[Engineer1955]

Your capacity factor will be in the 10%-15% range, meaning your 1.2 MW (1200 kW) will produce on average about 150 kW (day/night, sunny/cloudy).

1200 kW X 12.5% X 8760 hrs/yr X $0.22/kWh = $290,000 per year.

If that justifies your investment, go for it. (You should be able to get a better estimate for the capacity factor.)

[Tijeras_Slim]

Yeah, there’s 8760 hours in a year.

Some are at night, in case you didn’t notice.

[WHBates]

Were you addressing me with this comment? I think not (I didn’t pose the original question), but interesting. What is the installed cost (total investment) for a functional 1200kW Solar system.

[UnBubba]

Your math is sound. I ball-parked it at $300k/year. FYI, we would continue to pay, the utility every month,as normal, for our 3.2 MW annual usage. We would receive a check from LIPA each month for our $0.22/kWh fee from the 1.4 MW solar energy generation.

The system would cost approximately $3.36 million. We would receive a 30% federal ITC ($1.008 million), approximately 60% bonus depreciation on 85% of the project cost in the first year ($600,000 =$3.36 million * .85 * .60 * .35 (effective tax rate)). Thus, in year 1, our net cost would be about $1.75 million. Once the project is completed we would begin to earn our fees ($300k/year). We would also get the tax benefit of depreciating the remaining 25% of the project cost over time.

Having said all that, the pay back period is still quite long (about 6 years, which includes interest expense on financing the project).

We completed an energy efficient lighting project on our entire facility last year which had a pay back period of about 10 months. That project was a no-brainer. This project, not so much.