Photovoltaic System

A solar electric system is more commonly referred to as a photovoltaic (PV) system.

Before giving you the bottom line (and depressing) numbers concerning the cost to install a PV system, lets discuss some of the reasons why you should still consider investing in a PV system:

A. Once installed, you electricity cost never increases for the life of your PV system.

B. Your PV electricity producing panels are warranted for 25 years and will continue to produce electricity for 30, 40, 50 even 60 years. Grid tie inverters are now warranted for 10 years. Average cost of the inverter is $1,500 to $5,000.

C. There is almost zero maintenance associated with a grid-tied PV system. A PV system which also uses batteries is more expensive to install and maintain. The PV system costs listed on this web page pertain to batteryless grid tie systems only, which is the most cost efficient PV system.

D. The amount of electricity produced by your PV system reduces the amount of electricity required from a fossil fuel source. Each kilowatt hour generated by your PV system offsets 1.15 to 2 pounds of CO2 emissions that would have been produced from a fossil fuel generating plant. A 1,000 watt PV system will offset about one metric ton of CO2 emissions.

E. Renewable Energy Credits (RECs) realized from the production of "green" power may become more valuable to you in the future, and thereby reducing payback. You may sell your RECs through our website.

PV System Cost and Payback

Determining the cost of installation and the payback for installing a photovoltaic (PV) system is the easiest of all renewable energy systems to understand. There are 3 main components needed to analysis the cost and payback of installing a PV system, which are:

1. Your average number of peak hours of sun per day in your area (about 4.3 hours of sun per day, 365 days per year, in New England)

2. The amount you pay for each kilowatt-hour (kWh) of electricity you use (average cost of electricity in New England, including delivery charges and taxes, is 14 cents per kWh)

3. The cost of the PV system, including installation (average cost in New England is $8 per watt of PV panels)

Refer to this link for more details: Details on how to calculate performance and payback of PV systems

Quick Summary Analysis:

Based on the 3 components listed above, to install a 1,000 watt PV system at your home in New England would cost $8,000. Your new 1,000 watt PV system would produce 1,256 kWh per year and thereby reduce your electricity bill by $175 per year.

Payback is the length of time it takes for the energy savings realized to pay for the cost of the equipment that produced the energy savings. A detailed analysis would require estimating future energy price increases, inflation and interest rates.

Simple payback calculations avoid the detailed analysis by simply dividing the total cost of the energy saving equipment by the expected yearly energy savings. The result is the number of years it will take to break even on the installation. Simple paybacks of 5 years or less are very good.

Dividing the $8,000 cost of the system by the $175 per year savings yields a simple payback of 46 years. Will the PV system even last 46 years, long enough to break even? The PV panels, which are the most expensive cost of the system (about $5 per watt) theoretically will not wear out. The panels are guaranteed for 25 years and expected to still be producing electricity at 30, 40, 50 and even 60 years. However, due to discoloration of the protective glass over the PV cells, the efficiency of the PV panel is reduced after about 30 years of use. So electricity will still be produced by the PV panels after 46 years, just not at 100%.

Even though the life of the PV panels will most likely exceed 46 years, the 46 year return on investment is the reason these installations are rare. The federal government and some state governments do offer tax credits and rebates to reduce the cost of PV installations. The tax credits and rebates do help somewhat, but the upfront costs to the homeowner are still high. Thats the reason for the first category on our home page, "Are You Energy Efficient?" It is by far cheaper to reduce your kilowatt usage by replacing inefficient appliances with Energy Star rated appliances than to invest in PV panels. Refer to the , "Are You Energy Efficient?" menu item for suggestions and a list of Energy star rated products.

The following is a list of federal and state rebates and tax credits offered to homeowners and business owners who install PV systems at their location. To qualify for the rebate and tax credits, the installation must be completed by a master electrician who is certified by NACRB (North American Board of Certified Energy Practicers) or by a master electrician participating in the NABCEP program. Requirements vary so check with applicable program for specific requirements. Homeowners and business owners who install the PV system themselves will be not eligible for the tax credits and state rebates if the installer is not NACRB certified.

If youre interested in the rebates offered in a state not listed below, send us and email This email address is being protected from spambots. You need JavaScript enabled to view it. . Well check into the PV rebates offered by the state and update our website to show that information. Also, if you have information to share with us about your states PV rebate program and electricity rates, please send us an email. Well include your information on our website. For the latest information concerning federal and state rebates and incentives for all states, please visit www.dsireusa.org.

