Installing solar panels on homes is an economic “loser” with the costs far outweighing the financial benefit, a respected University of California-Berkeley business professor said Wednesday.
The technology, using photovoltaic panels to generate electricity, is not economically competitive with fossil fuels and costs more than other renewable fuels, said Severin Borenstein, who also directs the UC Energy Institute. “We are throwing away money by installing the current solar PV technology,” he said.
Not surprisingly, the solar industry reacted strongly to the report. Neal Lurie with the American Solar Energy Society called the study “a publicity stunt.” “Borenstein doesn’t give proper credit to the important role that competition and economies of scale play in driving down costs,” he said. And Julie Blunden, a vice president with San Jose’s SunPower, said Borenstein’s analysis was “deeply flawed.” “He seems to be disconnected from the empirical data in the market,” she said. “He doesn’t seem to have much peripheral vision from his ivory tower.”
But in his 38-page paper, Borenstein attacked several arguments made by solar proponents:
• Solar systems provide energy on hot sunny days, when the strain on the grid is the highest. That’s true, Borenstein said, but the ability to provide power during peak periods of demand increases the economic value of PV solar only slightly, perhaps up to 20% more. Making the power grid more efficient would extract more of the benefit from solar, he said, but even then the increase would be only 30 to 50%.
• Solar as a power source on people’s homes cuts the cost of transmission and distribution. But in California, adding solar has “not significantly” lowered these costs “and is unlikely to do so in other regions,” he said. At most, he writes that adds only 1 or 2% to the value of a solar system. Borenstein argues against government subsidies, such as California’s million-solar-roofs program, and for more research-and-development money from the US and state governments to develop more efficient solar systems. “We need a major scientific breakthrough, and we won’t get it by putting panels up on houses,” he said.
Solar advocates quickly fired back.
Gov. Arnold Schwarzenegger remains a big backer of solar roofs in the state, even after hearing of Borenstein’s study, a spokesman said. “The benefits of solar power are well-known and the governor’s committed to keeping Californiaat the forefront of the green revolution, which will help us fight climate change, create jobs and boost the economy,” spokesman Bill Maile said. “We need to get solar out there,” added Mike Hall, president of Borrego Solar, a San Diego installer with an office in Campbell. “There’s a need for it from a global-warming perspective.”
Under the most likely scenario, the cost of a 10-kilowatt solar system would be three or four times as much, as the electricity it’ll produce, Borenstein found. And even using a more favorable set of criteria, the cost would still be as much as 80% more than the value of the electricity it will produce. Borenstein’s research wasn’t sponsored by any group or organization or industry, and the UC Energy Institute does non-partisan research, he said. “I have nothing against solar PV and I hope it gets better,” he said. “It’s just very expensive and not terribly efficient.” Borenstein said he didn’t take into account the feel-good benefit or societal value of installing a solar system on your roof. "Certainly people make these decisions for a variety of reasons," he said. But installing better insulation would be a better bet economically, he said, although your neighbors won’t know you did it.
The state’s Public Utilities Commission said the California Solar Initiative has resulted in applications for 206.6 megawatts worth of solar projects in 2007, compared with 198 megawatts installed from 1981 to 2006. Nearly 7,000 homeowners have applied for incentives available through the program. (Mercury News.com, US)