Solar Power Industry and Energy Market

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Solar Power

The energy radiated by the sun is a renewable energy source, which means that no matter how much is harvested today an equal amount will be available tomorrow. The energy source is never diminished through usage, which is an ideal condition and why it is important in relation to the present volume of international energy consumption and projections of the increase in the volume of international energy consumption. Secondly, the technology of harvesting the radiated energy of the sun continues to improve.

Solar energy is light particles / photons emitted / radiated by the Sun in various wave length and frequency. The Earth absorbs a portion of the total energy emitted by the Sun. When a photon is absorbed it can be converted to heat or an electrical charge.

It is important to determine the average insolation level for the immediate region where one is planning on installing any type (both thermal and photovoltaic) of solar power system. Insolation is the measurement of how much sunlight / solar radiated energy / illumination is striking the earth's surface within a specific region and at a specific time. The sun radiates a constant rate of energy (solar constant, which varies with the distance between the Sun and the Earth and solar cycles, approximately 1.366 kW/m² at Equinox) energy / photons (light particles) in the direction of the Earth (which is only a portion of the Sun's total radiated energy). Some of the radiated energy is absorbed by the Earth's atmosphere. Thus, an average direct insolation measurement is the figure that is used.

At 12:00 Noon, when the Sun is at a 90° angle with the Earth, the radiated energy from the Sun has the least amount of atmosphere to penetrate compared to the angle of the Sun at dawn or at dusk. That is why the peak amount of radiated energy is absorbed at Solar Noon, and then is absorbed in lesser amount before and after that point.

Any location can potentially receive the Peak Sun of 1,000 Watts per m² at Noon / Solar Noon (1,000W / m²) which means that at high noon on a clear day, each square meter of earth receives 1,000 watts of radiated energy from the Sun. Thus, one hour of full / peak sun would provide 1,000 Watt hour per m² or 1 kWh / m². However, the Sun shines longer than just at Noon but of less intensity before Noon and also after Noon. That is why a location will have an average daily kWh / m², it is the sum total of the average amount of sunlight shining on the location.

The Average Direct Insolation measurement is:

 

Kilowatt hours per square meter per day (kWh / m² / day). It is the amount of solar radiation that strikes a square meter of the Earth's surface in a single day based on the potential Peak Solar / Solar Noon amount (W / m²).

Every location in the world has its own unique insolation measurement due to its location. In the United States, Phoenix, Arizona has an Average Annual Insolation - kWh/ m²/day of 5.38, while Fargo, North Dakota has a annual average measurement of 3.68. Similarly, Hamburg, Germany has a measurement of 2.52 and Malaga, Spain, is 5.16 (source: NASA). However, insolation is constantly changing in duration and intensity every hour of the day and during the year due to:

The measurement is important because for photovoltaic (electricity generating) equipment as it provides the basis for an estimate of energy output and appropriate system size requirement for any solar-based technology: 1,000 watts of sunlight falling on per square meter of surface is one part of the standardized test conditions used to rate the performance (Peak Watt) of photovoltaic cells, modules, or arrays.

Solar power (the sun's radiated heat/thermal energy and light) can be utilized for:

Heating

Cooling

Electricity generation

Water heating

There are 4 solar technologies:

Concentrating Solar Power

Photovoltaics (PV) (Light / photo)

Solar Heating (Thermal)

Solar Lighting

Concentrated solar power stations that utilize large arrays (collector field) of parabolic troughs (from several rows to several acreage of reflectors) function only optimally in regions of abundant sunshine. These type of power generating stations arrange the reflectors so that the concentrated reflection of light heats a receptor pipe or tank of water or salt (sodium and potassium nitrate) and the steam (either directly from the water tank or the molten salt is used to heat water in a separate tank) is used to drive a turbine that generates electricity. The molten salt technology is more promising as the salt can be stored in insulated containers and be used throughout the course of a day to heat water.

The largest solar farm (generation) in the United States is the SunEdison plant in Davidson County, N.C. (produces approximately 16 megawatts).

The DESERTEC Industrial Initiative (DII) is a proposal (July 2009 ) to develop and construct a concentrating solar power system in North Africa as part of the Plan Solaire Méditerranéen (PSM) / Mediterranean Solar-Plan (MSP). DII GmbH is proposing to develop the solar generating plants and then trnsmit the electricity to Europe via underwater cable. While much of the technology exists, the project would still be subject to financing, water resource access, political issues within the Maghreb region, and the harsh desert environment (UV radiation, sandstorms, etc.). Shareholders include ABB, Abengoa Solar, Cevital, Desertec Foundation, Deutsche Bank, Enel, Eon, HSH Nordbank, Flagsol, Munich Re, M+W Group, Nareva, RED electric, RWE, St. Gobain Solar, Schott solar, and Siemens. Transgreen is the consortium that would construct the underwater transmission cables.

PV electricity generating systems can be used for:

Large grid-connected and off-grid solar power stations

Residential and commercial rooftop systems

Power source for remote information monitoring, telecom and signaling systems

Water pumping systems

Battery charging systems

What is the advantage to a business by installing a solar powered electricity generation system?

Reduces the amount of electricity purchased from the local public utility so there is a cost savings.

Provides a slight hedge against a future increase in electricity rates (similarly, the PV installation is a fixed cost, thus savings increase as utility rates increase).

If enough consumers utilized PV systems and there was less of a demand on the utilities then less fossil fuels would be consumed and / or greenhouse gases would be released.

Solar PV systems have become less expensive, more efficient, versatile, easier to install and are durable (25-year lifetime; relatively low maintenance).

State rebates and Federal tax credits reduce a percentage of the cost of the initial investment.

Increases the value of the real property.

The greatest deterrent to the wide spread adoption of solar power is that solar generated electricity is substantially more expensive to produce compared to a traditional fossil fuel powered generator (coal and refined fuels). The key to success will be increasing cell efficiency and reducing manufacturing costs so that the cost of solar generated electricity is equal to the national average cost per kilowatt hour / per megawatt hour. The International Energy Agency (IEA) estimates that the per megawatt electricity generation cost for silicon-based photovoltaic systems ranges from $200 to $600 per megawatt hour; By further comparison, the cost per megawatt hour for competing onshore wind power electricity generation installations ranges from $50 to $100.

Photovoltaic Cells

A photovolatic solar (solaire photovoltaïque / French; solar fotovoltaica / Spanish) cell is designed to convert solar radiation (sunlight) directly into electric current (DC or direct current, approximately 1 to 2 watts per cell). High purity silicon is the raw material from which the solar cells are produced (and the price of cells are effected by high purity silicon feedstock availability and prices and reclaimable silicon availability and prices). There are different types of cells:

 

Crystalline silicon (c-Si) wafers, which is a substrate of purified silicon in a crystalline structure. Common wafer measurements are surfaces of 125 mm x 125 mm to 156 mm x 156 mm (6.14 x 6.14 inch) with a thickness of less than 0.3 mm. The silcon wafer base has n-type or p-type dopants (impurities) applied to create layers with atomic structures that have either extra or missing electrons (the energy from sunlight then allows the flow of electrons between atoms).

 

 

Metal conductors are placed in a criss-cross pattern across the wafer. Several of solar cells are then interconnected by the metal conductors and placed in a weatherproof housing (module / panel) with a special high optical transmittance and low reflection cover glass (panels can then be interconnected together to achieve a required voltage).

monocrystalline cells (Mono c-Si), which is silicon sliced from a single crystal, is the most efficient electricity producer.

polycrystalline cells (Multi c-Si), which is silicon sliced from a block of silicon crystals, are used primarily in modules for grid-connected systems.

 

The wafer / cell fabrication process consists of:

The silicon is put into an ingot mould.

The silicon is melted within the ingot mould at 1410°C / 2570°F.

The silicon ingot is removed from the mould.

The silicon ingot is cut by a band saw into square pillars.

The square silicon pillar is cut by wire saw into thin slices / wafers.

The individual cell surface is cleaned and textured.

The individual cell is diffused, which creates the p/n transition.

The individual cell receives an oxide etching, which is the removal of a phosphoric glass layer which formed from the diffusion

The individual cell receives a non-reflective surface coating to reduce optical loss.

Metal contacts are pressed into the front, back and side of the individual cell.

Individual cells are classified and sorted based on performance test data.

