Cost and Incentives
A PV solar system will last 40+ years and save you many tens of thousands of dollars
The U.S. Energy Information Administration says the average US household uses about 9000 kiloWatt hours of energy a year, so let’s use that as an example to provide you with an outline of cost figuring. We will assume the azimuth of roof to be 175 degrees with a 34 degree (8/12) pitch. The home’s favorable orientation and slope would make this a very good candidate for a roof mount. Perfect solar south for New Hampshire is 194 degrees and for a roof mount to be most effective the compass orientation should be within thirty degrees of that azimuth heading. The performance of solar panels(aka modules) begins to fall off rapidly outside of this 60 degree “pie” and at that point a ground mount array begins to make more sense. The best compromise for slope is around 35 degrees (between an 8 and 9/12 pitch). A flatter slope favors summer production while a steeper slope favors winter production.
A simplified way to figure out how many solar panels would be needed for this example is to divide the annual kilowatt hours needed by the rating of the solar module, and then divide that result by the production factor (explained below). The 9000 kWh consumption divided by 300 watts per panel equals 30 panels, and since this is a roof mount with a decent but not perfect azimuth we would divide that figure again by the production factor of 1.3 to get a final result of 23 panels actually needed. It has been our experience that most clients would want this rounded up to 24 panels and this makes sense. The incremental cost of adding extra panels is low and the reward high.
The production factor is a conversion mutiplier that will convert the solar panels DC watt rating into the AC rating of the kilowatt hours that you consume in your home. In Concord a perfectly oriented and sloped roof mounted array has a production factor of 1.34. By using the production factor multiplier we can derive that a 300 watt solar module mounted on a perfectly oriented roof should produce 402 kilowatt hours annually. As illustrated in the example above however most roofs don’t have a perfect orientation and/or slope and the kWh production will suffer a bit as a consequence. A roof off by 30 degrees in azimuth for example will have a production factor closer to 1.3, and if the pitch is less than ideal as well the production factor would fall off even further. A higher production figure provides a greater amount of power from the same number of modules, and this in turn leads to a better ROI and a shorter payback period. Any roof mount with a production factor of 1.2 is considered very favorable.
There are three other basic types of photovoltaic solar electric installations that can be used when the roof mount is not favorable or desired. In order of cost and popularity they are; fixed frame ground mounts, manually adjusted tilting fixed ground mounts, and active dual axis tracking ground mounts. A fixed ground mount is usually installed with the perfect 194′ azimuth and 35′ pitch, thus the production factor will be the same as a perfect rood at 1.34. Adding seasonally adjustable tilt to a fixed ground mount adds only a modest amount to the cost but will raise the production factor by roughly 7% to 1.44. The tilt adjustment on the adjustable pole mount favored by NH Solar is done with an awning crank and takes only a few moments. The AllEarth motorized and fully automatic dual axis sun tracking systems are top dog and have a production factor of 1.8. The same 300 watt rated solar module mentioned above would produce 540 kWh annually if mounted on a dual axis tracker! A side benefit to active dual axis trackers is that they ramp up to full power much earlier in the morning and fall off far later in the evening.
NH Solar verifies all it computations through the government’s National Renewable Energy Labaratory’s PVWatts website and includes that report in our quotes. The excellent NREL website is open for public usage and it would be advisable to use it to check any solar installers figures against it for accuracy. After you have entered your homes particulars you can easily derive the production factor by dividing the projected kWh production by the DC wattage of your array.
The total gross cash price for the roof mounted 24 panel 7,200 watt solar array for the home in the example would be $16,920 give or take a little depending on installation variables and the make of modules and/or inverter chosen. This would be your actual out of pocket cost due to the solar installer when the system installation is completed.
…Now let’s apply the incentives the government is currently providing to promote renewable energy and re-figure your true cost.
