Distributed Solar and the Metastasis of GHG-Emissions

It’s all solar energy, in our solar system, in any solar system, for that matter. The oil and gas in the ground are congealed solar energy, solar PV and solar thermal both are solar, wind is generated by the Sun before it can turn a turbine, and the earth’s crust is simply the biggest solar collector, which we can harvest with geothermal heat pumps.

Today, solar PV is all the rage. We’re at it again, jumping on a technology before we have figured out the right way to use it. Wall street is loving it, but we are getting way ahead of ourselves… just remind me, how do we spell bubble again? As a society, it seems we keep looking for a silver bullet to fix our problem, and this is not realistic.

It does not matter that solar PV is “cheaper” in terms of component pricing. Solar thermal produces about five times the amount of energy for the same square area, so unless the cost of real estate is zero, solar thermal should be the winner in that battle. Granted, solar PV tends to be easier to integrate, but there is an obvious issue here, particularly in areas large urban areas, where you don’t have one square inch to waste.

To use an analogy, if one year our government provides a tax incentive to sell more two-seater vehicles, and a father of five comes home with a two-seater instead of a family car, arguing that it was so cheap, most of us would side with the wife, if she divorced him. The five kids would have to take the bus from then on. Evidently, this would be a case of false economy, for it cannot solve your problem. How come we understand the fallacy of this proposition, yet in solar PV marketing, this is what is routinely done – selling people a solution that does not fit because it is “cheap.” If in doubt, refer to the tax incentives.

Just like the two-seater cannot solve the transportation problem of a family of seven, solar PV panels cannot solve the energy problems of most homes and buildings in northern climes. In the south, it may work fine if your home is all electric, and you have enough roof space to economically generate adequate electricity, but in the north your energy bills are likely to be 70% oil and 30% electric, and yet the solar companies want you to jump up and down because they can save you 10% on your electric bills. That’s the assumption anyway. It does not amount to the proverbial hill of beans, because 10% of your electric bill is 3% of your overall energy bills.

It actually gets worse, because the implicit assumption is that your roof space is valueless, which is likely not the case. If nothing else, that same roof space could be used for solar thermal equipment, which produces 4 to 5 times as much energy per square foot as does solar PV. Alternatively, one or more wind-turbines might be possible, and in all of these situations, it is one or the other, so you have to figure out what gives you the most bang for the buck.

Entropy and Climate Change

One of the first few things to realize about the whole climate change conundrum is that it is not solvable. The best we may be able to do is produce less entropy, and decelerate the decline of our physical universe. But in the end it’s a lost cause, or, as Keynes would have it: “In the long run, we’re all dead.” The case in point is the Toyota Prius, which has a lifecycle environemental impact that is worse than a Hummer. So dream on.

For those who want to get into the final nitty-gritty of the issues, there is no better introduction that Alex Marchand’s new book, The Universe is Virtual. Unless and until someone comes up with a better alternative to the second law of thermodynamics, the choices are limited, but right at the moment, the process is outright irrational, and we may be able to do better than we are. Again, the only thing we can do on the physical level, is to moderate the impact we are having, the problem is not solvable in any meaningful way as long as the laws of physics hold. If you want to stick to lighter fare, Jeremy Rifkin’s, Entropy, is still always a fun read, although a bit dated.

The solar PV fallacy: Oh to be green and foolish

These days the FTC has taken on greenwashing, and hopefully may be curbing some of the most egregious abuses, but if they got serious, very little of environmental business or products would be left standing, and certainly solar PV in its current form would have to be heavily restricted for the deceptive claims it makes.

What needs to be understood is that if we define the problem haphazardly, we are unlikely to solve the problem that we are presumably seeking to solve, in this case, reducing green house gases (GHG-emissions). To the promoters of solar PV, the problems is how much money can we make on selling solar PV installations (very little), or on financing solar PV (maybe something more), time will tell if it can be done profitably, but the current model of solar PPAs, solar leases, or even innovative lending like SolarCity’s new MyPower program, will likely not be enough to make solar PV really viable in the long run.


At single family scale – Solar PV disappoints

The exception is if you live down south and you have enough roof real estate to generate close to all the electricity you really want, perhaps solar PV makes sense. But up north the problem remains that electricity is 20-30% of the energy budget, and tying up all your money and roof real estate for a project that saves you a few percentage points on your overall energy bills, and locks you out of solving the whole problem categorically is not a smart decision.

The current sales paradigm for solar PV mistakes a marginal cost savings for the basis of a capital improvement to the property, and a permanent alteration of its energy infrastructure. The result is an impairment of the physical asset (property) and the balance sheet (liability), and the simple most obvious problem is that if the next buyer does not want to assume the remaining liability, it can depress the value of a property, as reported by Bloomberg here. Typically the risks include:

  • The lease or PPA may be under water at the time of the sale.
  • Newer solar technology may be more efficient.
  • Other technological alternatives offer superior economics.