 

 

Thin film (non-crystalline) can be created by directly depositing thin layers of several different materials such as amphorous silicon (a-Si), cadmium telluride (CdTe) and copper indium diselenide (CIS, which is called CIGS when the element gallium is added) onto a thin film or foil substrate and then processing the material to create the semiconductor. Thin film cells are approximately half the manufactured cost of Crystalline silicon cells but are less efficient than Crystalline silicon cells. Thin film panels are also very flexible and can be incorporated into / onto building materials, and can even be attached to heavy cloth material.

 

A variant of thin film is the research on the development of nano particles that can be sprayed onto glass, or even other material surfaces, to create a thin solar film. Thus, every existing window on a structure, or even the structure itself, could immediately be converted to a low current electricity generating module.

Modules / Panels

A module is essentially a flat panel, packaged generator made up of several or many individual interconnected cells encased within a weatherproof panel with an anodized aluminum frame. A module needs to be tough enough to withstand high levels of ultrviolet radiation, moisture and extreme temperatures. Several or many modules can be interconnected to provide a residential or commercial building’s power supply or created a large power generation station (solar farm).

A module panel is made up of several components:

PV permeable Glass (anti-reflective coating)

EVA film (Ethylene-Vinyl-Acetate clear insulation, top layer)

Solar cells, which have been wired together in a string of cells

EVA film (Ethylene-Vinyl-Acetate clear insulation, bottom layer)

Tedlar film

Frame (usually anodized corrugated aluminum which are corrosion resistant and can withstand high winds)

Junction Box

Some module panels are designed with white separating borders between the cells, which is used to promote heat dissipation.

The components of the manufactured module panel, glass, aluminum and plastic, partially come from recycled material sources, and the panel components themselves can be recycled once the useful life of the module has been reached. Similarly, the mounting hardware is fabricated from aluminum and stainless steel, which also makes it recycable. Silica, used in the manufacture of the photovoltaic cells and the glass, is a very abundant material: it is the second most common element on the earth’s surface. Thus, politically and socially the module panel is seen as a very positive product, especially when linked with its renewable energy function and purpose.

The flat panel module is usually mounted as an array of motorized frames that tracts the movement of the sun during the day (phtotvoltaic farm) or as an array across a roof (individual systems).

When used on a building, the PV panels (modules) are usually anchored to the roof of a structure but can also be installed along the walls of a structure. Optimumly, the panels are of a design type and are installed in a position that they can absorb direct, diffuse and reflected sunlight. For instance, some thin film panels are designed as cylindrical modules and are installed in a position above the roof's surface, which then captures sunlight across a 360° photovoltaic surface (it also beneficial to paint the roof surface white). The panels can also be located on the ground next to a structure and in some ways it is very beneficial: one is not reliant upon the existing orientation and angle of the roof, the panels are easier to access for maintenance, easier to wash / clean, easier to access to remove snow, and easier to adjust the tilt angle during the course of the year. However, the longer the wire from the panel array to the inverter the greater the voltage loss.

The placement of the module panels is based on orientation (compass direction), and azimuth (measurement of the position of the Sun from the reference observation point / horizon, which is usually where the module panels or solar collecter is to be located, measured in degrees, and usually as a deviation from the angle of true south; A positive azimuth angle generally indicates the sun is east of south, and a negative azimuth angle generally indicates the sun is west of south).

Residential (and commercial / utility scale) module panel dimensions are not standardized:

BP Solar 230 Wp BP 3230T - 65.6 x 39.4 x 2.0 inches / 1,667 x 1,000 x 50 mm; Number of cells: 60

BP Solar 175 Wp BP 4175B - 62.5 x 31.1 x 2.0 inches / 1,587 x 790 x 50 mm; Number of cells: 72

Conergy PowerPlus 215 Wp 215P - 65 x 38.8 x 1.8 inches / 1,651 × 986 × 46 mm; Number of cells: 60

Kyocera 235 Wp KD235GX-LPB - 65.4 x 38.9 x 1.8 inches / 1,662 x 900 x 46 mm

Kyocera 185 Wp KD185GX-LPU - 52.7 x 39.0 x 1.8 inches / 1,338 x 990 x 46 mm

Kyocera 135 Wp KD135GX-LPU - 59.1 x 26.3 x 1.8 inches / 1,500 x 668 x 1.8 mm

Mitsubishi 185 Wp PV-UD185MF5 - 65.3 x 32.8 x 1.8 inches / 1,658 x 834 x 46 mm

Mitsubishi 130 Wp PV-EE130MF5F - 58.9 x 26.5 x 1.8 inches / 1,495 x 674 x 46 mm

Sanyo HIT Power 205 Wp - 51.9 x 34.6 x 1.8 inches / 1,319 x 880 x 46 mm

Sanyo HIT Power 186 Wp - 51.9 x 34.6 x 1.8 inches / 1,319 x 880 x 46 mm

Sharp 230 Wp NU-U230F3 - 64.6 x 39.1 x 1.8 inches / 1,640 x 994 x 46 mm

Sharp 165 Wp NE-165UC1 - 62.0 x 32.5 x x 1.8 inches / 1,575 x 826 x 46 mm

SolarWorld Sunmodule SW 220/225/230/235 mono - 65.9 x 39.4 x 1.34 inches / 1,675 x 1,001 x 34 mm

SunPower 315 Wp E-19 - 61.4 x 41.2 x 1.8 inches / 1,559 x 1,046 x 46 mm

SunPower 230 Wp E-18 - 61.4 x 31.4 x 1.8 inches / 1,559 x 798 x 46 mm

SunTech 190 Wp STP190S - 24/Ad - 62.2 × 31.8 × 1.4 inches / 1,580 × 808 × 35mm

Trinasolar 220 / 230 / 240 Wp TSM-DA05 Series - 64.9 x 39.1 x 1.8 inches; Number of cells: 60

Trinasolar 175 / 180 / 185 Wp TSM-DA01 Series - 62.24 x 31.85 x 1.57 inches; Number of cells: 72

Yingli Solar 190 to 210 Wp YL P-26b Series - 1,495 x 990 x 20 mm

Yingli Solar 210 to 235 Wp YL P-29b Series - 1,650 x 990 x 50 mm

How to determine the amount of necessary square footage for placement of a module panel array on the roof? If the example is 16 panels layed out in two rows of 8 panels in each row, one row above the other:

The panels selected are 62.0 inches x 32.5 inches

The width of the 8 module array is 8 x 32.5 inches = 260 inches

The length of the array is twice the 62.0 inches, which is 124 inches

The area in square inches is 260 inches x 124 inches = 32,240 sq. inches

There are 144 inches in a square foot (12 inches x 12 inches)

Divide 32,240 by 144 to determine the square footage, which is 32,240 ÷ 144 = 223.9

Approximately 224 square feet (10 feet by 22 feet) of unobstructured roof space is required to install the 16 panels in 2 rows, one above the other.

How to determine the amount of necessary square meters for placement of a module panel array on the roof? If the example is 16 panels layed out in two rows of 8 panels in each row, one row above the other:

The panels selected are 1,575 mm x 826 mm

The width of the 8 module array is 8 x 826 mm = 6,608 mm

The length of the array is twice the 1,575, which is 3,150 mm

The area in square millimeters is 6,608 x 3,150 = 20,815,200

There are 1,000,000 mm in a square meter (1,000 mm x 1,000 mm)

Divide 20,815,000 by 1,000,000 to determine the square meters, which is 20,815,200 ÷ 1,000,000 = 20.8

Approximately 20.8 square meters of unobstructured roof space is required to install the 16 panels in 2 rows, one above the other.

Enter the Length and Width in either Inches or Millimeters to Calculate an Area in Square Feet or Square Meters.

(Select either Inches or Millimeters; Do not enter any commas)

Regardless of whether located on a roof or on the ground, the module panels are wired together in a series connection configuration in order to increase voltage. This means that the module panel junction box connections in the array are wired positive to negative (+ to -) or negative to positive (- to +), which is the opposite of parallel connection.

One of the most practical applications for the thin film solar panels is its application as a roof shingle compared to the traditional asphalt roof shingle. Residential property owners could integrate the photovoltaic shingle into rooftops with standard asphalt shingles and essentially turn a portion of the existing exterior roof into a solar panel (it is possible that the thin film panels could also be integrated into exterior sidings and fascia boards). One of these type of products is the Powerhouse solar shingle by Dow.

Building integrated photovoltaic (BIPV) systems are integrated directly into the design of the structure. For instance, transparent solar panels are utilized as facades, roof lights and canopies, and are installed over existing windows and doors.

