PV Solar Panels Can Pay For Themselves, by St. Funogas

Author’s Introductory Note: Grid-tied solar panel payback time is less than seven years in most of the lower 48 states, and quickest in some of the New England states, so don’t think solar isn’t for you just because you live in North Dakota or Vermont. RUN THE NUMBERS which I’ll show you how to easily do. If you don’t care about all the details of how and why, skip to the last section called “Quick Way to Figure out Payback Time.” There are only three numbers to enter on your calculator and you’ll have your payback time in years. Then you can come back and read the details if you’re so inclined.

From time to time on SurvivalBlog discussions come up about whether or not solar panels can pay for themselves. I’ve been amazed as I’ve traveled around the country and seen so few homes with solar panels, and wondered why more people don’t take advantage of nearly-free electricity. I’ve concluded that the three biggest reasons are 1.) most people are not aware of how simple it is to install grid-tied solar panels yourself, 2.) they erroneously think they need storage batteries and all kinds of complicated equipment, and 3.) they’re not sure how to do the math to figure out if solar panels are feasible in their area.

First, A Brief Tutorial

So, let’s tackle those reasons in a quick tutorial.

First, if you can hook up an electric water heater, you can most likely hook up your own grid-tied PV system in a couple of days. Second, if you can install them yourself and follow some basic rules of frugality outlined below, nearly everybody in the lower 48 can make a home, grid-tied PV (photovoltaic) system pay for itself in 3½ to 7 years.

My philosophy behind having a grid-tied PV system is this: for now, we want  inexpensive electricity and something simple to get us started in solar energy and, in the event of TEOTWAWKI, we want to be able to have the ability to convert our system over to something that will at least charge some batteries to provide lighting for our post-SHTF life, and hopefully much more than that. We are not trying to save the planet so let’s avoid that topic in the comments section please. (Note on EMP/Carrington Event later.)

What is a Grid-tied PV System?

Since there are no batteries involved, a grid-tied PV system is a very simple, maintenance-free setup. Instead of your solar panels charging a bank of storage batteries, the grid acts as your storage device. During the day when you are creating more electricity than you can use, your excess power goes out to the grid for your neighbors to use. At night, you borrow electricity back from the grid to run your home.

There are just two components: your set of solar panels and a small box the size of a desktop computer called an inverter. Three wires from the solar panels plug into the inverter, and, just like an electric water heater, four wires from the inverter hook into a double breaker in your home’s electrical panel.

I won’t go into the details of mounting solar panels since there are plenty of books and articles on that subject. The most crucial point to keep in mind is that, in most cases, the only way to make your PV system pay for itself in a reasonable amount of time is to do your own installation, or get it done “free” somehow via barter or bribing friends or relatives. The installation is not difficult. The second point to keep in mind is that you can make your PV system pay for itself much more quickly by making your own mounting rails rather than purchasing expensive ones offered by solar suppliers. I made mine from synthetic deck boards available at any lumber yard. You can probably come up with an even less expensive method.

The Parts List

I will be mentioning certain products but these are not endorsements. I have not kept up with technology since my installation, nor done any price comparing on inverters for this exercise.   The point is to show that if I were rebuilding my system today, here’s exactly how I could do it, and at what price. If I were doing this for real, I would be doing more in-depth research and would undoubtedly find an even least expensive way to do it. So this is not a how-to article on setting up your home PV system, rather, a how-to article on determining the payback time on your investment with some pointers on frugality.

Here are some of the major expenses:

For our exercise, let’s install a 3,000-watt system on your property. That’s 10 solar panels which, when mounted in two rows of five, take up about 16’ x 11’. They can be either roof or ground mounted. The lowest average price now is 65¢/watt from several suppliers for 300-watt solar panels. 65¢ x 300 watts = $195 per solar panel. (A year ago I was seeing them as low as 61¢/watt at Home Depot.) Ten of those will cost $1,950 plus tax and shipping. I received an estimate of $400 on shipping so if you can buy locally, you’ll save considerably.

I used synthetic deck boards for the mounting rails but there are many ways you can approach this.

We’re going to need different kinds of hardware variously known as “fasteners.” Based on what I spent, $200 will more than cover fasteners, plus another $60 for conduit, wire, and mounting the inverter.

For the inverter, let’s be frugal and buy a brand-new SunnyBoy 3,000-watt inverter off eBay for $640 which includes shipping. This one lacks the “secure power supply” which gives you some power even if the grid goes down temporarily. But at $1,200 extra, there are much less expensive and more reliable ways to get power during an outage.

With tax and other miscellaneous, the total installation cost comes to $3,903. If you’re paying taxes to Uncle Sam in 2020 then you qualify for the 26% rebate which lowers your cost to $2,888 if you begin installation this year. (Next year it drops to 22%, then disappears in 2022.) That total is for my location where the local government minds their own business. If you need permits and are required to do other hoop-jumping exercises, add those costs to your total.

How Much Electricity Can I Make?

Now that you know the cost to install 3,000 watts of solar panels, the next question is, how much electricity can I generate? Once we can answer that, we’re just one step away from knowing how quickly your solar panels will pay for themselves.

