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$ / kW·Hr

Cost of energy

This is how we compute it. 

$/kWhr (for life) = k·$/W (installed)

By now you've looked at the Price List and have an idea how much your system will cost, or you have a budget in mind.  The method for computing the cost of energy that you the buyer of a system can expect is based on a simple formula:

Unit Cost in  $ / kWHr = Capital Cost of System in Dollars / Energy Produced during Economic Lifetime


1) Let's look at the "Capital Cost of System in Dollars" That's easy, able to take the simple line item, because there are no fuel costs associated with the solar energy.  While there are O&M, and other costs, they vary by customer and are quite small by comparison.

Referring back to the price list, the cost of the system is easy to estimate if you know how much power you need, or want.  Like all things you buy, the bigger the package the lower the unit price; solar powered gensets are no exception.

2) The "Energy Produced during Economic Lifetime" needs some explanation.  It's actually a product of a number of terms.  So what is the "Economic Lifetime"?  20 years. Why 20, because that's just the arbitrary number the the PV industry had to use so *some* of their systems could shoe a breakeven.  It's also the time that PV systems are required to warranty their panels for, and it's the time when PV systems start to seriously fall apart.  We don't make PV systems.  Our systems will still be cranking out the power 50, 60, perhaps a hundred years from now, but we'll stick with 20 to keep it fair.

The "Energy Produced" part again is the product of the power rating and the amount of time the system is running.  Unless a system employs storage, is only makes power when the sun shines.  The percentage of time that usable sunshine is on the panels is always less than half of the day, and the number of days the sun is unobstructed by clouds varies by location.  Fortunately, there are charts and tables from all over the country, and the world, that document and predict the annual sunshine in a city near you.  Those tables are issued by ASHREA and the architect that built your building used them to specify your HVAC and the windows, roof, etc... (No A/C jokes right now, please.)

And then there's the S&T panels.  We design them to deliver the rated power for 8 hours per day.  That's a compromise we make based on your location, the size of the area you allow us to cover, local codes, and a few other factors.  We combine the 8 hours of sunshine per day with the estimated days of sunshine per year, and the 20 year lifetime and we get a number.  20 years x 240 days / year x 8hours / day =  38,400 hours of "Productive Economic Lifetime"

Let's punch in a hypothetical 100kW genset and the indicated $4.50/W price tag:

$450,000 / 100kW x 38400hr = $0.1171875/kWhr -- that's 11.7 cents -- for the next 20 years -- yes really!

But notice that the size of the system will actually from out of the equation.  That allows us to use a shorter equation to quickly estimate the lifetime cost of the electricity based solely on the installed price in $/W.  Therefore we have:

$4.50 $/W / 38.4 kHr = 0.1171875 $/kWhr -- same result -- same 20 years.

BTW: the equation works for everything from coal plants to nuclear reactors, fuel cells to hydroelectric dams.  BUT -- be careful -- it only tells you what the built in cost of the capital equipment of the plant adds to the lifetime cost of electricity.  If there is fuel then this number is only going to represent a small fraction of the total cost.

And if you need to compute the other way, that is to say you have a target rate for the cost of electricity you need to lock in for 20 years, simply multiply the rate; say 9 cents per kilowatt-hour (in dollars), by 38.4 and get:

  $0.09 $/kWhr x 38.4 kHr =  $3.456 $/Watt (installed )

That's why we say: "The Light is Green!"




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Updated: 09/11/10 19:32