Solar-Powered Electric Vehicles: Panacea Or Hype?

by: Market Exclusive

(Editors' Note: This article covers a micro-cap stock. Please be aware of the risks associated with these stocks.)

This article is the fourth in a series on the future of the electric vehicle (EV) industry. Past articles include:

  1. Not your Father's Gas Station: The Future of Electric Vehicle Charging
  2. Beyond Range Anxiety: The EV's Next Challenge
  3. Power Surge: Will The EV Revolution Overwhelm The Grid?

The equation sounds logical and enticing: solar power plus electric vehicles equals zero cost, zero emissions driving. Upon closer examination, solar-powered driving is neither as costless nor perfectly green as it might seem. The ability to harness the sun does, however, contribute to an unparalleled value proposition for the EV that its rivals cannot match.

Too Early to Pull the Plug

The idea of self-sustained, solar-powered driving has a whiff of alchemy to it that has captured the imagination of drivers for decades. Higher learning has fanned the flame by offering up actual working prototypes. Stanford's Luminos can run for days on end at speeds up to 55 mph on just the photovoltaic (PV) cells covering its surface. However, this state-of-the-art example is just as good at showing what is possible as it is at showing how impractical self-sustained solar driving really is. The cutting-edge PV cells the Luminos uses deliver much greater efficiency than what is commonly available today but at a much higher cost. Also, at 375 lbs. it is nearly ten times lighter than a Nissan (OTCPK:NSANY) Leaf. An unrelated Stanford study found it would take 350 square feet of PV cells (roughly the size of two parking spaces) to provide the average EV with a full charge. Obviously, that's much more surface area than a car can provide.

The numbers just don't add-up, which is why efforts to incorporate onboard solar power generation into EVs are largely symbolic. The Nissan Leaf SL, for example, incorporates PV cells into its rear spoiler, which are relegated to powering the dome light and cigarette lighter. Even combined with the benefits of regenerative braking, onboard power generation can't make a dent in range anxiety.

No Free Ride

Without major advances in PV technology, the self-charging solar-powered car will remain a science fiction fantasy for years to come. Many U.S. homeowners could, however, generate enough power from a rooftop PV system to meet an EV's daily power requirements. The average size of a residential PV system is 3 to 7 kW (according to leading solar company Sunrun). A Nissan Leaf with a 24 kW battery could be fully charged in a day by a 4.8 kW PV system assuming five hours of electricity-producing sunlight per day for most of the U.S. (4.8 kW system X 5 hours = 24 kWs).

(Click to enlarge)

Early adopters of EVs seem to be figuring this out. A recent survey of EV owners by the California Center for Sustainable Energy found that 39% of EV owners have already installed a PV system to support their EV and another 17% plan to invest in one.

From this back-of-the-napkin math, it's easy to jump to the conclusion that any EV owner can achieve the panacea of zero cost, zero emissions driving by going solar. One cannot, however ignore the initial cost of going solar. Sunrun puts the cost of a residential solar installation at between $18,000 and $40,000. Every homeowner in the U.S. is currently eligible for a 30% investment tax credit to help defray this cost. Beyond that, incentives offered by state and local governments as well as utility company rebates vary (see the DSIRE database for a breakdown by state). All of these incentives and rebates are designed to encourage early adopters to go solar, which means that they will disappear at some point.

Even with all the available financial assistance, most homeowners in the current economy cannot afford the thousands of dollars in net out-pocket-costs. This is why solar companies like Sunrun and Solar City (SCTY) offer what amount to zero-money-down payment plans that can take up to twenty years to pay-off. Though these plans are less expensive than an electric bill and offer locked-in pricing, they are by no means free.

It is also naïve to assume that solar-powered driving necessarily results in zero emissions driving on a well-to-wheels (WTW) basis. For the majority of EV drivers who use their EV to commute to a job during the day, EV charging must take place at night using off-peak power generation which as mentioned in a previous article is actually more dependent on coal-fired plants than peak power generation. Though solar-powered homeowners can pay for this power using credits generated by any power their PV cells generate during the day in excess of their household needs, night charging simply cannot be powered by the sun. So, unless solar-powered EV owners purchase a battery storage solution like this one offered by Tesla (NASDAQ:TSLA) through Solar City, they cannot run independent of their utility companies and thus cannot truly achieve zero emissions on a WTW basis.

Implications for Commercial EV Charging

If the cost of residential solar-powered EV driving is not truly free, one can certainly make the case that free public solar-powered charging is available through Tesla's Supercharger stations, which are powered by Solar City PV arrays. It is an oversimplification, however, to say that the Supercharger network means free solar-powered EV charging for all.

First, Supercharger service is only free to Tesla owners and is only compatible with the Model S. Second (as pointed out previously in this series), Tesla does not plan to put a Supercharger station on every corner in the U.S. Therefore, only those EV drivers who happen to own a Model S and live near a Supercharger station will be able to avail themselves of free solar-powered driving on a day-to-day basis courtesy of Tesla. As for initial installation cost, the only reason Tesla will not be entering a long-term equipment lease is that Tesla has a billionaire benefactor to put up the $25 million it will cost to build-out the network. (The founders of Solar City may be Elon Musk's cousins, but that doesn't mean they are willing to work for free.)

In reality, most solar-powered public EV charging will not be any more cost-free to the provider than it is to the typical residential solar-powered EV driver. Take for instance the town of Westport, Connecticut's exemplary implementation of solar-powered EV charging at its train station. Though EV commuters enjoy free charging while away at work, the high cost of solar power equipment forced the city to enter into a 15 year lease with local solar provider Encon Solar in which the city essentially pays Encon for the solar power they generate, in the same way an individual homeowner might make monthly payments to Solar City or Sunrun. These payments are 30% cheaper than a traditional electrical bill, but they are by no means free. Incidentally, the necessity of such arrangements is good news for commercial EV charging service providers like Car Charging Group (OTCPK:CCGI), because it means even with solar-powered solutions there is a long-term recurring revenue stream to monetize.

No Hype Required

Solar-powered EV charging may not live up to the hype, but it does add quite a bit to the EV's value proposition. Though solar power isn't free from a total cost perspective, it is materially cheaper than conventionally generated power which is already much cheaper than gasoline, ethanol, or liquid hydrogen. Though it may not result in zero emissions for most EV owners, solar-powered driving still contributes to a WTW environmental impact which (as detailed previously in this series) is unparalleled by conventional alternatives. By all means, let the solar revolution within the EV revolution continue, but let's be sensible about what can be achieved.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: Market Exclusive is a team of analysts and writers. This article was written by Carlos Uribe, one of our Group contributors. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.