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How Much Do Solar Panels Save – Cost of Solar Panels What you need to know about the cost of solar panels in Alberta, BC, Saskatchewan and NWT. Solar energy system long term economics, labor cost breakdown, payback period, LCOE and more.
The answer is – it is quite variable. Many factors must be considered such as roof area, azimuth, elevation, budget and solar capacity. We will discuss all of these and outline the overall costs of solar panels.
How Much Do Solar Panels Save
You may be wondering how azimuth/rotation affects the cost of solar panels, isn’t it just a lump sum cost?
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It’s an overall cost to buy a solar power system, but how much power the system produces over 25+ years will affect your overall economics, which is obviously much more important. Let’s break it down into two separate categories:
The first category is the cost of purchasing solar panels (ie the initial investment required) for systems of different capacities (sizes).
The second category is more in-depth and will describe the long-term economics of solar energy systems in Alberta, BC, Saskatchewan and the rest of Canada. This is extremely important for calculating ROI and payback period. In this category we will work with a real example.
Individual’s home without providing a free site evaluation. Site ratings are completed to rate anything that cannot be seen online, such as if an electrical panel or roof needs upgrading.
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Typically, it is easy to provide accurate distance estimates using satellite imagery, but such methods are not perfect.
Before we understand how much different solar energy systems cost, let’s understand what goes into a solar installation in Alberta, BC, Saskatchewan or most other places in Canada.
The chart above shows a rough breakdown of solar installations in Canada. Material accounts for roughly 70% to 80% of total labor costs, with the biggest culprit being the solar panels themselves.
Installation labor is the next major cost category besides material. Solar installation personnel MUST be a certified electrician to install solar modules in Alberta.
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The ratio will vary reasonably. If you live in Fort Simpson, NWT, you will have a higher travel expense than a solar installation in Edmonton, AB.
Similarly, if you want a large ground-mounted array, there will be more cost for the solar materials and labor associated with the work and rack system.
Each job will be slightly different, but this should give you a good sense of where your money is going.
Solar is often rated in dollars per Watt ($/W) which gives a representation of the value of your investment known as “bang-for-buck”. This value is similar to $/sq ft. in the flooring or painting industry.
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Like most things you buy, economies of scale play a big role in the cost of solar panels. This is due to 1) basic fixed costs such as permits and engineering and 2) installation time.
The base costs are fixed, meaning the more solar you can pile onto them, the lower the $/W will be and the better you’ll get for your solar panel investment.
Installation time also plays a big role. There will always be a fixed amount of installation time for setting up, unloading materials and cleaning. The time it takes to install 28 solar panels is about identical to the time it takes to install 26 modules, meaning for the same amount of fixed cost/labor you get more power and a lower $/W.
These are the reasons why $/W drops significantly as your pool size increases. The chart above gives an overview of solar costs versus system capacity.
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Note the logarithmic scale on the X-axis used to make readable the large drop in lower capacity systems.
With larger systems (lower $/W), but the total cost of solar panels ($) will increase.
Home solar power systems are generally in the 4kW to 10kW range depending on how much power you use and one’s budget. Standard solar panels range from 300W to 400W depending on which module/inverter configuration works best.
An average grid connected solar power system will be about 10 to 24 solar panels or roughly 4 to 9.6 kW which is typical across Alberta, BC, Saskatchewan and most of Canada.
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That means your average home solar panel cost is roughly $12,000 to $25,000, fully installed.
Of course, there are many other factors that influence this. If you live away from major centres, there may be more travel costs, or similarly, if you need electrical work to safely install the solar power system, then there may be additional costs as well.
Kuby Energy is a licensed electrical contractor and will always ensure that proper equipment is installed to or beyond Canadian Electrical Code standards.
For example, for solar power systems in the NWT, the average installation is likely to be slightly higher due to transportation and travel logistics. With that said, the higher electricity rates in the NWT actually make the economics more favorable than solar in Alberta.
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On the other hand, if you design your home for solar, you can expect a much better $/W and cost since it’s easy to optimize the array during the pre-construction phase.
Commercial solar systems follow the same general trends and guidelines as shown above in the residential solar cost breakdown. The main difference is that commercial solar arrays are generally slightly larger, ranging from 15 kW to 250 kW+.
As you can imagine, the price continues to drop as the scale increases. Large systems can drop to < $1.50/W fully installed.
Now that you have a good idea of how much solar panels cost, let’s take a look at the second category.
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The chart above shows the installed cost in dollars of solar panels for systems of various capacities. Note the logarithmic scale on the X and Y axes. This is the combination of the residential and commercial solar energy system cost graphs shown earlier.
If you are going to invest in solar energy, you want to know what your financial results will be like. how much money will you make from solar panels and what will be the return on investment.
These terms can be a bit misleading as what is really wanted is whether it will save you money in relation to constantly renting electricity from the grid. We recommend not only focusing on the payback period of solar panels, but analyzing the economics over 30 years as it is the investment period.
One method used to calculate the economics of solar energy in Alberta is called the Levelized Cost of Electricity or LCOE.
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LCOE is a good long-term economic evaluation metric since this approach takes into account the total lifetime of the solar energy system.
Mathematically, it is represented by the following equation (the actual calculation is more complicated and will not be explained in this post):
Calculating the LCOE for a solar power system is not overly complicated. There are several factors involved:
2. O&M Cost – Ongoing cost per year either provided by the solar installation contractor or estimated to be around $0-200/year for home solar systems. This will cover any replacement that may be needed in the rare event that an issue arises or any insurance premium that may be deemed necessary.
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3. Lifetime Energy Production – Annual energy production will be provided by your solar contractor. Remember that the system will degrade at ~0.5%/year.
The chart below shows the LCOE of solar panels versus grid-connected electricity for a typical residential system. The error bars are due to the wide economic and energy possibilities for solar energy, as well as the unknown escalation of the price of electricity over time.
In certain cases it is possible that grid electricity will be more favorable for 30 years than solar electricity, but in most cases solar will provide a lower (better) LCOE.
The more the overtime price of electricity escalates, the bigger the gap between solar and grid LCOE will be. In other words, the more expensive the electricity from the grid, the more favorable the investment in solar panels becomes.
Solar Panels Can Save You Serious Money On Energy Bills — Here’s What You Need To Know
Buying solar panels is essentially buying 30 years of energy, protecting yourself from rising grid energy prices and associated tariffs.
It is important to understand which charges on your bill may be affected by solar power. In Alberta, your bill has 4 main components – energy charge ($/kWh), transmission charge ($/kWh), distribution charge (flat rate and $/kWh) and other fixed charges (administration charge, access local fee, rider fee, CEO retirement fee, etc.)
The energy charge is fully scalable to $0.00/month if your solar panels supply 100% of your energy. This can be achieved in the summer months although you are likely to incur some charges for energy used at night or when the sun is not shining.
The distribution fee consists of two parts, a fixed fee and a variable fee. Fixed load is usually estimated per day or per kW of demand you need – solar cannot reduce this part. Variable load is based on how many kWh you need – solar power
The Economics Of Solar Power
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