The LA Times article “Taxpayers, Ratepayers will Fund California Solar Plants” took on the world of solar policy in a totally irresponsible way and got it all wrong. Renewable energy and distributed generation are too important to LA, the U.S. and the world to be dismissed so flippantly.
There’s no solar gold rush or windfall profit. Most solar developers and their projects are struggling. The failure rate is extraordinarily high. Financing and investment is hard to come by. There are few viable programs and they all have small capacity and difficult requirements and limitations. Interconnection processes are highly complex, costly, uncertain, and time consuming. Land use entitlements, environmental approvals, zoning, planning, building and safety issues all add additional barriers to solar development.
These barriers increase the cost of solar unnecessarily. As a result, Germany, with the same sunshine as Anchorage, Alaska, installed far more solar in the fourth quarter of 2012 than California has installed in total.
The article focuses on the few giant projects that received government loans (which were only for very large projects and are no longer available), are very far from load centers and require huge transmission upgrades. These projects make up a small part of California solar, and definitely are not the best opportunity for development. Even with government help, considering that they can take 5 to 10 years to permit and that most giant projects fail, their returns are probably not excessive.
Solar policy should be focused on smaller projects closer to load centers (called distributed generation or DG). DG projects can connect quickly to the grid, do not require any transmission upgrades, can be developed, permitted, built fast and efficiently and cause no environmental damage. DG is resilient and helps strengthen the grid, reduce blackouts and enhances energy security. And like all solar, it will provide peak power; power at the time we need it most and by far the most valuable.
Almost all of Germany’s solar is DG — on farms, schools, warehouses, freeways, factories and homes. Even though Germany gets very little sun compared to California, because their program is so robust, competition and increased expertise and experience have driven prices way down. Germany has also dramatically reduced the paperwork and other administrative processes that raise costs and cause delays. German banks are required to make reasonably priced loans for solar (essentially no-risk loans secured by the long-term contracts to purchase the power). As a result, it costs half as much to build a solar project in Germany as it does in California. In all, Germany’s solar program has cost ratepayers about the price of a loaf of bread each month. Of course, even that cost is only a short term investment because these systems will SAVE money over their productive lives.
It’s true that solar PV costs more in the first few years than the cost of business as usual. But, most responsible experts agree that it’s a good business decision because the average cost of solar, over the life of that 20 year fixed price contract, will actually be lower than the cost of power from conventional fuels. Moreover, these solar PV plants are likely, with minor maintenance and upgrades, to produce almost free power for a very long time beyond the original 20 year contract.
The article also makes comparisons between the cost of renewable energy and the cost of carbon-based energy. However, the prices quoted in the article for conventional power understate its true cost. According to various studies by academics and non-profits, the value of widely distributed renewable energy is at least 3 to 6 cents more per kWh than the value of central station-produced, carbon-based energy. This added value of DG comes from avoiding transmission losses (which average 10 to 11% system wide); avoiding investment in transmission, generation and other new facilities; the hedge value of a fixed price for 20 years; providing peak power which is the most valuable; reducing greenhouse gasses and pollution and more. When this added value is considered, solar only costs a very small amount more — and that cost is short term and should be seen as an investment.
Instead of characterizing solar as a boondoggle for developers and investors, the article should have carefully and thoughtfully analyzed and presented all sides of this complex topic. Most people know very little about it and already suffer from serious misconceptions. The author should write another article and interview the people who are really knowledgeable about this field — it’s too important to be poisoned by ignorance and inaccuracy.
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