Quantcast
Renewable Energy

Is Rooftop Solar Cheaper Than Buying Electricity From the Grid?

The National Renewable Energy Laboratory this week said that rooftop solar panels have the potential to generate nearly 40 percent of electricity in the U.S. But what about the cost of going solar?

Many people ask when the cost of producing power from solar photovoltaic (PV) panels will be equal to or less than buying from the grid—a point called “grid parity” that could accelerate solar adoption.

Thinking of going solar? Prices are approaching the cost of grid electricity, but only in some places—so far. Photo credit: Joncallas / Flickr

But in asking the question, they often compare apples to oranges and forget that the answer varies from place to place and from one type of installation to another.

For example, electricity from utility-scale solar systems (typically large arrays where panels slowly change tilt and orientation to face the sun all day) usually costs less than electricity produced from solar panels fixed on someone’s home. Also, residential electric rates, on average about 12 cents per kilowatt-hour in in the U.S., are much higher than wholesale electric rates—the price utilities pay to power generators—which are usually less than 4 cents per kilowatt-hour.

At the same time, different states have more or less sun—solar power in Florida is typically more economic than in Alaska, for instance. All of these factors make the question more complicated than people might anticipate.

How, then, can we compare the cost of rooftop solar to the cost of buying power from the local electricity grid and thereby find when which states will hit the point of grid parity?

Putting a Number on Solar Cost

The levelized or average, cost of electricity from a solar PV array is derived from all the money spent to buy, install, finance and maintain the system divided by the total amount of electricity that system is expected to produce over its lifetime. We call this value the Levelized Cost of Electricity (LCOE) and it’s expressed in terms of dollars per kilowatt-hour ($/kWh). The same metric can be used to determine the cost for a coal or natural gas plant. Planners like it because it reduces the cost of a power plant over a span of many decades into a single number.

Despite the strengths of LCOE as a metric—it is easy to understand and widely used—it has some shortcomings, too. Namely, it leaves out geographic variability, changes with seasons and usually ignores the cost of environmental impacts such as the cost of carbon emissions. This metric is a bit too simple when comparing variable wind and solar generators to power plants that you can turn on and off at will, such as those fueled by uranium, coal and natural gas.

Today the average cost of energy from solar PV in U.S. is reported to be 12.2 cents per kWh, which is about the same as the average retail rate.

Those who keep close tabs on electricity prices might think that it is about on par with what they are paying for their own electricity at home. This number can be misleading, however, because it represents the average price of utility-scale solar across the U.S., not necessarily the cost borne to produce electricity from solar panels on our homes.

So how do we know how close residential solar is to grid parity where you live? Ultimately, that depends on two things: how much you pay for the electricity you buy from the local grid and how much can you get paid for the electricity you can produce from PV. Let’s take a look at both of them.

How Much Sun Do You Get?

The Energy Information Agency (EIA) has created a map of average electricity rates by zip code, averaged to the county level and remade by the author in the map below. The deep red (or darker) colors indicate higher average residential electricity rates.

Map of average electricity rates across the U.S. Photo credit: EIA

Electric rates vary a great deal across the country and these differences could be caused by a number of economic, historical or regulatory reasons. Likewise, the costs of solar and the availability of the solar resource (i.e., how often and how strong the sun shines) also are not homogeneous throughout the U.S. The figure below shows the LCOE of residential solar across all counties nationwide.

LCOE of residential solar across the U.S.

The data on the residential solar costs were pulled together from an ongoing large-scale campus-wide research project at the Energy Institute at The University of Texas at Austin. The main assumptions behind the data are a total cost of US$3.50/Watt for the solar PV installation for a fixed array pointing south with a tilt of 25 degrees. Solar production data are based on a 2013 National Renewable Energy Laboratory study.

That southern orientation and tilt represent a rule of thumb and might not be the optimal solar placement in every locale.

The U.S. Department of Energy SunShot Initiative has a stated goal of lowering residential solar PV system installations to $1.50/Watt. Cheap PV panels from China have driven down the hardware costs to the point where the price of a total PV system is now dominated by “soft costs”—namely, customer acquisition, installation, supply chain, permit, etc. Still, total installed system costs continue to fall.

While those cost cuts are impressive, the major driver in the cost of energy produced is the amount of solar radiation that strikes the solar panels. Obviously, some locations are sunnier than others so a solar array in Arizona will produce more energy than one in Washington state, making the system more economic for the homeowner.

And, the prevailing cost of electricity varies nationwide. Some of the areas with the lowest cost of grid power (e.g., Washington) have some of the highest solar costs because of low levels of sunshine. It will be difficult to make solar reach parity in those locations.

