Calculating energy and carbon savings for solar projects

Calculating energy savings from solar installations is relatively straightforward and accurate.

First, a contractor does a 360 degree scan of your installation area and calculates how much energy the sun will provide. This amount varies depending on several factors, including the direction the installation surface is facing, the amount of shade, the latitude and longitude of the installation site, and the altitude. 

After the contractor determines the kilowatt hours (kWh) the system is expected to produce, you can calculate the energy and carbon savings. These calculations depends on the electricity rate in your area, but you can estimate these savings by using the U.S. Energy Information Administration's database of average electricity rates nationwide.

In addition, many states offer incentives to install solar systems,  and these figures should be considered when calculating solar savings. You can find the incentives available in your state by using the DSIRE widget below:

Solar Renewable Energy Certificates (SRECs) are the most common form of incentives, and mandate utility companies purchase a certain amount of solar-produced energy at a regulated minimum rate. Your organization can sell the SRECs to utilities for the duration of its estimated opt-in term.

For example:  The minimum rate in Massachusetts is $0.30/kWh. This means utilities will pay you $0.30 for every kWh your installation produces. If a utility does not meet its quota, it must pay a penalty price of $0.55/kWh.

A shortage of available SRECs on the market cause utilities to negotiate higher-than-minimum prices to avoid penalty.  The fall 2011 SREC value was $0.515/kWh in Massachusetts.

To calculate the net rate per kilowatt hour for the opt-in term:

Use the minimum SREC rate plus the current electricity rate.

To calculate the net rate per kilowatt hour for the years between the end of the opt-in term and the end of the estimated lifetime of the solar installation (20 to 30 years):

Use the current electricity rate as the net rate per kilowatt hour.

To find the project lifetime energy savings:

Multiply the yearly kilowatt hour production rates -- provided by the contractor -- by the net rate per kilowatt hour calculated above.

To calculate the lifetime CO₂ emissions reduction:

 Multiply the lifetime kilowatt hours by the U.S. Energy Information Administration-provided national average of 1.31 lbs CO₂/kWh.

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*Disclaimer: There are several different methods for calculating energy and carbon savings. The above described is the method most often used by New Generation Energy to determine figures for its project pages. Disagree with our calculation methods? Let us know in the comments below!