What Size System Do I Need?
Don't buy a solar power system that is too large
There are three ways you can size a solar power system for your home or business:
- Install as many solar energy modules as will fit on your roof
- Install enough solar power generating capacity to completely eliminate your electric bill
- Determine the exact system size to maximize your payback and Net Present Value
The graph below illustrates how installing more solar energy capacity may not always save you more money. Initially, installing more solar energy capacity increases the overall value of the system. However, for shading, electric rate tier and rebate reasons, installing more modules beyond a certain point ceases to be cost effective.
ACA Solar will run the numbers for you and recommend a solar power system that is optimally sized for your needs.
Solar Power Electricity - Net Present Value by System Size
1. Install as many solar power modules as will fit on your roof:
This method of sizing a system will always be economically best for your installer, but may not be best for you. In many cases, even though there may be available area for more solar power modules, installing additional modules beyond a certain point is not beneficial. In particular, shading may occur on modules installed at the perimeter of the roof or near obstructions. The performance of these shaded modules (even if they are only partially shaded during the day), will be less than modules in full sun. We have seen situations in which the center of the solar power (photovoltaic) array was in full sun, but modules far to the left and far to the right of the array were in complete shade for several prime sun hours during the day. To avoid making this mistake, it is necessary to do a careful solar site survey (ideally using a Solar Pathfinder) to determine the net energy output of partially shaded modules -- and then determine if it is economically beneficial to install modules in those locations.
2. Install enough generating capacity to completely eliminate your electric bill:
For business and residential customers on tiered rate plans, as you generate more and more power you will receive proportionally less for this power in lower rate tiers.
For example, if you are on PG&E's E-1 rate and have a monthly bill of 1,100 kWh:
- the first 51 kWh your solar electric system generates will generate a credit on your bill at the rate of $0.235 per kWh,
- the next 350 kWh will be worth $0.213 per kWh
- the next 245 kWh will be worth $0.174 per kWh
- the next 105 kWh will be worth $0.129 per kWh, and
- the next 350 kWh will be worth $0.113 per kWh.
Under the current Net Metering laws, PG&E must give you credit for any net power that you produce. However, that credit will initially apply to the lowest (cheapest) rate tier. To avoid oversizing your solar energy (photovoltaic) system it is necessary to analyze the impact of the energy your solar power system generates on each rate tier on your bill.
3. Determine the exact solar power system size to maximize your payback and Net Present Value:
The best way to size a solar energy system is to determine the Net Present Value of each system alternative (including varying numbers of panels, inverters, installation techniques and component manufacturers).
This NPV analysis should also take into account:
- your discount rate
- electric cost escalation rate
- tax rate
- incentive programs (rebates, tax credits, accelerated depreciation, etc.)
For example, one can see in the above graph that the NPV for a 24 module system is higher than for a 28 module system. In this case installing the additional 4 modules required the installation of a second inverter, thereby significantly increasing the total system cost without a commensurate increase in solar energy output. A similar break point occurs at 48 to 52 modules.
For this customer, the optimal number of modules was 72. Installing 76 modules required another inverter. Moreover, these additional modules were partially shaded, and the energy they generated was credited in the third rate tier ($0.174 per kwh) instead of the fourth rate tier ($0.213). Installing more than 96 solar power modules made absolutely no sense at all since the system size was in excess of 10kw at this point -- beyond the level of applicable rebates.
Maximize your inverter output
For many residences and businesses we recommend installing enough solar power module area to fully utilize each 2500 watt inverter (the inverter is the most expensive component in your system). Multiple inverter/solar energy module arrays can then be installed to generate the desired output. Since high performance solar energy modules generate about 12 watts per square foot, this will require about 250 square feet of available roof space (there are usually gaps and walking spaces between modules, so space utilization is not 100%).
Typical San Francisco Bay Area Solar Power System
There is an average of 5.5 hours of full sun per day at a 70% annualized efficiency for a well designed solar energy systems. With 18 high output modules, each producing 160 watts peak, this solar energy system will generate approximately 4,000 kwh per year -- or about $935 worth of energy per year at current rates.
Typical New York/New Jersey/ New England Area Solar Power System
There is an average of 4.6 hours of full sun per day at a 70% annualized efficiency for well designed systems. With 17 high output modules (lower operating temperatures reduce the number of modules you can install on a single inverter), each producing 160 watts peak, this system will generate approximately 3,200 kwh per year -- or about $384 worth of energy per year at current rates.
Commercial Solar Customers
For systems larger than 10kW it is particularly important to determine the total amount of energy produced by the solar power energy system each month, and then map that production into the electrical rate structure being used by the facility.
Consideration should be given both to savings generated by reduction in total kW demand as well as reduction in total kWh consumption in each applicable rate tier.
Changing to a Time Of Use billing rate should also be considered. Finally, the practical realities of receiving rebates and tax credits must be incorporated in your financial analysis when you evaluate your optimal solar energy system size and timing of your project.