Solar Photovoltaic

Solar photovoltaics (PV), which converts sunlight to electricity, and solar thermal, which converts sunlight to heat, are the most popular forms of solar power on the market.

In particular, solar PV can be used to reduce a building’s electricity needs by collecting sunlight and converting it to electric power. Most often, solar PV systems for homes and businesses are in the form of solar panels, which is held up by a racking system. The panels are composed of solar cells, which absorb sunlight, then convert the power from AC to DC for use in the building.

How Much Does Solar PV Cost?

Renewable energy investments in the U.S. have been motivated in part by tax breaks. While the prices of solar PV modules are decreasing, the project has a big upfront cost that is eased by government incentives.

Commercial solar PV projects have been stimulated by the federal Renewable Energy Production Tax Credit, which awards 2.2 cents per kilowatt hour for wind, geothermal and closed-loop biomass and 1.1 cents per kilowatt hour for other renewable energy technologies, including solar PV. Depending on the technology, the credit lasts for about 10 years. The solar tax credit is set to expire at the end of 2013, but may be extended by Congress.

There is also a federal Residential Renewable Energy Tax Credit for homeowners in the United States. It allows residential property owners to claim a 30% tax credit on a solar electric system, solar water heater, wind turbine, or geothermal heat pump placed in service after 2008. It also awards this tax credit to fuel cells, but limits it to $500 per 0.5 kW.

Additionally, there are many state and local tax incentives that help to lower the cost of solar PV installations. In May 2012, One Block Off the Grid released a great infographic showing how solar PV installation prices varied by state. The average price of a solar installation was $17,056. Many states were below $10,000, though - in Louisiana, it only costs $3,552 on average. The most expensive state for solar is South Dakota, which averaged $38,428.

The amount of money you can save every month also varies by region, because the amount of sun and utility prices also vary by location. The national average for energy savings is $84 per month by going solar, though Hawaii topped the charts with $270 per month. The smallest savings was seen in Kansas, at $35 per month.

Overall, a solar PV system in the U.S. could save $20,080 over 20 years, according to the study. Some will see savings of over $30,000. Therefore, considering the initial price of installation, the systems will pay for themselves in a range of 4-19 years.

What Is the Payback Period?

When figuring out if solar PV systems are ideal for your building project or home, one of the most important factors will be the system’s payback period, or the amount of time it takes to earn back your initial investment (this is similar to the return on investment, or ROI). The shorter the payback period, the more likely you will see the returns on your investment.

If you compare the estimated cost of installation (with tax incentives) with your annual utility cost savings, you can determine the payback period for the solar PV system.

Payback periods are variable and depend on your energy usage, your current utility costs, the cost of the system and how well suited the building is for solar power (which will affect the system’s efficiency and output).

For example, a building with electric heat would most likely have a much shorter payback period than a building with oil or gas heat, because the solar PV produces electricity. For someone with oil or gas heat, the solar energy would replace less of the building’s energy mix, which would means earning back the investment would take longer.

If you are interested in solar PV for your building, it’s a good idea to schedule a free consultation with a solar contractor. The contractor will assess your building’s orientation, energy use, location, shading, amount of sunlight and possible tax breaks to determine whether it is ideal for solar. Many will also give you an estimated cost and the predicted payback based on your current electricity bills and eligible tax incentives.

Choosing a Solar Contractor

When choosing a solar contractor, you will want to search for one with experience and qualifications. Some solar contractors will have achieved accreditation or certification through a third party organization, which demonstrates their knowledge and training in the industry.

For example, the North American Board of Certified Energy Practitioners (NABCEP) offers specific certification for PV installers, PV technical sales and solar heating installers. The Electronics Technicians Association (ETA) provides training and certification for PV Installers. They offer three levels of certification: Apprentice, Specialist, and Technician. Roof Integrated Solar Energy (RISE) also offers a Certified Solar Roofing Professional (CSRP) credential for rooftop solar energy installation and maintenance.

Solar PV and LEED

Solar panels can help a project, whether residential or commercial, to earn points toward LEED certification. According to the LEED for New Construction (NC) rating system, they could help to earn the following credits:

• Energy and Atmosphere (EA) Credit 2: On-Site Renewable Energy (1-7 points):
This credit awards for on-site renewable energy. Points are awarded based on the percentage of the building’s energy costs that the solar power replaces.

• Sustainable Sites (SS) Credit 7.1: Heat Island Effect – Nonroof (1 point):
This credit awards projects for reducing heat island effect by providing shading for the site’s hardscape. If the PV panels are installed on the ground, they could help to earn this credit.

• Sustainable Sites (SS) Credit 7.1: Heat Island Effect – Roof (1 point):
This credit awards projects for reducing heat island effect by covering the roof with reflective coatings or objects. If the PV panels are installed on the roof, they could help to earn this credit, because they absorb the sunlight and prevent it from warming the building via the roof.