Calling All DIY'ers....What is Your Cost of Production?

[DanS26]

If I avoid paying $.32/kwh for 100 kwh, and get paid $.02/kwh for 10kwh of excess production, I'm still WAY ahead, even if my costs are well over what I sold for.
And if I size it up a little and get to avoid paying $.32/kwh on 110kwh and am paid $.02 on 30kwh, it's still a good deal if my costs are under $.12/kwh for those additional kwh. (.32*10 +.02*20 vs. $.12 * 30)


My view is your cost-of-production is relying on more assumptions than a simple "when would this system pay for itself?" calculation.
And while you can get fancy with that calculation, just using 0% for inflation and 0% for increases in utility charges is probably good enough.
At least good enough to determine "yeah, this will pay off in 4-6 years" vs. "This pays off sometime around 20 years, but maybe never if my maintenance is a little higher or production is a little lower"

Now we are getting somewhere...CA Tom, I think you see the light.

When I first installed my system I wanted to offset my annual kWh usage, ~12,000 kWh. It turns out that of my 12,000 kWh production 44% was used internally (ie POCO never saw it) and I sold at wholesale 56% of production. OK now every kWh I produce above my internal needs must be sold at wholesale to my POCO. It is critical that I sell that excess at a profit....just simple economics. But as we know it is more complex than that. You have to take into consideration the time value of money (ie lost interest from putting that investment in a different productive asset) So it necessary to run an IRR calculation. If that IRR calc returns more than a comparable investment (lets say T-Bills) then I'm ahead of the game.

As sensij would want to do, you need to lay out your cash flows by year...from there its simple financial analysis. The tough part is determining the cash flows.

[CA_Tom]

If you are selling your excess production at a wholesale price then you have to know your costs. Selling at or below cost is just plain idiotic

If I avoid paying $.32/kwh for 100 kwh, and get paid $.02/kwh for 10kwh of excess production, I'm still WAY ahead, even if my costs are well over what I sold for.
And if I size it up a little and get to avoid paying $.32/kwh on 110kwh and am paid $.02 on 30kwh, it's still a good deal if my costs are under $.12/kwh for those additional kwh. (.32*10 +.02*20 vs. $.12 * 30)


My view is your cost-of-production is relying on more assumptions than a simple "when would this system pay for itself?" calculation.
And while you can get fancy with that calculation, just using 0% for inflation and 0% for increases in utility charges is probably good enough.
At least good enough to determine "yeah, this will pay off in 4-6 years" vs. "This pays off sometime around 20 years, but maybe never if my maintenance is a little higher or production is a little lower"

[DanS26]

Thanks gentlemen, your comments are appreciated.

I didn't get much of a response for COP metric from DIY'ers. Maybe russ is right...there are not that many DIY'ers around and if there are maybe they just don't like to fool around with numbers.

In any case I know my numbers and I see COP (as I define it) coming down rather dramatically in the last few years. We can argue about the method of calculation but you can't argue with the slope. This augers well for the solar industry...with or without subsidies.

I realize now that COP does not mean a lot to anyone on "net metering" schemes. But here in the coal rich Midwest where "net billing" mostly prevails it is meaningful. If you are selling your excess production at a wholesale price then you have to know your costs. Selling at or below cost is just plain idiotic, yet there are people throwing money at these schemes with no hope of a payback.

[J.P.M.]

Yes, it is hard to please everyone! Please do not misunderstand me, intrinsically, the COP calculation is fine. I really did advocate for a similar calculation in another thread, against some resistance, and even tried to give it a cool acronym like you are doing. My choice for the denominator was not lifetime generation, exactly, but lifetime electrical consumption from the PV system. As stated above, the value of electricity generated in excess of immediate consumption needs to be handled differently, and will depend on the net metering scheme used.

My issue with your posts in this thread is that the comparison of costs you are making is only meaningful with a very specific set of assumptions about what electricity rates will do in the future relative to the possible future value of today's cash used in other ways. Just because two numbers are reported in units of $ / kWh does not mean they can be meaningfully compared. Comparing your COP to LCOE, for instance, would lead to very misinformed conclusions about relative value of solar.

I am very glad to see another user of this forum attempting to independently determine the financial benefit of their system. Most just accept what they are sold, for better or for worse.

All this, pretty much regardless of what it's called, can be thought of as the stuff of process economics as applied to energy use. As such, there are as many ways to define what's meaningful as there are people to do the analysis - each one slightly or vastly different from the others. What may be a subject for discussion, among others, is how any method(s) is/are different from some commonly agreed upon set parameters put forward by people knowledgeable in the subject.

