Economics of Solar article

Re: Economics of Solar article

The economics for solar PV systems has improved over the last year or so... And may even improve further--if nothing else because of over capacity and the drop in spending world wide...

For Northern California, where Time of Use power rates vary from $0.09 to $0.58 per kWhr (summer off peak, summer peak) for residential power--and with the coming of "Smart Meters" for real-time power pricing--Grid Tied Solar can be competitive or even cheaper--especially with the current tax rebates from Federal and many State Governments.

My own 3.5 kW of solar panels on a 3kW GT inverter is around $0.14-$0.17 per kWhr (assuming 20-25 year life, no maintenance, after tax rebates/credits).

So, for me, I generate (in the Summer) power and "sell" it to the utility at $0.27 per kWhr (noon-6pm, Mon-Fri) and "buy" it back at $0.09 per kWhr at the other times.

The 3kW system easily produces more electric power than my family of four uses over a year (natural gas for cooking, heating, no A/C). And if you take into account the off-peak/peak use of power--I currently generate (in funny money) way more power than I use (~$250 per year or more in credits).

Now--if the tax credits went away, if they charged me property tax on the installation, if they took away net metering and only paid me wholesale power costs, and tossed away the "tiered pricing plan" where the more power you use, the higher rates you pay (<300 kWhrs per month $0.115 per kWhr; >900 kWhrs per month $0.44 per kWhr)--the financial picture would be massively different.

In California, a couple years ago, they almost killed "home solar power" because of some changes in the Net Metering Rules and Time of Use pricing requirements... The economic justification is very narrow and any changes can dramatically change the equations.

Last year, just looking around, an Arizona utility's large PV field (xxx Megawatts) was producing electricity (at the fence line--not including distribution charges) of $0.09 per kWhr.

In California, about 1/2 the bill is cost to generate, and the other 1/2 is transmission and distribution charges. So--that Arizona solar would cost around $0.18 per kWhr delivered (just guessing).

And, in many places in the US, customers are paying $0.07-$0.10 per kWhr delivered. So--the current solar PV plants only make sense because of rate/tax structures that penalize fossil fuels and heavy power uses to "pay" for Solar RE power.

In Europe--I think I remember Wind Farms getting paid $0.45 per kWhr for their output... Again, not very cost competitive with anything else... But government can force things like this on consumers.

-Bill