ContactEconomics and Examples
Often the most cost-effective way to install a renewable energy system is at the initial time of construction. This reduces the cost of running pipes, conduit, and conductors. Also, when evaluating economics, one should consider alternative investments that are available. Investing in renewable energy provides superior returns to many other kinds of investments, and at a much lower risk.
Solar Thermal Systems
Solar Thermal systems capture the sun's energy, using it to heat liquid or air. The majority of solar heated liquid is used to heat domestic water for uses in showers, laundry, dishes and pools. Two nominal 4x8 collectors will provide 75% or greater of the annual domestic water needs for a family of four. Most solar assisted domestic water heating systems use flat plate technology.
An increasingly popular and cost effective way to use solar heated fluid is in radiant space heating systems. Most solar assisted radiant floor systems use evacuated tube technology.
Maintenance of a solar thermal system is required as with any other appliance, and is simple and straightforward. All that is usually necessary is a semiannual check of the system's fluid quality by measuring its pH. A visual inspection of the piping system and pump should also be undertaken at this time. The inspection will take less than one hour.
Example of Solar Thermal Economics
The owner of a home is considering the use of solar water heating to reduce the expense of heating domestic water with fossil fuel.
The following is the financial analysis:
What are the economics of a Residential Solar Water Heating System?
COST |
|
| 2 Panel System | $9,600 |
| Renewable Grant | -$0 |
| Federal Tax Credit (1) | -$2,880 |
| State Tax Credit (2) | -$1,750 |
| Actual Installed Cost | = $4,970 |
| Average Annual Savings: | $850 |
Simple Payback: (Actual Installed Cost ÷ Annual Savings) |
$4,970 ÷ ($850 ÷ year) = 5.9 years |
| Return on Investment: | 1 ÷ 5.9 = 17% |
(1.) Fedeal - Residential, 30% of cost or $2,000; Commercial, 30% of cost.
(2.) State of Rhode Island - Residential, minimum of 25% of cost or $1,750, Commercial = $0.
This analysis is highly dependent upon the cost of fuel source being conserved.
Solar Thermal Information: http://www1.eere.energy.gov/solar/solar_heating.html
Solar Electric Systems
Solar Electric systems, also known as photovoltaic (PV) systems convert solar energy into electricity. These systems can be used to supply all of a building's electricity needs, or can run in parallel with the local utility in order to use the utility's energy when necessary. The inclusion of a battery system will enable excess solar generated electricity to be stored as a back up source of energy if the local utility has a power outage. Similar to solar thermal systems, the solar electric modules can be mounted on the roof or ground, or integrated into the building as part of the structure. A 1,600 watt solar electric system can supply approximately 60% of a typical family of four's annual electricity requirements.
Maintenance of a solar electric system is dependent upon the equipment installed, especially when batteries are included. Most owners of solar electric systems are very attentive the first year the system is in place. As time goes on, often the owners consider the system like any other appliance and the time between maintenance cycles increases. We recommend a semi-annual maintenance cycle that includes inspection of the electrical connections for corrosion or loose fittings, testing the batteries' specific gravity, adding distelled watr to batteries (if included in the design, and using a flooded battery type.)
Example of Solar Electric Economics
The owners of a four bedroom house investigate the installation of a solar electic system by considering a design that is modular and can be expanded at a relatively low cost. They decide to install 2,000 watts of solar power, but to specify an inverter that capacity for 3,000 watts. This system has ample capacity for expansion, and in the future, solar electric modules can be added using the existing enverter.
The following is a financial analysis for a residential and commercial customer on Block Island:
What are the economics of a 2,000 watt Solar Electric System?
Residential
COST |
|
| 2,000 watt system | $22,100 |
| Renewable Grant | -$0 |
| Federal Tax Credit (1) | - $6,630 |
| State Tax Credit (2) | -$3,750 |
| Actual Installed Cost | = $11,720 |
| Average Annual Savings: | $2,200 |
Simple Payback: ( Actual Installed Cost ÷Annual Savings ) |
$11,720 ÷ ($2,200 ÷ year) = 5.3 years |
| Simple Return on Investment: | 1 ÷ 5.3 = 19 % |
(1.) Federal - Residential, 30% of cost; Commercial 30% of cost.
(2.) State of Rhode Island - Residential, minimum of 25% of cost or $3,750; Commercial = $0.
Commercial
COST |
|
| 2,000 watt system | $22,100 |
| Renewable Grant | -$0 |
| Federal Tax Credit (1) | -$6,630 |
| State Tax Credit (2) | -$0 |
| Actual Installed Cost | = $15,470 |
| Average Annual Savings: | $2,800 |
Simple Payback: (Actual Installed Cost ÷ Annual Savings) |
$15,470 ÷ ($2,800 ÷ year) = 5.5 years |
| Return on Investment: | 1 ÷ 5.5 = 18% |
(1.) Federal - Residential, 30% of cost; Commercial 30% of cost.
(2.) State of Rhode Island - Residential, minimum of 25% of cost or $3,750; Commercial = $0.
Wind Energy Systems
Wind Turbines (or wind energy conversion systems (WECS) use the power of the wind to produce electricity. Similar to solar electric systems, wind energy systems can provide all or part of your electricity needs. They can run in parallel with the local utility and/or incorporate batteries as a backup source of power when it is calm, or the utility has a power failure. Wind turbines are offered in a wide range of sizes. Typical residential systems range from 1,000 to 10,000 watts. A 1,000 watt wind turbine in a location with wind speeds averaging 16 mph can provide 35% of the annual electricity needs of a typical family of four.
Example of Wind Economics
What are the economics of a 1,000 watt Wind System?
COST |
|
| 1,000 watt system | $6,300 |
| Renewable Grant | -$0 |
| Federal Tax Credit (1) | -$1,180 |
| State Tax Credit (2) | - $1,575 |
| Actual Installed Cost | = $2,835 |
| Average Annual Savings: | $1,400 |
| Simple Payback: | $2,835 ÷ ($1,400 ÷ year) =2 years |
| Simple Return on Investment: | 1 ÷ 2 = 50% |
(1.) Federal - 30% of cost of turbines, smaller than 100kW.
(2.) State of Rhode Island - minimum of 25% of cost or $3,750.
Wind Information: http://www1.eere.energy.gov/windandhydro/
Hybrid Energy Systems
Hybrid energy systems combine two or more of the above technologies. Wind and solar electric systems complement each other well, ince wind is usually available on cloudy days, or during seasons when it is not sunny or when the sun is at a lower seasonal energy level. A 2,000 watt solar electric and 1,000 watt wind turbine can supply all of the electricity needs for a family of four.
The maintenance of a hybrid system will depend upon the combination of the technologies described above that comprise the system.