[sensij]

Yes, it is hard to please everyone! Please do not misunderstand me, intrinsically, the COP calculation is fine. I really did advocate for a similar calculation in another thread, against some resistance, and even tried to give it a cool acronym like you are doing. My choice for the denominator was not lifetime generation, exactly, but lifetime electrical consumption from the PV system. As stated above, the value of electricity generated in excess of immediate consumption needs to be handled differently, and will depend on the net metering scheme used.

My issue with your posts in this thread is that the comparison of costs you are making is only meaningful with a very specific set of assumptions about what electricity rates will do in the future relative to the possible future value of today's cash used in other ways. Just because two numbers are reported in units of $ / kWh does not mean they can be meaningfully compared. Comparing your COP to LCOE, for instance, would lead to very misinformed conclusions about relative value of solar.

I am very glad to see another user of this forum attempting to independently determine the financial benefit of their system. Most just accept what they are sold, for better or for worse.

[DanS26]

Yeah, the COP calc...too complicated for an engineer....too simple for an accountant.

Its hard to please everyone.

[SunEagle]

I think we all are looking for a level playing floor.

The point of this thread is to calculate and use a cost of production metric to see how you stand in the market place. You go with what you got or what someone gives you...its the American way.

We can complain about the subsidies and give-a-ways in ALL industries, but it is what it is until its changed.

So the fact is, that a DIY type person here in the Midwest, with the necessary skills can install and operate a distributed generation plant TODAY, that is competitive in the marketplace with the large caveat that you do not count your own labor. If you have to pay somebody to do this work for you, then I totally agree, we're not there yet (unless you can get some crazy money from CA or NJ).

IMO we should be encouraging the DIY type person.

I will add some caution to encouraging a person to DIY a solar pv system. While there are many educated people that understand all of the electrical and mechanical requirements to perform that install, IMO the vast majority of the public do not possess even 10% of what is needed to safely do the work. While that 10% may be a low estimate all you have to do is read the majority of postings on this forum to see that a lot of people do not have a clue about solar and how it works or what is required to build and safely install even a small off grid system.

It might be worth your while to compile this data but I am not sure how you would develop an accurate spreadsheet showing the cost of production of a DIY pv system (based solely on hardware) when there are so many hardware selections and prices. Some panels/inverters are very expensive and others are much lower in cost. A 300watt panel will have different costs depending on who you purchase it from and where you make the purchase. The same cost differences goes for String or Micro inverters. So like the MEANS Construction Estimating Guide you will need multipliers based on location and hardware sources to level the playing field and get an accurate $/kWh cost of a DIY system anywhere in the US or outside.

My last comment is that while some DIY people do not care how much time and effort they put into a project, everyone has some "value" associated with their labor. Where and how you spend your time is your business. Based on my past I spent way too much time "at work" or working on a personal "project" when I should have been spending that time with my family. I now would rather pay someone to perform the hard labor while I use my time for family.

[sensij]

Anyone who views discount rates and present value analysis as "too complicated" is not, in my opinion, someone who should be taken seriously on matters of financial decision making. DIY PV systems can be less expensive than professionally installed systems, if the time spent to learn how to do it and perform the labor is valued at nothing. That might be appropriate for some people, but does not generalize to a large population. The costs associated with DIY PV systems can be competitive with the costs incurred by buying electricity from the Poco, but that is also a comparison that breaks down in generalization.

In a grid-tied PV system, any attempt to create parity needs to account for the net metering scheme used. If net metering is not in place, then using estimated PV production as the denominator for your COP calculation is only valid if every possible kWh the system can generate is consumed. If net metering is in place, assuming that full retail value will be assigned to your excess generation over the life of the system is questionable. Using the words competitive and parity at all is kind of misleading... those terms only apply when the environmental conditions allow PV generation. At night, or in bad weather, you need a grid to fall back on.

Encouraging DIY is a great message. Suggesting that PV generation is likely to save money over grid power that is < $0.10 / kWh is irresponsible, even with DIY. Yes, it is possible, but hardly assured.

Edit: BTW, I'm not sure what money you think CA is throwing at people who want to install PV, but as far as I know, the state no longer offers anything for residential installations, and only a small minority of Poco's have rebates at this point.

Edit further: I forgot mention the validity of using system lifetime production for the COP calculation. How many people live in the same home for 25 years? Hint: not many.

[russ]

IMO we should be encouraging the DIY type person.

Yep - a couple percent of the population is interested in solar to begin with and of that few percent a few percent are interested or capable of DIY.

[DanS26]

Sounds easy huh? It usually takes a person two years of a trade schools and 5 years of apprenticeship to get a decent grasp of electrical codes. Some never get it.

