Tag: Solar System Economics

Why Solar Power will change Traditional Power Systems

Solar Site Assessment for your HomeWhy solar power will change traditional power systems and when is the big question facing electrical generation companies, transmission companies, and investors? Utilities in the power generation and transmission business have been cash cows for investors for years. Many investors are beginning to wonder if their cash dividends are at risk. The quick answer is that it depends on how the existing companies respond to this new source of power. How do they manage the environmental impact message for the new and old systems? There is no question that there is less air pollution from solar and wind farm generation compared to coal, oil, and natural gas-fired generation plants. There is a lot of pressure to have a higher percentage of generation come from these sources as time goes on.

Why Solar Power will change Traditional Power Systems

Traditional power system companies must realize that they need to invest in this new technology to protect their investments in transmission systems and retain existing customers while being seen as being progressive from an environmental perspective. Progressive companies will make this transition and therefore protect their dividend stream for investors while producing low-cost electrical power.

The real threat comes from rooftop solar power which removes bottom line revenue from the system. This drives the per unit cost up for everyone else who does not deploy a rooftop solar installation. Remote areas and high cost per kilowatt areas will be the first to convert, simply because of the economics.

An aggressive approach to generating power by traditional power generation companies will help to keep costs to the consumer down. This action will also decrease the motivation to install rooftop solar generation. The jury is still out on how this issue will evolve. However, investors in utilities would be wise to pay attention to these issues.

For more solar power solutions and ideas, click here.


Solar Power Impact on Traditional Power Systems

Solar Power Impact on Traditional Power SystemsThere is no doubt that there will be a solar power impact on traditional power systems. The question that everyone is trying to figure out is how much impact will there be. What aspect of the system will be impacted? Solar power will impact these parts much differently. The areas of power generation can be broken down into the following categories: Fuel; Generation; Transmission; and Delivery. We will take a look at each one of these separately assuming two scenarios.

Solar Power Impact on Traditional Power Systems


Fuel today for electrical power generation depends on sources such as coal, oil, natural gas, nuclear and hydro. Both large solar projects and rooftop solar will have an impact on these sources. Solar is really a new source of fuel. Power is virtually free with no impact on the environment.


Generation will focus on the lowest costs and the least environmental impact. This means wind power and solar projects combined with existing hydropower dams. Generation from steam generated by burning coal, oil, and natural gas will tail off in that order. This change will take place slowly as more and more solar comes online.

Transmission systems will still be required. Unless rooftop solar and local wind farms really take off.  This could still motivate and drive consumers to rooftop installations. Large solar projects and wind farm projects will still require long-distance transmission systems.

Delivery – Delivery will depend on the penetration of rooftop solar panels. Local utilities could find that their revenue could drop significantly. However this is still at least a decade away in North America.

Roof top solutions are becoming more cost-effective. Locations with already high per kilowatt per hour costs will see an impact within the next few years.


Solar System Calculator

A solar system calculator is a must when you are considering installing a solar power system. There are many decisions to be made in addition to design and physical installation. These decisions should be made prior to your decision to purchase or rent a solar power system. Basically, consumers what to determine the answers to several questions. Is it better to lease or rent a solar power system compared to buying a solar power system?  What factors such as interest rate and other fees will impact the payback period and the overall savings? What is the impact regarding maintenance fees?

Solar System Calculator – Vendor Provided

A good solar power vendor will have a solar system calculator that they can provide to the consumer. These calculators help make the decisions surrounding the purchase and installation of solar power systems. Download the app to your smartphone. While others will use a spreadsheet that they can send to the customer. Some sellers may feel that their solar system calculator is a competitive advantage. As a result, they will not release it to the customer. If this happens to you find another provider.

The purchase or rental of a solar power system is a significant decision and the financial analysis surrounding this decision is important to ensure that you gain the maximum savings from the system. Interest rates, fees, maintenance, installation costs, usage, power costs, etc must all be factored into the calculations to ensure that the system is designed to maximize the customer’s return on investment.

