What is the real cost of Solar Energy ?

With the soaring cost of electricity in Jamaica, many persons are ready to crucify the OUR and JPS as it appears that the  two are in collusion to rip off the public.
There is a tremendous amount of emotions involved , with many persons showing bills which they have indicated have increased tremendously for no apparent reason.

The question of alternative energy sources have been championed once again, and always occurs when oil goes up which results in an increase in the cost of electricity. I too am in favour of an energy mix, of which renewable energy sources must be an integral part of that mix.
But what is the real cost of solar installation and can the average consumer really save money by installing such a system for their homes.

I have decided with the help of other resources to really break this down to see if this is just a lot of emotions ar work or can we really save at today's by installing such a system.

Lets first talk a little about demand in trying determine what kind of solar system one would need to extraciate themselves from the JPS grid.
A middle income family with say a 4 brm 's house may containing the following .

• 1 18 cubic ft refrigerator      -      420w (0.42kw)
• 1 x 16 cf freezer (NF)         -      600w (0.60kw)
• 1 x 12,000 btu ac unit -       -      3.5kw
• 1 micro wave                      -      1.2 - 1.5 kw
• 1 clothes iron                      -      1.5kw
• 1 washing machine              -      500w (0.5kw)
• 1 dryer                               -      2.7kw
• Toaster oven                      -     1.5kw
• Hair Dryer                          -    1.15kw
• Dish washer                        -    1.2kw
• Lighting (CFL)                    -    220w (0.22kw)
• Flat screen tv(42")              -    150w (0.15)
• Home Ent System               -    400w ( 0.4kw)
• 40 Gal water heater            -    3kw
• Other                                 -    500w (0.5kw)

Aggregate demand = 17.24Kw

Now we would never have all the above equipment running at the same time so lets use a load factor of say 30% , this means no more than 30% of the aggregate demand would be on at any one point in time.

Total average demand = 17.24 x 0.3 = 5kw ( Actually 5.17kw but I am using 5 for ease of calculation).

Cost of 5Kw Solar system

The cost of a solar grid tie system( NOT  installed) in the USA is estimated to be in the order of US $25 - $28,000 so lets use $26,000. Then for installation of the system and tie into JPS( net metering when it comes on board) lets add another $5000, for a total cost of US$31,000.

Assumptions.

1. Lifetime on panels 20 - 25yrs
2. Life time on inverter - 10 -15 yrs
3. Average life span of entire system lets say 20 yrs.
4. Efficiency of converting light to dc then inverting to ac  lets say system is 90% efficient.
5. System generation is 5hrs per day, ie period when sun is most prominent ( 9am - 2pm)

• Now system capacity is 5kw x 0.9 = 4.5kw but manufactures does not want you to run it at its max capacity so the max load they indicate is  4kwh.
• Total energy produced over the system life span = (#hrs per day we are generating power x # days per yr x total power produced x life span ) = 5 x 365 x 4.5 x 20   = 164,250Kwh

Given actual max rating of 4kw total available power = 5 x 365 x 4 x 20 = 146,000 kwh

Calculations

1. System installation cost per kw = System cost(installed) / System Capacity                                                                                                            

                                                           = $31,000/ 5 = US $6,200 / kw

     2.  Cost per kwh over the life time of the equipment = Total system cost(installed) /rated kwh available

                                                                                    = $31,000/ 146,600

                                                                                    = US$0.21/kwh

How does JPS compare to the above

At today's rate the residential customer is paying on average of US$0.39/ kwh so does this mean the customer who purchase this system and switched fromo JPS would save $0.18/ kwh over the life of the equipment. Not necessarily as recall the total aggregate demand for the customer was over 17Kwh.

Even when we dropped the load factor to 30% , the demand was 5Kw and this system is only producing usable power of approx 4kw.

This therefore leaves a short fall of minimum 1kw which must come from somewhere, either from JPS or another renewable energy source such as wind. The customer may also choose to go to say a 10kw system which would move the cost to over  US$50K installed.

Now lets assume the individual opts to use JPS (he has  a grid tie system)

How this grid tie system works is I can either use my system and sell the excess to JPS and get a credit, or if my system goes down I have JPS as back up. These new electronic meter allows for co-generations recordings ie it records what is generated in the house and what is generated from outside (JPS).

The individual would need the minimum demand of 1kw and say this demand is used 5hrs per day , then the total consumption per day would by 5kwh/hr.

Weight average cost of electricity becomes  $0.246/Kwh

Calculation  JPS 1 Kwh @ 0.39/kwh   = $0.39

Solar =    4 Kwh @ 0.21/kwh             = $0.84

5 kwh   = US$1.23

So cost per kwh = US$1.23/5 =  $0.246/ Kwh

The above is an over simplification as we ignored the following.

1. Shipping cost 
2. Duties applicable to the above (duty free status was removed)
3. Cost of capital ( if person is borrowing)
4. Time value of money.
5. Losses from exchange rate conversion and fluctuations.

When the above are taken into account we could very well be adding another 8 - 10 cents (US) per kwh hr, thus moving this cost to $0.32 - $0.35 /kwh.
However as time goes on the cost of solar system will fall and if oil keeps rising, the reverse could be occur where the saving as actually greater than those stated above.

Lets look at the graphs below credits have been noted.  It speaks volumes.