9/04/2015

Going Solar


Some people insist that solar PV has achieved "grid parity" but to claim this they obviously have to consider grid connected PV.

The real cost of solar PV is masked when grid connected. In order to better understand the real cost of solar PV, let's make a simplified exercise here.

What would be needed to go off grid? The following:

  • Obviously, the solar PV panels.
  • Storage batteries
  • A gasoline electric generator (unless you plan to store heroic amounts of electricity, you would need the backup generator).
We'll consider the following parameters in our installation (feel free to substitute your own numbers):

  • Annual solar capacity factor: 18%.
  • Cost of the PV installation (including inverters, installation, etc.): $3 per Watt.
  • We'll use Tesla storage batteries (the 7kW version) at a cost of $6,000 including installation.
  • Solar panel useful life: 20 years.
  • Batteries useful life: 10 years.
  • Annual electricity usage: 8,400 kWh.
So, this house would consume the following electrical energy in 20 years: 20 x 8,400 = 168,000 kWh.

The average electricity consumption is: 8,400 kWh / 354 / 24 = 959 W.

To supply (on average) that amount of power we need the following PV capacity: 0,959 kW / 0.18 C.F. = 5.3 kW of solar panels. Let's round this off to 6 kW to be on the safe side. 

To minimize cost, we'll consider storing only 3 days of electricity, That would be: 8,400 kWh / 365 x 3 = 69 kW. Let's round this off to 70 kW.

We would then need ten 7 kW Tesla batteries at a cost of $6,000 each: 10 x 6,000 = $60,000.

Finally, we'll need a gasoline backup generator at a cost of $1,000.

If we use it 10% of the time, we should be consuming ~$300 of gasoline per year.

So, the total cost to produce 168,000 kWh (in 20 years) would be:
Solar Panels: $18,000
Tesla batteries: $60,000 x 2 = $120,000 (considering the batteries last 10 years).
Backup generator: $1,000
Gasoline: $300 x 20 = $6,000

Total: $145,000

If we divide the above by the total kWh generated in 20 years, we get the cost per kWh:
$145,000 / 168,000 kWh = $0.86 / kWh.

Currently, the average cost of the residential kWh in the US is $0.13, thus the solar kWh as calculated here is 6.6 times more expensive.

Sure, the assumptions above can be modified and the costs will vary, still, once the total costs of solar PV are included it is very doubtful that this technology has reached "grid parity" or that it will achieve it any time soon. 

Feel free to double check the numbers above. Thank you.

References:

Average cost of residential kWh in the US:
http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_6_a

Cost of Tesla battery:
http://www.cnbc.com/2015/05/07/teslas-new-bet-a-home-battery-to-slash-energy-costs.html






14 comments:

PoCoTex said...

I've been saying to people that, when they see the word "organic," it actually means "expensive".

Now I know that, when I see the word "solar," it actually means "expensive".

Superb analysis and you're right.

Now if we really knew the environmental impact of making solar panels.

From what I've heard, homes are eventually torn down. I wonder what the environmental and financial impact is of recycling solar panels, if indeed they are recycled.

Anonymous said...

I understand that currently almost no used panels or Li batteries are being recycled.

OIFVet said...

We will one day have the means to economically convert solar power to electricity and the means to store it (superconductivity, flywheels, whatever), but until those obstacles are tackled we are stuck with sub-par technology, and the associated environmental costs. Factored in as is partially done in this article shows it to be untenable, unsustainable, impractical. In other words, tailor made for crony political favoritism.

gord said...

According to the above math running the house 100% of the time on gasoline/diesel would be still be far cheaper than solar.

Anonymous said...

The math is right...but your economics is wrong. You make no accounting for electricity price inflation. The price of electricity wont still be 0.18/kwh in 20 years....redo math compounding average inflation rate for 20 years. Then you'll get the real number.

K. Wayne Shantz said...

The math is right...but your economics is wrong. You make no accounting for electricity price inflation. The price of electricity wont still be 0.18/kwh in 20 years....redo math compounding average inflation rate for 20 years. Then you'll get the real number.

Anonymous said...

No, no, no... You don't take into account how many people are killed due to normal electricity generation. Each life, snuffed so early due to "environmental problems" associated with standard product. Each life is worth north of $10 million and there you have it.

K. Wayne Shantz said...

Screw the environment....i just hate bad economics. I believe in the truth no matter what answer it gives. So dont try to paint me as some leftist...just 'cause this argument is flawed. Goof.

Jim Vogel said...

Hi. Living in the south, is it break even or cost effective just to install and utilize the panels to offset Air Conditioning electric needs? i.e. not enough for whole house or storage for night or off grid.

My thought is that It will generate on what are usually the hottest days when sun shining. Also in winter, the coldest days tend to be clear with sun shining. It would be mounted on the sun exposed part of the roof, which would help decrease heat absorption (not good for winter). Where I live they do not vary the rates (yet) during peak usage, but would be more of an advantage if they did. Also not sure if they buy back surplus, or credit for what is sent to the grid.

Mkelley said...

I know a couple who live so far out in the sticks that it is prohibitive to get grid power. They found a used solar system on Craig's List and bought it. It works pretty well, but the only reason it does is that the guy is handy enough to keep it working. One of the many wonderful things about normal grid electricity is that you just flick on a switch and get power. Solar systems are nothing like that. Solar power will always be a niche power source until the systems become a lot more reliable, and even then battery storage is required. I bet most of the people who are telling us how wonderful solar roof arrays are don't have them on their roofs.

Mkelley said...

I know another guy who lives up in the mountains. He also uses solar and batteries. Several years ago he got a small wind turbine system and set it up. He was pretty proud of it until a 70 mph wind wrecked it. A 70 mph wind is not rare here in Montana.

Grene said...
This comment has been removed by the author.
Grene said...

You are high on usage and electricity amount needed unless you have many people living in a poorly designed house with inefficient systems. How much do the electric company pay you for this kind of math? Wonder our electric rates are too high. The way to make solar pay is to sell the electricity back to your neighbors during the day and use grid or battery at night. Decentralized electric distribution systems are more robust and flexible. Let capitalism work for power generation and we all are better off. Net metering and energy freedom and independence.

Anonymous said...

Here in Ontario Canada, our liberals decided to kill coal - HERE!! Our hydro bills are $800 per month for heating, $300 in summer months no heating.
Since they've gone so $green$ so have we, we installed a wood stove. Now we burn wood far cheaper than using electricity for our warmth and at -20C and barely any sun - solar and WIND is a joke. One bad freeze up and idle turbines still snap and break apart in cold temps.
Only thing they produce is dead birds and bats! Clever idea, executed in most stupid manner possible... lets see building to building turbines on high-rises where their very presence makes a constant wind tunnel situation with the slightest breeze.

Burning wood makes more pollution than coal plants. Canada is now shipping wood pellets from our forest to feed London's sub (power) stations for their winter heating demand...my my my.

I'm a proud carbon unit! :)