Monday, April 23, 2007

Solar Photovoltaics for Suckers

I'm on record that Solar Photovoltaics are far down on the list of viable energy alternatives. An article I just read on Yahoo Personal Finance (Bankrate) makes the point, while ironically implying that there is excitement about a big breakthrough in the product.

The article states that a 1 KW photovoltaic system costs about $14,000, and that it can be expected to reduce utility cost by about $200/year. This implies a return on investment of less than 1.5%. The article goes on to state that there is no operating cost, ignoring maintenance, which typically is rolled into economic calculations at rates between 2-7% of capital expended. In that case, return on investment for the photovoltaic system would be negative. It also tries to capitalize on the common misperception that "energy prices are going nowhere by up". See my previous posts to understand why this is not true.

Every time I make a case like this, someone responds that it is not a matter of economics, it is a case of saving the environment, and maybe the planet. Or, that it is a matter of independence from the oil barons. Ultimately, though, it is just the opposite. The same benefits can be had, much more effectively, by adding insulation, or by upgrading the efficiency of appliances, HVAC or lighting, or by driving a more efficient car. And, every dollar which goes into a less effective solution is a dollar less for solutions which have a greater effect.

But, let's say you are determined to produce energy, rather than just conserve, and want to reduce dependence on the middle east in the process. Attractive alternatives are ubiquitous. Coal, nuclear, oil sands are all attractive investments at today's prices.

What about carbon dioxide and nuclear waste? Solar heat and wind power make good investments. Coincidently, I also read an article today quoting a source of residential scale wind units. The price was about $2-3000 per KW, resulting in a 6-8% return. In other words, the same investment there would reduce carbon dioxide and dependence on oil barons by approximately 5 times the amount of the photovolaic investment. And the good investment would mean you have much more to invest, or maybe even to enjoy the better world you have helped make possible.

I'm an advocate of improving the world, but wasting resources in the process is counter productive. And photovoltaics still fall into that category.

7 comments:

Wesley Matthews said...

Wasting resources is wasting resources whether it is a light that is left on or purchasing inefficient technologies. It is still waste!

We had a nice sunny day yesterday here in Southwest Central Rural Pennsylvania. It was amazing to see all the people cruising around in their convertibles or motorcycles for no apparent reason other than because they can!

Slight lifestyle changes are all that is really needed, but American's don't want to change their lifestyle.

You can read more at my blog:

Thinking at Doe Valley

Brad said...

I appreciate you opinion on this mater, however I have to say a lot of those numbers are cooked.

Solar panels take roughly 10 years to pay for themselves and good ones come with a 25 year warranty so why it is no instant gratification, to say it doesn't pay off is misinformation.

Now I like wind power as well but again, these numbers are cooked in reality a wind system that can power 50-90% of your house ranges in price between 6k - 22k still over time it can pay for itself.

Now if you live in the south west (US) get a solar system and if you live by the coast or lake get a wind system.

The best part is both of these systems WILL become cheaper as more R&D is done and more importantly as demand increases

www.gosunsolutions.com

max said...

Brad, the numbers came from an article which, as I mentioned, was promoting solar. I have read thousands of such articles over the years, and if they provide the details to evaluate, the result is always the same. The only exception is when the taxpayer is paying the majority of the cost. Even then, the economics are generally marginal. I've also obtained several quotes for building a system over the years, again finding solar photovoltaics uneconomic.

I went to your site, but I found few details I could evaluate in the articles, so I went to several sites selling solar cells today. In all cases, rates of return in the low single digits, on an optimistic basis.

In contrast, even the numbers you provide ($5-22K for 50-90% of typical house usage)for wind power paint a picture of an reasonably attractive investment. Interestingly, you don't provide the same numbers for solar. Yet, on your site I participated in a poll, which indicates the vast majority of people think solar is a better option than wind. (I was the only one who voted for wind.)I can only conclude that this is the product of sales jobs by both the media and solar companies who promote solar but include the damning details in fine print, if at all.

Brad said...

You make a great point. And I agree with most of it. I'm not trying to say everyone should go out a buy a PV system...I haven't. But to completely disregard solar is a mistake. There is a lot of VC money being dumped into solar right now, and in turn a ton of R&D and innovations. By 2010 economists predict that it will cost no more to build a solar plant than it will to build a coal plant.
My personal opinion on solar energy is that it's a very exciting industry, and all that is holding it back is price.

At the moment I agree that wind is the best system to have. both for the price and efficiency. But again long term I think solar is the way to go.

Solar John said...

Max,

I respect your opinion, but I would rather burn less fossil fuels in order to have cleaner air and water, and to save those resources for future generations.

I've installed solar panels, and I don't bother to calculate whether or not it makes financial sense. I feel good about this, and my other lifestyle choices, especially when I think about my grandchildren's future.

Sooner or later it will become socially inappropriate to waste energy. I hope my efforts inspire others to do the right thing, even before it becomes fashonable to do so.

John
http://solarjohn.blogspot.com

max said...

Brad/Solar John,

Thanks for the comments. Sounds like we are largely in agreement. I agree that wasting energy is inappropriate and that we need to begin a transition away from fossil fuels. The facts support these opinions, whether seen from the standpoint of economics, environment or common sense.

My point is that we need to understand how to do it most effectively. And again, this is true, whether you see it based on economics, environment or common sense.

And right now, solar voltaics are far down the list of viable alternatives. I don't know the specifics of your location, but I'd bet that the same investment(as for photovoltaics)in wind or conservation technology would have returned several times the savings, in terms of not only dollars, but pollution and dependence on hydrocarbons as well.

Solar John said...

Getting back to your original post....

Once you've added insulation, replaced inefficient appliances, bought a hybrid vehicle, then what? You start to run out of efficiency and conservation options, and you're still contributing to the problems related to burning fossil fuels.

By the way, I burn corn to supplement the heat from my natural gas furnace. My heating bills are lower, and I'm doing something positive for the environment at the same time.

I guess I could get a better cash return if I were to invest in the stock market instead, but what fun is that?

Maybe it's just me, but I like the feeling that I can survive comfortably if my utilities were shut off. I could adjust to the absense of gasoline if I had to as well, since I grow a lot of my own food. Given the current situation in the Middle East, those things are not far-fetched.

Solar Photovoltaics for Suckers? I think not.

John