Solar design tips, sales advice, and industry insights from the premier solar design software platform

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Solar PV Education 101 | Solar design tips, sales advice, and industry insights from the premier solar design software platform

AC and DC disconnects are essential components necessary for placing a solar panel system on your roof and connecting it to your home.

Installing AC and DC disconnects properly will ensure that the home of your customer is kept safe while also allowing incoming power to be quickly shut off if necessary.

The majority of building codes across the United States require these disconnect switches to be in place, so it’s important to understand how they work and why they’re needed.

## What Do AC and DC Disconnects Do?

As the name implies, the primary purpose of these disconnect switches is so that you can shut off the incoming flow of power from your solar panels. Here is what a typical solar panel system looks like and where the disconnects are located:

Photo Credit: Upstate Solar Solutions

DC Disconnects: The DC disconnects (sometimes referred to as the PV disconnects) are placed between the solar panels and the inverter or, in many cases, are built into the inverter.

Inverter: The inverter is the piece of equipment that switches incoming power from DC (direct current) to AC (alternating current) so that your home can use the power. An inverter is needed because the power generated by solar panels is DC (direct current), but homes are wired for AC (alternating current).

AC Disconnects: After power goes through the inverter, it comes out as AC (alternating current). To protect the home in case of emergency, AC disconnects are installed after the inverter. AC disconnects are typically mounted on the exterior wall of the customer’s home near the electric meter.

## Why Are Disconnects Necessary?

There are 5 main reasons why you should have AC and DC disconnects on a solar panel installation:

1. They are required by local ordinances and building codes. In addition, some jurisdictions using newer editions of the National Electric Code now require rapid shutdown capabilities, which is essentially an electronic DC disconnection that can take place at the modules or within a few feet.
2. In the event of a fire in or around a customer’s home, using the AC disconnects to stop the inflow of power can lower the spread of fire and prevent the threat of electrocution to those entering the home.
3. In the event of severe weather, such as tornadoes, hurricanes, or severe electrical storms, a customer will be able to disconnect their system at the DC disconnects to lower the chance of weather causing damage to their inverter and the home’s interior wiring.
4. In the event of a flood, being able to shut power off is critical. Both disconnects should be used at this time.
5. If electric company crews are doing work in the area, such as replacing electrical lines or installing transformers, being able to disconnect your solar system from the grid is an important safety feature.

## Sizing your AC and DC Disconnects

Disconnects come in a variety of sizes, from 30amp all the way up to 800amp, so proper planning of your system is necessary to determine which disconnect sizes you need.

In order to know which size is necessary, you’ll want to know the size and power output of your PV system. If you’d like to design a system by hand, here are a few variables you’ll need to consider:

1. Voltage
3. Amps/breaker size
4. Wiring and cable sizes

All of these components come together to determine the overall load size, which will determine the disconnect sizes you need. Once you’ve designed the system, you’ll then need to submit your designs for permitting.

If all this sounds intimidating, don’t worry, Aurora can actually do a lot of this work for you. Using irradiance mapping, shade analysis, and LIDAR, Aurora can actually design the optimal system and pick out the best disconnects for your needs.

## Standing out to your solar customers

For homeowners, having a professionally designed solar system is about safety and savings. AC/DC disconnects are a crucial safety feature that can help you sell a homeowner on the solar panel system you’re building for them. Additionally, by sizing your disconnects properly, you can make sure you’re giving the homeowner the best price for their needs.

AC/DC disconnects are just one piece of the BOS (balance of system) components you’ll need for a successful solar installation. You can learn about some of the other components and how you can save customers even more money in this post: The Basic Principles that Guide PV System Costs.

Topics: Solar PV Education 101

While solar softwares can help design the optimal PV system, the components you select will also make a difference in achieving the desired energy production.

One particular component type—the smart module—has been increasing in popularity because of its benefits compared to traditional modules. If you haven’t considered smart modules (also known as DC-optimized modules) they’re worth a look.

## What Is a Smart Solar Module?

A smart module is a solar panel with an integrated DC power optimizer. Smart modules will have the power optimizers pre-attached to them, and the optimizers help each panel operate at its maximum power level regardless of how the other panels on the same string are performing. This allows for more energy to be harvested from the smart module PV systems.

The tradeoff of using smart modules comes down primarily to cost. The price tag might be higher, but the benefits from smart solar modules may be more attractive depending on the situation.