On the other hand, there are other locations where the price of grid electricity is high and the solar LCOE is relatively low, including New Mexico, California and Hawaii; these places are prime locations for solar to be at parity sooner.

Moving Target

To illustrate this point, we take the same information that underlies the solar cost map and reduce the total installed cost of installed solar in $0.50/Watt increments—from $3.50/Watt to $1.50/Watt (the SunShot goal). We can then subtract the electricity rate from the solar LCOE in every county. Where this difference is zero or negative (electricity rates > LCOE), we can estimate when that county will be at grid parity for residential solar PV.

Below is a GIF that shows the estimate of the point of parity as the price of installed solar falls. Note that the total installed costs include the federal investment tax credit and any local rebates and tax incentives.

These calculations and estimates come with several caveats. First, the above calculation assumes that PV owners are paid for their generation at standard electric rates in their area. This arrangement is typically known as net metering.

But there is a wide range of ways that utilities interact with customers who have installed solar PV. Some utilities may pay homeowners wholesale market rates for the excess electricity they feed into the grid from their panels, which tend to be considerably lower than retail rates. If utilities pay homeowners based on the wholesale rate, rather than the retail rate, solar is less economic.

But that’s not all. One could add in the cost benefits of reducing CO2 emissions and other pollutants. On the other hand, there are costs associated with “firming up” the solar power when it’s nighttime or cloudy.

Keeping these factors in mind, the answer to the question, “Does it make economic sense for me to install solar?” is: it depends. As the map demonstrates, the crucial thing to watch, apart from any changes in electricity costs, is how quickly the overall costs of solar go down.

YOU MIGHT ALSO LIKE

Clean Line Project to Deliver Wind Power to 1.5 Million Homes and Businesses

Renewable Energy Investments Set New Record, Twice That of Coal and Gas

Musk, DiCaprio and Rive Talk the Future of Solar at Tesla Gigafactory

3 Cities Disrupting the Local Electricity Market With Innovative Renewable Energy Projects

Show Comments ()

EcoWatch Daily Newsletter

Sponsored
Climate
Map of damage to the town of Paradise from the Camp Fire, the deadliest wildfire in California history. NASA / JPL-Caltech

Heavy Rain Could Trigger Mudslides in Fire-Weary California

Northern California, which is already reeling from the deadliest and most destructive wildfire in state history, is now bracing for heavy rainfall this week.

The forecasted rain could bring much-needed relief for the firefighters battling the Camp Fire in Butte County. However, it could also bring new hazards due to possible ash, mud and debris flows triggered by the rain.

Keep reading... Show less
Climate
A Super Scooper firefighting plane makes a water drop during the Holy Fire near Lake Elsinore, California this October. David McNew / Greenpeace

What Should We Know About Wildfires in California

By Rolf Skar

The Camp Fire raging in Northern California is now the most devastating and deadly fire in the state's recorded history. Simultaneously, deadly and destructive fires are burning in Southern California, as the Woolsey and Hill fires have engulfed iconic areas of Malibu and West Hills. With dozens dead, hundreds missing and thousands of structures destroyed, our hearts go out to those impacted across the region.

Keep reading... Show less
Health
Ambrosia artemisiifolia, common ragweed. PLOS ONE

Allergen Alert: Ragweed Is Spreading to New Regions

By Marlene Cimons

Cristina Stinson never had an allergic reaction to ragweed until after she started working with it. "I think the repeated exposure to the pollen is what did it," she said. It also didn't help that her community is chock-full of it. "There is plenty of ragweed in my neighborhood," she said. "In fact, it grows right outside my door."

Keep reading... Show less
Animals
A sperm whale that washed up in Indonesia's Wakatobi National Park had plastic bottles, bags and cups in its belly. @WWF_ID / Kartika Sumolang

13 Pounds of Plastic Found in Dead Sperm Whale

Yet another whale has suffered from plastic pollution. A sperm whale that washed up dead in a national park in Indonesia had nearly 13 pounds of plastic waste in its stomach, park officials told the Associated Press.

Researchers from the World Wildlife Fund (WWF) and the park's conservation academy uncovered more than 1,000 other pieces of plastic, including 115 plastic cups, four plastic bottles, 25 plastic bags, 2 flip-flops and a nylon sack.

