It’s Saturday, and I am at work testing a new solar powered vaccine refrigerator that uses ice packs rather than batteries to store energy and maintain cold temperatures. This is a key component of the distribution chain for vaccines and part of a global effort to eradicate polio and other preventable diseases. Solar energy is my passion, field of study, and occupation. For me it started when I was 13 and the US experienced the Arab oil embargo and subsequent long lines at the gas station. Only later did I realize that the long lines were caused by misguided government price controls.
Today, our government is likewise engaging in misguided policies to address similar energy concerns, policies that mandate inappropriate solutions, such as grid-tied solar panels, which fail to address our energy security or environmental concerns. These mandates will ultimately stifle creativity and generate false solutions to our energy dilemma.
Solar Photovoltaic (PV) electric panels are far too expensive to provide a sustainable energy alternative to homes and businesses already connected to the electric utility grid. The solar industry and solar jobs are artificial and only exist because of large government subsidies. The industry is similar in many ways to the housing market bubble created by easy mortgages. When the subsidies end, the solar bubble will burst and most of the jobs and industry will vanish overnight. This is because the underlying economics of Solar PV are not viable.
In sunny Arizona, the true cost of a typical 1000 Watt solar system is approximately $5,000. This 1000 Watt system will produce 1650 kWh/y and save our state about $65 per year in fossil fuel. This 77-year payback exceeds the life of the equipment and ignores the maintenance and eventual disposal cost of the hardware. Despite idealistic claims that solar PV can allow Arizona to avoid construction of new power plants, it will not. Solar is not consistent enough to meet the utility’s reliability requirements for dispatchable generation. In addition to intermittency, the peak output of solar panels is at noon, but the peak electrical demand is in the late afternoon. The bottom line is that solar cannot be counted on when power is needed most. So no significant reduction in generation or transmission infrastructure is possible by adding solar panels to the power grid.
For PV to be economically feasible, the “installed” cost would need to be equal to or less than $1/watt. This is the holy grail of the industry and consistent with the statements of Dr. Chu, the Secretary of Energy. Very large-scale PV systems are reaching $4/watt today, which is admirable, but still four times too expensive to be a credible solution.
Can we get to $1/watt any time soon? At present, solar panels are about half of the total system cost. The remaining cost is mounting hardware for the panels, the inverter to make AC power, wiring, labor, and permitting.
Therefore, even if it were possible to manufacture panels free, the balance of system cost is still about $2 per Watt and the industry would continue to be non-sustainable without substantial subsidy.
So why do we continue to subsidize solar power? There are many reasons, but mostly because of myths propagated by the solar industry and some naive public officials. Perhaps the most egregious myth is the claim we are helping our economy and creating jobs. This is false. Money for the solar subsidies comes from taxpayers and ratepayers. As this money is taken from us, spending for other goods and services must fall. This causes economic and job losses in other segments of the economy, such as in restaurants, stores, and service and manufacturing companies.
There is no free lunch, but it is easy to be fooled into thinking we are creating jobs. This is because the newly created solar jobs can be seen and counted. But the job losses in other segments of the economy are diffuse and difficult to see unless one knows to look for them.
Many politicians take credit for the solar jobs, but never mention the job losses caused by reduced spending in the balance of the economy. Even worse, the new solar jobs are not as productive as the jobs that were lost, because of the poor economics of solar. This is one reason why total unemployment remains high even with all the new solar jobs.
Another fallacy is that solar power provides energy security against interruptions in oil supplies. But using solar does not reduce oil imports because we do not make electricity with oil. We make electricity with coal, nuclear, natural gas, and hydro, all domestic energy supplies with more than 200 years of known reserves.
But the most ironic fallacy is the idea that solar is an effective means to help the environment by reducing CO2. Conservation and other technologies reduce CO2 for a cost of $20/ton. But saving CO2 with solar costs at least 150/ton. The writing of one respected economist strongly suggests that subsidies to renewable energy, on net, actually generate more CO2 than they save.
One day solar PV might be economical, and if that happens, we will still have great sunshine in Arizona and a competitive advantage. The market will come to us. But if we insist on subsidies to the industry on the hope it will drive the price of solar to $1/W, let’s at least ship the panels to developing countries where they are needed and would make a difference in the lives of millions. To install them here on our homes does nothing except makes us feel good and drains our economy of productive jobs.
So what is the future of solar in Arizona? The APS and SRP cut-backs were necessary because they burned through the annual budget for solar credits ahead of schedule. The budget will be renewed and spending for solar will continue. The real question is should it? If we are sincerely concerned about energy security, our economy, and the environment, the answer is no.