Monday, July 13, 2009


The New Energy Economy

Electricity in my state, Colorado, is pretty cheap for residential use, $.o941 per kilowatt hour. Back in 2004, the last time they did the study, the average electrical bill for Colorado families was $56.38 per month. It's certainly higher now. My average so far this year is about $85.00 per month. But for ease of calculation, let's assume that the house we want to outfit with a photovoltaic array uses $100.00 of electricity per month.

Colorado gets about 80% of its electricity from coal fired plants in and around the state. The amount generated from wind and solar is minimal, less than .07%. So, let's say our hypothetical, earnestly green, Warmie family using $1,200 worth of electricity each year wants to put a photovoltaic rig on the roof in order to save the planet from warm doom, does that make economic sense?

Well without any discounts, rebates or government subsidies, there is no way. The average price for an array which supplies the average house (during daylight hours) is between $35,000 and $76,000. Let's pick a less pricey model and pretend that it can generate enough electricity to generally equal the $100 per month of electricity we've assigned. Of course, our hypothetical family will have to buy electricity at night, early morning, late afternoon and when it's really cloudy or has snowed. But let's again presume that, plugged into the grid, our guys can sell the excess electricity generated back to the electric company. In the winter, they'll certainly be net buyers of electricity due to shortened days and in the summer they should be net sellers. Let's assume that the selling equals the buying and that they therefore have no electricity bills after installation of the array and thus save $1,200 a year. How long will it take them to pay off the investment (not counting borrowing costs, etc.)? If the system costs $36,000, it will take them 30 years to pay for it. Too bad the system will only last 20 years, 25 if they are lucky. So it makes no economic sense to install such a system; and that's why the amount of photovoltaic electricity in the Colorado grid is too small almost to be measured, much less have any real effect on base power calculations--that is, when the coal fired plants produce enough power so that when we flip the switch, the lights go on everywhere, everytime, they produce this amount of base power without considering the tiny bit of unreliable, intermittent power available through wind and solar radiation. So installing solar or wind power stations here and there doesn't diminish the amount of coal burned by the base power providers by a single lump. Not one lump, Warmies.

Ah, you say, but the array doesn't cost $36,000, you get rebates and subsidies. That's right. So the government takes money from successful people and gives it to losers who can't figure out it makes no economic sense to buy a photovoltaic array and it saves not a single gram of CO2 from being released into the atmosphere. But all that shifting of wealth, through taxation, does is reduce the cost to, say, $25,000 and increase the dollar value of the "sale" of sun generated power, if the utility will buy it. But that doesn't solve the problem.

There is a long list of things that the array will not power, like air conditioners or electric furnaces. So our hypothetical family won't get to $1,200 saving per year. Some of the components to a system, like the inverters, which change the DC photovoltaic power into usable AC power for the computer and refrigerator, only last 10 to 15 years and have to be replaced.

Even if there is a breakthrough and a system that generates, on average, $100 per month of Colorado power would last 25 years and only cost $18,000 installed, then it might make sense, with the subsidies and rebates, to those people who have that sort of money just lying around. If you have to finance the thing, it never pays for itself before you have to buy a new one; and it won't in the foreseeable future.

The next time you hear 'green' or 'new' energy from a Warmie or a politician, think 'pixie dust' instead. It's just as real.


So here we are just a few years later, and the climate has changed (pun intended). Solar electric (photovoltaic) pricing has plummeted, and electricity prices have increased. Despite losses of other incentives, there is now a strong economic argument for solar electricity's long-term investment. Utility companies themselves are investing in huge solar farms. Individuals in all states are seeing a viable investment. Even in places like Colorado and Florida where electricity is relatively cheap, there is still a strong argument for solar due to the excellent solar resource. So it's time to update the thinking... What a difference a few years makes!
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