Federal Tax Credits for Homeowners

Federal Tax Credits for Business owners

Connecticut PV Rebate Program

Maine PV Rebate Program

Massachusetts PV Rebate Program

New Hampshire PV Rebate Program

New York PV Rebate Program

Rhode Island PV Rebate Program

Vermont PV Rebate Program

List of local PV installers

Federal Tax Credits for Homeowners:

Homeowners may deduct 30% of the cost to install their PV system, up to $2,000, from their federal taxes.

For example, a New England homeowner who installs an $8,000 PV system may claim a tax credit of 25% of $8,000, which equals $2,000. The total cost of the PV system is now $6,000. Dividing the $6,000 by the $175 per year of electricity savings yields a simple payback of 34 years.

A New England homeowner who installs an $49,000 PV system may claim a tax credit of $2,000. The total cost of the PV system is now $47,000. Dividing the $47,000 by the $1230 per year of electricity savings yields a simple payback of 32 years.

Homeowners who receive state rebates for installing a PV system will not be able to claim the $2,000 federal tax credit, unless the homeowners rebate from the state is less than $2,000. If this is the case, the homeowner could claim the difference on their federal tax returns.

Federal Tax Credits for Business owners:

Business owners may deduct up to 30% of the cost of the PV system from their federal taxes. There is no maximum amount they claim on the tax forms. In addition, business owners may also depreciated the cost of the system in 5 years, reducing the total cost of the PV system to over half of its original installation cost after 6 years for tax credits.

For example, a New England business owner who installs an $8,000 PV system may claim a tax credit of 30% of $8,000, which equals $2,400. Additionally, the business owner may depreciate the equipment over 5 rears, which equates to another 30% credit at the end of 6 years. The total cost of the PV system is now $3,400. Dividing the $3,400 by the $175 per year of electricity savings yields a simple payback of 20.

A New England business owner who installs an $49,000 PV system may claim a tax credit of $14,700. The 5 year accelerated depreciation tax credit results in an additional $14,700 savings at the end of 6 years. The total cost of the PV system is now $19,600. Dividing the $19,600 by the $1230 per year of electricity savings yields a simple payback of 16 years.

Business owners who receive state rebates for installing a PV system will not be able to claim the federal tax credit, unless the business owners rebate from the state is less than the 30% federal tax credit. If this is the case, the business owner could claim the difference on their federal tax returns. The business owner may still take advantage of the 5 year accelerated depreciation tax credit.

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Connecticut PV Rebate Program:

Connecticut residents now pay on average 20 cents per kilowatt hour for electricity from their utilities. A 1,000 watt PV system would save the homeowner $241 per year in electricity costs. A 7,000 watt PV system would save the homeowner $1,758 per year in electricity costs.

For Residents

The Solar PV Rebate Program is offered to residents installing PV systems up to and including 10 kilowatts. Homes can be one to four family residences.

Systems up to and including 5 kilowatts: The program offers a performance-based rebate up to $5 per Watt (PVUSA Test Conditions or "PTC") for system and installation costs to a maximum of $25,000.

Systems greater than 5 kilowatts and up to and including 10 kilowatts: The program offers a performance-based rebate up to $5 per Watt (PTC) for system and installation costs on the first 5 kW PLUS a performance-based rebate up to $4.30 per watt for the next 5 kW.

A Connecticut homeowner who installs an $8,000 (1,000 watt) PV system may receive a rebate of $5,000. The cost of the PV system is now $3,000 Dividing the $3,000 by the $251 per year of electricity savings yields a simple payback of 12 years.

A Connecticut homeowner who installs an $49,000 (7,000 watt) PV system may receive a rebate of $33,600. The total cost of the PV system is now $15,600. Dividing the $15,600 by the $1,758 per year of electricity savings yields a simple payback of 9 years.

Information for this program is available at http://www.ctinnovations.com/funding/ccef/solar_rebates.php

For Nonprofits and Governmental Organizations

Rebates will be applied to the first 10 kilowatts for nonprofits and governmental organizations. These entities will be rebated based on a performance basis up to $5 per Watt (PTC) to a maximum of $50,000.

A Connecticut nonprofit who installs an $8,000 (1,000 watt) PV system may receive a rebate of $5,000. The cost of the PV system is now $3,000 Dividing the $3,000 by the $251 per year of electricity savings yields a simple payback of 12 years.

A Connecticut nonprofit who installs an $49,000 (7,000 watt) PV system may receive a rebate of $35,000. The total cost of the PV system is now $15,000. Dividing the $15,000 by the $1,758 per year of electricity savings yields a simple payback of 9 years

Commercial (for-profit entities) wishing to install solar PV systems at their places of business may apply for a grant under CCEFs On-Site Renewable Distributed Generation Program. For more information about this program, visit www.ctcleanenergy.com.

