Sunny Days Ahead?

Green Mountain Power is going to install over 1,000 solar panels in Berlin (Vermont) according to The Rutland Herald.  It will cost $1.2 million, but ratepayers customers, don't worry about the cost.  The $1.2 million cost will be partially paid for by the FTA (that's the Future Taxpayers of America, sometimes known as the government). And as we all know, the FTA is going to be on the hook for all sorts of stuff our government is buying these days, so what's a few bucks more for green energy?.

And how much electricity will these solar panels generate?  About 200 kw, enough to power about 200 homes, according to GMP.  And the cost?  About 15 cents per kwh.  If that's the wholesale price of the electricity on site, that's pretty expensive, given that the retail price of electricity in Vermont is just shy of 15 cents.  Including all other costs, the price to consumers will be much higher.

On a per house basis, the cost is about $12,000.  So the real question is if GMP gave 100 households $12,000 and told them to find energy savings (insulation, better windows, caulking, more efficient furnaces, etc) or be able to buy solar electricity, which would they choose?  Which is a better use of GMP's and FTA's resources?   

Meanwhile, over in the other Berlin, home to half the world's installed solar capacity, things are not all peaches and wurst.  Germany is

a country that gets an average of only 1,528 hours of sunshine a year, less than a third of the total daylight hours. That figure is comparable to London’s but it is one-third fewer sunshine hours than in Florence, Italy, and only half San Diego’s.

Not unlike Vermont.  

Why is solar so popular in Germany?  You can thank the FTG (that's the Future Taxpayers of Germany) and most likely current taxpayers as well.

Some German lawmakers are concerned that

solar generation is growing so fast that it threatens to overburden consumers with high electricity bills.

Couldn't happen here, could it? 

Comments

[GreggB]

Who cares about the price of electricity in VT, you guys got gay marriage.

[Mark Shepard]

What about an outdoor ceremony under a solar panel on one of those rare cloudy days? They have a lot of potential.

[David Usher]

GMP is betting on alternative energy mandates from the Legislature. They figure they'll be in solid shape by seeming to be 'with it' gleaning kudos from the green groups.

Why should economics matter when ideology rules the day, especially if someone other than GMP will pay? GMP's customers, present or future, will pay this bill either in rates, taxes or both.

Solar at today's wholesale electricity prices is a poor use of anyone's capital in Vermont.

[Brattleboro_conservative]

Gregg is spot on in his post, we'll just charge all those gay tourists a whole lot more money for their rooms! Yeah, with all the increase in the "tourist" trade, we're sure to make up for any increases in electricity, right?

Me? I'm seriously looking for real estate on the other side of the river. I have the strange feeling, I'm going to have a lot of competition soon.

[RFC]

What our legislature - and perhaps some of our business leaders - need
most is a refresher course in first grade arithmetic. Apparently the cost of anything (including taxes)is no longer a factor in what is imposed upon us by our state government. I wonder sometimes why we wasted so much time in school learning about numbers and their applications. Evidently they aren't very important if you live in Vermont.

[Karen Kerin]

I am very grateful that I do not have GMP, but then again CVPS is pretty shaky too.

[Mark Shepard]

Brattleboro,

You might want to look for a more distant river to get on the other side of. NH has been invaded and is being taken over as well.

RFC,
From my personal experience I can assure you there is absolutely no need for math, logic or facts in the VT legislature. They are completely obsolete.

[Daniel Foty]

Art,

There's actually a great deal more to this story - of how Germany foolishly and needlessly got itself into this mess, and how the consequences are destabilizing Europe as the chickens now indeed are coming home to roost. And the story has aspects that should sound very familiar here in Vermont.

Back in 1998, the Social Democratic Party leader Gerhard Schröder became Chancellor of Germany by forming a coalition with the Green Party. As is often the case with coalition-formation in parliamentary systems, the Greens only agreed to join the coalition if certain demands of theirs were met; one of the demands was that Germany would phase out all of its nuclear power plants (gee, does THAT sound familiar?), and replace the discontinued power generation capacity with solar, wind, unicorn dung, and so forth. (Up to that time, Germany had been - unsurprisingly - a world leader in nuclear engineering technology.)

Not surprisingly, as your narrative describes, this hasn't worked out terribly well as a plan for providing Germany with electric power that is either reliable or economical.

However, the political consequences have been even worse. Because of this muscle-headed energy "plan," Germany has become disastrously dependent upon Russian energy supplies (particularly of natural gas).

