The Truth About Solar Energy
There’s a lot of debate these days about the future of solar power. Certain news media outlets who must not be named have brought renewed attention to the issue, likely confusing the public further. I’m here to tell you that solar IS our future. Why? In addition to being an important part of fighting climate change, solar makes financial sense, creates jobs, is abundant, and enjoys widespread popular support.
Solar makes financial sense
“Wait,” I hear you say, “Isn’t solar just too expensive?” There are so many ways to answer with that, but they all lead to “No, get with the times.” The perception that solar is too expensive is outdated. The current reality:
The price of solar has been plummeting, to the tune of 30% in the past two years.
New financing options have brought solar within reach of the average person, allowing more lower- and middle-income people to go solar.
Schools, corporations, and government agencies wouldn’t be installing solar in droves if it didn’t make financial sense.
Costs may go down even further if the DOE’s SunShot Initiative succeeds in lowering soft costs, such as permitting and financing. Lower soft costs have helped Germany top the U.S. in installations despite having much less sun.
Many areas have already achieved grid parity, where unsubsidized solar power is on par with or cheaper than retail electricity prices. That’s expected to spread to many more regions in the coming decade:
Former Energy Secretary Steven Chu agrees -- in fact, he believes solar is close to being as cheap as any other power source: “This is not something that’s going to happen 20-30 years from today. This is going to happen 10 years from today. Maybe sooner.”
Solar benefits all utility customers
Utilities still aren’t convinced, and a major conflict is brewing with them. They’re saying that solar customers tied to the grid are driving up costs for everyone, because they buy much less power from the utilities than other customers and therefore pay less for the utility's fixed costs. In effect, they claim that non-solar customers are subsidizing solar.
However, it’s likely that the utilities are reacting out of fear of losing profits. Their math just doesn’t add up. In fact, two recent studies have shown that net metering not only benefits all electric customers but can also help a state’s economy. We haven’t heard the last of this hot topic -- the California Public Utilities Commission is due to weigh in with their own study in October 2013.
Some utilities are getting behind solar, though, as they see the benefits not only to customers but also to themselves. Most of the power grids in the U.S. are old, under stress, and in need of upgrades. In some cases, utilities are finding they can incorporate customers’ solar generation into the planning for these stressed networks and defer upgrades -- not to mention avoiding the costs of new distribution lines -- which results in savings to their customers. It’s a win-win-win!
Solar has lower externalities and indirect costs than fossil fuels
So let’s assume you’re convinced so far: solar is in fact cost-effective compared to fossil fuels. What happens if you add the costs of fossil fuels beyond what it costs to generate them? These include externalities, or hidden costs, such as pollution and resulting illnesses. Fossil fuel-related health costs in the U.S. alone are estimated at $120 billion a year.
Some of the costs are unexpected. A recent study by the World Future Council provides a new take on the costs of fossil fuels -- the costs of using them instead of renewables. All the fossil fuels we burn for energy, the study notes, are fuels we are taking out of circulation for other purposes. Given the petrochemical industry’s reliance on these substances, the study estimates that using conservative measures, the future use loss amounts to $3.2 - $3.4 trillion dollars a year.
Suppose, though, that in the future we figure out ways to make our stuff without fossil fuels. We’re still left with other externalities and indirect costs, such as the costs of extreme weather events.
Superstorm Sandy is estimated to have cost as much as $71 billion in damages -- and we’re seeing many more major storms resulting from climate change. A recent study estimated that U.S. storms between 2011 and 2012 have cost us $188 billion.
We’ll continue to see the costs of extreme weather not only in damages but also in damage prevention, something cities like New York will have to invest in further. A major coal company has already invested significant shareholder dollars to protect their coal export infrastructure from these increasing superstorms.
There’s another aspect to calculating costs: we must consider costs of the entire life cycle of generating any form of electricity. Just about everything we make on this planet comes with some waste, and even solar is not immune. But the waste caused by producing solar systems is much less than that from fossil fuels, and solar’s actual power generation is very clean.
Solar is looking more appealing all the time, isn’t it?
Solar makes sense even without subsidies
Whether solar can thrive without subsidies depends on a number of factors, including location. Solar is coming closer to holding its own thanks to falling costs, but what about subsidies being cut in many places? Will that make solar unsustainable economically?
Let’s start by asking the same question about fossil fuels. What would happen if we cut all the subsidies for coal, oil, and gas?
For one thing, we’d have a lot more money to spend on other things. During the time they’ve been getting subsidies in the U.S., according to a DBL Investors study, oil and gas have received $4.86 billion a year. That’s over 13 times more than the $0.37 billion a year in subsidies for renewables.
Coal also gets more subsidies than renewables. It can be hard to calculate the actual amounts coal and other fossil fuels benefit from when you consider all the tax credits, tax breaks, and indirect subsidies -- not to mention externalities. When you add those, a 2011 Harvard study estimated the real cost of U.S. coal subsidies at $345 billion up to that time.
