Solar power still won’t pay back
My buddy Frank Fowler just gave me the actual numbers for his solar installation in Grass Valley. The great news is that Frank has so much solar power he is completely electricity independent. All he has to pay PG&E is a 4 dollar-a-month connection fee and that is really priceless since it is what allows him to feed power into the grid during the summer days and take it out over the winter nights. Frank notes:
I think being tied to the grid makes good sense. For a very small service charge every month I have full backup and peak load service. I also don’t have to pay for expensive batteries, which have a limited life. The downside is that when PG&E goes down, so do I. I can’t operate independently even if I want to. This rarely happens and I have a 10KW generator if I need it.
Franks says that on very good (cloud-free) summer days starting in April he makes about 60 kwh a day. Last year he generated 2400 kwh more than he needed. PG&E does not let you roll that energy to the next year, you lose it at the yearly anniversary date of the installation going on-grid. Frank uses 54 Mitsubishi panels of 170 watts each. Note that means his nominal 9180-watt set of panels average 2500 watts a day. The factor of 3.6 makes sense what with nighttime and angular losses. He has two SMA “sunny boy” inverters, a 6000-watt and a 3800-watt unit.
I mentioned to Frank that solar installations pose a significant safety hazard for PG&E workers. If the grid goes down and they are working on the lines, a solar power installation can back-feed the grid and maybe electrocute a linesman. Frank pointed out that the inverters would drop out when the grid goes down, and there is a lock-out/tag-out switch on the outside wall so a linesman can mechanically disconnect the unit.
Whoopee, energy independence, just like this article promises. But what about the cost? Frank said that he spent 40 grand in the install and he did the work himself. If he had to have it installed the cost would be about 50 grand. He says that includes the rebates and credits and such, but warned me that all those are moving targets and may change from time to time and place to place. Now according to Frank the payback will be about 8 years. That would be OK but I have to question those numbers. Not that Frank is a liar, but he was a VP of marketing before retiring to Grass Valley so factor that in the equation. See, if the payback for $40k is 8 years that means $5 grand a year. That is 417 dollars a month. I have a hard time believing Frank is using that much energy up there. Especially that, just like people who buy small cars, Frank is being extra careful about minimizing his energy use. He writes:
It’s ironic that once a system like this is installed, you become hyper energy conscious. I’ve replaced every available light with CFLs and just simple conservation efforts have cut consumption way down.
So lets look at it another way—say the install costs 50 grand. If you put that in an 8% stock market account, and the market does average about 8%, you would get 4000 dollars a year. That is 333 dollars a month. So if your electric bill is less than 333 dollars the install does really not pay off, ever. Remember that after 20 years you will still have the 50 grand as opposed to a worn-out and broken solar power installation. And that brings up another consideration. When you put a solar install on your roof you are now the caretaker for a complex industrial installation. There will be maintenance and repair issues. I have two friends that just formed a startup to make inverters since their research shows that inverters blow up every 5 years since the electrolytic caps in them wear out due the necessarily high ripple currents the caps experience. You have to keep the panels clean, you have to fix any damage and you have to fix any leaks in the roof caused by the install. I once thought it would be a good idea to host my own mail server, but an IT buddy convinced me that paying AT&T or some web host to do it is a really good deal. Manufacturing centralization always seem to engender fear in some people but it is what allows economies of scale and that is a good thing. This love of distributed solar and wind power reminds me of Chairman Mao’s 5-year plans that called for little steel mills in everyone’s back yard. Very uplifting and good for character development, but all the steel they made was dangerous junk. Americans have consistently foregone character development for methamphetamines and tractor-pulls, so who has the time to maintain a kilowatt-class power station?
