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The economics of solar power

Currently most consumers within the US are paying between 20 and 40 cents per kwatt hour marginal rate. To find out what you pay, get two electric bills. Divide the difference in money paid by the difference in kilowatt hours consumed. This is the rate you pay for consuming one more or less kilowatt hour. Businesses are generally railed at 40 cents per kwatt hour. Electric rates appear certain to increase in the near future.

In parallel with this bill, homeowners and businesses also pay $1.50 per therm or equivalent and up for space heating and hot water. Solar thermal can reduce both bills simultaneously. Solar thermal works in parallel with your existing systems, so the electricity and hot water you use are exactly the same sun or clouds, but the amount you pay is less. Solar thermal systems use materials costing under $1000 for a 6x8 foot array. An 8 foot array produces average 500 watts of electricity in full sunlight and 2500 watts of heat for hot water. At an average of 6 hours per day of full sun (equivalent) this pays for its materials in 2.28 years from electricity generated, and 3.5 years in hot water, or 1.4 years combined. The electricity is always credited, the hot water has to offset hot water being consumed at the time.

If instead of generating electricity one runs a pool pump, the same array can turn a 1 horsepower pump for an average of 6 hours per day. The array will pump more in summer and less in winter which is desirable and heat the water as well. This saves 1500 watts of power at 6 hours per day, reducing the payoff time to under a year. Compare with photovoltaics with payoff times at 15-20 years.

Installation will be very profitable in the early decade or so, as the market for solar power becomes larger. With installed system payoff times in the 3 year range, the majority of homeowners will become customers. Very few individuals have access to investments that provide 33% return per year. Pool pumps and businesses with flat roofs and belt driven refrigeration equipment will be the most profitable sectors. Businesses with a need for large amount of hot water as in restaurants and hotels will be a substantial secondary market, followed by pure electric consumers.