The largest incentive is a 30% tax credit that you will be able to claim on your Federal tax return the year after we have installed your new solar system.In this example the 30% Federal tax credit would be $5,076. This can usually be split if needed and taken against two years of income. There are no State or utility company rebates available in New Hampshire at this time. Your net cost for the solar power system after applying the Federal incentive is $11,844. It is again important to note both that the initial cost due to the installer when the system has been completed would be the $16,920 gross price, and that it could take as much as 15 months to get the tax refund created by the 30% renewable energy credit.
Specially designed solar financing programs that New Hampshire Solar offers can make this initial gross outlay very easy to accommodate and in most cases your average monthly expenditure to finance your new solar system will be very close to or maybe even less than what you were formerly were spending for your electric billings. The monthly payment for a Greensky 3.99% 12 year loan would be $64.35 for the first 18 months, and $132.41 for months 19 to 144. Note that the second part of the loan has been calculated with the assumption that you would be paying the note down by $5,076 once you have received the refund created by the 30% tax credit
The cost per kilowatt hour to purchase power from one of the New Hampshire public utility companies varies, but is usually averages somewhere around 18 – 20 cents per kWh. In this example the customer will have been buying an average 750 kWh per month, and with a rate of $0.18/kWh paying an average utility bill of $135 per month ($1,620 per year annually).
New Hampshire Solar generally recommends designing a solar system to offset as close to 100% of a customers annual electricity usage as possible, this is termed net zero. If you were to divide the net solar system cost by the annual utility bill savings you will get the amount of time it would take for the system to “pay for itself” with the utility bill savings. This is usually referred to as either the Return On Investment or Payback period. In this case the system will have justified its cost in just 6.83 years ($11,844 net cost/NREL estimate x $0.18 utility rate). Note that no additional funds have been spent, the funds paid out by the homeowner have simply been diverted from the expense of having to purchase power from a utility company, to the cost of purchasing the asset of a solar array to produce that same level of power. Best of all at the end of the ROI period you own the system outright and from that point forward your solar electricity will be coming into your home truly for FREE!
The expected life cycle of a photovoltaic solar system is generally thought to be forty years or more. The 40+ year life expectancy of a PV solar system less the ~6.8 years of the payback period equals 34+ years of free electrical power! If you continued to purchase your power from the grid during the forty year period you will have paid a total of $64,800, and that is assuming that the rates for electricity never go up, and discounting that it will take a lot more than $65K in taxable income to come up with the after tax dollars needed to pay a utility bill month after month. With a PV solar system your cost for the same amount of power over forty years would be the $9,344 net cost to purchase the array. Installing a PV solar system would save this homeowner well over fifty five thousand dollars inafter tax net income during the expected 40 year lifetime of the array!
It is only fair to state that there may be some required maintenance, but even in the unlikely event of an inverter failing entirely. the cost would only amount to a few thousand dollars at the most.
But wait, there’s more! As you may recall from the “how PV Solar works” page, New Hampshire Solar will also install a REC meter with your system and introduce you to a company that will pay you for those Renewable Energy Credits. Every 1000 kWh that your solar system produces qualifies you for 1 REC. Since the system in this example was engineered to produce roughly 9,000 kWh annually, it will generate 9 RECs for you to sell. RECs are sold to the utilities in an auction format and as a consequence the pricing changes frequently in accordance with demand. Right now (5/1/17) RECs have a value of about 30 dollars. This example will currently produce provide an additional REC income for the system owner of $270 per year!
Lastly, a photovoltaic solar electricity system will add considerable additional asset value and marketability to your home or business. There are many ways of evaluating the worth of a solar system, but in general it is safe to say that a relatively new PV system will add value that is nearly equal to the systems gross cost. Plus if the cost of electricity purchased from the utility company rises, the value of your solar system will go up as well. A spreadsheet outlining the costs for this system can be found here
Why “rent” your electricity when you can “own” it for so much less??
Solar Electricity… good for your home, good for your business, and good for the planet!