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Solar Power Basics: Is Solar Energy Suitable For You?

If you’re considering the purchase of solar panels, there are many factors to consider, including your financial situation, electricity rate, electricity consumption, climate, and more.

Rooftop solar panels
Rooftop solar panels in Indooroopilly, Brisbane, Australia.
Image obtained with thanks from Micheal Axelsen on Flickr.

What Is Your City’s Climate Like?

Note: Before I go any further, I need you to keep the fact that solar panels last longer in cloudy climates in mind. Direct sunlight degrades them. This means that your financial payback time will be slower in cloudy climates, but not proportional to ROI.

First, it helps to know the average capacity factor rating of solar panels, which is 24%. All power plants have a capacity factor rating. Capacity factor is the amount of electricity they generate calculated as a fraction of their nameplate capacity. In other words: A power plant with a capacity factor of 50% only generates 50% of its rated electricity generation capacity on average over the course of a year.

The capacity factor of solar panels is dependent on your region’s climate. The 28% capacity factor rating was calculated with night time and cloudy weather in mind, so you needn’t worry about those.

Are You Installing Solar Panels On A Commercial Building Or Residential Building?

If you are a commercial building owner, you have an advantage over other homeowners: You can install a solar system at a fraction of the price they have to pay by purchasing your solar panels in bulk.

Example Case: You could purchase 4 230 Watt solar panels at a cost of $2.06/Watt of generation capacity, or a set of 29 of those panels for $1.09/Watt. That’s almost half as much!

While this is an enormous price reduction, solar panels are only a fraction of the cost of a solar system. The cost of installation is even more staggering. It’s a little higher than the cost of the panels. You will still benefit greatly from the bulk purchase, though. The financial benefit I mentioned could increase your solar system’s return on investment (ROI) by approximately 25% in the example above. However, don’t rule out the possibility that solar system installers might offer you a discount to be hired for this valuable job.

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