How Much Will It Cost To Install Solar Electric (PV) If My Goal Is To Eliminate My Electric Bill (“Net Zero”)?

Putting it all together… we’ll use an example addressing everything we discussed in our last blog post (See Part 1), using the following assumptions: your kWh usage over the last 12 months was 15,325kWh’s and you don’t anticipate any change in your future usage; you live on a small acreage and have room for a ground mounted system; your roof is shade free, faces southwest (225 degrees from north) and has a 20 degree pitch; you have plenty of roof space but want to know the cost difference between a ground mounted solar system and roof mounted system; and of course you want to get as close to “net zero” as possible.

Using our power production tools (based on 40 years of solar irradiance data collected in Colorado) we can determine that an 12 kW system on your roof will produce approximately 16,095 kWh’s per year (based on the above assumptions); whereas a 10kW ground mount array built at a 40 degree tilt and 168 degrees from north (100% optimal) will produce 15,997 kWh’s. As you can see, this ground mount array will produce approximately the same amount of power (within 98 kWh’s) as the roof mounted array but is much smaller in size (10kW vs 12kW).

An 12 kW roof mounted solar PV system installed by Alt E would cost around \$36,000 (\$3.00/watt), at today’s prices, whereas a 10kW ground mounted system would cost around \$35,000 (\$3.50/watt). As you can see the cost per watt for a ground mount system is a little more than the roof mount system but the total cost is much less since the ground mount system is 100% optimal and produces about the same amount of power as the less optimal roof mounted system. Therefore the return on investment is much higher for the ground mount system since the price is lower!

Taking the next step, let’s assume you decide the ground mount system is the way to go. Using \$35,000 as the price, you will receive a federal tax credit of \$9,100, thereby bringing the cost down to \$25,900. Now let’s assume your electric rate is \$.12/kWh (this is Xcel Energy’s approximate current residential electric rate). Your solar system will save you \$1605/per year at today’s electric rates (15,997kWh’s produced x \$.12/kWh = \$1,919.64 annually). Therefore the total annual financial benefit to you is 1,919.64 in annual savings.

To do a very simple payback analysis, simply divide the net cost (after your federal tax credit) of \$25,900 by the annual financial benefit (savings) of \$1.919.64 to determine that the payback timeframe is 13.5 years. However, we all know that electric rates are only going up (average annual electric rate increase over the past 30 years has been 5% annually – doubling about every 16 or so years), so if you factor in this rate increase going forward, then your actual payback time frame is more likely around 10.56 years. However, even factoring in increasing electric rates doesn’t give you a true financial perspective.