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The decision to implement a photovoltaic system involves careful consideration of economic factors. While the initial costs can be substantial, solar power offers the potential for long-term savings, energy independence, and protection against rising electricity prices. This article explores the key financial aspects of going solar.

Cutting the Powerplant Cord, or At Least Loosening Its Grip

Steve Maurer, IME
As a Northwest Arkansas resident, I live in a pretty progressive area, electrically speaking. Our local electrical cooperative is big into solar energy. They offer programs for both the residential community and the business sector. Of course, these require onsite installations of solar panels and related equipment, the backbone being photovoltaic cells.

However, they also offer a community option, powered by a five acre solar “farm” located in the town just north of me. That facility has 4,080 solar panels that generate more than two million kilowatt hours(kWh) every year.

It’s a unique program where cooperative members can buy shares in the system to help fund it, and receive credits on their energy bills. And the upside is that the homeowner doesn’t need to purchase and maintain equipment on their property.

Obviously, solar energy is big business in the United States and even across the world. Renewable and sustainable is a huge topic for people, businesses, and communities wanting to do their part in promoting clean energy.

In this article, we’re going to explore the three main types of solar energy, powered primarily by photovoltaic (PV) cells. But each has its different idiosyncrasies, and it used for different purposes based on the unique structure inherent to the installation.

The three types are grid-connected systems, hybrid systems, and stand-alone systems.

We’ll briefly explore these areas of the types of photovoltaic systems:
  • components
  • site assessment and design
  • performance monitoring
  • economic considerations
Components of Photovoltaic Systems
This may vary by the type of system because of the unique structure of each type. So let’s define the differences first. Grid-tied or on-grid PV systems connect to the public electrical system. Using solar panels, the system generates power for both the consumers’ use individually and energy that flow back into the grid, reducing power load and offsetting some of the power load.

Typically, these systems don’t use storage batteries, although they could. The main function is to offset the power consumption of the home or business where the system is installed. It also help allow for continuous power, regardless of weather or time of day.

In many cases, it also allows the user to “sell” electricity back to the power company, monitored by a metering system. The main components are the PV cells array, inverters to convert the DC power into AC for consumer use, mounting systems (rooftop or ground mounted frameworks), the electrical infrastructure including wiring, switches, fuse boxes and protective devices, and monitoring equipment.

Stand-alone systems
are similar, but often contain additional components needed to charge and maintain storage batteries. Since no power is generated with the sun is down, batteries are necessary for maintaining power at night and during overcast, cloudy days.

The requires additional equipment such as charge controllers to monitor and regulate voltage and current coming from the array to the batteries to prevent overcharging. Additional monitoring devices ensure the performance and health of the system. These stand-alone systems are initially more expensive to install because of the additional components. But the users is completely free of the public system, including any rate increases, an inevitable part of power generation.

Many of these stand-alone systems are used for smaller applications such as water pumping and remote locations on the property where running conductors to them is costly or unfeasible.

That brings us to Hybrid Systems. In a hybrid system, other forms of energy production supplement the PV solar array. These systems can provide a reliable power supply, regardless of weather conditions. They’re designed to augment the PV using additional sources such as wind turbines. In some cases, fueled generators can be integrated for extreme conditions where natural power generation isn’t possible.

Battery storage is often used for these systems as well.

PV System Considerations
Before installing any type of photovoltaic system, there are several factors to consider. Doing a site assessment is crucial and the design of the system will be based on the findings.

Some of the determining factors are:

  • Proximity to grid-sourced power
  • Obstructions to solar “farming,” such as tall trees, surrounding buildings, and other structures that impede solar collecting
  • The history and availability of wind sources, particularly for hybrid systems
  • The potential for hazardous conditions in the area may affect the design of the system, as well as the age and condition of the dwelling or commercial facility.

Economic Considerations of Implementing Photovoltaic Systems

Let’s face it. Designing and installing isn’t inexpensive. So you need to seriously consider the economic factors involved. These include both short term expenses and long term investment.

The biggest cost in solar power is the initial price of designing and installing the various components. You also need to consider the unique expenses involved in each type of system. For example, will you need to add battery backup and storage, which can significantly add to the price tag?

Another question to ask is about the length of time it will take for the potential savings to match up to the outlay of funds for installation.

Be sure to calculate your ROI (return on investment). Some of the factors involved are the initial outlay for installation, potential maintenance costs, ongoing savings, and of course, the lifespan of the system.

According to research, the average ROI for solar panels in the U.S. is about 10%, but this can vary based on location, system size, and local incentives. The payback period—the time it takes for the savings from the system to cover its initial cost—typically ranges from 6 to 12 years but can be shorter or longer depending.

Since it’s not cheap to install any type of solar system, you may need to check into financing options.

The Final Consideration: Energy Independence
There’s no doubt that our current energy grid is aging, and in some areas it’s failing at an ever increasing rate. And the threat of cyber attacks on our grids also raises both questions and eyebrows.

Reducing reliance on grid electricity can protect homeowners from rising energy prices, which adds an economic buffer by stabilizing long-term energy costs. This is particularly valuable in regions with high or volatile electricity prices.

When you need to keep the home lights burning, photovoltaic systems may help provide the peace of mind you demand.

The decision to install solar power involves a comprehensive analysis of costs, savings, incentives, and long-term financial impacts. These economic factors, combined with environmental benefits and energy independence, make solar power a compelling choice for many homeowners and businesses.
Photo courtesy of Littelfuse
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