Solar: Cost-Effectiveness by Regions, Climate and Latitude

Whether rooftop solar is a sensible investment depends on:

• Details of grid power tariffs in your locale — in progressive jurisdictions, you may be paying very high rates as part of a conservation/soak-the-rich scheme to charge much more for higher use, and subsidize lifeline use (very small houses, no AC, few appliances.)

• Site characteristics, including local shading by nearby trees or buildings, the practical tilt your roof allows. Few roofs are optimally aligned with the correct E-W roofline and angle so an optimal array of panels can collect maximum solar energy. Closely-spaced panels on flatter roofs will shade each other unless tilt is decreased and spacing between panels increased.

• Weather: clouds and fog, dust and rain cut down insolation (amount of solar energy hitting the surface), and dust or snow on the surface of solar panels either must be cleaned off or lower production accepted.

Online calculators that take solar angles and local climate records into account can give you a rough idea of how much power a rooftop solar installation will produce. One of the best is the National Renewable Energy Lab’s PVWatts Calculator. First look up the approximate latitude of your site, then look up the optimal tilt of panels for that latitude here. If your roof is ideally aligned and angled, you can use the optimum fixed tilt for your location, or substitute an angle required by your roof or siting issues. I’ll go through using the calculator for the site we used near Palm Springs, which has almost ideal solar conditions, then repeat for the same house in Seattle, which has fewer cloud-free hours and lower solar intensity even under clear conditions since at higher latitudes the sun is lower in the sky and solar radiation has to travel through more atmosphere to reach the panels. Not to spoil the surprise, but the combination of lower grid rates and much less power production from panels due to much less sun will demonstrate that rooftop solar is not cost-effective in Seattle now, and won’t be until grid rates rise and panel prices fall substantially from here.

The Palm Springs Case

First, enter the site address so the calculator can pick up the nearest climate and solar data:

PVWatts Screen 1: Palm Springs, CA
PVWatts Screen 1: Palm Springs, CA

Then you enter some details of the planned installation — in this case, 66 panels generating 360W each for about 24KW total power, “Premium” type (we used the current industry-leading Sunpower X-Series panels.) “Azimuth” is set to 180° for exact south-facing alignment, “Tilt” at 15° as installed, and “Average Cost of Electricity” (from the grid) at 20c/KWh — as we’ll see later, utilities in progressive areas have complex tariff schedules that make this number hard to calculate, and even more complex ToU (Time of Use) and moment-by-moment charging schemes are on the way. Since we’re simplifying this just to get an idea if solar comes close to being cost-effective, I’ve selected 20c as an average cost for high users in Palm Springs — actual peak rates are much higher.

For our own project, a flat roof with limited area meant keeping the tilt angle of the panels less than the optimal 28° — higher angles would have rows of panels shading the next row, so a lower angle (15°) was chosen.

PVWatts Screen 2: Palm Springs, CA
PVWatts Screen 2: Palm Springs, CA

The outcome is shown below: about 40,000 KWh/Year generated, saving about $8,000 a year in grid power bills. Since this installation cost about $65,000 after subtracting the Federal tax credit, it is expected to return about 12% of its cost yearly and pay for itself in about 8 years — neglecting some minor cleaning and maintenance costs and assuming little degradation in production as the panels age, which is close to correct for these premium panels, which are guaranteed for 25 years. This is one of the highest-return investments you can make, under these almost-ideal conditions. Note less costly thin-film panels cost less but also degrade faster.

PVWatts Screen 3: Palm Springs, CA
PVWatts Screen 3: Palm Springs, CA

The Seattle Case

Now we set the calculator up for a similar installation in Seattle:

PVWatts Screen 1: Seattle, WA
PVWatts Screen 1: Seattle, WA

Now to give the Seattle case the optimal tilt angle of 39° is entered — this works well if the Seattle house has a south-facing roof at a 39° angle to start. Few real Seattle houses will be so ideal for rooftop solar., and most will have local obstacles like trees and nearby obstacles like hills and other roofs cutting down on insolation. But we’re supposing the best imaginable house:

PVWatts Screen 2: Seattle, WA
PVWatts Screen 2: Seattle, WA

Results: only 27,000 KWh/year generated, and because local power averages out to 12c/KWh (on the low end of costs in the US), grid power costs saved is only $3,200/year. Ignoring other costs, the rate of return on investment is 4.9%, and payback period 20 years — but the maintenance costs and cost of money invested, with loans for 20-year periods in the 4% range, means the panels will be nearing the end of their guarantee and producing less than we assumed. The investment is marginal at best, close to break-even even after the 30% tax credit.

PVWatts Screen 3: Seattle, WA
PVWatts Screen 3: Seattle, WA

Large areas of the US have unsuitable weather, lower grid costs, or a limited supply of houses with appropriately aligned roofs for solar installation. So when you see solar installs in those areas, it’s a result of government spending foolishly on trophy installations that make no sense, or the desire by a few consumers to sport a trendy symbol. If you look around at your neighborhood and see few or no solar panels on roofs, that means you are likely to be disappointed in the return on your investment in solar. Designing in future solar during homebuilding, on the other hand, can make sense in much larger areas of the country — having the right roof and house orientation may well be a wise choice for when panels are even cheaper and electric rates have risen further in your area.

The widespread hype for solar, including the large number of scams and fly-by-night, high-pressure solar sales companies active recently, has victimized some consumers. “Aspirational” solar purchased by wealthy homeowners because they want to signal their enlightened attitudes is just another conspicuous consumption good, like Teslas. Rooftop solar is another complicated system to maintain and is a bad investment unless it returns its costs quickly.

