Economics of Photovoltaic Systems

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This is the 4th in a series of five fully annotated presentations created for the solar energy community to assist in the dissemination of information about solar photovoltaic (PV) cells in 2006. They have been updated by students in MECH820, a graduate engineering course in photovoltaic materials, devices, and systems in 2010. In order to make these presentations more accessible some of them have been transformed to odp, an Open Office format. The full series can be found here:http://www.appropedia.org/Solar_Photovoltaic_Open_Lectures

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Economics of Photovoltaic Systems

Original Presentation by J. M. Pearce, 2006 Updated in 2010 by J.M. Pearce and M. Pathak Email: [email protected]

PV Economics Basics Solar Photovoltaic Cells convert sunlight directly into electricity They are sold on a $/Wp basis or $/power Wp is the power in Watts for Peak sun hours -- the equivalent number of hours per day, with solar irradiance equaling 1,000 W/m2, that gives the same energy received from sunrise to sundown. To convert power to energy simply multiply by the amount of time that the cell is illuminated W * hr = 1 W-hr

Electricity (energy) is normally billed $/kW-hr

PV Economics Terms kW = kilowatt = 1 000 Watts MW = Megawatt = 1 000 000 Watts kW-h/kW/ * * year or month or day Amount of power predicted to be produced from a 1 kW solar panel in the desired location

Payback = minimum time it takes to recover investment costs.

Economics of a Solar Electric Home A typical American uses ~11,000 kWhrs/year A well-designed U.S. home needs 4kW5kW of PV to provide for its energy needs averaged throughout the year Depends on location (solar flux) Energy use of home Because calculating on /Wp basis you do not need to worry about efficiency

How much for a Solar Electric House? The 2nd presentation discussed the components of a grid-tied solar home system The price tag for the complete installed system including all labor as of 2010 is between $5/Wp to $10/Wp For a 4kW system: 4000Wp x $5/Wp = $20,000 4000Wp x $10/Wp = $40,000

Financing PV For new homes a PV system can be folded into the mortgage long term low interest loan For retrofits of existing homes PV can be economic with: Financial assistance through grants, subsidies, or other incentives High costs of electricity in your area Green power purchase agreements Off-grid Applications

PV Incentives One stop shop for financial incentives is www.dsireusa.org/ The Database of State Incentives for Renewable Energy (DSIRE) is a comprehensive source of information on state, local, utility, and federal incentives that promote renewable energy. Lists includes: Corporate Tax Incentives Direct Equipment Sales Grant Programs Leasing/Lease Purchase Programs Loan Programs Personal Income Tax Incentives Production Incentives Property Tax Incentives Rebate Programs Sales Tax Incentives

Feed-In Tariff Solar FIT rates for Ontario: Rooftop Less than 10 kW - 80.2 /kWh 10 - 100 kW - 71.2 /kWh 100-500 kW - 63.5 /kWh Greater than 500 kW - 53.9 /kWh

Ground Systems Less than 10 MW - 44.2 /kWh

You are guaranteed these rates for 20 years.

Where PV makes Economic Sense Now Remote sites that are too far from power Or where the power is too unreliable for a given application (e.g. internet server) Costs for power lines range from $8000 to $75,000 per mile. As a general rule, if you are more than mile from a line, solar is probably the best alternative.

PV : Cheap Electricity for Road WorkIn areas that have grid power, where the cost of tearing up the streets and/or other construction are expensive.

Portable Radio Station

The Developing World

Stand Alone Systems

Coast Guard Stations and Aircraft

Bus Stops and Emergency Phones

Solar in Space

Parking Lights

Running Trails and Lighthouses

Solar powered monaste ries!

When will PV make economic sense for me?

Economy of Scale

$3.12/Wp to $3.56/Wp

0 subsidies Grid-tied Market

Module Costs

Component Costs

Industry-Developed PV Roadmap

World PV Module Production (MW) Increases

512.2 World PV installations in 2004 rose to 930MW -500 growth of 62 % Consolidated world production of PV now 1.15 GW+ 390.5 400 U.S. Japan Europe Rest of world 287.7

300

200 55.4 57.960.169.4 40.246.5

100 33.6 0

201.3 154.9 125.8 77.6 88.6

1988 1989 19901991 1992 19931994 199519961997 19981999200020012002Source: PV News, March 2003

World PV Module Production (MW) Increases

World PV Module Installation (MW) Increases

So Why Cant We Do It?

PV System vs. Electricity Costs44 40 Cost of Generated Electricity (cents/kWh) 36 32 28 24 20 16 12 8 4 0 $9.00 Additional Assumptions: System Lifetime = 20 years Real Interest Rate = 6% O&M = 0.1 cent per kWh $8.00 $7.00 $6.00 $5.00 Capactiy Factor = 0.25 (South West U.S) German Retail Rate Japanese Retail Rate Capacity Factor = 0.2 (U.S. Average)

Pennsylvania Retail Rate

California Retail Rate

$4.00

$3.00

$2.00

$1.00

$0.00

Installed PV System Cost ($/Wp)

New Technology Could Play a Role Heterojunction with Intrinsic Thin-layer Sanyo 18.5% SANYO, plans to continue to grow its unique solar business, aiming to reach a production scale of approximately 2GW for HIT solar cells by 2020.

New Technology Could Play a Role

Built-in IncentivesBuilding Material Replacement ValueMaterial Credit $1/sq-ft $5/sq-ft $10/sq-ft $20/sq-ft Material avoided by BIPV Installation Asphalt Shingle roof, monolithic glazing Laminated glass w/coatings metal roofing/cladding Roofing slates, clay tile, high performance coatings Stainless steel, photochromic glass $/W Value $0.10/W $0.50/W $1/W $2/W

Utilizing Financial Incentives

Subsidies for Fossil Fuel Fossil fuels and nuclear energy receive 90% of the government money, (with PV receiving