Meeting the Energy Challenge

By Gerold Lee Gorman

California has always been a leader with respect to the issues of protecting the environment and making proper use of our natural resources. We need to be thinking now not only about how we are going to solve our energy needs though 2006, but rather we need to see that we have an opportunity to take positive steps that look forward well into the next several decades.

For example, a quick search on the Internet for Photovoltaic Cells will produce a multitude of results indicating that the basic cost for such cells as would produce 100 Watts maximum output would currently cost around $600. Thus the cost of procuring a sufficient number of cells capable of producing a kilowatt of electric power runs in the neighborhood of around $6000. That does not of course include the cost of any inverters or batteries or other hardware needed to run such a system. On the other hand - the very computer that I am using right now is powered via an uninterruptible power supply that has a built in rechargeable battery. What that unit lacks of course is a set of terminals on the back of the unit to hook a solar supply to that might make it possible to converge the technologies. That would of course be a very desirable feature, i.e. the convergence of so called grid-tie power systems with battery backup systems. That battery backup systems have become available at commodity prices should be strongly suggestive that it should be possible to develop and deploy integrated grid-tie + backup technologies at a much more favorable price point than is presently available to the consumer.

Of course what I'm really doing at 2 am is dodging the question as to the cost of grid-tie integration of solar power systems, because I need to get this written and uploaded onto my website before 15 million Ballot statements line the mailboxes of this state. So I'm just going to use the figure of $6000 per kilowatt is the cost for the photovoltaic collector portion of a solar power system as the principal cost and divide that by a figure of about 20 cents per kilowatt hour for the highest spot rate. This suggests that such a system would need to operate at peak output for about 30,000 hours in order to break even with respect to the cost of the photovoltaic cells. If you had 10 hours of useable sunshine per day, and 300 really good days of usable sunshine per year - then the break even on the cost of the cells would come after about 10 years. I think that some more realistic figures have it at around 17 to 25 years for some typical systems.

This is getting near the cross-over point where it becomes worth examining the financing options and the cost of money to deploy such systems. The time to pay for the system is inconsequential if it is possible to lower one's total monthly payout, i.e. if a homeowner installs a solar power system that results in a zero net electric bill, while incurring the costs paying for the system in the form of a higher mortgage payment. Of course, nobody wants to be an early adopter of such a system - in the event that suddenly the cost of solar cells drops 90% a few years down the road. That might call for some kind of State participation to protect the investments of early adopters of such technology. One method of doing this would be to allow future tax credits against the potential loss of value of such systems in the event that there is a breakthrough in technology that greatly reduces the cost of deploying such systems.

Thus if a particular homeowner pays $10,000 to have a grid-tie system that provides 1 kilowatt installed, and suddenly a few years from now such systems become available for under $3,000 - is it fair to the early adopter to remain on the hook for the full balance of the cost of that particular system? That's where a modification of the Solar tax credits would kick in. Instead of offering the homeowner or business entity a one time cash tax credit for installing such a system, wouldn't it be better to guarantee to that homeowner or entity that they will not be penalized for being one of the early adopters? The State would do this by watching the competitive costs of providing power via conventional sources, and by tracking the cost of providing and deploying comparable solar technologies. If there is a sudden drop in the cost of deployment, then the early adopters would receive economic parity with their later adopting neighbors. Presto - now everyone on the block wants solar power yesterday!

So how does this solve the "power crisis?"
Now this is the easy part! I suspect that if we had reliable and abundant sources of alternative energy, then our power crisis might have never happened. Solar power for example requires sunshine - and has its highest output on those hot sunny days when people want to run their air-conditioners. Yet during the power crisis, we were frequently within 2% of the limit of our total generating capacity. For whatever reason - this lead to a tripling of electricity rates - since in that time of a manufactured shortage the out of state providers were able to bid up the price for ALL of the power and not just for the incremental spot need.

OUCH! This seems to imply that if this state had invested a few billion dollars in developing more solar power before the power crisis - then there wouldn't have been a crisis to begin with. Consider this: if the cost of solar cells is around six dollars per watt output, and the State was gouged for $12 billion - then that means that the amount we the taxpayers were gouged could have paid for two billion watts worth of solar panels. That's equal the output of two nuclear power plants, capable of providing enough extra power to meet the spot energy needs that we have been faced with. This is something to think about, since it implies that the manufactured "power crisis" might have been prevented if alternative energy sources had been deployed on a larger scale before the existing leadership of the State sold us out only to be held hostage by the power czars. Now regrettably, that money that has been flushed out of state because that was not done. So where does that leave us?

Edited: 09-08-2003 2:49AM Copyright 2003 Gerold Lee Gorman