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Thursday, September 4, 2008

In England, solar power makes little sense

The British newspaper The Independent has an article pointing out that solar power installations have a 100 year payback up there, and some may never pay out. I guess all that I have been trying to say with my blogs about solar power is that energy production and distribution is an analog problem, just like any other real-world problem. As I have pointed out, installing 5 dollar-a-watt panels to try and pay down electricity that costs you 13 cents a kilowatt-hour is a fool’s errand. As I have also pointed out, if you use so much electricity you are getting charged 31 cents a kwh and you can install the panels yourself and maybe get the cost down below 3 dollars an installed watt, well, then things are much more sensible. I have friends working in solar powered startups who have told me of breakthroughs that will allow them to price the panels wherever they want since the cost will be under a dollar a watt. I hope that is true but since this startup uses copper indium gallium selenide technology you have to expect the cost of the materials to rise substantially if we all start paving our roofs with the stuff.

OK, so I have tried to counter some of the hype with economics, but the article from England shows another analog problem with the suitability of solar power. If you are at northern latitudes in a country with a lot of cloud cover, then that also changes the economics of solar. Hey, I am all for PV solar, it helps my friend and my town and my industry. But you have to have the intellectual honesty to appreciate the advice of the article that points out that in England, you would be better off putting in insulation with money you would have spent on solar.

It fascinates met that people with no appreciation of economics and the markets see everything as a crisis. What no news organization seems to be pointing out is that when oil went from 22 dollars a barrel to $120 a barrel, that opened up a lot of reserves that used to be uneconomical. Here is an article about a German plant that uses plentiful cheap coal and then sequesters the carbon dioxide. If you look at the energy needs of the country, and realize that we can’t pave every square meter with PV panels, then you see that coal and natural gas will be used to make most of our energy for several hundred years. There is no energy crisis but that headline does not sell papers. Just like with every other commodity like concrete and wood and cheese whiz, when demand went up, price went up and that is creating more supply. Indeed some of that supply will be done with solar and wind, but any rational energy policy has to respect the role of fossil fuels for a couple more centuries. And I won’t get all the greenies raving by mentioning nuclear power.

Related entries in: Analog |

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at 9/4/2008 5:38:25 AM, Marius said:
"Just like with every other commodity like concrete and wood and cheese whiz, when demand went up, price went up and that is creating more supply." Even though high oil prices make it affordable to extract it from places which seemed unaccessible five years ago, there's only that much oil, coal, natural gas! While one can easily increase the production of cheese or cement, one cannot produce more oil than it actually exists! The author's logic is not that...logic. Besides, oil is too precious to burn it. Just look around you and you'll see that most of the things that you see are made from plastic or rubber, so made from oil...

at 9/4/2008 7:32:52 AM, Darren Holdstock, UK said:
You''ll get naff-all energy out of a solar panel here at the moment, as we''ve had the wettest August for nearly 100 years. No-one is really pushing solar power for the UK because of the unfavourable climate, but we do have a lot of coastline and reliable winds, so the emphasis will be on wind farms and wave-powered generators. Using solar infra-red to warm up roof-mounted heat-exchangers is just about viable, but not photovoltaic panels. That said, the average temperatures have been rising year on year, to the point where solar panels may yet have a place.

at 9/4/2008 1:06:24 PM, RobS said:
That 5 dollars a watt doesn't sound too bad to the uninitiated...until you point out 13 cents per kilowatt hour. Quick! Someone buy this author an airplane ticket to Washington!

at 9/4/2008 1:51:36 PM, Jonathan Williams said:
The price went up on Cheez Whiz ?!?!?! Argh !! What's this world coming to? We can't have that !! The government had better do something about that right away. That is going to cause an unstoppable inflationary spiral. Our whole economy is going to collapse ! We're never going to make it.

at 9/4/2008 2:01:20 PM, MEP said:
In Lexington, MA, I paid $90 for 403kWhr. That's 22.3 cents per kWhr.

