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Solar Power vs. Conventional Energy: A Comprehensive Economic Analysis for Homeowners

When choosing how to power your new home, consider both conventional energy and solar power. This analysis compares a medium-priced solar power system that supplies 80% of power needs against maintaining the existing conventional setup. With a 30-year ownership period in Pomona for a 2,000 sq. ft. house, we evaluate costs, benefits, and drawbacks of each option. Through Present Worth Analysis, we reveal the financial implications of solar installation costs, energy savings, and environmental benefits to help you make an informed decision.

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Solar Power vs. Conventional Energy: A Comprehensive Economic Analysis for Homeowners

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  1. Solarize Me! Team 1 Kunal Muchhala Luis Rodriguez John Scott

  2. Scenario • You have recently acquired a new home and have to decide how to power it. • Conventional power is already installed but as an environmentally conscious individual you also want to consider a conversion to solar power. • Economic analysis will help you decide

  3. Scenario Details • 2000 sq. ft. house in Pomona, family of 4., will be owned for 30 years • Medium priced solar power system will be alternative which will supply up to 80% of power needs • Excess solar power will be sold back to power company • Solar power will be used to supplement existing electricity • MARR is 6%

  4. Options • One option is to keep the conventional energy setup (Power from the power lines complements of Southern California Edison) • The other option is solar paneling on the roof to complement or replace purchased energy

  5. Pros No installation costs (already installed) No panels on roof (better appearance) Low weather dependence Cons Higher monthly payments Blackouts Not as “green” Buy Power

  6. Pros Lower monthly payments Energy during blackouts Environment friendly Cons Installation cost Panels on roof (appearance) Weather dependant Solarize Me!

  7. Findings (Using Present Worth Analysis)

  8. Variables and Calculations • Annual Power Used: 12187 kWh • Percent Power from Solar: 80% • Power from Solar: 9749.6 kWh • Power from Standard: 2437.4 kWh • Cost of Electricity: 15 ¢/kWh • Cost for 12187 kWh: $1828.05 • Cost for 2437.4 kWh: $365.61

  9. Variables and Calculations (cont.) • Solar Power need per day: 26.7 kWh • Daily Usable Sunlight: 8 hr • Power needed each hour of sun: 3339 W • With 15% buffer: 3840 W • Installation cost per needed watt: $7.00 • Total Installation Cost: $26,878.18 • Government Scholarship percentage: 30% • Net Installation Cost: $18,814.72

  10. Bottom Line

  11. Cash Flows

  12. Cash Flows (cont.)

  13. Present Worth Analysis

  14. Sensitivity Analysis

  15. Percent Power From Solar Panels

  16. Cost of Electricity

  17. Hours of Usable Sunlight

  18. Installation Cost (by solar power needed)

  19. Free Money

  20. Minimum Attractive Rate of Return

  21. Period of Investment

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