Solar Guy

First Solar Earnings: Eight Points About the Solar Industry

Good point Windsun33. Just remember that the total cost of a solar PV installation is only 1/3 equipment, 2/3 labor. Agree on permitting process - a nightmare as you obviously know from experience.

First Solar Earnings: Eight Points About the Solar Industry

To Fred W: "NE Florida utilities don't generally have a base rate of $0.15/kWh" Have you checked your utility bill lately? The base rate has nothing to do with the true cost. It's the same obfuscation tactic that cell phone companies use to hide the true cost. Divide the total amount due at the bottom by the monthly usage of kWh for the "true " cost. All those taxes, service/demand charges, and fuel adjustment charges in addition to base rate is the true cost of electricity.

We have a proprietary model that builds in the economic assumptions, discount rate, annual escalation rate, etc. that we're constantly updating. Since September 1, 2008, our two local utility companies rates have increased 20.3% and 30% respectively in NW Florida. You can throw out all the historical data on annual rate increases in the pre-carbon tax and pre-grid upgrade era. Just wait until 2010 - consumers and businesses are about to get hammered with all these pass-through costs for grid-based electricity in the next year, making distributed solar energy on the rooftop an even more compelling value proposition.

It's actually irrelevant how many years a person stays in the home as it's the LEC of the energy producing system that you're analyzing. The increased value of the home with renewable energy and a lower utility bill is passed on to the next homeowner. People don't live in their homes for 30 years, but they budget for them that way typically with 30-year fixed mortgages. Why? Lower monthly payment.

First Solar Earnings: Eight Points About the Solar Industry

Troy,

You make some excellent points, except your LEC math is inaccurate on point number 4.

As a complimentary service, we provide all our customers a 30-year system life analysis to determine their IRR, Net Present Value, and Payback Period on their solar systems. Almost all of the solar panel manufacturers now offer a 25-year warranty and the panels will actually perform for 30+ years. So the LEC analysis should be based on 30 years lifetime, not 20 years as you stated.

Reference your final comment - "Solar's LEC must come down to the level of other, traditional energy generation sources for it to truly gain critical mass and the accelerated investment and deployment that comes with it." On every analysis I've provided to our customers here in Northwest Florida, the fixed solar rate equivalent cost for 30 years has been in the $0.03 - $0.08 / kWh range based on the size of the system versus the local utility provider's grid-based rate of $0.15 / kWh. In reality, we're already at or below "grid parity".

Even if you take away the current subsidies and tax credits for the unsubsidized, TRUE cost of energy from all energy sources (solar versus coal, natural gas, and nuclear) in the US, decentralized electricity generation from solar panels on a rooftop with no associated grid transmission costs or non-competing, utility company monopoly dependence is still much less expensive for the next 30 years.

Where to Next for Solar ETFs?

To windsun33. Excellent point, except that there is an indirect and psychological realtionship between solar and the price of oil. I know -- my company sells and installs solar panels, and when the price of oil then gas at the pump goes up our inquiries for solar panel installations skyrocket. Go figure...

Has Solar Demand Finally Hit Bottom?

rdasher needs to do his homework on payback for solar. I do solar sales and installation for a living in Florida with a sophisticated spreadsheet tool for comprehensive financial analysis. Payback period for both residential and commercial solar is running from 8-10 years now and internal rate of return (IRR) from 10% to 22% based on PV system size, local rebates, incentives, and Federal tax credit due to economies of scale. Try making that kind of return on your money with any other investment in current credit market.

Intel Creating a New Solar Play

Good to see computing techology titans like Intel (also IBM) entering the solar sector. Should bring a lot of solar cell advancements and innovation to that space to accelerate development and drive costs down. Will create some good investing opportunities also. A natural extension of their business IMHO.

