typical costs for Photovoltaic solar systems

While every homeowner has a unique set of energy requirements, we thought it would be useful to try to paint a picture of what the costs of a typical residential photovoltaic solar energy system might be. Given the recent tax incentives made available through Congress beginning in 2004 and the various state and local incentives now available, photovoltaic solar systems have become very cost effective for most home owners. The Federal solar incentive will expire at the end of 2008 but there are several bills before Congress which would extend it so for the purpose of this discussion we will assume that it is available. Payback periods have become considerably shorter, particularly in places like California and New York where there are strong state incentives.

The following tables show typical system costs of 3 systems in 2008 prices taken from the 2007-2008 Renewable Energy Design Guide & Catalog..  In each example we will assume that a careful analysis of the home has been conducted and that the homeowner and installer have agreed that a system of approximately 4 kilowatts will be sufficient. There is a big difference in cost between grid-tie and off-the-grid systems so we will look at both types. We will also look at the difference between a grid-tied system with state incentives and without.  In order, our examples will be as follows:

• a grid-tied photovoltaic system in a state with no incentives
• a grid-tied photovoltaic system in a state (New York) which has incentives
• an off-the-grid photovoltaic system which has no incentives

All prices are current retail so would the total would probably be lower if you buy any of your components on sale or at a discount. Please keep in mind these system designs will not be appropriate for every home.  In order to get a specific estimate for your home you should contact a NABCEP certified solar installer.

Costs for a Grid-Tied System with No State Incentive

In this example we are presuming that a homeowner is purchasing a grid-tied system that will be mounted on the roof of their home. We are also assuming that the homeowner lives in a state which provides no incentives for solar energy. The table below shows the components that will make up the system and their cost:

For the PV system we have gone with 22 of the 180 watt solar panels from Evergreen.  Evergreen is a well established solar panel manufacturer and is U.S. based.  Generally the cost per watt is better for the larger panels so we have gone with just 22 of the 180 watt panels rather than use a greater number of lower watt panels.  If you multiply the number of panels (22) times the rated watts (180) you will see that this should generate a total theoretical output of 3,960 watts ( 3.96 kW).  However actual performance under real sun conditions is almost always less than the rated output so to be realistic it is probably better to adjust this down by 20% to about 3,168 watts.

We will use a UniRac solar panel rail kit to mount the panels on the roof.  UniRac is one of the largest providers of panel mounting systems. Based on the size of the Evergreen solar panels we have calculated we will need 4 sets of rails to hold the panels.  Each rail kit will contain the aluminum rails that the panels rest upon as well as the various clamps for mounting the panel and the feet for attaching the rails to the roof.  The panels will be mounted in a fixed position based upon the latitude to optimize the energy output for a fixed array.

An inverter is needed to convert the DC electricity coming from the panel to the AC electricity that is coming off of the grid.  We have chosen a Xantrex GT5.0 inverter. We have gone with an inverter that is rated a full kilowatt above our target output of 4 kilowatts for two reasons.  First, we have to account for the fact that under low temperatures the voltage of a system actually goes up. If we had gone with a 4 kilowatt inverter the temperature effect on a cold day could have driven the voltage over the limit of the inverter and burned it out.  The National Electric Code suggests that all inverters be sized 1.25 times the targeted voltage to adjust for the cold temperature effect so by going with a 5 kilowatt inverter we should have plenty of room to spare.  Another reason for going with a larger inverter is that this gives us the option of adding additional panels should we later decide to expand our system.

There are several other things we will need.  First, we will need a DC disconnect.  The disconnect is a switch which allows us to shut off power coming in from our solar panels.  This is required by code and will be necessary should we ever have to replace a panel or work on the inverter.  We have also chosen to get an internal AC meter.  This meter will allow the homeowner to monitor how much electricity they are generating in KW hours before it goes to the load center (circuit breakers) in the home. By monitoring this output we can confirm that the panels are outputting the expected wattage and the homeowner can estimate the monetary value of the energy the system is generating.

We will also need wiring, both for wiring the panels together and for connecting the panels to the inverter. The wiring will include both the wire and MC connectors which are used to connect the panels to each other. Copper wire has gone up significantly in the last year so the prices shown here are higher than those we quoted last year.  We will also need copper wire for grounding the panels.  The National Electric Code requires that all panels be completely grounded.  Finally, a junction box has been added to facilitate combining the wires coming from our two strings of 11 panels.

