A discussion on life-cycle costs of residential photovoltaic systems Page: 1 of 4
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9N2O D2 - 20 _010C
A Discussion on Life-Cycle Costs of Residential Photovoltaic Systems
Mike Thomas and Chris Cameron
Sandia National Laboratories*
Albuquerque, NM 87123-0753
This paper discusses the characteristics and needed
improvements/enhancements required for the expansion of the
grid-tied residential power systems market. The purpose of the
paper is to help establish a common understanding, between the
technical community and the customers of the technology, of
value and costs and what is required in the longer term for
reaching the full potential of this application.
The decision to invest in PV is based on a unique set of values
depending on everything from improvement of the environment,
to more personal involvement in energy production, to increased
reliability, to energy value. In this paper, we will discuss many
of the key technical and non-technical elements that affect
values and the purchase of residential PV systems. The intent of
the paper is to lay a foundation for common understanding of
terms, an understanding that is required for the technology to be
understood by all and the lack of which is currently a major
barrier toward future expansion of the residential application.
We will first look at the rationale commonly used to purchase
such a system and combine them into a discussion regarding
system value and costs.
The decision to purchase a PV system is affected by a number of
What do customers want?
What is the purchase price?
Is there a product/system infrastructure available?
What is required to own and maintain a system?
The following customer specific values and costs are at the heart
of the discussion to improve acceptance of PV systems and
- Enhanced quality (value)
- Training of installers and builders (cost)
- Development of a qualified database (cost)
- Improved building integration (value)
- Reduction in installed and recurring costs (cost)
- Expanded electric utility acceptance (value)
- Improved consumer education (value)
WHAT DO CUSTOMERS WANT?
The consumer buys many things that are seen as good
investments because of their quality and because of the
perceived benefit from them. While some of these reasons may
change in the future, the primary benefits from PV today are
substantial. First, the residential consumer can use PV to offset
energy production from other more polluting technologies. PV
systems can be placed on the roof of virtually any structure and
therefore require no additional land space. PV, like solar
thermal hot water collectors, can directly defer costs and
increase self-reliance. These systems also require very little
The size in watts of a residential, grid-tied PV system is not
really a design issue, but one of preference and match with the
structure and its orientation. There is little economy of scale
difference between 500 W and 5 kW. So the homeowner can
invest a relatively modest amount and still get some of the
benefits. Because of the modularity, the consumer can either
increase or move their system. This issue is, in fact, critical
because of the re-roofing issue (discussed later).
WHAT IS THE PURCHASE PRICE?
It would be convenient to be able to combine all of these
concepts and come up with a cost and a value for these types of
systems on a national basis. There are many reasons why this is
not straightforward. First, the economic value from the systems
is, to a first approximation, a function of the amount of sunshine
and the utility rates. These two commodities are different for
each locale throughout the country, so the energy value will be
different. Systems in areas with the high sunshine and highest
utility rates will provide the highest energy value. If energy
value were the sole reason for purchase, then sales would be
limited to those areas of the country where the value is greatest.
Right now with an installed system efficiency of-10%, 1 kW
nameplate of PV modules will produce from about 1050 to 1650
kWh ac depending on location. At an average kWh price of
$0.10, that means the total energy value ranges from a little over
$100 in the first year to $165. Today's purchase prices vary
from about $6.00/W to over $10/W installed.
Industry/government goals for 3-5 years out put these costs at
about half, and in ten years down to half again -- $1.50-
$2.50/W. Even for a system that produced $165/year and cost
$1.50/W, that corresponds to a breakeven in less than ten years
if there are no recurring costs and if the energy production is
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THOMAS,MICHAEL G. & CAMERON,CHRISTOPHER P. A discussion on life-cycle costs of residential photovoltaic systems, article, April 11, 2000; Albuquerque, New Mexico. (digital.library.unt.edu/ark:/67531/metadc711740/m1/1/: accessed November 19, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.