battery maintenance can be a chore for some.

Applications.

1) Remote well pumping where the cost of bringing in a power line is prohibitive. There are also landscaping and drip-feeding irrigation water pumping applications.

2) Off grid homes typically in remote locations. Again the cost of bringing in a power line is prohibitive. In the past most solar PV was of this sort. Obviously battery banks for energy storage are required and perhaps a generator for those unusual times when it is cloudy for several days in a row.

3) Grid tie homes and businesses. This is PV's most common application. This is where a building is tied to the utility grid but also has a PV array to offset the utility energy costs. When the PV array is producing electricity the home or business consumes that power and what it doesn't use goes onto the utility grid. The utility company then credits back the difference for what is called net metering.

4) Grid tie hybrid systems where some of the photovoltaic energy is stored in batteries to back up critical appliances during power outages. This is not commonly done since it adds to the cost, but if your home or business is prone to long utility outages you might want to price it. Otherwise, UPS devices (uninteruptible power supplies) and/or a generator might be a better solution.

Types of PV arrays. There are basically three with examples pictured below.

ROOF MOUNT                             POLE MOUNT                              GROUND ARRAY

How big a system should I buy? Of course one's budget and available space for the array will be limiting factors, but it is better to approach the subject conceptually, that is, with the concept of zeroing out your utility bill.

To start we need to understand what is meant by a kilowatt hour (1000 watts per hour), abbreviated KWH on your electric utility bill. It is a basic unit of energy either consumed or produced. If you imagine 10 table lamps each with a single 100 watt bulb that are all turned on and left on for one hour, the energy consumed simultaneously by the 10 lamps is one kilowatt hour or 1 KWH. All your appliances and lights have their own individual wattage ratings. How long each of them is turned on and running collectively add up to the total KWHs consumed over a month's time and that is what you are billed for by your utility company.  (LPEA's current (2012) rate is 10.4¢ per kwh). On the other hand, if you have a grid-tie home or business you are producing energy with your PV system at the rate of 10.4¢ per kwh. If what you produce is equal to what you consume over the period of a year then you have zeroed out your utility bill.

So, do we just take the monthly average of kwhs on our utility bill and then install a PV system that will produce that much on average? No, we want to look at three other things first: 1) Is our house well insulated and air tight? If not, money spent here first will reduce your utility bills more effectively than anything else.  2) Do we have energy efficient appliances and lights? What are our personal habits regarding energy use? Are we in the habit of turning off appliances and lights when they're not in use? 3) Solar is often more financially efficient at heating water than producing electricity, so you may want to consider a solar hot water system instead or in conjunction with a PV system.

Most people who buy solar have an energy epiphany, but it is better to have the epiphany before the PV installation than after. Some or all of the above three items, when implemented, will lower the average number of kwhs on your electric bill so that you do not need as big a PV system to zero out your utility bill. After you have done everything you reasonably can to get your KWH number down (and maybe you are already there), we can tell you what would be the PV system's matching size. You may not have room for it all, but you can offset part of your bill with a smaller system. On the other hand, you may have sufficient space, but not enough money for a PV system large enough to offset your entire electric bill. Often it is possible to install some PV now and more later as the money becomes available.

Financial analysis. In the solar industry it is said that the decision to buy solar is ultimately emotional. Nonetheless, we all need to believe that we are spending our money wisely, that we are not throwing it away. Saving our planet is all important, but we would rather do it with money well spent, thus the need for cost analysis. Unfortunately just about everything the solar industry provides on this subject seems obtuse and onerous to master. It is enough to bring any CPA to tears, but whether in pain or to the thrill of it I couldn't say. For the rest of us who are not so perspicacious about accounting consider the following simplified version with a sample PV system. Let's say that your average utility bill is 625 kwh per month. You would need about a 4.0 KW system to zero out your electric bill. (We'll take a pass on the math that connects these two numbers as it is solar technician/design math, not difficult, but long to explain.)

Your solar company chooses to bid it at $6 per DC watt for a total cost of $24,000 (4000 watts x $6 per watt). After the LPEA REC (renewable energy credit) payment of 40¢ per watt and the federal tax credit of 30% (applied to the sub-total) we now have a cost of $15,680. It is believed that the system will last more than 30 years, but the inverter that converts the DC to AC is expected to last 15 years so we will add a replacement cost of $3000 to the $15,680 to arrive at the 30 year cost of $18,680.

Now if we take our 625 kwh monthly average energy consumption and multiply that by the 10.4¢ rate this is equal to $780 per year.  When this is compounded by a 5% annual average increase in the cost of energy this yields a net profit over a 30 year period of $33,142.30.  This is an ROI (return on investment) of 4.18% and 4.8% when compared to a taxable investment.  (You would have to pay a capital gains tax on stock market or real estate profits.  There is no capital gains tax on the money saved by a solar system.)

Of course this was all based on cash up front. Some of us will have to borrow the money, perhaps in a home equity loan or a new home mortgage. Surprisingly, the PV system tends to be cash positive from day one since we do not have the big initial cash outlay. The borrowed money payment (principal + interest) is generally less than the money saved on the electric utility bill, albeit small at first. Then with the utility cost inflating annually and our monthly payment staying the same, our savings gets better every year. Then if, for example, the term of our loan is 15 years, our savings really jumps after that.

If you own a commercial building the incentives are the tax credit of 30% plus the MACR 5 year depreciation that is potentially worth another 20% plus the LPEA REC payment. The 30 year savings is $40,622.30 and the ROI is 7% and 8% when compared to a taxable investment.

What about payback?  This is a commonly used term to calculate how much time it takes to break even, when the accumulated energy savings is equal to the system cost.  However, payback is a silly term because it misrepresents the fact that a solar system is an investment and no one ever uses the term payback when talking about an investment.  ROI is the proper comparative term for investments.  A bank CD is 1/2 of 1%.  Solar PV residential often has a 5% ROI and commercial a 10% ROI.  Sometimes you can get these kinds of ROI's in the stock market or real estate, but it comes with risk that doesn't exist with a solar system investment.  And if you're thinking that the initial cash outlay is money lost, this is not the case.  Just like your money in the bank earning interest, the solar system is money transferred to your home equity.

Long story short, solar has a good return on investment, is risk free, is good for the planet, and a reason to feel good about yourself.  If you like what you've read here give us a call and we will be glad to answer your questions or come to your home or business for a solar site analysis.  It's free of charge, no obligation, and no pressure sales tactics.