Cost of off grid solar electricity

How much is the cost of off grid solar electricity?

"To off grid or not to off grid? That is the question..."

Blog entry by EastGreenfields Enterprises

Nowadays there lots of people thinking of going solar… sure, good it’s about time! With dwindling supply in the provinces or even in the cities during the summer months and the monthly power bill increases who wouldn’t think about going solar?

Off grid solar is advantageous especially if you don’t have an access to cheap electricity. Hands down, off grid solar just makes an economic sense… But if you are living within an area that is already supplied by the grid electricity is it still economically wise to have off grid system? This blog entry will try to answer that question.

As stated, an area without access to grid electricity, off grid solar generated electricity makes sense simply because there is no benchmark of the cost of electricity in that areas…say an island in the Visayas or in a village in the Mountain province. But within city limits or within an area with access to Meralco or cooperative distribution grid, there is a benchmark how off grid solar electricity should cost.

In average, the cost of grid electricity is P12 per kW-hr. The cost of off-grid solar electricity should be less than the grid price so that you can say it’s a good economic sense… a wise investment.

                                    (E1) Grid electricity cost > off grid solar electricity cost 

So how much is the off grid system cost?

Off grid solar main components are the following: Solar panel, charge controller, power inverter and batteries. And the ancillary equipment (termed as balance of system or BOS in geek speak) as follows: mounting bracket, junction/panel boxes, breakers and switches.

If we would like to power a desk top computer (230 watts) and electric fan (100 watts) for at least 6 hours per day then the power requirement will be at least 1980 watt-hour. For this load requirement a 500 watt off grid system is required. The table below summarize the equipment required for the system and the cost of the main equipment. Note here that balance of system or the ancillary equipment is not given price and the labor too is not included.

500 Watts-peak Off grid system
Parts	Price
5x 100 watts Solar Panels – Polycrystalline  (Yingli Brand)	PHP 35,375.00
40 Amps Solar Charge Controller (MPPT Type)	PHP 19,656.00
'- EPSOLAR Tracer 4210
2000 watts Inverter (Pure Sine Wave)	PHP 12,298.72
3x 120 AH Motolite Solar Master	PHP 24,120.00
Capital cost of 500 Watts-peak Off grid system	PHP 91,449.72

(Disclaimer: The prices indicated in this blog entry are the current market price of each component. There maybe some discrepancy in the price, reader may disagree on the prices indicated, after reading this blog the reader is encourage to make their own calculation and analysis to make their own decision in going off grid solar.)

Cost of off grid solar electricity per kW-hr produce

To make an analysis or cost comparison against Meralco prices, the off grid solar electricity for the 1^st year of operation should be calculated. The 500 watts-peak off grid system on average can produce 648 kW-hr of electricity. Divide the capital cost by the 1^st year energy produce to calculate the cost of off grid solar electricity for 1^st year operation.

(E2) 1^st year operating cost, C_{1st yr}

             

Equation 2 (E2) shows how much the cost of off grid solar electricity. The result is not encouraging given that the average grid electricity cost only P12 per kW-hr. But the system will not only be operational for just 1 year right? Yes of course so it should be evaluated against energy produce for the rest of its useful life cycle.

Off grid solar has one big disadvantage, it uses a battery for energy storage and batteries needs to be maintained and replace after a period of time because of deterioration. And batteries are not replace piece by piece, a battery bank of 3 batteries, should be replaced by equal number of 3 batteries. For the 500 watts-peak off grid system, it was designed with a depth of discharge of 50%. It has a battery bank of 3 units of 120 AH Motolite Solar Master. With a diligent operation of 50% DOD, it is estimated to last 5 years. So it means that in the 5^th year of operation the batteries should be replaced. Replacement will incur at least P24,120 (note: to simplify calculation, we will not impose future cost of batteries, we will only use present cost).

(E3) 5th year operating cost, C5th yr

After 5 years of operation and battery replacement on the 5^th year, the cost of off grid solar electricity is still higher than the average grid electricity. Thus, after 5 years, off grid solar electricity is more expensive for areas with readily available grid electricity.

Solar panels are designed for at least 20-25 years effective up to 85% of its rated name plate capacity. It means that after 20-25 years, the 100 watt panels can still deliver 85 watts of its name plate. Given the longevity of the solar modules, it is therefore calculated against 20-25 years of production.

The table below shows the cost of off grid system from 1^st year to 25^th year design life cycle.

	off grid solar cost
Yr cost	500W off grid system	cost per kW-hr
1st yr cost	PHP 91,449.72	PHP 141.13
5th yr cost	PHP 115,569.72	PHP 36.25
10th yr cost	PHP 139,689.72	PHP 22.36
15th yr cost	PHP 163,809.72	PHP 17.85
20th yr cost	PHP 187,929.72	PHP 15.69
25th yr cost	PHP 212,049.72	PHP 14.48

The table shows, without doubt even if we use present cost calculation, the cost of off grid solar electricity is always greater than the cost of grid electricity.

The cost of off grid solar escalates over the years because of battery replacement. It is inevitable because the system simply won’t work without batteries for energy storage.  

The advantage of independent power source by using batteries is also the biggest cost disadvantage of off grid systems. That is why off grid system is best used in areas without access to grids like resort homes, farm houses, and other remote applications.