To help evaluate whether a home solar electric system will work for you, you should consider the following:
- Your available solar resource — do you have clear and unobstructed access to sunlight for most or all of the day, throughout the year?
- The system size — do you have a roof or area large enough to accommodate it?
- The economics — is it worth the investment?
- Local permits and covenants — are there any issues with installing a system?
Evaluating Your Site’s Solar Resource
The solar resource across the United States is ample for solar electric systems — also known as photovoltaic (PV) systems — because they can use both direct and scattered sunlight. However, the amount of electricity generated at a particular site depends on how much of the sun’s energy reaches it. Thus, PV systems function most efficiently in the southwestern United States, which receives the greatest amount of solar energy.
Before you buy a PV system, you will want to be sure your site has enough solar energy to meet your electricity needs efficiently and economically. Your local system supplier can perform a solar site analysis for you or show you how to do so on your own.
The Economics of a Small Solar Electric System
The economics of a home solar electric or PV system are determined by both the capital and operating costs. Capital costs include the initial costs of designing and installing a PV system. Operating costs include the costs associated with maintaining and operating the PV system over its useful life.
The factors that affect both capital and operating costs include:
- System components
- System size
- Whether a system is grid-connected or stands alone (off-grid)
- Solar resource at your location (amount of sunlight).
Before selecting system components and sizing a PV system for an existing home, you should evaluate your energy consumption patterns and try to reduce your home’s electricity use. You can start by performing a load analysis, which includes these tasks:
- Looking at your utility bills over the past year
- Calculating energy consumption
- Recognizing consumption trends.
By understanding your “energy habits” and becoming more energy efficient, you can reduce the size of the PV system you’ll need, lowering both your capital and operating costs.
If you’re designing a new home, you should work with the builder and the solar professional to incorporate your PV system into your whole-house system design — an approach for building an energy-efficient home.
PV Cost Considerations
Ask your PV provider how much electricity your new PV system will produce per year (measured in kilowatt-hours) and compare that number to your annual electricity usage (called demand) to get an idea of how much you will save. As a rule, the cost per kilowatt-hour goes down as you increase the size of the system.
You should also compare the purchase price of utility-generated electricity to the higher costs of smaller PV systems. PV-generated electricity is usually more expensive than conventional, utility-supplied electricity. However, these costs will vary by geographic location.
Solar rebate programs, subsidies, and other incentives can help make PV more affordable. Tax incentives may include a sales tax exemption on the PV system purchase, a property tax exemption, or state personal income tax credits, all of which provide an economic benefit to consumers by lowering high capital costs.
Some solar rebate programs are capped at a certain dollar amount. Therefore, a solar electric system that matches this cap maximizes the benefit of the solar rebate.
Many homeowners use PV systems because other considerations — such as environmental benefits and energy independence — tip the balance in their favor.
Permits and Covenants
Before purchasing a home solar electric system, research your local permit and neighborhood covenant requirements.
You will probably need to obtain permits from your city or county building department. These include a building permit, an electrical permit, or both. Typically, your PV provider will take care of this, rolling the price of the permits into the overall system price. However, in some cases, your PV provider may not know how much time or money will be involved in obtaining a permit. If so, this task may be priced on a time-and-materials basis, particularly if additional drawings or calculations must be provided to the permitting agency. In any case, make sure the permitting costs and responsibilities are addressed at the start with your PV provider before installation begins.
Code requirements for PV systems vary somewhat from one jurisdiction to the next, but most are based on the National Electrical Code (NEC). Article 690 in the NEC spells out requirements for designing and installing safe, reliable, code-compliant PV systems.
If you are one of the first people in your community to install a PV system, your local building department may not have experience in approving one of these systems. If this is the case, you and your PV provider can speed up the process by working closely with building officials to educate them on the technology.
If you live where a homeowners association must approve a solar electric system, you or your PV provider will likely need to submit your plans and get approval before you begin installing your PV system. However, some state laws stipulate that you have the right to install a solar electric system on your home.
For more information on state and community codes and requirements, see planning for a small renewable energy system.
Stand-Alone Small Solar Electric Systems
A stand-alone home solar electric or PV system operates “off-grid” — it isn’t connected to a electricity distribution grid operated by a utility.
A stand-alone PV system makes sense if any of the following apply:
- You live in a remote location where the system would be more cost effective than extending a power line to a grid.
- You’re considering a hybrid electric system — one that uses both a PV system and a small wind electric system.
- You need minimal amounts of power; e.g., irrigation control equipment and remote sensors.
Anyone can take advantage of outdoor solar lighting — a stand-alone PV application.
For more information, see Stand-Alone Home Energy Systems.
Grid-Connected Small Solar Electric Systems
A grid-connected home solar electric or PV system receives back-up power from a utility’s grid when the PV system is not producing enough power. When the system produces excess power, the utility is required to purchase the power through a metering and rate arrangement.
Net metering is the best arrangement. Under this arrangement, the power provider essentially pays you retail price for the electricity you feed back into the grid.
For more information, see Grid-Connected Home Energy Systems.
Estimating Energy Cost Savings for Net-Metered PV System
Using the equation below, you can estimate the annual electricity production and electric bill savings for a grid-connected home solar electric system with a net metering arrangement.
- Determine the PV system’s size in kilowatts (kW). A typical range is from 1 to 5 kW. This value is the “kW of PV” input for the equation below.
- Based on your geographic location, select the energy production factor from the map below for the “kWh/kW-year” input for the following equation.
Electricity production from the PV system = (kW of PV) × (kWh/kW-year) = kWh/year
You can calculate your annual electric bill savings using the following equation. Note that the residential rate should be in dollars per kWh; for example, a rate of 10 cents per kWh is input as $0.10/kWh.
Electric bill savings = (kWh/year) × (Residential Rate) = $/year
(To determine your monthly electric bill savings, divide the final number above by 12.)