It is quite useful to pencil this out for a real solar PV system. I routinely do this for my clients both residential and commercial, for real solar proposals. When you do this, you will see how viable solar PV already is at today’s prices for retail small-system customers (the highest cost PV as volume customers would be lower).
Remember, solar PV is a distributed power source so it must only compete with retail electric rates (when there is net metering, common in many states today). It need not compete with the incompletel-cost busbar electricity cost (without any transmission & distribution costs added) at the power station.
The key to determining the viability for a retail customer is the Cash Flow Analysis. If the customer finances the system, which is likely, they have converted an up-front cost into a monthly payment, similar to their monthly savings on their electric bills.
For a sample 9.8 KW system in my location – Grand Junction, CO – the customer can expect net production of about 17,000 kWh/yr, from my own experience with an identical system. At a very conservative 11 cents/kWh retail electric rate, this saves $1,870 on their electric bills the first year. These savings will go up every year as electric rates rise, say at 8%/yr which is also pretty conservative given recent history.
If they finance the cost of say $5,000/kW, as I said a pretty high cost for today because this is for small customers, as part of a 30-yr refinanced home mortgage at 6.5% interest rate (also high today), the addition to their monthly mortgage payments is about $3,492/year. Initially, electric savings aren’t quite enough to make the extra mortgage payments, but with electric rate increases the cross-over occurs by Year 9, after which the project cash flows positive every year just on electric bill savings.
Yet we mustn’t forget the 30% Federal Tax Credit, which the customer gets in Year 1. Even with no utility help whatsoever, this is cash in their pocket of $14,700 in Year 1 – enough to make those mortgage payments for several years.
Pencil it out and you will see that the customer – even at today’s PV prices – is never out a single penny, and they have positive cash flow in their pocket, after making the loan payments, from Year 1 forward. (They can cut their Federal WH to make sure of this since they won’t owe the taxes.) This Positive Cash Flow never goes below $12,000 positive balance to their bank account in any year.
It’s even better for businesses – as they can depreciate the equipment over five years.
Progressive utilities like Xcel Energy are actively promoting solar PV because it has become a cheap way for them to meet daytime peak and intermediate loads, and the customers actually pay part of the costs of doing so.
Utilities who ignore these facts, however, do so at their peril as more customers are "walking away" daily as seen by the explosive growth of the solar PV market.
This is no academic or think tank study -- look into this yourself, and you will see that central utility shareholders should be concerned about their ability to continue to sell their product.