How to Size a Solar System

If you’re a homeowner interested in researching solar for your home, there are many items to consider. Not the least of which is to understand why a solar company may or may not design a solar system for your home that doesn’t offset 100% of your annual kWh usage. In fact, depending on some factors I’ll highlight below, it may be more financially beneficial to go with a smaller system. So, let’ get into how to size a solar system.

One note before we do that. This information is to help inform homeowners that will contract with a professional, licensed solar installation company. It is not to be used as a guide for the DIY solar installation. There are more detailed guides available for DIYers. One such guide is from Leonics.

The Reimbursement Rate from Your Utility Company

When designing a solar system for a homeowner the first thing that I do is analyze their utility bill. Amongst a lot of data that I get from a bill, is the utility company itself. Then I’ll research the state in which the home is located along with the reimbursement rate that the utility company will pay the homeowner for excess energy production by a residential solar system.

A solar system only works during the day when the sun is out. Depending on the number of solar panels installed, that system is going to produce more energy than the home needs to operate during each day. The energy not needed to power the home will be sent out to the electric grid. The homeowner’s utility company will then pay the homeowner for producing that excess energy and they will sell it to other customers. This is called net metering.

The key is at what rate will the utility company pay the homeowner. In some states, it is mandatory that the utility company pays the homeowner the same rate per kWh that the homeowner pays to buy electricity from the utility company. This is 1 to 1 Net Metering. If this is the case in your state and with your utility company, then it is more feasible and financially beneficial to build a larger solar system. You’ll be getting credit for excess energy produced that will offset what energy that you’ll still be buying from utility company at night. Remember, your solar system only produces energy during the day so to power your house, you still need to buy kWhs at night. Unless you have what is called a consumption battery which is only allowed by certain utility companies in certain states.

Lower Utility Company Reimbursement Rates

Different than what is described above, what if the utility company only credits homeowners for what is called the Export Rate? The Export Rate is basically the wholesale price the utility company pays to produce the electricity or pays for another company to produce the energy. The Export Rate is typically around 4 to 4.45 cents per kWh. So, if you’re paying 14 cents per kWh to buy energy but only getting back 4 cents per kWh to produce energy it usually makes financial sense to build a smaller solar system. If you build the largest system allowed by the utility company or that you can fit on your roof, the only one benefiting from the higher price you pay for the system will be the utility company.

How to Size a Solar System Using the Export Rate

When designing a solar system in an area with 1 to 1 Net Metering it’s relatively simple to size the system. Start out by building it as large as the utility company will allow. That’s typically between 100% and 120% of historical annual usage of that home. There are some adjustments that need to be made based on other factors, but this is a good starting point.

When sizing a solar system in an area with Export Rate reimbursement it’s a bit trickier. I need to run multiple scenarios to figure out what is most advantageous for the homeowner. As an example, if their average monthly utility bill throughout the year is $130/month, and by building a system with a 100% offset will cost them $180/month with system cost and continued utility payments (there will always be a bill from the utility company for at least the monthly service fee) then I need to reduce the size of the system. I will do so next to perhaps 80% offset of their annual usage. Then, if needed, down to 60% offset. The sweet spot is usually between 60% and 80% of their annual electricity usage.

What Are Some Other Factors in Sizing a Solar System?

Other variables come into play when sizing a solar system. One of the next biggest factors is the size and direction of the roof planes. What I love to see is a big roof plane that faces South/Southeast. This will give us the most sun which will produce the most energy. If the southern roof planes are blocked by trees or are very small, we then need to use other roof planes on the home that may not give us the best sun exposure. This is called the Irradiance factor.

Various other considerations need to be made regarding cost. If the main electrical panel of the home is old and not up to current code, does not have any open slots to connect the solar system, or for some other reason cannot support solar, we need to upgrade that main panel. In some cases, we can just add a sub panel, or something called a ‘Line Side Tap’. If we do have to add a new main panel the good news is that the home and homeowner will benefit other than just being able to go solar. It will increase efficiency, allow for expansion, is sometimes safer, and adds value to the home.

Other factors can affect cost as well such as steep roof planes, the number of roof planes that will have solar panels that require conduit, etc.

What is the #1 Goal?

The #1 goal in figuring out how to size a solar system is the benefits to and desires of the homeowners. If the homeowners, despite a higher monthly payment, want more panels, I’ll add those panels. That conversation will take place after I show them the design I came up and the financial considerations of that design. My priority is to build a system that puts the homeowner before the profit. If I do my job correctly, I will get referrals from my homeowners and be far better off in the long term.