An economic analysis of grid-connected residential solar photovoltaic power systems

Abstract

The question of the utility grid-connected residential market for photovoltaics is examined from a user-ownership perspective. The price is calculated at which the user would be economically indifferent between having a photovoltaic system and not having a system. To accomplish this, a uniform methodology is defined to determine the value to the user-owner of weather-dependent electric generation technologies. Two models are implemented for three regions of the United States, the first of which is a previously developed simulation of a photovoltaic residence. The second is an economic valuation model which is required to translate the ouputs from the simulation into breakeven array prices. Special care is taken to specify the input assumptions used in the models. The accompanying analysis includes a method for analyzing the year-to-year variation in hourly solar radiation data and a discussion of the appropriate discount rate to apply to homeowner investments in photovoltaic systems. The results of this study indicate that for the regions characterized by Boston, Omaha, and Phoenix, under the assumptions noted, photovoltaic module breakeven costs for the residential application are in the range of $.68, $.43 and $1.27 per peak system watt respectively (.42, .24, .89 per peak module watt).