on investment analysis
of residential
solar photovoltaic systems
Duotong Yang, Haniph A. Latchman,
Dave Tingling, and Anim Adrian Amarsingh
D
ue to the increasing cost (PV) systems around the world rose PV installation was highly enhanced
effectiveness of solar pan- from 4.07 GW in 2010 to 10.12 GW by federal energy incentives and util-
els, the growing demand in 2012. As shown in this report, ity rebate programs that reduced the
for renewable energy Europe remains the predominant cost of PV systems. In particular, the
sources, and the U.S. leader in the global PV power market high average sunshine hours in Cali-
government’s financial and possesses a 75% share of new fornia correlate to significant state-
support, the adoption of solar energy installations. The report also illus- wide installations of grid-tied solar
has soared in the past few years. trates that in the United States PV systems.
According to the PV Market Report, approximately 1.8 GW of PV systems Certainly, the key component
presented by the European Photovol- were installed, yielding a cumulative of a PV system is the solar panel,
taic Industry Association, the cumu- total of 214,000 operating systems in which represents more than 50% of
lative installed capacity of photovoltic 2011. The significant growth of solar the overall cost of the PV system. A
0278-6648/15©2015IEEE IEEE Potentials Jul y/August 2015 n 11
price history provided by IMS Re- 7) system operation, maintenance,
search shows that the prices of so- and troubleshooting instructions.
lar module (US$/W) have dropped 300
250 C
economics of solar energy utiliza- B D
200
tion and the possibility of system A Mounting system
150
installation by customers, we will The mounting system size is
100
present a computer-aided design deter mined by the PV system’s
50
process for a residential solar PV installation site. Further discus-
system. An ROI report is provided 0 sion about site analysis will be
0 5 10 15 20 25 30 35 40 45
to demonstrate the positive eco- Voltage Output (V) presented through a three-dimen-
nomic performance of the DIY sys- sioanl (3-D) model simulation in
tem installation. fig2 The basic concept of the MPPT. the next section.
12 n J u l y / A u g u s t 2 0 1 5 IEEE Potentials
PV system design Prated = 24 # 280 w = 6.7 kW.
IEEE Potentials Jul y/August 2015 n 13
dc
Fuses Positive To
Red Line Bus Disconnect Utility Grid
+ dc
13A 2 plcs
M
SMA SUNY BOY 6,000
- US Grid-Tied Inverter
Negative ac
Bus
PV Circuit Surge ac Output Auxiliary
Combinor Arrestor ac Generation
Disconnect Disconnect
N L1
L1 N
PV Array: Green
24 x Line
Suntech House
STP280 Grounding
24Vd System
Modules
Disconnect Box
Two
Strings
Sub Panel
Surge Arrestor
House Grounding
System
Tilt Angle
Sun Path During N
S NW
June SE
NE
N
S 117.8
Sun Path
During
December Azumith Angle
fig5 A sun path for Florida. fig6 Three roof areas for a PV array. fig7 The azimuth angle for PV arrays.
can also be obtained. Figure 9 and area) should be considered along investment with a high ROI will be
Table 1 illustrate the power energy with the corresponding PV watt out- more attractive. In this section, a ROI
drawn from PV arrays on different put computations. In our case, com- report is developed to illustrate the
roof areas. paring the total amount of PV sys- advantages of investing in solar PV
Moreover, the Sketchup simula- tem output per configuration, the SE systems and to compare the ROI
tion shown in Fig. 8 demonstrates area would be the best choice for the between PV systems installed by cus-
that the number of solar panels that PV system installation. tomers versus those installed by
can be installed on the NE area is licensed contractors. The formulas for
fewer than the number of panels ROI calculating ROI can be simplified as
possible on the SE area. The possible ROI is an economic performance
variations of array configurations measure for evaluating the efficiency Net profit
(due to the available roof surface of an investment. Certainly, an ROI = Total Investment .
14 n J u l y / A u g u s t 2 0 1 5 IEEE Potentials
Since the estimated payback periods Net profit = P # (r + w) + Tax
are fewer than ten years, we would - C OM = USW906.72.
not consider the effect of inflation.
Also, we assume that the annual SE Solar PV system incentives
electric output of PV system and the and rebates
NE
incentives policies do not change. In Gainesville, GRU provides the
Solar Electric System FIT program to
Cost of the solar PV system PV system owners. According to the
The rough price for the whole system Solar Energy Purchase Agreement,
fig8 PV arrays on both areas SE and NE.
is illustrated in Table 2. this is a contract between the PV
The total expenditure of the PV system owner and GRU. It was
system C = US$12, 717.52. 1,000 designed to encourage investment in
The electricity consumption of 900 renewable energy by requiring utili-
PV Array Output
the aforementioned residence is as- 800 SE ties to buy renewable electricity from
sumed to be 900 kWh per month. 700 NE customers at fixed prices. In Gaines-
600
As stated in the Gainesville Regional ville, customers sell 100% of the
500
Utilities (GRU) residential electricity NW power drawn from the solar system
400
bill calculation methods, the retail 300 to GRU at the price of US$0.21/kWh
price is US$0.115/kWh , which con- 200 when the system capacity is equal or
0 2 4 6 8 10 12
sists of the electric retail price and less than 10 kW.