There are many solar system calculators available and it may even be to your benefit to try several to compare answers. Also, consider whether you should buy or rent a solar power system. If you buy do you need to borrow the money or do you have the cash available to make this purchase? All of these factors can impact your decision.

Rent or Buy a Solar Power System

The rent or buy a solar power system questions basically comes down to two issues. This assumes that you have already made the decision to become involved in solar power generation for reasons of conservation or to get some control over your electricity costs. This issue is discussed in several other posts on this website. What are the issues? The first is the main one and concerns whether you have the ready cash to pay for the installation and operation of the system. The second is what are the terms and conditions for renting vs. buying and which one makes the most economic sense for your situation.

Rent or Buy a Solar Power System – Rent

Renting a solar power system is really no different from leasing a car. You do not own the system, you might place a down payment which lowers your monthly fee and you get the use of the system to lower your electrical costs. There will be a rental fee, there will be an assumed interest rate since the lender must charge an interest rate to make money and of course, the seller is making a profit as well which is built-in. Your rental may or may not come with maintenance. All of these details should be considered and built into your analysis. If you do not have the ready cash to invest then renting is probably the best option.

Rent or Buy a Solar Power System – Buy

Buying with cash or buying and borrowing money is another option. There is a cost of borrowing if you need to take out a loan. Of course, there is an interest income that you will not be earning because you invested in a solar power system. You still need to incorporate a maintenance fee to keep the system running.

A solar power system calculator should be provided by the solar power system seller to help you analyze your options. You can determine which option is the best approach and provides the largest savings. Along with the quickest payback for your investment. Again if you do not have the ready cash, then a loan is needed or you rent the system.

Solar System Installation DIY

Solar Panel DesignIn our last post, we discussed the need to get a solar system design and to get approval for permits from the city and the electrical organization in your area. It is extremely important to have all the permits in place and approved before you start installation.

Solar system installation is pretty straightforward. However, you do need to know what you’re doing and be able to follow an electrical design. There are also practical ways to install cables and mount hardware on your roof. You do not want to damage your roof in any way. It could cause water leakage or deterioration of the roof material.

Solar System Installation

It is often better to hire a qualified solar installation professional. They will ensure that everything is done according to the electrical code, the permit that has been approved, and the solar system design that has been laid out.

If there are any damages caused by the solar system installation, you may attempt a claim against your home insurance. Make sure that everything meets the electrical quote and installation procedures.

In fact, before you begin installation, you should confirm with your insurance company that they will insure your home and the electrical system. You may have to add a rider to your insurance for proper coverage.

We also suggest that you discuss the installation with the installer. Make sure that you’re totally 100% comfortable with everything that they’re going to do. Particularly with any mounting hardware, they’re going to install on the exterior of your home, as well as penetration through any walls for cabling and installation in the interior of your home.

Most installation companies will be more than happy to explain all of this before they begin.

For more thoughts and ideas about using solar power, click here.

Solar Panels that Plug into Electrical Outlets

Solar Panels that Plug into Electrical OutletsWhy is it that we cannot easily purchase solar panels that plug into electrical outlets to generate electricity? We are not actually sure. But there are a number of areas that we believe contribute to the situation and until the costs of solar panels change, it is not likely that we will see a disruptive change to electrical generation in the near future. We have listed a number of areas that need to change to enable this disruptive technology to really have an impact.  We are going to do more research on all of these areas, but this is our first foray into this subject area and reflects what we have initially found. Your comments are welcome.

Basically at this time the cost of equipment makes it prohibitive to invest in this technology for consumers. The amount of money you might save is insufficient to cover the cost of buying the inverter, the panels and meters you need to measure your savings.

Why Solar Panels that Plug into Electrical Outlets are Not Being Used

Solar Companies are looking for large contracts to install and operate solar farms. Solar installations are roof mounted or mounted on large pedestals.

Why don’t We Have Solar Panels that Plug into Electrical Outlets

The economics are just not there. The initial up front cost for the equipment has a very long payback for this equipment. It does not make sense from an investment perspective.