at 9/4/2008 2:03:24 PM, Jonathan Williams said:
But seriously, the marketplace has an uncanny way of regulating things in spite of certain factions who think the government should force and/or subsidize alternative energy sources. We'll get there. I am seriously considering installing solar thermal collectors to heat my domestic hot water and even supplement the natural gas fired furnace (at least when the sun shines in Maryland). Hawaiian Electric has made it attractive for people to heat their hot water with solar panels and hence have delayed the requirement to add additional capacity to their grid. That's a good economic move coupled with the very favorable temperatures (you never have to worry about freezing your collectors or using closed loop systems with glycol or complicated drain-back systems) and Hawaii has plenty of sun.

at 9/4/2008 8:23:43 PM, Bluebear said:
We should not takl down PV using biased arguments based on solving economic problems using an engineering frame of mind. An alternate choices analysis, i.e. compairing buying from the local company for 13 cents/kWh against installing PV panel for $5/watt, reports what economists call consumer surplus. The qucik math works out to be 4.4 years of continuous sunlight to generate the electricity to pay back the PV investment. 4.4 sunlight years may be 100 years in London: Bad investment? Not sure. Consumer surplus should not be the target of an ROI analysis. It is for the same logics that, e.g., beef being more expensive than chicken does not, by itself, makes it not profitable to produce beef. In economists’ terms, we need to think of the producer surplus by considering the investment in terms of the opportunity cost of money. $5 per watt means a $5,000 PV panel could produce 5 kWh every sunlight hour. If the cost of money is 6%, and the price for each kWh is $.13, we would need $5000*0.06/365/(5*.13) = 1.26 sunlight hours average a day to break even on the operating cash flow. If the PV panels MTBF is 20 years, to go from operating to free cash flow we also need: $5000/20/365/(5*.13) = 1.05 of additional sunlight hours per day to pay back the cost of the PV. Hence, suppose PV is only a supplemental means, i.e. energy storage is not a factor as we can scale the purchase from the grid to our instantaneous demand levels, all we need is 1.26 + 1.05 = 2.31 hours of sunlight a day on average earn the present market’s rate of return with the subsidies and commodities inflation being on our favor. I am not sure about the UK, but based on Paul’s numbers, anywhere on earth that can see more than two hours of sunlight a day shoudl consider PV.

at 9/4/2008 10:48:19 PM, DM said:
If you capture all the CO2 from coal power plants in the US, you are talking about 50M barrels a day of liquid CO2, substantially greater than US oil production. So disposing of it has corresponding cost. The article sited above said that carbon capture could make coal plants more expensive than wind, and essentially there are no production plants today, just experiments. Having seen a lot of the FutureGen activity, it isn''t clear to me that coal with carbon capture can be cost-competitive with alternatives. And there is the obvious problem that there are lots of coal plants far from good ground injection sites, implying the need to greatly expand the US CO2 pipeline system. Coal with carbon capture shouldn''t be rejected, but we should recognize that it has some serious challenges.

at 9/5/2008 4:31:35 AM, arclight said:
Bluebear: You wrote: "$5 per watt means a $5,000 PV panel could produce 5 kWh every sunlight hour." If it's $5 per watt, doesn't that mean that the $5,000 panel will produce 1 KWH per sunlight hour, not 5 KWH? What does that do to your numbers?

at 9/5/2008 1:21:16 PM, Bluebear said:
arclight: You are right, it was my mistake, I am sorry. However, the breakeven number was not off by a factor of 5 because there were many other typo and modeling errors. (I was rush chit chatting online while my wife was rushing me to the diner table…) Now, to show appreciation for your critical reading, I attempted to rework the numbers. (Rushing again while my coworkers are waiting for me to go to lunch. Isn’t self-handicapping a wise strategy?) If we ran my previous interest rate math through a finance person she would point out that the upfront 6% rate is only used in places like a used car dealership: It could lead to a misrep litigation in other settings. The correct payoff should be an annuity series of equal monthly payments for 20 years that has the present value of $5,000 at the nominal annual interest rate of 6%. The effective compound period should be monthly instead of the real energy harvest rate of continuously compounded because the 13 cent monthly post-usage billing rate already included a credit financing charge in it. This compound factor is material because, for example, a factor of 100% yearly compounded rate (doubling the money after one year) yields the magic natural logarithm base number of 2.71828 of effective yearly yield (or 36% higher in return after just one year) when the compounding period is changed from yearly to continuously. Using Solver on Excel or a financial calculator, the monthly annuity number is $35.82 monthly (please verify). That means a stream of 240 monthly payments of $35.82, totally to $8,597 of nominal value, has a present value of $5,000 at 6% APR. Now at a fixed producer cost of $35.82 per month, and a revenue rate of 1 kWh/h, the breakeven number should be, $35.82/(365.6/12)/0.13 = 9.04 sunlight hours per day. Nine sun hours a day sounds more believable... Please check my math. Thanks!