In this example we will assume that the labor will be done by an experienced solar installer and an experienced electrician both working at $35 per hour plus one assistant working at $20 per hour for a combined hourly labor rate of $90 per hour.  Our estimate is that a typical grid-tied installation will be approximately 48 hours of labor though the solar installer's labor will probably be spread across several weeks due to the need to submit paperwork, get permits and arrange inspections. It should be noted that labor costs vary widely by region.

Finally, we have estimated a federal tax credit of 30%.  The federal tax credit is capped at $2000 or 30% whichever is less.  Since 30% of $37,133 is well over $2000 the tax credit is capped at $2000.  It should be noted that the federal incentive is off the top of your tax return, not just a deduction. Because the system will be tied to the grid there is no need for a battery bank or a charge controller.  However, you may want to consider a gasoline or diesel generator as backup for when the grid goes down.  Also, depending on your state, the utility company may charge you for the cost of putting in a two way electric meter which supports net metering.

The total for our grid-tied system without incentives is $35,133 or about $8.87 per watt.  Generally most grid-tied systems will cost between $8 to $10 per watt before state incentives so this one is fairly typical of what you will probably find.  

Costs for a Grid Tied System in New York with State Incentives

Now let's look at the same system, but this time assuming that our homeowner lives in the state of New York where there is both a solar rebate and a significant state tax incentive.  One of the goals in offering the incentive is to build up a base in the state of certified installers.  Therefore in order to get the incentive the photovoltaic system must be installed by a state certified (NYSERDA) provider . This is typical of many state incentives.

 

Component	Quantity	Cost per Unit	Total
Evergreen ES-180 W panels	22	$1,205	$26,510
UniRac Top Mount Rail Kit	4	$357	$1,428
Xantrex GT5.0 5000 Watt Grid-Tie Inverter	1	$3,950	$3,950
Xantrex 250 Amp DC Disconnect	1	$329	$329
AC Kilowatt Hour Revenue Meter	1	$96	$96
Copper wire and junction box	1	$350	$350
Grounding wire	1	$150	$150
Installation and labor	48	$110	$5,280
Cost before Credits			$38,093
US Federal tax credit			-$2,000
New York State solar Rebate	3960	$4	-$15,840
Sub-total			$20,253
New York state tax credit			-$5,000
Total			$15,253

In this example we have raised the labor rate to account for the fact that labor is more expensive in New York and for the fact that we will have a state approved installer putting in the system.  There is considerable paper work that the installers have to go through when using a state incentive program and most charge a little additional cost to cover this paperwork process.  So the labor rate has been increased from a combined rate of $90 per hour to a combined rate of $110 per hour. We still assume that the job will take 48 hours total.

New York has taken the approach of providing a solar energy incentive based upon the size of the system, not its output.  The rebate from the state energy agency, NYSERDA, is $4 per watt of installed power.  Since our system has an officially rated power of 3,960 watts the rebate is 4 x 3,960 which equals $15,840. As you can see in this example the state rebate makes a huge difference in the overall cost of the system.  It has brought the total cost down to $20,253, a reduction of about 42%. The New York NYSERDA incentive is capped at 60% of the total installed cost which we came out under.

The good news doesn't stop here.  In addition to the solar rebate the state of New York also provides a state income tax credit for solar photovoltaic systems provided they are tied to the New York electrical grid.  The tax incentive is equal to 25% of the cost of the system or $5000 whichever is less.  In this case 25% of the system cost is more than $5000 so the credit will be capped at $5000.  The credit is applied against any money you owe in state taxes and if you don't owe that much in one year the remainder can be carried over into subsequent years. With this credit the cost of the system is now down to just $15,253.

You can see from this example what a dramatic difference state incentives can make when buying a solar PV system.  The federal and state incentives have reduced the cost by 60% and most of that came from state rather than federal incentives. If you live in a state that has no incentives then this example from New York gives you plenty of incentive to lobby for renewable energy incentives in your state!

Costs for an Off-the-Grid System with No State Incentive

Now lets take a look at an example of a 4 kilowatt photovoltaic system which is designed to be used standalone off-the-grid.  When designing a solar system for an off-the-grid system we first have to take into account two critical factors.  First, since the solar panels are our primary source of electricity (no grid is available) we have to account for those times when the sun doesn't shine.  If the homeowner is familiar with the area they should be able to roughly estimate what the longest stretch of cloudy days are likely. For most areas in the U.S. it is probably safe to estimate that cloudless days could stretch to 4 or 5 days in a row.  For our estimates here we will assume a worse case of 5 days.