One consequence of this energy dependence has been the "Finlandization" of Germany by Russia. Germany has been acting virtually as a Russian-interests section inside both NATO and the European Union. In one of the worst moments on that count, Germany used its NATO veto power last year to implement a major Russian foreign policy goal - of seeing that neither Ukraine nor Georgia were offered even a chance of beginning the road to NATO membership.

And of course, a few months later, Russia took advantage of an opportunity to attack Georgia and seize critical Georgian territory.

In another non-surprise, when Mr. Schröder stepped down from the Chancellor's position in 2005, he immediately stepped into an extremely lucrative executive position with Gazprom (the Russian state natural gas monopoly).

In combination, and to the consternation of its eastern European neighbors, Germany and Mr. Schröder are working directly with Russia to build an environmentally-risky (!!) natural gas pipeline under the Baltic Sea that will move gas directly from Russia to Germany - bypassing (both in fact and in politics) all intervening countries - including many fellow EU countries who understandably are very, very nervous about Russian intentions.

And given the horrid history of the bitter fruits of German-Russian cooperation, they have every right to be nervous.

[Anonymous]

FYI
I think that the statement that 200 kW is enough capacity to supply 200 homes is a gross overstatement. I just checked the microwave oven (countertop type) in my kitchen and found that it uses 1.5 kW. An electric hot water heater uses between 2.5 and 4.5 kW. Refrigerators, freezers, water pumps, etc. all use 1 kW plus or minus EACH.
In my opinion, 40 homes would be a more realistic number to be supplied by 200 kW.....unless, of course, there happens to be a run of cloudy weather.....To think of shutting down VY, which supplies 30% of Vermonts' baseload power, without a practical alternative, makes me cringe.

[Sheldon Katz]

Art,

Let's take it one step further. Instead of giving the 100 households $12,000 to find "energy savings," how about giving them $12,000 to do with as they please (e.g. pay down debt, save for retirement, college, buy a new GM or Chrysler (or other make of) car, improve their homes, take a vacation, go out to eat more often, add more insulation and install solar panels, etc.). Some may use some of the money do find energy savings, but each household would determine how much if any to use for that purpose.

Then let's take it a step further. Let's give all households a like amount to do with as they please and watch Vermont's economy take off like a rocket, erasing the state's deficit without tax increases before you can say "Jack Robinson." The only reason I can think of not to do this is based on the belief that (i) individual households are not smart enough or well enough educated to know what is good for them, or (ii) each individual household is a terrorist with a strapped-on bomb (like the mortgage defaulters) threatening not to detonate it if it does not receive a subsidy to be used only for home energy efficiency.

We will not hear it expressed in these honest terms from advocates of politically-correct but economically foolish solar (and other "renewables") subsidies. So much for the new transparency.

[Lance Hagen]

Gotta love these folks that tout ‘Solar Power’ for Vermont. The solar project at Green Mountain Coffee falls into the same cost ‘pit’. Project cost is $750K (of which $250K comes from the taxpayer and $50K from GMP). Solar panels last about 25 years, so if you spread the project cost over this time period the cost is $30k/year. Now Green Mountain Coffee claims these panels with generate 112,000 kwhr/yr. So just considering the initial project costs and no operating or maintenance costs (the inverters needed to convert DC to AC don’t last 25 years), this comes to about 27 cents/kwhr.
This gets even better. Solar panel output degrades at about 1% per year. So by the 25th year the panels are only outputting 84,000 kwhr/yr. But the $30K in yearly project costs still needs to be covered. This means the cost of the electrical output rises to 36 cents/kwhr in the 25th year.
Fortunately for Green Mountain Coffee, the power generated by their project solar panels only account for 1% of their total electrical power usage. This means that for their other 99% of the power usage they pay a price of somewhere around 12 cents/kwhr. So what is being touted as a serious energy project by ‘greenies’, in reality is just a PR effort by Green Mountain Coffee to demonstrate they are ‘with it’ for the green groups.

[RFC]

How to predict the viability and success of any given energy source?
Very simple: is there a labor union of workers associated with the industry? In oil? Yes. In coal? Yes. In nuclear energy? Yes. In solar or wind turbine energy? No.

Labor unions are formed only in industries where the union leadership can expect to rake in lots of money, i.e. successful commerce. Ergo, it will be a cold day in hell before a Jimmy Hoffa or a John L. Lewis appears on the solar and wind energy lakefront. This is a fool-proof indicator validated by the passage of many moons.

[Ed G. Mann]

Sheldon, giving $12,000 to Vermonters would have the sane ones using that windfall to decamp this state for more logical pastures posthaste.

