Solar power still won’t pay back

Tag : Vector Power Inverter
My buddy Frank Fowler just gave me the actual numbers for his solarinstallation in Grass Valley. The great news is that Frank has somuch solar power he is completely electricity independent. All hehas to pay PG&E is a 4 dollar-a-month connection fee and thatis really priceless since it is what allows him to feed power intothe grid during the summer days and take it out over the winternights. Frank notes:
I think being tied to the grid makes good sense. For a very smallservice charge every month I have full backup and peak loadservice. I also don't have to pay for expensive batteries, whichhave a limited life. The downside is that when PG&E goes down,so do I. I can't operate independently even if I want to. Thisrarely happens and I have a 10KW generator if I need it.
Franks says that on very good (cloud-free) summer days starting inApril he makes about 60 kwh a day. Last year he generated 2400 kwhmore than he needed. PG&E does not let you roll that energy tothe next year, you lose it at the yearly anniversary date of theinstallation going on-grid. Frank uses 54 Mitsubishi panels of 170watts each. Note that means his nominal 9180-watt set of panelsaverage 2500 watts a day. The factor of 3.6 makes sense what withnighttime and angular losses. He has two SMA “sunnyboy” inverters, a 6000-watt and a 3800-watt unit.
I mentioned to Frank that solar installations pose a significantsafety hazard for PG&E workers. If the grid goes down and theyare working on the lines, a solar power installation can back-feedthe grid and maybe electrocute a linesman. Frank pointed out thatthe inverters would drop out when the grid goes down, and there isa lock-out/tag-out switch on the outside wall so a linesman canmechanically disconnect the unit.
Whoopee, energy independence, just like this article promises . But what about the cost? Frank said that he spent 40 grand in theinstall and he did the work himself. If he had to have it installedthe cost would be about 50 grand. He says that includes the rebatesand credits and such, but warned me that all those are movingtargets and may change from time to time and place to place. Nowaccording to Frank the payback will be about 8 years. That would beOK but I have to question those numbers. Not that Frank is a liar,but he was a VP of marketing before retiring to Grass Valley sofactor that in the equation. See, if the payback for $40k is 8years that means $5 grand a year. That is 417 dollars a month. Ihave a hard time believing Frank is using that much energy upthere. Especially that, just like people who buy small cars, Frankis being extra careful about minimizing his energy use. He writes:
It's ironic that once a system like this is installed, you becomehyper energy conscious. I've replaced every available light withCFLs and just simple conservation efforts have cut consumption waydown.
So lets look at it another way—say the install costs 50grand. If you put that in an 8% stock market account, and themarket does average about 8%, you would get 4000 dollars a year.That is 333 dollars a month. So if your electric bill is less than333 dollars the install does really not pay off, ever. Rememberthat after 20 years you will still have the 50 grand as opposed toa worn-out and broken solar power installation. And that brings upanother consideration. When you put a solar install on your roofyou are now the caretaker for a complex industrial installation.There will be maintenance and repair issues. I have two friendsthat just formed a startup to make inverters since their researchshows that inverters blow up every 5 years since the electrolyticcaps in them wear out due the necessarily high ripple currents thecaps experience. You have to keep the panels clean, you have to fixany damage and you have to fix any leaks in the roof caused by theinstall. I once thought it would be a good idea to host my own mailserver, but an IT buddy convinced me that paying AT&T or someweb host to do it is a really good deal. Manufacturingcentralization always seem to engender fear in some people but itis what allows economies of scale and that is a good thing. Thislove of distributed solar and wind power reminds me of Chairman Mao’s 5-year plans that called for little steelmills in everyone’s back yard. Very uplifting and good forcharacter development, but all the steel they made was dangerousjunk. Americans have consistently foregone character developmentfor methamphetamines and tractor-pulls, so who has the time tomaintain a kilowatt-class power station?