Keep reading... Show less
Sponsored
Climate
The first smoke from the Camp Fire arrived in Ukiah and turned the daylight red. Bob Dass / Flickr / CC BY 2.0

Winds and Wildfires in California: 4 Factors to Watch That Increase Danger

By Brenda Ekwurzel

Before we dive into the science behind the four factors specific to the California Santa Ana winds, let's review the current situation in California and wildfire disaster risks in general.

Keep reading... Show less
Climate
A woman stands amidst the ruins of her home following Hurricane Michael; if action isn't taken on climate change, some places could face up to six such disasters at once. Joe Raedle / Getty Images

Tropics Could Face Six Climate Disasters at Once by 2100

In a year that saw record-breaking heat waves, record-breaking hurricanes and record-breaking wildfires, it's hard to imagine how the future could look any more like a disaster movie than the present. But that is exactly what researchers from the University of Hawaii at Mānoa have predicted in a study published in Nature Climate Change Monday.

Keep reading... Show less
Sponsored
Politics
Zinke tours Paradise, Calif. Nov. 14 with Governor Jerry Brown and FEMA Administrator Brock Long. Justin Sullivan / Getty Images

Zinke Blames ‘Radical Environmentalists’ for Historic California Wildfire

In an interview with Breitbart News on Sunday, Secretary of the Interior Ryan Zinke blamed "radical environmentalists" for the wildfires that have devastated California in recent weeks, The Huffington Post reported.

"I will lay this on the foot of those environmental radicals that have prevented us from managing the forests for years. And you know what? This is on them," he said in the interview.

You can listen to the whole thing here:

The remarks come as California has suffered the deadliest blaze in the state's history. The death toll from the Camp Fire, which destroyed the town of Paradise in Northern California, has now risen to 79. Around 1,000 people are still listed as missing, and the fire is now 70 percent contained, according to an Associated Press report Monday.

California Governor Jerry Brown blamed climate change in a statement made last weekend.

"Managing all the forests everywhere we can does not stop climate change, and those who deny that definitely are contributing to the tragedies that we are witnessing and will continue to witness," Brown said.

Regardless, Zinke has remained consistent in pointing the finger at forest management. His current criticisms echo his remarks following other fires this August, in which he said the increasingly frequent and violent blazes were the result of inadequate forest management, and not climate change. He continued in that vein during Sunday's interview:

"In many cases, it's these radical environmentalists who want nature to take its course. We have dead and dying timber. We can manage it using best science, best practices. But to let this devastation go on year after year after year is unacceptable, it's not going to happen. The president is absolutely engaged."

President Donald Trump has indeed vehemently blamed forest mismanagement ever since the recent batch of fires broke out, even threatening at one point to withhold federal funding if the forests weren't managed properly. During a visit to California Saturday to survey damage, Trump brought up forest management again, suggesting that the problem in California was that the forests were not raked enough.

"You look at other countries where they do it differently, and it's a whole different story," he said, as CNN reported. "I was with the president of Finland, and he said: 'We have a much different [sic] ..., we're a forest nation.' And they spent a lot of time on raking and cleaning and doing things, and they don't have any problem," he added.

Finnish President Sauli Niinistö, however, told a Finnish newspaper he did not recall suggesting raking to Trump.

"I mentioned [to] him that Finland is a land covered by forests and we also have a good monitoring system and network," he said.

Finnish people have taken to Twitter to poke fun at the U.S. President's statement using the hashtag "Raking America Great Again."

Despite Trump and Zinke's criticisms, the fact remains that the federal government controls almost 60 percent of the forests in California while the state controls only three percent. Paradise was surrounded by federal, not state, forests. Further, the fires in Southern California spread in suburban and urban areas, The Huffington Post reported.

Some think the emphasis put by Zinke and Trump on forest management is not about preventing fires at all but rather an attempt to justify opening more public forests to private logging interests.

U.S. Department of Interior Secretary Ryan Zinke speaks with land managers, private landowners, university staff, and the media about federal forestry and land management at Boise State University on June 2, 2017. USDA photo by Lance Cheung

Animals
Dolphin found with a bullet wound in California's Manhattan Beach. Marine Animal Rescue / Facebook

'Senseless Killing': Dolphin Found Shot Dead on California Beach

How could anyone shoot a dolphin? A dolphin that washed up dead in Manhattan Beach, California died from a bullet wound, according to local animal rescue workers.

Earlier this month, Peter Wallerstein, the founder of Marine Animal Rescue, responded to a call about a stranded dolphin on the surf, according to NBC News. By the time he arrived at the scene, the marine mammal was dead.

Keep reading... Show less
Sponsored

mail-copy

The best of EcoWatch, right in your inbox. Sign up for our email newsletter!