What Is The Solar 120% Rule?

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What is the 120% Rule?

The 120% rule refers to a guideline for sizing residential solar panel systems. According to the 120% rule, your solar array should be sized to meet approximately 120% of your average annual electricity usage (1). This means if your home uses 10,000 kWh of electricity per year on average, your solar array should be sized to produce around 12,000 kWh per year.

The reason for sizing to 120% is to account for several factors that can reduce solar production compared to rated capacity. These include:

Panel degradation – Solar panels lose some efficiency over time.
Seasonal changes – Solar output is lower in winter months.
Orientation – Panels facing south produce more than those facing east/west.

Shading – Any shading blocks a disproportionate amount of energy.

By oversizing to 120% of usage, installers build in a buffer to account for these derating factors. This aims to ensure your solar system will continue meeting 100% of your electricity needs in the years after installation.

(1) https://blog.gogreensolar.com/120-percent-rule-derate-breaker-for-solar/

Why Size Solar Arrays at 120%

There are several reasons why solar installers recommend sizing arrays at 120% of your home’s electricity usage:

First, to account for seasonal changes in sunlight. Solar panels produce more energy in sunny summer months than cloudier winter months. Sizing at 120% ensures your system will meet your full electricity needs year-round, even in winter.¹

Second, solar panels work less efficiently at high temperatures. On hot summer days, solar panel efficiency drops slightly. Oversizing by 20% provides a buffer for this as well.²

Third, it allows room for increased future electricity usage. If you add electric appliances or vehicles in the future, a 120% system will be able to handle the increased demand.³

Calculating Your Electricity Usage

The first step in sizing your solar array is to calculate your home’s average monthly electricity usage. The easiest way is to check your monthly electricity bills over the past 12 months and average the kWh usage. If you don’t have a full year of bills available, you can estimate based on a few months by multiplying by 12 and dividing by the number of months you have data for.

According to Ohio State University Extension, once you have the total kWh used for the year, divide it by 12 to get the average monthly usage. This gives you a more accurate picture than just looking at a single month, since usage fluctuates by season.

For example, if your total usage for the year was 9,000 kWh, dividing by 12 months gives an average monthly usage of 750 kWh. Knowing this average monthly usage will allow you to properly size your solar array.

Sizing Your Solar Array

When sizing a solar array, most experts recommend using the 120% rule as a starting point. This involves taking your average electricity usage and multiplying it by 1.2 to account for future energy needs and system inefficiencies. For example, if your average usage is 1,000 kWh per month, you would multiply that by 1.2 to get 1,200 kWh.

However, you also need to factor in the specific sunlight hours and sun angles for your geographic region. Areas that receive more annual sunlight can use smaller solar arrays than less sunny locations. There are solar maps and tools online that provide average daily sunlight data by zip code and region (Greentech Renewables, 2021).

Additionally, the wattage and efficiency ratings of the solar panels you choose impact sizing. Panels vary in wattage from around 250-400 watts each. Higher efficiency panels will produce more kilowatt-hours (kWh) per square meter. Work with a qualified solar installer to determine the right number, wattage, and placement of solar panels for your needs.

The 120% rule provides a good baseline, but customizing array size for local conditions and efficient components ensures your system generates sufficient solar electricity.

Installation Factors

There are several important factors to consider when installing a solar array that can impact performance and electricity generation:

Orientation and tilt of the panels are critical. Solar panels should face true south in the northern hemisphere or true north in the southern hemisphere. The tilt angle of the panels should match the latitude to maximize exposure to the sun’s rays throughout the year. For fixed mounts, tilting panels at latitude plus 15 degrees helps optimize winter time output (Source).

Proper spacing between panels and accounting for potential obstacles like chimneys and trees is necessary to avoid shading. Panels should be spaced apart at a distance equal to twice the height of potential obstructions on the winter solstice when the sun is lowest in the sky. The layout must ensure no shading occurs year round (Source).

Careful planning of wiring runs, junction boxes, and the locations of inverters and other system components is needed. Following electrical codes, having tidy wire management, avoiding excessively long wiring distances, and proper system grounding helps maximize efficiency and safety (Source).

Expanding Your System Later

Many homeowners find that their electricity needs increase over time, or that their original solar array was undersized. Luckily, most solar panel systems can be expanded by adding more panels. Here are some key things to know about expanding an existing solar array:

When installing your original system, check if the inverters and other equipment are sized to handle additional capacity in the future. Many solar installers will plan ahead for expansion if you let them know upfront. For example, they may install inverters that can handle double your current needs, so more panels can easily be added later.