## Top 3 Benefits of Smart Modules

1. Increased energy production: As mentioned earlier, a PV system using smart modules can produce more energy compared to a traditional system. With the embedded DC optimizers, each module is able to correct for its “mismatch” and function independently from one another, resulting in more energy production.
2. Lower soft costs: Smart modules can help streamline purchasing processes and reduce installation time. Instead of having to source a vendor for both panels and DC optimizers and order them, you only need to do it for one hardware. Also, installers won’t need to carry multiple hardwares up to the roof, install and connect them. Faster installation times can lower labor costs, and the savings could be passed down the end customer.
3. Faster troubleshooting: Since smart modules operate independently of one another, you can monitor the performance of each module. If maintenance is required or the system is underperforming, you’ll have a much easier time identifying which panel(s) need attention.

## When to Use Smart Modules

Smart modules (or adding power optimizers to your PV system) are typically ideal for situations where shading is a problem or if the PV system will be installed on multiple roof surfaces. For systems on a roof surface with no shade throughout the day, in an area with great weather almost year round (like Southern California), a traditional system may be the ideal choice.

Before selecting which components to use, it’s important to have a full understanding of each component and what your options are, and know how much solar energy (or irradiance) is available at the project site. Depending on the situation and what you’re trying to solve for, smart modules may be the best option or there might be another suitable solution at a lower price point.

As a solar professional, it’s important to be able to explain the process of how a solar photovoltaic system produces electricity. This process seems mysterious to many and misconceptions abound among those unfamiliar with solar energy. In this article, we get back to basics with an overview of how solar installations provide electricity and how the process works for the customer.

How Does a Solar Photovoltaic System Work?

Solar panels convert the energy of photons (light particles) into electricity (as we discuss in The Beginner's Guide to Solar Energy). This process is called the photovoltaic effect. When a photon hits a photovoltaic (PV) device, its energy is transferred from the photon to the local electrons in the material. These excited electrons begin to flow, producing an electric current.

Solar cells (within solar panels) produce direct current (DC) electricity, which is typically converted to alternating current (AC) electricity by an inverter. This allows it to be sent back to the electric grid, which operates with AC electricity, as well as used to power appliances in the customer’s home (or commercial building, in the case of commercial solar installations). In summary, the process of how solar panels works involves three primary steps:

1. Solar cells within solar panels absorb light from the sun, which causes electric current to begin flowing.
2. An inverter converts DC electricity to AC electricity.
3. This electricity is used to supply current energy demands in the customer’s building and excess electricity beyond what the customer can use is exported to the grid.

## What Happens with the Energy a PV System Produces?

Most solar customers in the U.S. have grid-connected solar installations. Their home is connected to the electric grid, which allows them to use energy supplied by their electric utility when they need more than their solar installation is producing (such as on a rainy day or at night). It also means that whenever their PV system is producing more than they need, that excess energy can be sent to the grid for others to use.

A policy called net metering, common throughout the U.S., compensates solar customers for this excess energy, so that they can offset the cost of future electricity they use from the grid.

Net metering has played a significant role in making solar energy cost-effective. However, around the country, we are beginning to see some changes in how utility companies implement net metering, many of which reduce the value that solar customers receive from their solar installations.

Feed-in tariffs are another way of compensating solar customers for the electricity they send to the grid in some areas.

## What are the Parts of a Photovoltaic System?

A simple PV system contains two basic types of components:

• Solar Modules: Solar modules contain solar cells that convert sunlight into electricity.
• Inverter(s): An inverter converts DC current to AC current. It can also perform other functions that are beneficial to the electricity grid (see our article on smart inverters, which are now required in California).

Diagram of a simple PV system. Source: Aurora Solar.

It is common practice to refer to all components of a PV system besides the modules as balance of system (BOS) components. Examples of BOS components include inverters, disconnects, racking, and wiring.

Of course, this is just a basic overview of the parts of a solar installation and how they fit together. Explore some of our related articles for a deeper dive into the ways that solar panels and inverters can be wired together (stringing) and some alternatives to traditional inverters, known as module-level power electronics (MLPE)

## What Factors Affect Solar PV System Efficiency

It is important to note that the process of producing electricity from solar energy is not 100% efficient. Environmental factors—such as temperature, soiling, and shading—as well as losses in the electrical components, can affect the efficiency of a PV system (for a deep dive on these losses see our PV System Losses Series). Typical loss categories include:

• Temperature: Solar panel efficiency varies with temperature. High temperatures have a negative impact on performance.
• Soiling: Material that accumulates on the surface of PV panels can block light from reaching the solar cells, thereby reducing the generated power. The power loss due to soiling is highly variable, depending on the type of soiling (such as dust or snow), and how frequently the panel is cleaned.

