Photovoltaic Cells
Most people are familiar with photovoltaic cells (PV cells). You see them on calculators, the kind that don’t require batteries. You see PV panels on people’s roofs and on businesses and schools and government buildings. Remote telephones along the interstates have PV panels poised overhead.
A standard PV cell is a thin semiconductor sandwich, with two layers of highly purified silicon. A semiconductor is a crystal that is constructed in such a way as to yield certain specific properties that can be used in electrical circuits. Transistors are made of semiconductors.
Microprocessors are as well. In fact, the entire field of modern electronics uses various forms of semiconductors, so the implications are worldly. If you connect an electrical circuit to your semiconductor sandwich when sunlight is shining on it, electricity flows.
Photovoltaic arrays are nothing more than huge matrices of interconnected semiconductor sandwiches. The color appears shiny blue. Usable PV systems are comprised of all sorts of equipment that protects the user from electrical shock, stores the electricity in battery banks, and converts the direct current
(DC) into alternating current (AC), which is what people use in their houses.
Evaluating Your Solar Potential
Depending on where you live geographically — and the orientation and exposure of your particular house or business — you get more or less usable sunshine. Even within small, localized regions, weather patterns vary due to topography and landscape details like trees and ponds. So two identical solar systems separated by a few miles, but otherwise built and operated identically, may yield different energy outputs averaged over a period of time. GCI Energy will make sure that your solar energy system is installed correctly to get optimal sun light exposure.
In this article I will explain the factors that allow you to optimize the orientation and location of solar systems at your home. This information can give you a head start in making important decisions, such as which type of system will work best for you, how big a system you will need, and how much potential, in relative terms, you can expect to achieve. Above all, this article gives you an idea how to evaluate the relative economics of a solar investment. Keep in mind that GCI Energy will take care of all these issues without you having to worry about anything but here at GCI Energy we believe that knowledge is power so we try our best to inform and educate our audience as much as possible.
1. Sunlight: Climate dictates how much sunlight you can expect annually. The Southwest gets the most sunshine per day — and Canada and the northern states get the least — should come as no surprise. The sun is higher in the sky in the southern states, so the days are longer.
2. Snowfall: You want to locate your panels so they avoid being inundated with heavy layers of snow. For example, some locations on your roof will experience very shallow snow buildups as compared to other parts of your roof. Also, some parts of your roof may be warmer than others due to proximity to heaters, exhausts, chimneys, and so on.
3. Cloud cover: If you’re living in a cloudy region, you still have solar energy, and it’s generally diffused (spread out). As a result, collector panel orientation isn’t so critical because light will be coming in at many different angles rather than just directly overhead from the sun.
4. Smog: Air pollution and smog affect the amount of sunlight you can expect to receive. If you do live in an area with heavy air pollution, expect less system output over an extended period of time.
5. Air density: You get better solar exposure in the mountains than near sea level simply because the air is thinner and scatters less sunlight. You can make an approximate estimate of how clear your air is by simply observing how blue the sky is on a clear day. Thick air scatters more red light, and so the appearance of the sky is less blue and more white.
6. Temperature: With PV systems from GCI Energy (not solar water heaters), the lower the temperature, the happier the semiconductors, and the greater the output. You can get more system output on a cold, clear day than a sunny day.
7. Frequent fog: If you’re living in an area that’s foggy and misty in the morning (in the San Francisco Bay Area, for example) but the mist burns off into a clear sky by noon, you want to orient your solar panels more westward to optimize the amount of sunlight you can achieve over the course of a day.
8. Wind: If you have a lot of wind, you need to consider where you mount your solar equipment for a couple of reasons. Wind can tear equipment off of its mounting hardware and result in expensive repairs, not to mention dangerous conditions. If you’re in a windy climate, you need to make sure that you specify, heavyduty mounting equipment. Mounting schemes all have wind speed specifications; pay close attention because mishaps are expensive. GCI Energy will make sure to install your Solar Energy System correctly so you never have to worry about wind damaging your solar energy system.
