Technology Solutions
PV + Storage
Welcome to our guide to on the costs of rooftop solar configurations! Whether you're new to solar or looking to upgrade, this page will help you understand the financial aspects of different setups. From basic systems to those with battery storage, we'll cover what you need to know to make the best choice for your home and budget. Explore your options and start saving with solar!
Subteam
Prof. Kristopher O. Davis
Prof. Mengjie Li
Elizabeth Trader
Introduction to PV and Energy Storage Technologies
Photovoltaic (PV) technologies directly convert light into electricity. PV modules are just another name for solar panels, and like many other products, different variations of PV modules can be used to generate energy. When connected to an inverter, the direct current (DC) power produced by the modules is turned into alternating current (AC) power and synched to the power coming from the grid so that from the perspective of the electrical loads within a home or building, the power from the PV system and grid are indistinguishable. There is no fuel required! However, the power generated by the PV system is directly proportional to the intensity of sunlight. Since power consumption does not stop when the sun goes down, either the grid or some type of energy storage system is required to ensure power is provided at night.
Costs and Benefits of PV + Storage Systems
PV systems obviously cost money to design, install, and (to a lesser extent) maintain. Almost all of the costs happen up front, and then the PV system produces energy over its lifetime and that energy is worth money! It’s therefore a good idea to think of a PV system as an investment that warrants a cost-benefit analysis. A common way of doing this is by taking the total costs (e.g., in dollars) and dividing by the total amount of energy the PV system is expected to produce (e.g., in kilowatt hours or kWh). This yields the levelized cost of energy (LCOE) in units of $/kWh, a useful metric since it can be compared directly to retail rates for electricity provided by utilities.
The LCOE values for a location in Florida are shown below for a few different scenarios.
PV system without storage vs. PV system with storage
Three different PV module technologies
Three different loan interest rates
A few other parameters are also varied to account for some uncertainy in different inputs associated with the cost and performance models used to calculate LCOE. Box plots are shown for each each scenario, and these plots indicate the expected range of LCOE values that can be directly compared to retail electricity rates shown as a horizontal dashed line in these figures.
Levelized Cost of Energy - PV without Storage
Here are the LCOE values for PV systems without any energy storage. Energy storage systems provide real functionality, but add cost and do not actually produce energy, so these values are all pretty low. In fact, for any type of module and for any loan interest rate, the resulting LCOE is lower than the retail electricity rates paid by Floridians.
Figure 1: LCOE values for different PV system configurations without energy storage and varied loan interest rates. Simulations were performed with Orlando, Florida as the system location, but are generally representative for the entire state.
Levelized Cost of Energy - PV with Storage
Without energy storage, a PV system does not provide any increase to resilience. For example, if a hurricane knocks out power from the grid, the PV system will also shut down because the inverter must maintain connectivity to the grid for safety reasons. With energy storage and the proper electrical switchgear, power produced by the PV modules can be used directly and also stored as energy for later usage. Of course the sizes of the PV system and storage system will dictate what level of power consumption can be maintained over time and therefore the total amount of energy for some extended period of time.
The figure below shows that only system financed with a very low interest rate (or systems paid for with cash) have a LCOE than the retail electricity rates for this situation in Florida. This shows that the financial considerations are much more critical than the technology choices for the situation of an individual or family looking to purchase their own PV + storage system for their house.
Figure 2: LCOE values for different PV system configurations with energy storage and varied loan interest rates. Simulations were performed with Orlando, Florida as the system location, but are generally representative for the entire state.
Adding a battery to a solar energy system does increase the overall cost, but it also brings significant benefits, particularly in terms of resilience during power outages. While the upfront investment is higher, the battery allows you to store excess solar energy generated during the day and use it when the sun isn't shining, such as at night or during a grid failure. This added layer of energy independence ensures that you have power when you need it most, making your home more resilient against unexpected outages. Moreover, in areas prone to power interruptions, the peace of mind and continuous power supply provided by a battery can be invaluable, turning a higher cost into a worthwhile investment.
When it comes to the overall cost of solar energy, the type of panel—whether premium, standard, or thin film—plays a role, but it is not as significant as the financial parameters, such as loan terms and conditions. While premium panels might offer higher efficiency and longevity, the difference in energy production cost is often marginal compared to the impact of your financing strategy. The terms of your loan, interest rates, and repayment period can drastically affect your monthly payments and total investment over time. Choosing the right financial plan tailored to your budget can often outweigh the incremental benefits of opting for the most expensive solar panels. In short, understanding and optimizing your financial parameters is key to maximizing the affordability and savings of your solar energy system.
Financial terms play a crucial role in determining the overall cost of solar energy, often more so than the specific type of solar panels you choose. Factors like loan interest rates, origination fees, and the length of the repayment period can significantly influence your monthly payments and the total amount you'll end up paying over the life of your solar energy system.
For instance, high origination fees and interest rates can quickly erode the potential savings from switching to solar. In some cases, these unfavorable terms could make the investment less financially viable, offsetting the benefits of lower electricity bills. This is why it's essential to perform thorough due diligence when securing financing for your solar project.
Exploring different solar lenders, such as the Solar Energy Loan Fund (SELF), can help ensure that you're receiving fair and transparent financing terms. SELF and similar organizations often provide more favorable loan conditions tailored to help homeowners afford solar installations without hidden costs or excessive fees. By taking the time to compare lenders and understand the full scope of the financial agreement, you can protect your investment and maximize the long-term savings and benefits of your solar energy system.
