Solar Energy: Good Feel, Bad Deal

This week the Curmudgeon will focus on energy issues.

First off: solar power and why, for most homeowners at least, it is not going to be an economical way to reduce reliance on fossil fuels.

First, the good news: the Curmudgeon has gone solar! As we type this, the sunlight filtering through a thin layer of high clouds is powering our laptop and running the lights in our home office, among other things. Accordingly, this is now a green blog--no carbon was emitted (other than our breathing) in producing it.

Last week, just before the Thanksgiving break, we finished installation of 14 rooftop photovoltaic cells, which are now busily producing electricity in the waning sunlight of the coming winter.

Here's the details: each cell is rated at 190 watts, meaning that at peak efficiency (direct sunlight) it could produce 190 watts of electricity--basically enough to power three 60 watt lightbulbs. Since we have 14 cells, our system is rated at 2660 watts, or 2.660 kilowatts.

Sounds like a lot, but it really isn't. And the economics of the system aren't pretty!

Our system was installed by Don Sandros and his crew from Sand Energy (http://www.sandenergy.net/ ) out in Leesburg, Virginia, one of the few local companies specializing in alternative energy systems. Don's a good fellow--he's not overhyping solar. Indeed, he'd be the first to tell you that a residential solar electric system in the D.C. metropolitan area is not likely to pay off for a long time.

The first problem is that the cost of solar photovoltaic cells has remained stubbornly high due to increased demand, especially from Germany and Japan, which have highly subsidized programs to promote solar energy in homes and businesses. In the U.S., demand is also high in California, which has an agressive 10-year program to install solar power on a million homes. And China is starting to enter the market as well.

While supply is expanding, especially with new manufacturing plants in China, it can barely keep pace with demand, so prices are not falling. The solar panels installed on the Curmudgeon's roof are manufactured in the U.S. by a company called Evergreen, and they ain't cheap: they sell for roughly $1000 apiece. That means you're looking at something on the order of $5.25 per watt of installed power just to get started.

The total cost of our system, including the cells, mounting hardware, an inverter (needed to hook into the local power grid) and labor was approximately $24,000. (If you don't hook into the local grid, you'll need a battery system to store energy from sunny days for use on cloudy ones--the batteries cost more than an inverter. Most homeowners in urban areas opt for the simple approach of hooking into the local grid.)

Our net cost will be about $22,000 after we claim the $2000 federal tax credit for solar energy. Unfortunately, the federal credit maxes out at $2000 whether you intall a few hundred watts, or several thousand watts. And, if you live in Virginia, you don't get squat from the state. If you're lucky, you'll get a local property tax exemption on the new installation, but that's it. (It's pretty much the same in Maryland.)

Yes, you say, but what about those fantastic savings on electricity? Well, we certainly feel good about doing our part to reduce carbon emissions and eliminate a few barrels of imported oil from politically unstable regions of the world. But, truth be told, it's going to take a long time to pay off these solar panels.

The Curmudgeon's household uses approximately 16,000 kilowatt hours of electricity each year (which is not bad, considering our friend from Scarsdale, New York, who uses 35,000 kilowatts for her expansive home). (Tomorrow, we'll talk about what we're doing to conserve and decrease our overall consumption.)

Our new solar array will offset about 2700 of those kilowatt hours, meaning a 17% reduction. We get our electricity from Dominion Power, which is really quite cheap compared to what folks pay in other parts of the country. Our electric bill over the past year was about $1800, meaning we'll save about $300 a year IF prices for electricity stay the same.

Of course, electricity prices are likely to increase--indeed, Dominion is due for a big rate increase next year. Still, even if electric rates TRIPLED it would take more than 20 years for us to pay off our investment.

You can see from all this that while it feels good to install solar power in one's home, it's no economic bargain, certainly not in Virginia. Even if the price of installing solar comes down by half and the price of electricity doubles, the payoff to an average homeowner is still going to be well over a decade absent a significant government subsidy.

One way to make it more economic, however, would be to credit homeowners with solar arrays at a price that is closer to the utility's cost of producing peak power, especially in the summer when peak solar output corresponds to peak demand (due to air conditioning). While more complicated, such a system of credits is feasible and should be required as it more closely approximates the savings to the utility and other customers of not having to build more peak generating capacity.

With a Republican controlled state legislature in Virginia, however, we won't be holding our breath for such progressive legislation anytime soon.

Tomorrow, we'll talk about an easy way you can reduce your electricity consumption by almost as much as our solar system for only a few hundred dollars, resulting in immediate savings that will offset the cost in just a year.