We Need an Entrepreneur – Solar Panels that Plug into Electrical Outlets

There are people who are developing the electric vehicle, again large companies aiming at the large retail market. But so far there does not seem to be any entrepreneurs that are aiming at the retail markets. We need the costs of solar panels to drop significantly for this to happen. Apparently Tesla is planning to build a large solar panel factory in the US that will bring the costs down. Perhaps this will be the disruptive step that will bring a disruption to the huge electrical generating business.

How inefficient is solar energy

How inefficient is solar energyMany people wonder how inefficient is solar energy. However we wanted to take a more positive approach. We wanted to assess how efficient solar energy is compared to some of the other technologies for generating energy. But first some information about the efficiency of solar panels which can be very enlightening.

It turns out that solar panels have a large range. They can range from a theoretical maximum of 55% efficient all the way down to 25% efficient. There are a lot of factors that go into determining how efficient and solar panel installation actually is. We will discuss some of the factors that go into determining some of the real issues.

How inefficient is solar energy

With sunlight shining directly on a solar panel at a 90 degree angle to the surface, the efficiency is going to be a maximum of 55%. This is due to the inherent capabilities of a solar panel. Next the angle that the sun strikes the panel is going to further determine the efficiency. It will change during the day. If the panel is not tracking the sun then the efficiency is going to drop as the sun moves off the 90 degree angle. In addition even with tracking, as the sun sets, there is more air and pollutants for the suns rays to pass through. This drops the efficiency further.

Next it depends on whether you have a sunny day or a cloudy day. On cloudy days or days with snow or rain the efficiency is really going to drop off drastically. Perhaps even below the 25% level on a particularly dark day during the winter. Don’t forget that in the winter in the northern climates there are less hours for the solar panels to generate electricity. Over all the average efficiency can drop to 25% or even lower. It really depends on the time of the year, the time of the day and the type of weather that is being experienced.

Other Types of Electrical Power Generation

It turns out that electrical generation by coal, gas, nuclear or wind plants are also around the 30% to 40% range based on current technologies. The major difference between solar power and some of the others is that all of these power generation techniques are using non-renewable energy sources while solar power is generating power from renewable resources such as sunlight.

Electricity generated by water flowing through turbines is probably the most efficient power generation of all and it is using renewable resources. Efficiencies approaching 90% are possible and far surpass all of the other types of electrical power generation solutions.  Some countries are fortunate to have lots of water and lots of potential water power driven generation solutions. They do not need to rely on other fuels and minimizes the use of non renewable resources.

We know that the coal and natural gas solutions are pretty much mature technologies, while solar and wind technologies are just getting started so their efficiency will no doubt improve over time.

Solar Panel Efficiency for Your Home

Embarking on a solar panel installation is a complex business with a lot of variables that are taken into account by the installation company. We happen to believe that consumers should be aware of these issues as well and should really look into them before they make the decision to select a particular vender to complete the installation. One of the variables is solar panel efficiency and we will spend some time on this post discussing this particular variable and how it relates to your business case for your new solar panel installation.

When you are considering a solar panel installation, you can impact your financial cash flow and business case in several ways. You can either control your costs and get them as low as possible and / or you can also increase your generation of electricity as much as possible by making sure that the efficiency is as high as possible. Obviously you want to make sure that both of these areas are dealt with in the best manner possible. We believe you actually should model this on a spread sheet and review how long it will take to repay the installation cost of the solar generation system based on the cost and the electrical generation. But that is the subject of other posts so we will move on to the main subject.

Solar Panel Efficiency – Specifications

Solar panels are manufactured with various specifications. Some are more efficient at generating electricity than others and of course the cost also varies as well. So the most efficient solar panels under laboratory conditions may not be the most efficient when you factor in the cost of these panels. Less efficient, lower cost panels may be actually better from a cost perspective per kilowatt generated. There are other factors to take into account as well when selecting solar panels and a solar installation firm. Here are five questions that we feel are important to take into account:

1. “How many solar panel systems has the company installed?”

Consider installers who have more than 50 installations under their belt. Consider installers who really understand the technology and can explain it to you. If they generalize too much, this should lead you to ask more questions. Take the time to educate yourself as well and know as much as the installers should know. You do not want to find out that the fence installer is now installing solar panels because there is not sufficient fence installation work.