Sunking, when I first started reading the NEC code book it was sometimes hard to understand. It's like a cook book only instead of all the ingredients and instructions on one page, they are spread out over hundreds of pages (the 2014 NFPA 70 is 910 pages long). Some people say it is written in greek, but like most complicated subjects you have understand the "language" first.

[DanS26]

Dan - Only when your neighbor pays the bill do you get what you claim. Net parity and the great costs HAVE to be without subsidies, incentives etc.

I think we all are looking for a level playing floor.

The point of this thread is to calculate and use a cost of production metric to see how you stand in the market place. You go with what you got or what someone gives you...its the American way.

We can complain about the subsidies and give-a-ways in ALL industries, but it is what it is until its changed.

So the fact is, that a DIY type person here in the Midwest, with the necessary skills can install and operate a distributed generation plant TODAY, that is competitive in the marketplace with the large caveat that you do not count your own labor. If you have to pay somebody to do this work for you, then I totally agree, we're not there yet (unless you can get some crazy money from CA or NJ).

IMO we should be encouraging the DIY type person.

[russ]

Dan - Only when your neighbor pays the bill do you get what you claim. Net parity and the great costs HAVE to be without subsidies, incentives etc.

[DanS26]

[QUOTE=russ;130055]From PV Watts for nearby for a 1 kW DC system - they estimate 19 cents per kWh. Right with the cost you can make good financial decisions - but it does take correct costs - not pie in the sky stuff. Grid power is shown at 10 cents per kWh.


They are using $3.30/Wdc....Doug's system is $1.60/Wdc..that cuts the COP to $.09. Now they don't disclose system life, if they use something less than 25 years it explains the rest.

[russ]

Not knowing your insolation in TN, but I can guess your cost of production is somewhere in the 5 to 6 cents per kWh. What is nice about the COP metric is that once you know it you can make good financial decisions on how you use your excess production.

From PV Watts for nearby for a 1 kW DC system - they estimate 19 cents per kWh. Right with the cost you can make good financial decisions - but it does take correct costs - not pie in the sky stuff. Grid power is shown at 10 cents per kWh.

RESULTS

3.11	82	9
4.07	95	10
4.70	118	12
5.67	134	14
5.86	139	15
6.20	140	15
6.25	143	15
6.04	139	15
5.26	119	13
5.07	123	13
3.57	86	9
2.89	75	8
4.89	1,393	$ 148

Find A Local Installer Download Results: Monthly | Hourly
* Caution: Photovoltaic system performance predictions calculated by PVWatts® include many inherent assumptions and uncertainties and do not reflect variations between PV technologies nor site-specific characteristics except as represented by PVWatts® inputs. For example, PV modules with better performance are not differentiated within PVWatts® from lesser performing modules. Similarly, the “Energy Value” column simply multiplies the utility-average electricity price by production. Complex utility rates and financing can significantly impact the energy value. See Help for additional guidance.

Requested Location	Waynesboro, tn
Weather Data Source	(TMY2) HUNTSVILLE, AL 72 mi
Latitude	34.65° N
Longitude	86.77° W
DC System Size	1 kW
Module Type	Standard
Array Type	Fixed (open rack)
Array Tilt	20°
Array Azimuth	180°
System Losses	14%
Inverter Efficiency	96%
DC to AC Size Ratio	1.1
Average Cost of Electricity Purchased from Utility	0.10 $/kWh
Initial Cost	3.30 $/Wdc
Cost of Electricity Generated by System	0.19 $/kWh

These values can be compared to get an idea of the cost-effectiveness of this system. However, system costs, system financing options (including 3rd party ownership) and complex utility rates can significantly change the relative value of the PV system.

[DanS26]

Here's my self installed 4.6KW grid tie micro inverter $1.60 a watt total system install step by step- http://www.builditsolar.com/Projects...ougEnphase.htm
And here's my Enphase page-

https://enlighten.enphaseenergy.com/pv/public_systems/dpBj53033

Sundug-29 years in self built passive solar home-25 years DIY SHW
http://www.builditsolar.com/Projects...gsProjects.htm

Doug, great DIY project.

Not knowing your insolation in TN, but I can guess your cost of production is somewhere in the 5 to 6 cents per kWh. What is nice about the COP metric is that once you know it you can make good financial decisions on how you use your excess production. Most solar producers in the Midwest are not on the "net metering" scheme, so it makes sense to use as much of your production internally rather than sell it at wholesale or less.

For example...gas or electric appliances? How much will it cost to charge my EV internally?....you get the idea.

I can only guess how many DIY'ers you have inspired...good work.

Dan

p.s. Did you ever get that switched neutral fixed?