Soiling, such as dust, on PV modules reduces power output.

• Shading: Shading is the obstruction of irradiance due to trees, buildings, terrain, and other objects in the environment. The effect of shading on the power output of a solar installation is highly variable. (To learn more about  the causes and consequences of shading, this article and this section of our PV system losses series are great resources.)
• Wiring and connections: Resistance in the electrical connections of a solar installation typically results in energy losses of a few percent.
• Mismatch: Due to manufacturing variations, modules of the same type can have slightly different electrical characteristics. This mismatch between modules can lead to a performance loss.
• Inverter Efficiency: Converting DC into AC current via an inverter is typically around 96-97% efficient. Inverters typically have higher efficiency when the DC input power is high. The conversion efficiency takes a big hit when the input power is much less than the inverter's rated power.
• Age: Solar panels produce less energy the older they get. Typically the decrease in performance is assumed to be around 0.5% per year.
Term Typical Value
Temperature -0.5%/°C above 25°C
Inverter Efficiency 96.5%
Mismatch 98%
Wiring/Connections 98%
Soiling 95% (highly variable)
Age -0.5%/year
Typical solar efficiency values for different PV system loss types.

The above factors are combined in a coefficient called the system derate factor to represent the overall losses of a solar installation. For instance, PVWatts, an NREL supported PV system energy production calculator, uses a default system derate factor of 86%.

However, depending on the system design or environmental conditions, this value can be higher or lower. Advanced solar design software like Aurora can ensure that you accurately determine PV system losses and how much energy your PV system will produce.

Solar panel (module) efficiency denotes what portion of irradiance a module converts into electricity under standard test conditions (STC; irradiance of 1000W/m2, ambient temperature of 25°C). As a general rule of thumb, you can estimate a PV system’s efficiency in converting irradiance into electricity (under STC) using the following formula:

$$\text{Overall System Efficiency} = \text{Module Efficiency} \times \text{Derate Factor}$$

It is important to note that these are merely back-of-the-envelope calculations. To get a comprehensive energy production analysis, you need a software application, such as Aurora, that incorporates all of a PV system’s environmental, mechanical, and electrical characteristics.

### About Solar PV Education 101

How a Photovoltaic System Produces Electricity is part of Solar PV Education 101, a six-article series that serves as an introductory primer on the fundamentals of solar PV for beginners.

Editor's Note: This article was originally published on October 7, 2016. It was updated in December 2019 for freshness, accuracy, and comprehensiveness.

## Solar Industry Growth and Affordability

Solar is playing an increasingly important role in the transition to a world powered by renewable energy. Over the past decade, the number of solar installations has grown at an accelerating rate and with increasing affordability. In the first quarter of 2016, over 29 GW of solar was installed in the United States.

Figure 1 illustrates the correlation of the increasing number of installations with the decreasing costs. It shows that the price of a solar installation is now less than a third of what it was in 2009, while annual installations have grown more than tenfold during the same period of time.

Figure 1. Annual solar installations in the US are accelerating as price decreases. Source: SEIA

SEIA states that the solar industry is a powerful engine for economic growth. The US solar industry currently employs over 200,000 people, twice as many as in 2010 and now employs more people than the coal, or the oil and gas industries. As installed capacity continues to increase, SEIA predicts that the solar workforce will expand to 420,000 by 2020.

Figure 3. The solar industry now employs more workers than coal mining and petroleum extraction. Source: SEIA

## Solar Energy, Power, and Irradiance

Solar panels convert the energy of photons, or light particles, from the sun into electricity. Photovoltaic devices, such as solar panels, permit the incoming photons to transfer their energy to electrons. These energized electrons begin to flow, creating an electric current. We use the terms irradiance or insolation to refer to the power density of sunlight on a surface.

Figure 4. Basic schematic of a PV array. Source: clean-energy-ideas.com

We typically measure energy in kilowatt-hours (kWh), and power (the rate at which energy is produced) in kilowatts (kW).

$$\text{Energy} = \text{Power }\cdot \text{Time} = 1\mathrm{kW} \cdot 1 \mathrm{hour} = 1\mathrm{kWh}$$

In solar, we usually define the size of a solar installation in terms of its power (in kW).

Irradiance is typically reported in units of kilowatt-hours per meter squared per day (kWh/m2-d). The amount of irradiance hitting the surface of the earth is often quoted in terms of the number of hours of “full-sun” of solar energy. A "full-sun" is defined as 1 kW/m2.

