Comparing the True Costs of Solar

Are you considering investing in solar technology for your home or business? The economic advantages of solar are at the forefront of most buyers’ minds, but getting the best bang for your buck isn’t as straightforward as you might think. There are some common misconceptions regarding solar power that can muddy the waters when comparing systems for initial cost and long-term benefits. Whether you’re just beginning to investigate systems and suppliers or you’re looking at competing proposals, it’s important to understand two issues clearly.

Cost per watt versus Cost per kW-hr

Cost per Watt refers to the number of dollars you would spend to buy a system capable of producing one watt of electricity. To find the cost per watt divide the total cost of the project by the number of watts it can produce.

Cost per kilowatt-hour: A kilowatt is 1,000 watts, and a kilowatt-hour (kW-hr) is a kilowatt of power being used for a full hour. Finding the cost per kW-hr is a more complex figure to calculate than cost per Watt, as it involves estimating the total lifetime cost of the system (less incentives) and the total kilowatt-hours it will produce over its lifetime. But it’s a more accurate reflection of economic efficiency, because it measures the actual cost of energy over the system’s lifetime.

Cost per watt is the number most people focus on, because that is one fair and simple way to compare systems on installation cost. However, a lower cost per watt does not necessarily make it the better choice. In the long run, you may end up paying a lot more for your energy with a less expensive system with a lower cost per Watt but a higher cost per kilowatt-hour.

Keep in mind that you may qualify for tax credits and that could affect your costs. Read our previous blog post, Taking Advantage of the Solar Energy Tax Credit.

Cell Efficiency versus Module Efficiency

Cell efficiency refers to the portion of energy (from the sun) that can be converted into electricity by an individual solar cell in a solar panel. This can vary due to the weather and the latitude. Typically, you will see cell efficiency ranging from 10 percent to 30 percent.

Module efficiency refers to the efficiency of the solar panel as a whole at converting sunlight into electricity. A panel’s efficiency is always a little lower than the efficiency of its component cells, because the frame and the spaces between cells don’t produce electricity, and circuits within the panel consume a certain amount of power too. It is, however, a more accurate way to compare the efficiency of competing systems, since you’re not, after all, installing individual cells on your roof: you’re installing panels.

Most manufacturers promote cell efficiency because the number is always higher and more attractive. But module efficiency should be your point of reference. It is possible for a panel with more efficient cells to have lower overall efficiency, and vice versa.

Also remember to check on system warranties and take those into consideration during your purchase.

To learn more about solar system efficiency and economy in New Jersey, Pennsylvania and Delaware, contact TerraSol Energies, Inc.