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Shining a Light on Fuzzy Logic

Published on 13 Jan 2014  |   Written by    |   Be the first to comment!

A recent RenewablesBiz piece, “Why roof-top solar panels really don't make sense” makes a puzzling argument at best. The combination of fuzzy logic and conflating arguments on everything from roof angle to net-metering “magic” leaves all but the most uninformed solar observer baffled. Simply put, rooftop solar makes a ton of sense--when you look at the facts.

Consider this: in 2013, California installed more rooftop solar than in the previous 30 years combined.

And it’s not just the Golden State that understands the benefits of rooftop PV. From 2011 to 2013 alone, approximately 200,000 U.S. homes and businesses added brand new rooftop solar – an amount equal to approximate 3 gigawatts of power, or four to five conventionally-sized coal plants, according to Bloomberg.

Tell me again why rooftop solar “doesn’t make sense”…?

Let’s debunk a few more myths:

Myth #1: Solar is only for the wealthy.

A recent study from the independent nonpartisan Center for American Progress looked at three of the top solar states – California, New Jersey and Arizona – and found that at least 60% of all rooftop solar installations were occurring in middle class neighborhoods, with income levels between $40,000 and $90,000.
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How is this possible? Don’t rooftop solar systems cost tens of thousands of dollars? Not anymore – for the consumer at least. Take a look at SolarCity for example. A recent deal with finance giant Goldman Sachs opens up $500 million in solar power projects; an estimated 110 megawatts in generation capacity for rooftop solar. SolarCity notes, “As more investors have become familiar with the reliability and quality of solar as a technology and an asset class, it has become possible to expand the pool of available financing and offer options to a broader range of potential customers, including those with lower credit profiles.”

This is not your grandparents’ solar market. With advanced financing options, brand new systems can be obtained for no money down, relying solely on the intrinsic value of 20+ years of predictable power sales. Rooftop solar is quickly becoming power to the people.

Myth #2: The rooftop installation process is costly and ineffective.

This one is actually partially true, depending on your definition of “expensive.” But here’s the deal: it doesn’t have to be!
Part one of this answer requires a look at the trends of solar PV costs over the past couple decades. One popular chart shows how solar costs have dropped 99% since 1977, when a watt of solar PV would cost you approximately $76.67. Today, that same watt can be had for approximately $0.74. A second chart, (see below) overlays installation data with cost data:

haley2Also impressive is the fact that solar panel costs in the second quarter of 2013 were down by a whopping 60% over the first quarter of 2011, according to research by GTM. Looking at the facts, it’s pretty clear that solar has gotten a lot cheaper.

But let’s be fair on cost – it’s not perfect yet. Part two of this answer examines what are called “soft costs” – i.e. the cost of actually putting the hardware onto the roof and hooking it up to the grid.

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As you can see, putting solar on your roof does incur costs beyond simply purchasing the panels. But as the German data shows, there is tremendous improvement that can be made here in America. The Department of Energy is actually focusing on this specific issue in their Sun Shot initiative, a concentrated effort to drop the cost of rooftop solar to $.10 or less.

Nonetheles, all of this being said, citing installation costs and logistics a reason why rooftop solar installations “just don't make sense” is wild hyperbole. Customers can easily save money over the lifetime of their systems with the current costs, and bringing soft costs down will only accelerate customers’ ROI. 2014 will continue to be a big year for cheap solar and with advance financing, lower soft costs and cheaper panels, more and more homeowners will be able to save money with a rooftop system.

Myth #3: Net metering policies are “magic.”

Hardly! Net metering, or NEM for short, varies from state to state, but generally allows rooftop system owners to sell their power back to the grid at normal, retail prices – thus saving on monthly electric bills.

Some groups – particularly many traditional utilities – argue that customers with rooftop solar systems increase the costs for non-solar customers, by paying less money on their monthly bills. But this topic has been closely studied, and numerous report note that the impacts of NEM on non-participating ratepayers depends heavily on the utility’s retail rate design. Severin Borenstein, professor of Business and Public Policy at the Haas School of Business, U.C. Berkeley explains, “[The] fundamental problem isn’t net metering, but rather marginal prices that greatly exceed marginal cost”

A Crossborder Energy study from California shows how several key investor owned utilities (IOUs) actually draw more benefits from NEM than costs (see below).

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From the same Crossborder study, a list of potential benefits for utilities from NEM includes:

• Avoided energy costs
• Avoided capacity costs for generation
• Reduced costs for ancillary services
• Lower line losses on the transmission and distribution system (T&D)
• Reduced investments in T&D facilities
• Lower costs for the utility’s purchase of other renewable generation

While this issue is far from settled, NEM policies do benefit customers and as solar costs continue to drop, the need for smart policy provisions at the state and local level will become more important. As things stand today, there is no barrier to entry due to NEM for homeowners and small businesses aspiring to add rooftop PV. Hopefully this will remain the case in the future.

Conclusion:

It’s probably worth pointing out that much of the “renewables don’t work” agenda is being driven by commentators with connections to the fossil fuel industries. This case is no different – anti-rooftop solar writer Davis Swan worked in the oil & gas industry for 20 years. Why RenewablesBiz printed the piece is unknown.

Instead of reading an oil and gas expert’s opinion on solar power, why not read someone who has actually put a solar system on their rooftop? Fortune Magazine editor-at-large David Whitford did just that, and here’s what he has to say:

“I love my new power plant. Because I can, I monitor it compulsively, on my laptop and on my phone. At this moment, for instance -- 11:45 AM on a bright, bitter-cold January day -- my roof is generating 2.51 kilowatts of electricity. Since the dog is the only one at home, I'm pretty sure my meter is running backwards. That warms me.”

His experience wasn’t perfect – “I've learned a few things over the past several months that I probably should have known going in. Nothing that would have changed my mind, but still” – and that’s fair. But the bottom line is simple: rooftop PV makes a lot of sense and at the end of the day, David joined with thousands of other Americans who can now boast that they too are generating their own, renewable power.

 

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