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Maine PV Rebate Program:

Maine does have a PV rebate program in effect for years 2006 and 2007. The program provides rebates to homeowners up to $7,000 as follows: $3 per watt for the first 2,000 watts of installed capacity, and $1 per watt for the next 1,000 watts. Unfortunately the funds for this program were very limited and in fact exhausted within a few months being available. The program managers discovered there is additional funding available that will be effective on January 1, 2008, on a first come, first served basis. Information for this program is available at http://www.maine.gov/msep/programs_solar.htm.

If your lucky enough to take part in the Maine PV rebate program, a Maine homeowner who installs an $8,000 (1,000 watt) PV system may receive a rebate of $3,000. The total cost of the PV system is now $5,000. Dividing the $5,000 by the $175 per year of electricity savings yields a simple payback of 29 years.

A Maine homeowner who installs an $49,000 (7,000 watt) PV may receive a rebate of $7,000. The total cost of the PV system is now $42,000. Dividing the $42,000 by the $1230 per year of electricity savings yields a simple payback of 34 years.

Business owners may also qualify for the PV rebate program. Overall cost and payback is identical to that listed under the Federal Tax Credits for Business owners section.

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Massachusetts PV Rebate Program:

The Massachusetts Technology Collaborative (MTC) has a Small Renewables Initiative (SRI) rebate program each year through FY2010. The program provides rebates of up to $50,000 for design & construction of renewable energy projects that are up to 10 kilowatts and located at residential, commercial, industrial, institutional, and public facilities that will consume 50% or more of the renewable energy generated by the project onsite. The applicant and project site must be a customer of a Massachusetts investor-owned electric distribution utility.

The grant awards may be used to facilitate the installation of renewable energy projects on existing buildings (retrofits) or in conjunction with new construction/major renovation projects, including green buildings. Awards are made on a first come first serve basis on a monthly basis.

Applicants considering larger onsite projects are encouraged to explore funding opportunities provided through the MTC Large Onsite Renewables Initiative, which is a competitive grant application process.

The SRI is designed for projects 10 kW and less (3.6 kW and less for residential PV). Applicants may install systems of any size, but the rebate from MTC will be based on the rebate caps ($2 per watt of installed capacity).

For residential customers, rebates for PV are limited to an amount based on a maximum system capacity of 3.6 kW (3,600 watts) per household. All other rebates are limited to a maximum system capacity of 10 kW (10,000 watts) per meter. Additional rebates apply for low income areas and if the PV system is manufactured in Massachusetts. For more information, please visit http://www.masstech.org/renewableenergy/sm_renew/one.html

A Massachusetts homeowner who installs an $8,000 (1,000 watt) PV system may receive a rebate of $2,000. The total cost of the PV system is now $6,000. Dividing the $6,000 by the $175 per year of electricity savings yields a simple payback of 34 years.

A Massachusetts homeowner who installs an $49,000 (7,000 watt) PV may receive a rebate of $7,200. The total cost of the PV system is now $41,800. Dividing the $41,800 by the $1230 per year of electricity savings yields a simple payback of 34 years.

Business owners may also qualify for the PV rebate program. Overall cost and payback is identical to that listed under the Federal Tax Credits for Business owners section.

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New Hampshire PV Rebate Program:

None. Refer to the Federal Tax Credit programs detailed above.

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New York PV Rebate Program:

NYSERDA has cash incentives available for the installation of small PV systems. The cash incentives are only available for PV systems purchased through an eligible installer. NYSERDAs New York Energy $martSM initiative currently has several programs that, when combined with the PV cash incentives, could help offset the total installation costs of a PV system by 40-70%. While incentives are capped at 50kW for non residential and 10kW for residential systems, PV systems can be larger than 50 kilowatt (kW).

The three incentive levels are:

Residential Incentive
$4.00 per watt up to 5,000 watts or 5 kW,
$4.50 per watt Energy Star up to 5,000 watts or 5 kW
$4.50 per watt for all building integrated PV systems up to 5,000 watts or 5 kW.
For additional watts above 5 kW, all residential incentives will be reduced by $1.00/watt and all residential incentives will be capped at 10 kW.

Non-Residential Incentives
$4.00 per watt up to 25 kW,
$4.50 per watt for all building integrated PV systems up to 25 kW,
$5.00 per watt for schools, non for profit organizations, and municipalities up to 25 kW.
All non-residential incentives will be reduced by $1.00 per watt for additional watts above 25 kW and non-residential incentives will be capped at 50 kW per site/meter and 100 kW per customer. Exemptions related to systems per customer may be considered on a case-by-case basis. All customers will still be able to receive additional financial assistance through the Loan Fund.