Solar PV on a Palm Sorings rooftop
Solar PV on a Palm Springs rooftop

7 Replies to “Solar: Cost-Effectiveness by Regions, Climate and Latitude”

  1. Quick question. Can you comment on the attached article: https://greentumble.com/effect-of-temperature-on-solar-panel-efficiency/. I have considered solar, but an skeptical that it really makes sense. SInce I live in Florida and have a roof that is well situated for solar, it could make sense. But, living close to the ocean and having high heat in the months when solar would make the most sense, according to this article, the high heat will diminish the efficiency of an panels.

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    1. The article is correct, but Florida temperatures aren’t extreme enough to cause real problems. I notice 10% reduction in power generated here when the temp goes over 110, but these are the best panels from SunPower. If you are buying panels, the cheapest amorphous silicon variety will be more affected by heat and will degrade faster with time, so after 20 years may have lost half their generating capacity. High-quality panels will have detailed technical data on efficiency loss at higher temperatures, and going with the better and costlier panels with 20 or more years guarantee is wise.

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  2. I’ve read your articles on solar panels with great interest. I agree with your overall thesis, which is that panels make little sense in most areas. I live in Klickitat County, Washington, in the Columbia River Gorge, and we have some people here with panels.

    The local utility gets almost all its electricity from Bonneville Power. 89% comes from dams and wind turbines; 8% from a nuke at Hanford, Washington; 3% from a coal plant at Boardman, Oregon. The rate is 9.49 cents/kWh plus a $20 monthly flat customer charge.

    I looked into panels, and even with “net metering” the numbers didn’t work. Now the local utility has ended net metering for new customers and will pay the wholesale rate (about 3.8 cents/kWh) for the excess from someone’s panels. The local solar types protested, but I am on the utility’s side. This is a far-flung county, and 60% of the utility’s costs are for the grid and administration. People with panels are generally the most affluent in the county, and neither need nor deserve a subsidy from other rate payers, in my opinion.

    Here’s the kicker: I checked for “life cycle” data on carbon dioxide output associated with solar panels (80% of which are manufactured in East Asia and sent over here on diesel-powered ships, then delivered by diesel-powered trucks) vs. emissions associated with dams, nuclear plants, wind turbines, and that smidgen of coal. Turns out that a solar panel user in this country is responsible for two-thirds more carbon dioxide emissions per kWh than a utility customer is.

    Needless to say, I have not been popular with the solar types around here ever since I passed along those facts.

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    1. Low rates and abundant hydro power in the PNW make solar mostly an exercise in virtue signalling, unless you’re far away from the grid. Plus cloudy skies and low solar angle. The cultural pressure makes people think solar is cool, but the costs to the system are higher so it’s not green at all to spend money to have solar panels produced, beyond a small percentage of the base power level.

      Now costs will continue to drop (though not as fast as for computers, advances in efficiency and materials will continue). When panels are half current prices, it will begin to make sense to use more utility-scale solar, which up there would be best located east of the mountains – in less cloudy locales, but still near enough to feed the coastal users. With the complications and maintenance on rooftops (the additional leaks are a huge headache with typical installs on typical roofs), it may never be wise for individual homeowners to install solar.

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      1. I agree about virtue signaling, at least in the part of the Pacific NW where most of the people live, i.e., the Puget Sound and Portand, which are the cloudiest places in the continental United States. In the interest of accuracy — me being relentless fact-driven — I need to point out that the Pacific NW gets very sunny on the east side of the mountains, where I live.

        I ran the numbers was surprised by how close a call it was with net metering, at least on a preliminary basis. But once they dropped net metering (a decision I agree with, as I already noted) then it made no economic sense at all. And I was absolutely determined not to install a vanity project. I’m not at all sure that there are major economies of scale on the utility side of things. I’d need to see those numbers to be convinced.

        By the way, if I’d installed panels, I’d have ground-mounted them for ease of cleaning and other maintenance. I fully understand why people roof-mount them in various places, but we have the acreage and an unobstructed southern vista for ground mounting. It would be particularly important where I am, because our little neck of the woods gets 25 inches of snow in a mild winter, and 100 inches or more in a harsh one. Solar panels don’t work too well if they are covered with snow, and when the rains come (here) in the tag end of winter, panels need to be cleaned.

        Something else to say. Some people have an “off grid” fantasy with respect to panels, the idea being to store the excess daytime production in batteries. This doesn’t work, because you not only have to shift within a single day, but you need to shift seasonally on account of summertime production being high and wintertime production being low.

        I ran those numbers, using prices for Tesla’s “Powerwall.” Turns out that for us to go off-grid, the price would be at least $600,000 for batteries that are warranted for only 10 years. The solar panel numbers are based on a 25-year warranty, with degradition deductions applied, so the battery requirement would actually cost $1.5 million — and probably more, because there are significant energy losses when you use batteries. Therefore, no one will economically going off-grid at any time unless they live a sort of hair shirt existence. I haven’t done the numbers to see what panel prices would need to be for it to make sense in my county, but off the top of my head I might bother to look into it if I read that panel prices dropped by 50%.

        Finally: When I pointed some of this stuff out in a letter to my local newspaper, I was lectured by others on my lack of sustainability. I laughed.

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      2. * Note: I wrote in that reply that panel prices would have to decline by at least 50% for me to get interested. This would be for a grid-tied system. I cannot conceive of ever getting interested in going off grid. Battery prices are simply not going to decline to levels they’d need to be for that to be feasible.

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      3. The battery+solar off grid solution is very costly, but it does open up isolated locations to settle — it’s less costly than a half-mile power line (c. $100K), allowing cheap land to make up for the cost of gridless power. Not many people want to be such hermits, so it’s tiny in numeric terms. Neither solar nor battery tech is going to improve much in the near term.

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