2. “How long is the warranty on my solar panels – 25 years?”

Most solar panels on the market are high-quality and should have a guaranteed output of not less than 90% after 10 years and no less than 80% after 25 years. Look for this level of output from all brands. Also ask the installer how he will demonstrate this level of efficiency when the units are initially installed and how it can be measured in 10 years time.

3. “How long is the warranty on your labor – it should be 10 years or longer?”

Some installers will warranty their labor for 10 years in order for the system to be eligible for state rebates. They should also cover any potential damage to your roof as well. Any installer in the business for the long term should have no problem including this.

4. “How many kilowatt-hours will your system produce the first year?”

Assuming you have the warranty on labor and the efficiency on the panels, the next most important measure is how many kilowatts will the system produce every year. This is where the system will pay for itself. Sometimes less efficient systems cost less but meet the warranty measures. They may produce as much if not more kilowatts and significantly improve the business case for your solar installation.

5. “What will the total cost be for the system including components, installation, warranty and maintenance”?

The final cost or profit is going to be the income or energy saved in terms of dollars vs. the cost of the system. Include the labor to install and the annual maintenance plan. Don’t forget to include the cost of the loan if you have one. Or the cost of money that it takes to pay for this system. The money you spend could be used for other investments and gain a return so you have to take this into account if you are going to do a true business case.

For more information about solar panels, costs, installation and more, click here.

Solar Site Assessment for your Home

Solar Site Assessment for your HomeIn our last post we talked about some of the variables that would go into a business case or business model for your assessment of whether it makes sense for you financially to install a solar panel system on the roof of your home. One of those variables, a big one, is of course the revenue you will gain from this type of installation.

It may be net revenue or it can also be cost of electricity not used that you would need to factor into your calculations.  Either way you need to understand how much electricity can be produced from your roof.  This is where it gets complicated, because you really need a solar site assessment to be able to calculate the theoretical value of this income.

Some companies will charge for the solar site assessment and then write it  off if you decide to go ahead with a solar panel installation.  It is all in what you negotiate, so have that discussion up front so that there is no misunderstanding once the assessment is completed.

Information needed to Complete a Solar Site Assessment for Your Home

The following list is pretty straightforward and should be included in your assessment if it is completed in a professional manner. This is something that you need to make sure that you receive from a professional company  and that it is done right. If they estimate high in terms of the amount of electricity generated, then your business plan may not pay off as expected. Take your time to understand all of the assumptions and confirm all of the estimates before you take the plunge.

  • Which roof or roofs will be candidates for solar panels
  • Azimuth of each roof
  • Pitch of each roof
  • Number of panels
  • Wattage of each panel
  • Inverter make , model, and efficiency rating
  • Shading on the roof from External Factors

Which roof or roofs will be candidates for solar panels?

Typically, east, south and western roofs will be included in your assessment. Northern facing roofs will generate electricity, however since most are not receiving direct sun unless you are very far south, it is just not worth it to include a norther roof in your solar assessment.

Azimuth of each roof?

The azimuth is the angle between the north point and the direction your roof is facing. This is the accurate measurement of the direction each roof is facing and will be a factor in calculating the efficiency factor associated with each roof..

Pitch of each roof?

The pitch of each roof is the angle from the horizontal and also plays a part in the calculation of the efficiency factor of each roofs as well.

Number of panels?

The number of panels is a combination of the area of your roof as well as the ability of your roof to support the additional weight. Each panel will produce a specific amount of electricity depending on the Azimuth, the Pitch, the time of day and the season.

Wattage of each panel?

Each panel has a wattage that it is capable of producing. Different solar panels will have a different wattage rating or power that they will produce.

Inverter make , model, and efficiency rating?

Each solar panel is connected to an inverter. Which converts the electricity generated to the desired voltage and amperage level required to interconnect with all other panels. Also the electrical distribution system. Depending on the manufacturer, each will have their own efficiency rating as well.

Shading on the roof from External Factors?