Calculating Payback on Your Solar Investment
With every investment, you have options. You don’t need to invest in solar energy at all. You can just leave your house the way it is and instead put your riches toward life insurance, stocks and bonds, real estate, and so on. When something breaks, you don’t have to replace it with solar; you can just put the same thing back in. But as the financial pros say, you should assemble a mixture of investments to limit your risk, and solar power may be just the ticket to help balance your portfolio — and help the environment in the process. GCI Energy can help you determine what type of solar energy system will work best for you and save you money while helping the environment.
Hedging is making investments that reduce risk. If you invest in solar by GCI Energy , you shield your utility bill from energy price fluctuations. If you put a solar system by GCI Energy on your roof that reduces your energy bills to zero, that’s exactly where they’ll stay, even if the cost of energy quadruples. That’s a powerful form of hedging.
In this article, I give you the big picture on calculating payback — the amount of time you have to wait to recoup your investment — and help you evaluate the costs, gains, and risks of solar power. I also help you analyze solar investments so you can see what kinds of returns you can expect. Finally, I take you through some real-life scenarios so you can see the numbers in action.
Analyzing Solar Investments
An important factor to consider when deciding how much money to earmark toward each investment is the risk profile. Some investments entail more risk than others. A bank is much safer than the stock market, for example. When an investment entails more risk, it needs to offer more of a chance for gain to offset the increased risk.
The following sections outline a system for analyzing solar investments. The goal is to compare different investment options using the same criteria of costs, gains, and risks and then choose the best one.
Calculating net costs
The first step in calculating payback is to calculate costs. In this article, I discuss net costs, which means the total net amount that you’re paying for your solar investment. These days, most solar investments are eligible for rebates and tax advantages, which are subtracted from the “retail” cost of a system. GCI Energy is here to help you take advantage of all the solar energy rebates available.
Collecting cost data
The typical solar system has many cost components, and the sum total of all the individual costs must be added up to yield the total cost. Note also that the timing of the costs is important, as well as the timing of the rebates and tax advantages. Timing is important because of the basic idea that a dollar today is worth more than a dollar in one year, the difference being given by current interest rates. So the result of a cost compilation will usually be a timeline rather than a single number.
Consider the following factors:
1. Equipment: Sometimes equipment costs are spread out over time — for example, if you get financing from a supplier or different parts of a system are delivered at different times. You need to specify the timeline, as well as the dollar value of each outlay.
2. Installation costs: If you’re a do-it-yourselfer, you won’t have to worry about installation. If you hire out to GCI Energy the installation costs will be fixed and the total costs will be depending on the complexity of the job. GCI Energy will be happy to come to your home to discuss this in more detail.
3. Refuse: Add in costs if you’ll pay to have project trash hauled away. If you go with GCI Energy for your solar energy system then GCI Energy will take care of disposing all the trash.
4. Maintenance: Consider the likelihood that you’ll have to pay for servicing — and when that may occur, so you know whether it’s likely to be covered by warranty. GCI Energy offers the best warranty in the business so you don’t have to worry about hidden costs from faulty equiptment.
5. Taxes, permits, fees: Note when such charges are due.
6. Interest: If you finance your equipment, the interest is a cost.
7. Taxes: Many states have legislation that lets you install solar equipment without paying higher property taxes, but you should find out whether it applies to you. In rare cases, property taxes may go up as a result of a solar investment.
Subtracting estimated gains and discounts
You recover some of your expenses right away, so you can subtract that amount from your costs. For example, you may be able to take advantage of rebates and subsidies offered by utilities, state and federal governments, manufacturers, and so on. Or if you’re installing equipment for your home business or office, you may be able to depreciate certain items.
You also need to consider both salvage (if you can sell some of the old equipment you’ll be taking out) and appreciation — the value of your home goes up when you install solar. The appreciation amount depends on the following:
1. The cost for a homebuyer to put in new equipment personally: Don’t expect to get much more than that. However, if the cost of new solar equipment increases, the value of your equipment can also go up. Equipment can increase in value if inflation becomes significant or if the demand for solar equipment increases (supply versus demand).
2. The amount of documentable energy savings achieved with the equipment: Your energy bills provide proof of the energy savings achieved.
3. Changes in energy costs: The more energy costs rise (all energy), the more your equipment — and thus your property — is worth.
4. Popularity: Some things sell because of a fad. In some real estate markets, a solar home is worth a lot more than the same model with conventional energy.
