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The Payback Period for a typical Residential solar panel installation is around 7 years. Currently available Incentives mean you only have to pay 36% of the total cost.
You have a 1 to 2 year window to install panels at this 64% discount so start getting yourself up to speed. Start with the Roof Assessment section in menu above.
$ 13,000 Initial Cost of Solar Array.
$ -3,900 Federal Tax Credit.
$ -4,400 Solar Renewable energy Credits (SREC)
$ -4,700 Remaining cost will be offset by electricity production over the next seven years.
PAYBACK PERIOD & INTERNAL RATE OF RETURN
The panels are expected to produce $ 4,700 worth of electricity in just over 7 years. And $ 17,760 worth of electricity over the life of the panels for an Internal Rate of Return of 10%.
WHY INSTALL SOLAR PANELS NOW?
The 30% Federal Tax Credit starts to go away after 2019 so start getting yourself up to speed so you can complete your research and installation by the end of 2019 at the latest.
The recent passage of the Illinois "Future Energy Jobs Act" as well as the passage of a Illinois State Budget signaled political stability and locked in favorable solar incentives. The drop in solar panel installation costs along with rising electricity prices have now made it cheaper to generate electricity on my roof than to buy in from the utility.
Every square meter receives 1,500 kWh of solar energy per year.
With this roof being visible from the street, all black panels/frames, racking and flashing were selected. All black panels are 20% less efficient than regular panels but it was decided the added curb appeal made this trade-off worthwhile.
BILL OF MATERIALS
15 Solar Panels ( 280Watt - All Black )
- Canadian Solar (Model: CS6K-280M)
15 Power Optimizers (Frame Mounted)
- SolarEdge (Power Optimizer)
Inverter (Converts DC to AC)
- SolarEdge (Model: SE3800A-US)
Roof Connection (Black Flashing/Post)
- IronRidge (Model: FM-FF2-001-B)
Racking (Black Rails and Skirt)
- IronRidge (Model: XR Rail)
Knoch Knolls Nature Center, Naperville, Illinois
72 Panels @ 260W/Panel = 18.7kW System)
Supplies 13% of the power needed for the building
RETURN ON INVESTMENT (ROI)
Solar ROI Chart
$ 13,000 = The total initial cost before incentives. Payback Period is 7 years.
$ 9,100 = Cost after this years 30% Federal Solar Tax Credit ( Saves me $3,900).
$ 4,700 = Cost after my 1st 5 year SREC contact that pays me $220/quarter. ( Saves me $4,400).
$ 0 = Cost after 7 years and a few months I will have generated $4,700 worth of electricity.
$ 600->900 = Then every year the panels will continue to generate at least $600 worth of electricity.
Here is a graphic representation of cash flow from installation through the 25 year life expectancy of the panels.
You'll notice that in addition to generating your own electricity there are two critical sources of income.
You will deduct 30% of the Solar System cost from your federal taxes. (2017/2018)
Ensure your solar installer sets up your initial 5 year SREC contract as part of your installation contract.
Learn more about SRECs here.
The combination of Federal Tax Credit and SRECs gets your payback period as short as 7 years. With generated electricity alone your payback period can be as long as 22 years.
KEY CONCEPT YOU SHOULD UNDERSTAND
You will frequently hear references to the SIZE of a solar array. Usually somewhere between 4 to 10 KiloWatts for residential installations. This is NOT the amount of electricity the array will produce in a year. This number IS the amount of electricity the array will produce in just 1 hour of full sun. To determine the arrays yearly output you need to multiply the array SIZE by the number of hours of full sun available in your location in a year. For my roof this is around 1464 kWh/Year.
So my 4.2 kW Solar Array X 1,464 kWh/year = 6,149 kWh/Year of Electricity.
How do you know how much money you'll save?
Collecting Solar Energy is just like collecting Rainwater.
If you multiply the size of the bucket by how frequently it rains you can determine how many gallons you can expect to capture a year.
Bucket Size (5 Gallon) X Annual Rainfall (25 Gallons) = 125 Gallons
Then multiply this by the amount you pay for a gallon of water to determine your savings.
125 Gallons X Cost of a Gallon ($ 1.50) = You Saved $ 187.50
Collecting Solar Energy
If you multiply the size of the Array by how frequently the sun shines you can determine how much energy you can expect to capture a year.
Array Size (4.2 kW) X Annual Solar (1,464 kWh = 6,149 kWh
Then multiply this by the amount you pay for a kWh of electricity to determine your savings.
6,149 kWh X Cost you pay per kWh ($ .1135) = You Saved $ 698
Link to find your: Annual Solar Energy
For accurate collecting capacity calculations, always reduce the Nameplate Array Size (In this example 4.2kW) by 22%. Panels on a roof get hot and so are less efficient (-9%), converting Direct Current to Alternating Current and a few other factors (-13%) are what accounts for this 22% reduction.
Nike Sports Complex, Naperville, Illinois
45 Panels @ 270W/Panel = 12kW System)
Supplies 30% of the power for Nike Sports Complex
Knowledge Is Power
KNOWLEDGE IS POWER
I've organized everything I've learned about Solar Energy in these first four sections.
It's best to read them in order starting with "Roof Assessment" then "Energy Production", "Utility Interaction" to "Payback Period".
North Central College, Naperville Illinois
Residence Hall/Recreation Center (Res/Rec)
1,632 Panels @ 330W/Panel = 538kW System
Supplies 22% of the power for the building.
If you have questions about this site, or would like more information about the technology and economics of solar energy, Feel free to contact me.
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