After the Bids, Crunching the Numbers

You should no more buy a PV system for your house based only on the lowest installed cost than you should buy a water heater or refrigerator in such a manner. For energy-consuming appliances, it’s critical to consider ongoing operating costs. But for energy-producing equipment—like a PV system—once you are satisfied with the qualifications of your potential installers, considering operating efficiency of the presented systems is crucial.

As a way to provide comparative information on the cost-effectiveness of batteryless, grid-tied PV systems, DC Solar United Neighborhoods (DC SUN), a coalition of solar cooperatives, solicited bids from four installers for a rooftop system in the Capitol Hill neighborhood of Washington, DC. The results shown are specific to one homeowner and rooftop scenario, but DC residents can use the customizable spreadsheet (downloadable from the "Inside this Article" pane above) to assess the finances of installing your own PV system. (The worksheet can also be modified for the circumstances in any location.)

In this comparison, the constant is the slope and size of the roof, which in this case is the flat roof of a row house, found commonly in many DC neighborhoods. The variables are the installers and their bids, some of whom offered more than one equipment and/or financing option. The proposal analyses included:

• Financial return. Simple payback (SPB), net present value (NPV) and internal rate of return (IRR) were all calculated. NPV and IRR are sophisticated financial metrics that consider the time value of money and are therefore more useful.
• Production. Estimated annual production is a function of local seasonal climatic conditions, PV array size, and DC-to-AC derate values (wiring losses, module soiling, inverter efficiency, etc).
• Energy Cost. Both dollars per nameplate watt and dollars per kilowatt-hour per year were calculated. The latter is more useful, as it factors in overall PV system efficiency.

Methodology

So as not to prejudice the evaluation by having an adequately informed consumer, no direction was given to the vendors as to the goal of the PV system, be it to just offset annual household electricity consumption or to maximize energy production given the available space. Nor was a preference expressed for buying or leasing a system. While the competing vendors saw the same roof, each proposed different configurations. Though most all PV bid packages came with their own presentations of the financial benefits the homeowner would receive, each made different enough assumptions as to make any across-the-board comparisons useless without further analysis.

To compare the competitors, the bids were analyzed using PVWatts (see Access). The same key variables were extracted from the bids: number of PV modules and module rating to determine DC nameplate rating; inverter type (string or microinverters) to determine inverter efficiency; and module tilt to determine array efficiency. Except for the case of microinverter efficiency, all the PVWatts default derates were used. The PVWatts results were used in the financial calculations.