PHOENIX - The nation faces tough questions in tough times, and there are people on both sides of every issue.
Arizona is no different. But who’s saying what about the issues important to Arizonans?
Each Sunday, ABC15.com debuts an Arizona issue - along with two opposing sides on the topic.
Don’t worry, you always have the opportunity to make comments at the bottom of the page. Yeah, your opinion matters too.
This week, we're tackling the debate on the future of solar technology in the Valley. Is it too expensive to work?
Krystal Book with American Solar Electric says it’s not too expensive for homeowners. Book says nothing in Arizona is more consistent than 300 days of radiant sun each year. She says with a solar electric system, the sunny days would provide a stable source of energy and predictable tax-free savings that is unparalleled by any investment in today’s Wall Street, bonds, or banks.
David Bergeron, president of SunDanzer Development, Inc. says solar electric panels are far too expensive to provide a sustainable energy alternative to homes and businesses already connected to the electric utility grid. Bergeron says the solar industry and solar jobs are artificial and only exist because of large government subsidies.
So, what's the future of solar technology in the Valley of the Sun? Is it just too expensive to work?
Click "next page" to read the first of two positions, "Solar technology can be far too expensive".
Solar technology can be far too expensive: By David Bergeron, president of SunDanzer Development, Inc.
It’s Saturday, and I am at work testing a new solar powered vaccine refrigerator that uses ice packs rather than batteries to store energy and maintain cold temperatures. This is a key component of the distribution chain for vaccines and part of a global effort to eradicate polio and other preventable diseases. Solar energy is my passion, field of study, and occupation. For me it started when I was 13 and the US experienced the Arab oil embargo and subsequent long lines at the gas station. Only later did I realize that the long lines were caused by misguided government price controls.
Today, our government is likewise engaging in misguided policies to address similar energy concerns, policies that mandate inappropriate solutions, such as grid-tied solar panels, which fail to address our energy security or environmental concerns. These mandates will ultimately stifle creativity and generate false solutions to our energy dilemma.
Solar Photovoltaic (PV) electric panels are far too expensive to provide a sustainable energy alternative to homes and businesses already connected to the electric utility grid. The solar industry and solar jobs are artificial and only exist because of large government subsidies. The industry is similar in many ways to the housing market bubble created by easy mortgages. When the subsidies end, the solar bubble will burst and most of the jobs and industry will vanish overnight. This is because the underlying economics of Solar PV are not viable.
In sunny Arizona, the true cost of a typical 1000 Watt solar system is approximately $5,000. This 1000 Watt system will produce 1650 kWh/y and save our state about $65 per year in fossil fuel. This 77-year payback exceeds the life of the equipment and ignores the maintenance and eventual disposal cost of the hardware.
Despite idealistic claims that solar PV can allow Arizona to avoid construction of new power plants, it will not. Solar is not consistent enough to meet the utility’s reliability requirements for dispatchable generation. In addition to intermittency, the peak output of solar panels is at noon, but the peak electrical demand is in the late afternoon. The bottom line is that solar cannot be counted on when power is needed most. So no significant reduction in generation or transmission infrastructure is possible by adding solar panels to the power grid.
For PV to be economically feasible, the “installed” cost would need to be equal to or less than $1/watt. This is the holy grail of the industry and consistent with the statements of Dr. Chu, the Secretary of Energy. Very large-scale PV systems are reaching $4/watt today, which is admirable, but still four times too expensive to be a credible solution.
Can we get to $1/watt any time soon? At present, solar panels are about half of the total system cost. The remaining cost is mounting hardware for the panels, the inverter to make AC power, wiring, labor, and permitting. Therefore, even if it were possible to manufacture panels free, the balance of system cost is still about $2 per Watt and the industry would continue to be non-sustainable without substantial subsidy.
So why do we continue to subsidize solar power? There are many reasons, but mostly because of myths propagated by the solar industry and some naive public officials. Perhaps the most egregious myth is the claim we are helping our economy and creating jobs. This is false. Money for the solar subsidies comes from taxpayers and ratepayers. As this money is taken from us, spending for other goods and services must fall. This causes economic and job losses in other segments of the economy, such as in restaurants, stores, and service and manufacturing companies.
There is no free lunch, but it is easy to be fooled into thinking we are creating jobs. This is because the newly created solar jobs can be seen and counted. But the job losses in other segments of the economy are diffuse and difficult to see unless one knows to look for them.
Many politicians take credit for the solar jobs, but never mention the job losses caused by reduced spending in the balance of the economy. Even worse, the new solar jobs are not as productive as the jobs that were lost, because of the poor economics of solar. This is one reason why total unemployment remains high even with all the new solar jobs.
Another fallacy is that solar power provides energy security against interruptions in oil supplies. But using solar does not reduce oil imports because we do not make electricity with oil. We make electricity with coal, nuclear, natural gas, and hydro, all domestic energy supplies with more than 200 years of known reserves.
But the most ironic fallacy is the idea that solar is an effective means to help the environment by reducing CO2. Conservation and other technologies reduce CO2 for a cost of $20/ton. But saving CO2 with solar costs at least
$150/ton. The writing of one respected economist strongly suggests that subsidies to renewable energy, on net, actually generate more CO2 than they save.
