How Solar Works
Photovoltaic (PV) solar has never been more in demand as it is right now due mainly to the falling prices on solar modules accompanied with rising prices on electricity rates that make installing a residential or commercial electricity generation array an excellent financial investment.
PellSolar offers the consumer a wide array of panel options for their specific needs or requirements. Panels vary in size (wattage), racking method, and frame color (aluminum or black anodize). The majority of the panels that PellSolar sells are polycrystalline modules. The module consists of interconnected and encapsulated solar cells in a durable and environmentally protected package. A cut-away view is shown in Figure 1. The encapsulation system incorporates the latest developments proven by the U.S. Department of Energy program.
The cells in these modules generate electricity (movement of electrons) when light (photons) strike the surface of the panel. The average hours of sunlight in Southern California, make it one of the most productive areas for solar power generation in the world.
The solar production potential in California where a much higher potential exists in the southeastern part of the state than elsewhere. The potential for solar is extremely large at nearly 17 million MW statewide.(That is 17,000,000,000,000 watts) Given that PV manufacturing capacity worldwide is approximately 1000 MW per year, the technical potential far exceeds the PV capacity likely to be installed. The technical potential also assumes PV systems can be installed as standalone power plants or as rooftop applications. Due to economic considerations, it is assumed that PV systems will be installed on rooftops rather than as standalone power plants in the near term.
How Solar Arrays Work
The term to remember is "Grid Tied" meaning when a person who is connected to a local electrical service, they are on the grid. When a solar array is installed to the residence or business, it is also connected to the grid by means of a roof top mounted installation or ground mount installation. This means that the installation is "grid tied" . Being a grid tied installation qualifies the installation to be subsidized by the government through their incentive program.
During the day, the panels generate the electricity and if the amount of electricity is greater than what is being consumed, the meter spins backwards building a credit through the utility service. When the sun sets and electricity is still being consumed, the meter will revert to its normal direction and electrical charges will resume. The amount of credits cancels out the consumption proportional to the size of system that is installed. No system is designed to generate more electricity than what is consumed due to that the utility service does not pay for extra electricity that is not balanced in the net metering scenario.
Financial Incentives
Currently there are two major incentives provided for commercial and residential installation in California from the State of California Solar Initiative and US Federal Tax Credit or Tax Grant. Some cities have also adopted incentive programs in order to boost solar installation within their local communities along with receiving Renewable Energy Certificates (RECs) for the installations they help support. One should check with Solar Incentive web sites like http://www.dsireusa.org/ for incentives offered in their local area, however it is important to note that with just the State and Federal incentives at the current level of return, at the time this document was written, in an residential application over 55% of a solar array is recovered through these incentives. For commercial applications, it is even more lucrative due to Obama's $787 Billion package known as the American Economic Recovery and Reinvestment Act. This grant provides a 30% federal cash grant to the application at commissioning along with the State rebate of +30% in EPBB or PBI incentives that are either paid in one lump sum or in monthly installments over a period of five years. A business also has the right to take an accelerated depreciation off the solar system in the first year.
All of this means that a solar system can pay for its self between 4-6 years depending, on the size of the system, and whether it is installed on a home or business. The average warrantee for a solar panel is 25 years, so you can do the math, when the array provides the bulk of the consumable electricity for a business or home for 20 plus years absolutely free of charge to those whom make the investment today.
California Utility Electricity Rates: A History
Our sources for California historical rates are the Energy Information Administration database and an analysis by the California Public Utilities Commission. From 1970 to 2004 (the data available from both studies) California energy rates have generally been rising, at times with great volatility. During this period, industrial electricity rates grew at a compound annual growth rate (CAGR) of 6.8% (Energy Information Administration). The California Public Utilities Commission chart below shows that electric rates in California have risen by an average of 7.5% per year over the past 30 years. Increases for investor owned utilities were even higher, with a CAGR of 7.2% for large businesses (analysis by California Public Utilities Commission, see Appendix 1). These rate increases were frequently drastic: in three cases rates increased by more than 40% in a single year.
Year-to-year since 1970, electric utility rates rarely fell; the greatest annual decrease of roughly 11% occurred during the recovery period after the California Energy Crisis, the most recent example of electricity market volatility. While events of the past are unlikely to be repeated, future disruptive events will undoubtedly create similar, if not greater, volatility.
Additional mandates that the president has made on utility providers to have one third (33%) of their supplied power generated by renewable sources generates profit losses and in turn will be rolled down to the consumer in to form of utility rate increases. We'll have to wait and see to tell for sure, but with the historic past, one can count on much higher rates growing into what was once considered a mortgage payment for some homes or businesses.