at 9/5/2008 1:30:25 PM, Roger said:
A while ago, a venture capital friend of mine told me that on average, his firm received more than five silicon solar-cells startup business plans each week, which was more than all other business plans combined. “It seemed to be the only thing the entrepreneurs were interested in nowadays,” he said. All of a sudden, solar cell (PV cell) stands to be a “can’t afford to miss” business opportunity for investors, a killer application of magnitude that is tantamount to the 1980s personal computers and ‘90s internet revolutions. Maybe for semiconductor makers and semiconductor equipment manufacturers, the presence of this almighty solar power will bring another resurgence of technological innovation and stock market run-up, that is just in time when Moore’s Law which states that unit area transistors would double every 18 months, is approaching its end of endurance. I was excited as well. After all, this technology is supposed to give us perpetual and unlimited energy because, after all, the Sun will shine for a few billion more years. The energy the Sun provides to the Earth is impressive. In fact, every minute, enough energy arrives at the Earth to meet our demands for a whole year. And it is clean too. It doesn’t generate CO2 or other gases that can harm the planet; it doesn’t impose any radiation risk; it is not subject to the political stability of the oil rich Middle East region. And most importantly, the Sun shine is free! As the old saying goes, if it sounds too good to be true, it probably is. To my own surprise, a simple calculation indicates, believe it or not, that today’s silicon solar cells glory is a misguided, energy wasteful product and technology. Based on known data, for a solar cell of 1W of electrical output, it will take 20 KWh of energy to produce. If one considers other necessary accessories associated with solar panel assembly (metal frame, battery, diodes, capacitor, D/A converter, wiring etc), a few more KWh of energy should be added into the equation. Majority of the energy consumed comes from transforming SiO2 quartz to silicon (mono or poly silicon crystals) wafers of solar grade. Usually the definition of 1W output is based on the maximum sunshine condition (without cloud and directly under sunshine during the Summer time). Any factors such as clouds, dust on the panel, angle of the sun ray will degrade the efficiency of the solar cells. Assume we are lucky enough to have an average of 5 hours of maximum sunshine (Summer intensity) condition per day, day after day, one season after another, and the D/A conversion efficiency of 90% (D/A conversion is necessary for transmitting solar electricity to the net), we can conclude that it will take more than 15 years (not even consider the solar cell quantum efficiency degradation over time or dust-on-panel effect etc) of non-stop usage of this solar cell panel to generate equal amount of energy that had been consumed during the manufacturing of this solar panel in the first place. An analogue can be drawn as follows: you deposit $15K cash to a bank, and each year you can withdraw at most $1K, and there is a good chance that between the first year and the 15th year after your deposit, your bank will not be around anymore for your to continue the withdraw. And the maximum lifetime withdraw is $15K, if you are lucky. If that is the case, would you put the money to the bank? And forget the “energy interest.” Energy interest is similar to money interest. When you deposit your hard-earned money to the bank you expect to get the principle back plus certain amount of interest. If you get 0% energy interest, plus less than 100% energy principle back, would you do it? Wouldn’t it be better off to invest the energy into somewhere else that can have better energy return? Maybe the conventional MBA term ROI should be applied to solar cells. One question may arise, which is, can the solar cell panel system last for more than 15 years? The answer is simply be addressed by a different question: Is there anyone or any entity who can claim that his or her commercial grade solar cell has been working properly for the last 15 years? Another question one may ask, that is, if it is a net energy wasteful product, then why so much attention and so many smart investors are willing to put the money into the ventures? The answer is simple. It is a good investment because many governments, particularly Germany and Spain, are willing to purchase the solar cell panels at a high price, which translates to profits being made by the solar cell manufacturers and therefore the investors. To conclude, we must search for a better solar cell technology with higher “energy return on energy invested (EROEI).” Granted, the solar energy is a great, unlimited and clean energy source; yet, to have less energy return than energy invested as seen in today’s silicon based solar cells is not a responsible way to pursue

