Why Utilities Don’t Buy Solar Energy (and why they do)

cost-effectiveUtilities don’t buy solar energy to provide energy to their customers. It’s too expensive and too unreliable. They don’t even buy wind for their customers, even though in most cases it is very close to being cost-effective. Neither of these intermittent sources suits their needs, either in price or dependability.

But they do buy solar and wind. They are trying to reduce their carbon dioxide emissions, and to a lesser degree, diversify their sources of electricity in case of fuel price shocks.

They are required by state and Federal regulations to buy wind and solar.

It’s really a simple equation. If –

Federal and state requirements – Added cost of electricity – Intermittency and transmission penalty > 0,
then they buy solar and wind.

First Solar, Ordos, China, US

China, USHow can we be so profoundly behind in our awareness of solar PV? China signs an agreement with the world’s largest PV company (which just happens to be an American company) for the world’s largest PV system (equivalent to Hoover Dam in output) using the most advanced, lowest-cost technology, and we haven’t even heard about it? The company, the technology, the concept of big PV. All that is new. Our press and our government are in the dark. Why?

We hear about self-promoting Silicon Valley PV start-ups manipulating the press for coverage while they raise money (First Solar is from the Rustbelt). We hear about Chinese silicon PV companies using low-cost labor to take the market away from everyone, because that is a cliché of our psyche – the foreign threat.

EPA’s New Mandatory GHG Reporting Rule and Solar Energy

Smoke StacksIndividuals interested in solar energy and climate policy are likely aware that the U.S. Environmental Protection Agency (EPA) published its final Mandatory Greenhouse Gas Reporting Rule in the Federal Register on October 30, 2009. (74 Fed. Reg. 56260) This regulation represents the first U.S. effort to require public reporting of certain greenhouse gas (GHG). However, few of these observers may be aware that the final rule will not require the tracking of progress by electricity consumers in reducing greenhouse gas (GHG) emissions by substituting on-site solar energy for purchased fossil fuel-fired electricity.

Nonetheless, a close reading of the final EPA rule indicates that solar energy supporters should not pack their bags and go home. Although the final rule is focused on direct emissions from electric generation sources, the Agency signaled its interest in conducting a future rulemaking to address the treatment of electricity purchases. According to the preamble to the final rule, EPA stated as follows:

Postponed Gratification

electricityThis must be the denomination of photovoltaics. Could anything be more out of tunedness with its time?

Put up money great, now; earn money slowly, later.

Put up money great, now; make almost chargeless electricity, later.

Put up money great now, decrease CO2 later.

Operate now, sit on your honours, later.

Even badly: sponsor now, decrease prices for later.

So many points about PV assume the shape: settle accounts of a great amount now (put up money, energy, CO2), raise money slowly but in a great way, later:

Reward(t) = Slow payback(t) – One Big, Up-front Cost