This can be a huge issue and may vary depending on the time of year. Shading from surrounding trees will change from season to season as the leaves grow and fall from the tree. Other buildings or  obstructions on the roof such as a chimney can also provide shade. Which decreases the amount of power that will be generated. Decisions may have to be made in terms of trimming trees or locating panels only were there is no shade. Shading can be different in the  morning vs. afternoon so time of day must also be taken into account.

All of these factors should be assessed  in your solar assessment. These are mathematical calculations which can be generated by a computer model. We would recommend that some sensitivity analysis be completed on the results. Assess the impact more or less solar power generated will have on your budget and payback.

Consumers have to remember that sales people are motivated to sell you a solar system. They will more often than not make assumptions in their favor. It pays to take as much as 20% off the estimate of electricity generated to see what impact it has on the business case for your system.

More to come on alternative energies and solar systems. If you have added comments or opinions please leave us a comment. We are trying to learn as much as possible about this subject. For more help with solar power assessments, click here.

Solar Power Business Model

Solar Power Business ModelThe solar power generation business is going through a shakedown at the time of writing this post, which is going to have a huge impact on the prices that consumers pay for solar panels and also on the number of opportunities that are available for consumers to find products and solution to help them generate their own electrical power. The big companies want to keep power generation and distribution for themselves. They want to avoid getting this into the hands of the consumer. Prices for solar panels dropped while China was dumping on the market. Consumers in general are concerned about the complexities of dealing with panels and batteries etc.

The Big Picture in the Solar Power Business

Back when oil prices reached their highs in 2008, many people who are promoting green energy and independence from oil pushed hard for the solar power business. The result was a number of companies heavily funded by investors with promises of subsidies from various governments. Their business model worked at the time as long as oil remained high. Also as the subsidies stayed in place and demand for electricity continued to grow.

Three years later in 2011, the perfect storm hit and it was devastating to many companies that did not have a sound business model in place. First the economy tanked and we can debate the reasons for this. But the net result was that demand for electrical power fell and has not caught up yet with demand pre 2008. Secondly, as the economy went south, government revenues also fell. Which meant a variety of belt tightening measures had to be put in place. One of the first things to go were the subsidies that the governments promised.

Now companies who depended on this revenue found themselves cash poor and unable to meet their commitments. Oil also fell which pleased the consumer and is helping industry, however it takes away the momentum and support needed by the green activists to continue pushing solar power generation. Several major companies who produce power via solar panels as well as solar panel manufacturers have gone bankrupt as a result.

What will Happen to the Solar Power Business

While the events that triggered this collapse are one of a kind, we hope, this stage of a new industry is pretty typical. There are always many companies entering a new industry hoping to make it to the big time. At some point there is always a shake out that is triggered by some market or world event that causes many of the underfunded or poorly managed companies to fail, leaving the stronger ones to survive. As we indicated this is pretty typical in the life cycle of a new industry.

The next couple of years will be difficult for the industry as prices fluctuate and demand cycles, however those who manage cash flow tightly and maintain a sound business approach should survive. They need to treat government subsidies, if any are available as icing on the cake.

What Does all of This mean to the Consumer

For the short term, it means that the cost of purchasing solar panels is going to decrease. With inventories of panels remaining high, prices are falling as corporations cancel their orders for panels. The price of electrical energy has not fallen to any extent. So the business case for many consumers and corporations alike has just improved. There is a much shorter payback for adopting a solar power solution involving solar panels.

Oil will increase again in the next year or so. Interest in alternate forms of power generation will increase as consumers spend more on oil related products. Once the inventory of solar panels and related products is used up, prices will again begin to rise. The message in this story is constantly review your business case. Keep the numbers up to date to ensure that you are making the right decision based on accurate numbers.

Solar Power Business Model for the Consumer

We are looking for a spread sheet model that compares the cost of installing a solar panel systems for a consumer application, It should reflect generating power to be used in the home. The excess power would be fed back into the grid providing additional savings to the consumer. We have not seen an economic model as of yet. We may build our own to help ourselves as well as readers make accurate decisions regarding this business decision.