Inverter

The other major component of the PV system is the Inverter, which converts the direct current (DC) of the cell / module electricity generator into alternating current (AC), which is the form that is compatible with the grid and building electrical wiring. Inverters also control the connection and disconnection of the PV system to the main grid. There are inverters designed and sized for individual building PV systems, and there are station-sized inverters designed for large, photovoltaic electricity generating plants. The inverter usually includes a display that indicates the wattage output of the PV system at the present moment. The digital data can also be sent to a central / home computer by CAT5 cable, or it can be connected to a network (wired or wireless) for remote monitor by a web browser.

A PV inverter or an inverter used in an independent power production system / grid-tie / inter-tie / grid-interconnection, that allows a PV system to interconnect with a public power grid is based on the UL 1741 standard for distributed generation (voltage, waveform, grounding, neutral-sensing). Traditionally, electric power systems were designed for a one-way flow: from generation to distribution. However, Distributed Generation means that there are other electricity producers connected to the grid at the distributuion level and the power system was not designed to accommodate this condition. Thus, a standard had to be developed to protect the all of the equipment (and personnel) connected to the grid from poorly functioning distributed generation interconnection equipment. UL 1741 is the standard that defines and sets the fundamental requirements for the construction and performance testing of inverters, converters, and controllers. In addition to UL 1741 compliance, there is also IEEE 519 (power quality) an IEEE 929 (anti-islanding, which is the ability of the inverter to detect the connection to the public AC grid). The FCC Part 15, Class B rating for an inverter indicates that it should not interfere with a residential wireless network for computers / laptops.

There are also mini inverters / micro inverters that are attached to the back of the panel module, and are designed for the exact number of cells in the module. However, the array of panel modules, each with mini inverter, will require a separate circuit to power the inverters (15 amp AC).

Other components include a DC combiner box, which is used as an alternative to daisy chain wiring the modules together by bringing the output cables from each panel to parallel in a housing with pair buss bars that can handle increased amperage; DC disconnect, which is a manual switch to disconnect the PV system; lighting arrestor, which is self-explanatory.

Retro-fitting an existing structure for the installation of a turnkey solar module system for electricity generation includes:

Feasability study / Site analysis (location, available space on roof / ground / parking area, shading, and existing utility service)

Economic analysis (Efficiency analysis and Payback analysis / IRR)

Subsidy and utility interconnection analysis

Project design

Project approval and permits from local authorities

Utility interconnection application

Net metering application (in order to sell excess capacity back to the local utility electrical grid)

National Electrical Code compliance documents

Installation of racking, support structures, infrastructure, inverters (converts DC power from solar panels to AC power) and power conditioning equipment

Preventative maintenance programs, diagnostic, and repair service

Secure rebate

Efficiency

The are three separate efficiency ratings in a photovoltaic electricity generating system:

Cell Efficiency

Module Efficiency

System Efficiency

Cell Efficiency

Individual PV cells are rated on their power conversion efficiency, which indicates what percentage of sunlight energy is converted into electric current. The higher the efficiency rating of the cell(s) the more electric power a cell can produce in a given amount of area, which increases the electricity produced by each module and increases the cost effectiveness of a system installation by reducing the total number of panel square footage / square meter necessary to generate sufficient electricity to fulfill electric power requirements.

Individual cells have a rated efficiency, which is translated into an output measured in watts. The individual cells are always tested under optimum factory conditions. The Standard Test Conditions (STC) under which cells are tested are:

Crystalline silicon photovoltaic cells presently on the market have an average efficiency rating of approximately 15.0%. Thin film cells are slightly lower at 8.5% to 11%.

It is expensive to produce silicon based photovoltaic cells. However, there is a trade off: monocrystalline silicon solar cells are the most costly to manufacture but they have the highest efficiency (approximately 24%). Thin film solar panels (Copper Indium Gallium DiSelenide / CIGS solar cells) on glass, plastic or flexible metal are not as efficient as silicon based solar panels but are less expensive to manufacture than the silicon cells. In addition, a 2004 National Renewable Energy Laboratory (NREL) report indicated that there are two key reliability challenges of thin film modules: water absorption by the lamination, and sodium migration and electrochemical corrosion of the transparent conductive layer. Thin film panels may also degrade at a more rapid rate compared to silicon wafers.

Module Efficiency

Individual modules also have a rated capacity or output measured in watts. The Standard Test Conditions (STC) under which module panels are tested are similar to that of the individual cells:

Total Peak Watt output closely corresponds to the size / number of cells per square foot or square meter of the module panel. As the efficiency rating relates to the total surface of the module, the rating is lower than the individual cell efficiency ratings.

System Efficiency

System efficiency rates the efficiency / output of all of the combined equipment in the installation: cells, modules, cables, inverter. Again, there is a further decline in the efficiency value when compared to the module efficiency, which is related to the inverter efficiency and to conductance losses in cables.

In addition, once the array of module panels are installed outside either on a building's roof or on the ground, the array's performance is influenced by a number of factors:

Insolation average

Orientation of the array

Latitude angle at which the array is mounted

Dirt deposited on the individual module panels

Snow coverage on the individual module panels

Shade coverage from the building or surrounding structures / objects on the individual module panels

Exterior temperature and increase in the temperature of the cells / module panels

Wiring loss

Inverter efficiency

Cloud coverage

Humidity

Battery load draw

Overall, minute to minute, hourly, daily, monthly electricity output is not consistenet: electricity output from a PV system is constantly fluctuating.

Grid-Connected / Off-Grid

Grid-connected / Grid-tied System

A grid-connected / grid-tied system means that the photovoltaic equipment will supply electricity to the system / building. A photovoltaic power plant (with hundreds or thousands of modules producing several hundred kilowatts to tens of megawatts) and / or a building with photovoltaic equipmet can be grid-connected. In the case of a building with photovoltaic equipment, to be grid connected means that it can also draw electricity from the local utility if the electricity output provided by the PV system is insufficient to fulfill the power demand. In addition, local government or utility regulations may provide for the commercial or residential PV system to be integrated into a net metering program.

Net metering is the policy of local electric generators / public utilities that allows for the flow of electricity both to and from a customer’s facility through a single, bidirectional meter. Thus, a PV system that is generating electic current in excess of what is being utilized by the connected structure can direct that excess electricity back into the grid and be compensated / credited for the amount. Not every utility or government regulator allows for net metering (in the United States, South Dakota, Tennessee, Mississippi and Alabama do not have net metering programs; South Carolina, Texas and Idaho have voluntary utility net meterin programs only). In the United States, the number of electric utility customers in net metering programs (with either photovoltaic, small-scale wind or biomass / agricultural facilities electricity generating capacity) remains a tiny share of the total number of electric utility customers in the nation. Some utilities have a cap on the amount of net metered electricity that they will purchase / credit, and they may also have an expiration time frame on banked net metered credit.

A grid-connected PV system can also have battery backup capability. However, the battery bank is usually only connected to critical circuits such as the furnace and the refrigerator (or the circuit that includes the kitchen wall plugs). This PV system design will not be as efficient as one without battery backup cpapbilites a certain amount of the electricity produced will be utilized to keep the batteries charged.

Distributed Generation (also referred to as on-site generation or dispersed generation) means that small electricity producing generators are located near power consumption. Grid-connected photovoltaic electricity generating systems located on commercial and residential properties allow these properties / buildings to become electricity providers to the local / regional electrical grid network. The conventional infrastructure for electricity generation is that a large generating plant produces a large volume (gigawatts) of electricity and then transmits the electricity for widespread distribution. Distributed generation reverses that concept by allowing small electricity generating equipment (residential / commercial real estate PV system, residential wind turbine, residential / commercial real estate fuel cell, natural gas / propane microturbine, small commercial solar park / wind turbine park) to either provide some of the electricity (kW to MW) consumed by the residential or commercial property, or transmit into the grid from the distribution edge, usually through the stimulus of a feed-in-tarrif or net metering agreement.

Off the Grid

Off the grid implies that the stand-alone photovoltaic equipment supplies all of the elelctric power consumed by the system to which it is connected. The off-grid design is similar to a grid-connected design however the off-grid system also tends to include a bank of deep-cycle batteries for additional power output when the power demand is greater than the photovoltaic generator output (either due to cloud conditions that reduce generated output or from increased power demand from electric devices connected to the system), and electric power storage for electricity consumption by the system after the sun sets for the evening and the PV system is no longer generating electricity.

