Deciphering the ‘Mumbo Jumbo’

By Hawaii Renovation Posted in: EnergyExteriorRoofing

In this competitive climate, photovoltaic systems are proposed to potential buyers with a dizzying array of figures and numbers. While the intent is to enlighten consumers, some information has the effect of adding more confusion to the process, even to the point of misleading customers.

System size

This is expressed in kilo-watts (kW), which differs from kilowatt hours (kWh). The higher the number, the “larger” the PV system. This is calculated by multiplying the number of panels by the stated wattage of each panel. Thirty-three 240-W panels is equal to 7,920 watts (7.92 kW), while 30 215-W panels equal 6,450 watts (6.45 kW). Kilo-watt hours (kWh) is the measurement of electricity produced by the PV system or drawn off the grid by the customer. The obvious, but often erroneous, conclusion is that larger systems generate more energy. The previously mentioned 7.92 kW system yields 923 kWh per month, while the 6.45 kW design produces 990 kWh, despite its “smaller” size.

Number of qualified systems

This has the potential to create serious problems for the taxpayer with the Hawaii Department of Taxation. Some solar firms will say just about anything regarding the tax credits that might be claimed, but that is probably only a marketing ploy to sell systems. It’s the taxpayer, not the solar company, who will be affected by any challenge the tax department poses to the energy credits being claimed. For example, the 33-panel design producing 923 kWh per month is similar to other three-string systems. It is not so similar in price, however, at $63,950 versus $45,000 or less for most of its competition. While such a design will qualify for two or three systems at best, the selling point is the claim that it comprises five PV systems. That will never pass tax-department scrutiny.

Power production

The higher the kWh energy production by the PV system, the greater the savings. A great deal of this is predicated by panel efficiency and the number of panels utilized. But, projections are simply estimates based on laboratory testing, not necessarily real-world conditions. Production also is affected by panel orientation, pitch/slope/angle of the installed modules, elevation of the geographical location and shading caused by trees or adjacent buildings. Orientation is critical as the closer the panels are aimed toward dead south, the more effectively the modules will work. Deviation will lower the power production and require additional panels. The same can be said for properties in higher elevation — the “cure” is more panels. Installation on flator low-sloping roofs becomes more efficient on a rack system with between 22 1/2 and 45 degrees of pitch rather than being flush-mounted between 0 and 15 degrees. There’s not much that one can do about neighboring buildings or trees, but the owner’s own trees and shrubbery can be trimmed.

Net cost

This is one of the figures that determines the true cost of a solar system. It is the “out-of-pocket” cost after the rebates and tax credits are applied against the gross system price. A key component is that the tax credits are legitimate. The other figure is the energy saving from a properly functioning water heater or PV system.

Return on investment

The periodic savings divided by the net cost of the system can be expressed as a percentage return on the net cost, assuming that a $6,000 solar water heater has a net cost of $2,100 and saves $60 per month ($720 annually). That is a return on investment of 34.3 percent annually, yielding a “payback” period of just under three years. Similarly, a 20-panel PV system with a $30,000 gross cost has a net cost of $11,000 after credits, assuming energy savings of 660 kWh per month at the $0.326 rate recently announced by HECO, that works out to $2,582 annually. The rate of return is then 23.5 percent, a “pay-back” period of just over four years, three months. While returns of 14 to 16 percent would be considered excellent in the current financial marketplace, they pale in comparison to the 20 to 25 percent or higher that is available from the best designs.

Gross cost

In general, a low system price might indicate cheaper components in a lower-quality system, or an inexperienced company that is unable to properly price its PV systems. These “low-balling” tactics harm the legitimate firms in the solar industry. Prices that are astronomical compared with the rest of the industry do not necessarily equate to top-quality components or service. They may simply be over-priced. You do not always “get what you pay for.”

While there is little doubt as to the wisdom and viability of “going green,” being aware of certain basic facts can keep consumers from making imprudent choices. It only takes knowledge coupled with a bit of common sense to avoid potential mistakes.

Call the friendly people of Hi-Power Solar at 342-0802 for straight answers on the high-quality components utilized in their system designs. They are always ready to provide information on a no-cost, no-obligation basis.

CONTACT: 342-0802