Even as the costs of solar power continue to decline, a widespread perception from the public and many policymakers that solar is ‘too expensive’ remains stubbornly in place – much to the frustration of advocates and industry professionals.
A new study challenges this assumption by delving into the numbers to compare the actual costs and benefits of solar power projects. The results confirm several key widespread public benefits of solar power and could provide the industry with a valuable weapon in the public-perception fight – a battle that remains crucial for long-term viability and growth.
The report, authored by Richard Perez at the University of Albany, Ken Zweibel at the GW Solar Institute and Thomas E. Hoff of Clean Power Research, focuses on tangible benefits that solar power generation delivers to utilities, ratepayers and taxpayers.
‘It is clear that some possibly large value of solar energy is missed by traditional analysis,’ the report says.
Notably, these advantages apply to a wide population, thus providing a rebuttal to the ‘what's in it for me?’ argument. Many other well-known recent studies on solar power's benefits focus on real – but not public – benefits. For instance, the average taxpayer may not care that his neighbor's rooftop PV array has raised that home's value or that the solar sector has created jobs for other people.
The new study, titled ‘Solar Power Generation in the U.S.: Too expensive or a bargain?,’ finds that, in all, solar PV installations deliver $0.15/kWh to $0.40/kWh to ratepayers and taxpayers.
Although incentives have proven to be a vital driver of solar power growth, the report's authors argue that the gulf between ‘inexpensive’ conventional energy and ‘expensive’ solar is smaller than often portrayed, especially when solar's public benefits are taken into account.
‘This large apparent 'grid-parity gap' can hinder constructive dialogue with key decision makers and constitutes a powerful argument to weaken political support for solar incentives, especially during tight budgetary times,’ the authors wrote.
Instead, according to the report, incentives can be viewed as a logical means of transferring value from the public – which is enjoying solar's $0.15/kWh to $0.40/kWh benefits – to those who invested in the solar plants creating those benefits.
Where did the public-benefit dollar figure come from? What are these benefits, exactly? The report breaks down solar power's public value into the following nine accrued benefits (based on an analysis of relatively non-sunny New York City):
1. Savings on wholesale energy ($0.06-$0.11/kWh, of the total $0.15/kWh-$0.40/kWh). Locally generated electricity from solar installations reduces the amount of power utilities must purchase at higher prices on the wholesale market.
2. Reduction of demand-response expenses ($0.00-$0.05/kWh). ‘PV installations can deliver the equivalent of capacity, displacing the need to purchase this capacity elsewhere, e.g., via demand response,’ the report explains.
3. Savings on energy losses within the distribution system ($0.00-$0.01/kWh). Electrical losses typically incurred when energy is moved from large power plants to local loads can be avoided with distributed solar plants sited close to the load.
4. Reduced need for feeder equipment upgrades ($0.00-$0.03/kWh). Because distributed PV can deliver capacity at the feeder level, it can reduce the wear and tear on transformers and other feeder equipment.
5. Hedge against fuel-price spikes ($0.02-$0.03/kWh). ‘Solar energy does not depend on commodities whose prices fluctuate on short-term scales and will likely escalate substantially over the long term,’ the report says.
6. Grid security aid ($0.03-$0.06/kWh). Solar power's ability to closely mirror peak power demand can help reduce the chances of blackouts that can occur when the existing power system is overly stressed. Power outages currently cost the U.S. economy approximately $100 billion annually, according to the report.
7. Health-related and environmental gains ($0.03-$0.06/kWh). The deployment of solar power displaces the greenhouse gas emissions, mining-related consequences, water contamination, and other environmental- and health-related damages associated with fossil fuels. The $0.03-$0.06/kWh figure cited is ‘certainly a conservative range,’ the report adds.
8. Long-term taxpayer benefits from reduced fuel-price volatility ($0.03-$0.04/kWh). Using an estimate of a 150% rise in fuel-based generation costs by 2036 (deemed a conservative estimate), the report found that the ‘insurance hedge’ of solar generation contributes a significant long-term value (in addition to the short-term fuel-price hedge value mentioned earlier).
9. Economic boost. The job-creation benefits of solar power have been demonstrated in numerous studies. Moreover, ‘Job creation implies value to society in many ways, including increased tax revenues, reduced unemployment and an increase in general confidence conducive to business development,’ the report explains.
Photo credit: U.S. Department of Energy's National Renewable Energy Laboratory