$1 today versus $1 tomorrow
Strictly speaking, when doing payback calculations, the time cost of money must be taken into account, which basically means that you discount the value today of a receipt of a dollar in the future.
Suppose that you have a choice between two alternatives: $1 today or $1 a year from now. You take the $1 today, of course. But how much would you be willing to trade that dollar today for a payment in one year? The answer is given by the current interest rate, or even more precisely, by what the interest rate is going to be over the course of the next year. Say that the interest rate is 6 percent. Then you would trade a dollar today for $1.06 a year from today.
In calculating payback, it works the other way around. For example, if you’re going to save $100 a year from now, that savings is only worth $94 today (at 6 percent interest).
In the following calculations, I ignore the time cost of money, for simplicity sake. A way to account for the time cost of money, without making the computations overly complex, is just be very conservative. The net effect is the same.
Figuring out monthly savings
With most solar investments, lowering monthly utility bills is the ultimate goal. Here’s how to calculate your potential savings:
1. Look at your power bills and determine your average monthly energy use (gas or electric).
Use the electric bill if the new system will reduce your use of electricity, the gas bill if it’ll reduce your gas use.
Suppose, for example, you want to replace an electric water heater with a solar one. You look at your power bills and find that you use an average of 1,000 kWh of electricity per month.
2. Out of that number, estimate how much energy the system you’re replacing uses or how much energy the new system produces.
Making online calculations
Fortunately, GCI Energy offers resources that can help you gather numbers for the calculations, and walk you through a calculation. You just answer their questions, and GCI Energy will crunch the numbers for you.
Putting the numbers together: Figuring payback
Payback is the amount of time you need to hold on to your investment for it to pay for itself. In the case of solar, almost the entire investment is upfront, meaning you have to invest cash before you see a single dime of savings.
Payback is measured in years or months. You simply take the net costs of your solar system (costs minus discounts and appreciation — see the earlier “Calculating net costs” section) and divide it by your anticipated monthly savings (see “Figuring out monthly savings”). For example, if you invest $2,000 in a solar water heater that saves $30 a month in electric costs, here’s your payback period:
$2,000 ÷ $30/month ≈ 67 months, or 5.6 years
Analyzing risk
No investment is risk-free but GCI Energy is here to help you avoid these risks. The following elements can affect the returns you get on your investment:
1. Repairs and maintenance: Solar equipment is not simple when it’s doing a big job. And being outdoors all the time is wearing, especially in extreme climates (how’d you like to be strapped to a roof 24/7?) You can’t always anticipate when something will break down, and if your equipment has problems after the warranty expires, your costs go up. GCI Energy will always be here to help when your solar energy system need servicing.
2. Efficiency decreases over time, just as it does for autos and humans and pretty much everything. PV panels may see a 15-percent decline in ten years. It’s harder to estimate the decline in water systems, but it’s on the same order, unless you’re using hard water or have well water with a lot of sediment. Use 15 percent per ten years in your calculations for a good approximation.
3. Lifetime: Eventually, every system will simply not be worth running anymore. PV systems are warranted up to 20 years, water systems for up to 15. However, it’s not as bad as that, because what the warranties really cover is guaranteed performance. You will probably be able to run your systems for much longer than the warranties, but they simply won’t be putting out the same performance.
4. Inexperience: If you design and install a system yourself, the performance may not be as good as you planned. The experts here at GCI Energy know all the little tricks, but you don’t. Savings can suffer and that’s why you have to pay the experts to come in and set things straight.
5. Newer, more efficient technologies: People like new things because they’re new. The bottom line with a solar system from GCI Energy is the performance it’s putting out, but it may be true that a homebuyer simply doesn’t like a system that’s 10 years old simply because it’s 10 years old. Newer equipment is always more efficient as well. This increased efficiency rarely results in a situation that merits tossing out old equipment that is still working, but it may make a difference to a prospective buyer.
Investing in a full-scale PV system from GCI Energy
Suppose some homeowners have good roof exposure for solar equipment and they want to install a full-scale, intertie (connected to the grid so that extra generated power is credited to your power bill) PV system in a threebedroom, two-bath house. Their monthly average electric bill is $260, and energy consumption is 1,600 kWh’s per month. The home is all electric.