Now we get to that slipperiest of slopes—rebates and taxincentives. I saw Rick Wagoner , the chairman of GM on the Commonwealth Club last week . He was talking about electric vehicles. Any respect for himevaporated as soon as I realized that the central thing he wantedwas government money and incentives for GM and the batterycompanies and everybody else. I wonder if Rick thinks we shouldoffset that handout with handouts to the oil industry to improvetheir ability to extract oil from shale and other projects? Thenagain we can just uses taxes for defense, courts and welfare andlet the economy determine what things cost. Not doing that is whatcollapsed the Soviet Union, after all. My buddy Frank also pinesfor free handouts, but being a really decent guy who really doescare about the planet, he does not want them for himself, he wantsthe handouts so everyone can have a bright shiny $50k solar poweredinstallation on their roof that they got their neighbors to payfor— hey wait a minute, if we tax everybody to pay everybody,that does not make any sense —oh I know we will just tax thepeons and lesser people so you and I can have solar powerinstallation on the roof. As I have tried to explain over and over,it is the true cost of something that indicates whether it is goodfor the planet. Stealing a billion dollars from taxpayers to save amillion dollars in electricity is hardly good social policy.
Now once again, do I think it is bad or immoral to pay for a bigunwieldy solar installation when you could have a few thousandshares of stock? Not really. It is all about freedom. I sure thinkthat having a solar installation is a far better way to spend yourmoney than crack cocaine and over-priced clothes. But bear in mindthat is a choice, not a moral law. Some people prefer the crack andthe clothes because that is their value system and their statusregime. Other people like to show off with solar power and electriccars. I like Harley Sportsters and electric guitars. But as long asnone of these choices make economic sense you have to understand itis not about saving the planet, it is about identifying yourselfwith a group. I have respect for all these groups. Heaven knows itis more fun to hang around the crack users than constantly behectored by the greenies on what a bad person I am just because Iuse oil without shame or guilt. But while the crack cocaine crowdis fun, we all admit that they are also unsustainable and that isthe allure of the green crowd. They really are trying to thinklong-term and do what is best for the planet. That is great andreally a noble aspiration. I just hope that these caring, thinkingpeople realize that as long as it costs less to buy power fromPG&E, that is the best thing for the planet. It is a bigmistake to think that we are doing good by having the governmenttake money from all of us and then pick some winner beforehand, andthat just “priming the pump” with a few billion dollarswill make solar power or electric cars economically feasible intotal cost. I am amused that the same people that ridicule RonaldReagan’s trickle-down economics suddenly think it makes sensewhen the trickling is all over their pet projects. I do think thatthere is a place for solar and electric cars and that they willcome into use in the next twenty years, but do not think that ithelps the planet by paying more for less right now. And yes thereare significant distortions— I think we need much stricteremissions on coal so we stop poisoning ducks with methyl mercuryand we should also scrub the sulfur out to prevent acid rain. Butthat will not double the cost of electricity. When electricity costis on par with solar costs, before any rebates and incentives, wellthen it will make sense to use solar, but only until then.
So do I think Frank is dumb for dropping 50 grand on something thatwill never pay back? Far from it, Frank was in marketing so he isfar from dumb. And it is his marketing savvy that provides him withthe justification for the solar installation. Like I said, itidentifies him and his family with a group and Frank hopes thatgroup will attract better spouses for his progeny. That is simpleevolution. Back in Darwin’s time it was thought evolution wasdriven by genetic mutation. Turns out that sexual selection, thefact that we can choose our mates, is an even greater evolutionaryvector. Why else would all higher species separate into male andfemale? So while I am right that the dollar payback does not makesense, the social payback for Frank’s installation isgigantic. He is the cool guy, a leader among his peers, hiskid’s wives think they are in a cool family and don’twalk out and the grandkids will be able to attract better spouses.This is what justifies all cool things like a person using aCadillac Escalade to commute to work all by himself. We can alldecry status and ridicule other’s choices, but they aredriven by social and psychological factors every bit as strong asthe desire for self-preservation. That is why Frank is way smarterthan I. He is attracting and keeping good blood in his brood whileI am just doing the engineer’s dollars-and-cents analysis. Iwish people in general (and those willowy blond socialist girlsfrom the 60’s) appreciated my value system more, but Frank isthe clear the winner, what with his large family spreading hisgenetic code over the planet while my sorry, childless ass issitting is Sunnyvale worried about the economy. Marketing triumphsengineering once again.
So if you want to show status by buying electric cars and solarpower that is great, only be aware that you are costing the planetno less than the Escalade driver or the guy wearing gold chains.Just remember both over-gold and over-green are bad for you.