Anyone interested in self sufficiency will have looked at generating their own electricity, especially via solar photovoltaic (PV) panels. However, what you actually pay for a given installation capacity can vary wildly. This article looks at how to estimate the basic costs involved with buying the components and doing the installation yourself.

Note that I am going to ignore a number of factors which can actually have a big impact on price. For example, local laws and insurance companies may mandate that the wiring is done by a qualified electrician. This will almost certainly be true if your solar PV array is going to be connected to the grid. I am also going to omit the costs of roof support and physically setting up the array, labor, housing any batteries etc. as well as local taxes or subsidies on the items. However, all will be costed as best one-off retail.

So, the costs are going to be for a standalone battery backed system only. It will assume only three major components, the PV array, a mains inverter, a battery backup system. And of course, sunlight.

Taking the latter first, whether your electricity is cost effective depends heavily on how much *insolation* you receive. Included is a world map of insolation from the Green Rhino Energy site http://www.greenrhinoenergy.com/solar/radiation/empiricalevidence.php

They also have several regional maps for greater detail.

Something to bear in mind is that in high and low latitudes you are going to have shorter nights in summer and long in winter. The above is a map of the *average*.

Anyway, what does it mean in real terms? Well, taking a specific example London receives around 1000 kWh of energy per square meter per year. So, if you laid one square meter of PV panel on the ground in an open space that’s how much energy would hit it over a year. If the energy was converted with a typical 15% efficiency you would get 150 kWh of electricity. In London the typical price of domestic mains is around US 20 cents per kWh, although various plans and standing charges obscure that figure. So, the one square meter of PV panel would save $30 per year. Given that such panels have a life exceeding 25 years we can say that the return over its life is $750 – but what does the panel cost?

Note that this is if the panel is laid flat. This is only really ideal on the equator, and in higher (or lower) latitudes the panels should be angled towards the mid-day sun. If this is done then yield can increase substantially. For now though, I will assume flat.

The problem is that you do not buy PV panels rated in square meters but in peak watts (Wp). So a 200W panel is one which would give you 200W if you put it under sunlight whose intensity was 1000W per square meter. Hence we need to do a number of conversions to match various figures.

The first conversion is insolation energy (Is) to insolation power. That is, converting from total energy to average power. 1000 kWh = 3.6 x 10^9 Joules. That is spread over 365 days, or approximately 30 million seconds, so the average power (P) is 120 Watts of insolation per square meter.

P = Is x 0.12 Watts

The second figure we need is the cost of the panel in terms of $US per peak Watt. In other words, how much does that 200W solar panel cost? The site SolarBuzz :

http://www.solarbuzz.com/facts-and-figures/retail-price-environment/module-prices

tracks the retail cost of such panels, and by shopping around we can see that today (June 2013) a good achievable price would be $1/W, so that 200W module can be bought for $200.

Now all we have to do is work out what that 200W means in terms of area. From looking up such a panel, one recently advertized was 1477mm x 975mm = 1.45 square meters which implies a conversion efficiency of 12%-15%. I am going to assume that such efficiencies will remain typical for the next decade or so, barring any radical new technology.

Therefore the cost of 1 square meter of PV is $200/1.45 = approx $140

So, $140 of PV in London will get you 150 kWh x 25 years = 3750 kWh

at a price of 140/3750 = **3.7 cents per kWh**

So it is considerably cheaper than domestic mains over the long period. This also assumes you actually use all this electricity or sell it on to others or the grid. If not, you are paying for over capacity. It also ignores installation, battery and inverter costs.

Looking at various regional maps London is clearly not best placed for solar electricity. Southern Europe, much of the USA and South Asia has more than 1.5 times the amount of insolation. North Africa up to 2.5 times the amount, so electricity generated is proportionately cheaper eg Spain would yield figures of around half the above.

**Inverter**

In order to power a home, from either battery or PV panels an inverter is needed to convert the DC voltage to AC mains. Current prices are around $0.70 per Watt, or $70 per kW. Unless you are using an electric cooker electricity use will probably not exceed a couple of kW peak, so budget $150.

**Battery Storage**

In order to maximize energy use, or live totally off grid, a battery system is needed, since a lot of electricity consumption is at night. The major exception being when PV is used to run air conditioning during the day – an ideal match. However, if I again assume that a storage capacity of one full day is needed (excluding air conditioning) how much is reasonable? At a guess, most households would expect to use around 10 kWh per day and so I will take that as the capacity of the battery used. Obviously, depending on lifestyle and energy efficient appliances that could be considerably less.

Once again from SolarBuzz, we have average figures of around $250 per kWh for deep discharge batteries (NOT car or truck batteries), and about $6 per amp for the charger.

http://www.solarbuzz.com/facts-and-figures/retail-price-environment

Unfortunately, choosing ideal battery capacity is not easy since battery life is heavily dependent on how deeply the battery is discharged per charge/discharge cycle, the number of cycles and the type of battery. Lifetime is likely to be somewhere between 5 and 15 years. Also bear in mind that batteries are not 100% efficient.

A PV array delivering 1kW at 24VDC will supply approximately 40 amps of current, so budget around $250 for the charger bringing that cost to around $3250 amortized over (say) 10 years, which is roughly $1 a day for a 10 kWh battery installation – 10 cents per kWh per day.

**Summary**

Most of the above can be summarized by a formula for the cost of a kWh of solar electricity from panels only. All units are metric and area in square meters.

Is = Insolation in kWh of sunlight per year per square meter

Ef = Percentage efficiency of PV conversion (typically 15% for Silicon)

Wp = Peak Watt rating of a PV panel (eg 200W)

$ = Price of a PV panel (eg $250)

A = Area of PV panel.

T = Amortization of the system cost in years (eg 25 years)

Pkwh = Price per kWh amortized over T

A = Wp / (10 x Ef)

Cost of one square meter = $/A

This area generates Is x Ef/100 kWh per year

To generate 1 kWh over 1 year = $ x 100 / (A x Is x Ef) = $ x 1000 / (Wp x Is)

To simplify even further, we can reduce $/Wp to the “Dollars per Watt” (D) rating used in the PV industry. Currently, it stands at around D = 1.

Then amortized cost becomes:

Pkwh = D x 1000/(Is x T)

Plugging in some figures, where:

Is = 1500 kWh/year (most of N America, S Europe, populated Asia and Africa)

T = 20 years

D = 1 $/Wp

Cost = 1000/(1500 x 20) =** 3.3 cents per kWh**

**Conclusion**

Going solar for electricity is a *lot* cheaper than you might imagine, given existing quotes for systems provided by regular companies. If you have the roof area and can do the whole job yourself you can save a small fortune. However, the real cost comes when you want to add battery backup.