Quantity Units Definition
Power kW Rate of energy production/output
Energy kWh Capacity to do work
Irradiance kWh/m2-d Hours of full-sun for a square meter each day
Table 1. Important quantities used for solar energy

## Solar Resource of a Rooftop

We can estimate the solar potential of a rooftop using its area and the local irradiance. NREL, the National Renewable Energy Laboratory, publishes irradiance data in its report Solar Radiation Data Manual for Flat-Plate and Concentrating Collectors.

Figure 5. Annual irradiance value for a 150m2 roof plane in Palo Alto. Source: Aurora Solar

It is fairly straightforward to calculate rooftop solar potential of a rooftop using this data. For example, a south-facing roof plane of a home in Palo Alto, CA (Figure 5) receives an average irradiance of approximately 1,900 kWh/m2/year. Dividing the annual irradiance value by the number of days in a year yields the average daily irradiance.

$$\text{Average Daily Irradiance} = \frac{\text{Annual Irradiance}}{\text{days/year}} = \frac{1900 \mathrm{kWh/m^2year}}{365 \mathrm{days/year}} = \mathrm{5.2 \mathrm{ kWh/m^2day}}$$

To calculate the amount of solar energy available on a roof face, multiply its area by the average irradiance value.

$$\text{Rooftop Energy}\mathrm{[\frac{kWh}{day}]} = \text{Irradiance}\mathrm{[\frac{kWh}{m^2 \cdot day}]} \times \text{Area}\mathrm{[m^2]}$$

If the rooftop has an area of approximately 150m2, the solar energy available on the rooftop is as follows.

$$\text{Rooftop Energy} = 5.2 \frac{\mathrm{kWh}}{\mathrm{m^2}\cdot\mathrm{day}} \times 150\mathrm{m^2} = 780 \mathrm{\frac{kWh}{day}}$$

Besides the solar irradiance, Figure 5 also displays information on three additional quantities related to the solar resource: Solar Access, TOF, and TSRF:

Solar Access: This is the ratio of the actual solar energy available — taking into account shading cast by objects in the environment — to the solar energy that would be available in the absence of shading. You can learn more about the effects of shading on PV systems here.

$$\text{Solar Access} = \frac{\text{Energy with Shade}}{\text{Energy without shade}}$$

TOF (Tilt and Orientation Factor): This is the ratio of the amount of solar energy a location receives to the amount it would receive if the orientation of the roof were optimal.
$$\text{TOF} = \frac{\text{Energy with actual tilt and orientation}}{\text{Energy with optimal tilt and orientation}}$$

TSRF (Total Solar Resource Factor): This is the percentage of the available solar resource that a location receives as compared to what it would receive with optimal orientation and without shading. TSRF is equivalent to the Solar Access multiplied by the Tilt and Orientation Factor.
$$\text{TSRF} = \text{Solar Access}\times \text{TOF}$$

### About Solar PV Education 101

The Beginner's Guide to Solar Energy is part of Solar PV Education 101, a six-article series that serves as an introductory primer on the fundamentals of solar PV for beginners.

You might not give your electricity bill much thought—except perhaps to lament how high it is—but electricity bills actually provide a lot of valuable information to inform the process of installing solar.

For solar professionals, these bills are an easy way to quickly understand how much energy a customer uses, which is a key factor in determining what size PV system will meet their needs. They also show how the local utility company calculates a customer’s electricity charges, which can have important design implications.

For homeowners or businesses considering solar, having a deeper understanding of the information contained in electricity bills can offer insights into whether installing solar makes sense, as well as whether switching to another billing plan may increase savings.

In this article, we explain the terms, sections, and calculations in an electricity bill and how these change when a customer installs solar. In the next article in our Solar PV Education 101 series, we explain how this information can be used to size a solar installation.

#### Rate Plans

As you probably know, an electricity bill is a charge for the electricity a home or business consumes. This consumption is measured in units called kilowatt-hours (kWh) and customers are charged a per-kWh rate. These rates differ across utilities and are calculated differently depending on the customer’s “rate plan.” Rate plans specify the rules for how customers’ bills are calculated and utilities typically offer multiple types.

Common rate plans include fixed rates, time of use (TOU) rates, and tiered rates. While a fixed rate plan charges the same amount for every kWh consumed, under TOU rates and tiered rates the price per kWh changes depending on the time of day (peak vs. off-peak) or the total amount of energy consumed, respectively. (For more in-depth discussions of different utility billing approaches, see our Solar Utility Bill series.)

