Yash
The advancement in solar PV technology and the falling prices with time have made solar more attractive than ever.
A 5-kW solar power system (without battery backup) with an average price of Rs. 3.2 lakhs, when placed in good sunlight, offers you over 15% of the annual return.
However, there are a number of factors that affect the average solar price and the return offered by it.
These cost factors can be understood clearly once we know the components used in the basic solar power system.
Basic Solar Power System
A solar power system consists of solar panels which convert sunlight into Direct Current.
These solar panels are connected to the battery through a solar charge controller.
This battery acts as a backup at night.
The charge controller placed in between regulates the charging of the battery.
And also prevents the backflow of current from the battery to the solar panels.
The output of the battery and the solar panels goes inside the inverter.
It converts the DC into AC and runs our electrical appliances.
All these components are joined with wires.
The price of these components adds to the total cost of the solar power system.
1. Price of Silicon
The basic unit of any solar panel is silicon.
It is a semiconductor material that is used to make solar cells.
Silicon is the second most abundant element (28% of the earth’s crust by mass) in the earth’s crust.
It mainly occurs in the form of oxides and silicates.
And it has the unique property of producing current.
When sunlight falls on its surface, it absorbs and converts it into the current.
A single solar cell produces a current of 28 mA to 40 mA.
But this is not enough to run our electrical appliances. Therefore, many solar cells are combined, we get a solar panel.
Any fluctuation in silicon prices impacts the price of solar panels.
Many countries are considering solar for meeting their energy needs.
They are importing solar panels from top solar panel manufacturers like China.
The percentage of the custom duty on the solar panel plays an essential role in deciding the overall price of solar modules.
Top Silicon producers in the world
Any shortage in its production from the top silicon producers has a direct impact on the price of the solar panels.
2. Sunlight and location
Your location plays an important role in deciding the cost of the solar power system.
A region that is closer to the equator will receive more sunlight when compared with a place that is away from the equator.
A solar panel that is placed near the equator will produce more current than a solar panel of the same rating placed away from the equator.
Let us understand with an example:
3 persons with the same energy needs (of 20 units per day) but living in 3 different locations (New Delhi, Berlin, and California) on the earth need different sizes of solar power systems.
New Delhi (5-kW Solar for 20 units daily)
A person living in New Delhi in India with an average daily PSH of 5.35.
will need a 5 kW solar power system to meet her/his energy needs of 20 units daily.
A 10 kW Solar for Santa Cruz in Argentina:
Santa Cruz in Argentina receives PSH of 2.52. The person will need a 10 kW solar power system to fulfill the energy needs of 20 units daily.
Arizona in the USA with Average daily PSH of 6.44
The person in Arizona will need a 4-kW solar power system to produce 20 units per day.
A comparison chart
A person living in a good sunlight region can meet her/his solar electricity needs with less investment.
The technology of solar panels
The technology of solar panels also decides their cost.
When we talk about the technology, we can broadly classify it into mono-crystalline and poly-crystalline solar panels.
The poly-crystalline solar panels are less expensive and less efficient than mono-crystalline solar panels.
If you want solar solutions under budget then poly-crystalline solar panels are the right choice.
But when we see people want more energy in a limited space then mono-crystalline solar panels are a great option.
In addition, many improvements are made to further improve efficiency such as:
a) Half-cut solar cell technology is integrated into mono-crystalline solar cells.
b) In Mono-PERC solar technology, a layer is pasted at the back of the solar cell to further improve its power output.
c) We also see bi-facial solar panels that conduct from both sides. And you get more power in a limited space.
A conventional solar panel produces direct current.
d) In an AC solar panel, a small micro-inverter is integrated at its back which converts the dc into ac and then fed to the electrical appliances.
But all these technological improvements come with a price.
If you choose highly-efficient solar panels then the overall cost of the system is higher than the solar panels based on polycrystalline silicon technology.
Type of Configuration
Here the cost of solar depends on the type of configuration you chose, Grid-tied or Off-grid system.
The type of configuration you chose depends on your location and the grid supply.
When you are living in a remote place where the grid supply is not available or erratic, an off-grid system is preferred.
Whereas, a grid-tied system is preferred in places where grid supply is costly.
The Off-grid system is costlier than the grid-tied system.
The off-grid system is not connected to the grid.
Therefore, it requires a battery backup to power your house at night.
And adding batteries increases the overall cost of the solar power system.
