Free-Market Solar: The Real Opportunity (this solar executive tells the feds and Arizona to cool the subsidies)
[Editor note: David Bergeron is president of SunDanzer Development, Inc., a solar energy company located in Tucson. His first post at MasterResource was titled Economic/Environmental Assessment of Grid-Tiered Photovoltaics: Arizona Lessons for the U.S. More information on Mr. Bergeron and SunDanzer is provided at the end of this post.]
It’s Saturday. I’m 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. It started when I was 13 years old, a time of the Arab oil embargo and gasoline lines at the pump. Only later did I realize that the long lines were caused by misguided government price controls, not a tiring mineral-resource base.
Today, our government is again engaged in misguided energy activism, policies that mandate inappropriate solutions to real and imagined problems.
Such is the case with grid-tied solar panels, an energy alternative which fails to effectively address either energy security or environmental concerns. Although unintended by state and federal lawmakers, preferences and mandates for political correct energies will ultimately stifle creativity and generate false solutions to our energy dilemma.
Sunny Arizona–Cost-Prohibitive Solar
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 on-grid solar industry and associated jobs are artificial and only exist because of special government favor.
The solar industry today is a bubble ready to burst. It is similar in many ways to the housing market bubble created by easy mortgages enabled by government favor. When the subsidies end, the solar bubble will burst, and much of the industry and jobs therein will vanish overnight.
This is because the underlying economics of Solar PV are not viable. In sunny Arizona, my homeland, the true cost of a typical 1,000 Watt solar system is approximately $5,000. This system will 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 as a power source to meet the utility’s reliability requirements for power generation (the dispatchability problem). 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 it is needed most. So no significant reduction in generation or transmission infrastructure is possible by adding solar panels to the power grid.
Can Solar Get There?
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 system cost. The remaining cost is mounting hardware for the panels, the inverter to make AC power, wiring, labor, and permitting. So even if it were possible to manufacture panels for 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 the answer is that when it comes to the grid, the future belongs to stored solar, not the dilute solar flow, that is embedded in super-fuels oil, natural gas, and coal.
The Fallacious “Jobs” Argument
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, department 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.
This is Economics 101, presented perhaps best of all in Henry Hazlitt’s timeless primer, Economics in One Lesson.
The Fallacious “Energy Security” Argument
Another fallacy is that solar power provides energy security against imported oil. But using solar does not reduce oil imports because the U.S. generates not more than 2% of its electricity from oil.
We make electricity with coal, nuclear, natural gas, and hydro–all homegrown. Domestic supplies of gas and coal are in the hundreds of years. Energy insecurity has a lot more to do with intermittency than it does the fuel source.
An Economical CO2 Saver?
But the most ironic fallacy is the idea that solar effectively helps the environment by reducing carbon dioxide (CO2). Conservation and other technologies allow carbon credits to be traded for $20/ton in Europe. But saving CO2 with solar costs at least $150/ton. Solar, in other words, in the loser of losers, perhaps the last thing that should be done even from the viewpoint of climate alarmists.
If and when solar PV becomes economical, the market will come to us in places such as Arizona where the sun really shines. But for now, and the foreseeable future, solar has a niche: not here but in developing countries where they can provide electricity where there is none. As such, solar panels can be a bridge to the denser, consistent energies that the developed world enjoys today.
Installing PV solar on U.S. roofs, on the other hand, does nothing except make us feel good and drain our economy of more productive employment.
David Bergeron founded SunDanzer in 1999 and currently serves as President and CEO. SunDanzer has operations in Qingdao, Monterey, Tucson, and El Paso with 15,000 square feet of office, laboratory, manufacturing, and warehouse space.
SunDanzer performs R&D for NASA and the Department of Defense in the area of solar powered cooling equipment, manufacturers in the USA, and exports solar refrigeration equipment to every continent.