When President Jimmy Carter installed solar panels in the White House in 1979, he was making a point, but it wasn’t about solar energy’s economic viability. At the time, the cost of solar panels, or photovoltaics, was about $40 per kilowatt of generation capacity, which would render household energy bills sky-high. However, since 1977—the first year for which data is available—the cost of solar energy from solar panels has fallen by about 99.5 percent.
Colorado has favorable conditions for those interested in investing in solar panels: 300 days of sunshine a year; high elevation, resulting in more intense sunlight, therefore a more effective performance ratio than panels at lower elevations; and a favorable “net metering” policy, which allows owners of solar panels to receive credit for the created electricity to use at any time, not just when it is generated.
The number of installed solar panels will double in the next five years, according to GTM Research, a market research, analysis and advisory firm focused on renewable electricity.
Pricing and Other Common Misconceptions
In the last decade, the price of solar panels has fallen precipitously. It hasn’t leveled off and solar panel installation has been climbing just as sharply.
According to Fort Collins Utilities, the average home solar array is 6 kilowatts and costs $21,000 including installation. Subtract from that up to $1,500 in rebates available (depending on location) as well as a 30 percent federal income tax credit. Oftentimes, a solar array that’s financed creates savings that exceed the monthly payments for the array.
Ian Skor, co-founder of Sandbox Solar, says price is the most common misconception he encounters from customers. “I think a lot of people may have looked into solar five years ago or eight years ago and don’t realize how much the price has dropped in that short period of time.”
A startup located in the Colorado State University Powerhouse, Sandbox Solar in just three years has installed 250 kilowatts of solar panels in area homes and businesses, enough to accommodate the electricity needs of about 50 households.
Some Fort Collins households with rooftop solar enjoy negative utility bills due to net metering. This is an arrangement where excess energy produced on residential roofs and delivered to the utility is credited to the household utility bill based on the city’s net metering rates. The city is also offering a total of $400,000 in rebates for approximately 266 homes. For homeowners, these incentives can be a deal-maker.
Another misconception is a concern about maintenance or durability. Modern solar panels, however, are subjected to extreme abuse in pre-market development and testing, simulating various extreme weather conditions. Following an intense hail storm last May, only one solar panel on NREL’s campus was damaged out of over 3,000, report NREL and the Department of Energy.
While economic incentives motivate some to invest in solar power, others are motivated by their desire to be good stewards of the environment. We are almost to the point where solar power makes sense from both standpoints.
“Whether you incorporate environmental questions or not, when solar on a lifecycle cost is cheaper than just burning coal in existing coal plants, there’s absolutely no reason to extend the lifetime of that coal plant,” says Thomas Koch Blank, an engineer and principal at Rocky Mountain Institute (RMI) based in Basalt, Colorado. He notes that we’re at, or very near, the inflection point where renewables make more sense from a hard-nosed economic perspective than coal. RMI and National Renewable Energies Laboratory (NREL) in Golden report that for some regions of the country, grid parity—where renewable energy can be delivered as cheaply as coal and gas-generated energy—has already arrived.
“I really do believe that in most U.S. markets within the next investment horizon, solar will be cheaper on a lifecycle basis than the cash cost of coal,” Blank notes.
The recent announcement of new tariffs for imported solar panels and the repeal of the Clean Energy Plan raise further questions about the economics of solar. The cost of solar panels, however, is expected to continue falling—though less sharply than projected. The consensus is that policy change is a bump in the road. Blank and colleagues wrote in RMI’s blog that the tariffs would be mitigated by cost-cutting innovations and continued improvements.
Today, solar panels provide 10.6 gigawatts of electricity in the U.S., which is theoretically enough to meet the needs of 10.1 million households. According to Platte River Power Authority, a wholesale energy provider serving Fort Collins, Longmont, Loveland and Estes Park, the region has 30 megawatts (MW) of solar capacity connected to the transmission grid for its owner communities. Most of the carbon-free energy resources being used in Northern Colorado are from PRPA projects outside the cities they serve, and the utility is currently assessing bids for 20+ MW of new solar, which could also be made part of a green power program offered through the owner communities.
Loveland recently completed a 3.5 megawatt solar project, replacing the Idylewilde Dam, which was damaged in the 2013 flood. The system is expected to generate enough power to accommodate the equivalent of 574 Colorado homes.
RMI released a report in March on community scale solar, defining these as “projects that are between 0.5 MW and 10 MW and interconnected to distribution grids.” This means that the solar panel arrays serve multiple businesses or residences connected to the distribution grid in a single community.
Experts at RMI and NREL regard these projects as the most promising segment in solar energy generation. Community scale solar is large enough to provide economies of scale and small enough for distributed installation, meaning smaller arrays are installed closer to the places they service. This markedly reduces transmission costs associated with delivering energy to households from a centralized source, which can amount to over 20 percent of what ends up in your utility bill.
NREL found, in a 2008 study, that only 22–27 percent of rooftop area is suitable to on-site solar panel installation because of building orientation, shading, structural issues and other impediments. That underlines the importance of off-site solar options for homeowners, renters and building managers.
Community scale solar is not to be confused with larger installations (20 MW) that Platte River Power Authority develops, which would interconnect with the transmission grid so that it could serve all four of its owner communities.
The program that residents can take part in comes through the owner communities, but is predicated on the green power that is supplied by Platte River from larger scale installations that are interconnected at the transmission level.
The four cities comprised by PRPA need “to come together to build an open market for community solar because it will create more opportunities for more residents to invest in solar,” Skor remarks. He notes that with larger, interconnected solar arrays being brought on board by co-ops and utilities, those whose circumstances kept them from participating in the solar energy economy, particularly renters, homeowners and small businesses, will now be able to.
Residents of the four cities served by PRPA can contact their respective city utility to request green energy, which is supplied by PRPA under a “tariff” and delivered separate from normal energy. It is helpful to know, however, that electricity produced through any means—wind, hydro, solar or coal—is stored in a grid and the electrons are indistinguishable from one another.
To learn more about PRPA’s green energy program, visit www.prpa.org/generation/carbon-free-resources/. You can learn more about installation costs, rebates and financing from Sandbox Solar or Boulder-based Namaste Solar.
The Big Picture
Of course, reconfiguring our grid infrastructure will present challenges along the way. The question is whether renewables and decentralized power generation will ultimately make us more resilient.
“Our view at RMI is that the risks are higher with a centralized system because you’re more exposed to single points of failure,” explains Blank. “And you’re more exposed to miles and miles and miles of often overland lines hanging, exposed to all kinds of storms, situations and falling trees and whatnot.”
As a case in point, Blank points to Puerto Rico in the aftermath of Hurricanes Irma and Maria.
“Eighty percent of the country’s out of power now for almost six months because they only had a centralized system.”
It’s easy to take our solar resource for granted living in sunny Northern Colorado. It’s a good thing, however, that not everyone does.
John Garvey is a Fort Collins-based business journalist and freelance writer. To comment on this article, send an email to email@example.com.