Adding more solar panels to an existing array does incur costs. You’ll need to pay for the additional panels, as well as any extra racking, wiring, and labor to integrate them. However, much of the infrastructure like the inverter and electrical hookups should already be in place. Expanding a system is often cheaper than installing a whole new array.

To calculate expansion costs, get quotes from solar installers. Expect to pay around $2-$3 per watt for additional solar panels and installation, though costs vary by system size, location and complexity. Any federal or state tax credits can also help offset the costs of expanding.

When adding more solar panels, choose panels that are the same brand and model as your existing array for optimal performance. Mixing and matching panel types is possible but not ideal. Also confirm your inverter has enough capacity to handle the increased solar production.

Variations to the 120% Rule

While 120% is the standard size recommendation, there are situations where a smaller or larger solar array may be optimal.

Homeowners who consume very little electricity may only need an array sized closer to 100% of their usage. Overproducing solar energy typically does not provide much financial benefit when net metering is utilized. Sizing the system closer to your actual needs can save money on upfront costs (Aurora Solar).

On the other hand, homes with electric vehicles, pools, hot tubs, or plans to add high-consumption appliances may benefit from sizing their system larger than 120%. This provides a buffer for increased future energy needs. Arrays up to 150% or more of average usage may be recommended in some cases (EnergySage).

Limitations on roof space or local regulations may also prevent installing a full 120% system. Homeowners can still benefit from solar with a smaller array size.

The 120% rule specifically applies to grid-tied solar arrays. Homes planning to disconnect from the grid and go completely off-grid will need an array large enough to fully power the home, which often exceeds 120% of previous utility usage (KumuKit).

Financial Incentives

There are several tax credits and solar incentives available that can significantly reduce the cost of installing a solar array. The most notable is the federal solar Investment Tax Credit (ITC). The ITC allows homeowners to deduct 26% of the cost of installing a solar array from their federal taxes for systems installed in 2023. This tax credit drops to 22% in 2024 and 0% for residential systems in 2025 and beyond [1]. Many states and utilities also offer additional rebates and incentives that further reduce the upfront cost.

These financial incentives can have a major impact on the payback period and return on investment of a solar array. The ITC alone can reduce the payback period of a solar system by 25-30%, from an average of 8-10 years without incentives down to 5-7 years with the ITC. When you combine state/local rebates, the payback period can be reduced even further to 3-5 years in many cases. This greatly improves the ROI on a solar investment and makes it much more financially attractive for homeowners.

Going Off-Grid

When installing a solar system completely off-grid, without any connection to the electrical grid, the 120% rule may not apply. Off-grid systems are designed to be entirely self-sufficient, with solar panels charging batteries to store electricity for use when the sun isn’t shining. Some key considerations for off-grid solar include:

Battery storage is essential for off-grid solar systems to provide power at night and on cloudy days. Batteries increase costs significantly compared to grid-tied systems. The size of the battery bank must be calculated to meet all electrical loads. Days of autonomy, depth of discharge, and other factors determine battery capacity needs. Lithium-ion batteries offer the best performance but have a higher upfront cost than lead-acid batteries [1].

Energy usage and production must be balanced in an off-grid solar system design. All loads need to be accounted for to properly size the solar array and batteries. Off-grid homes require more conservation and efficiency. Non-essential loads may need to be limited during extended bad weather when solar production is reduced. Generators or secondary energy sources are often used as backup.

Specific battery-based inverters and charge controllers are required for off-grid systems. Grid-tied inverters cannot be used. Off-grid equipment is designed to efficiently charge batteries, disconnect solar when batteries are full, and manage alternating between battery and solar power. Professional design and installation expertise is highly recommended for off-grid solar systems.

While grid-connected solar systems are usually sized based on the 120% rule target, off-grid systems are sized based on the specific energy demand and desired days of autonomy. The 120% rule doesn’t directly apply since there is no grid limitation on amperage from solar panels. Total solar and battery capacity must be calculated based on the site’s load analysis and desired level of self-sufficiency.

Key Takeaways

The 120% solar rule is an important guideline for properly sizing your solar array to meet your electricity needs now and into the future. Here are the key things to keep in mind:

Summary of the 120% solar rule: When sizing your solar array, add up your annual electricity usage and multiply it by 120%. This oversizes your system to account for future energy needs and non-ideal conditions that reduce energy production.

Importance of proper sizing for efficiency: Undersizing your system means you’ll still rely heavily on utility power. Oversizing can be inefficient and costly. The 120% rule aims to right-size your system for optimal solar production.

Allowing for future expansion: The 20% oversizing buffer allows you to expand energy needs over time without immediately needing a larger system. You can always expand your solar array later as your needs grow.