Is Solar PV finally here?
Yes. As I pointed out in my December Resilient Strategies report, Solar PV technology is now ready for prime time (particularly for DIYers in the right areas!). As a result, we’re going to see solar panels pop up everywhere in next decade. However, contrary to expectations, almost all of that will be produced locally rather than in large, remote, sunny locations. The reason for this rapid residential roll-out is largely due to the particular problems big power companies are facing. These include:
- The average power plant was built in the 1960s. They were only designed to last 40 years or so. These need to be replaced, but how?
- They can’t do anything to improve the electricity grid. It’s too expensive to upgrade to a smart grid. Further, they can’t put any new high voltage lines in due to NIMBY (not in my back yard) opposition.
- Peak demand for electricity is hitting new highs in built up areas (hot summers plays a big role in that).
Local Power to the rescue
To solve this problem, many of the big power companies are going to move into local, rooftop solar power. How? By leasing and financing rooftop solar power systems to their customers. The reasons for this are:
- Solar PV energy reduces peak demand stress since peak production on these system occurs at the same time.
- Local solar doesn’t stress the grid. It is used as it is produced, eliminating transmission costs/losses. Nothing new needs to be built and it offers and opportunity for smart metering upgrades.
- They will make a mint on these leasing programs, producing low cost power and selling it peak demand rates (most of these companies actually want to be like Goldman Sachs instead of utilities — see Enron as an example).
Who Profits? I hope it’s You and Your Community
Of course, if you do lease these systems from a financing company, all you will get is a fixed rate. The power company will take all of the rest, and it is a substantial amount (4/5 of the value). I think that would be a BIG mistake. What are the alternatives?
- DIY it. Put it in at cost. Recoup most of the benefit for yourself. That benefit can be a significant investment income that will support you long term.
- Install it as a community. A small team that rips through multiple installs quickly to allow the community to reap the benefit. That benefit could be large enough to substantially underwrite a town’s cost structures. Also, if there is a high enough participation rate in a local program, it will gut the value of the local loop to the Power Company, which may make it easier for the community to buy its local grid (and convert it into a microgrid), in the future.
- Join with multiple communities to negotiate as a single group. This group has the potential to get dynamic pricing on the electricity that is produced (in short, to get what power company pays peak producers, which is quite high).
PS: While doing research for my upcoming Resilient Strategies report on DIY solar, I found more evidence that resilient homes are ALREADY much more valuable than non-productive homes. A comparison of the appraisals of homes before and after the installation of solar panels shows that for one dollar per year a solar energy system saves a home owner in utility expenses, the market value of the home increases by twenty to thirty dollars.