A customer’s rate plan will determine what is displayed in the different sections of their bill. It also impacts how much a customer pays; depending on their energy consumption patterns, customers may pay more or less for the same amount of energy under different plans.

#### Utility Bill Sections

An electricity bill is broken down into several different sections, each of which provides important information. While the names and contents of each section often differ depending on the utility, we explain some of the most common sections below:

##### Account Summary

The Account Summary generally appears on the front and center of the bill. This section provides an overview of the account status, including the previous account balance, any payments made on the previous balance, and the new amount owed for the current billing period. If the customer gets electricity and gas from the same utility, the Account Summary will include charges for both of these services.

Sample account summary from PPL Electric.

##### Bill Details

This section shows the number of kWh the customer consumed during the billing period and the rate they pay per kWh. What is shown in this section and how it is formatted will change depending on the utility and rate plan.

##### Electricity Charges Breakdown

The per-kWh rate shown in the “Bill Details” section is made up of many smaller charges. In addition to covering the cost of the energy consumed, some of these charges are used to maintain and upgrade the electric grid and to fund other state-sponsored energy initiatives. The names and amounts of these electricity charges vary by utility, but generally include a generation, transmission, and distribution charge.

• Generation Charge: This charge supports the cost of producing the electricity used.
• Transmission Charge: This charge supports the cost of transmitting electricity from power plants, over high-voltage lines and towers, to the distribution system.
• Distribution Charge: This charge supports the cost of the lower-voltage system of power lines, poles, substations, and transformers that connects to homes and businesses.

Sample energy charges from PECO Energy Company (fixed rate plan).

If you are interested in your utility’s additional electricity charges, visit their website for further information.

##### Usage Profile

Many utilities provide a monthly usage profile, showing a customer’s total consumption each month over the past year. This gives a good visual representation of how much energy they consume throughout the year and sometimes even compares the current year’s consumption to that of years past.

Sample usage profile from PECO Energy Company.

#### How Electricity Bills Change with Solar

When a homeowner or business in the U.S. installs solar panels, they will typically become a net metering customer. Net metering is a policy used throughout most of the country that credits solar customers for excess energy produced by their solar panels. This changes the way these customers’ bills are calculated. After installing solar, a customer’s bill may include some of the following terms:

• Minimum Delivery Charge: This is a charge that some utilities require solar customers to pay to support the cost of maintaining and upgrading the grid. This charge ensures that enough funds are available to maintain the grid in the case that solar customers produce enough energy to pay nothing for electricity.

• Net Usage: This represents the total electricity consumption minus the total amount of electricity sent back to the grid by the solar installation. Net usage may be represented differently for customers on a time of use (TOU) rate plan. This is because the utility separates the day into “peak” and “off peak” hours, and charges different rates for energy used during each time period. In this case, net usage may be split into “Net Peak Usage” and “Net Off-Peak Usage.”

Additionally, the timing of bills may change after installing solar, depending on the utility. Some utilities bill solar customers every month, while others bill on an annual basis. This annual statement is sometimes referred to as a “true-up,” and reconciles the customer’s energy production and consumption in a single statement at the end of a 12-month period.

If you’re new to the solar industry, getting to know the nuances of electricity bills can be a helpful starting point for understanding other aspects of the solar design and sales process—like how to size a solar PV system (which we delve into in the next article in this series). As a utility customer, understanding your electricity bill is an easy way to identify potential savings and can help determine whether installing solar makes sense for you.

### About Solar PV Education 101

Reading Your Electricity Bill: A Beginner’s Guide is part of Solar PV Education 101, a six-article series that serves as an introductory primer to the fundamentals of solar PV for beginners.

Topics: Solar PV Education 101

## Sizing a PV System from an Electricity Bill

An electricity bill typically reveals information about a residential or commercial customer’s total monthly energy consumption (as we discussed in the previous article in this series, Reading Your Electricity Bill: A Beginner’s Guide). From this value alone, it is possible to approximate the required size of a PV system that offsets monthly energy usage.

Take a hypothetical monthly energy consumption of 500 kilowatt-hours, which is on the lower end for a household in California. Assuming there are 30 days in a month, an average daily energy use value can be reached by dividing the monthly use by 30.

$$\text{Daily Energy Use} = \frac{\text{Monthly Energy Use}}{\text{Days in Month}} = \frac{500 \mathrm{kWh/mo}}{30 \mathrm{days/mo}} = 16.7 kWh/day$$

Next, insolation values are needed. As mentioned in The Beginner’s Guide to Solar Energy, insolation values are reported in kWh/m2-day. Since a “full-sun’s” worth of incoming solar energy is approximated as 1 kW/m2, insolation values reported in kWh/m2-day approximate the hours of full-sun equivalent that a location receives over the course of a day.