The door would not hit anyone in the butt, it would be off the hinges.

[Bob Essman]

In 1908 when Ford introduced the Model T, horses left 2.5 million pounds of manure a day on New York City streets which was far more dangerous to human health than the auto exhaust we now breath in in large cities. No one ever seems to consider the materials usage or what to do with all that stuff when any of the current "alternative energy" toys wear out. Talk about waste!

The politicians talk grandly as long as the solution is not in their back yard. The green squawkers scream platitudes with little consideration of reality. The established energy producers spend valuable research money on public relations.

I see no real advantage to any of the less than innovative ideas currently available - this is old thought. What we need is a "power" program, perhaps like the original space program to explore and innovate some real alternatives to producing electricity or some other undiscovered power source. We're still thinking in the same old box and until we move out of that old box there will be no real change.

The auto producers, the oil companies, the power companies and the banks should be pooling resources or fighting to be first to make this happen. There has to be a Henry Ford or Thomas Edison or a Bill Gates out there with a real idea that will not only solve the problem, but make money doing it.

[Jeff Wolfe]

Actually, Vermont gets 30% more sunshine than Germany, Germany is more like Seattle, or Alaska.

Your math is off a bit. The ‘per house cost’ would be $6000 ($1.2 million / 200 = $6000).

Solar displaces peak power, so that’s the price to compare to. Vermont buys quite a bit of power from the spot market during peak times, very frequently at prices well above $0.15/kWh, and increasing every year. GMP’s solar project is just one way to move some of the benefit of that cost into the state, instead of sending it out every day to power companies in other states and countries. And of course all other electric sources have tremendous Federal subsidies built into the cost. Remove them all and solar is cheapest.

I think it’s time that Vermont got to keep more of the money spent on electric generation, as well as capturing all the other necessary benefits of an in-state renewable energy supply.

[Lance Hagen]

Jeff Wolfe
"Remove them all and solar is cheapest", where did you get this? Or did you just make it up.

The world is not flocking to solar because it is so expensive. The initial investment is just to high and even in the best of areas (where the sun shines) the payback period is still 15-20 years.

[syphax]

A few thoughts:

- The relevant price point is retail. Solar is generally delivered @ the point of use. Further, the really relevant price point also factors in demand charges (as JW mentions)

- It's called investing in our future. Solar costs have been dropping continuously (http://is.gd/spom) due to increased scale and innovation. Government incentives spur both and are meant to get us to the point where solar reaches grid-parity. Not planning ahead means more future energy price shocks.

- External costs lead to market failure, economics 101. Solar has way fewer external costs than e.g. coal.

- Germany's renewable initiative is going so poorly that they just announced plans to go 100% renewable by 2050 (http://is.gd/spnv)

- RFG: I take it you haven't seen IBEW 103's wind turbine recently: http://www.ibew103.com/node/605

[Brattleboro_conservative]

In reply to Jeff Wolfe and syphax:
The price per panel makes solar one of the most expensive power options out there. Yes, solar is delivered at the point of use, except that with all the extra baggage needed for a "solar powered" (batteries, inverter, mounting and installation) home, you might recoup the cost in say, 40 years. Not a terribly cost efficient option if you ask me. As someone noted earlier, solar panels also degrade with time, making the price per kwh even more expensive. Not every house in this state is in an area with southern exposure making any kind of solar installation impractical.

[syphax]

Brattleboro,

Valid points, except your numbers and logic are incorrect.

You might get a 40 year payback if you ignore available incentives, and the fact that electricity generated at times of peak solar production is quite a bit more valuable than average (as it's pretty coincident with peak demand). There is some decay over time, but the decay is slower than the increase of electricity prices- I'd bet on that.

Ignoring government incentives is fair if you want to think about the big picture. But if you're thinking about the big picture, to compare with other energy sources you also need to consider the external costs of: mountain-top removal, airborne emissions, the implicit costs of the Price-Anderson Act (which indemnifies the nuclear industry), and so forth. Factor all those in and all of a sudden solar doesn't look so expensive.

The logic of government support is that it's in our collective interest to help get the cost of non-fossil energy sources to grid parity sooner rather than later, so that we can further diversify our energy supply, and hedge against fossil fuel availability and price variability.

The trick, as always, will be weaning the industry off government incentives once it's fully competitive on its own. Maybe we could agree to end all solar incentives by the time the Price-Anderson Act is due to expire in 2025, and see what happens.

P.S. Lance- from 2003 to 2007, global PV production increased by 7x. That's not flocking?