The second factor that would need to be looked at is the maximum power consumption on a daily basis.  Most off-the-grid homes will be designed to use less electric power than grid-tied homes.  Most use less demanding appliances and few use electric resistance heating.  The solar installer should work with the homeowner to estimate the peak electric demand during the day. We will need to know this in order to determine what size battery bank to put in.  For the purposes of this example we will assume this is a fairly large home and that the system calls for a 48 volt battery bank.  Most battery banks are in either a 12 volt, 24 volt or 48 volt configuration. 

In this example, we have again used 22 of the Evergreen 180 watt solar panels as the source for the electricity. However we will wire these panels slightly differently to adjust for the fact that we are feeding the panels into a battery system.  We will still keep the voltage fairly high in order to avoid using expensive heavy gage wiring.

An off-the-grid system will need deep-cycle batteries to store the electricity which has been generated by either the solar panels or the generator.  In this example we have chosen 20 of the Trojan SCS-150 12 volt deep cycle batteries. These are reasonably priced lead-acid batteries and will last 3-6 years if heavily cycled.  Each battery is capable of storing 110 amp-hours of energy at 12 volts.  By combining these batteries in series in groups of 4 we get the 48 volts needed for the system. In order to ensure that we have 5 days worth of backup we will need 5 sets of 4 batteries or 20 batteries in total. 

Batteries can be permanently damaged if they are allowed to overcharge.  Therefore with any battery bank we will need a charge controller, a device which monitors batteries and prevents them from being overcharged. In this example we are going to go with two Outback MX60 MPPT charge controllers, one for each of our two strings of 11 panels.  Outback is a major manufacturer of charge controllers and the MX60 is a widely used charge controller.  The MX60 has two nice features which we can leverage.  First, it tracks the Maximum Power Point for our solar panels throughout the day in order to get the maximum wattage from panels.  Second, it is designed to have a fairly high voltage input which means that the solar panels can be wired in series to a fairly high voltage.  Therefore we will not need expensive heavy gage wire for our solar panels which reduces our costs.    

Another cost will be a lockable box to store the 20 batteries in.  The National Electric Code requires battery banks to be secure and well vented.  The battery box will insulate the batteries which will give them better performance and the lock will prevent anyone from tampering with them which could be dangerous.  In addition, the battery box is vented so that the gas which is generated by a battery towards the end of its charging cycle can be fully released. 

We have gone with one Xantrex model SW5548 5000 watt off-the-grid Inverter.  This inverter is specifically designed for off-the-grid systems which take as input 12, 24 or 48 volts coming from the batteries.  This is much less voltage than a grid-tied inverter which may be designed for up to 500 volts coming directly from the solar panels. Also, off-grid inverters are designed to support generators.  Most off-the-grid systems use generators as backup and to deal with those occasions where the homeowner may wish to run a demanding appliance such as an electric dryer or air conditioner.  Such appliances could drain the battery bank too quickly if a generator was not used.  In this example we have also added a Generator Start Module (GSM) which will automatically start the generator should the voltage ever drop too low on our battery bank.  This will protect the bank from being drained too deeply which could permanently damage the batteries.

The system will include a 20 kilowatt generator which will be connected to our inverter.  Should the battery voltage ever drop to low the generator will automatically kick in to protect the batteries.  The generator can also be run manually whenever needed to provide some extra power to our off-grid home.  This particular model is designed to run on propane but there are other types of generators which will run on gasoline, diesel fuel, or natural gas. Because this system is considerably more complex than the grid-tied solar system the labor to install it will be higher.  A reasonable guess is that a system such as this would take approximately 72 hours of labor to design and install.

When you add everything up you will see that the total bill for this system is $45,184 after we take the $2000 federal tax incentive.  Most off-the-grid systems are not eligible for state incentives and we have not presumed any state incentives in this example.  It is worth noting that the final cost is much more than that for the grid-tied examples we looked at before which was $35,133.  It is over $11.41 per watt given an output of 3780 watts.  The additional equipment including batteries, charge controllers and a generator all increase the cost significantly.  In addition, this more complex system has higher labor costs.