1) Introduction to Solar PV

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Is PV electricity expensive?

The economics are site-specific and it depends on where you live.

PV generated electricity is less expensive than conventional utility electricity in many parts of the world. When the cost of producing electricity from alternative energy source like PV or wind is less than or equal to the price that your utility charges for electricity we say that grid parity has been reached. Grid parity has happened in many parts of the world. However, grid parity has not yet happened in Alberta.

The majority of costs comes from the expense of initially purchasing and installing the system. This investment may feel like paying for 10-15 years of electricity bills at the start, but your monthly electricity bills could be gone or substantially reduced. Also, at some point in time your system will start to generate free power.

The Levelized Cost of Energy (LCOE) is often used to calculate the economics of a PV system. It represents the per-kilowatt hour cost of the PV system divided by its expected life-time energy output. For example: If a 5kW solar energy system costs $15,000 to install and it provided 150,000 kWh of electricity over 25 years, then the levelized cost of the solar PV system is approximately: $0.10 per kWh
$15,000 / 150,000 kWh

Thus you are paying a fixed cost of ~$0.10 per kWh for the power that is being produced from your solar PV array. This is for the next 25 years and then the power is free.

 

How far have costs dropped?

Improvements in manufacturing technology has substantially reduced and will continue to reduce the cost of PV. The price of silicon PV cells has dropped from $76.67 in 1977 to well under a dollar today.

Solar modules account for less than half of the system’s overall cost, labour and the balance of system (BoS) cost make up the remainder. These BoS costs are falling and will continue to do so as companies become more efficient.

 

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