Originally Posted by
Rich Enders
If you search "True cost of solar" it brings up a number of hits that discuss the total cost per KwH to generate solar voltaic energy by installing a residential unit. This "true" cost is defined as what it would cost a homeowner if there were no subsidies, or tax rebates, and the cost is truly astounding. An article by WKB Associates (10/12/2012) calculates that in a semi-realistic example the true cost is $0.42/KwH. Costs vary around the nation, but mine last year from the local power company was $0.117/KwH. That is a big difference. Another article by the American Thinker (10/19/2012) estimates that for every dollar you spend installing, maintaining and operating a solar system, you would get $0.12 back if there were no subsidies or tax rebates.
But this is unrealistic because there are subsidies, and tax rebates. So who is making up the $0.30/KwH difference? Of course it is the American taxpayer. The homeowners who install these units are actually transferring the bill for the difference between the true cost, and their cost to the rest of us. Am I missing something here?
I don't know about your state, but the rebate from Southern California Edison is not that much. The federal tax credit is 30% of the system cost. I don't know what those people who did the "true cost of solar" used as numbers but here in CA, the cost of electricity in the highest tier is presently around $0.36 per KWh. Most people do not try to zero out their electricity bill, but just generate enough to get them down to tier two ($0.16 per KWh). And just FYI, tier three is $0.29 per KWh, and tier four is $0.33 per KWh - this is winter rates and summer rates are a bit higher.
But in analyzing the payback, you have to take into account that there's very little variable cost in the system - it's all up front fixed cost. So if the system will last for 30 years, you need to take the present value of what you would have paid for the electricity you generated (and therefore didn't have to buy) during those 30 years and compare it to the capital cost of the system. My guess is that you will get to payback (in present value) a lot sooner than 30 years. I expect to get paid back (in present value) in about 10 years. That means that I get 20 years of free electricity, which seems like a pretty good deal to me.
Regarding who pays for the tax credit and rebate. Let me address the rebate first. Here in CA the power company has a mandate to generate about 30% of it's power from renewable sources by some date (maybe 2020, I don't remember). By encouraging homeowners to put up solar panels, the electric company avoids having to invest in renewable energy power plants. They feel it's a pretty good deal for them.
As for the federal energy credit, the government has funded (in many different ways, sometimes directly, sometimes through tax credits) the investment in many technologies that are believed to be important to the future of the country. The federal government funded the development of what became the Internet, for example, and radar was developed completely with government funding during WWII. GPS is fully funded by the government - what would we do without it now?
Mike
Last edited by Mike Henderson; 03-26-2013 at 11:50 PM.
Go into the world and do well. But more importantly, go into the world and do good.