A new solar PV calculator from MIT's Sustainable Design Lab. Demonstrates (correctly) how Cambridge, MA residents can save money with solar PV panels.
Now to see where these "savings" come form. This MIT calculator is conveniently transparent about these facts.
- 70% of annual "revenues" are a state-level subsidy, the Solar Renewable Energy Certificiate ($6,090 out of $8,902).
- Roughly 60% of the remaining $2,812/year is subsidy. Thought called "utility generation value", this is really the retail value: $2,812 for 22,494 kWh works out to 12.5 c/kWh. The wholesale rate is 4.7 c/kWh in New England (2011 average). This is an indirect subsidy, called net metering: forcing utilities to value PV electricity at non-market rates, like at retail rate instead of wholesale.
- 30% of the cost is a federal tax subsidy (FTC)
What would the finances look like without subsidies? This sample customer
- Pays $101,720, for a PV system that averages only 2.6 kW (22,494 kWh/year)
- Earns $1,050/year selling at market rate
- Sees a payoff time of 97 years
Present value calculations (25 year PV lifetime, 5% discount):
|value or cost||present value|
|solar system cost||-$101,720||-$101,720|
|tax credit (subsidy)||+31,516||+31,516|
|electricity value (wholesale)||+$1,050/year||+$15,173|
|electricity value (retail)||+$2,812/year||+40,615|
|wholesale-retail difference (subsidy)||+$1,762/year||+25,449|
|SREC value (subsidy)||+6,090/year||+87,960|
|All subsidies PV||+$144,926|
|Net PV without subsidies||-$86,554|
|Net PV with subsidies||+$58,371|
In particular, in present value terms, the subsidy is 954% of the market value of the electricity being subsidized.