at 9/9/2008 1:17:29 PM, Jim Jarvis said:
PV Solar has to be considered in terms of life-cycle costing. None of your (plural) payback calculations considered the energy necessary to CREATE the cell arrays, and to distribute them to the point of installation. More disturbing, however, is the free-for-all approach by uninformed policy makers who see tax incentives as the answer to everything. Color me.. a wonk who just spent $1500 worth of billable manpower completing (pro-bono) an energy conservation grant which will yield $1400 for my church. Bureaucracy is a wonderful thing.

at 9/9/2008 5:44:52 PM, Show me the Math said:
There is no way England can go totally green. There is a good article, unbiased, in the Register on Professor David J C MacKay who crunched the math to show why. www.theregister.co.uk/2008/06/20/mackay_on_carbon_free_uk/

at 9/21/2008 2:40:02 PM, Wayne Morgan said:
When you say "There is no way England can go totally green" are you suggesting, by intentionally not mentioning the rest of the United Kingdom, that Wales, Scotland, and Northern Ireland potentially could go totally green or are you just repeating the thoroughly annoying Anglo habit of referring to the entire Kingdom as England?

at 9/22/2008 8:48:59 AM, Darren Holdstock, England, UK said:
I live here, and I still get confused with the geopolitical terminology: www.alt-usage-english.org/english_british_uk_et_al.shtml As a general rule, The Law of Athletics Commentating applies: If they're winning, they're British; if they're losing, they're the "plucky Scot bringing up the rear". That said, SMT Math may yet be correct - take England out of the equation, and it may be possible for the rest of the UK to be self-sufficient in energy, if only because England has the highest population density in Europe. There might, for instance, be enough potential hydro power in Wales to power a population the size of, say, Wales.

at 10/2/2008 12:32:19 PM, RickyDee said:
I think you will all find the use of interior lighting with a solar collector and fibre optic very interesting. Systems are available now, the collector is controlled by GPS to follow the sun based on location. System uses standard florescent to balance light needed based on brightness setting, clouds, etc. Would seem to have great potential in sunny areas, large office buildings, big box stores, etc. Also, interesting reading on the amount of energy that could be saved if belts used to drive machinery and equipment from a motor were designed better. Huge potential. There are so many ways. I like the fact that those of you posting have taken the colateral energy usage into account when considering alternatives. It should be an interesting 20 year period in the energy field.

at 10/4/2008 11:20:14 AM, Phil Quesinberry said:
I'm in agreement with the last poster; there are lots of ways to attack this problem and we're probably going to have to draw on many of them to be successful. For example: how many of us are heating our hot water with the waste heat from our air conditioners? That's an awful lot of heat going to waste when you remove it from the air-conditioned space and just throw it outside. Take the average-size 3-ton air conditioner, and assume it runs about 50% of the time during the cooling season. 3 tons is 36,000 BTU, enough to raise the temperature of 64 gallons of water (8 pounds per gallon) 70 degrees in one hour, say from 60 degrees to 130 degrees. With that in mind, your 12 hour cooling day would generate 768 gallons of water. Even if we can only recover half of that heat, that's still 384 gallons of hot water a day if my math is correct. Think of what you could do with all of this heat... showers and baths, heat your hot tub, dry your clothes, etc. This is just one of many opportunities to save significant amounts of energy that would otherwise be wasted. - Phil

at 11/4/2008 3:56:41 AM, John said:
Hey there, there is an energy crisis. "then you see that coal and natural gas will be used to make most of our energy for several hundred years. There is no energy crisis" Hmm, we have hundreds of years left then?? No way. Do the maths. We do not have 100's of years left. For a growth of 6%/year we have at best 50 years of coal left. See this for more details: Go to YOU TUBE and look for:The Most IMPORTANT Video You'll Ever See (part 1 of 8) This series of lectures explains what I am getting at. Best Regards, John

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Thursday, September 4, 2008

In England, solar power makes little sense

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