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Solar (PV) Electric

With the rising cost of energy, and the wide availability of Federal, State, and local tax incentives, we belive that all homeowners (existing homes and new homes) should consider installing a Solar PV electric system if it is feasible for your property. With the tax incentives, solar electric systems will usually "pay for themselves" within five years. After that, you will have a positive cash flow that will save you as much as $75,000 over the life of a typical residential system. Financial analysts rate investments based upon what is known as their Internal Rate of Return (IRR). The IRR for installing solar electric today is usually between 15 and 18% per year. We can think of no other "investment" that can deliver that type of return.

How Does It Work? - The Basics of Solar PV

While solar electricity producing devices have been around for over 50 years, solar photovoltaics (PV), are still considered "cutting edge" technology by consumers. Nothing could be further from the truth. While there is some "high technology" parts involved (the panels themselves), the technology is actually quite simple.

Photovoltaics (PV) are semiconductor devices that convert sunlight into direct current (DC) electricity. Groups of PV cells are electrically configured into modules and arrays (panels), which can be used to charge batteries, operate motors, and to power any number of electrical loads. With the appropriate power conversion equipment (inverter), PV systems can produce alternating current (AC) compatible with conventional appliances, and can operate in parallel with, and interconnected to, the utility grid. Contrary to popular belief, most residential solar PV systems installed today do not use batteries. The electricity you gererate goes "right back out over the line" for use by others and you are "credited" (by your electric provider) for the electricity you generate. It's that simple.

A Typical Residential System

While the size of residential Solar PV systems vary, for the average homeowner a 5 kilowatt (Kw) system would normally be installed (1 Kw equals 1000 watts). As of early 2011, a 5 Kw system will require the installation of 22 panels. How did we calculate that number ... it's quite simple. The standard 3 1/2 feet wide by 5 1/2 feet long solar PV panel today ia rated at 235 watts. To determine the number of panels needed, simply divide the total system watts (in this case 5000) by the number of watts per panel (235), which is 21.27. Since you can't buy "partial panels", round up to the nearest even number, in this case 22. Then, to compute the exact Kw of you system, multiply the total number of panels (22) times their wattage (235). In this case, your system is rated exactly at 5.17 Kw.

The system can be roof mounted (preferable) or ground mounted. The panels should be mounted facing south as much as possible. Their angle should be as close as possible to the latitude of the are in which you live (for Baltimore it's 39 degrees of "tilt").For a roof mount, your installer will most likely install a set of two "tracks" (similar to railroad tracks) on your roof. The panels are then attached to the tracks about six inches off of your roof. The panels are wired together in parallel or in series, based upon the homeowners preference. The wiring is then run to an inverter that will be installed as close as possible to your electric panel. The inverter converts the DC power into "usable" AC power, which is transmitted back over your electric power supply line. "Micro-inverters" that convert the DC power to AC can also be installed directly on the back of each solar panel. This design is slightly more expensive, but should be used where local ordinances prohibit DC power to be run through pipes inside your home to your basement.

Costs and Benefits

A 5.17 Kw, 22 panel solar PV system will cost between $32,000 and $35,000 fully installed. Having said that, the "net out of pocket cost" after receiving your tax incentives (usually within one year) is almost half that amount. The Federal income tax credit alone is 30% of the cost of installing the system. The system should produce between 500 - 600 Kw of electricity per month. At today's electricity rates, thats a savings of nearly $100 per month. But there's more ...

In the mid-Atlantic region, including Maryland, all of the large electric utilities are required by law to produce a certain percentage of their electricity from renewable sources (solar, wind, and geothermal) by 2025. Failure to do so will result in financial penalties, referred to as Alternative Compliance Penalties (ACPs). The cost of one ACP is now set at $400 by law. As part of the renewable energy plan, the utility companies are allowed to "purchase" your solar PV credits to offset their potential ACP penalties. A 5 watt residential solar PV carries 6 Solar Renewable Energy Credits (commonly referred to as SRECs). The mamximum value of each SREC is limited, and closely tied to, the cost of an ACP ($400). As of 2011, the SRECs are valued at approximately $350 each.

Once you system is installed, you will actually be registered with the Maryland Public Service Commission (PSC) as a certified "electric energy producer". Your SRECs can then be sold on the open market to the highest bidder. As of 2011, the 6 SRECs associated with a 5 watt residential solar PV installation would generate nearly $2,000 per year directly to you. You will sign a contract with whomever purchases your SRECs for "sliding scale" payments over the course of the 25 year expected life of your system. You read that correctly. In addition to producing and saving on energy, you will get a check every year from your SREC purchaser. For the first five years the payment averages $1,400. For the next five years, it's about $1,000. And then it gradually drops to a minimum of $400 per year.

If you are building for LEED, installing as solar PV system will have a large (positive) impact on your HERS score, and will add several points to your LEED goal. In addition, many local governments have tax incentives in place based upon your HERS score alone (without LEED certification). To us, this is one of the most valuable and environmentally friendly options that every homeowner should seriosuly consider installing.

In summary, after just one year, you have "invested" about $15,000 and are receiving over $3,000 a year in "returns". Again, we believe there is no better place to invest your hard earned money than in a residential solar PV system

Caution - Snow

In areas of the country including the mid-Atlantic region, where snow can be heavy at times, we have a cautionary note regarding solar PV panel placement for roof mounted system. Snow can be very wet and heavy. It will cover your solar PV panels during storms of two inches or more. As the snow melts, you will eventually experience a "mini-avalanche" of snow coming off of your roof all at oncefrom your solar PV panel array. The volume and weight of this snow can be very large and quite forceful. For that reason, we strongly recommend that, wherever possible, you avoid mounting your panels where the "mini-avalanche" will fall directly on decks, portches, or entrance/exit areas where children, adults, and pets could be seriously injured if struck by the "event". This will also avoid potential exterior structural damage in heavy snow events.

Photos of a typical 5 watt residential solar PV installation

Financial details of a 5 watt solar PV system SREC payment schedule

More on Solar PV Basics -->

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