Saturday, September 06, 2008

Solar Investment: Conflicting Views?

We were thinking about putting solar-panels on the south-facing roof of our home-extension some years ago, but determined it would take about 20 years to pay-off the cost in terms of the electricity-bill savings that would be incurred. The upshot was we didn't bother. There are conflicting views, however, with the "Rics" (Royal Institution of Chartered Surveyors) saying that "solar panels are one of the least cost effective (home) upgrades" while the solar industry, including the CEO of Solar Century, Jeremy Leggett, claims that the above conclusion is based on faulty-calculations.

According to the Rics, it costs around £4,000 - £5,000 to fit the average house with solar panels (that's about what we reckoned) but the energy savings are a meagre £24 a year (and so that would amount to 160 - 200 years to pay it off!). In their recent report, Rics also maintain that to swap a wall-mounted boiler with a more energy-efficient one costs around £1,700 to equal an annual saving of £95, a lead-in time of 18 years. They claim that the most cost-effective means to save energy is cavity wall installation, at a cost of £440 - £2,400 depending on the size of the home, to yield a saving of up to £145 a year which could be recovered in three years. We did go for this option and thereby insulated the said extension, at a cost of around £500. I'm not sure yet what it saves us in terms of heating, but this is a well-insulated house and our bills are in any case quite modest.

The solar industry has vigorously objected to the Rics's report, for example Andrew Lee, who is head of solar at Sharp Electronics, said: "Rics' claim on solar panels is massively misleading and potentially damaging for both the UK solar industry and the UK's renewable energy targets, being based on outdated and inaccurate information. Instead of 50 years plus for payback, most average installations will payback within approximately 12 - 15 years." Mmmm, that's about what we thought, and didn't go for it either!

Rics also slams the cost-effectiveness of personal wind-turbines: "A large free-standing wind generator (meaning an electricity generator powered by wind-force) can cost anything from £12,000 to £24,000 to install. But they are only really economic or practical for people in rural areas, particularly those not connected to the electricity grid. Even then, and taking account of electricity fed back into the grid, it would take at least 15 years for them to pay for themselves.

However, this is all costed at current circumstances, and in 15 years or more, there may not be the gas or other provision for electricity, and solar could prove a worthy investment. I can imagine that the price of solar and the dubious sturdiness of conventional power supplies will be good reasons to promote nuclear power, on the national rather than the local scale. It is my understanding however, that solar water-heating systems rather than photovoltaic cells are a good energy investment overall, albeit they don't product electricity, but they may save it in heating water per se. For example, we use an electric immersion heater.

Leggett and Greenpeace are both quoted as saying that solar should become cost-effective with conventional energy by 2020 across most of Europe, and Ernesto Macias, president of the European Photovoltaic Industry association claimed that: "solar voltaic electricity has the potential to supply energy to more than four billion people by 2030 if adequate policy measures are put in place today."

I suspect that the scale of manufacture and installation across the world would be colossal and I have calculated before that only through thin-film cells can the level of resource to fabricate so much solar PV be even addressed. How long it will take to install is a fair question, and I doubt the present level of electricity production can be maintained. All considerations seem to anticipate the reality of a lower-energy society.

Related Reading.
"Solar panels are a 'waste of money', says Rics." By Andrew Ellison.


Yorkshireminer said...

Dear Chris,
there is a sort of More's Law in the PV industry which says double the production and the price is reduced by 20% the result of economies of scale. The problem though is that the price of silicone has been very high I think somewhere in the region of $400 dollars a kilo because the high feed in tariff in Germany has artificially reduced the payback time to about 10 years which caused the industry to literally explode. Living on the German border and traveling often into Germany I have noticed how many more houses have had PV panels fitted during the last few months. A farmer I know has had both his large barns covered in PV panels he can draw the cost of the loan off his taxes and the high prices payed for the electricity pay for the system. He is literally rolling in clover. In ten years time he will be getting his electricity free. I think that Germany has now more than 4 giga watts of PV installed with something like half a million separate installations. What the numb nuts don't take into account is the amount of money saved on the countries balance of payments account by not having to import fuel to produce this electricity. They also don't take into account what it does for the German economy. Because of this subsidized market many foreign firms have set up business in Germany to take account of the guaranteed market and the capital grants the Germans give to firms setting up in the former East Germany. This has amounted to approximately 17,000 Germans being employed directly in making the panels and I don't know how many more doing the installations. The taxes paid by these people must certainly reduce the cost of installing PV for the country. Most of these firms are being established around Berlin and Leipzig where the Frunehof institute have there headquarters. As the industry grows this will form a core of expertise which will only attract even more firms, a bit like silicon valley in America. With the price of other forms of energy rising it is expected that the price of PV electricity will be competitive in Germany around 2012. After that point then they can do away with the subsidies. In the mean time laggardly Britain will be well behind the curve and have to buy there panels from Germany as there will be no manufacturing capacity as they will not have nurtured it like the Germans. The Balance of Payment will get even worse. I don't know why I call it the Balance of Payments Unbalance of Payment is a better description. The mentality of the Government in Britain drives me sometime to distraction. Keynes said that most people were lead by dead economists the one our Government is lead by has been dead for nearly 200 years (Adam Smith) and his ideas will bury all of us. The Germans have placed themselves in the forefront of an industry that can only grow exponentially because when Peak oil really kicks in, any form of energy however expensive, will be better than no energy. What has caught my attention the last few days is that Nanasolar with its thin film printing technique has just had a 300 million dollar capital infusion bring up the value too 500,000,000 dollars. They have a printing technique using a type of ink that can be printed onto stainless steel foil. This could be game changing for several reasons. The capital equipment is about one tenth of that used in the silicon panel production and secondly if they can increase the speed of the process from 100 feet per/minute to what they estimate the maximum of 2,000 feet/minute the cost of PV panels will fall drastically. It wont happen like that though, the devil is in the details. Here is the web site from NanaSolar check it out it is well worth the read

