Solar PV Economics 101
November 15, 2007
Solar Photovoltaic panels are over 50 years old, but it is only in recent years that anyone other than NASA could afford to use them. They were expensive and inefficient. As technology has progressed, they are still expensive and inefficient, but much less so than in the past. Efficiencies (the percentage of energy from the sun that is actually turned into useful electrical power) improve every year. Costs of the panels decrease every year. We are finally at a crossroads where PV panels can be used for more than just the isolated desert home or third world pump station.
There are several items which have to be taken into account in the state of North Carolina when installing a photovoltaic system. The first is the Federal Tax Credit. This is 30% off the top in the first year. You also get the benefit of Depreciation over 5 years. However, you still have to pay federal taxes on any State Tax Credits. On the North Carolina State level, you get a 35% Tax Credit taken over 5 years (7% a year), and then a depreciation deduction over 12 years. On small systems (under 100KW), you also get revenue from the NC Greenpower Program. Lastly, there is still a monthly metering fee that you have to pay the utility.
Once you take all this into account, you end up with a payback period in the 8 to 10 year range. After that point, you are making money for the rest of the life of the system! Take for example a 10KW system. The initial cost is approximately $85,000. After the first year, with the credits listed previously, you end up paying approximately $49,000 instead of the $85,000. Then, after 7 additional years, the system is paid for and you end up making approximately $2,100 per year in income!
Solar Photovoltaic panels will be seen more and more in our area of the country. Prices for systems will most likely continue to slowly fall, as prices for utility energy will continue to increase. Right now, they are a rare site, but in 5 years, they will most likely be very common.
