Introduction to Solar Photovoltaics
Solar Photovoltaics is still only a small part of Alberta’s energy provider but its popularity is growing. In our three-part series of articles, we have discussed the most frequently asked questions about a Solar Photovoltaic System and how it works. In the third and final article of the series, we will discuss the costs related to a Solar PV System. If you have further questions or would like to discuss solar options for your home or business, please feel free to contact us at 403-742-1676 for a no-obligation consultation.
Is PV electricity expensive?
PV generated electricity is less expensive than conventional utility electricity in many parts of the world. When the cost of producing electricity from alternative energy sources like PV or wind is less than or equal to the price that your utility charges for electricity, we say that grid parity has been reached. Grid parity has happened in many parts of the world. It has not yet happened in Alberta however we are getting close.
It is difficult to pinpoint an average cost of a Solar PV System without in-depth discussions with the end users. This is because the usage in one home could be very different than the usage in their neighbours home depending on specific factors such as how many people live in the home, how much energy is used, how many appliances are in the home, etc.. Every system is unique to the client and the fees vary depending on the equipment chosen to install, the number of panels required for the usage, the location of the install, etc.. Time is also a factor in estimated pricing as solar grows in popularity and new advancements are made causing prices to fluctuate. With this in mind, the Alberta average in 2019 for a Solar PV system install was $2.77 – $3.02/Watt with the median price being somewhere around $2.89/Watt.
Sizing Your System
To determine the size of the system for your ideal install, you need to understand how much energy you use during the course of a year. Your monthly electrical bill will show your usage (in kWh). Calculate your annual energy usage by adding the 12 consecutive months prior to the current invoice. You could also take one month and multiply it by 12 however your estimate may be off slightly as your energy usage fluctuates over the seasons. After you know how much energy you use, you can calculate the size of the Solar PV system that you’ll need by using the following equation:
Size of system needed (in kW) = yearly energy use (in kWh) / 1,276h
(where 1,276h equals the annual average equivalent of full sunlight hours in Alberta)
So let’s pretend you added up your power bills and determined that you use 7,200kWh over the course of a year (the Alberta average). You would then complete the calculation and determine that you need a 5.64kW Solar PV system!
7,200kWh / 1,276h = 5.64kW or 5,640 Watts
Calculating the Cost of Your System
To calculate an approximation of how much your system will cost, take the size of your system determined above and multiply it by the $2.89/Watt average cost of installing a solar system in Alberta (2019). Using the example from the sizing section, we can see that a 5.64kW system would cost approximately $16,299 to install.
System cost = size needed x cost per installed watt
= 5,640 Watts x $2.89/Watt (2019 average)
Please note that the exact price of the system depends on several factors including the system size, the quality of equipment used, and the complexity of the location. Installation prices can easily go as high as $3.50/Watt or as low as $2.77/Watt. The numbers above are being used for example purposes only.
The majority of costs comes from the expense of initially purchasing and installing the system. This investment may feel like paying for 12-13 years of electricity bills at the start however your monthly electrical costs will be substantially reduced or possibly even gone all together. Also, at some point in time your system will start to generate free power.
Here’s a simple way to approximate your solar return on investment (ROI):
1. Start with your estimated installed solar system price (as determined by the calculation above).
2. Divide that number by the cost of electricity from your local utility company. The Alberta average is currently $0.167 per kilowatt hour (February 2020). This can fluctuate dramatically and is being used for example purposes only.
3. Divide the result by your annual electricity usage in kilowatt hours as calculated previously. The provincial average is 7,200kWh/year per household.
The result is your payback period measured in years.
Here’s an example, using the listed averages for energy rates and consumption:
$16,299 system price ÷ $0.167/kWh ÷ 7,200 kWh/year = 13.55 Years
Most solar panels are warrantied for 25 years. You can divide the final number into 25 to calculate the total payoff of your investment into solar. In this case, our example system would pay for itself in half the time and long before the end of the warrantied life of the system.
Improvements in manufacturing technology has substantially reduced and will continue to reduce the cost of Solar Photovoltaic systems. The price of silicon PV cells has dropped from $76.67 in 1977 to well under a dollar today and prices continue to decrease. Keep in mind that aiming for the cheapest price shouldn’t be your ultimate goal. Remember that the energy output on solar equipment is guaranteed for 25 years, so you want to make sure your installation job is good enough to support that.
If you have further questions or would like a free no obligation consultation, call us today at Sirrom Wiring and Electrical Services Ltd. As a member of Solar Alberta, we make it our commitment to offer you the most up to date information in this ever changing trade and continue to educate our staff as the industry grows and improves.