How can you determine if a solar energy system is economically viable?

1 Location and size

The location and size of your solar energy system are important because they determine how much sunlight and space you have available. You need to consider the latitude, climate, orientation, tilt, and shading of your site, as well as the roof area, structure, and condition. These factors affect the solar irradiance, which is the amount of solar energy that reaches a unit area per unit time. The higher the solar irradiance, the more electricity your system can generate. You can use online tools, such as PVWatts Calculator, to estimate the solar irradiance and potential output of your system based on your location and size.

2 Design and performance

The design and performance of your solar energy system depend on the type and quality of the components you choose, such as the solar panels, inverters, batteries, and mounting systems. You need to compare the efficiency, durability, warranty, and maintenance of different options and select the ones that suit your needs and budget. The efficiency of a solar panel is the percentage of solar energy that it converts into electricity. The higher the efficiency, the more power you can get from a given area. The durability of a solar panel is the ability to withstand harsh weather conditions and degradation over time. The warranty of a solar panel is the guarantee that the manufacturer offers for the performance and quality of the product. The maintenance of a solar panel is the frequency and cost of cleaning and repairing the system.

3 Cost and incentives

The cost and incentives of your solar energy system are the upfront and ongoing expenses and benefits that you incur and receive from installing and operating the system. The upfront cost includes the purchase and installation of the system, as well as any permits, inspections, and fees required by your local authorities. The ongoing cost includes the operation and maintenance of the system, as well as any grid connection or backup power charges. The incentives include any grants, rebates, tax credits, or feed-in tariffs that you can access from your government, utility, or other organizations to reduce your cost or increase your income from the system.

4 Consumption and bills

The consumption and bills of your solar energy system are the amount and price of electricity that you use and pay for before and after switching to solar energy. You need to analyze your current or projected electricity consumption and bills to determine your baseline scenario and compare it with your solar energy scenario. You can use your past or estimated electricity bills to calculate your average monthly or annual consumption and cost per kilowatt-hour (kWh). You can also use online tools, such as Solar-Estimate, to estimate how much electricity your solar energy system can generate and offset your consumption and bills.

5 Payback period and savings

The payback period and savings of your solar energy system are the time and money that you need and gain to recover your initial investment and start making a profit from the system. You can calculate the payback period by dividing the upfront cost by the annual savings. The annual savings are the difference between the annual cost of your baseline scenario and the annual cost of your solar energy scenario. You can calculate the savings by multiplying the annual output of your solar energy system by the electricity price, and then subtracting the annual cost of your solar energy system. The shorter the payback period, the faster you can break even and save money from the system.

6 Environmental benefits

The environmental benefits of your solar energy system are the positive impacts that you have on the environment by reducing your greenhouse gas emissions and dependence on fossil fuels. You can estimate the environmental benefits by multiplying the annual output of your solar energy system by the emission factor of your electricity grid, which is the amount of carbon dioxide (CO2) emitted per kWh of electricity generated. The emission factor varies depending on the sources of energy used by your grid, such as coal, natural gas, nuclear, hydro, wind, or solar. The lower the emission factor, the cleaner your grid is. The higher the environmental benefits, the more you contribute to mitigating climate change and improving air quality.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?