Month
electric fuel adjustment. Supposing Customers can also apply for the
that the solar PV system has started fig9 An annual PV array output. Solar Electric System Rebate Pro-
to generate electricity and all of the gram from GRU. Participants will
power drawn from the PV system is be reimbursed a rate per watt based
consumed by the customer, the an- Table 1. Enery drawn from on the amount of direct or diffused
the PV system.
nual net profit can be represented as sunlight available based on a PV
AC energy Energy Value system’s location. However, the pur-
Net profit = P # (r + w) + Tax - C OM ,
Areas (kWh/year) (US$0.115/kWh) chase agreement shows that cus-
where P is the system’s total annual SE 8,628 992.22 tomers who receive the Solar Electric
output that equals 8,628 kWh, r is NW 6,612 760.38 System Rebate are not eligible to ap-
the electric retail price, and w is the ply for the FIT program.
NE 6,812 783.38
electric fuel adjustment. r + w = The rebate rates are shown as
0.064 + 0.051 = USW0.115/kWh.C OM follows.
represents the cost of operation and Therefore, the total Tax charge 1) US$1/W for a solar window of
maintenance, which equals 6.72kW # will be 80% or greater
US$25/kW - yr = US$168/yr. T h e Tax = Tax1 + Tax2 2) a rebate would be available for
tax calculation is shown as follows. = 24.8 + 57.7 solar windows 79% or lower
There are two taxes that would = USW82.5. Before applying the rebate pro-
be charged on electricity bills when We can have the annual net gram, the capacity of the system
residents are living inside the city of profit as needs to be calculated. The system
Gainesville. The Florida Gross Re-
ceipts Tax, represented as Tax1, is the
tax on GRU’s nontax revenue received Table 2. The cost of the whole system.
for electric energy, which is 2.5%. Price
Tax1 = [P # (r + w) # 2.5%] Quantity Components (US$) Total Price (US$)
= 8, 628 # 0.115 # 0.025 24 Suntech 280 W 308 7,392
= USW24.8.
2 Solar panel cable 43.86 87.72
In addition, the Gainesville Elec-
2 Fuse holder 5.4 10.8
tric Utility Tax Electric Surcharge,
represented as Tax2, will charge 1 Grid-tied inverter SMA 2,647 2,647
the sum of the electricity charge 2 Lightning arrestor 40 80
and the Florida Gross Receipts at 1 Combiner box 330 330
the rate of 10%.
1 dc disconnect 170 170
Tax1 = [P # r + Tax1] # 0.1 1 Mounting system 2,000 2,000
= [8, 628 # 0.064 + 24.8] # 0.1 Total 12,717.52
= USW57.7.
IEEE Potentials Jul y/August 2015 n 15
Research has indicated that most PV DIY projects did program. Hence, the tax can be recog-
nized as part of the net profit. Accord-
not provide detailed solutions on PV system output ing to Table 2, the cost for the whole
optimization, site analysis, and roof space evaluation. system is US$12,717 and the federal
tax credit can be represented as
Installed by
Installed by Contractor with Solar
FIT and Federal Solar Electric Rebate Contractor with FIT Electric Rebate and
Credits and Federal Credits and Federal Credits Federal Credits
PV system output P 8,628 kWh/year 8,628 kWh/year 8,628 kWh/year 8,628 kWh/year
Net profit US$1,726.4/year US$906.72/year US$1,726.4/year US$906.72/year
with FIT without FIT with FIT without FIT
Cost US$12,717 US$12,717 US$25,200 (Average US$25,200 (Average price
price in Gainesville) in Gainesville)
30% federal credits US$3,815 US$3,815 US$7,560 US$7,560
US$1/W for solar rebate None US$6,417.6 None US$6,417.6
program
Total rebate R US$3,815 US$10,232 US$7,560 US$14,261
ROI 0.19 0.36 0.098 0.082
Period for ROI (i.e., 1/ROI) 5.26 years 2.77 years 10.2 years 12 years
16 n J u l y / A u g u s t 2 0 1 5 IEEE Potentials
Net profit ing a residential PV system. With the ••B. Marion and M. Anderberg,
ROI = Cost - Tax credit
incentive programs, the payback pe- “PVWATT version 2-enhanced spa-
906.72 riod of a grid-tied PV system would tial resolution for calculating grid-
= 12717 - 10232
be only two to six years. In addition, connected PV performance,” in
= 0.36.
the PV systems with FIT programs Proc. NCPV Program Reviewing
provide approximately US$1,800 in Meeting, Lakewood, CO, Oct. 2001,
The payback periods can be writ- revenue per year. Thus, DIY instal- pp. 14–17.
ten as lation of a solar system provides an ••Calculating Your Electricity Bill,
Total Investment attractive means for reducing energy Gainesville Regional Utilities,
Payback Period = costs and air pollution. Gainesville, FL, Sept. 2011.