Residential PV systems are typically eligible for a New York State income tax credit. Please visit the NYS Department of Taxation and Finance for more information.

Additionally, the New York Energy $martSM Loan Fund provides interest rate reductions on loans for energy efficiency projects and renewable technologies. Interest rates for loans can be reduced by 4.0% for up to 10 years. Visit www.nyserda.org/loanfund for more information.

Please visit http://www.powernaturally.org/Programs/Solar/incentives.asp for more information about the PV incentive program.

A New York homeowner who installs an $8,000 (1,000 watt) PV system may receive a rebate of $4,000. The cost of the PV system is now $4,000 Dividing the $4,000 by the $175 per year of electricity savings yields a simple payback of 23 years.

A New York homeowner who installs an $49,000 (7,000 watt) PV may receive a rebate of $28,000. The total cost of the PV system is now $21,000. Dividing the $21,000 by the $1230 per year of electricity savings yields a simple payback of 17 years.

A New York business owner who installs an $8,000 (1,000 watt) PV system may receive a rebate of $4,000. The cost of the PV system is now $4,000. Dividing the $4,000 by the $175 per year of electricity savings yields a simple payback of 23 years.

A New York business owner who installs an $49,000 (7,000 watt) PV may receive a rebate of $28,000. The total cost of the PV system is now $21,000. The 5 year accelerated depreciation tax credit on the $21,000 results in an additional $7,000 savings at the end of 6 years, reducing he total cost of the PV system to $14,000. Dividing the $14,000 by the $1230 per year of electricity savings yields a simple payback of 11 years.

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Rhode Island PV Rebate Program:

Rhode Island offers a personal tax credit for photovoltaic systems (on-grid and off-grid). The tax credit is equal to 25% of the system cost and applies to residential installations. Photovoltaic (PV) systems must have a minimum module size of 24 square feet, and must either be connected to the grid or to a battery-storage system. PV systems up to $15,000 are eligible for the full 25% credit. (Owners of PV systems that exceed $15,000 in cost will receive a credit based on a $15,000 system cost.)

A Rhode Island homeowner who installs an $8,000 (1,000 watt) PV system may receive a rebate of $2,000. The cost of the PV system is now $6,000 Dividing the $6,000 by the $175 per year of electricity savings yields a simple payback of 34 years.

A Rhode Island homeowner who installs a $49,000 (7,000 watt) PV may receive a rebate of $12,250. The total cost of the PV system is now $36,750. Dividing the $36,750 by the $1230 per year of electricity savings yields a simple payback of 30 years.

For more information, please visit http://www.energy.ri.gov/programs/renewable.php

None listed for business owners. Refer to the Federal Tax Credit programs detailed above.

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Vermont PV Rebate Program:

New equipment purchased and installed in Vermont after the programs start date, September 1, 2006, is eligible for incentive. Only grid-connected PV systems are eligible for incentives. All new systems must include the components necessary to result in a functional, independent system. Upgrades to existing systems are also eligible, but to be eligible, an upgrade must include new modules with a rated output of at least 1 kW. New modules must be UL 1703 listed. All inverters must be UL 1741 listed or listed by another nationally recognized testing laboratory. All systems must comply will all applicable requirements of the current version of Vermont Public Service Board Rule 5.100.

The program provides rebates to homeowners and business owners of $1.75 per watt of installed capacity, up to $8,750. Multi-family low-income housing projects may receive rebates of $3.50 per watt of installed capacity, up to $35,000. For more information, please visit http://www.rerc-vt.org/incentives/index.htm

A Vermont homeowner who installs an $8,000 (1,000 watt) PV system may receive a rebate of $1,750. The homeowner could also receive a $250 federal tax credit resulting in a total savings of 2,000. The cost of the PV system is now $6,000 Dividing the $6,000 by the $175 per year of electricity savings yields a simple payback of 34 years.

A Vermont homeowner who installs an $49,000 (7,000 watt) PV may receive a rebate of $8,750. The total cost of the PV system is now $40,250. Dividing the $40,250 by the $1230 per year of electricity savings yields a simple payback of 33 years.

Business owners may also qualify for the PV rebate program. Overall cost and payback is identical to that listed under the Federal Tax Credits for Business owners section.

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Details on how to calculate performance and payback of PV systems

1. Determining your average number of peak hours of sun per day in your area:

There are several calculation programs and solar maps available on the internet to estimate the amount of sun available for major cities located all around the world. The PV calculation program available at www.RETscreen.net is the tool we use. This program may be downloaded for free.

