Pennsylvania-based solar installer Paradise Energy Solutions issued a report last week showing several metrics from solar projects installed during the first half of 2019. Operating in Delaware, Maryland, New York, Ohio, Pennsylvania and Virginia, the regional installer averaged total system size, annual production, electricity coverage, ROI, payback and environmental metrics for systems in six states from the first and second quarter of 2019.
Reporting on both systems installed for businesses and systems installed for farms, the dataset sheds light on what an investment in solar is like in the commercial sector in the Mid Atlantic region of the United States. On a state level, the highest average ROI for solar was in Maryland at an average of 18.59%, while the lowest of the six states was Ohio at 11.19%.
The charts above show the average ROI for both businesses and farms.
Solar systems in New York pay for themselves the quickest with an average payback period of 6.33 years, likely driven down by strong incentives on the state level, including the NYSERDA grant. Systems in Ohio take the longest to reach payback with an average estimate of 11 years.
The charts above show the average payback for both businesses and farms.
In total, the largest solar systems were installed in Delaware with an average size of 139.76 kW. This number is driven up with the company’s installation of several large systems installed for the agricultural industry in the state. The smallest systems were installed in Virginia with an average size of 42.11 kW. Environmental metrics were also disclosed in the report. The average solar system across all states saves 2,060 trees or offsets 531 tons of CO2 or 187 barrels of oil.
According to the report, the agricultural sector stands the most to gain from a solar investment with an average ROI of 15.55% and a payback period of 8.1 years across all states. However, systems installed on commercial businesses are close behind, with an average ROI of 13.91% and 8.21-year payback period.
The report did not take into account residential solar investments.
View the full report on Paradise Energy’s website.
News item from Paradise Energy
Interesting: “Solar systems in New York pay for themselves the quickest with an average payback period of 6.33 years, likely driven down by strong incentives on the state level, including the NYSERDA grant. Systems in Ohio take the longest to reach payback with an average estimate of 11 years.”
It has been proven time and again, the ROI is a moving target and as utilities go to the State PUC with rate case after rate case over the years, sooner or later the PUC will allow an increase in the electricity rate or a fee for TD&D or an increase when an old generation plant is decommissioned before its time due to poor performance in the current market. It is almost inevitable every time electricity costs go up per kWh for the ratepayers, the ROI goes down for the already installed solar PV system. Trying to “project” what the electricity increases will be is not effective either. Yet historically over the last 30 years, electricity rates have increased on average of 1% a year. It seems now with the early decommissioning of coal fired assets, the average rate increase is starting to rise to the 1.5% to 2% mark each year. Now that utilities realize non-fueled generation although “intermittent” is by far cheaper to construct and operate than any commodity fueled generation plant. Utility scale energy storage is now coming along to make “intermittent” solar PV and wind generation capable of “dispatchable” generation resources with grid demand reaction times in the milliseconds to seconds as compared to the old mechanical generation systems of several minutes to hour(s).
Personal experience, my first solar PV system was put on our home in 2005. Very expensive at that time, not as cheap as it is to do today. The “simple ROI” “metric” supplied gladly by the electric utility was a payoff in 22 years. Didn’t care, had the system installed anyway. After some grid expansion rate increases over the years and some real screw ups by the utility itself getting stuck with high long term natural gas futures created rate increases that did not affect me. After 13 years of use, we sold the house and moved on. By that time, the “actual” ROI was right at 15 years. The only “metric” to follow here is, as the utilities cry about “lost revenues” and “stranded assets”, with the electric rate increases “allowed” by law, the time it takes to pay off your system decreases as electricity costs per kWh increase. This is a marathon, not a sprint and the race will not be as long as one thinks.