Solar photovoltaic (PV) is increasing in capacity and availability throughout the United States each year. The value of solar, defined as the present value of future cash flows from a solar installation, is a useful metric which can help potential system owners understand the financial implications of an investment in solar in their location. A discounted cash flow model was developed and used to investigate sensitivities of various metrics across the United States showing that the geographically linked parameters of electricity price and solar radiation by far the most influential determinants of the value of solar. It is shown that systems with expected lifetimes longer than the panel warrantee can achieve significantly higher values. Additionally, the factors of panel orientation and local shading are quantified as site-specific penalty factors which can affect the value of solar. Modeling expected parameters which capture the expected range across the United States, it is shown that fixed-tilt installations can be financially feasible in nearly 50% of the United States given minimal shading and an optimal panel orientation when compared with average costs. This percentage is only expected to increase as the cost of solar decreases. Finally, state averages of radiation, electricity prices, and electricity price growth are used to determine the average value of solar for each state. Seven Southwestern states are shown to be profitable for residential installations, and over half of the states are currently profitable for businesses able to take advantage of depreciation tax benefits.
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Engineering economic analysis of solar PV installations considering power conversion alternatives
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