Solar: Costly or Cost Effective

by Jessica Levinson

This year we witnessed a whole new market for solar energy. Newspapers, radio, and catalogues alike showed gadgets galore. And the number one gadget this year? The solar charger. In every shape and size. They’ll charge your phone, your radios and your appliance. They’ll attach to your backpacks and even your cell phone covers. For those lucky enough to bathe in sun, there were solar ”fans” for windowsills. Every conceivable means to trap the sun’s rays were in some form of a device.

Now, I am not living under a rock. But, I was incredibly excited by this solar outbreak. That is, until I saw the price tag. I had been hoping for solar panels on my home. Unfortunately, the current cost of converting my home to solar exceeded my budget. With some of the little solar accessories, I thought I had found a way to get some sun as well as a little bang for my buck. Turns out, these little chargers can be expensive as well. (Solar backpacks can run over $100—and that’s for the ones with only a few panels). Solar is expensive no matter how you dice it. But why?

The sad fact is solar energy can be more expensive than gas. Yes, natural gas. You read correctly. On Long Island, the Power Authority will be purchasing 50 megawatts of solar power to help with the electric demands. And while this seems like a wonderful idea (and don’t get me wrong, it is), the cost to the consumer will be about $10 more per year than natural gas. How can this be? Sun is free, n’est ce pas? Well, yes. However, the panels and the installation are not.

It turns out that solar panels are made from expensive material that can be anything but easy to cut correctly with most of the material being wasted. Now, don’t despair just yet. There are several bright spots on the horizon. The Department of Energy (DOE) has announced its winners of the most coveted Advanced Research Projects Agency-Energy grant, which is a $4 million dollar grant given by the DOE to companies investing in green initiatives. One of the winners selected for this grant is 1366 Technologies. According to their web site, the company will be using “a proven, safe, abundant material–silicon–and develop practical manufacturing solutions that increase efficiency and dramatically cut cost.”

In a December 22, 2009 article in The New York Times, Ely Sachs, 1366 Technologies Chief Technology Officer, was interviewed on the hopes, challenges, and ideas behind producing lower cost silicon solar photovoltaic cells. Mr. Sachs explained that solar panels are so expensive because of its main material.

"That's hard because silicon is a brittle material,” he said. “If it were a metal or plastic, you could saw through it rapidly, but with silicon it takes a long time, and you have to grind your way through. You end up wasting about half the material as dust, which cannot be reused economically.”

Apparently, the problem is tri-fold: Loss of valuable material, loss of time, and the over-use of machinery. Solar companies have to pay for all three. When the material is wasted, they have to pay for that plus more hours of labor and machinery (that has a useful life, after which, it needs to be replaced or maintained). This cost is then passed onto the consumer.

Mr. Sachs went on to discuss 1366 Technologies plans. "What we're doing is making silicon wafers directly in one step rather than taking refined polycrystalline silicon, melting it, making an ingot, sawing it into wafers and etching off the saw damage,” he said. “We're going right from refined silicon to wafer in one step: Direct wafer technology." All that in laymen’s terms: Less waste, less cost!

While the technology to create solar panels more economically and efficiently is in the works, there are cost savings that we can each grab onto right now. These savings come in the form of incentives from solar companies, utilities, and the government. In The New York Times article dated August 29th, 2009, the affordability of solar power just in the last year was brought into focus.

According to the article, solar panel prices have dropped by 40% over this year and are expected to drop a little bit more. The reason for the decrease in price is the result of several factors. The first is good ol’ supply and demand. Today’s supply market is much greater than it was several years ago. The U.S. has their own plants but the major contender is China. China has been manufacturing polysilicon solar panels and marketing them to Europe for the past several years. But, that market has dried up. Europe has seen an economic down turn like us so government funding for solar energy overseas has dwindled. China has thus turned its attention to the U.S. market.

Along with an increase in supply (lowering the cost from the manufacturer directly), the U.S. also has a new administration that has placed alternative energy as a top priority. The government has flooded the industry with incentives for homeowners. One of these added bonuses is the removal of the tax credit cap. Signed in as a bill in February 2009, the $2000 tax credit limit was removed and individuals can receive up to 30% back in the form of a tax credit for installing solar panels on their home. According to The New York Times article, with all of these incentives, it has decreased the payback period from 22 years to 16.

Utilities have also been giving out rebates. Especially if you live in an area where electricity is at a premium, the utility will likely pay you handsomely for any extra energy you sell them (removing some of the burden on the overtaxed grid). The article does caution, however, that with the decrease in price and the surplus of solar, utilities will start cutting back on their rebates, as was seen in the Salt River Project in Phoenix.

The major utility in Phoenix cut rebates to homeowners by 10%. They cited a lack of funds for the program. The market for solar power is heavy in places like Arizona and Texas where there is a great deal more sun light, and thus energy, produced. The utility in Phoenix didn’t account for how many new homes would come off the grid. They couldn’t keep up with the demand in rebates, thus slashing the percentage given back to the consumer.

Apparently there is light at the end of that costly tunnel! If we can just hang in there a little longer, the probability of solar panel energy will be tangible. For now, I will continue to cut down on my electric consumption and see what incentives are ahead in the new year. And, if I’m really good, my husband is sure to buy me one of those handy backpacks for my birthday. While it won’t heat our house, after going for a hike or strolling around town, it will charge our phone!

Comments

[Lana Madison]

Hi, thanks for this wonderful post. I certainly agree that though solar energy is free, solar panels comes with a price. But it certainly is becoming more affordable these days. It still might not be enough for some individuals budgets, they could just go with your last option, save as much energy until such time they can afford it. yes, it doesn't go with a cheap price, but just think of benefits we will have after the initial installment. Or we could also go for little solar system if were not yet ready for the bigger system.