(jump directly to calculation tables)

We want to look at a very simple model of economic efficiency where are we interested in the annual return on investment. A project involving a solar photovoltaic installation requires certain amount of capital to be built and will expect certain amount of annual revenue. The simple indicator of efficiency that we want to study is this annual return on invested capital.

There are more complex models that also include the cost of capital. In a model that studies the cost of the electricity produced for example the cost of capital and factored in return for the investor could be very important factors. Cost of capital on its own can be a complex concept too. Whether the capital is borrowed and the cost will be defined by the interest rate of the loan or is cash participation from the investor and the cost will be defined by other opportunities the investor has to invest in (including risk free investments) or the combination of the two, cost of capital is very significant factor in such models.

We simplify our model to the level of looking at potential return from invested amount of capital. Further investment efficiency study and study on the cost of production of electricity should involve cost of capital.

We will also try to come to tables of calculated efficiency depending on different factors but not the size of the installation. The size of the installation definitely impacts the efficiency of a project. This is the traditional concept of economy if scales. A larger project will be expected to be more efficient over all because of the spread fixed expenses that the project has. But we will be building our model around the idea of dollar per watt, dollar per watt peak, so that it is applicable to different. The efficiency that comes from scale can be reflected in the factors going in to our model – specifically cost to build.

Another factor not included in our model is the maintenance cost of the solar installation. We are hoping that the reader can find resources which will indicate dollar per watt peak what the expected cost to maintain the station are.

The factors that expect to influence our model are: cost to build the power installation, insolation at the geographic location, electricity market price.

The cost to build the power installation includes:

• the price of the core photovoltaic components employed: modules, panels, arrays (what exactly list of such components we deal with depends on the design and configuration of the installation),
• the price of the mounting equipment (trackers and, or positioning frames) and wiring;
• price of inverters and grid connection equipment
• service and labor cost to assemble
• management and administration costs and costs of permits

The insolation at the geographic location. The insolation is the amount of solar light energy falling on the surface of the earth at a given geographic location per certain amount of area in the span of certain unit of time. More specifically the unit of measure used is watt per square meter (W/m²) or also kilowatt hour per square meter per day (kWh/m²/day). Insolation in Europe, just for reference purposes, approximately, ranges between 1,000 to 2,000 kWh per year per installed kWp, in the continental US – between 800 to 2,100 kWh per year per installed kWp for different regions. Exact numbers can be found in different reference tables and insolation maps on the internet and elsewhere.

In the photovoltaic industry a measure of insolation is employed which helps us more directly figure out how much electricity in kilowatt hours (kWh) we can produced annually from an installed nominal watt (Wp) – that is kilowatt hours annually per installed kWp (kWh/kWp/y).

The market price of the electricity produced. Since we are trying to figure out economic efficiency – annual return on investment we need to involve in the model:

• the price of the electricity we produce and sell to the grid

or conversely

• the price of the amount of electricity we offset that we were otherwise going to pay for at such market price.

In many places in the world – by country or by specific territory (state, other subdivision) there are financial incentives for investors in photovoltaic power stations in the way of a special feed-in-tariff. These usually are higher price the grid pays to energy producers who utilize photovoltaic power stations. If we have to give some examples these countries have the following feed-in-tariffs (unit of measure is Euros per kWh since classically many of the notable incentives started in Europe and that is the currency used there): Austria 0.57 – 0.59, Germany 0.52 – 0.57, Italy, 0.36 – 0.49, France 0.30 – 0.55, Spain 0.19 – 0.44, Switzerland 0.10 – 0.50, Israel 0.14 – 0.16, Bulgaria 0.40.

The formula.

The annual return on investment in a solar power station will be the annual income from sold (or offset electricity) divided by the amount of the investment.

Annual return on investment = annual income ($) / investment amount ($).

The annual income is the market price of the electricity in dollar ($) per kilowatt hour (kWh) times the amount of energy produced in an year in kilowatt hours (kWh).

Annual income ($) = production per year (kWh) x market price ($/kWh)

The production per year is the solar insolation in kilowatt hours per year per kilowatt peak installed times the installed capacity/power in kilowatt peak (kWp).

