If you are like most Americans, your experience with solar power has been pretty limited. You may own a solar-powered calculator. You may have noticed the solar panel powering the flashing road construction message sign. You’ve probably seen a house with solar panels on the roof, but you don’t know anyone who lives there. That is about to change.
Solar power provides only one third of one percent of all the electricity in the United States, yet last year the Edison Electrical Institute called distributed generation an “existential threat.” By that they mean that rooftop solar panels threaten the very existence of electrical utilities as we know them today.
Think about mobile telephones and telephone utilities. When Motorola developed the first cellular telephone system, AT&T hesitated. Who would need to be able to carry a telephone so that they could be reached wherever they were? Perhaps a few doctors and CEOs would. McKinsey & Company noted that the handsets were heavy, batteries didn’t last long, coverage was patchy, and the cost per minute was exorbitant. It predicted that in 20 years the total market size would be about 900,000 units, and advised AT&T to pull out. Yet people by the millions got mobile phones in addition to their wired phones. And eventually the mobile phones got so reliable they began cancelling their home phone service. Your phone company is no longer a monopoly with captive customers who must buy their service.
Electric utilities are worried that they could be next. The market for voice and data transmission is skyrocketing, but the market for electricity is steady or declining. Electrical generation in US peaked in 2007. In the past 7 years it has not increased. In fact, due to improvements in efficiency, they amount of electricity consumed in the US is down slightly.
Meanwhile, the amount of electricity generated from wind and solar power has been rising. Solar power generation has been rising exponentially.
The electric utilities have responded by lobbying the state legislatures seeking to tax or limit distributed solar power systems. In response, both environmentalists and conservatives are pushing back. In Arizona, Republican Barry Goldwater, Jr. has started TUSK (Tell Utilities Solar Won’t Be Killed) to fight against grid-connection fees for solar power. http://dontkillsolar.com/tusk/ In Georgia, Tea Party activists have aligned with environmentalists to form the Green Tea Coalition. https://www.facebook.com/thegreenteacoalition The movements are spreading to Florida, North and South Carolina, Wisconsin, Louisiana, Oklahoma and Utah.
In Iowa, Alliant Energy and the Iowa Utility Board took on Eagle Point Solar which had installed solar panels on the roof of a City of Dubuque municipal services building. Under a power purchase agreement, Eagle Point Solar installed the panels on the building and then agreed to sell the power to the City. The Utility Board argued that this arrangement violated Alliant’s monopoly utility status and took the case all the way to the Iowa Supreme Court. The court decided against the utility and in favor of Eagle Point. http://www.thonline.com/news/breaking/article_d0604f26-0901-11e4-a002-0017a43b2370.html
One problem for utilities is that once the solar panels are installed, the fuel (sunshine) is free. The main cost is installation, and that installation cost is coming down fast. Solar cells are made out of silicon wafers, similar to computer processor chips. The price of the solar panels has come down 75% in the past 5 years. Other elements of the solar installation (mounting hardware, inverters, labor) have not come down in price so rapidly, but when you spread out the installation cost over the life of the system, the cost is approaching what the consumer would otherwise pay for electricity.
For massive ground-mounted utility scale, the levelized cost of electricity is nearly the same.
As costs come down, solar power installations have risen.
Solar power facilities are now being built faster in the US than any other fuel source except natural gas.
For individuals, deciding to go with solar power often boils down to cost. It all depends on how much sun you get, what rebates or incentives are offered by the government, and what the cost of the alternative is. In one state, solar power has been the cheapest source of electricity since 2010. See if you can figure out which one that is.
For three out of four families solar is not an option. They may be renters. They may not have a roof with a large southern exposure. Or that roof may be shaded by trees. If you are lucky enough to own your own building with lots of direct sunlight, consider how much light you actually get.
Obviously it helps to live in an area to the south without many cloudy days.
The other factor is the regular retail cost of electricity. This can vary widely depending on where you live.
In fact, unless you live in Alaska, the local cost of power is a bigger factor than how much sunlight you get.
If you haven’t yet guessed the state where solar power is cheaper than the local utility company, I’ll give you another clue. This state has no local source of coal, oil or natural gas. All of its energy is imported on ships.
That state is Hawaii. Hawaiian Electric charges residential customers 34.6 cents/kwh on the island of Oahu; on Maui its 37.8 cents/kwh; and on the rest of the islands it’s over 40 cents/kwh. A rooftop solar system can pay for itself in 4 or 5 years. So it’s no surprise that solar power installations in Hawaii grew last year by almost 80%. Ten percent of Hawaiian homes now have rooftop solar power systems providing a statewide average of up to 255 watts per person. During daylight hours on weekends, solar can provide 50% or more of the islands’ needs.
In the continental US, the decision to install a solar system depends much more on tax credits, rebates and other incentives that vary from state to state. As solar installation costs continue to come down, there are some sweet deals to be had in the right location. I’ll discuss what that means for the future in another installment.