What is the payback period on a renewable energy investment?
The payback period can vary widely depending on the technology, and the availability of grants and tax incentives. It also depends on the stability of utility energy prices. Most experts use a conservative 4% yearly inflation rate for utility electric rates. Actual rate increases have at times been much higher. For example, utility inflation rate in California has averaged 6.7% over the last 30 years. Ohio increases have varied widely from year to year and company to company, at times exceeding 10%.
Using a 4% annual utility inflation rate, a residential solar PV system that qualifies for a state grant and the federal tax credit, would pay for itself in approximately 8 to12 years. A commercial solar PV system has a much faster payback period because the 30% federal tax credit is not capped, and MACRS accelerated depreciation can be applied to the capital investment. This can result in a payback for some commercial solar PV systems of under 7 years!
A large wind generator in the right site can pay for itself in 6-10 years. A 12 to18 year payback is typical for smaller, residential Ohio wind systems.
For solar thermal, a domestic hot water systems usually takes 10-15 years to pay back. The shortest pay back for our region is using solar thermal technology to heat a swimming pool. It can pay for itself in as little as 2-3 years.
Several studies have shown that the average re-sale value is increased for properties with renewable energy systems. It can be as much as a $20 increase in property value for every $1 of annual energy cost reduction.
In all cases, a renewable energy system provides the owner the advantage of locking in the cost for some portion of their energy usage, and essentially free energy from the system once the cost of the initial investment has been recovered.
Solar Photovoltaics - How much should I expect to pay?
General cost break down
• Complete residential systems installed: $5-7/watt
• 1 KW System: $8-11,000
• 2 KW System: $14-16,000
• 4 KW System: $22-27,000
• Solar modules: $2-3/watt, approximately 50% of total cost
• Installation: approximately $1/Watt, 10-20% of total cost
• Inverter & Balance of System: approximately $2/Watt, 30-40% of total cost
See our Residential Solar PV and Commercial Solar PV sample price sheets for more information.
How does a solar panel work?
Sunlight is composed of photons, or particles of solar energy. These photons contain various amounts of energy corresponding to the different wavelengths of the solar spectrum. When photons strike a photovoltaic cell, they may be reflected, pass right through, or be absorbed. Only the absorbed photons provide energy to generate electricity. When enough sunlight (energy) is absorbed by the material (a semiconductor), electrons are dislodged from the material's atoms. Special treatment of the material surface during manufacturing makes the front surface of the cell more receptive to free electrons, so the electrons naturally migrate to the surface.
When the electrons leave their position, holes are formed. When many electrons, each carrying a negative charge, travel toward the front surface of the cell, the resulting imbalance of charge between the cell's front and back surfaces creates a voltage potential like the negative and positive terminals of a battery. When the two surfaces are connected through an external load, electricity flows.
Photovoltaics (PV), a process by which solar energy is converted directly to electricity through a photovoltaic cell is commonly called a solar energy. A photovoltaic cell is a non mechanical (no moving parts) device usually made from silicone. The photovoltaic cell is the basic building block of a PV system. Cells are electrically connected into a packaged weather-tight module. Modules or panels can be further connected to form an array. As many modules as needed can be connected to form the array size (power output) needed. Photovoltaic cells generate direct current (DC) power. When direct current from photovoltaic cells is to be used in homes, commercial applications, or sold to electric utilities, it must be converted to alternating current (AC) by an inverter.
When was the PV cell invented?
The PV cell was discovered in 1954 by Bell Telephone researchers examining the sensitivity of a properly prepared silicon wafer to sunlight. Beginning in the late 1950s, PVs were used to power U.S. space satellites. The success of PVs in space generated commercial applications for PV technology. The simplest photovoltaic systems power many of the small calculators and wrist watches used everyday. More complicated systems provide electricity to pump water, power communications equipment, and even provide electricity to our homes.
Historically, PVs have been used at remote sites to provide electricity. However, a market for distributed generation from PVs may be developing with the unbundling of transmission and distribution costs due to electric deregulation.
Why use PV?
Photovoltaic conversion is useful for several reasons. Conversion from sunlight to electricity is direct, so that bulky, dirty, noisy mechanical generator systems are unnecessary. The modular characteristic of photovoltaic energy allows arrays to be installed quickly and in any size required or allowed. The siting of numerous small-scale generators in electric distribution feeders could improve the economics and reliability of the distribution system. Also, the environmental impact of a photovoltaic system is minimal, requiring no water for system cooling and generating no by-products.
How efficient are the panels?