In our next post we will start to list some of the variables that need to be included to help assess the economics of this decision. Your input would be invaluable. For more posts about solar power business models, click here.

Solar Power Solutions for the Consumer

Solar Power Solutions for the ConsumerThe DC to AC inverter converts the DC electricity into AC electricity. AC Electricity is the kind of electricity used to power the appliances in your home.This web site is aimed at finding solutions for consumers to use in their homes and one of the first things we have come to realize is that it is not easy to find solutions that are easy to find and easy to implement.

One web site we read compared buying a solar solution to buying a car. Would you design the engine, the transmission etc or do you go in and purchase a car with a few identified options that are easy to figure out? The latter of course and that is one of the things that is currently wrong about solar panel solutions.

Most consumers do not understand anything about kilowatts, power, current, converters from DC to AC  and so on. What is needed in the industry are solutions for customers to chose from. Perhaps standard configurations that deliver solution’s that consumers and homeowners are looking for. In much the same way that a furnace is sold with sufficient heating capability for a 2500 square foot house, a solar panel installation should be sold in such a way that an installation could replace all or a percentage of your power usage.

Solar Power Solutions – How Many Panels Do I Need

I have no idea nor do I really want to try and figure this out. Even if I was given a formula to use, the average consumer like me is not going to be confident that they are making the right calculations. What are my alternatives?  Hire an expert which costs money as well and I am still not sure what the final solution is that I need. Just look at the picture on the right with all the different sizes ! With such new technology you can be sure that what you buy today will be updated and changed within 6 months.

How would I mount these on the roof and is this the right location to put them in? What is the optimum direction to face them towards and do I need to clean them once and awhile or are they maintenance free. I really do not want to get up on the roof very often to clean these things. I can only assume that dirt and grime that accumulates on the surface will cause the amount of power they generate to decrease over time.

What is a DC to AC Converter?

The DC to AC inverter converts the DC electricity into AC electricity, the kind of electricity used to power the appliances in your home. This is the same power that you can sell to the commercial power provider in your area or at least this is what many web sites say.

Were should this inverter be installed; are there any cooling requirements; special mounting requirements; electrical inspections required; approvals from the company providing power before you can connect to the grid? Devices such as these come with various power capacities . What size do I need to accommodate the amount of power that I am generating? This is an example of a component that must be sized to fit the system that you are installing.

Do I need a Controller

Apparently using an optional charge controller with a DC circuit breaker is required to manage the charging of batteries that can be used for backup purposes. The controllers use DC power from the solar modules to charge the battery bank. Do the controllers  protect the batteries against overcharging and what happens at night? Will the batteries then discharge back through the solar panels?

Who Wants batteries

This were the solution issue really comes to a head. What problem am I trying to solve?

  • Solar power generation for backup in case of electrical system failure?
  • Alternative power generation to reduce my electrical power cost
  • Generating income by selling power to the electrical grid
  • All three solutions?

Depending on the answer, I will need batteries especially for the backup solution. As a result you have to have something to store the power in if you want a backup solution. As a result that usually means batteries somewhere in the basement. They need to be designed, sized,  purchased and  maintained! Who wants that in your home?

Solar Power Solutions – Installation

This is not an easy thing to install. For example first you must install the solar panels somewhere. They usually go on the roof, which means you risk roof damage. Hence wiring and cabling must then run down from the roof to the basement. Or wherever you are installing the inverter, the batteries and perhaps connecting to the electrical grid.

The wiring must be installed and inspected by an electrician. While the roof installation should be installed by experts who are not going to wreck your roof.


As we research this topic to find out more information, it is obvious at this time that the solar generation solutions for consumers is just getting started. There are not a lot of simple solutions for the average consumer. We have not factored in prices as of yet. But since the industry is still in it’s infancy, this usually means that prices are not anywhere near commodity type pricing.

Comments are welcome and help with finding solutions for consumer related installations. for posts about solar power solutions, click here.


  • Copyright © 1996-2010 Managing Home Maintenance Costs. All rights reserved.
    iDream theme by Templates Next | Powered by WordPress