I would also like to bring your attention to a firm I have been following very closely over the last few years. Anybody who has been following and understands the consequences of Peak oil knows that the only real source to beat the energy deficit is electricity and the problem with that is that we have no way to store electricity at the same density as an equivalent quantity of oil, lead acid batteries are a joke, and Lithium batteries are an expensive joke. If we could do that we could ship electricity the same way we ship oil. We could ship it from wind farms on reefs in the most windy parts of the world, the roaring 40s for example, or any other place in the world where it can be produced with renewables, and then just feed it into our grid. It would be a paradigm change also for the transport industry. I will leave it too you to let you fantasy run away with you but please be very skeptical. Eestor is the name of the firm, it is very tight lipped and it keep an extremely low profile, the list of investors is very interesting and the fact that it has signed a contract with Lockheed, makes me think it is genuine.

Deep regards

Yorkshire Miner

Professor Chris Rhodes said...

Hi Dave!

Move to Germany maybe?? I know the east to some extent - I used to go to Leipzig at one time.

Britain doesn't seem to be offering much in the way of incentives though, does it?

I guess with the benefits bill they can't!

I agree with you, when peak oil kicks-in, having electricity will be useful - all these cities still operate tramways, and so local transport can be met!

Deep regards,


Anonymous said...

I have just returned from a 6 month stay in Munich during which I visited the huge Solar Show in the Spring. There were 5 exhibitors from the UK of which two were selling books and one was an employment agency. The show was massive and many stands had the extravagance expected at motor shows. Solar Power has arrived big time but obviously not here.

Whether it is recycling, public transport alternative energy even the use of open source software there seems to be an abundance of common sense. I wonder if it is because the German environment ministry seems to produce such good reports

Professor Chris Rhodes said...

Dear Roger,

many thanks. The Germans always do things well, including producing good reports on what they are doing!

We are nowhere in comparison in the UK, but capturing solar energy in various ways, including photosynthesis does see like the way forward, combined with energy efficiency.

I just returned from a conference on "biochar" in Newcastle. The idea here is to lock-up atmospheric carbon through photosynthesis in plant/bio-mass, pyrolyse the material into various useful products leaving a char that can be buried shallowly on soil.

This has the benefits (potentially) of sequestering carbon, and generating fuel in the form of gas and liquids, and nourishing the soil.

I will be thinking and probably posting some more about this. The whole project however, will need to be of "global" proportions, to lock-up 8 billion tonnes of carbon annually!



Charles Barton said...

I loose patience with such schemes. Where is the electricity to come from during the many winter hours of little or no sunshine that is typical of northern Europe? Severin Borenstein has argued that PV electricity is not economically viable in sunny California.
yorkshireminer tells us all about the German balance of payment during the day time, but nothing about the balance of payment at night. Are the Germans going to turn all the lights out at dark?

Professor Chris Rhodes said...

Hi Charles,

yes, there is also the problem of using solar when the sun isn't shining and so there needs to be a very large "battery" of some kind to store the power generated when it is.

The only way I can see this might work otherwise is to have it as part of an integrated national-grid scheme so that the usual sources, fossil-fuel, nuclear, mainly, are producing the power at night.

Their is a German university group who have proposed an integrated network of solar, biomass etc, etc. which they reckon could power the whole country night and day, but it did seem rather optimistic especially as starting from scratch.



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