Still Working On My Solar-Panel ROI

July 21, 2008
“The meter’s running backwards!” I wrote that line in August 2006, quoting my wife Vicky, who was entranced by the most visible manifestation of what our just completed rooftop grid-connected solar system was achieving (“A Solar Story,” ED Online 13242).

“The meter’s running backwards!”

I wrote that line in August 2006, quoting my wife Vicky, who was entranced by the most visible manifestation of what our just completed rooftop grid-connected solar system was achieving (“A Solar Story,” ED Online 13242). While that column covered the technical details of its installation, this story is about the economic advantages we’ve seen since then.

“Our costs sum out around $17,600,” I wrote two years ago. “If we actually reduced our utility bill by $1250 a year, payoff would be a little more than 14 years. Ask me in 2030.” An Electronic Design reader immediately wrote to chide me that I had not considered the time-value of money in making that estimate. He said I could have put that 17 grand into certificates of deposit or some other investment and collected interest, so that had to be figured into the equation, and the time-to-payoff would be longer. Okay.

Yesterday, the utility’s annual reconciliation of the account arrived in the mail. We’re on a “time of use” plan, so electricity taken from or placed onto the grid is approximately four times as valuable during peak-demand times than it is at slack times. There are more peak-demand hours in summer than in winter, so the algorithm is somewhat complicated. Effectively, we get only one electric bill a year, although we pay seven bucks or so in use taxes monthly.

The first full year living under a roof partially covered in solar panels, we found we had put approximately $80 more juice onto the grid than we’d taken from the grid. In terms of dollars (but not in terms of Watt-hours), we were energy-neutral. This year, we’d given the utility roughly $90 worth of free (to them) electricity. Vicky had been eager to see how year two compared to year one, so I phoned her at work. She was pleased, but then I mentioned that time-value of money thing.

“Ha!” she shouted. “We financed that system by selling Bank of America stock at $55 a share. Today, it’s worth $25!”

She also noted that accounting in dollars as if today’s inflated bucks were worth as much as they were two years ago was misleading. (If only we’d sold Bank of America and put the money into oil futures… Yeah, right. As Keynes said, “In the long run, we’re all dead.”)

So, will it take me 12 more years to reach my payoff? If oil keeps going up, or even stabilizes at $130, it may be sooner. What it comes down to is that it’s impossible to come up with a hard number for payback time, but Vicky’s original notion that this was a good investment is being amply demonstrated.

The Specs

Since I’m writing for engineers, rather than economists, let me recapitulate the details of the solar installation. On the roof, there are 16 Kyocera KC190GT modules on a Pro Solar rail-mount system. Solar panels are rated according to “PV USA Test Conditions” (PTC), which were developed at the Photovoltaic (PV) USA test site at the University of California, Davis.

The PTC rating refers to the output of a panel under conditions of 1000 W/m2 solar irradiance, 1.5 air mass, and 20°C ambient temperature at 10 m above ground level and a wind speed of 1 m/s. Each module on my roof has a PTC rating of 167.7 W dc. The dc output of the total panel array is nominally 2683 W (under PTC conditions). Two years ago, I said that our array appears to be better than that, based on voltage and current measurements made by the inverter, but I think that was optimistic. When I remember to look at the readout on a normal sunny day, I’m seeing 2200 to 2400 W.

That dc-ac inverter is a Fronius IG-series unit rated for 3 kW. The inverter’s nominal efficiency is 94%. The ac output from the inverter goes through an emergency cutoff switch located next to the house’s service entrance and goes on to a pair of breakers in the electrical panel.

Let’s look at capital cost and labor. To mount the panels, we needed some plywood under the shingles. The brackets for the mounting rails attach to that. But the old roof needed replacing, not just under the relatively small area where the panels would be mounted, but everywhere. All told, the roofing work came to around $10,000. When I wrote about this two years ago, I arbitrarily allocated $2000 of that to the solar system.

The contractor charged $24,600 for materials and labor, but we received a $7000 rebate from the utility. (I’m doing some rounding-off here.) So non-roof costs were $14,600. A county permit (we’re outside the city) costs around $750, and the contractor charged $250 for steering that through. That’s how I arrived at that $17,600 in 2006 dollars, when oil cost $75/bbl—see, and no, I don’t apologize for looking stuff up on Wikipedia.

Loking forward, I expect the costs for home and business solar installations to come down. New technologies like sputtered copper indium-gallium selenide (CIG) are moving closer to commercial viability, and efficiencies aren’t bad if you have enough roof. But that’s a topic for another column.

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