Questions about wind and solar power

[cbrodsky]

iman:

I just spent a week picking the brain of a sales mgr. for one of the largest solar integrators in the country. I did this to prepare to interview him for a special Earth Day radio show I hosted, on solar power.

Okay, here's your question:

I have thought that wind and solar power are great. The cost seems a little high for the equipment. My question is how long does it take before you break even with solar and with wind. Is it months, or years. Is solar more reliable than wind? Do all wind turbines have to be 100 feet in the air? You also hear about people selling the power back to the power company how many panels do they have? Is that really even hapening?
just a few questions that I hope you could anser

And here's Colin's answer, which I thought was RIGHT ON with everything I just learned.

I believe there are a few select areas where people are saving money - but like you say, only with generous state incentives, and very high power costs from “conventional” sources. I looked into it a bit and it seems like the returns are in the mid single-digits. But that is only possible because in NY, you can get a ~$32,000 system for about $10,000 after state rebates to the PV supplier (passed to customer), state income tax credits, and the federal income tax credit. This is the sweet spot that maximizes your tax benefit since some are capped at flat values. Start taking any of those away, and it becomes a tough proposition. Then again, if your current power cost was $0.18/kWh versus our $0.10-$0.12/kWh, it could be quite attractive.
-Colin

Myth One: Payback time is 25 Years:
Residential--10-12 years

Myth 4: The Systems Aren't Economically Viable

The ROI (return on investment) of a residential system: 8%

The $32,000. system that Colin was talking about sounds remarkably like the 3kw, $29,000. system my guy was talking about, in that, the 3kw system does a little better than the bigger 5kw system, due to how the gov't. incentives are structured. The 5kw system earns only 7% ROI.

My guy did point out that you don't want to go over a 5kw system, because the way the incentives are structured, they just won't offset the greater costs of a bigger system.

40-50 yr life - 12 yr. payback = 28-38 yrs free power.

Interesting post - more or less consistent with everything I've seen although I still think the payback/ROI may be a bit optimistic, unless I am misunderstanding how much annual power output a solar system generates.

What is the assumed electric rate in the 8% ROI, and how much power do they assume the 3kW system produces annually? I came up with more like 4% ROI based on electric rates running $0.12/kWh. As I understand it when I was looking into this, a 4kW system generates roughly 4000 kWh per year in this area. That would be about $500 worth of electricity at retail. If my investment is $10K, and I have to depreciate the value to zero over the lifetime of the system in my ROI calculation, I'm getting something less than 5% over the 25 year life. (not counting any maintenance)

A lot of people talk in payback terms, but that is not quite as fair on these long intervals. If I spend $10,000, and save $500/year, I could say I had a 20 year payback. But then you neglect the alternative investments you could have made with that money. For something you'll pay off in a couple years, payback is a simple enough way to look at it, but I think for these long horizons, you have to think in terms of annual ROI over the life of the system.

Of course it is a tax-free ROI since you are saving after tax money that would be spent on power, so that can often help tip the scales... 4% solar ROI is like getting 5.5-6% in an equivalent taxable investment.

And the ROI of couse jumps up as electric rates go up. (or down if they drop)

-Colin

 

[jjbaer]

iman:

Alright--I am speaking ONLY about a batteryless, grid-tied system, in NYS.
Why? Because batteries add A LOT of expense, don't last forever, require a charge controller (in addition to the inverter you'll need)

Comment: before you can "net meter" power into the grid you must first have a utility approved grid-tie system which by definition means you have an inverter......so, with or without a battery bank, you still must have an inverter if you want to use or sell 60 cycle, A/C rectified/conditioned, sinusoidal type power .....

Myth One: Payback time is 25 Years:
Residential--10-12 years


Myth 2: The Utility Will Only Pay You Wholesale Rate.
Not true, with some exceptions. Some states, it's true, will only pay wholesale rates. However, NYS, NJ and CT are a few that DO pay retail rates to you. And there are more states than that.

comment: Most states don't give these heavy subsidies and therefore the payback to MOST people is much longer that the 10-12 years mentioned....more like 20-25 years.....so your statement that it's a MYTH is (for most people) "busted"....LOL.....but I agree it does apply given the narrow assumptions you've made.

Now...this is not instantly apparent, but what this means is *drum roll*: YOU CAN MAKE YOUR ELECTRICITY BILL DISAPPEAR.

comment: I think that for most people, their electric bill will never be zero (unless they make more electricity than they use) because most states don't allow net metering at retail rates.

Myth 4: The Systems Aren't Economically Viable

The ROI (return on investment) of a residential system: 8%

Comment: again, for most people, the ROI is no where near 8% but rather, much lower.......the 8% is based on two critical assumptions that don't apply to most people...1) that states pay 67% of the system cost and 2) that they let you net meter at retail prices....... since both of these assumptions do not apply to most people, the ROI is much lower and therefore the payback period is MUCH, MUCH longer than stated.


Bottom line: your payback period and ROI seem correct if the two critical assumptions (heavy state incentives and net metering at retail) apply however, for MOST people, neither assumption holds and these two facts combine to make solar NOT viable at the present time. What will change this is: 1) increased solar cell efficiency, 2) more mass production to lower costs and 3) integration of cheap, higher-efficiency solar cell technology into roofing shingles.......