Figure1. Visualization of how total solar insolation received over the course of a day (left) can be represented by number of full-sun hours (right). Source: pveducation.org

For a Palo Alto home, the average daily irradiance value is 5.2 kWh/m2-day. By dividing the daily energy usage by hours a day of full sun, the power output required by the PV system is calculated.

$$\text{Power Output} = \frac{\text{Daily Energy Use}}{\text{Daily hours of full sun}} = \frac{16.7 \mathrm{kWh/day}}{5.2 \mathrm{hours/day}} = 3.21 \mathrm{kW}$$

Figure 2. The Palo Alto home used for this PV system sizing exercise. Source: Aurora Solar

This would be the size of the PV system required, if our system was 100% efficient. However, that is not the case because all PV systems have a corresponding derating factor that takes into account the inefficiencies of the overall system, such as soiling of the panels and imperfect electrical connections.

According to the National Renewable Energy Laboratory’s PVWatts calculator, a typical derate factor is 0.84. For the sake of this calculation, we assume the derate factor be 80%, or 0.8. In order to determine the size of the PV system, divide the required power output by the derate factor.

$$\text{PV System Size} = \frac{\text{Power Output}}{\text{Derate Factor}} = \frac{3.21 \mathrm{kW}}{0.8} = 4.01\mathrm{kW}$$

From this analysis, the approximate size of a PV system required to completely offset the average monthly energy usage of a 500 kWh/month home in Palo Alto would be about 4 kW.

## Comparing the PV Size Estimation to a Simulated Result

Since this is a rough estimate, how does it compare against an actual, comprehensive design for a home with the same characteristics?

Using the same conditions as above, a PV system design software found that the required system size to be 4 kW, which is almost identical to the answer from the estimation conducted above.

Although the answers are very close, it’s important to note that this may not always be the case. For instance, when there is shading on the panels, a significant reduction in power output can occur. Although a shading term is included when calculating a derate factor, it can fail to accurately capture the effect that shading has on a PV system’s power output. Therefore, expect the results to be less close when modeling a location with shading.

### About Solar PV Education 101

How to Size a PV System from an Electricity Bill is part of Solar PV Education 101, a six-article series that serves as an introductory primer on the fundamentals of solar PV for beginners.

## Effects of Shade on PV Output

Since PV systems generate electricity based on the amount of sunlight they receive, it makes sense that when a shadow is cast on a panel, for example by a nearby tree, its power output decreases. However, the decrease in power could be a lot worse than it initially seems.

Figure 1. Solar panels in partial shade. Source: lowcarbonlivingblog.wordpress.com

Intuition suggests that power output of the panel will be reduced proportionally to the area that is shaded. However, this is not the case. In his book Renewable Energy and Efficient Electric Power Systems Stanford University’s Gil Masters demonstrates how shading just one out of 36 cells in a small solar module can reduce power output by over 75%.

## Waterflow Analogy

To conceptualize why shading results in such severe losses, it is helpful to use the analogy of water flowing in pipes. The flow rate of water through the pipe is constant, much like the current through a cell string is constant for a given irradiance level.

Figure 2. Analogy of a water pipe to a string of solar cells.

Shading a solar cell is similar to introducing a clog in a pipe of water. The clog in the pipe restricts the flow of water through the entire pipe. Similarly, when a solar cell is shaded, the current through the entire string is reduced.

This is significant because every cell in the cell string has to operate at the current set by the shaded cell. This prevents the unshaded cells from operating at maximum power. Therefore, only a small amount of shading can have a dramatic effect on the power output of a solar panel.

Similar principles apply to PV modules connected together. The current flowing through an entire string of modules can be heavily reduced if even just a single module is shaded, leading to potentially significant loss of power output.

## Approaches to Reduce Shading Losses

Fortunately, there are a number of different approaches that can be applied in PV system design to reduce shading losses. These include the use of different stringing arrangements, bypass diodes, and module level power electronics (MLPEs).

### Stringing Arrangements

Modules connected in series form strings, and strings can be connected in parallel to an inverter. The current through all the modules of a string has to be the same, and the voltage of parallel strings has to be the same. As we saw in the last section, a shaded module in a string can bring down the power output of the string significantly. However, a shaded module in one string does not reduce the power output of a parallel string. Therefore, by grouping shaded modules into separate strings, the overall power output of the array can be maximized.