Grid Price
It is the price you pay to the grid every month.
The grid price varies from state to state.
The average grid price in India is close to Rs.7 per unit. And it is increasing by 8% annually.
The chart tells us that after 25 years, you will pay Rs. 45 to the grid for every unit consumed.
The states where the grid price is high, solar electricity is a very option.
How high grid price affects the price of solar?
The high residential grid prices indicate 2 things:
- The state government is getting electricity units at a higher price and these prices are passed on to you.
- The demand is very high which makes electricity prices rise.
In either case, it makes the government think of alternative energy options to ease the demand.
Also, in India close to 70% of our electricity needs are fulfilled through coal.
A fossil fuel that when burns release carbon emissions into the air.
The excess carbon emissions in the air are a cause of climate change.
And we are seeing serious consequences:
- Melting of glaciers
- Rising sea-levels
- Droughts
- Floods
- Extreme Weather patterns
- Migration of birds, animals, and humans
- Scarcity of food and potable water
Governments are making efforts to reduce carbon emissions from the air.
They are looking for clean and affordable energy sources that can meet their energy needs.
And
Solar fits in that category.
The states are offering subsidies and tax incentives for purchasing solar.
Thus, reducing the overall cost of solar.
Also, the technology of other components in the solar power system affects the overall price of Solar.
As you increase backup time, more batteries are needed.
Which increases the overall price of solar.
The technology of solar charge controller and Inverter
An MPPT solar charge controller used in between the battery and the solar panels can significantly improve the charging time of the battery.
But it is more costly than the conventional PWM solar charge controller.
Similarly, highly efficient sine wave solar inverters come at a higher price.
Installation cost
A solar power system once purchased, needs to be installed properly on the roof.
A team of experienced and expert solar professionals can do this work effectively.
And this work costs you some money.
It is around 10% of the cost of the system.
However, this percentage varies depending on a number of factors.
a) Terrain
The installation cost is slightly more in hilly areas and remote places where transportation of material is difficult.
b) Roof type
It also depends on the type of roof and available shade-free area.
In a cemented strong and flat roof, a rivet and screw system with a frame can withstand the solar panels.
India is in the Northern Hemisphere and the solar panels should face the south direction to get the maximum sunlight.
And the tilt of the panels depends on the latitude of the location.
A natural sloping, shade-free south-facing roof can significantly reduce the structure cost which supports the solar panels.
c) Shade-free area
If the shade-free area is scattered, the solar professional need to do extra work to fix the solar panels at different places on the roof where ample sunlight is available.
This increases the installation cost.
Also, the varying shade length from the nearby building makes solar professionals do extra work.
They will install solar panels considering the relative motion of the earth and the sun.
So that varying shade length does not fall on the solar panels and affect the power output.
(The relative movement of the earth and the sun causes changes in the shade length throughout the day).
d) Fixed tilt vs Solar trackers
The solar trackers move the solar panels in the direction of the sun.
While the solar panels with fixed tilt are fixed in one direction and orientation.
One big advantage of using solar trackers is that they make your solar panels receive the maximum sunlight throughout the day.
But these are costly and their installation needs more expertise and money. However, these are suitable for big-size solar power systems.
When I consider a complete 5-kW Off-grid solar power system with quality components used and 2 days of battery backup.
The cost breakup would look something like shown below:
Other factors that affect the price of solar
Metal prices
Copper is used in making busbars in solar panels. These busbars collect the current produced by the solar cells and send it to the output of the solar panel.
Another main metal is Aluminium which is used for making frames of solar panels.
Any price fluctuation in these metal prices affects the price of solar panels.
Inflation
Inflation is the price rise in commodities with time.
It is natural and can be resulted due to any disruption in the supply chain.
Inflation increases the equipment cost, transportation cost, installation cost, and energy cost.
Resulting in an increase in the overall cost of Solar.
You can control or manage some cost heads to a certain extent
Choosing polycrystalline solar panels over mono-crystalline ones will cost you less. But you compromise with efficiency.
Similarly, PWM solar charge controllers are more affordable than MPPT ones.
While on the other hand, heads such as Inflation, silicon prices, metal prices, and energy prices are beyond your control. A rightly sized solar power system not only meets your energy needs but also gives you excellent returns on your investment.
Yash has over a decade of experience in Solar PV technology and is the founder of Solar with Yash.
Check out his Youtube Channel Solar Design and Payback with Yash
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