The performance of a photovoltaic array is dependent upon sunlight. Climate conditions (e.g., clouds, fog) have an effect on the amount of solar energy received by a PV array and, in turn, its performance. Most current technology crystalline photovoltaic modules are about 12 to 13 percent efficient in converting sunlight into electricity. Some modules provide as much as 20 to 21 percent efficiency. Further research is being conducted to raise this efficiency to 23+ percent.
Thin film solar PV products generally are less efficient. They range from 6% to 10%. However, their retail cost per watt is comparable to crystalline modules.
Who should consider buying a wind turbine?
A residential wind turbine can be a relatively large device and is not suitable for urban or small-lot suburban homes. Except for very small wind turbines (i.e., with rotors one meter or less in diameter) on very small towers, a property size of three acres or more is desirable.
The economics of a wind system are very sensitive to the average wind speed in the area, and to a lesser extent, the cost of purchasing electricity. As a general rule of thumb, if economics are a concern, a turbine owner should have at least a 11 mph average wind speed and be paying at least 10 cents/kWh for electricity.
What size turbine would I need for my home?
American homes use approximately 10,200 kilowatt-hours (kWh) of electricity per year (about 850 kWh per month). Depending upon the average wind speed in the area, a wind turbine rated in the range of 1.5 to 5 kilowatts would be required to make a significant contribution to meet this demand.
Will a small wind turbine save me money?
The wind turbine typically lowers your electricity bill by 50 to 90 percent. It is not uncommon for wind turbine owners with total-electric homes to have monthly utility bills of only $8 to $15 for nine months of the year. In northern parts of the country where less air conditioning is used, the bills can be very low year-round. The amount of money a small wind turbine saves you in the long run will depend upon its cost, the amount of electricity you use, the average wind speed at your site.
How do residential wind turbines work?
A wind turbine, which is installed on top of a tall tower, collects kinetic energy from the wind and converts it to electricity that is compatible with a home's electrical system.
In a normal residential application, a home is served simultaneously by the wind turbine and a local utility. If the wind speeds are below cut-in speed (6-8 mph) there will be no output from the turbine and all of the needed power is purchased from the utility. As wind speeds increase, turbine output increases and the amount of power purchased from the utility is proportionately decreased. When the turbine produces more power than the house needs, the extra electricity is sold to the utility. All of this is done automatically. There are no batteries in a modern residential wind system.
Small wind systems for remote applications operate somewhat differently.
Will it help the environment if I install a wind turbine at my home?
Yes. Wind turbines produce no pollution, and by using wind power you will be offsetting pollution that would have been generated by your utility company. Over its life, a small residential wind turbine can offset approximately 1.2 tons of air pollutants and 200 tons of greenhouse gases (carbon dioxide and other gases which cause climate change).
Don't I have to take wind measurements for a year or more?
For most residential systems, the cost of taking wind measurements is not justified. Wind resource data published by the U.S. Department of Energy is sufficient for an experienced evaluator to predict wind turbine performance. Ohio residents have an even better resource. The Ohio Wind Resource database can provide wind maps and a wind resource report for any location in the state.
In very hilly or mountainous areas or if you are considering installing $200,000 or more wind system, it may be best to collect wind data before purchasing a system to ensure that your site has a good wind resource.
Do wind turbines make noise or interfere with TV reception?
Small wind turbines do make some noise, but not enough to be found objectionable by most people. A typical residential wind system makes less noise than the average washing machine. Wind turbines do not interfere with TV reception.
Will I have to change any of the wiring in my house?
No. A wind turbine is easily retrofitted to virtually any home without the need to change any wiring or appliances. In most cases, the utility will install a second utility meter to measure how much surplus electricity it is purchasing from the turbine owner.
What about towers?
A 50- to 120-foot tower is usually purchased along with the wind turbine. Towers this tall are necessary to raise the wind turbine above turbulence generated by obstacles on the ground and trees. Wind velocity and, therefore wind turbine performance, increases with altitude. Several different types of towers are available, depending upon which manufacturer you select. Each type has its advantages; the most economical type of tower is the guyed lattice tower, but a hinged tower can be easier for you to install yourself and provides easier access for maintenance. The most common tower installed by Dovetail is a free standing steel lattice tower. We also provide elegant monopole towers.
How much does a wind system cost?
A small turbine (500watt - 3kW) can cost anywhere from $6,000 to $30,000 installed, depending upon size, application and service agreements with the manufacturer. Customers with greater energy requirements than the standard home can take advantage of 'economics of scale' with Dovetail's medium to large wind turbines.
How reliable are wind turbines? Will I have to perform much maintenance?
Most small turbines have very few moving parts and do not require any regular maintenance. They are designed for a long life (20 years) and operate completely automatically. Annual maintenance/inspection typically involves minimal lubrication and a re-torque of bolts.
How do wind turbines perform as an investment?