Production per year (kWh) = insolation (kWh/y/kWp) x installed capacity (kWp) .

So that we can work on dollar per watt basis we will express the investment amount by the investment cost per watt.

Investment amount ($) = total cost per watt ($/Wp) x installed capacity (kWp) x 1,000

– the 1,000 factor  is to adjust the dollar per watt unit to the kWp in which we are measuring the installed power.

So the complete formula for the annual return on investment will be:

Annual return on investment = annual income ($) / investment amount ($)

If we use the formula for the annual income we get:

= production per year (kWh) x market price ($/kWh) / (total cost per watt ($/Wp) x installed capacity (kWp) x 1,000)

If we use the formula for the production per year we come to:

= insolation (kWh/y/kWp) x installed capacity (kW) x market price ($/kWh) / (total cost per watt ($/Wp) x installed capacity (kWp) x 1,000)

Here we can get rid of the installed capacity (kWp) in the numerator and denominator and get to:

Annual return on investment
= insolation (kWh/y/kWp)   x   market price ($/kWh)
/  ( total cost per watt ($/Wp)   x   1,000 )

Let’s use the formula in an example where $7 per watt were spend in the building of the station, the insolation is 1,200 kWh per installed kWp and there is a $0.52 feed-in-tariff for the electricity produced.

Annual return on investment = 1,200 x 0.52 / (7 x 1,000) = 624 / 7,000 = 8.92%.

This calculated rate now can be compared to cost of capital and maintenance cost can be factored in to look for some more complete number of real economic return.

In addition to this formula the following tables can be used to get to approximate numbers:

The first table is given for insolation of 1,000 (this can be easily factored if we know the specific insolation, i.e. for 1,500 we just have to multiply by 1.5, for 2,200 we simply multiply by 2.2, etc.)

The investment cost per watt is given in a very wide range of $3 to $10 per watt but it is not implied that these are possible, practical or easy to obtain prices in reality. Our research shows that large industrial project can reach down to $6 per watt of such cost and smaller commercial and residential projects can go up to $10 and even $15 per watt peak installed.

The price for kWh of electricity is given in a range of $0.05 to $0.60 to reflect different market prices for electric energy and all possible feed in tariffs.

Annual Return on Investment At Insolation of 1,000 kWh/kWp:

Annual Return on Investment At Insolation of  1,500 kWh/kWp:

Annual Return on Investment At Insolation of 2,000 kWh/kWp:

To factor in the cost of capital  in the numbers from these tables one needs to subtract the cost of capital as a percentage. For example if the cost of capital is 4%  that has to be subtracted from the numbers in the tables above. Similar adjustment can be made for to factor in the maintenance costs.

Configuration efficiency, (performance ratio). We do not know whether this term is discussed in other research in length but we want to mention it for this reason: projects with equal labeled peak power – watt peak (Wp), nominal power, if taken directly from the labeled peak power of the modules involved can have different overall output electricity production – kilowatt hour (kWh) per year at the same geographic location. This could be because of how different modules perform when positioned with trackers or mounted stationary, or how well they perform in different cloud conditions etc. etc. So, realistically the nominal installed power (Wp) that can be used with insolation numbers to figure out annual production can be different for different installations mainly because of the type of modules used a the specific conditions (insolation, cloudiness, positioning etc.) For the different projects this factor has to be specifically researched based on data from similar configuration used in existing projects. By information we can get to such factor can vary between 0.75 and 1.4 – i.e. the electricity produced in a year from the installation in kWh may vary from the above calculation for known insolation from –25% to +40% from the indicated.

Related Articles:

Solar Energy Land Area Efficiency or How Many Acres per MW, kWp per Acre

Can Solar Energy Completely Replace Fossil Fuel and Other Sources?

A Short Science Lesson for Journalists – Watts, Kilowatts, Megawatts, Kilowatt Hours

Lowest Solar Panel Prices Per Watt 2009-02-24

Resources:

http://en.wikipedia.org/wiki/Photovoltaic

http://en.wikipedia.org/wiki/Insolation

http://en.wikipedia.org/wiki/Feed-in_Tariff

http://en.wikipedia.org/wiki/PV_financial_incentives

Begin by establishing exactly how much of your home’s total energy usage you want to be run on solar power. Do you want solar power merely to heat the water and the water-heating system? Do you want to go completely off-grid and power the whole house by solar power? Either way, you’ll need to know how much energy your home is consuming per month on average.