The deep-cycle (generally lead-acid) batteries typically used for small systems last five to ten years and reclaim about 80% of the energy channeled into them (deep-cycle means that the battery is designed to be regularly discharged to most of its capacity). In addition, these batteries are designed to provide electricity over long periods, and can repeatedly charge and discharge up to 80% of their capacity. As indicated above, these batteries, depending on the quality of design and materials, can work for several years to many years before having to be replaced, but they will eventually have to be replaced.

Obviously, the off-grid system always needs to be aware of how much electricity is being produced and how much is being consumed or the batteries will be drawn down.

Electricity Consumption

The best method to improve the performance of a PV system is to control electricity usage / consumption.

There are several options for utilizing the sun's power for heating is water heating.

 

Direct Gain System. This is a passive design such that materials (tile or concrete) that absorb solar energy are installed primarily on the south wall of a structure (the southern exposure of the exterior facade of a building always receives the most sunlight), which then heats up during the day and then slowly releases the heat (especially at night when it is most needed).

 

Daylighting is the concept of designing a structure so that natural sunlight penetrates the building's interior and heats the wall materials and air.

 

Active Solar Space Heating. Air flat-plate collectors are installed on the exterior roof or wall and consist of metal sheets, layers of screen, or non-metallic materials absorber plated in a thin, insulated, rectangular flat panel that has a transparent cover (glazing). Cool air is drawn into the panel via an external duct and then flows past the absorber by using natural convection or a fan, and then exits the panel via a second duct connected to the interior space that is meant to be heated.

There are several options for utilizing the sun's power for heating is water heating.

 

Flat-plate solar collectors are typically installed on the rooftop of a structure and are positoned facing south. The thin, insulated, rectangular flat-plate collector has a transparent cover (glazing) and a series of tubes in an absorber plate that carry fluid through the collector. The sun's rays pass through the cover to heat the interior of the collector, the tubes and the fluid passing through the tubes. Active systems have a pump that circulates the heated fluid between the collector and an insulated storage tank. These systems can only heat the liquid to temperatures less than standard 180°F that a oil-fired or gas-fired boiler can attain. Usually, a state-licensed / certified master plumber or solar plumber has to be hired to install the system (commercial systems do not have to be certified by the Solar Rating and Certification Corporation; OG-100 glazed collector system; OG-300 system).

In 2008, the Grenelle de l’Environnement / Renewable Energies Operational Committee set a target of 1.1 GW of installed photovoltaic electricity generating capacity in France by 2012. However, construction of photovoltaic parks in France is low compared to other European nations.

Photovoltaic Parks include:

Narbonne (Aude); Nominal capacity 7.1MW; Operator: EDF Energies Nouvelles

Thémis (Pyrénées Orientales); Nominal capacity 0.2MW; Operator: EDF Energies Nouvelles

Montesquieu (Gironde); Nominal capacity 0.1MW; Operator: EDF Energies Nouvelles

The German Renewable Energy Law (EEG / Erneuerbare-Energien-Gesetz) stipulates that operators of photovoltaic installations may supply electricity in specified reimbursable batches to the power grid. The exact amount of the reimbursement depends on the year of the installation as well as on its type and size. Electricity generated by photovoltaic installations and farms accounts for approximately 2.0% of Germany's total electric power production. Combined electricity supply from renewable energy sources accounts for approximately 15.0% of Germany's total electric power production.

Installed capacity has been increasing substantially since the introduction of feed-in tariffs (guaranteed purchase price) in 2000, which compels German utilities to allow the photovoltaic farms or inidividual installations to connect to the national transmission grid and to purchase the electricity generated by photovoltaic farms or individual installations at a slightly higher preferential rate (which guarantees photovoltaic farms and other renewable source electricity generating installations a guaranteed return as high as 15%). The utilities are allowed to pass on the higher rate to consumers but as new capacity comes on line the feed-in tariff rate is declining. The traiff was reduced in fiscal 2009 due to the substanital increase in installed photovoltaic capacity during the year. It is scheduled that the feed-in tariff for solar energy will be reduced by 16.0% effective July 1, 2010 (with an additional decrease scheduled for January 1, 2011). Germany accounted for approximately 50% of the new installed photovoltaic capacity in 2009 in the world.

During 2009, it is estimated that within Germany an additional 3.8 Gigawatts of photovoltaic and concentrating solar capacity was installed, and that the nation's total photovoltaic and concentrating solar capacity is now approximately 10.0 Gigawatts.

Photovoltaic Parks include:

Energiepark Waldpolenz (Leipzig / Muldentalkreis district); Nominal capacity 40 MW; 550,000 thin film panels

Solarpark Bayern (Mühlhausen, Günching and Minihof); Nominal capacity 10 MW

Solarpark Erlasee (Arnstein, Bayern); Nominal capacity 12 MW

Solarpark Finsterwalde I (Finsterwalde, Brandenburg); Nominal capacity 40.7 MW; Operator: Q-Cells International GmbH

Solarpark Geiseltalsee (Braunsbedra, Sachsen-Anhalt); Nominal capacity 10 MW

Solarpark Köthen (Köthen, Sachsen-Anhalt); Nominal capacity 14.8 MW

Solarpark Lieberose (Turnow-Preilack in the district of Spree-Neiße / Brandenburg); Nominal capacity 53 MW; approx. 700,000 First solar thin film modules; Operator: juwi Solar GmbH

Solarpark Pocking (Pocking, Bayern); Nominal capacity 10 MW

Solarpark Strasskirchen (Strasskirchen); Nominal capacity 54 MW

Support from the national and provincial governments, along with loans from state-owned banks and low labor costs, have resulted in the People's Republic of China becoming the prevalent manufaturer of photovoltaic equipment. Approximately 50% of international manufacturing capacity of photovoltaic cells and systems is located in The People's Republic China, and the nation's PV equipment manufacturers export approximately 90.0% of their production. However, producers expanded too quickly and were caught in the economic downturn in the United States and Europe (China's largest export markets). Module prices declined and companies were forced to reduce employee levels (one of the largest module manufacturers, Suntech Power, had to reduce employee count by 10% in 2009).

Additionally, the national government's publicly indicated goal is to generate 20 GW of electricity from photovoltaic or solar thermal sources within the country by 2020. The first large scale project is located in northwestern China at Dunhuang.

Portugal's PV electricity generating infrastructure is centered within the Baldio das Ferrarías valley region.

Photovoltaic Parks include:

Amareleja (Moura, Alentejo); Nominal capacity 45.6 MW

Serpa (Serpa, Alentejo); Nominal capacity 11.0 MW

The government in Spain provided a subsidy for the construction of photovoltaic farms and the nation increased capacity very rapidly to the point of a proliferation of photovoltaic farms without a sufficient customer base. In September 2008, the government limited the subsidy and the solar power industry incurred serious problems.

Photovoltaic Parks include:

Parque Fotovoltaico Albacete (Albacete); Nominal capacity 9.55 MW

Parque Fotovoltaico Abertura Solar (Cáceres); Nominal capacity 23.1 MW

Parque Fotovoltaico Beneixama (Beneixama, Alicante); Nominal capacity 20.0 MW

Parque Fotovoltaico Casa El Ángel (Casa de los Pinos, Cuenca); Nominal capacity 12.0 MW; Developer: Renovalia Solar SL; 69,850 panels

Parque Fotovoltaico Casas de Los Pinos (Cuenca): Nominal capacity 28 MW

Parque Fotovoltaico de Lucainena de las Torres (Almeria); Nominal capacity 23.2 MW

Parque Fotovoltaico Lobosillo (Lobosillo, Murcia); Nominal capacity 12.7 MW

Parque Fotovoltaico Monte Alto (Milagro); Nominal capacity 9.90 MW; Developer: Renovalia Solar 3; 1,648 panels

Parque Fotovoltaico Casas de Los Pinos (Cuenca); Nominal capacity 28 MW

Parque Fotovoltaico Olmedilla (Olmedilla de Alarcón); Nominal capacity 60 MW

Parque Fotovoltaico Puertollano (Puertollano); Nominal capacity 47.6 MW; Developer: Renovalia Solar 2; 231,653 panels

