Economics of grid-tied household solar panel systems versus grid-only electricity

Abstract

Photovoltaic (PV) technology is available for purchase and use to provide households with electricity. The objective of this research is to determine the economic consequences of installing microgeneration grid-tied solar panel systems (4kW; 12kW), given alternative pricing structures for households, at five locations with different solar radiation resources. Twenty years of hourly solar radiation and temperature data, and hourly electricity use data for representative households, were obtained for each location. These data, electricity pricing rate schedules, and purchase prices and power output response functions for each solar panel system are used to address the objective. The annual household electricity cost among the five locations ranges from $845 to $1128 for smart meter rates and from $870 to $1191 for traditional accumulation meter rates. The estimated annual cost of $2148 for the least costly household grid-tied 4kW solar panel system with net metering is two-times greater than the annual cost of purchasing from the grid. If external consequences of electricity generation and distribution are ignored, given region specific rate structures and prices, household solar panel electricity generation systems are not economically competitive in the region studied. A major finding is that the economic consequences of grid-tied household solar systems differ substantially among locations that are relatively close in proximity.