Saturday, August 4, 2012

The Residential Solar Economics Basics

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This article was written to give us a basic idea just how much  residential solar panel electrical systems cost.  Not a problem.  Below is a truly basic presentation of how much your system will cost with a BONUS detailed math on why these systems make a lot of sense financially. 
Section I

ON-Grid (Grid Connected Solar) – Your Solar power is connected to and interacts with the local Elec Company such as MERALCO, ETC.

A.                The Electrical Consumption and Expense

Kwhr of electricity used   600 kwhr/month
Basic (Ave rate)                Ph 9.24/kwhr
Total Elec Bill                    Ph 5,544/month

B.                 The solar electric system needed to ELIMINATE  the expensive bill.

Solar System Needed   3500 watts (3.5kw)
Solar Panel Size 240 watts /panel
Solar Panels total  15
Solar Inverter size   - 4kw
Space needed to install  25 square meters
Load KG  292

C.                 Funding, necessary to acquire the system.

Loan Total   P225,658.00/41pesos =$5503.00
Loan Interest 8%
Amortization in years 15
Monthly  P2197=$54

D.                Day One of System in FULL OPERATION, the SAVINGS start :

1.                   Your electric meter starts to run BACKWARDS which means your system ,AS DESIGNED, produces more power than you are using. You are NOT using any electricity from Meralco.  Panel size and number are designed to produce a total kwhr more than you use during the day.
2.                 The excess power generated by the solar panels are ‘SOLD’ BY YOU to Meralco, through Netmetering.
3.                 At night time the panels DO NOT PRODUCE ELECTRICITY.  You then ‘BUY BACK’ the power from MERALCO.
4.                 In effect you simply used MERALCO as your FREE ‘STORAGE’ of electricity PRODUCED  BY YOU, during the day so you can get it back at night. 
5.                 At the end of the month , your electric bill is Zero Pesos .  And it is by LAW that you can do this if you have solar panels on your roof and you have Netmetering approved according to the Law.
Now, let us look at the rest of the excitement:

You used to pay P5544 per month for your electricity. Now your bill is zero. Your monthly payment to the loan is P2197 per month. Looks like a monthly windfall of P3347!

Being a smart guy that you are , you sink half or more of the windfall into the loan. Your amortization years (number of years you pay into the loan)  drop according to your aggressiveness in paying off your loan. 

Let us say you ‘killed’ your loan in 7 years. 
Day one after pay off of your loan is freedom day!  Your electricity from day one of year 8 is FREE.

Solar panels are known to last 30 to 40 years with the least efficiency loss and least maintenance or care. That is roughly 22 to 32 years OF GETTING FREE ELECTRICITY with the sunlight as your source!

The inverters (DC to AC) last between 10 to 15 years .  All these components are under warranty for a certain number of years.

The secret of inverters or NO inverters:
Replace all your equipment with DC (Direct Current) appliances and you get rid of the inverter. Solar panels produce DC. But DC appliances are hard to come by and expensive.

Section II

Off-Grid Solar Electric Systems

Off-grid systems are solar electric systems that are not tied up to the grid and are capable of sustaining their own electrical loads without the assistance of electric companies. This means YOU RUN ALL  YOUR HOUSE OR BUILDING ELECTRICAL TOTALLY FROM YOUR SYSTEM AND YOU ARE NOT TIED UP TO MERALCO!

This independence and self sustainability is achieved using back up power. Small wind power or windmill driven generators, diesel generators and batteries are the most common back up power.  I choose batteries as more reliable sources of back up power. 

They are very efficient , quiet, have minimum maintenance and very low cost to run. They are also powered up or charged by the solar panels during the day.  The batteries ‘give back’ the power to you at night when solar are not producing , through the same inverters that convert the DC produced by solar panels. The batteries which  are DC sources, convert your DC power to house AC.

Note: The cost analysis above is typical of small (low kw) systems for residentials . As your system gets bigger into the hundreds of Kilowatts to  MW(million watts) level , the price of the systems drop.

Solar power systems , whether installed on your roof or backyard, your farm , will produce power where you set it up. It has no ‘ electrical generators’ that have too many moving parts that break down, it makes no noise, very light and portable , scalable in size from the smallest power source to charge your cell phone, cook your food in the middle of the desert, power up your tv on the mountain, all the way up to the huge Multi-Megawatt systems that power up whole cities or province. No other electrical power source can even come close to this versatility.

And that includes its financial advantage over the rest of the power generating lot. It truly makes perfect sense to go solar.

Joe Joson
Communications, Marketing, Consulting
Lim Solar Philippines 
Mendoza Solar , LLC -California/Nevada Corporation


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1 comment:

  1. For my experience, I really believe in the power of the solar panel and solar energy. It is really helpful to everyone.
    Make Money Selling Residential Solar from Home