A simple residential solar cell cost analysis

Residential solar panels...how do they relate to your utilities rates?

Okay here's a brief cost analysis synopsis for solar panels and how one might, for instance, in theory approach a calculation for measuring the cost per kwh for such panels. In theory, what sorts of cost might play into solar panels? I mean once you've purchased the panels the solar energy is free, you don't need to mine the resource, you don't need to transport the resource, the resource which is sunlight comes to you. It is free energy at relatively no cost...I say relatively speaking, however, because we know in nature that due to natural forces, machines and mechanical systems might not exist forever. Cars break down like people that grow older whom would eventually die. Thus while the sunlight is free the cost you spent on the mechanical, or in this case the photovoltaic system (solar panels) wont last forever. So in our purely theoretically cost analysis, we say what is the purchase cost of such system, that produces our otherwise free power, and how long does such system last? Well I happened to just do some brief glancing at warranties and advertisements of solar panel systems. Currently advertisement would read at 30 years but warrantied 25 years...okay 25 years can we based upon the cost of commercial home solar systems determine a rough estimate as to the rates that our systems would cost us economically for such systems? Yes, of course, at least roughly speaking we can give ourselves an idea. In a very simplified cost analysis we might...hey by the way, I support the exchange of thoughts and ideas even if I am wrong...nevertheless, here goes the cost analysis idea. The idea with regards to cost analysis is that we look into all of the things that might cost for such system...whether its the life span of the equipment, the rate of failure of such equipment, maintanence issues that might go into such (which might include technicians that maintenance such system). All of such factors add into the cost of operating such system, and subsequently they provide a base cost rate that such power is costing us. Never mind profit if we are reselling such. In a purely simplified model, if we assumed that under peak optimal conditions that we were generating power according to average power generation models based upon our geographic area and assuming that one hundred percent of the time such solar arrays were operating at one hundred percent efficiency, requiring no maintenance, or additional labor cost, we can basically develop a very very simple rough cost analysis for such system. In this case the cost is merely the life expectancy of such system, which we may as well use manufacturers warranty in such case, 25 years but in the upcoming example I will use no more then 20 years, and the total output power for its entire lifespan that would be expected contrasted with the initial cost investment for such solar array. We can then get an idea as to whether or not such is competitive within our local markets with regards to cost savings.
The good news is that I believe solar power, may yet be quite attractive, even for smaller residential systems. Lets look at power generation.
Let's say I live in New England and I want to determine my per year kWH power generation...well the equation is Energy from the PV system = (kW of PV) x (kWh/kW-year) = kWh/year. That is kW is the output power from your solar array x a output power generation constant determined by your geographical location...this can be found on a map provided at the DOE at http://www.nrel.gov/docs/fy04osti/35297.pdf. In this case lets say I have a five kilowatt grid...that means with such modest setup I can produce 5.320 x 1600 = 8512 kWH per year. Over the lifespan of such array I can produce...we'll use manufacturers warranty 20 years, 170,240 kWH = 8512 kWH/yr x 20 years. Basically this means that the energy I am using is costing me yearly, how much? We'll lets examine the initial cost investments of some common commercial home grid setups to be hardwired into an existing utilities line...that is, in such case, whatever power you don't use could otherwise be tapped from utilities...but for the sake of simplicity and avoiding further complications, because utilities in different areas of the country have their own policies with respect to home generation and how such is allocated to a respective home user...let us assume we are calculating as if the home were using entirely the power that it intended to generate. In the above example, I have chose a Sunwize grid system, and I have also chosen based upon product warranty information to use lifespan according to their product warranty specifications, some parts in such system may need replacing sooner adding cost to such system, and I had chosen the pricing listed at a commercial residential website concerning the price for a solar home kit grid tie system, which allows the flexibility of using both utilities power in additional to consuming self-power generation. The grid system is currently advertised, at $37,584.99. Okay here comes the basic cost analysis. We need to break down the rate into a cost per kWH, so we in a very simplified way, divide the cost of the system/by its life expectancy of power generation...this means $37,584.99/170,240 kWH and this yields $.220776 per kWH basically relatively to a very simple rate schedule in a given state no additional incentives, and lets say mine is currently listed at around $.081 per kWH is still cheaper. If one were trying to save costs, using one's regular power utilities would probably be better, in the above example...now the good news, is that in areas where rates are higher, yes, the system might pay for itself. The good news is that here's a nice report that I picked up from a back issue Scientific American article http://www.sciam.com/article.cfm?id=engineering-silicon-solar-cells. The contention is that cost per watt for producing solar cells may be dropping to a cost of around $1.65 per watt. This means that the next cost to create that same 5.320 kW grid above may cost around $8778 , barring costs for batteries, and all additional accessories in such grid-tie system. If we presumed the same lifespan, above we would determine the cost per kWH for that same system at $.0515625 per kWH...wow I'd rather go completely offline and produce my own power then rely on my big power plant utilities...basically this gives producers of solar arrays a comfortable profit margin to compete with big utilities producers in the production and sale of their solar systems. In other words, aside from maitanence costs that otherwise might factor into additional cost for such array system, I cannot see why solar wouldn't be competitive with fossil fuel produced power. There is margin of profits to be made and there can be margins of economic savings for consumers. We must factor, however, that solar energy alone produced might be variant in any given region, and therefore, variability in production might otherwise effect life expectant capacity generation from year to year.