Monday, August 3, 2009

Renewable Energy Sources

There are several types of renewable energy sources such as solar, wind, geothermal and water movement. Each of these have different ways in harnessing energy. All are usually cost effective when they are either commercial or institutional applications. The two most common involving residential are solar and geothermal. Both of these are considerably expensive to install in one's home. Though both of these technologies can produce a considerable amount of energy a residence is highly unlikely to demand that much energy. Even if the home is an excessive user of energy. The phrase “Economy of Scale” clearly does not apply with residential applications with these technologies. As a result these two technologies are provided with large incentives first by the State and with solar the federal government. For the users of these technologies these incentives make it cost effective to install them in their homes. In other words the cost of installation minus the incentives received equals the homeowners contribution. This contribution is then divided by the amount of the cost of energy the system produces a year to reveal its payback period. This period should be less than the life expectancy of the system to be cost effective. However in most instances an arbitrary time period is used. Simply put if a system costs $100. to install and is produced $10. a year then the payback period would be 10 years (100/10=10).

This method of calculating payback for residential applications completely ignores the incentives as part of it. These incentives purportedly are there to promote the development of these technologies to where mass production reduces the cost of installation and the incentives are no longer required to make them cost effective. Unfortunately, especially in the solar industry, are heavily dependent upon the incentives. This by definition makes it a “Parasite Industry” and no industry defined as such is a viable industry regardless of its good intentions. Furthermore the solar industry argues it's the economy of scale that defines its viability and that the incentives induce that objective. Yet it is well known that for solar to become a viable industry their solar panels for residential use must become more than 30% efficient. The average solar panel installed today is only 14 to 18% efficient. This appears to be the argument “Which came first, the chicken or the egg?” the costs for improvement and re-tooling would result in the dissemination of the industry. Yet the incentives appear to perpetuate this inefficiency causing the solar industry to remain as a dep3endent on the incentives. We as taxpayers who fund these incentives will never see any benefit. This is because the costs of the incentives far exceed the life expectancy of these systems and industry existence is questionable. For example if Administrations change or a more viable alternative comes about.

This by no means that incentives should not be given to solar panels for residences. Rather the incentives should be for the benefit of society as a whole. Though this is quite broad and can be interpreted in many ways and is used in a way to support the present industry, it should be given in such a way that it produces conditions that are conducive to obtaining its goal. For example provide smaller incentives for today's average solar panel, a larger one for solar panels that are more than 18% efficient and an even larger incentive for panels that are more than 20% efficient. This tier incentive program should extend to commercial and institutional applications. Though this does not obtain the more than 30% efficiency of the panels for economic viability, it does move it towards it. This progress is what benefits society.

There are many universities and organizations doing research on solar panel. All are attempting to obtain the more than 30% efficiency. The use of dyes and the re-configuration in panels holds great promise for the industry. However some of these methods can be adapted to present solar panel manufacturing at minimal costs that would produce modest increases in efficiency. Though this is not proven, it's clear no-one has tried. The present incentive programs does very little for some-one to try. Rather it induces them to keep doing what they are presently doing. The goal here is to make the solar industry a viable one and any movement towards that end is called progress. There are those who will argue that the number of homes that now use solar as a result of the incentives is a clear sign of progress in the industry. My reply would be questions, “What happens if the incentives goes away?” “What progress has come about in the industry in becoming a viable industry as a result of those incentives?” Furthermore this industry continuously argues for the need of incentives with apparently no end to them. Will it take a billion dollars, a trillion dollars before it becomes viable? Will it take a year, 10 years, decades?

The incentives at least should move the industry towards becoming viable. Though I support the solar initiative, one must not forget the solar incentives during the Carter administration. Clearly no-one wants history to repeat itself. Admittedly times are different but the goals between these two administrations appear to be the same concerning solar. If the present administration really wants change and its intent to apply solar to government building then have bids for the contracts and state that those solar panels that exceed 18% efficiency will be given preference.

1 comment:

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