Parque Solar Calaverón (Albacete); nominal capacity 21.2MW

Parque Solar Darro (Darro); Nominal capacity 5.8 MW

Parque Solar El Bonillo (Albacete); Nominal capacity 20 MW

Parque Solar El Coronil (Sevilla); Nominal capacity 21.4 MW

Parque Solar El Cura (Andalusia); Nominal capacity 3.1 MW

Parque Solar Guadarranque (Cádiz); Nominal capacity 13.6 MW

Parque Solar Hoya de Los Vincentes, (Jumilla, Murcia); Nominal capacity 23 MW

Parque Solar Los Palacios (Sevilla); Nominal capacity 2.4 MW; 27,720 First Solar FS 272 modules

Parque Solar Olivenza (Badajoz); Nominal capacity 18 MW

Parque Solar SPEX Mérida/Don Álvaro (Badajoz); Nominal capacity 30 MW

Planta Solar Arnedo (Arnedo, La Rioja); Nominal capacity 34.1 MW

Planta Solar Calasparra (Murcia); Nominal capacity 20 MW

Planta Solar Calzada de Oropesa (Toledo); Nominal capacity 15 MW

Planta Solar de Salamanca (Salamanca); Nominal capacity 13.8 MW; 70,000 Kyocera PV modules in three separate arrays on a 36-hectare (89-acre) site

Planta Solar Fuente Álamo (Los Mayordomos, Murcia); Nominal capacity 26 MW

Planta Solar La Magascona & La Magasquila (Trujillo); Nominal capacity 34.5 MW

Planta Solar Lorca (Murcia); Nominal capacity 14 MW

Planta Solar Osa de la Vega (Cuenca); Nominal capacity 30 MW

Spain is also the location of the world's largest corporate roof photovoltaic array installation: the 11.8 MW photovoltaic installation at the General Motors Facility, Figuruelas, Zaragoza; installed by Energy Conversion Devices, Veolia Environment, Clairvoyant Energy; 85,000 thin panels, 325,000 sq. meters, 20 inverters, feeds into Red Electrica grid.

In the United States, the Department of Energy's Solar America Initiative has set a goal of lowering the cost of solar electricity so that it is cost-competitive across all U.S. market sectors by 2015. In addition, the program will:

• Provide 5-10 gigawatts of new electric capacity (enough to power 1-2 million homes) to the U.S. grid
• Avoid 10 million metric tons per year of carbon dioxide (CO2) emissions
• Employ 35,000 new workers in the PV industry (technology research, design, manufacturing, distribution, training, installation, inspection, maintenance).

The nation would like to promote and develop a diversified and competitive domestic solar / photovoltaic manufacturing capability so that it is not reliant upon importing products to meet domestic demand, a position similar to the one the country presently experiences with regarding petroleum product supplies.

However, the wide spread adoption of photovoltaic infrastructure for electricity generation would not really go far in reducing the demand in the United States for imported petroleum. The U.S. Energy Information Administration (EIA) indicates that for 2009, electricity generation in the United States is powered by coal (44.9%), natural gas (23.4%), nuclear (20.3%), hydroelectric (6.9%), and other renewable sources (3.6%). Generating stations fueled by petroleum-based products (gas or diesel) account for 1.0% or less of electricity generating capacity.   www.eia.doe.gov/cneaf/electricity/epm/table1_1.html

The real benefit of the wide spread installation of photovoltaic systems would be to reduce the carbon emissions by electric generating plants that burn fossil fuels.

As indicated above, the greatest deterrent to the wide spread adoption of solar power in the United States is that solar generated electricity is substantially more expensive to produce compared to a traditional fossil fuel powered generator (coal and refined fuels). The key to success will be increasing cell efficiency and reducing manufacturing costs so that the cost of solar generated electricity is equal to the U.S. national average cost of 10.4 cents per kilowatt hour, of $104 per megawatt hour.

An additional problem in the United States is that local town / municipal building or architectual boards will often deny permits and not allow residents to install photovoltaic panels based on "aesthetic" issues. However, new applications of photovoltaic material can be integrated into building structures to minimize the aesthetics issue.

The U.S. Energy Information Administration (EIA), which is part of the U.S. Department of Energy, indicates that domestic solar photovoltaic cell / module manufacturing in the United Stats has increased substantially over the past decade: shipments increased from 21,201 cells / modules in 1999 to 1,395,376 in 2008.   www.eia.doe.gov/cneaf/solar.renewables/page/solarreport/table3_2.html

The largest solar electricity generating power plant in the world is located within the United States: nine solar thermal power plants, in three locations, in California's Mojave Desert comprise the Solar Energy Generating Systems (SEGS). SEGS VIII and IX (80 megawatts each), located in Harper Lake, are, individually and collectively, the largest solar power generating plants in the world. However, in 2008, less than 1.0% of the electricity generated within the United States was from solar power.

Photovoltaic Parks include:

Alamosa Photovoltaic Power Plant (San Luis Valley, CO); Nominal capacity 8.2 MW; Operator: SunEdison

DeSoto Next Generation Solar Energy Center (Arcadia, FL); Nominal capacity 25.0 MW; 90,000 SunPower solar panels with single-axis trackers; Operator: Florida Power & Light

Mars Solar Garden (Hackettstown, NJ); Nominal capacity: 2.15 MW; 28,000, ground-mounted First Solar thin film panels; Operator: PSEG: Output is contracted by Mars Chocolate North America’s headquarters

Nellis Solar Power Plant (Nellis AFB, NV); Nominal capacity 14.0 MW

Photovoltaic Parks under construction include:

Blue Wing Solar Energy Generation Facility (San Antonio, TX); Nominal capacity 16.0 MW; 214,500 ground-mounted, thin-film panels; Operator: Duke Energy Generation Services (DEGS)

Silver State South (Primm, NV); Nominal capacity 250 MW; interconnect with SCE’s proposed Eldorado-Ivanpah 220-kilovolt transmission line; Operator: First solar; scheduled to be operational 2014

On January 10, 2011, Southern California Edison (SCE) signed contracts with SunPower Corp. and Fotowatio Renewable Ventures, Inc. (FRV) for more than 800 MW produced by 7 separate facilities (interconnect with existing and forthcoming transmission lines)

The three contracts with SunPower include:

110 megawatts from Solar Star California XIII, LLC, located in Los Banos, scheduled to be operational by Dec. 31, 2014.

325 megawatts from Solar Star California XIX, LLC, located in Rosamond, scheduled to be operational by Oct. 31, 2016.

276 megawatts from Solar Star California XX, LLC, located in Rosamond, scheduled to be operational by Oct. 31, 2016.

The four contracts with FRV include:

60 megawatts from Regulus Solar L.P., located in Lamont, scheduled to be operational by Dec. 31, 2013.

20 megawatts from Cygnus Solar L.P., located in Arvin, scheduled to be operational by Sept. 30, 2013.

20 megawatts from Mojave Solar L.P., located in Mojave, scheduled to be operational by Dec. 31, 2013.

20 megawatts from Mojave Solar 4 L.P., located in Lancaster, scheduled to be operational by Dec. 31, 2013.

The Public Utility Regulatory Policies Act of 1978 (PURPA) was the first legislature in the United States to promote an increased production and usage of renewable energy. The establishment of a new class of generating facilities, referred to as qualifying facilities (QFs), included a sub-class referred to as small power production facilities, which were generating facilities that shall not generate more than 80 MW and that utilize renewable energy as its primary source. The legislation articulated that any small scale renewable energy producer had the opportunity to sell generated electricity back to a utility.

The Economics & Math Behind Installing a Photovoltaic System (PV System)

The cost of an array of flat panel modules installed on a roof is measured in cost per installed watt (not cost per square foot or square meter of module). The cost per installed watt includes the planning, approval / permit, solar module panels, panel mounts / frame, inverter, cabling, and monitor. The total cost of the entire PV system must also factor in any incentive / rebate from the utility and / or municipal government (at all levels) for the actual installation, and any tax credit (at all levels) for the first year of installation and any year of operation thereafter.

The selection of the size of the PV system (measured in watts) to be installed should correspond to the decision by the owner of how much of their electricity demand / requirement is to be fulfilled by a photovoltaic electricity generating installation. In addition, on a grid-connected system is there a maximum amount of kilowatt hours that may be sold / credited under a net metering program?

Solarbuzz, an industry consultant, indicates from a survey of manufacturers that in the United States the retail price per watt per module (125 watts or higher) has declined from an average of approximately $5.40 at December 31, 2001, to an average of $4.21 as of May 2010 (there are modules priced below $4.00 per watt). The company further indicates that the lowest retail price for a mono-crystalline silicon module (the most efficient conversion efficiency material) is $2.07 at May 2010.

