Sunday, August 20, 2006

The US Energy Roadmap

Last weekend I was talking to a guy who works for a company that sells wind power. He started making comments about how solar energy is uneconomical and impractical, all the while bragging about how much cheaper wind is. It was like he was trying to pick a fight with me. I wanted to tell him, “Buddy, I’m your friend here, aren’t we on the same side?”

Environmentalists make me nuts. We can’t get the political heavy-hitters to listen to us, so we argue and nitpick with each other. We’re fighting an uphill battle against big corporations with money, power, lawyers, policy wonks, and lobbyists behind them, and this schmuck is trying to drive a wedge between wind and solar. Unbelievable.

Most people know that the United States is dangerously dependent on non-renewable sources of energy. These sources – namely coal and natural gas, are finite, meaning they’re going to run out eventually. The difference between the two is that natural gas burns clean, with minimal carbon emissions. Coal is…well… you can imagine what coal looks like when it burns.

According to the U.S. Department of Energy, about 50% of our electricity comes from coal, while only 18% comes from Natural Gas. About 20% comes from nuclear power, which has no emissions, but it’s also non- renewable, since it comes from limited supplies of uranium.

(There’s also that little “deadly-carcinogenic, kids-born-with-three-feet, radioactive-waste” problem, but we can just keep cramming it in Homer Simpson’s shirt pocket, right?)

The safest alternatives would be the major renewable energy sources – wind, solar, and hydro. They’re entirely abundant and renewable, since wind, sunlight, and water won’t be running out anytime soon. They’re also clean, since they burn zero fossil fuels, emit zero greenhouse gases, and produce zero emissions.

Hydro-power is the leading source of renewable electricity in the country. But some people worry about the ecological impacts, since river dams can affect the migratory and reproductive patterns of fish, while also impacting plant life.

But there are ways to avoid these risks, and in general, hydropower is a well-utilized source of power for many parts of the country. But even with our hydropower resources being utilized to the fullest, which most experts will agree they are, hydro still only represents 6.5% of electricity supplies in the country.

The other renewables make up only 2.3%... yup…this wind guy wanted to fight with me for a bigger share of 2.3%

The fact is, the wind and the solar guys need to be on the same page for the US to reduce its impact on climate change. We’re not doing anybody any service by competing with each other. And in truth, most of us are working together. My ignorant adversary was really an anomaly. Take a look at the National Renewable Energy Laboratory (NREL), The American Council on Renewable Energy (ACORE), and The Alliance for Clean Energy in New York (ACE NY) to see the ways in which renewable energy is moving forward.

But what does this mean? How do we move forward?

Many of you have seen An Inconvenient Truth, you know that this is important. You just don’t know what the answer is.

Well, I hate to disappoint you, but there isn’t one answer. Environmentalists need to get over these pie-in-the-sky delusions of windmills and solar panels saving the country from global warming. It’s a naïve theory, and it hurts our credibility in circles where politicians, policy-makers, and scientists are thinking seriously about climate change.

The real answer lies in 4 parts, and anyone who doesn’t include all of them in describing our energy landscape is missing something. Here they are, in order of significance.

1 – Energy Efficiency

We’ve got to start using less energy. There’s no reason our consumption levels need to be this high. While this means being smarter, it doesn’t just mean we have to change our lifestyles. It means that the technology needs to get better. Energy Star Appliances are a great start – the air conditioners and refrigerators, for example, use a lot less energy than conventional models. If you have old appliances around the house, get rid of them. The newer energy star models will save you enough money on your electricity bill to make up the cost in just a few years.

Compact Fluorescent Light Bulbs are another biggie. The difference between these and conventional incandescent light bulbs isn’t even close – they use 4x less energy. I’ve heard stories of people who changed every bulb in their house and their electricity bill dropped by 50%.

And the technology is still improving.

2 – Cleaner Technology for burning fossil fuels.

As much as I’d love to see wind and solar replace coal, it ain’t happening. Environmentalists need to get over themselves. Coal is cheap, and there’s probably enough of it to power the world for another 800 years.

What we should focus on instead is how to burn it more cleanly. The US and China are both researching new methods of burning coal that would produce lower levels of carbon emissions. Don’t ask me how, I’m not familiar enough with the studies, but it’ll happen someday soon.

Another interesting technology is called Sequestration. This is where Carbon Dioxide is actually filtered out of the air and pumped back into the ground. Don’t ask me how this works either, scientists still haven’t quite found a way. But it’ll also happen soon

3 & 4 (tie) – Wind and Solar

In the long run, solar is more abundant than wind. But wind is a lot cheaper right now, and we can’t sit around and wait for solar to become less costly. We need to use the technologies that are affordable right now.

A lot of states in the country have implemented Renewable Portfolio Standards (RPS). This means that by a certain year, they’re going to have to incorporate a certain percentage of renewable energy into their portfolios. (For example, New York has an RPS of 25% renewable energy by 2013)

All power utilities are going to have to meet this, and in order to do it cheaply, most of them are looking into wind… not solar. It’s still not as cheap as coal, but it’s getting close. And in order to make up the difference, a lot of utilities are passing the extra costs onto willing customers.

For example, Con Edison offers a great program through one of their subsidiaries, Con Ed Solutions. Customers can sign up to receive their power from wind farms instead of conventional fossil fuel plants. It's a bit more expensive – a few cents more per kilowatt-hour, adding up to about $50 more per year on your electricity bill. But plenty of customers are willing to pay it in order to support renewable energy.