A properly installed wind system will usually recoup its investment through utility savings within six to 15 years and after that the electricity it produces will be virtually free. Over the long term, a wind turbine is a good investment because a well-sited wind system increases property value, similar to any other home improvement. Many people buy wind systems in preparation for their retirement because they don't want to be subject to unpredictable increases in utility rates.
How would I have a wind turbine installed at my home?
Dovetail Solar and Wind offers either complete "turnkey" (ready-to-operate) installations or the option to purchase direct from the factory and install the system yourself. The first option offers more customer support from Dovetail. Self-installation offers significant savings and a hands-on understanding of the turbine. Prospective owners can discuss the options available with us to decide which method best suits their budget and technical skills.
What is net metering?
In most states, consumers can install small, grid-connected renewable energy systems to reduce their electricity bills using a protocol called net metering. Under net metering, electricity produced by the renewable energy system can flow into the utility grid, spinning the existing electricity meter backwards. Other than the renewable energy system, no special equipment is needed.
Even in the absence of net metering, consumers can use the electricity they produce to offset their electricity demand on an instantaneous basis. But if the consumer happens to produce any excess electricity (beyond what is needed to meet the customer's own needs at the moment), the utility purchases that excess electricity at the wholesale or 'avoided cost' price, which is much lower than the retail price. Net metering simplifies this arrangement by allowing the consumer to use any excess electricity to offset electricity used at other times during the billing period.
Why is net metering important?
There are three reasons net metering is important. First, as increasing numbers of primarily residential customers install renewable energy systems in their homes, there needs to be a simple, standardized protocol for connecting their systems into the electricity grid that ensures safety and power quality.
Second, many residential customers are not at home using electricity during the day when their systems are producing power, and net metering allows them to receive full value for the electricity they produce without installing expensive battery storage systems.
Third, net metering provides a simple, inexpensive, and easily-administered mechanism for encouraging the use of renewable energy systems, which provide important local, national, and global benefits.
What are the benefits and costs of net metering?
Net metering provides a variety of benefits for both utilities and consumers. Utilities benefit by avoiding the administrative and accounting costs of metering and purchasing the small amounts of excess electricity produced by these small-scale renewable generating facilities. Consumers benefit by getting greater value for some of the electricity they generate, by being able to interconnect with the utility using their existing utility meter, and by being able to interconnect using widely-accepted technical standards.
The only cost associated with net metering is indirect: The customer is buying less electricity from the utility, which means the utility is collecting less revenue from the customer. That's because any excess electricity that would have been sold to the utility at the wholesale or 'avoided cost' price is instead being used to offset electricity the customer would have purchased at the retail price. In most cases, the revenue loss is comparable to having the customer reducing electricity use by investing in energy efficiency measures, such as compact fluorescent lights and efficient appliances.
The bill savings for the customer (and corresponding revenue loss to the utility) will depend on a variety of factors, particularly the difference between the 'avoided cost' and retail prices. In general, however, the difference will be between $5 - $10 a month for a residential-scale photovoltaic (PV) system (2 kW), and between $25 - $50 a month for a farm-scale wind turbine (10 kW).
Moreover, any revenue losses associated with net metering are at least partially offset by the administrative and accounting savings, which are not included in the above figures.
Can I really use my existing meter to take advantage of net metering?
The standard kilowatt-hour meter used by the vast majority of residential and small commercial customers accurately registers the flow of electricity in either direction. This means the 'netting' process associated with net metering happens automatically-the meter spins forward (in the normal direction) when the consumer needs more electricity than is being produced, and spins backward when the consumer is producing more electricity than is needed in the house or building.
How can I be sure that these small-scale generating systems are safe?
During the last decade there has been tremendous technological progress in the design of the equipment that integrates small-scale generators with the utility grid. Called 'inverters' because they were originally designed only to 'invert' the DC electricity produced by solar arrays and wind turbines to the AC electricity used in our homes and businesses, these devices have evolved into extremely sophisticated power management systems. Inverters now include all the necessary protective relays and circuit breakers needed to synchronize safely and reliably with the utility grid, and to prevent 'islanding' by automatically shutting down when the utility grid suffers an outage.
Moreover, this protective equipment operates automatically, without any human intervention needed. Most new inverters comply with all nationally-recognized codes and standards, including the National Electrical Code (NEC), Underwriters Laboratories (UL), and the Institute of Electrical and Electronic Engineers (IEEE). These systems are now operating safely and reliably in every state in the nation.
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- courtesy of the American Wind Energy Association.
FAQ on Net Metering
- The summation of net metering was published in the excellent resource, Home Power magazine. It appears in full form, and can also be found at Home Power's web site.