The U.S. trend is mirrored globally: in 2008, according to the U.S. Energy Information Administration, fossil fuels received $557 billion in global subsidies, compared to $43 billion for renewable energy.
And if solar got the same treatment? Keeping in mind that One Block Off the Grid created this graphic in 2010 and by now more of the U.S. can support solar without subsidies, this is still a nice illustration of what we’d be looking at:
So why are we even asking if solar can thrive without subsidies? The fossil-fuel industry has been around for a long time and is still benefiting from that help. The newer renewables industries should be getting more of a boost, shouldn’t they? Whatever your opinion on that, they’re not. In fact, during the first 15 years of subsidies for the respective industries, oil and gas subsidies represented half a percent of the federal budget, about $1.8 billion a year, and all renewables only about a tenth of a percent, or $0.5 billion.
It’s especially odd that there would be such a fuss about this when a majority of Americans support subsidies and incentives for solar. But when you have such entrenched financial interests as the fossil fuel industry has, it’s hard to let go.
The good news for solar is that it’s becoming more cost-effective even without subsidies. The grid parity it’s reaching in more areas is in relation to existing fossil fuel generation. When it comes to new power plants, many places around the world are finding that solar and other renewables are cheaper than coal and gas even without subsidies. Global investment banking analysts at UBS recently predicted a boom in unsubsidized solar in Europe. And a new analysis by Deutsche Bank predicts that by the end of 2014, the global solar market will be sustainable without subsidies.
We can still benefit from subsidizing clean power. Some countries are still putting feed-in tariffs and other programs in place to accelerate solar adoption. To see what can be done with smart subsidy policies, just check out Wildpoldsried, Germany, a town generating so much clean power that they’re making money selling the excess. And to put the icing on the cake, you need look no further than Gainesville, Florida, whose feed-in tariff has helped it become a world leader in solar.
Solar creates jobs
One benefit of subsidizing solar is the jobs it creates. In fact, that comes to many more jobs per dollar invested than is true of fossil fuels, according to a University of Massachusetts study:
And the actual job numbers for 2012 were good. According to the Solar Foundation’s National Solar Jobs Census 2012:
As of mid-November 2012, over 119,000 Americans were employed in the solar industry.
The employment growth rate in solar over the previous 12 months was 13.2%, compared to 2.3% for the overall economy.
Out of every 230 U.S. jobs created in the past year, 1 was in the solar industry.
As Danny Kennedy, co-founder of Sungevity, points out, this doesn’t even account for all solar jobs. The census focuses on jobs related to installing, but the industry also employs thousands in solar-related financing, as well as software and information technology services.
Solar is abundant and popular
Some are quick to point out that even in places with increased solar adoption, it’s still a small part of all power generation. But this is not an argument for not doing more. It doesn’t need to be this way. The sun is our most abundant resource, shining enough rays on the United States every day to more than power us for 10 years. Coal, oil, and gas combined can’t come close to matching that.
Support for solar, while not as abundant as sunshine itself, is widespread. A September poll of likely U.S. voters showed that 92% of Americans support developing more solar, and a majority want the government to support solar with tax credits and other financial incentives. And despite claims that Germans are fed up with solar, a recent poll found that most favor renewable energy and many even think its progress in Germany is too slow.
Why are so many people in favor of solar? When you look at the benefits of solar -- plus the costs of fossil fuels, both direct and indirect -- it just makes sense. Isn’t an ounce of prevention worth a pound of cure? We have to ask ourselves if we care more about our planet, and all the life on it, or about the financial interests of a few people who already have more money than they need. Isn’t the answer obvious? Isn’t the answer solar?
This post was originally published at PV Solar Report.
Rosana Francescato is the Communications Director for Domino, a concierge service that helps consumers save energy and money. She writes about solar for PV Solar Report, Mosaic, and other publications. Rosana serves on the boards of Women in Cleantech & Sustainability and Everybody Solar. She has hands-on experience installing solar with GRID Alternatives, where she’s been the top ...
Other Posts by Rosana Francescato
What are the emerging energy and utility trends?
Learn more in an exclusive, free ebook:
"The Future of Energy and Utilities: An IBM Point of View."
|More coming soon...|
The Energy Collective
- Rod Adams
- Scott Edward Anderson
- Charles Barton
- Barry Brook
- Steven Cohen
- Dick DeBlasio
- Senator Pete Domenici
- Simon Donner
- Big Gav
- Michael Giberson
- Kirsty Gogan
- James Greenberger
- Lou Grinzo
- Jesse Grossman
- Tyler Hamilton
- Christine Hertzog
- David Hone
- Gary Hunt
- Jesse Jenkins
- Sonita Lontoh
- Rebecca Lutzy
- Jesse Parent
- Jim Pierobon
- Vicky Portwain
- Willem Post
- Tom Raftery
- Joseph Romm
- Robert Stavins
- Robert Stowe
- Geoffrey Styles
- Alex Trembath
- Gernot Wagner
- Dan Yurman