DEC 02

Earlier this year, Southern California Edison made a commitment to install a whopping 250 MW of photovoltaic power. To make that happen, they are planning 150 projects, each of which will blanket the roof of some gigantic commercial building will panels. This week, they completed the first one.

The site: the 600,000 square foot roof of a warehouse owned by ProLogis, Inc. The monstrous, $10 million array will generate 2 MW of power for about 1,300 homes. When the other 149 projects are completed, the resulting 250 MW of power will serve 160,000 homes. When all is said and done, there will be two square miles of solar panels.

On the surface, it seems like a step in the right direction. This first project even used thin film panels from First Solar, a move that encourages further development in the field. Getting to the 250 MW goal, though, is going to be expensive. Even though thin films and other PV technologies have come down in price, Edison is still expecting their solar power to cost 27 cents per kwh – 19 cents more expensive than conventional generation. Who’s going to pay for it? Naturally, Edison wants the customers to pay for it, while the customers feel Edison’s shareholders should foot the bill.

Rooftop solar has many attractive qualities – it creates new real estate value and it brings the power generation close to the site of power consumption. Seeing a grey urban rooftop transformed into a solar landscape is pretty and gives residents a feeling of progress and satisfaction. But if cheaper solar power can be provided through, say, desert-based solar thermal plants, then I question whether these projects should be applauded or rethought.

Via LA Times

Comments (12)

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written by Perelmanfan, December 02, 2008

It is all a question of priorities. If we could stop spending $500 million daily on the Iraq war, we could federally subsidize both rooftop installations and desert solar-thermal projects. Rooftop installations matter - they "normalize" solar power for the people who see them, and thus help to speed its deployment. They also don't create new "dead footprints" on fragile desert ecosystems as solar-thermal projects do.

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Green roofs
written by jared, December 02, 2008

Why not may a 600,000 square foot green roof instead? Particularly in light of more advanced solar solutions as mentioned in the article.

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written by Virgil, December 02, 2008

So, at $10m cost for 1300 homes, that's $7692 per home. At 27c per kWh the home-owners would have to burn through 28500 kWh for this project to break even (i.e. $7692/27c). According to EIA figures for 2005 the average US household burns about 940 kWh a month. So, this would pay for itself within 30 months, which is way less than the lifetime of the panels!

What's the betting that instead of dropping the price back to 5c/kWh after 3 years, to cover maintenance, they'll just keep milking people for 27c/kWh for the remaining lifetime of the project? After 30 months it's pure profit baby! Even with a modest life expectancy of 15 years, and keeping the cost at 27c with no inflation, this project will rake in a total of $59.4m (i.e. 940kWh x 12 months x 15 years x 1300 houeholds x 27cents).

2 questions therefore arise...
1) Why aren't all the utilities doing this? A six-fold return on investment in 15 years ain't too shabby in the current economic climate.
2) If utilities are bilking the consumer out of tens of millions of dollars with such schemes, is it any wonder the uptake of these new technologies is slow? Why are the energy watchdogs letting them get away with such a humongous profit margin?

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Response to Virgil
written by Al, December 02, 2008

Because nobody except the most zealous will pay 27 cents for power when they can pay 8 cents. That is like taking my 100 dollar a month bill and making it 337.50 instead, no way. Especially since solar cells use up more energy to create then they can ever produce in their entire exagerated lifetime. Solar thermal is the way to go, its the only one that makes the most sense.

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written by Cliffski, December 02, 2008

whats the source for the claim that solar voltaic uses up more energy than it generates?
(a 2008 source please)

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Response to Al
written by Juan Gonzalez, December 02, 2008

Thin PV solar panels are energy positive, not energy negative. Meaning they produce more energy than required to make them. I agree that solar thermal power is amazing technology that should be utilized to a larger extent, but your ridiculous claim that "solar cells use up more energy to create then they can ever produce in their entire exaggerated lifetime" proves you don't know what you're talking about.

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The price will go down over time
written by Enriquee, December 02, 2008

As the company become more efficient as its learns how to make the photovoltaic chips more efficient, the price will come down to par with fossil fuels within 5 years.
There will be also be a cap and trade legislation to curb CO2 gases. The company could sell its credits to another company to make a profit.

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Real value of distributed generation
written by Sydney Lind, December 02, 2008

Has anyone done an analysis of the econonmic value of distributed generation? I would be particularly interested in the cost KW/HR equivalent for the following items:

Transmission loss savings due to generating power in proximity to the end user.

Avoided capital costs for "upgrading the grid" to handle the additional capacity.

Reduced security expenditures thru elimination of "juicy" infastructure targets.

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Cost analysis
written by Doc Rings, December 03, 2008

With power only being generated during daylight hours, and peaking only in the mid-day...producing 3MWh in a year, or almost 9 years to payback with your assumptions.
Still a good first step, considering the longevity of the panels... it's a money-maker in the long run. Kudos to them for championing this cause.

Source of output: kyocerasolar.cleanpowercalculator dot com calculator for 2000 MW system in that geographic region.

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SO... 2 Sq/Miles = Energy for 160,00 hou
written by Eduardo, December 03, 2008

SO... 2 Sq/Miles = Energy for 160,00 houses ???? At 10 Mill ?? Doing the math Virgil did... Looks great !!! Now Al responds that... OK "they make your 100 $ energy bill a 337.50 by tomorrow" would you like that ??? of course NOT ! But what if I tell you... pay $337.50 a month for 2.5 years (30 months) and you WON´T pay your electric bill for the next 12.5 next years. How that looks ??? I am wrong ?

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Costs...
written by Anthony, December 03, 2008

"Edison is still expecting their solar power to cost 27 cents per kwh – 19 cents more expensive than conventional generation"

That is slightly deceptive. If you look at peak power costs in California (specifically southern CA, SP15 region), in summer power can sell for between 12.5c and 17.5c. So while still more expensive on paper, its not as expensive. And if CA goes through another power shortage issue, the price can spike as high as 40c/kWh.

I'm still curious about the 27c/kWh number, how they arrived at that figure, and if they included the tax incentives for solar. The PTC and ITC currently in effect can reduce the cost by 17%, bringing the real cost down to 22c/kWh.

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written by WScott, December 04, 2008

I thought the cost of PV panels was getting as low as $2 per watt? At $10 million for 2 MW, that's $5 per watt. I've tried to estimate how many KWH can be generated in a year compared to the cost of the power. At $5,000 per KW generating an estimated 3840 KWH per year (12 hours per day X 320 days per year), that's $1.30 per KWH within one year. But over 5 years, that's 26 cents per KWH and over 10 years, it's 13 cents per KWH. I know it's a pretty simple analysis and there are more variations to it.

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