Solar Panels on a roof. Is it worth the investment?

The question is really, unless you do it for pure environmental reasons, is it motivated to install Photovoltaic Solar Cells on your rooftop as a household investment given todays and predicted future elecricity costs?

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To figure this out we start from the sun!

1. The Solar Constant, which is the rate at which radiant solar energy is received at the outer layer of the earth’s atmosphere is currently 1366 W/m2. On top of this there is a variation ranging between 1412 W/m2 (January) -1321 W/m2 (July),

which is called extraterrestrial solar illuminance (Eext) and comes from earth distance to the sun over the year cycle. There is also a smaller 11 year sun spot cycle variation of a couple of SolarConstant

For this calculation we use the Solar constant average of 1366 W/m2

2. Then we have the atmosphere taking a big toll of useful sunligt. 5 % is directly bounced back to space. 3% is absorbed by the Ozone in the upper atmosphere, 10 % is absorbed by water wapour and dry air and finally the rayleigh scattering scatters 8% of the light dependant on the incident light angle. So the total loss here is around 24%.

So now we are down to 1366*0.76 = 1038 W/m2 as a yearly average

3. Weather is a factor in many countries and a clowdy day reduces the usable irratiation by 15 %
Here we assume we loose 5% in average over a year which gives 1038*0.95 = 986 W/m2

4. Now including the the annual variation we loose a big bunch of this which is due to the sunlight interception angle and the scattering thereof. This cuts 50 % worst case in the winter and the average loss is approximately 25%.
Nice description here: http://www.newport.com/Introduction-to-Solar-Radiation/411919/1033/catalog.aspx
Assuming 25% we now have 986*0.75 =739 W/m2
annual irradiance variation

5. Night Time of course eats a big bunch of this budget and if we look at the average loss over a full year we loose approximately 60 % of nice sunlight.
Very nice explanation with images here: http://www.nrel.gov/solar_radiation/pdfs/history.pdf
Assuming 60% we now have 739*0.4 = 295 W/m2

6. Now it comes to the efficiency of the solar cell itself where the latest current production Cristalline Silicon in various formes like monocrystalline and polycrystalline. Monocrystalline is more efficient but more expensive due to round wafers and more expensive process. Normal efficiency in production today is 14 %
Nice description here: http://www.solarnavigator.net/solar_cells.htm
Assuming 14 % we end up with 295 * 0.14 = 41 W as an average over a year.
This gives about 360 kWh/Year/m2

Solar-Cell-Efficiency

7. Material cost of high efficiency multicrystalline solar cells (Currently the most cost effective at 45 $/W) is roughly 600 $ / m2 and the with a lifetime of 25 years.
Reference : http://www.solarshop-europe.net/
This gives 600/25 = 24 $ / year /m2 + yearly investment interest at 5% = 600*0.05 = 30 $/year/m2
Total Material Cost = 54 $/year/m2

8. Installation and service Cost of the above equippment is (Assuming a 70 m2 installation at a normal household) is
installation 2000/70/30 = 1.2 $/year/m2 + Service cost calculated as Zero + interest of 2000/70*0.05 = 1.4 $/year/m2 gives total installation & Service cost of 2.6 USD
This adds up to 54 + 2.6 = 56.6 $/year/m2

9. Summary is then that you get 360 kWh /year for 56.6 USD wich gives about 16 Cents/kWh
This should now be compared to about 9 Cents/kWh (In sweden and can vary between countries) which means that it is not yet a good investment. There is always also a risk premium for this type of investment + it has some estetic downsides wich means that for this to be a global hit my guess is that it needs to get down to around 2 cents
Conclusion: It is NOT worth it yet. Cost needs to be cut by a factor of 8 to make it worth the investment.

10. Government Incentive Programs definately helps and for example in sweden goverment pays for 60% of the total material and installation cost which makes it almost worth it and you don’t at least loose a lot of money. In Germany the govement pay rougly 50 cent / kWh when people produce electricity in this way, which has made solar cells and wind power boom. Incitament programs also boosts production and volumes that enables further cost reductions.

11. What to expect from the future then? Well this blog will follow this and update whenever there is progress. I believe though that production costs may go down much further of the existing Solar Cell technologies and especially the multicrystalline solutions. This is the way it always is, existing technologies can always be pushed way further than anyones expectations. But there is also the question of look and feel which should not be underestimated.

Can solar Cells make it as a global hit when they certainly will ruin any architecture?
Nuclear electricity production is also on a strong march forward over the world and they are, unfortunately, getting very good. This is perhaps the biggest threat to solar power since it produces so cheap electricity that it removes the need for the solar investment.
However there are some very nice solutions on the way which will be another post.

Latest development that affects the outcome of this analysis:

2009-08-08 Increased production in china and world financial crisis has over the last year dropped the price of Crystalline silicon base material in todays most common production technology. This will most likely shortly lead to a drop of solar cell price by 50%. This would give roughly 8 cents/kWh which still is not good enough but with attractive incentive programs it could make solar cells take boost. See (Swedish) :

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