Photovoltaic Economics

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How much does a PV system cost?

The cost of a PV system depends on the system's size and the types of components. The table below lists average installed price for grid-connected PV systems in Santa Clara since 2009 (based on customer data from rebate applications).

Grid-connected systems (batteries excluded)

  1-5 kW > 5 kW
$/Watt $5 - $7/Watt $5- $7/Watt
Total $5,000 - $35,000 $25,000 - $50,000


svp_workersolarpanelsThese prices are estimates only. The actual cost of a PV system will depend on the equipment options, installation costs, the PV manufacturer, and the financing or payment option used. Buying a PV system with cash up front generally costs less per watt while leasing or financing may have a higher total system price but may actually cost less over time depending the type of lease or financing agreement.

Is a PV system cost-effective?

PV systems can be a cost-effective alternative for remote and grid-independent applications. However, compared to utility-generated power, costs are relatively high. For example, the simple cost savings value of a PV system can be calculated as follows:

Let's consider the same PV system described in How much electricity can a Solar Electric system produce? Using an average SVP system cost of $6 per watt (or $6,000 per kW) the simple payback for this system is calculated as follows:
=($6,000/kW x 2 kW) / ($223) = 63 years

Grid-connected systems, however, have value beyond cost savings and environmental concerns.

Can customers get credit for producing their own electricity?

Yes. The energy that is produced by a PV system will first serve a home's electrical load. However, if the PV system produces more electricity than the home needs at any given time, SVP credits the excess electricity to the customer at the same price they would pay for electricity from SVP in effect turning the electrical meter backwards. This is called "Net Metering," and the credit will appear on the monthly Net Metering Statement from SVP with an Annual "true-up." At the true-up anniversary if a customer has kWh credits on their account, they will be compensated for the extra electricity at the current Net Metering Generation Rate approved by City Council. The current Net Metering Generation rate is $0.05020 per kWh.

Will a PV system require additional insurance?

Most standard homeowner insurance policies should provide adequate insurance protection and meet the minimum requirements stated in SVP's interconnection agreement. If you are uncertain whether you have sufficient coverage you should contact your insurance provider.

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