Related link: http://www.solarwarrior.com/
Solar energy falls out of the sky every day. Some of it will eventually be converted to electricity by feeding plants, which are eaten by animals, which may be converted into oil and natural gas over eons. That oil and gas may be shipped to a power plant where it is converted to electricity, creating pollution in the process. Some analysis suggests that photovoltaic arrays (solar panels) can dramatically reduce pollution by converting sunlight directly into energy. The problem, of course, is that solar energy isn’t free. You need to have some sort of a collection device to harness the energy, a storage system to store the daytime surplus, and converters that change stored energy into useful power for your household appliances.
In no particular order, here’s my understanding on the major barriers to adoption of photovoltaic arrays on a large scale:
- Financial. Installing your own solar array costs tens of thousands of dollars (or, as the linked example illustrates, hundreds of thousands of dollars if you want to generate a lot of power). This large up-front investment is required for a payoff that trickles in over the years as hundreds of dollars per month in savings on your utility bill. For many systems, the net payoff happens only after a decade or more, but the average homeowner sells after five to seven years. It would help a great deal to come up with a financial model that allowed the savings to pay for the system over time. If a solar energy improvement directly added on to the value of a home (spend $X on a system and see the value of your home increase by $X), it might be possible to borrow against the increased value of the home.
- Storage. Solar systems generate usable power when the sun is out, but electric usage is spread throughout the day. To use electricity at night, you may need to store it during the day. In some areas, the utility will “net meter” and give you credit for the power you generate during the day; in others, you may need to store energy during the peak production during the day and draw from it in the evening.
- Building. Making solar modifications to your home means obtaining approval from local planning authorities. In some locations, the permit approval process is time consuming and expensive.
- The Utility. Your local utility is in the business of selling you electricity, and may not be too keen on helping you use less of their product. Interconnection costs them money in lost sales, so they may fight it on safety or narrow legal grounds.
- The Government. The government will not necessarily support you. Public utilities commissions are often in the utility’s pocket, and contributions to key legislators can keep favorable laws bottled up indefinitely. Year-to-year budget considerations and public opinion may also change the government incentives available every year, and photovoltaics may not be economically viable without sustained subsidies. (To be fair, a great number of tax code provisions that provide expensive subsidies for dinosaur-based power are rarely discussed in public policy arenas, so at any point, fossil fuel subsidies dwarf spending on alternative energy technologies.)
Interestingly enough, the financial problem is similar to the one faced by the 802.11 hot spot industry in its infancy. There is a large up-front capital investment (the solar array/access point) that needs to be paid off by a trickle of revenue in small chunks over a long period of time (monthly electric bills/network access fees). Although it might eventually pay off over time, the huge up-front investment discourages it.
As an alternative, it might be possible to change the financial model, as described for the 802.11 access business by this 802.11 Planet article. Originally, hot spot access providers needed a large initial outlay to install a network at a location, and had problems when hotels did not understand how to sell access. RoomLinX converts the large up-front cost to a lease payment plus a management fee, which allows a hotel to develop a business model that pays for an 802.11 network incrementally by attracting guests. (Interestingly enough, Marriott’s hotel business is run on similar lines. They arrange for third parties to take on the large construction debt of building new hotels, and provide management services for a fee.)
Returning to solar energy, I wonder if there’s a similar business for photovoltaic installations. My imaginary business would arrange for installation and maintenence, and consolidate all the financial aspects into a single monthly payment that could easily be compared to an existing utility bill for expected savings. The challenges I see immediately are that a solar array might not add value to a home dollar for dollar, so that it might not be possible to recoup the cost of a system if the home is sold before it is paid off. (Anybody know of research on the value of a photovoltaic array on home values?) My understanding of current financial viability of solar electricity is that long-term viability also depends quite a bit on various tax incentives, and I do not know to what extent changes in the tax system affect installed systems. Furthermore, many of the financial incentives in place depend on home ownership, so there is little hope of assisting renters in this way, especially since owners have no incentive to install systems to save their renters money.
What would it take to get you to use solar power?