For example, in a commercial system with parapet walls, it can be beneficial to group modules that receive shade from the parapets into strings, and keep modules that do not receive shade from the parapets in separate, parallel strings. This way the unshaded strings can maintain a higher current and power output.

Figure 4. PV arrays with modules connected in series (left) and in parallel (right).

### Bypass Diodes

Bypass diodes are devices within a module that allow the current to “skip over” shaded regions of the module. By utilizing bypass diodes, the higher current of the unshaded cell strings can flow around the shaded cell string. However, this comes at the expense of losing the output of the cells that are skipped over.
Although it would be theoretically ideal to have a bypass diode for each solar cell, for cost reasons a typical solar module will have three bypass diodes, effectively grouping the cells into three series cell strings (Figure 5). For instance, a 60-cell module will typically have one bypass diode for every 20 cells.

Figure 5. PV module containing three cell strings in series, each with a parallel bypass diode.

### Module Level Power Electronics (MLPEs)

MLPEs are devices that are attached to individual modules in order to increase performance under shaded conditions (though there are other benefits, such as mismatch mitigation and module-level monitoring). This is done by performing maximum power point tracking at the module level. MLPEs include DC optimizers and microinverters.

DC Optimizers:

A DC optimizer adjusts its output voltage and current to maintain maximum power without compromising the performance of other modules.

For instance, when a shaded module produces electricity with a lower current, the DC optimizer will boost the current at its output to match the current flowing through the unshaded modules; to compensate, the optimizer reduces its output voltage by the same amount it boosts the current. This allows the shaded module to produce the same amount of electrical power without impeding the output of other modules. A system utilizing DC optimizers still needs an inverter to convert electricity from DC to AC.

Microinverters:

As opposed to having a single inverter servicing all of the panels, each panel can have a small inverter attached to it to convert its output from direct current (DC) to alternating current (AC). Since each microinverter has an MPPT, and their outputs are connected in parallel, each panel will operate at its maximum power point, without impacting other panels.

Figure 6. Simplified schematic of a PV system utilizing microinverters (top) and a PV system utilizing DC optimizers (bottom).

## Effects of MLPEs on PV System Performance

Using Aurora’s simulation engine, we compared the performance of three different PV systems subject to significant shading. As shown in Figure 7, we placed a 3.12 kW system near the edge of a roof, which has tall trees next to it. Note that while this design effectively showcases the performance difference of these system topologies in shaded conditions, it is not an optimal—or even a practical — design. Our findings are summarized in Table 1.

Figure 7. The system analyzed for this case study featured a 3.12 kW system that is partially shaded by trees.

Table 1. Results from performance simulations of PV system on a Palo Alto home utilizing different MLPE components. The difference between the two MLPE outputs is attributed to the differences in their inverters' efficiencies. Source: Aurora Solar.

System Topology Annual Yield Improvement with MLPEs
String Inverter 2,585 kWh/year N/A
Microinverters 3,033 kWh/year +17.3%
DC Optimizers 3,035 kWh/year +17.3%

Our results show that using MLPEs under these conditions increases system output by 17.3% annually, showing the benefit of using these components for shade mitigation. Additionally, the effective yield of a system using a microinverter or a DC optimizer is approximately the same, although there could be small differences (on the order of 1%) in some cases due to differences in efficiency curves.

For the same reason that they can mitigate shade losses by decoupling module output, MLPEs can eliminate module-to-module mismatch losses. These losses are typically caused by manufacturing variations that lead to slight differences in the electrical characteristics of two modules of the same type. Since MLPEs allow the modules to operate independently from one another, these variations will not impact the system’s overall performance.

### About Solar PV Education 101

Article 5: Shade Losses for PV Systems, and Techniques to Mitigate Them is part of Solar PV Education 101, a six-article series that serves as an introductory primer on the fundamentals of solar PV for beginners.

## Costs Associated with a PV System

In order to determine financial returns, it is important to have a solid understanding of the basic economics that dictate PV system costs. There are two general categories of PV systems costs: capital costs and operation and management (O&M) costs.

### Capital Costs

Capital costs refer to the fixed, one-time costs of designing and installing the system. Capital costs are categorized into hard costs and soft costs.

Hard costs are the costs of the equipment, including modules, inverters, and BOS components, as well as installation-related labor.

Soft costs include intangible costs such as permitting, taxes, customer acquisition costs, etc.