A study conducted by the DOE/Lawrence Berkeley National Laboratory on the installed costs of a PV system indicates that the cost per installed watt declined from an average of $10.50 per watt in 1998 to an average of $7.60 per watt in 2007 (cost per installed watt differs by region and type of system installed). (Source: Wiser, Ryan; Barbose, Galen; and Peterman, Carla; Tracking the Sun: The Installed Cost of Photovoltaics in the U.S. from 1998–2007; Environmental Energy Technologies Dision, Lawrence Berkeley National Laboratory; February 2009;   eetd.lbl.gov/ea/emp/reports/lbnl-1516e.pdf .pdf Format).

An update of the report in October 2009, indicated that the as of 2008 the average cost per installed watt had declined further to $7.50 per watt (but revises the 2007 average cost per installed watt to a larger figure of $7.80 per installed watt).   eetd.lbl.gov/ea/emp/reports/lbnl-2674e.pdf

The installation of a PV System is complicated. The average commercial building maintenence crew and / or average home owner cannot do it on their own. Rather, in most states a PV system must be installed by a state-licensed master electrician, electrical contractor, or solar contractor. The installation must comply with all applicable federal, state and local building codes, and applicable fire and electrical code requirements. In the United States, Article 690 of the National Electric Code (NEC), which is published by the National Fire Protection Association (NFPA), provides the regulations for the installing equipment and wiring for photovoltaic systems, and who is qualified to do so. Similarly, the National Electrical Manufacturers Association (NEMA) provides the standards (American National Standard / ANS) for housings, connectors, terminals, outlet boxes, receptacles, programmable controllers, electricity metering, and so on (photovoltaic equipment enclosures / housing / cabinet should be rated a minimum 3, which means that the enclosure / housing constructed for either indoor or outdoor use will provide a "degree of protection against falling dirt, rain, sleet, snow, and windblown dust; and that will be undamaged by the external formation of ice on the enclosure"). In addition, the local utility has to be notified and involved in the process (for a grid-tied system) and the installation must comply with state interconnection standards. The installation also requires, and is the result of, a municipal approval and permit process.

Installing the PV system equipment to an existing structue is a challenge. If the house was being constructed for the first time, and the design is to include a PV system, then the house would be physically situated on the lot or designed so that the exposed roof space where the modules are to be located would be in the correct position to receive as much as direct and indirect sunlight as possible.

The installation of a PV System is best on a roof with a southern exposed, however if necessary an east or west exposures is also acceptable. The flat panel module should be mounted parallel with the roof at a 35 degree roof pitch with no shading between the hours of 9:00am through 4:00pm (shading sources are trees, chimneys, TV antennas, satellite dishes, dormers and gables, and adjacent structures).

That may not be the case with an existing structure. Thus, in the case of an existing structure the modules must mounted to the existing roof, which has a fixed location and existing angle and pitch that may actually be disadvantageous to the mounting and location of the modules. The installation may require an extensive frame assembly to position the modules at the optimum angle to receive as much sunlight as possible during the course of the day. The instllation of the flat panel modules does not protect a roof from the natural elements but it can prolong the quality of the shingles. If the shingles are in poor condition or the roof rafters are not structurally sound then that repair / replacement work must proceed the installation of the PV system. In addition, the waterproof integrity of the roof must remain intact after the attachment of the PV system mounting hardware.

The installation of a PV System is not the only cost. There is also an annual maintenance expense. PV systems usually last approximately 20 to 25 years (generating capability of the cells declines over time). Whereas this is a solid state piece of equipment, it is still exposed to the natural elements on a daily basis and they break and they need to be repaired just like any other piece of equipment, and they need to be maintianed / cleaned. Each piece of the combined photovoltaic equipment will usually have each respective manufacturer's warranty. For instance, the photovoltaic flat panels may have a 20-year warranty, the inverter may have a 7-year warranty, and the installer may provide a 1-year year warranty for the installation of the complete PV system. An extended warranty for any piece of equipment or for the installation will have an associated additional cost.

The newly installed PV system should be added to either a homeowner’s insurance policy or to a commercial / corporate insurance policy, which will increase the annual insurance premium.

The municipal government's assessed value of the property will increase by the adjusted value of the newly installed PV system, which may result in the increase of the annual real estate tax bill.

The installation of the PV system increases the value of the property not just in terms of the dollar value of the installed equipment but also in terms of marketing the property due to the reduction of the electric utility expense. However, if the technology of the photovoltaic cell was to improve substantially in a very short time after the installation, perhaps increasing cell efficiency to over 50%, then a property with module panels that are only 15% efficient is at a disadvantage.

The total electricity output of an array of modules is dependent upon the insolation level at the location of the module(s) and the cloud cover conditions prevalent during a specific period (weekly, monthly, annual). In the United States, the region with the highest insolation level is the Southwest from Texas to Southern California. Thus, a 4 kW PV system in Arizona is going to produce, on average, more kWh of electricity than a similar 4 kW PV system in Michigan. It has less to do with the local, external temperature, the key issue is the amount of solar radiated energy that is striking the earth's surface. However, the publicly labeled, rated electricity output of any cell or module is always based on ideal / test conditions. Ideal conditions do not occur in real life, that is why they are called ideal.

External temperature actually does affect the efficiency of individual photovoltaic cells. The "ideal" test condition is usually at 25°C / 77°F. The photovoltaic cells work better as temperature remains cool. As the cells start to heat up, which is part of being exposed to the sun, they become less efficient.

In May 2010, SunPower (a solar cell / module manufacturer located in California) publicly indicated the introduction of a cell with a 19.5% efficiency in a 96 cell / 318 watt configuration (3.3125 watts per cell; E19 Series solar panel). However, this is under ideal test conditions. The actual output may be closer to 275 to 250 watts per hour. With that type of output a single module could power a reading light (100 watts) and a celing fan (125 watts) for perhaps several hours. As the number of modules are increased, 10 modules could power the light (100 watts), the ceiling fan (125 watts), the refrigerator (600 watts), the television (300 watts), the coffee maker (600 watts), and a personal computer (250 watts) per hour for several hours.

The value of a PV system electric power output can be measured based on the total amount of kilowatt hours (kWh) of electricity produced during a specific period and the cost of electricity paid by consumers to a utility in the location of the PV system during the same period. For instance, if the PV system produces 5,685 kWh per year, and the average cost to consumers within the immediate area was 12.5 cents per kWh during the year, then the PV system electric power output is valued at $710.63 (5,685 x .125). One either is credited with this amount in a net metering arrangement or one purchases less electricity in a situation where there is no net metering.

As local electricity rates increase after the date of the installation, the PV system increases in value. If electricity rates decline after the date of the installation then the PV system decreases in value.

In the event of a black out, a grid connected PV system ceases to operate due to the grid interconnection safety design of the system. The PV system will not provide any independent electric power source to the residential property owner in a prolonged black out (unless it is designed to include backup deep cycle batteries and an off-grid capacity, which substantially increases the installation price).

Thus, the initial cost, less any incentive / rebate(s), less the tax credit(s), less the value of the first year's electricity output amounts to the actual initial cost, and then any coninuing annual tax credit plus the annual estimated output value thereafter will indicate the length of time for the full cost recovery of the balance of the initial installation expense.

Incentive payments / rebates are not automatic and are usually granted on a first-come, first-serve basis. One must file the paper work in order to receive a payment and / or a credit. Incentive payments / rebates can be terminated at any time.

A tax credit is exactly that: it is the opportunity for a business or individual taxpayer to credit a specific amount against taxes paid in order to lower the net tax obligation for the fiscal year. It is not a direct payment: the tax credit does not provide any upfront cash to offset the installation cost. The maximum an individual tax payer is going to receive is not the actual amount of the credit but whatever amount of taxes one paid during the fiscal year, which can be less than the amount of the credit. In addition, the tax credit recovery also depends on the timing of the installation: if the business or individual home owner installs the PV system in the 1st quarter of a year, then files their taxes for that fiscal year in the 1st or 2nd quarter of the following year, and then actually receives the tax refund in the 2nd quarter of that year, then the recovery of the initial tax credit has been one year. Secondly, one has actually been paying the taxes all year and there is the lost opportunity cost of not having the money now, and one has effectively been making an interest-free loan to the government during the whole period so one is actually receiving a refund of money already paid out without any income earned on it. The point is: can one receive a larger refund? Yes. However, it is money that one already paid out. It is not an additional sum, it is a refund of one's own previous cash outlay. In a situation where one is spending money on a project, and obtains the refund of taxes paid out during the fiscal year independently of the project means that there is not traditional ROI analysis: there is no connection between the two events on a cash flow basis.

