Photovoltaic Modules (PVs) Ch. 15-16

My name is Frank E. Orzechowski and I am an Engineering Consultant, here in Polk County, Florida. Over the last three years, several folks have contacted me about the application of photovoltaic (PV) modules for their home. I have come to realize, there is substantial misinformation and confusion pertaining to the use of this solar electric technology and its benefits. Upon request, I have produced a 16-part series providing the Homeowner with the basic information, necessary to determine whether it is practical to invest in this technology. It includes calculation tools the Homeowner can use, to obtain a, fairly accurate prediction of the cost of the required equipment, along with the length of time it will take to receive a total return on their investment. Below are chapters 15 and 16.

To read chapters 1-4, see my post dated March 3, 2010; to read chapters 5-9, see my post dated March 8, 2010. To read Chapters 10-14, see my post dated March 16, 2010. 

Chapter 15–R.O.I. Summary

Before the Homeowner should consider the aforementioned R.O.I. calculations as an indicator of investment capability, it should be noted, the average Homeowner will not purchase the equipment with cash. Most Homeowners, should they decide to invest, will require a loan and the average interest on a 12 year loan is presently, 5.5 %-12%. This needs to be accounted for when calculating the true R.O.I. Income Tax deduction will not be able to eliminate all of this extra cost and that extra cost must be factored into the R.O.I. calculation, which will extend the time to recoup the investment to a period, even longer than previously, calculated. Also, consider the State Rebate and especially, the Federal Tax Credit, will not immediately be returned to the Homeowner, so technically, this, also extends the R.O.I. The credit calculation is more difficult because it would require each Homeowner’s tax accounting record which is not available.

At first, it appears, the application for the plan to purchase the system meeting 25% of the Homeowner’s electrical needs is more acceptable however, it is misleading. First, the Homeowner will not be able to receive the total available rebate offered by the State. This is a one-time rebate. Second, as the cost of electricity increases, the return on that investment becomes less and less. It is true the Homeowner’s equipment will continue to pay for about 25% of the energy bill, however, the increased cost of electricity, sure to follow, will cost more, via the 75% not using solar. So, the contribution of the present equipment toward the future energy bills will be less and less. The only way to eliminate the threat of rising electric costs is to have an array large enough to take care of the Homeowner’s total, electric needs. Then, the only increase over the years will be the customer service charge, which will be regulated by the State. Unfortunately, the R.O.I calculations for the rest of the applications indicate greater than 23 years, a very long time before the Homeowner will recoup the investment. Only the Homeowner can decide whether this is feasible and practical.

This completes the technical and financial discussion of installing PV modules for the typical Homeowner. The following and final chapter is my personal conclusions as to whether I would recommend a Homeowner investing in PV technology.

Chapter 16–Conclusion

Because I am an engineer and because doing anything to help the environment is good for all of us in the long run, I support Solar PV Technology. The use of solar power is considered clean energy, often referred to as “Green Energy” and the great State of Florida has an abundance of sunshine resource. The question is and always has been, to what degree should our citizens sacrifice their hard earned dollars to support the “Go Green” movement? I don’t have the answer, but I believe, waiting over 23 years to receive a return on this investment is asking too much of Floridians and conducive to bad long-term investment. The nine-year R.O.I. application is no more favorable because it will not significantly reduce electric use, which results in continued production of fossil fuel emissions. In the long run, its contribution toward saving on energy costs will be less and less.

I think the legislature has done a fair job in promoting PV technology, as indeed, both the State and Federal Government are investing a substantial amount of tax dollars to help the Homeowner become part of the Green Movement. However, I have two concerns. The first is the discontinuation of increased rebates for equipment, utilizing greater than 5 kilowatt systems. This would seem to indicate, the State has no interest in encouraging Homeowners to purchase the sufficient equipment to become energy independent, which would greatly, reduce fossil fuel emissions. The second is the denial of rebates and credits to the Homeowners, should they install the solar equipment themselves. Substantial savings to the Homeowner are available if they are allowed to do their own installation. My experience in this business indicates the average Homeowner who possesses any mechanical/electrical aptitude could do the installation without the use of a contractor and in my opinion this should be allowed by the State and Federal Government, without penalizing that Homeowner. The State and Federal Government’s concern for testing and proper installation is already addressed because County Codes already require permits and testing for the installation. In addition, the local electric utility also requires their own inspection before allowing any Homeowner to connect to their grid. To be fair, the Homeowner should have the option for using a contractor or doing their own installation, without losing the government’s incentives.

As for the electric utilities, I think they are doing what they can. We must remember, they sell electric power and if every home in the United States no longer required this product from them, it would almost certainly cause a financial calamity. Their seemingly, counterproductive requirements, perceived by Homeowners as obstacles to obtaining energy independence are the result of what they feel are necessary to protect their investments. Of course, from the Homeowner’s perspective, this becomes subject for debate, beyond the scope of this article.

From an engineering and economical standpoint, the solution for the Homeowner is the technology. The only way the R.O.I. can be significantly reduced is to either increase the efficiency of the technology already available or invent a new, less expensive technology.

The FSEC, in conjunction with product developers, have been working on this every day and I have confidence they will find a practical solution within the next two decades. I hope this series has been helpful to the Polk County Homeowners and has resolved any questions concerning the Photovoltaic Technology and its benefits.