Solar Electic Power

Solar Costs We are in good agreement on the cost of the installed system. There are pluses and minuses in my calculations. The guarantee on solar panels is that they will produce 80% of their original output after 25 years, not 100%. I think the battery backup system will need to be larger, mainly to make sure that is never more than half discharged, a requirement to ensure the battery life. On the other hand, I think the professional installation costs are less than Ore_Ele estimated. I'm willing to go with an installed cost of $78,660.60.I was going to figure the average costs per year, but working with total costs over 25 years is fine. The $78,660 investment is a hedge against inflation, so it's fair to compare it to grid costs that will rise with inflation. However, there are additional costs associated with the solar electric system that will rise with inflation. We must figure the costs of maintenance, insurance, and real estate taxes over the 25 year period. A low estimate for inflation is 2.5% per year. That's about what we had in the period from 2000 - 2009. That compounds to 28% per decade, or 85% over 25 years. I'll total the yearly costs and then figure inflation on top of that.I use the estimate of six roof maintenance actions per year. The minimum to get a service person to come to your house for any reason is about $50. That's $300/year. The battery maintenance, twice a year, can be done at the sae time as cleaning, so figure another $50 total, for $350 a year.Insurance on a a home is about $4.10 for each $1000 of home price. I figure that from the average house value of $173K http://bubblemeter.blogspot.com... and the average insurance bill of $725. http://homeinsurance.com... The solar electric system will start out costing $322 per year to insure.When you make an improvement to your home, your taxes will go up. Real estate taxes vary considerably, with the most expensive places having the lowest tax rates and the least expensive the highest tax rates. The median rate is about $10 per $1000 of assessed valuation. The solar electric system will cost about $786 per year in increased taxes. Even though the economic value of the solar electric system decreases with, the assessment ignores that. The yearly cost of having the system starts at $350 + $322 + $786 = $1458 per year. After 25 years, with minimal inflation, it would be $2697. Roughly figuring the average, that would be $51,937. However, the yearly cost could have been invested instead. Con likes to figure that as part of the other side of the calculation as part of the invest-the-money and buy from the grid calculation. I can go wih that. Without figuring the cost of capital, the solar electric system costs $130,797. for 25 years. The battery backup has some residual value at the end of the period, but the solar panels need to be replaced and a new system installed.The Grid AlternativeCon notes that electricity costs have risen 4.6% per year since 2003. That's more than the 2.5% average inflation over that period. From 1984 to 1999 the inflation adjusted price of electricity dropped. The price of oil was rising, but electricity is generated from coal and natural gas, which are in abundant supply in the US. The fuel prices should be dropping as mining and drilling technology improves. Nuclear power costs are not much affected by fuel prices, and the technology is improving. The reason grid electricity is increasing in cost is due to unnecessary political costs. Politics are causing valuable plants to be retied early, and building a new plant is more costly than ever. It's extremely difficult to even get a site for a solar facility, let alone a nuclear generating plant. The smart grid is expensive and only required to cope with unreliable energy sources like wind and solar. We should be figuring a decreasing cost of grid electricity. Never mind, I'll use the 4.6% per year increase.The cost of the grid alternative starts with putting $78,660 into an account. Each year the grid cost of electricity is deducted from the account, The grid cost increases each year at 4.6. Interest at 4.3% is added to the account balance. We also add to the account the money spent on the maintenance, insurance, and taxes for that solar electric system. With the grid alternative, with a 2.5% increase each year for inflation, those costs would not have been paid out, so they could have been saved instead.The calculations were put into an exciting spreadsheet. The solar power system cost $130,797. The residual value of the solar power system is less than $10,000. After 25 years, the grid alternative spent $59,278 on grid electricity and there is a residual value of $184,804 in the account. Including the cost of capital, the solar electric system cost was ($78K + $184K - $10K)/$59K = 4.3 times the grid cost.Other Considerationsa) For a while the solar panels are an asset, but after 25 years they have to be replaced, so they are not an asset. Some of the battery system life remains. I put the asset value, generously, at $10,000 in may calculations,b) Selling electricity back to the utility company at the wholesale value is actually a subsidy to the solar electric system on the house. The homeowner is using the grid without paying for the grid capital and maintenance costs, and the grid costs are increased substantially by requiring a grid "smart enough" to absorb the extra power. The system is properly figured as an off-grid enterprise. If the system is consistently generating too much power, then it was over designed. If it only occasionally generating surplus power, then you are asking the power company to buy it when it's not needed.c) I think the maintenance costs are underestimated. The system is complex enough to have failures in the panels, inverters, wiring, and batteries. The technlogy is in it's infancy. Failures shouldn't be frequent, but when they occur they will require competent attention. d) It's true it gives the homeowner an opportunity to save money by doing his own installation and maintenance. However, as a do-it-yourself project, it's still going to require $50,000 of ready cash. A person with that much free cash probably has an occupation with a high wage, so the person's time is more valuable spent on the job that playing with solar. If putting is a hobby, no problem. I recommend a solar hot water system if you really enjoy maintenance.e) Check my reference [3] for a different story on battery maintenance. It's not horrible, but it is something.f) Insurance cost estimtes are probably low. Wait until insuranc ecompanies learn about solar panels interacting with hail storms and hurricanes.g) The "average homeowner" is oddly the best case. Go north and the shorter days and frequent snow cover make the economics worse. Go south and the high summer air condiioning loads mean higher summer peak loads and more panels.Solar is now more than four times the cost of the grid for the average homeowner. It may seem somehow unfair to include all those maintenance, tax, and capital costs. The reason it is fair is that utilities have to include those costs. they are real and inescapable. Everyone should aspire to live in the same school district as a nuclear power plant, because after the real estate taxes are dived up, you are going to be paying about 29 cents for schools. Capital costs dominate the utility industry. The whole trick to making green energy seem reasonable is to ignore real costs in the comparisons.I believe the situation will change. Give solar another twenty years and it may well be there. I'm all for it. But it's not close now.