Solar Economics

Calculating System
Cost
Slides by Gay Canough
 Solar Economics
The installed cost of the project
- grants
- federal tax credit
- state tax credits
- depreciation (if commercial)

= system cost to end user

Add back estimated maintenance costs over 25 years, mostly labor cost since PV modules and inverters
have long warranties. Insurance covers external damage. Experiential number for residential systems =
$100/year.

Calculate kWh production over 25 years, including PV degradation over time (which is around -0.5% per
year)

Cost per kWh = system cost to end user / 25-year-production

Some states have renewable energy credits (REC) attached to kWhs produced. In NY, NYSERDA owns the
RECs for the first 2 years. In PA, the system can sell the RECs. The value of them (which represents the
green attributes) is currently fairly low, a couple of cents per kWh.

Property and sales tax implications may increase OR decrease savings. Local tax effects must be
considered.
 Solar Economics

PV System cost
• PV modules, racks, inverters, disconnects, wiring, conduit, performance
monitoring equipment
o Charge Controllers and Batteries (if battery system)
• New equipment necessary to replace outdated or inadequate equipment
• Labor, subcontractors
• Equipment such as materials lift, excavator
• Engineering
• Paperwork such as for Interconnection, grants and Permitting
• Overhead and Profit
 Solar Economics

PV Watts Calculator pvwatts@nrel.gov

RET Screen
http://www.retscreen.net

Solar Advisor Model

https://sam.nrel.gov/

HOMER
http://www.homerenergy.com/