After an audit, they employ conservation measures to decrease the bill 15 percent to 1,360 kWh’s per month, or $221 with the goal is to reduce their average monthly electric bill to zero.
A TOU rate structure will apply when the system is in place. The owners believe they can use 90 percent of their electricity in off-peak hours, so they’ll be selling most of their solar production back at the top rate and using it at a much lower rate. In California, utilities are required by law to pay you for your excess generated power the same rate they charge you. In some states, the utilities pay you only a percentage of the rate they charge. Look for this to change in the future, because it’s a way to encourage solar investment.
A 5 kWh system that’ll do the job costs $40,000. The state will give a rebate of $10,000 directly to the PV system contractor so it’s not even billed to the homeowners. The total out-of-pocket cost is $30,000. On top of that, the feds will give a $2,000 tax credit for the system, which now costs only $28,000.
The warranty is 20 years on the panels, less for some of the other equipment. Reliability is good on the brand chosen, which isn’t the cheapest. In theory, maintenance and repair costs should be very low. GCI Energy uses Sharp solar panels which are the highest quality panels available.
The owners finance this with an equity loan at $140 per month, tax deductible. They’re immediately saving the difference between the power bill they’ve erased ($221) and the cost for the loan — in this case, $141 per month after taxes. From day one, this deal is in the black.
Using 7 percent as the energy inflation rate, the payback is 11 years, but this doesn’t account for the fact that the value of the equipment is also rising because demand is rising. With this factor included in the equation, the payback goes down to 7 years.
The potential savings in carbon footprint are 13,000 pounds per year. Not bad! What will happen to the value of your equipment if rebates and subsidies dry up? Homebuyers will have to pay a lot more if they choose to install their own equipment. The seller providing that equipment with the house has become much more attractive.
Solar panels by GCI Energy
Climbing around on roofs is statistically the most dangerous part of any installation. Injuries can be severe, maybe even fatal. Do you belong up on a roof? Not just climbing around, but pulling heavy weights and tools and going back and forth a lot? If you have a flimsy ladder, you’re asking for big trouble. after all, solar panels are heavy and awkward. (Imagine hoisting a heavy piece of plywood around in the wind while you’re balancing on a roof, and you get the idea.) GCI Energy will take care of installing your solar energy system so you never have to get on your roof.
Solar water heating panels can be particularly heavy when full of water. If you don’t know your roof can take the weight, either find out from an engineer, which costs you money, or forget about it. Imagine what a stinking mess a caved-in roof would be, especially with hot water dripping all over! You probably wouldn’t be a lifelong solar fan.
Also pay attention to local ordinances. Sometimes building codes forbid solar panels in view from the street, although more and more state legislatures are banning this limitation.
Lighting Your Yard with Solar
One of the easiest and cheapest ways to start out in solar is by installing lighting in your landscape. For $15, you can get a decent solar light with a range of mounting schemes. The simplest units come with a built-in stake so you literally don’t do anything more than stick it into the ground. If it turns out that you don’t like that spot, pull it out and stick it somewhere else.
The vast majority of solar landscaping lights come one-piece, with the PV module on top of the light itself, so you should put the whole thing where it surprise you by how well they work, given a meager amount of light. If the lights don’t get much sun, they still come on at dusk — they just don’t last all the way to dawn. Your best bet is to try one out in the location you want, even if no direct sunlight is there. It may work just fine.
Some lights are static, meaning they don’t blink or change colors. Background lighting, for example, should be static; it should establish a sense of place and highlight the best features of the environment. The most functional locations for the spotlight variety are around porches and walkways and along driveways where people will be walking. Put one near your garbage can out back, and you don’t have to flip the light switch anymore. You can also get solar lights connected to motion detectors.
Other lights revolve through patterns of color and brightness. The effect is entirely different. Dynamic lights should add a subtle hint of presence. One of my favorite solar lights is a clear plastic butterfly that changes colors slowly and subtly. It comes on a stake with a 2-foot wand to the butterfly, which seems to be floating because you can’t see the wand at night. It draws your eye without demanding it, and the colors are rich and textured.
Don’t buy cheap lights, because they don’t last. If it’s in a flimsy plastic housing, don’t buy it. Aluminum is good; heavy black plastic is cheaper and works just as well. You may want to buy an entire matching set; 6 units for $60 is usually good quality.