If you’re a customer with Con Ed, click here to sign up for wind power. Aside from the extra costs, it won’t change the way you receive electricity at all.

I will happily bash Con Ed for all of their shortcomings, but this isn’t one of them. It’s a great program.

But as cheap as wind is, studies have found that in order to power our entire country with wind, we would need to put up windmills in a landmass the size of the state of Colorado…

…which ain’t gonna happen

By comparison, to power the entire country with solar, we would only need about 10,000 square miles of solar panels.

This portion of the Nevada Desert has the capacity to meet all of our country's electricity needs through solar energy

Make no mistake about it…this ain’t happening either… but it shows how much potential energy there is in sunlight. As the technology gets cheaper and more efficient, we’ll be able to tap into more and more of it.

Maybe by 2200, the entire country will be powered by renewable energy. But for now, in our lifetimes,

-We need to use energy more efficiently
-We need to burn coal more efficiently
-We need to put policies in place that will enable the wind industry to continue to provide affordable electricity to homes all over the country
-And the solar industry needs to continue to grow, so that costs will go down, and solar power will become more and more economically viable.

That’s the roadmap… now let’s see if we can follow it.

Don’t Take My Word For It

“Don’t Take My Word For It” is a feature I’m going to include at the end of every post. It’s a link to a credible, scholarly source, for those of you looking for more info.

Dr. Klaus Lackner at Columbia University is one of the most highly regarded experts in fossil fuels and climate change in the country. This is a link to a paper he published on carbon reductions and sequestration of carbon emissions.

Monday, August 07, 2006

Solar Economics for Homeowners

One of the things I love about doing solar installations is the people I meet. Talking to homeowners who have made the decision to go solar is both fascinating and gratifying. Some do it for environmental reasons, others do it for the economic benefits, and some people do it just because they love the freedom and independence of producing their own electricity.

Whatever the reason, solar energy is a wonderful investment. I hope and believe that one day solar is going to become the next super-trend. Rich mansions in Beverly Hills are going to be equipped with solar arrays, just so lawyers and investment bankers at barbecues can say things like, “Oh, you only have a 9 kw system? I have a 10 kw, and it’s earned me over $6,000 since I had it installed.”

When that finally happens, it’s going to be a great day for the industry. But for now, I enjoy meeting the folks who are on the cutting edge of this trend, before it becomes a high-brow phenomenon.

These are the folks who realize what a great deal it is. Different state and federal policies have made solar energy more affordable right now than ever before. In fact, the biggest problem with the incentives is that not enough people know about them.

In New York State, there are rebates that will cover 50% of the equipment costs. There is also a state tax credit worth $3,750 (It will go up to $5,000 on Sept 1st) and a federal tax credit worth $2,000.

So let’s say you’re a homeowner looking to buy a 5 kw system for $40,000 (A decent-sized system that can reduce your electricity bill by about 70%). Here’s what you’re looking at:

Initial System Cost: $40,000
50% State Rebate: -$20,000
State Tax Credit: -$5,000
Federal Tax Credit: -$2,000
Final System Cost =$13,000

$13,000 for a $40,000 system… it’s not going to get much better than that anytime soon. And that remaining cost can be easily financed with the state loan program, which provides financing for solar electric systems at 4% below lender rates.

But what do you really get for all that money?

Whatever you spend on your system, whether it’s $13,000 or $50,000, it will take you about 10-12 years to make up the cost in energy savings. But solar panels have a warranty to be productive for 25 years, and most will actually produce for 30. So once you’ve made up your initial investment in 10-12 years, you’ll probably have another 18-20 years of energy savings.

That means a $13,000 system could earn you as much as $30,000 over thirty years. It’s not the most lucrative investment, but wouldn’t you rather save $30,000 than spend it?

Not to mention the fact that this payback is based on the prices of standard electricity remaining where they are now. If fuel prices go up (and they will) the payback could double or triple. In fact, plenty of large companies are investing in solar as a type of hedge-investment against spikes in natural gas prices.

The other day I came across this bestsolarenergyblog, which features a nice article about how building owners are investing in solar as a way of “freezing” their electricity costs, and avoiding volatile energy prices.

But I digress…sorry…back on track…

There’s also net metering, where your system can earn you money if it produces more than you use (Click here to read my last post on net metering)

Another facet of the financial angle is increased property values. Real Goods, based in California, cites the Appraisal Journal of the National Appraiser's Association as saying that property values increase by $20 for every $1 of annual energy savings. That means our $13,000 system could increase property values by $20,000.

You'd be up $7,000 from day 1.

Truthfully, these increased property values are somewhat skewed, since they're based on finding someone who's interested in buying a house with solar panels, and since the panels might be done with their productive lives by the time you're looking to sell the house. But still...

Solar energy may not be the most profitable way to invest your money, but you’re going to have to pay for electricity one way or another anyway. Isn’t it better to purchase your power in a way that will save you money, even if it’s only $1, than to do it in a way that will cost you a thousand dollars a year?

Don’t Take My Word For It

“Don’t Take My Word For It” is a feature I’m going to include at the end of every post. It’s a link to a credible, scholarly source, for those of you looking for more info.

For those of you in New York State, visit the New York State Energy Research and Development Authority (NYSERDA) web site to find out more about the state incentives.

For those of you outside of New York State, visit the Database of State Incentives for Renewable Energy (DSIRE) to find out what types of incentives are offered in your state.