How It Works

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Before you begin to “size” a solar system for your existing home, Texas Solar Power Company recommends that you implement several energy management and conservation techniques in order to reduce your overall need for energy:

• Change all incandescent and halogen light sources to compact fluorescent lighting (CFLs).  Home Depot is a great source for these indoor or outdoor lamps and fixtures.  Most compact fluorescent lamps will fit into existing lamp sockets.  This will result in double savings – fewer watts used to light a space AND less A/C used to cool down the air around those little heat lamps!
• Wherever possible, add additional insulation to your attic walls and floors.  Use pipe insulation on heated water pipes.  Insulate your hot water heater.
• Add shading devices and/or solar screens to your east, south, and west-facing windows.  However, during winter months, you may want to take off the south-facing screens in order to gain solar heat.
• If you have old appliances, consider upgrading.  Today’s appliances are much more energy efficient than those made as few as 5 years ago.  We highly recommend that you purchase only Energy Star rated appliances and air conditioning equipment.
• Use natural gas or propane appliances where possible for cooking, central heating, water heating, and for your clothes dryer.  Better yet, dry your clothes via solar (clothesline)!

If you are already served by a power company, it is considerably cheaper to purchase a “grid-tie” system.  If you want to be totally independent of your energy company and/or you need electricity in a location that is not yet served by your energy company and it would be very expensive to connect, you will want to consider a “Battery Stand-Alone” system.  A “Battery Back-up” system is a combination of the two systems, where batteries are used as a back up for a power outage in an emergency situation.

• Grid-tie: You generate power during the day (while the sun is out) so if you’re producing more than you’re using, your meter will run backwards.  Your energy company supplies the power you use at night, so your meter will run forwards.  This push-pull will “net” at the end of the month with a balance either in the customer’s favor or in the electric company’s favor.  In this dynamic, the power company acts as a huge energy storage device/battery.
• Battery Stand-Alone:  Along with the solar panels and support system, you will need to purchase batteries.  Your solar panels charge the batteries and you then draw energy needed for your house from the batteries.  You would need to determine all energy needs and make sure your system is large enough to acquire and store enough energy.

• Battery Back-Up:  This is a hybrid system that is useful when power goes out.  You can pre-determine which appliances should never be without energy, and then store that needed power.  For example, you might have emergency back-up for your refrigerator, computer, and 4 lights.

Realistically, you will probably look to supplement your power needs via solar (“grid-tie” as described above) rather than use a Battery Stand-Alone system. If you want more information about battery back up and true system sizing, please let us know – we have an overview you can use to determine your full
power needs. However, if you simply want an understanding of how much electricity you use and how much a solar system will produce, follow the steps below.

One way to look at the math:

1. Solar systems are generally sized in 1 kW – 6 kW (and larger) systems.  A typical size is 3 kW.
2. 3 kW, or 3 kilowatts = 3,000 watts
3. A 3 kW system will generate around 3,000 watts per hour
4. Multiply the per hour generation by the average number of sun hours in a day in your area.   Austin, Texas sees 5.4.   (3,000 x 5.4 = 16,200)
5. Multiply the new total by the average number of days in a month (16,200 x 30.5 = 494,100)
6. Multiply the new total by .77. This is the “derating” factor, or the amount of energy lost when the solar-generated Direct Current (DC) is turned into the power we use in our homes - Alternating Current (AC). (494,100 x .77 = 380,457)
7. So, a 3 kW system will generate about 380,457 watt hours per month, or about 380 kWh.
8. Now compare this number with the kWh usage noted in your electric bill. How many kWh do you use in a typical month? Twice this amount? Then you would save roughly ½ your electric bill if you installed a 3 kW system.
9. Consider how much money you save per month to figure out how long it will take to pay off your system.

Another way to look at the math – in reverse:

1. Take a look at your electric bill to find the number of kilowatt-hours (kWh) you use in a month. Remember that your summer bills may be higher than those in winter (or vice versa) so determine an average.
2. Multiply your kWh by 1000 to get a number in terms of watts.
3. Divide this number by the average number of days in a month: 30.5
4. Divide the resulting number by the average number of good hours of sunlight per day: 5.4
5. Now divide the resulting number by the output of the solar module you intend to use. A standard is 175 watts.
6. The resulting number is about how many modules you would need to meet all your power needs.

1. There is a $2,000 federal rebate for solar installations until 12/31/2008.  We are hopeful that Congress will extend the rebate one or more years.
2. The most productive system is located on a South- or West-facing roof (or area) that is shade-free from 9 am – 3 pm every day of the year.
3. Generally speaking, you will need ~ 1 square foot of space for every 10 watts. So a 3 kW system would take ~ 300 square feet; a 4 kW system would take ~ 400 square feet.
4. You do not need to size a system to meet all your energy needs. You will remain a customer of your electric company, so you can use more (or less) power as needed.
5. When considering “payback” time, think about the price of electricity per kWh. Has it increased in the past? Will it increase in the future? By how much? We do not know the answer either, but the question should be factored in to your decision-making.
6. All energy providers are obligated to allow “net-metering” which means that the electric meter must be able to run backwards (i.e. when you are generating electricity). However, they are not obligated to pay you a set $ amount, or anything at all, if you generate more energy than you use in a month. Check with your energy provider to find out their particular “Tariff Agreement”.
7. Be sure to check with your Homeowners’ Association before committing to a solar PV installation. For some odd reason that we simply cannot imagine, some are opposed to the “look” of solar.

Source:  HomePower Magazine April/May 2004 Paul Symanski "Money From The Sun"

Since 1926 the average rate of return has been 10.2%.  The inflation rate has been 3.05%.  This leaves the real rate of return at 7.15%.  This graph assumes interest payments are reinvested. 

Savings on utility bills are like post-tax income.  This is crucial in the analysis:  you pay taxes on interest income; you don't pay taxes on money you save.

Capital gains tax reduces the traditional stock investment return to 5.65%.

What if you take the savings realized from on-site generation of solar-electricity, reinvested it and any interest earned as you do for traditional investments, how would it compare?

The PV vs. Traditional graph below shows the results of on-site solar-electric generation versus a traditional investment with a 7.15% return.  When inflation and taxes are taken into account, the solar investment is the winner.

From your electricity bill you will recall that power is not charged at a flat rate. The hours of 3:00pm ot 7:30pm are usually charged as "Peak" power and can be anywhere from 2-5 times the normal cost per kWh.  Much of your savings is realized during these peak power times. Your PV system will produce the most power during these times removing the largest portion of your energy bill. System sizing becomes an important factor here because you want to use all of your PV power at peak power times to get the fastest "simple payback" on your system.