small solar electric system economics
![solar house](../../images/solar_house.gif)
The economics of the small solar electric or photovoltaic (PV) system are determined by both the capital and operating costs. Capital costs include the initial costs of designing and installing a PV system. Operating costs include the costs associated with maintaining and operating the PV system over its useful life.
The factors that affect both capital and operating costs include:
Electricity consumption
Before selecting system components and sizing a PV system for an existing home, you should evaluate your energy consumption patterns and try to reduce your home's electricity use. You can start by performing a load analysis, which includes these tasks:
By understanding your "energy habits" and becoming more energy efficient, you can reduce the size of the PV system you'll need, lowering both your capital and operating costs.
If you're designing a new home, you should work with the builder and the solar professional to incorporate your PV system into your whole-house system design – an approach for building an energy-efficient home.
PV cost considerations
Ask your PV provider how much electricity your new PV system will produce per year (measured in kilowatt-hours) and compare that number to your annual electricity usage (called demand) to get an idea of how much you will save. As a rule, the cost per kilowatt-hour goes down as you increase the size of the system.
You should also compare the purchase price of utility-generated electricity to the higher costs of smaller PV systems. PV-generated electricity is usually more expensive than conventional, utility-supplied electricity. However, these costs will vary by geographic location.
Solar rebate programs, subsidies, and other incentives can help make PV more affordable. Tax incentives may include a sales tax exemption on the PV system purchase, a property tax exemption, or state personal income tax credits, all of which provide an economic benefit to consumers by lowering high capital costs.
Some solar rebate programs are capped at a certain dollar amount. Therefore, a solar electric system that matches this cap maximizes the benefit of the solar rebate.
Many homeowners use PV systems because other considerations – such as environmental benefits and energy independence – tip the balance in their favor.