Using your monthly utility bills, calculate your home’s average energy usage. Note any peak times when you use radically more energy. The Christmas period can cause surprisingly heavy energy demands. In essence, you need to design your solar power system to cope with your home’s maximum energy demand.

Once you have these figures, I recommend multiplying the amount by at least 1.5. This will give you a working leeway for any extra appliances you might add to your home over time. Now you know how much solar energy you need to pull in from the sun, you also have an idea of the amount of solar panels you will need to buy.

I would advise you to buy solar panels online. Go to Ebay and input the words “solar panel pallet”. You’ll probably get an amazing bargain there. Prices have dropped dramatically recently. For an average family house, you can probably buy enough panels to power your home for less than $15,000.

Get good quality skilled and experienced tradesmen to do the job. Again, look online or check your local phone book. Always get at least three quotations. Cost is central, but it is very important that they have previous experience in installing solar power for homes.

Once you have someone you can trust at a good price, discuss with them which inverter to get and how much that will cost. Solar panels harness the power from the sun and turn it into direct current (aka DC power). The inverter converts this DC current into alternating current, (aka AC power). Everyone who installs solar power for homes needs to buy an inverter. Just about everything in your home runs off AC so your inverter is essential.

A good inverter will cost about $2,000. Add another $500 or thereabouts for installation. Inverters have a lifespan of about 10 years, while solar panels, if looked after, will last 25-30 years. So you’ll probably need to replace your inverter over time.

If you want to go completely off-grid, you’ll need to store your excess energy in good quality batteries to store excess solar power harnessed on sunny days. That way, you’ll have a reserve of power to run your household appliances on darker days and at night-time. They cost about $50 – $100 each for the deep-cycle types. You’ll need about 10 of them. New batteries generally need replacing every 3-5 years.

Typically, your installation costs shouldn’t be much more than $10,000. However, installation costs depend on a variety of factors. How is your roof constructed? Steep roofs or Spanish tiles cost more to install as the panels need to be properly secured. Yet further cost goes into ensuring leak-proof seals in these roofing systems.

Installing solar power normally doesn’t need much electrical work to set up. Older houses may require additional rewiring, though this is rarely extensive. Nevertheless, have a qualified, experienced electrician check all the wiring.

Don’t forget to look for government support. Most local governments around the world are offering major tax credits. Your utility company might also have incentives to offer. These can all add up to as much as 50% of the total cost.

Final point – if you are investing in solar power for homes, it makes sense to protect your new asset. Ask your insurance advisor to add this to your homes and contents policy. Adding your new solar power system to your homeowner insurance policy won’t cost you more than $100 per annum. This will protect the investment you’ve made on your house. An additional $100 per year to cover your $40,000 solar system against any disaster really is an absolute bargain!

Look on your solar power system as a long-term investment. Each step of the installation process should be taken carefully. To remind yourself of the value of your investment, ask yourself, “What is the payback time?” Of course, after it’s all paid off, you have free electricity for years to come.

Consider if you were to take a loan to finance your solar power for homes system. Although it may seem like a hefty initial outlay, the monthly payments will probably be less than your current utility bill. So all ways up you’re saving money.

Of course saving money is not the only reason it makes good sense to install solar power for homes. It’s good to know that you are reducing your carbon footprint. Thereby your children and their children can inherit a planet worth living in. That’s the very least you can do for them, don’t you agree?

——

As a travel magazine editor and publisher, a life coach and trainer, Sam Deane has seen the world. Nowadays, he dedicates most of his free time to maintaining the well-being of this precious, miraculous planet on which we live. Sam runs an important and lively blog about solar power. http://www.gosolarpowerforhomes.com

Article Source: http://www.articlealley.com/article_766371_27.html

Author: samdeane author www.articlealley.com

We list the lowest prices per watt that we can find on the internet and through direct research. We do not claim at all that these are research and results of an absolute character. That is, we realize that there might be products, vendors, pricing structures for certain types of projects and quantities that we are not able to identify through our effort.