Walter Nasdeo Discusses Solar Energy

Nice overview, but no article on grid parity economics is complete without including a discussion on subsidized costs of conventional energy sources (coal, natural gas, nuclear) and the unsubsidized costs of solar. See Jack Yetiv SA article on this subject at seekingalpha.com/artic.... I believe (as Jack clearly points out) that an apples-to-apples comparison of all the "true" and hidden costs of fossil-fuel based electricity generation that taxpayers subsidize (e.g. 20-year life cycle costs and environmental impacts being quantified, health risks, loss of US capital overseas for imported oil, annual defense expenditures to protect strategic interests in Middle East region) versus unsubsidized solar would drastically change the narrative of this energy debate. The truth is we're already at grid parity. That data is obscured by lobbyists in the oil and natural gas industry -- because if revealed to consumers it could cause a major revolt on the utility prices and an explosion in renewables that would truly accelerate adoption of them.

Nuclear and fossil fuels received over 6X the combined tax subsidies in 2007 for electricity-related R&D funding ($9.3B versus $1.4B for renewables.

The popular argument forwarded by the oil and gas industry that renewable energy sources such as solar and wind are not cost-competitive with conventional sources ignores the fact that the latter are subsidized at a far greater rate, and renewable energy is not currently mass produced so it cannot take advantage of the economies of scale (yet).

Other than Jack Yetiv, no author has really tackled this subject in depth. Would be a great business case study for Harvard.

Is the Sun Shining on Solar?

If you examine the true, unsubsidized costs of solar versus the traditional sources of energy we're already at grid parity. See Jack Yetiv's article on this subject at
seekingalpha.com/artic....

When Will Solar Achieve Grid Parity? We're Already There!

Good supporting economic analysis and puts it in context. Thanks Jack!

When Will Solar Achieve Grid Parity? We're Already There!

Jack, thank you for the time you've invested in responding to all the people in this article. Very educational for us all as this is what I consider the most important issue of our time (followed closely by availability of clean water), and as a society we have to make the right decisions for the future of our children and the planet. You've done us all a great service as this is a hot button, emotional issue with a lot of different opinions. I will be using a lot of this content for economics of solar in my presentation to a local utility company soon. They are in a quandary about which direction to go with a new power plant to meet growing power needs, and afraid Governor Crist will veto both coal and nuclear options. The SCE decision to go solar makes a compelling business case and is clearly a testimonial on the future energy generation choice for our country.

Keep up the good fight, and May God Bless You!

Solar Power Will Be Transformational in the Next Decade

Another great article Jack. Keep 'em coming. Your facts match up very well with the guru, Travis Bradford, in his book "Solar Revolution". As a fellow Baby Boomer, I'm on a crusade to do exactly what you suggest and leave this a better planet for our kids and grandkids. Did you catch the announcement from the King of Saudi Arabia about capping oil production at current levels to save what's left in the ground for their future generations? Wow -- what a profound statement and worldwide impact as other oil-exporting countries will probably follow suit. They probably have, or will soon, reached peak oil but won't disclose it because it would weaken their geopolitical power. They (and the oil companies) will continue to maximize profits as demand exceeds supply and reduce the depletion rate without any further investment in new fields. See article at www.evworld.com/articl.... (It's also why I'm looking for investors for my solar power plant startup here in Florida). I'm the former CEO of a dot-com company for 10 years, and believe this sector is bigger than the Internet for the next 20 years. We can't get the solar industry going fast enough in my opinion.

When Will Solar Achieve Grid Parity? We're Already There!

Right on Mr. Yetiv! After much due diligence on this subject, I came to the same conclusion. In fact, I am making a presentation to a local government agency tomorrow on a large solar initiative. I am in stealth mode on a start up company to build a solar power plant. Thanks for the endorsement!

Energy Affecting Food Prices

President Bush sure got some lousy counsel from his staff on the whole mandated use of ethanol and subsidy issue. What a debacle that is turning out to be as it drives up food prices and is not the renewable energy solution he was told it is. Now who in his administration has the courage to tell him it was a huge mistake?