Alternative Generation & Storage
Capacity, energy, and value stack
Distinguish kW (capacity) from kWh (energy) at every step. PV yield is expressed as kWh per kW per year (roughly 1,200–1,600 in most U.S. climates), which is capacity factor × 8,760. Apply a system derate (typically 0.75–0.85) for soiling, wiring, inverter, and temperature losses - never plan from STC nameplate alone. Module degradation runs about 0.5% per year.
Other options: wind (strongly site-dependent, high capacity factor variance), CHP/cogeneration (value depends on the spark spread and on actually using the thermal output), and storage. For batteries, know usable kWh (nameplate × depth of discharge), round-trip efficiency (about 85–90%, applied twice - charging and discharging), power versus energy ratings, and the value streams: demand-charge management, time-of-use arbitrage, resiliency, and demand response.
LCOE = total lifecycle cost (capital, O&M, fuel, replacement) ÷ lifecycle energy produced, discounted. Compare alternatives on LCOE or NPV, not on installed $/W.
Traps. Treating nameplate kW as annual kWh; ignoring the inverter derate; valuing PV energy at the full retail rate when net metering does not apply; forgetting battery round-trip losses on both directions; omitting O&M and inverter replacement from LCOE; and ignoring demand-charge savings, which often dominate the value stack.
Worked example
A 200 kW PV array at 1,450 kWh/kW-yr produces 290,000 kWh/yr. At $0.12/kWh that is $34,800/yr. Installed at $2.20/W = $440,000, simple payback is 440,000 ÷ 34,800 ≈ 12.6 years - before incentives, and before any demand-charge reduction that would shorten it considerably.