One day solar PV might be economical, and if that happens, we will still have great sunshine in Arizona and a competitive advantage. The market will come to us. But if we insist on subsidies to the industry on the hope it will drive the price of solar to $1/W, let’s at least ship the panels to developing countries where they are needed and would make a difference in the lives of millions. To install them here on our homes does nothing except makes us feel good and drains our economy of productive jobs.
So what is the future of solar in Arizona? The APS and SRP cut-backs were necessary because they burned through the annual budget for solar credits ahead of schedule. The budget will be renewed and spending for solar will continue. The real question is should it? If we are sincerely concerned about energy security, our economy, and the environment, the answer is no.
Do you agree with this opinion? Add a comment below to sound off.
Click "next page" to read the second position, "Solar technology is not too expensive for homeowners".
Solar technology is not too expensive for homeowners: By Krystal Book with American Solar Electric
As Arizonans, we possess a valuable, largely untapped resource that pays substantial dividends. Nothing in Arizona is more consistent than our 300+ days of radiant sun each year. With a solar electric system, our sunny days provide a stable source of energy and predictable tax-free savings that is unparalleled by any investment in today’s Wall Street, bonds, or banks.
As an example, the final cost for an average-sized 5 kilowatt solar electric system in APS territory is $6,875 after the total cost is reduced by $16,875 in all applicable utility, state, and federal incentives. Currently, incentives are quite generous and offset the cost to go solar by more than 70%.
Yes, utility incentives have decreased recently, but so have panel costs. These incentives were not created to support the industry forever and are designed to decrease over time as cost efficiencies are gained by growing demand, driving the costs down in turn.
The simple payback for the above example system in APS territory is achieved in less than 7 years. Strip away the utility incentive, and the solar investment remains compelling with a payback just beyond 10 years factored with a conservative annual increase in the cost of utility supplied electricity.
Taking into consideration that solar electric systems generate energy for more than 30 years, the investment potential of a solar system is undeniable. Consider this: an average solar electric system realizes a 10-year return on investment of over 10% per year. Conversely, in the last three years, the average Dow Jones stock has lowered by nearly 28%!
When comparing a solar portfolio to other investment strategies, it is important to consider the variety of short-term and long-term benefits associated with a solar electric system.
-- Solar electricity can offset a substantial amount of utility power.
Over the more than 30-year life of the system, the above-referenced 5 kilowatt example system can offset over $100,000 in avoided utility costs.
-- Your annual return is locked in.
American Solar Electric and our suppliers provide warranties on our systems for decades, so your annual savings is predictable and rarely fluctuates— creating a risk-free investment.
--Investing in solar is 100% tax free.
No sales tax, no property tax, and no income tax on your savings, ever. In fact, the federal government will give you an income tax credit of up to 30% of your system cost on your federal taxes, and the state of Arizona will credit you $1,000 on your state income taxes.
--Owning a solar system substantially increases your home’s market value.
According to a series of widely regarded articles in the Appraisal Journal, it is suggested that for every $1,000 you save in electricity each year, your home value increases $20,000. And, studies show that solar homes sell at twice the rate of their conventional counterparts.
-- When utility power rates increase, your solar power stays exactly the same.
Most indicators suggest utility rates will increase 5% annually for years to come. Not many home improvements allow you to decrease your cost of living. Solar offers you a hedge against rising utility rates.
-- Solar promotes energy independence and supports the health and welfare of future generations.
An average-sized solar electric system can generate over 300,000 kilowatt-hours over the life of the system. This clean, renewable energy offsets utility generated power, saving 237 tons of CO2 that would have been released in to our environment. This is equal to removing the emissions produced from 41 cars.
There are many reasons more and more people are choosing clean, reliable solar technology to power their homes. While reducing costs month-to-month, it easily pays for itself over time, in many cases within 7-10 years. Here in Arizona, where the sun shines almost daily, solar is the smartest choice for your home. Given these many benefits solar provides, how can we afford not to employ this technology to power our homes and businesses?
Furthermore, financing options make solar even more affordable for homeowners. The Biltmore Bank of Arizona, offers a Solar Select program that comes with payment term options ranging from 5 to 10 years and resembles conventional loans familiar to most consumers. Additionally, a Solar Select option with a unique interest-only period of up to 18 months was developed specifically to give consumers the opportunity to capture applicable tax benefits and, if desired, make a principal payment toward the balance prior to the full amortization of the loan. Assuming the principal loan balance is paid down to an appropriate level at the start of the term loan, monthly utility savings can be greater than the monthly loan payment, thereby creating a cash-positive scenario. Additionally, a SunRun solar lease offers what all of us wish we could get from our utility, clean solar power and
fixed electricity costs, no hardware purchase necessary, and little to no up-front cost.
As market turbulence continues to rise, an investment in solar is a wise decision. Now is truly the time to consider solar, not only as a commitment to the environment, but as a commitment to your stable financial future.
Do you agree with this opinion? Add a comment below to sound off.
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