How much electricity your solar panels will generate is dependent on a variety of factors, the most important being your geographic location. In order to maximize your output, you’ll want to mount your solar panels in the sunniest location available, facing as due south as possible, and mounted at an angle that matches as closely as possible the degrees of your latitude. But everything doesn’t need to be “perfect” so just get as close as you can on these.

Variables for Determining Electrical Generation

You’ll need to know how much sun, called Solar Irradiance, your county receives on average. Use the color-coded map above (or click here) to approximate your location, then find the number that correlates with that color. For example, where the word “Illinois” is printed on the map, that shade of yellow correlates to a solar irradiance value of 4.5-4.9. Let’s keep it simple and choose the middle value of 4.7.

That number is the average daily solar irradiance received over the course of the year. We also use a constant of 0.7 to account for a 30% loss of efficiency in our solar panels mainly due to overheating and the physics of what happens when you convert AC to DC.

So far in the equation we have our solar irradiance of 4.7, multiplied by 0.70 to account for inefficiency, and now we multiply those by our 3,000 watts of solar panels to get our average amount of electricity produced each day:

4.7 x 0.7 x 3,000 = 9,870 watt hours

In electricity, we commonly talk about kilowatt hours (kWh), which is 1,000 watts per hour, so let’s divide our watt hours by 1,000 to get 9.87 kWh.

Again, that’s a daily average only. It will be higher in the middle of June and lower on Christmas day. We now multiply that 9.87 by 365 to find out how much electricity you can expect your solar panels to produce in one year.

9.87 kWh x 365 = 3,603 kWh of electricity produced each year.

How Quickly Will My Solar Panels Pay For Themselves?

Now we only need one more number to figure out how long it will take our solar panels to pay for themselves.

You’ll need a recent power bill, or more likely, you’ll need to call your power company. How much do they charge per kilowatt-hour of electricity? Due to the meter charge, you can’t just divide your total bill by total kWh used.

Once you have the kWh rate you can use it to figure out the annual value of the electricity your solar panels are generating and thus calculate the payback time.

Currently, the U.S. national average for electricity is around 13.5¢/kWh, so let’s use that. With our solar array generating 3,603 kWh of electricity per year, when we multiply that by 13.5¢ (0.135), we get a yearly total of $486.40. That’s how much money we save each year by generating our own electricity. By dividing our total installation cost by how much the electricity is worth each year, we find our payback time:

$2,888 / $486.40 = 5.9 years to get our money back w/IRS rebate

$3,903 / $486.40 = 8.0 years to get our money back if no IRS rebate

Ironically, some of the best solar-producing areas of the country have the longest payback times because they also have cheap grid power. The New England states have some of the shortest payback times due to high energy costs. So don’t make any assumptions about solar before you run the numbers for yourself.

Once we have paid off our solar panels, we’re now generating $486.40 of free electricity each year. Since we’re now more comfortable with solar electricity, and we’ve been working on lowering our electricity needs (I’m down to 100 kWh/month), we can use that money to start buying components to convert to an off-grid system which is more EMP-proof. In the event we don’t convert to off-grid before the SHTF, as long as TEOTWAWKI is something other than a solar-panel-frying EMP/Carrington Event, we’ll still have workable solar panels to charge batteries, have lights, run water well pumps, etc. by using less expensive smaller inverters.

A Quick Way to Figure Your Payback Time

Formula:

$2,888 ÷ (DNSI x kWh cost x 767) = your payback years

Formula Notes:

  • If not getting the IRS rebate, use $3,903 instead of $2,888. Add to this any permit and hoop-jumping costs your area may require.
  • DNSI is the average solar irradiance for your area. See the map, above.
  • kWh cost is your current kWh cost for electricity. Ask your power company. Be sure to use a decimal amount in dollars. (e.g. 0.135, not 13.5¢)
  • 767 is a constant based on a 3,000-watt solar panel system, a 70% efficiency factor, and 365 days in the year.

Here is a chart showing some sample payback times in various parts of the country based on different kWh costs for electricity. This chart is only a rough ballpark idea of payback time, so run your own numbers to be more exact. If you like what you see, then come up with a more precise number of payback years by using your estimated total system cost instead of the $2,888 presented here.

Summary

Don’t sell yourself short when it comes to solar electricity! People think solar panels only work well in the Southwest, but nothing could be further from the truth. They pay for themselves much more quickly in the Northeast where grid electricity is expensive. Grid-tied solar panels are very easy to install yourself. If you can install an electric water heater, you can almost certainly install your own PV system. If you can’t, one of your friends or family probably can.

Get your feet wet with a super simple, grid-tied PV system and then work towards a more independent system which is EMP proof. Do it now while the IRS rebates are still in place and Uncle Sam will pay for 26% of your costs. (By taking less of your own money.)

Most fuel-based electric-generating systems won’t last long in a grid-down, Patriots/Alas Babylon situation. You can only store so much fuel. Solar panels are guaranteed for 25 years and even then they keep working, just at a lower efficiency. While electricity isn’t a necessity, it will sure make transitioning to life after TEOTWAWKI a whole lot easier. Especially with the Andrews Sisters harmonizing in the background and Charlie Daniels belting out, “Mario Andretti woulda’ sure been proud the way I was movin’ when I passed that crowd, and just for fun I chased ‘em once around the parking lot!”

Let’s hope your spouse isn’t chasing you around the parking lot for not getting those solar panels installed when you had the chance. Hard times are coming!

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