 

[begreen]

Now...this is not instantly apparent, but what this means is *drum roll*: YOU CAN MAKE YOUR ELECTRICITY BILL DISAPPEAR.

comment: I think that for most people, their electric bill will never be zero (unless they make more electricity than they use) because most states don't allow net metering at retail rates.

I agree with Cast's comments in general. Fortunately, we appear to be turning the corner on less expensive residential solar. There are large scale plants being planned to produce thin-film, non-silicon based cells that should be much less expensive and more efficient. In Germany, the first is going into production soon.

In preparation, don't waste time. If your state doesn't have a retail buy-back program for grid-tied systems, contact your legislators and ask why. Attend a few solar groups and develop a ground up approach to bring about change. Ask why your state doesn't have a progressive buy-back program and what it will take to get it started. I kept bugging them until we got a grid-tie buyback program in this state and will continue to push them for tax reforms, etc. that add incentives for grid tied systems.

 

[jjbaer]

Now...this is not instantly apparent, but what this means is *drum roll*: YOU CAN MAKE YOUR ELECTRICITY BILL DISAPPEAR.

comment: I think that for most people, their electric bill will never be zero (unless they make more electricity than they use) because most states don't allow net metering at retail rates.

I agree with Cast's comments in general. Fortunately, we appear to be turning the corner on less expensive residential solar. There are large scale plants being planned to produce thin-film, non-silicon based cells that should be much less expensive and more efficient. In Germany, the first is going into production soon.

In preparation, don't waste time. If your state doesn't have a retail buy-back program for grid-tied systems, contact your legislators and ask why. Attend a few solar groups and develop a ground up approach to bring about change. Ask why your state doesn't have a progressive buy-back program and what it will take to get it started. I kept bugging them until we got a grid-tie buyback program in this state and will continue to push them for tax reforms, etc. that add incentives for grid tied systems.

Good comments BeGreen. Ohio energy costs 10 cents/KW-hr (about 5 cents for production and 5 cents for distribution) but they only give you the generation cost when you sell it back to them.....I think they're in-bed with the regulators........ as for the rest, I agree......time and technology eventually drives down the cost of everything.....it happened with microwave ovens, digital watches, cameras, etc......very few things it hasn't driven down.....even with computers, the "last frontier" of high-end items in computer systems (LCD screens) eventually also came down.........

 

[keyman512us]

even with solar, the payback is about 25 yrs. That $10,000 solar system might save you from a yearly $900 or so electric bill but you're giving up about 5% interest you could get if you DIDN'T lay-out the $10,000 for the solar powered system. So, you save $900/year by not getting power but forgoe $500/yr in interest for a net savings of about $400/yr....payback is then about 25 years, maybe less with interest AND at 25 yrs, you're approaching the life expectancy of your system.....so...even with Gov help, the payback is a long time. Note: calculation changes if you net meter back to the electric company.

Good points. Personally...If "Our Government" subsidized PV the way they do the OIL INDUSTRY...PV could be on everyones' rooftop.
PV while limited to "Daylight hours" is the perfect way to "shave peak loads" and should be subsidized right down the line (Gov to utility to Homeowner).
PV is growing (technologically) by leaps and bounds. (From personal experience as an electrician)...I got to "take a hands on tour" of a PV set-up. A lady called me up because she "had 1/2 power in her house". Went on the service call and wondered if her house was "one of the PV houses on Clark Street"...sure enough it was. Trouble-shot the problem (bad Main breaker)..."Gotta shut your power down for a few minutes mam'..." shut down the PV system, pulled her "Cyclops meter" so I could replace the MAIN...then started everything back up.
When I "flipped the switch" for the PV...I was in awe! It was November, cloudy outside and a 'dreary day' to say the least...I watched the LCD display counting out PV power produced...after five minutes it was producing 2600 watts and climbing! Now this might not sound like alot...but keep in mind...this equates to over 21 Amps...the average home "draws less" than 4 amps on a "continual basis".
Do the math...the majority of the time..."a small PV system" produces five times what you consume....add conservation, smarter solar DHW heating...and you got a "pretty picture".

 

[keyman512us]

Ohh...and BTW...In case anyone was wondering...This lady "has the best deal going". Her PV system (although she doesn't actually 'own it') didn't cost her A SINGLE DIME...not ONE RED CENT! Her home is part of a long term "study" (over 20+ yrs now) funded by the utility (which deserves a lot of credit).

The "bigger picture" needs to be explained in greater detail.

This project (with some modifications) is the smartest way to go...and makes the most sense...for everyone:

http://www.energybulletin.net/648.html

Utility companies need to be "given incentives" and recognized for their efforts.

The only answer...is to "get involved" and fight for change...contact legislators...DEMAND IT!

 

[keyman512us]

"The Bigger Picture":

Everyone brings up good points, quotes the #'s, and has interest in the subject...unfortunately without "unity"...it's all a waste of time.