Net profit
1
= ROI .
••Solar Energy Purchase Agree-
Read more about it ment, Gaeinsville Regional Utilities,
The ROIs of PV systems on different ••Q. Zhao, P. Wang, and L. Goel, Gainesville, FL, Jan. 2012.
scenarios are illustrated in Table 3. “Optimum PV panel tilt angle based
on solar radiation prediction,” in About the authors
Interpretation of the ROI results Proc. IEEE 11th Int. Conf. Probabilis- Duotong Yang (yangduotong@ufl.
The ROI estimation presented in tic Methods Applied Power Systems, edu) graduated with his B.Sc. degree
Table 3 can be summarized as fol- Singapore, June 2010, pp. 425–430. in electrical engineering from North
lows: For projects with a licensed ••F. O’Flaherty, J. Pinder, and C. China Electric Power University in
contractor, the payback periods for Jackson, “Determination of payback 2011. He earned his M.S. degree in
the two contractor-installed projects periods for photovoltaic systems in electrical and computer engineering
in Table 3 are 10.2 years and 12 domestic properties,” in Proc. Retrofit, from the University of Florida in May
years, respectively. Salford, U.K., Jan. 2012, pp. 24–26. 2013. He is pursuing his Ph.D.
The payback period for a system ••NC Sustainable Energy Associ- degree in electrical engineering at
installed with the solar electric re- ation. (2013, Jan.). Levelized cost of Virginia Polytechnic Institute and
bate and federal credits is the short- solar photovoltaics in North Caroli- State University.
est—2.77 years. Compared with the na. [Online]. Available: http://energ- Haniph A. Latchman (latchman@
contractor-installed projects, the ync.org/assets/files/LCOE%20of% list.ufl.edu) earned his Ph.D. degree
payback periods are much shorter, 20Solar%20PV%20in%20North%20 from Oxford University (Rhodes
which highly enhances the econom- Carolina-FINAL.pdf Scholar) in 1986 and his B.Sc. degree
ic performance of the investments. ••K. H. Hussein, I. Muta, T. from the University of the West Indies–
Therefore, if possible, it would be de- Hoshino, and M. Osakada, “Maxi- Trinidad and Tobago in 1981. He is a
sirable for customers to design and mum photovoltaic power tracking: professor of electrical and computer
install the PV system by themselves. An algorithm for rapidly change engineering at the University of Flor-
atmospheric conditions,” IEEE Proc. ida and director of the Laboratory for
Conclusion Generation, Transmission, Distribu- Information Systems and Telecom-
From the presented design process, tion, vol. 142, pp. 59–64, Jan. 1995. munications.
we can see that without the coopera- •• S. J. Steffel, “Distribution grid Dave Tingling (dave@stream-
tion of licensed contractors, home- consideration for large scale solar lines.biz) has been an information
owners can prepare documentation and wind installation,” in Proc. IEEE technology practitioner, systems in-
requirements for a residential solar T ransmission Distribution Conf. tegrator, and independent contractor
PV system. Sophisticated computer Expo., New Orleans, LA, June 2010, since 1993. He is the systems opera-
software such as Sketchup, SMA pp. 1–3. tions administrator at the Depart-
Sunny Design, and PVWatt, among ••National Energy Education ment of Fire and Emergency Servic-
others, provides customers with Development Project. (2013). Photovol- es in Richmond, Virginia.
solutions for PV system sizing, site taics student guide. [Online]. Available: Anim Adrian Amarsingh (ani-
analysis, PV system performance http://www.fi.edu/PECO/photo- mamarsingh@uf l.edu) graduated
optimization, and roof space evalua- guide-family.pdf with his B.Sc. degree in electrical
tion. If customers are able to design ••SMA. (2013). Sunny Design engineering (Summa Cum Laude)
their own systems, contractors can Web. [Online]. Available: http:// from Morgan State University in
simply analyze customer-prepared www.sunnydesignweb.com/sdweb/ 2011. He earned his M.S. degree in
designs and charge a lower rate. SunnyDesign/Home electrical and computer engineer-
Reducing the cost of hiring a con- ••O. Asowata, “Optimum tilt and ing from the University of Florida
tractor would make solar panels orientation angles for photovoltaic in May 2013. He is currently an
more attractive for wide-scale panels in the vaal triangle,” in Proc. electrical engineer with the Pe-
deployment in residential areas. Asia-Pacific Power Energy Engineer- troleum Company of Trinidad and
The ROI report illustrates the ad- ing Conf., Shanghai, China, Mar. Tobago.
vantages of planning and document- 2012, pp. 1–5.
IEEE Potentials Jul y/August 2015 n 17