Figure 1. Cost breakdown of PV systems. Source: B. Fiedman, et al, "Benchmarking Non-hardware BoS Costs for US PV Systems, Using a Bottoms-Up Approach and Installer Survey," National Renewable Energy Laboratory, Second Edition, December 2013.

Figure 1 illustrates the relationship between soft and hard costs, and breaks down hard costs into its components. According to SEIA, while hard costs have come down dramatically over the last decade, soft costs have remained largely constant.

### Operation and Management Costs

O&M costs refer to costs that are associated with running and maintaining the system. These can include fuel, repairs, and operation personnel. PV systems generally have low O&M costs.

## Incentives and Policies that Benefit Solar Energy

The high capital costs are one of the biggest factors that discourage people from going solar. To combat this, there are a number of incentives and policies in place to make PV systems financially competitive.

### Cost-Based Incentives

Cost based incentives, such as the Solar Investment Tax Credit (ITC), allow those who invest in a solar system to apply a tax credit towards their income tax. The incentive is determined by the cost of the system, and is independent of its performance.

### Performance-Based Incentives

Performance based incentives (PBIs) encourage PV system owners to install and maintain efficient systems through payments that are based on the monthly energy production of the system.

### Net Energy Metering

In addition to incentives, many states, such as California, implement a net energy metering (NEM) policy that allows consumers who generate excess electricity to be reimbursed at the then-prevailing rate of electricity. For instance, if a residential PV system produces an excess of 100 kWh over the course of the month, the owner will be reimbursed for 100 kWh at the market rate of electricity for that time period. The owner is then free to use that reimbursement credit towards electricity they consume from the grid when solar is not meeting their current energy load. Therefore, households with solar PV and NEM are able to significantly reduce their electricity bill.

Figure 2. Visualized relationship between PV energy production and household electricity use for an average home in New South Wales, Australia. Source: solarchoice.net.au

Figure 2 shows the relationship between PV electricity production and electricity consumption during the day. Note that while the PV system can generate more than enough electricity during the daytime, it can fail to deliver electricity during peak consumption hours.

## Basic Financial Calculation for a Residential PV System

In return for a large upfront investment in a solar installation, homeowners that go solar benefit from a reduced monthly electricity bill. Thus, for NEM regimes the benefit of solar comes in the form of avoided costs.

For instance, assume that upon installing a rooftop PV system, a home electricity bill is reduced by $1,500 per year and the cost of the hypothetical PV system is$10,000 after incentives. In order to calculate the simple payback period, which is the approximate time for a PV system to pay for itself, we divide the cost of the PV system by the savings.

$$\text{Simple Payback Period} = \frac{\text{System Cost}}{\text{Annual Savings}} = \frac{10,000}{1,500\mathrm{/year}} = 6.7\mathrm{years}$$

Thus, the payback period for a system that costs $10,000 and reduces the electricity bill by$1,500 per year is 6.7 years.

However, a PV system can last much longer than the duration of its payback period. A typical rooftop PV system has a lifetime of about 25 years. This means that for the last 18 years of its life, after it has paid itself off, the hypothetical PV system described above will generate revenue in the form of additional savings. To calculate this revenue, we multiply the annual savings by the remaining lifetime of the system, after it has paid itself off.

$$\text{Net Revenue} = \text{Annual Savings} \times \text{Years left in lifetime after system is paid of}$$ $$\text{Net Revenue} = 1,500\mathrm{/year} \times 18.3\mathrm{year} = 27,450$$

Based on this simple analysis, the system will generate approximately $27,450 in savings over its lifetime. It is important to note that this is an approximation, and does not take into account factors such as maintenance costs, changes in electricity price and usage, as well as system degradation over time. The figure below shows another financial analysis for a hypothetical residential PV system. In both graphs, the y-axis is the dollar amount and the x-axis is the year. Figure 3. The cumulative (top) and annual (bottom) cash flows of a hypothetical PV system. Source: Aurora Solar The top graph, which shows the cumulative cash flow of the project over time, and indicates that the project has a payback period of approximately four years. Additionally, the dollar amount in the 25th year, which is about$25,000, is the cumulative net revenue that the system generated. The bottom graph is the annual cash flow of the project. The first year is characterized by a large negative cash flow, due to the large upfront cost required to install the system, but after that there is positive annual cash flow with the exception to this is in the 14th year, which is when the inverters are being replaced.

### About Solar PV Education 101

The Basic Principles that Guide PV System Costs is part of Solar PV Education 101, a six-article series that serves as an introductory primer on the fundamentals of solar PV for beginners.