My friend Emma is excited about the new PhotoVoltaic Solar system which is coming to be installed on her roof very soon.  I understand her anticipation because she was guaranteed it will save her more than $83,000.00 in electric bills in the next 20 years.  That’s a lot of savings!  Emma is smart and if you promise to save her $83,000.00 she’s gonna want to hear the details because she knows offers like this don’t come along every day.  And from what she tells me, there isn’t much of a downside.  She pays $16,000.00 to the installation company and agrees to lease them her roof for 25 years to support the collecting panels.  These will produce electricity from sunlight and feed it into her existing electric supply system which in turn connects to the PGE electric power grid.  Once operational, the installation will provide a local source of electricity usable by everyone (especially Emma!).  The installers build the system and maintain the equipment at peak capacity for the duration of the lease.  Emma makes no further payments and she can freely use about four hundred dollars worth of electricity every month, or more depending on the array output.  As a recovering cynic, I couldn’t help wonder what was missing from the equation – where was the downside? – but other than the initial $16,000.00 outlay all I could come up with was that the process might damage her roof and make it hard to repair.  Emma assured me that even damage to the roof was covered by the lease guarantee.  There will be a few wires which need to run through the house, and some additional equipment for inverting the power into alternating current but the company does it all.  After hearing about it, I had to agree it looks like she will indeed reap a great benefit from this arrangement — over twenty years her promised savings will far outweigh her expenses and she did well to make it happen.   I must confess I’m a little jealous of her good fortune at having such a productive solar site but I’m happy for her.

I’ve been interested in solar energy for many years and have built several systems which, while they were working, collected lots of useful radiation.  But my experience has been that these machines were expensive to build, difficult to maintain, died prematurely and ultimately didn’t live up to the high hopes everyone initially had for them, and because of this I was skeptical about Emma’s new installation.  However, in the interest of better understanding the current state of affairs surrounding residential PV solar systems, I did some research and learned  how it is that Emma can expect to get such a large return on her investment.  I have also learned that the field of solar powered electricity generation is vastly complicated, both from an engineering point of view and a political point of view, and is way beyond my ability to understand totally.  I am encouraged by some of the facts I found and dubious of others.  The economic realities are greatly affected by State subsidies, Federal tax rebates, and Public Utility policy derived from the California Solar Initiative (CSI) under pressure from industry lobbyists.  Private solar installation contractors are flooding home owners with offers for free consultations and low-cost installation contracts.  And in the midst of all this I really can’t say whether the benefits will out-weight the costs, particularly if we’re talking about over-all public benefits, but I’m still skeptical.

Three aspects of the current situation strike me as particularly troublesome and I want to say a little about each of them before I quit this screed and get back on the bandwagon to save the planet.  The first issue is a ‘Freakonomics’ effect by which the actual result of public policy incentives may be far different than the intended outcome and will end up being paid for by those who reap very few of the actual benefits.  The second uncertainty lies in the long-term viability of the contracts currently being created with the home-owners, particularly given how rapidly everything seems to be changing these days and how untested the technology.  The last issue is the use of residential rooftops for PV installations as opposed to other structures and locations which may in the long run turn out to be far more cost-effective.

Emma can expect to reap the huge payback she has been promised because of one major factor in the economic formula.  It’s not the Federal tax rebate, which is a deduction allowed for 30% of the net cost of the system.  Nor is it the 20% State subsidy given to the installation companies to effectively lower the price of the individual PV panels.  Emma will profit primarily because PGE is bound by law to buy electrons from her at a rate up to three times what they sell them back to her for, limited only by her total annual consumption.  Connection to the PGE grid makes this possible and Time-Of-Use accounting using Smart Meters determines the rates.  The number of panels placed on her roof is determined based on her current consumption and is intended to make her home ‘self sustaining’, but the fact remains that Emma is not the least bit ‘independent’.  She will gain because she consumes a large amount of energy and she is connected to the grid.  Now and in the future, she has no financial incentive to reduce her consumption and in fact will probably use more just to insure she gets her maximum return.  Anyone who actively conserves energy and has a low current monthly PGE bill does not qualify for this potential benefit.  High consumption is rewarded and conservation is ignored.  I recognize that the overall supply of energy is increased, and that this increase is possibly  ‘cleaner’ energy (unless you live in China or India where the panels are manufactured), but demand is also increased and conservative behavior is discouraged.  Total overall costs are high.  Maybe this is good for the industry and consumers who own large homes blessed with good solar exposure but residential PV installations may not turn out to be the best way to invest public resources.

Despite the assurances of her contract, Emma is not without risk.  She is entering into an agreement with a company which will act as a middle-man with PGE and pay off her bill each month (and keep any over-production revenue for themselves, I believe) while maintaining the panels at full operating capacity for 20 years or more.  I cannot think of another warranty that comes anywhere close to this, for any product,  and the notion that these relatively new contractors will survive 20 years in a field which is changing every day and buffeted by a volatile political environment is really a stretch for my imagination.  PGE buy-back rates may change.  New solar panels may not perform as well as advertised and replacements may not qualify for tax rebates and subsidies.  The average lifespan for a contractor’s license is closer to five years than to twenty.  What will be the legal ramifications?  It seems to me that a lot of assumptions are being made about the future in order to stimulate the current enthusiasm (and resultant sales) which are uncertain at best, deceptive at worst, and bear a large part of the burden for making this endeavor beneficial.

The final aspect which has continued to nag me has nothing directly to do with Emma, but rather concerns the larger goal of producing clean and renewable electricity in the most cost effective way.  It’s tempting to imagine each home as a self-contained, net-zero energy user which can  generate enough power to meet it’s own needs, but this can’t be the most efficient model to use.  When I imagine a future with solar electricity for everyone, I don’t see millions of separate installations spread out on the shingles of randomly shaped and haphazardly oriented rooftops shaded by trees and neighboring houses.  It makes little sense that panel maintenance should be so conflicted by the condition of the roof covering and that we would install dangerous high-voltage wiring systems in and over every dust-filled, fire-prone attic.  Accessibility will be a nightmare (and a danger).  There is no economy of scale.  A far more reasonable approach, I believe, would consolidate our solar production into larger arrays without these peripheral problems and reward everyone equally irrespective of the size of their roof or it’s orientation and exposure.  High volume consumers would continue to pay higher rates because we the public want to discourage excess usage (obviously private home systems could still be purchased).  We should find a way to reward conservation to the extent that it improves the environment for everyone.  Many of the fantasies about solar power were born in the 60’s and 70’s when being ‘independent’ and ‘off-the-grid’ had a lot of allure, but we’re not off the grid and we’re not independent and we might need to let go of some of our old ideas in order to do the most good.

The End.