Calculating Costs, Solar Power Costs

Let’s face it, the cost of installing a home solar power system is the number one reason everyone hasn’t already gone solar. So here is what to expect in terms of the cost of owning and operating a home solar power system.

Costs that you should be aware of and that will be addressed below are:

  1. System Cost (dollars per watt, $/W),
  2. Life-Cycle Cost (dollars, $), and
  3. Cost of Electricity (cents per kilowatt hour, cents/KW-hr),

System Cost

The system cost is the cost of installing your entire system divided by your systems rated output. To calculate this you would take all the costs associated with installing your system and divide by how many watts electricity it supplies your home.

Due to electrical loses inherent in your system between your solar panels and your outlet, I would recommend taking the AC output of your system to get the most accurate reflection of how much you paid for the electricity that is actually entering your home.

Now if you haven’t installed your system or are deciding between two systems, you would just use the calculated rated power of the systems you are deciding on for this calculation.

You can also subtract any rebates you might have or potentially will received for installing your system–that is if you really want to get excited about what a great decision you just made :-)

Life-Cycle Cost

Now calculating costs gets a little bit more complicated when doing it over the life of the system. First its hard to determine the life of you system. Most warranties are about 25 years for your solar panels and will get longer as technologies get better, but you should anticipate your solar panels lasting around 50 years.

Next comes all the electrical components of your system. With technological advances over the years your components should now be expected to last 20 year or more.

Also consider the fact that as you expand or modify your system to take advantage of the improved efficiency of newer technology your components will most likely be replaced before they fail.

Your batteries‘ lifetime will depend more on how much it is used and how well you maintain it over its lifetime. Your battery bank will last longer if kept at room temperature and only discharged minimally when used. Depending on the quality of your battery you maybe looking at anywhere from 7 to 20 years of good operation.

Your mounting hardware and wiring should be expected to last the life of the modules however depending on the quality of the install these things may deteriorate faster. So just be aware of this and check your systems connections from time to time to ensure they are holding up.

The lifetime of your system is determined by the longest lasting system component. So if your modules are going to last 40 years and everything else has a shorter lifetime than that, your systems lifetime is 40 years.

For any component that will last less than 40 years you just take its life time, say your battery has a lifetime of 20 years (because you got the hottest thing on the market), then you would need to purchase two batteries over the lifetime of your system.

This is what you would call a recurring cost because you have to purchase a new battery twice over the life of the system. Other recurring costs are anything that is necessary to maintain and operate your system (cleaning, inspections, testing, repairs etc.).

Don’t forget to subtract any solar power tax credits or rebates you receive for your home solar power system. Now calculating costs gets a little bit more complicated when doing it over the life of the system. First it’s hard to determine the life of you system. Most warranties are about 25 years for your solar panels and will get longer as technologies get better, but you should anticipate your panels lasting around 50 years.

Cost of Electricity

After you have calculated your life-cycle cost you can find the cost of electricity by dividing the life-cycle cost by the total power generated over the lifetime of the system.

To estimate the total power generated over the lifetime of the system take the power output of your system (KW), the estimated hours of useable sunlight at your location (hours/year), and the lifetime of the system (years) and multiply them together.

This will give you the expected KW-hours your system will provide you. Take this number and divide the life-cycle cost by it. This will be the amount of money you are paying for your electricity per KW-hour.

Things to Think About

There are several different ways to purchase your system like Solar Leasing, Power Purchase Agreements (PPA), Property Assessed Clean Energy (PACE), and Feed-In Tariffs (FITs) which complicate these calculation or make them unnecessary all together.

Don’t forget to check out your financing options as the financial impact of installing a system could be far less with the proper financing method.

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