That is why nobody should get offended that their product brand or vendor company is missed in our research or they are not ranked correctly because we have not found out about their lowest, low or otherwise competitive prices.

While we maintain that prices as dollar per Watt ($/Wp, dollar per Watt peak) is the number that will take the solar power industry to the stage of playing a major role of resolving the gigantic issues the US and the world have with securing clean, safe and abundant source of energy, we also realize that with many products groups prices reflect many other things than just willingness of the manufactures and the marketers to provide an affordable product.

Namely, different prices may reflect different quality and quality preference of the market – i.e. higher quality products would maintain relatively higher prices given all other factors being equal.

Different prices may reflect different costs to manufacture products of certain type of technology. We are well aware that this is especially true with solar panels. We will try, as effort grows to provide a way for our readers to be able to separate prices listed and researched for different underlying technologies of products.

In any case if any one buyer or seller of solar products thinks that our best research effort has not presented certain vendors, brand or price – please, feel free to contact us and forward to us details of the the product and price we should list. We will add additional level to research that such price is being offered on regular basis and will try to reflect this in our report.

Here is or current ranking:

($/Wp, $ per module, Wp of the module, nominal voltage, technology, Brand, Model, Vendor, URL to the vendor’s page)

$2.84 / Wp, $567.60, 200W, 18.1V, Poly-crystalline, Sun-A-200, SUN, KULLY Solar, http://kullysolar.com

$3.54 / Wp, $637, 180W, 24V, Poly-crystalline, CSI ECOSENSE CS6P-180, Canadian Solar, Affordable Solar Group LLC, http://www.affordable-solar.com

$3.56 / Wp, $142.49, 40W, 17.3V, Poly-crystalline, BP Solar, Discount Sales Electronics, http://discountsales.com

$3.83 / Wp, $230, 60W, 67V, Thin-film, Kaneka, GSA-60, Living Off The Grid, http://livingoffthegrid.ecrater.com

$3.94 / Wp, $630, 160W, 24.9V, Poly-crystalline, ES-160-A, Evergreen Solar, KULLY Solar, http://kullysolar.com

$4.62 / Wp, $1,016, 220W, 28.7V, Poly-crystalline, SCM220, REC Solar, Affordable Solar Group LLC, http://www.affordable-solar.com

$5.16 / Wp, $1,032, 200W, 55.8V, Mono-crystalline, HIP-200BA19, Sanyo, Affordable Solar Group LLC, http://www.affordable-solar.com

$5.48 / Wp, $328.88, 60W, 12V, Poly-crystalline, CD Tech Solar, RV Fun Products, http://www.rvfunproducts.com

$5.52 / Wp, $552, 100W, 18V, Mono-crystalline, SW100C, Sunwize, atlE Store, http://store.altenergystore.com

Please, be patient, we are adding more to this list. We are hoping the prices at the top of the list will reduce as we add more vendors.  Feel free to send suggestions through comments on our articles or the Contact Us page.

Related articles on the web:

Utility Scale Solar aims to bring solar costs level with coal, natural gas

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SolarByTheWatt.com

Grid parity, or the potential for electricity generated from solar power stations, to compete in terms of price with other energy sources on the national electric grids, is a phenomena expected to critically turn the table so that solar ultimately becomes a major player in the efforts to find a clean, reliable, on mass scale, source of energy.

When we say price per watt we refer to the watts in Wp or watt-peak – the nominal or peak power output of a device (solar module, etc.)

SolarByTheWatt.com will collect data from solar products vendors and will publish price reviews and comparisons specifically focusing on the price per watt.

In addition SolarByTheWatt.com (Solar By The Watt dot Com) will publish news and commentary on the developments in the industry that leads to lower price of the solar cells and solar modules (panels).

Related articles on the web:

earth2tech.com: Can First Solar Shake the Earnings Blues?

VentureBeat.com: Utility Scale Solar aims to bring solar costs level with coal, natural gas

earth2tech.com: Solar Prices Drop, Deeper Discounts Expected

HuffingtonPost.com: Solar Prices Poised to Fall Dramatically

SustainableBusiness.com: Non-Module Costs Responsible for Decreasing Solar Prices – Report

SolarByTheWatt.com