Five years ago Forbes magazine proclaimed that “a new era for solar power is approaching.”
It isn’t the first time that the promise of solar has been touted as ushering in a new era in energy.
(Content currently under review: 12/15/2013)
PV arrays can be used to generate electric power for many applications such as homes, cabins, telecommunication equipment, lighting, and other electrical equipment. These power systems can be either connected to the electric utility grid, or be "off-grid". The economics of the PV system are determined by both the capital and operating costs. The analysis varies according to the type of PV power system; off-grid, grid connected (non-interactive), and grid connected (interactive).
Off Grid PV
PV systems in Arizona are currently cost competitive with electric utilities for two major areas of applications: Situations requiring utility line extension at high cost (generally for extensions of over 0.5 miles, charged to the customer), or requiring low amounts of power (irrigation control equipment, small lights, etc.) for which the minimum utility charges exceed the amortized cost of the PV system.
The capital (initial) costs of PV systems have been falling in recent years; they currently are around $10 per peak watt of the PV module, including the storage batteries - less if buy-down funds are available. A small house (or larger with house with extensive energy efficiency improvements) with a low usage can function with a PV system as small as 2 kW (peak), thus would call for an capital outlay of $20,000. Assuming a 20-year simple amortization, this would be equivalent to about 20-25 cents per kWh. Such a unit can supply power for many appliances (refrigerators-freezers, pool pumps, etc.) and many lighting systems. It will not provide air conditioning in Arizona's hot climate. Comparable costs for alternatively home generated power using propane, gasoline or diesel operated generators are on the order of 80 cents/kWh.
PV power costs for uses that do not require batteries, such as agricultural water pumping, are lower, in the 15-20 cents/kWh range.
Grid Connected PV
PV power systems currently cannot produce electricity competitive with centrally generated power, currently selling for about 10 cents/kWh, on average.
A utility will compare the capital cost of large scale PV arrays to the alternative methods of generating utility scale electric power (oil, coal, natural gas, nuclear, etc). A homeowner will compare the purchase price of electricity to the higher costs of smaller PV systems (with and without batteries). These are not simple calculations as the availability of sunshine varies both with weather patterns and seasonally, and the prices/costs of other sources of electricity also vary.
At present neither homeowner nor utility PV systems are strictly cost effective against utility electric power in Arizona. PV systems are being used by homeowners and utilities in Arizona because other considerations tip the balance in favor of PV systems. Government subsidies, tax rebates/exemptions, the time of day value of summertime PV power, the enhanced value of "Green" power to a utility, etc. can and have made PV systems practical in Arizona. Many homeowners like the ability to continue to operate a home in the absence of the utility (even if they have to implement energy saving strategies).
Grid connected PV systems can be of two major types, grid connected (non-interactive), and grid connected (interactive). An interactive system uses inverters that are capable of converting the dc power from a PV system into ac power that can be fed back into the utility system (at the correct voltage, frequency, phase, and power quality). A non-interactive PV system can only use utility power to supplement the PV system and is not capable of feeding power back into the utility electric grid.
Net metering is a practice offered by some electric utilities to help encourage PV system interconnection. With net metering the homeowner can offset some of the costs of purchased electric power by selling surplus electric power back to the utility. This is an interactive PV system as described above. The net period can be monthly or annual (depending on applicable laws, regulations, and utility policy). Typically a PV system produces more power during the peak sunshine period of the day than the home can use at that time. In an Off-Grid situation this power can be stored in a battery bank for later use, but in a grid connected system with net metering, the excess power can be "sold" to the utility for use by other customers, and is generally an offset to the purchased power (such as nighttime use).
Not all Arizona electric utilities offer net metering, it is necessary to check with the utility serving a specific address to determine if net metering is available as an option. Net metering requires special inverters that are capable of delivering power into a utility, and the utility will want to approve of the inverter and other safety related equipment in order to protect their equipment, personnel, and other customers.