Photovoltaic (PV) panels are an increasingly common sight on urban rooftops and rural properties across the U.S. The declining cost of equipment and installation makes installing a behind-the-electric-meter (net metered) solar electric system enticing for many homeowners, businesses, non-profits, and agricultural producers. Evaluating the financial prudence of an investment in solar requires careful consideration of installation costs, the value of production, and operation and maintenance costs.
Unfortunately, some installers are not forthcoming with information necessary to make fully informed investment decisions. Third-party ownership structures, such as leases, further increase the challenge of understanding the viability of an investment. This six-part series distills the information collection and decision process into six parts:
- Part 1: Estimating System Production – Site-specific factors can influence the amount of electricity produced by a PV installation.
- Part 2: Assessing System Cost – From initial costs to incentives to ongoing insurance expense, the present and expected costs dominate the decision to install a PV system.
- Part 3: Forecasting the Value of Electricity – Utility and governmental policies affect how much electricity is worth. Not all electrons are created equal.
- Part 4: Understanding Incentives – Federal, state, and local incentives can greatly affect the financial viability of a PV installation.
- Part 5: Conducting a Financial Analysis – Accurately evaluating the viability of a PV system requires understanding financial concepts, such as simple payback, net present value, and the levelized cost of energy. Preferences for risk, environmental attributes, and independence also inform these measures of viability.
- Part 6: PV Solar Example – The importance of accurate evaluation is clear when applied to a hypothetical project.
We highlight in each part critical questions you must ask yourself and your installer. You will be empowered in the ultimate goal of making an informed decision about whether PV is right for you.