Now we get to that slipperiest of slopes—rebates and tax incentives. I saw Rick Wagoner, the chairman of GM on the Commonwealth Club last week. He was talking about electric vehicles. Any respect for him evaporated as soon as I realized that the central thing he wanted was government money and incentives for GM and the battery companies and everybody else. I wonder if Rick thinks we should offset that handout with handouts to the oil industry to improve their ability to extract oil from shale and other projects? Then again we can just uses taxes for defense, courts and welfare and let the economy determine what things cost. Not doing that is what collapsed the Soviet Union, after all. My buddy Frank also pines for free handouts, but being a really decent guy who really does care about the planet, he does not want them for himself, he wants the handouts so everyone can have a bright shiny $50k solar powered installation on their roof that they got their neighbors to pay for— hey wait a minute, if we tax everybody to pay everybody, that does not make any sense —oh I know we will just tax the peons and lesser people so you and I can have solar power installation on the roof. As I have tried to explain over and over, it is the true cost of something that indicates whether it is good for the planet. Stealing a billion dollars from taxpayers to save a million dollars in electricity is hardly good social policy.
Now once again, do I think it is bad or immoral to pay for a big unwieldy solar installation when you could have a few thousand shares of stock? Not really. It is all about freedom. I sure think that having a solar installation is a far better way to spend your money than crack cocaine and over-priced clothes. But bear in mind that is a choice, not a moral law. Some people prefer the crack and the clothes because that is their value system and their status regime. Other people like to show off with solar power and electric cars. I like Harley Sportsters and electric guitars. But as long as none of these choices make economic sense you have to understand it is not about saving the planet, it is about identifying yourself with a group. I have respect for all these groups. Heaven knows it is more fun to hang around the crack users than constantly be hectored by the greenies on what a bad person I am just because I use oil without shame or guilt. But while the crack cocaine crowd is fun, we all admit that they are also unsustainable and that is the allure of the green crowd. They really are trying to think long-term and do what is best for the planet. That is great and really a noble aspiration. I just hope that these caring, thinking people realize that as long as it costs less to buy power from PG&E, that is the best thing for the planet. It is a big mistake to think that we are doing good by having the government take money from all of us and then pick some winner beforehand, and that just “priming the pump” with a few billion dollars will make solar power or electric cars economically feasible in total cost. I am amused that the same people that ridicule Ronald Reagan’s trickle-down economics suddenly think it makes sense when the trickling is all over their pet projects. I do think that there is a place for solar and electric cars and that they will come into use in the next twenty years, but do not think that it helps the planet by paying more for less right now. And yes there are significant distortions— I think we need much stricter emissions on coal so we stop poisoning ducks with methyl mercury and we should also scrub the sulfur out to prevent acid rain. But that will not double the cost of electricity. When electricity cost is on par with solar costs, before any rebates and incentives, well then it will make sense to use solar, but only until then.
So do I think Frank is dumb for dropping 50 grand on something that will never pay back? Far from it, Frank was in marketing so he is far from dumb. And it is his marketing savvy that provides him with the justification for the solar installation. Like I said, it identifies him and his family with a group and Frank hopes that group will attract better spouses for his progeny. That is simple evolution. Back in Darwin’s time it was thought evolution was driven by genetic mutation. Turns out that sexual selection, the fact that we can choose our mates, is an even greater evolutionary vector. Why else would all higher species separate into male and female? So while I am right that the dollar payback does not make sense, the social payback for Frank’s installation is gigantic. He is the cool guy, a leader among his peers, his kid’s wives think they are in a cool family and don’t walk out and the grandkids will be able to attract better spouses. This is what justifies all cool things like a person using a Cadillac Escalade to commute to work all by himself. We can all decry status and ridicule other’s choices, but they are driven by social and psychological factors every bit as strong as the desire for self-preservation. That is why Frank is way smarter than I. He is attracting and keeping good blood in his brood while I am just doing the engineer’s dollars-and-cents analysis. I wish people in general (and those willowy blond socialist girls from the 60’s) appreciated my value system more, but Frank is the clear the winner, what with his large family spreading his genetic code over the planet while my sorry, childless ass is sitting is Sunnyvale worried about the economy. Marketing triumphs engineering once again.
So if you want to show status by buying electric cars and solar power that is great, only be aware that you are costing the planet no less than the Escalade driver or the guy wearing gold chains. Just remember both over-gold and over-green are bad for you.