U.S. Solar Energy Project Investment Tax Credit

The Emergency Economic Stabilization Act of 2008 (HR 1424), which was signed into law on October 6, 2008, extended the solar investment tax credit for an additonal eight years (from the existing December 31, 2008 termination date), and extended the deduction for energy efficient commercial buildings for and additional five years.

Commercial

A 30.0% Solar Investment Tax Credit is in effect through December 31, 2016 by filing the Internal Revenue Service (IRS) Form 3468 Investment Credit, Part III Rehabilitation Credit and Energy Credit, Line 11 Energy credit, Letter b Basis of property using solar illumination or solar energy placed in service during the tax year that was acquired after December 31, 2005, and the basis attributable to construction, reconstruction, or erection by the taxpayer after December 31, 2005.

Form 3468   www.irs.gov/pub/irs-pdf/f3468.pdf
Instructions for Form 3468   www.irs.gov/pub/irs-pdf/i3468.pdf

The amount is entered on Line 11 b and Line 13 of Form 3468. If there are no further adjustments then the amount is entered again on line 15. If there are not further adjustments then this amount is entered on line 19 of Form 3468, and is also reported on Form 3800 General Business Credit, line 29a.

Form 3800 General Business Credit. The amount from From 3468 is entered on line 29a, and on line 30 with any other adjustments. The tax payer may have additional entries on Form 3800. the total amount of the credit allowed for the current year is the smallest of the sum of entries on Form 3800 or the amount carried forward from Form 3468 and entered on line 29a of From 3800. (The 2009 Form is used as a guideline).

Form 3800   www.irs.gov/pub/irs-pdf/f3800.pdf
Instructions for Form 3800 (2009)   www.irs.gov/pub/irs-pdf/i3800.pdf

In the United States, companies that install a solar system to produce electricity to offset the cost of operating the business and/or commercial property can receive a an annual depreciation allowance for the solar module equipment.

Instructions for Form 4562, Depreciation and Amortization: www.irs.gov/pub/irs-pdf/i4562.pdf   (.pdf format)
IRS Publication 946 How to Depreciate Property: www.irs.gov/pub/irs-pdf/p946.pdf   (.pdf format)

Residential

A 30.0% Residential Solar Investment Tax Credit is in effect through December 31, 2016 by filing the Internal Revenue Service (IRS) Form 5695 Residential Energy Credits for a qualified solar electric system placed in service during the tax year. The property does not have to be one's primary residence but it may not be an investment property. (The 2009 Form is used as a guideline).

Form 5695 (includes instructions)   www.irs.gov/pub/irs-pdf/f5695.pdf

The Federal Tax Credit amounts to the gross cost (one does not first deduct the utility company installation rebate) x 0.30 (30.0%). The amount is entered in Part II Residential Energy Efficient Property Credit, Line 12 Qualified solar electric property costs; it is then summed with other investments on Line 16. On Line 17, Line 16 is multiplied by 30.0% (0.30). Line 17 is then summed on Line 23.

On Line 24 of Form 5695, the amount from either Form 1040, line 46, or Form 1040NR, line 43 is entered. If taken from Form 1040, it is the sum of the tax paid during the fiscal year of the Alternative minimum tax for the fiscal year. One then enters on Line 25 the sum of all other credits from Form 1040, lines 47 through 50 (there is also a test on Form 5695, Lines 8 through 11: if your other credits exceed the tax paid in the fiscal year you cannot claim the Nonbusiness energy property credit, and the number from Line 11 is also entered on Line 25). On Line 26, one subtracts line 25 from line 24. If zero or less, then one enters 0 there and on line 27. On Line 27 one enters the Residential energy efficient property credit by entering either the smaller of line 23 or line 26. The current year credit is entered on Line 29.

3d. Individuals report the credit (Line 29 on Form 5695) on Form 1040, line 52 (credits from Form) or Form 1040NR, line 48. This is not a direct payment or grant. What the credit does is that it allows the tax payer to reduce their tax paid (on Form 1040, line 44 / line 46; all credits are totaled on line 55; line 55 is subtracted from line 46; all other taxes are entered on lines 56 through 59; lines 55 through 59 are added together, and the Total Tax is entered on line 60). Thus, the tax payer receives a larger refund of tax payments expended during the fiscal year that the PV system was installed and placed into service (as long as the tax payments in Form 1040, line 71 exceeds line 60). This is a one time credit for the fiscal year that the PV system was installed and placed into service.

Form 1040   www.irs.gov/pub/irs-pdf/f1040.pdf
Form 1040 Instructions   www.irs.gov/pub/irs-pdf/i1040.pdf

Example:   Cost for the new installation during 2010 of a residential PV system for Nassau County, NY.

1a. The average size of a PV system is 4 kW (4,000 watts).

1b. The average cost per installed watt (before incentives) in NY for 2008 (most recent year for which data is available as per the Lawrence Berkeley National Laboratory, October 2009) is $8.70 per watt for systems of 1.0 kW to 10.0 kW in size. In Nassau County, there is an incentive of no state sales tax on the purchase of the photovoltaic equipment.

1c. Cost of a 4 kW PV system is estimated at $34,800.00 (4,000 x $8.70).

2a. LIPA (Long Island Power Authority) installation rebate. The LIPA rebate is $2.00 per watt, for a PV system up to a 10 kW in size, with a maximum rebate of $20,000 or 50% of the installed costs, whichever is less. The rebate will remain at the current level until 1 megawatt (1,000 kilowatts) of residential photovoltaic systems has passed the LIPA Pre-Approval process. LIPA has presently preapproved 790 kW of PV systems for the 1 MW bloc as of May 21, 2010. Everytime a 1 MW bloc of pre-approved PV systems are reached the rebate declines in value (On May 3, 2010 at 5:01pm, the LIPA rebate declined from $2.25 per watt to the present $2.00 per watt).

2b. The rebate amounts to $8,000.00 (4,000 x $2.00).

2c. Cost less rebate: $26,800 ($34,800 - $8,000).

Changes to LIPA’s Solar Pioneer Program Effective May 28, 2010   www.lipower.org/residential/efficiency/renewables/solar-blocks.html

3a. Federal Tax Credit. A 30.0% Residential Solar Investment Tax Credit is in effect through December 31, 2016 by filing the Internal Revenue Service (IRS) Form 5695 Residential Energy Credits for a qualified solar electric system placed in service during the tax year. The property does not have to be one's primary residence but it may not be an investment property.

3b. The Federal Tax Credit amounts to $10,440 ($34,800 x 0.30). As indicated above, if one receives a rebate from a utility company for the installation of a PV system then the rebate must be deducted from the total cost prior to determining the 30.0% federal tax credit. This credit must be applied for on the individual property owner's IRS Form 1040 (and IRS From 5695) next year and it may not be until June 2011 until they receive their federal tax refund.

4a. New York State Tax Credit. A 25.0% tax credit is offered on PV systems installed at a principal residential property, and the credit is capped at a maximum of $5,000. The credit is obtained by filing NYS Form IT-255 (2009) Claim for Solar Energy System Equipment Credit, Schedule A and Numbers 1, 2, 3, Schedule B 4, 5, and any carryover is entered in Schedule B line 8. The amount from line 3 is also entered on Form IT-201-ATT, line 5, or Form IT-203-ATT, line 6. (The 2009 Form is used as a guideline).

4b. The New York State Tax Credit amounts to $5,000 ($34,800 x 0.25 = $8,700; Maximum credit is $5,000, the $3,700 balance of the credit may be carried over to fiscal 2011). Again, this is neither a direct payment or grant, the credit is a one time opportunity to reduce the tax obligation for the specific fiscal year.

Form IT-255 (2009; includes instructions)   www.tax.state.ny.us/pdf/2009/fillin/inc/it255_2009_fill_in.pdf

5. Property Tax Incentive. In order to encourage the installation of renewable energy systems, New York State provides property tax exemptions on properties that install a PV system. Title 2 - Section 487 of the New York State Real Property Tax Law, enacted in 1977 and amended in 1979 and 1990, provides a 15-year real property tax exemption for certain solar energy systems (includes electrical energy) constructed before January 1, 2011. However, the exemption is subject to local municipal option: each county, city, town, village and school district (except the city school districts of New York, Buffalo, Rochester, Syracuse, and Yonkers) may choose whether to disallow the exemption. The option must be exercised by counties, cities, towns, and villages through adoption of a local law and by school districts by adoption of a resolution.