"The Government" needs to be 'pushed into action'. PV has promise. If the government "put some effort" into the 'PV Side of the house'...by putting even a "fraction" of the effort/money they give to wind (I.E. The biggest interest in wind-GE) to those of us in the NE states...everyone would benefit. Wind might work "out west". Ironically, Texas has the biggest 'wind project' right now (Surprised?). Wind will probably only make it as far as NY...IMHO. Let's face it...wind just isn't as feasible in NE...nobody wants to live under 1.5 MW "windmill farms". Add into the equation the NIMBY factor (Cape Cod for example) the picture looks bleak. Whether you live in the "Burbs' of NYC...or Boston" PV is the best choice.

One "sad part of the equation" nobody takes into account: The "Electrical Grid" of the USA is "painfully outdated" to say the least. The fact the lights "stay on" in this country is a miracle. If this sounds "far fetched"...talk to the "unsung heroes" (those that keep the 'grid' working). Looking at "the bigger picture" requires some background knowledge of just how intricate the system is.

First off...here is my argument for why PV should be "pursued" in the Northeast...we have already "paid for it" for all intents and purposes:

...PV is quoted (in one source) at $0.91 kw/h. Grid-Tied...only makes sense. Unfortunately...in years past...the Government has made "all pay for some"...those of us in Populated areas in the past have had to pay for those who "live in rural settings" (Roads,Electricity,telephone, 911 service etc.)
So why don't "those of us who have paid in the past"...that don't have ample wide open spaces for windmill farms...demand a "pay-back" in the form of PV subsidy?

If the government is "pumping all sorts of money into Texas"...how about "giving some of our money back".

Secondly...What does $0.91/kw hr actually represent? We don't have room for windmill farms...nor room for more powerlines. In the future... system capacity is going to have to be added at the "local" level....PV "fits in" in the least obtrusive way.

I don't believe in Socialism, Communism, or even Capitilism anymore! I look around at how "^ucked up the system is" shake my head and say "When are people going to get a clue??? These people over here don't like windmill farms...these people don't want new powerlines running through their backyard....these don't want coal plants, these nuke plants, these people don't want hydro because of the fish"....and on and on and on...."

So until "People get a Clue" and at least as a MAJORITY agree on "Something"(in regards to a national energy policy)...

Can anyone out there (With a 'straight face'...) make an argument against "rooftop PV" (like it is un-appealing to the eye...bad for the enviroment..etc)...because if trends keep going the way they are...I"M READY TO GO TO WAR FOR IT!! Give me MY MONEY BACK

"...If my tax dollars can pay for an Iraqi to have Democracy...I should get rooftop PV out of the deal..." lol

As long as "Our Government" ignores the need for a OVERALL REALISTIC "National Energy Policy"...whether it's bio-fuel this, green power that..we all lose.

How much is $0.91 kw/hr when you factor everything else in?

 

[EatenByLimestone]

(broken link removed to http://news.yahoo.com/s/nm/20070427/sc_nm/solar_env_dc)

Ontario gets solar farm

By Jennifer Kwan
Fri Apr 27, 12:30 PM ET



TORONTO (Reuters) - Work on North America's biggest solar power plant will start next year in Ontario, the Canadian province's energy minister said on Thursday.

ADVERTISEMENT

Once complete in 2010, the 40-megawatt project, near Sarnia in southwestern Ontario, will be able to supply enough emission-free electricity to power up to 6,000 homes.

It will be built by OptiSolar Farms Canada Inc., a subsidiary of Hayward, Calif.-based OptiSolar Inc.

"This is an exciting development in Ontario's quest for cleaner power and in our efforts to minimize our ecological footprint," Ontario Energy Minister Dwight Duncan told a news conference.

Duncan added the next largest photovoltaic project in North America was announced earlier this week. It is a 15-megawatt solar system to be built at an air force base in Nevada.

"Solar electricity is just about everything we could want in an energy source," said Peter Carrie, vice-president of OptiSolar Farms Canada Inc.

"It's clean, you can tap into it wherever and whenever the sun shines. It's quiet, sustainable and Earth-friendly."

Currie would not disclose how much it will cost to build the project, but said typically a project in a 10 megawatt range would cost up to C$80 million.

The solar farm will stretch across nearly 365 hectares, and about one million panels will be erected as high as 7 meters off the ground. Currie said the company plans to begin building the solar farm in spring 2008.

Ontario pays solar power generators 42 Canadian cents a kilowatt-hour for electricity, a key reason OptiSolar chose to build its project in the province.

The Ontario Power Authority has agreed to purchase the electricity under a 20-year contract that will see the power go into the provincial grid.

The solar farm project is part of 14 new, renewable energy projects awarded through Ontario's Standard Offer Program, which sets a fixed price for small renewable energy projects.

The program is expected to add up to 1,000 megawatts of renewable energy to Ontario's electricity supply over the next 10 years.

($1=$1.12 Canadian)

 

[EatenByLimestone]

Here's a post on a company who will pay for your system install. I just found out about it, so I haven't looked too far into it.

http://www.treehugger.com/files/2006/11/citizenres_renu.php

Matt