If you are still in doubt, look at alternatives that are about to hit the market, like the Archimedes wind-turbine, and the Zonbak solar thermal solution, as well as a long-since proven solution of Geothermal Heat Pumps, which allows you to do complete central HVAC, heat your pool, and put a snowmelt in your driveway, while eliminating your oil bills.

One of the issues is that solar PV is still early in its developments, while Solar Thermal (85-95% efficiency), and geothermal (3-600% efficiency) are much higher, and mature, and wind turbines, in the right locations produce more energy per square area than solar PV does. Solar PV is now going from 15-18% efficiency and jumping by about 30% to 21-24% efficincies, while new technologies in the 30% and 40% efficiency ranges are in the pipeline for commercialization in the future.

Worse yet, as net-zero construction is growing and consistently profitable already for decades, just imagine selling your home 7 years from now when there is a new development of net-zero homes going up nearby. If those new homes offer $0 energy bills, and you are saving 3 or 5, or even 10% off your 2015 bill, what do you think that will do for the value of your property? The correct answer is: it will sell at a discount. Your investment in PV under those conditions is likely to produce a liability. You will be looking for ways to take those panels down in order not to depress the price of the house, and then you have a waste disposal problem on your hands.

At societal scale – Solar PV disappoints again

New York State has an ambitious energy plan, but it sadly lacks realism. The top-line goals are 50% reductions in GHG-emissions by 2030, and 80% by 2050, but there is very little detail on how to get there. Too many line items in the plan achieve 15-25% reductions in GHG-emissions, and are financially burdensome like solar PV. To tie up a lot of capital, and assume unnecessary 20-30 year liabilities to save 3% on your energy bills, and lock yourself permanently out of better alternatives is counter productive. We are throwing good money after bad, and mostly it is consumers who are on the hook, deceived by government incentive programs.

This first round of Solar PV-madness will prove to be regressive for climate change in the long run, because it locks properties into 25% reduction of GHG-emissions, instead of pursuing the 75%, which would make a difference. So, not only are these owners locking themselves out of the real solution, the collective effect is that we are averaging down, and ensuring we will never achieve anything like 50% GHG-reductions by 2030 or 80% by 2050.

With the current approach GHG emission reduction will be limited to something in the 20-30% range with solar PV and some energy efficiency, and GHG-emissions will metastasize into an unsolvable problem, so present programs guarantee we will never make those glorious goals of 50by30 and 80by50. It sounded good while it lasted. We are painting ourselves into a corner by over-promoting solar PV in inappropriate place.

It’s not those batteries either – thermal batteries are free

Remember the jokes about the Fisher ballpoint that could write upside down, and cost a million dollars to develop? Presumably the Russians used pencils instead. The truth is the Russians switched to Space-pens also. The point is clear however. We humans have a terrible tendency to reinvent the wheel.

In energy solutions for buildings, thermal solutions come in the form of passive design as well as active generating technologies such as solar thermal and geothermal. Batteries are cheap: it is also known as Domestic Hot Water, or depending on the application you can have some high temperature water storage. Overall, this is far cheaper and safer than the chemical batteries that are the norm for Solar PV.

Conclusion: time for method over myth

We have had the Internet bubble, and the subprime mortgage bubble, but now we have the budding distributed solar PV bubble. Some of the same people are promoting it, for the securitization machine was looking for work after the bust of subprime mortgages. Once rational analysis gains the upper hand–which may take a long time–this bubble of solar subprime will also burst, and it won’t be pretty.

Having said that, there are plenty of good applications for Solar PV, but the mass market that is currently forecast will dry up sooner than later. Serious GHG emission reduction will have to wait until the Solar PV-mania gives way to a more methodical approach using Solar thermal, and other solutions, providing a whole-house solution, not a 3% savings on your bills. There is a reason for the significant short interest in the SolarCity and Vivint Solar, see here (SeekingAlpha, registration required), and here (StockViews).

The rational model for retrofits is one that is focused on a pareto-optimal solution for each individual property, maximal GHG-reduction paid for eliminating energy bills with renewable retrofits, no a holistic basis, in the form of a 30 year capital budget with a positive NPV, so that it adds to building value. It should be understood that future property values will be determined by the fringe properties that are net-zero, not by whether or not somebody saves 10% on their 2015 energy bills. Future incentives should become like the Baucus energy tax proposal, which erroneously limited itself to the supply side (utility scale projects), for the demand side the goal should be GHG-reductions of 50% or better, with an incentive structure that starts at 50% and maxes out at 80%. The incentives for individual technologies flies in the face of good design. We can’t have accountants or Wall Street design energy systems on the basis of tax incentives.

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