Section 487 of the New York State Real Property Tax Law   www.orps.state.ny.us/assessor/manuals/vol4/part1/section4.01/sec487.htm
List of municipalities that have enacted local law that disallow / do not offer the exemption   www.orps.state.ny.us/legal/localop/487opt.htm

6. LIPA offers a Net Metering Agreement program for residential electricity customers: the residential property owner establishes an interconnection agreement with LIPA to get a net-metering account and new meter that is capable of recording the electricity flow in both directions is installed. The PV system produces a specific amount of kilowatt hours of electricity during a specific period (day, week, month, year). When the residential property's electrical demand is less than that being produced by the PV system, the electrical demand is serviced by the PV system, and the balance of the electricity production is transmitted from the residence to the LIPA (National Grid) electricity grid through a net meter and the residential property owner is credited with the amount of electricity transmitted. The amount of the credit is at a rate equal to the retail rate for electricity that is purchased by the property owner from LIPA. When the residential property's electrical demand is more than that being produced by the PV system, the electrical demand is serviced by the interconnection with the LPA service. The monthly billing for kilowatt hours of electricity is only for net consumption. However, the consumer still incurs a daily service charge (line and meter charge) regardless of the Net Meter Agreement.

7a. As per the NREL Solar Radiation Map, Long Island has an estimated annual, daily average direct insolation (kWh/m²/day) range of 4.5 to 5.0, which means that the panels receive on average 4.5 to 5.0 hours of peak sun (W/m²) per day.

NREL: Dynamic Maps, GIS Data, and Analysis Tools - Solar Maps   www.nrel.gov/gis/solar.html

7b. The basic electricity generation equation if a solar panel array of 24 panels, each with a 170 Watt rating, has a Peak Watt rating of 4.0 kWh (24 panels x 170 Watts), is 4,000 Watts x 4.5 hours = 18.4 kWh / day nominal capacity. However, the module panels were installed on an East facing (orientation) portion of the roof as it had the greatest surface area. There is a loss when the inverter converts from DC to AC electric current. The annual insolation is lower due to cloud build up and humid conditions. During the Summer, it was particularly hot on days with clear sunshine, often in the high 80's and the module panels heated up well above 77°F.

7c. If due to orientation, insolation, local weather, and system inefficiency the actual output is less than the stated rating then the system will produce less electricity in the course of the day:

An output of 80% of stated capacity results in 14.7 kWh per day (24 x 170 x 4.5 x 0.80)

An output of 75% of stated capacity results in 13.8 kWh per day (24 x 170 x 4.5 x 0.75)

An output of 70% of stated capacity results in 12.8 kWh per day (24 x 170 x 4.5 x 0.70)

8a. LIPA charges a flat rate of $0.1790 per day Basic Service fee, which is the daily charge for connection to the electric system. Thus, 365 days x $0.1790 = $65.34 per year.

8b. LIPA charges an approximately $0.004 per kWh consumed PILOTS (Payment In Lieu Of Taxes) fee, which is state and local taxes on utility revenues.

U.S. Solar Energy Project Finance / Credit Analysis

There are several ways for a business to finance the project:

Traditional cash out refinance mortgage of the commercial property

Capital equipment term loan / revolvling line of credit

SBA loans

Power Purchase Agreement (PPA) - All of the equipment and installation costs at a property are paid by a separate investor who then owns the equipment and sells the energy it produces to the property owner at a pre-negotiated rate.

Residential property owners usually commence the process by applying with the local electric distributor for approval of the PV system project and qualify for any rebate. If the project is approved then the rebate is usually placed in escrow until the completion of the project. At completion, the rebate is usually payed directly to the installer and the residential property owner is responsible for the balence of the amount due to the installer. Some installers offer low interest financing to residential property owners. The residential property owner can also refinance the residential mortgage if there is sufficient enough equity in the property in order to cash out additional funds to cover the cost of the PV system.

Property Assessed Clean Energy (PACE) is a program for residential property owners that originally was developed in the State of California during 2008, and has been adopted by several other states. Under the terms of a PACE program, the residential property owner arranges to have photovoltaic panels installed at the property, which is paid for by a state government provided loan (which is actually funded through a state bond program). The property owner then repays the loan through a special assessment that is added to the semi-annual real estate property tax payments. The loan is a tax lien against the property, superior to the mortgage, and remains in place with the sale of the property until satisfied.

The key credit issues include:

The PV or thermal project is installed in a competent manner, and is compliant with all codes.

Accurate estimate of the pay back period on the investment in the equipment.

Whether the technology will change so rapidly as to make the investment in one type of equipment obsolete in a short period of time.

Whether tax incentives will be maintained and/or revised.

Whether net metering incentives (selling excess electricity back to the local utility) will be maintained and/or revised.

Whether extreme weather conditions (high wind, hail or lightning) damage the eguipment.

These are companies that either manufacture and / or install photovoltaic (PV) cells (crystalline and thin film), modules, PV glass, solar collectors, inverters, evacuated tube solar collectors, batteries, cable, mounting systems and frames, components, distributors, integrators / packagers / installers (design and install roof mounted PV solar systems for third parties). The industry is fragmented and competitive. Not all companies are fully integrated. For instance, some module manufacturers source their cells from third party manufacturers. Module production is measured in megawatts per annum.

The key credit analysis issues related to reviewing a company in the solar industry include:

Price and availability of silicon feedstock (high purity silicon and reclaimable silicon).

Average selling price of solar cells, modules and collectors.

The timing, availability and/or revision of government incentive programs, subsidies and regulations.

The impact of seasonal weather conditions that impact local sales and / or construction of solar systems.

Reliance upon single, large or key customer / supplier.

Revisions of utility interconnection or standby fees for access to the electric utility grid.

Technological innovations in the solar power industry that may render existing products uncompetitive.

American Solar Energy Society (ASES)   www.ases.org/

Arizona Research Institute for Solar Energy (AzRISE)   www.azrise.org/

Asociación de la Industria Fotovoltaica ASIF / Spain)   www.asif.org/

Asociación Nacional de Energía Solar (ANES)   www.anes.org/

Baseline Surface Radiation Network (BSRN)   bsrn.ethz.ch/

Bundesverband Solarwirtschaft (Germany)   www.solarwirtschaft.de/   (Deutsch / English)

Canadian Solar Industries Association (CanSIA)   www.cansia.ca/

Database of State Incentives for Renewables and Efficiency (DSIRE)   www.dsireusa.org/

EREC (European Renewable Energy Council)   www.erec.org/

European Photovoltaic Industry Association (EPIA)   www.epia.org/

EUROSOLAR (European Association for Renewable Energy)   www.eurosolar.de/

International Energy Agency (IEA), Solar Heating and Cooling Programme   www.iea-shc.org/

International Solar Energy Society (ISES)   www.ises.org/

Interstate Renewable Energy Council (IREC)   www.irecusa.org/
IREC's state-by-state net-metering table   www.irecusa.org/index.php?id=90

North Carolina Solar Center   www.ncsc.ncsu.edu/default.cfm

Solar America Board for Codes and Standards   www.solarabcs.org/

Solar Rating and Certification Corporation   www.solar-rating.org/

State of California, California Energy Commission, Go Solar California   www.gosolarcalifornia.ca.gov/

State of Florida, Dept. of Revenue, Corporate Income Tax and Franchise Tax Florida Renewable Energy Production   dor.myflorida.com/dor/tips/tip07c01-01.html

State of Florida, Solar Energy Center   www.fsec.ucf.edu/en/

State of Florida Solar Energy System Incentives Program   www.dep.state.fl.us/energy/energyact/solar.htm

Tax Incentives Assistance Project (TIAP)   www.energytaxincentives.org/

U.S. Dept. of Energy, National Center for Photovoltaics (NCPV)   www.nrel.gov/pv/ncpv.html

U.S. Dept. of Energy, Renewable Energy Production Incentive (REPI)   apps1.eere.energy.gov/repi/about.cfm

U.S. Dept. of Energy, Solar America Initiative   www1.eere.energy.gov/solar/solar_america/

Western Renewable Energy Generation Information System (WREGIS)   www.wregis.org/