To view the average amount of sun available per day for various cities located throughout New England, click on the Solar Data Table link below . For comparison purposes, the average amount of sun available to Phoenix, Az and Honolulu, HI are also included.

Solar Data Table (11 kB PDF)

The Solar Data Table shows solar radiation data collected by NASA over several decades. This table lists the average number of peak hours (100%) of sunshine that is expected to be absorbed by PV panels, depending on its location (city) and tilt of the PV panel. Testing conducted by the National Renewable Energy Lab has shown that permanently mounted PV panels that are tilted at the same latitude of where its installed will produce the greatest number of kWh per year. For example, Portland Maine is located at approximately 43 degrees North latitude. Therefore the optimal performance of PV panels will be achieved if the panels are tilted up 43 degrees from lying flat (0 degrees).

Looking at the bottom numbers in the Solar Data Table, we see that the average amount of sun available to New Englanders ranges from 4.3 hours of sun per day to 4.5 hours of sun per day. Lets use the 4.3 average hours of sun per day to do our calculations.

4.3 hrs of sun/day x 365 day/year = 1,570 hrs/year of peak sun available to New Englanders

For each 1,000 watt (1 kW) PV system install, you would then expect the renewable energy delivered to you power panel to be:

1,570 hrs/year of peak sun available x 1 kW = 1,570 kWh/year

Realistically, the PV system will only deliver 80% of the peak sun amount due to losses inherent to the PV system installation. There are losses associated with converting the DC current produced by the PV panels to 120 volt, 60 hertz AC current. And there are additional losses through the cabling and connectors that supply power from the PV system to the power panel. All losses combined equate to about 20%.

Therefore, for each 1,000 watt (1 kW) PV system, expect the actual renewable energy delivered to the power panels to be: 80% of 1,570

0.80 x 1,570 kWh/year = 1,230 kWh/year

2. Your monthly electricity bills:

To determine your true cost you pay for each kilowatt watt hour (kWh) of electricity, look at your latest electricity bill. Assuming you havent carried over any electricity charges from previous months, locate the "Total Amount Due" shown on your electricity bill. If you have charges for more than one month, locate the total amount due from this month only.

The "Total Amount Due" includes all of your charges, including cost to produce and deliver the electricity and all state, federal and local taxes. These combined charges are called the �retail rate." Each kWh of electricity produced by your PV system offsets your cost to purchase the electricity at the retail rate. Therefore your PV system is producing "retail rate" electricity, or about 14 cents on average in New England.

3. The cost of PV systems:

For batteryless PV system connected to the grid, the most expensive component of a PV system are the panels. PV panels cost about $5 per watt. The cost of the panels alone in a 1,000 watt PV system would be $5,000. The second most expensive component is the grid tie inverter, which could range from $1,500 to $5,000. The remaining costs including cabling and installation.

For a PV system that includes batteries, whether connected to the grid or not, substantially increases the cost and complexity of the system.

4. Net Metering Agreement:

What happens when your PV system produces more electricity than you are using, such as during those long summer days? A net metering agreement allows the excess electricity produced by your PV system to be "banked" by the electric utility company for you to use at a later date, such as in the winter. As long as you use the excess electricity within a certain period of time (usually a year), your excess electricity will not be a free give away to the electric company.

If your PV system is sized perfectly to match your usage, you could actually reduce your electricity bill down to zero. You will actually never really reduce your payment to the electric company to zero as long as you are connected to the grid. The electric company will still charge you a monthly connection fee, usually about $7, just to be connected to the grid. This monthly connection fee is well worth it since the grid is now your battery bank, storing your excess electricity. Without this grid connection, your alternative would be to store your excess electricity in a battery bank, which is more costly system to install and maintain.

The drawback in using the grid as your storage is that when the grid has an outage, so do you. The grid tie inverters are design to shut off electricity produced by your PV system when it senses a loss in grid power. This a safety feature to prevent utility workers from being electrocuted when working on utility lines that should not have any electricity flowing through them.

Many states allow net metering agreements between PV system owners and the electric utility company delivering your normal electricity. Before investing in a PV system, check with your utility to learn about net metering requirements.

Additional Resources:

The following links provide additional information concerning PV system installations.

Home Power magazines online website, www.HomePower.com, provides an easy to understand tutorial about solar electric basics. Lots of other great information is available at Home Powers website. Every member of our company has their own subscription to this magazine.

The link below provides a detailed overview of the different PV systems available and the installation procedures.

 

High-Performance Home Technologies: Solar Thermal & Photovoltaic Systems; Volume 6, Chapter 4. NREL/TP-550-41085; PNNL-16362; June 200. (1.35 Mb PDF)

List of local PV installers:

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