“Well, you know what they say about paybacks….” That’s not the kind of payback I have in mind, the payback that line refers to is more appropriately called revenge and is a dish best served cold.
I’ve been thinking about other paybacks this week. Tuesday, Senate Republicans blocked a bill that would have taken away tax breaks from the major oil companies, imposed a windfall profits tax on them and directed some of that money toward investments in alternative energy. The five major oil companies have made over 35 billion dollars so far this year. Yes, that’s billion with a “B.” The service rendered by the GOP is a payback for all those campaign contributions the oil companies have showered on them for the past decade. Good luck running on that in November, Republicans. You may run into a payback of the type alluded to in the first sentence above.
Republicans argued that passing such a bill would do nothing to lower the price of gas at the pump and they’re absolutely right. The bill would, however, take some of that money away from the oil barons and put it in service to the American public, so someday this price gouging may come to an end, because we will have developed other ways to live our lives than solely via an oil addiction.
The alternative energy sources the Democrats’ bill might have funded include wind and solar power. There was an ad in a local paper this week for solar panels. It said the return on investment is five to fifteen percent. I think I’ll clip that out and save it. I’ll pull it out and compare those numbers to what an ad might say next year.
The big stumbling block to alternative energy in America is “payback” and this is the definition that most concerns us today. You can buy a solar panel for your house, but before you do, you’re likely to figure out what the payback is. It goes like this: If I spend $1,000 on a solar panel and that panel reduces my electric bill by $10 a month, then it will take 100 months, or eight and a half years, for that solar panel to pay me back. That’s where the five to fifteen number comes from in the ad. The reason I’ll clip and save that is that as the price of oil – and therefore every other form of fossil fuel – goes up, the return on investment gets higher, the payback gets shorter.
Energy consumption seems to be the only area in American life where we apply the principle of payback. As soon as I bought my uninsulated house, everyone told me it’s worth a couple grand to insulate. “The payback is like, five years,” they all said. They were right. (It’s been seven years.)
Imagine your 12-year-old needs a kidney transplant. Do you figure out the payback? “Even with insurance, the hospital and doctor bills will be enormous and then our premiums will go through the roof and she’ll have to take anti-rejection drugs for the rest of her life and those are expensive and there’s no guarantee she won’t be hit by a bus when she’s 15…..” Of course, not. You’d be ghoulish if you did. I’m obviously choosing an extreme example to make my point, right?
OK then, anyone you know recently switch from regular to hi-def tee vee? Anyone you know get a big, flat plasma screen? Did they run a payback equation? “I’m not buying that grandiose tee vee unless I can prove to myself it will save me money in less than five years.” I think it’s clear no tee vee ever saved anyone money.
If you and I and everyone we know put solar panels on the top of our houses – even with the limited sunshine I get here in Vermont – several things would happen. First, we could shut every nuke and a considerable number of coal-fired power stations across the country. The price of oil would drop. We would slow the rate at which greenhouse gases build up in the atmosphere. Thanks to economies of scale and the magic of the marketplace, the price of solar panels would drop and the quality would increase.
Yes, that first generation of solar panels will be relatively crappy and expensive and will have a comparatively long payback. But do we have to break even or save money in the short to mid-term future before we act to preserve a decent way of life for our children? Are we that selfish?
Why doesn’t Congress tax the living daylights out of the oil companies and use that money to subsidize any American who wants to put a solar panel on her or his roof? Saving the planet in our lifetime is the kind of payback we should all be looking for.
© Mark Floegel, 2008
One Comment
You make some of the arguments/present some of the perspectives I conventionally make and present nowadays (esp. to folks visiting our home during the ASES Solar Tour or the Mpls-St. Paul Home Tour!), but I’ll add a couple of others:
1) That capital investment doesn’t go away — our PV system will still be on our house, and operating pretty well despite some very gradual diminishment of output, after my currently 58-yr-old bod is in the ground; yes, the warranty on our (used) Solarexes only runs for 20 years and they’ve already got 6 years of use, but after 14 years, the little Solarex PV panel I bought after traveling with Greenpeace’ 1994 Cyrus (16-wheeler outfitted with a 140 sq. ft. solar array) tour is still putting out almost exactly the same amount of power it did the first day I set it up on the CA hillside where we then lived, to run my old laptop. — In the meantime, should we sell our place, we’ll get all that capital back (and maybe a bit more).
And here in MN, anyway, I _cannot be taxed_ on the appreciation in my home’s value that comes with installing a solar system.
So: since depreciation isn’t going to be a real-world factor during my lifetime (and I’m not a utility CEO charged with making money any way the law will possibly allow it), truly, now, other than greed, what reason would I have for expecting the capital investment to be paid back? — Any money we make from net production above and beyond our consumption under net metering is gravy (this will happen when we expand the system, as planned; we bought an oversized inverter and can add more panels to the array)… that will be added to the offset, on our utility bill, that comes from currently producing about as much power as we use (97% over the first year of the system). And while the income from excess production will presumably be taxable, as far as I can make out, the offset money isn’t.
2) Along the lines of your plasma TV analogy: when I was 21, I bought a used Porsche. Gee, I sure don’t remember ever asking, “What’s the payback period?” The payback came when I got behind the wheel and drove, like a young fool, 80-90mph on MA Rte. 128 (as it was then known), Rtes. 93 and 89 up into ski country, and other inviting 4-lane surfaces (I got it up to 106 once, on Rte. 2… did the same later on with a BMW 2002, which was sweaty fun at the time, tho’ the Bimmer was never as much entertainment as that old 912 — totally different handling characteristics). Well, when I wake up here on a sunny morning, I get about as big a rush as I did driving those cars — with minimal associated risks, unless I race down the cellar stairs to check the inverter readout as I used to do before we got a remote monitor installed — and _that’s_ my payback. As far as I’m concerned, experientially, I’m driving a solar-powered sportshaus. I’m simply thrilled to finally have solar on my home.
So there.
🙂
Some additional notes on our system for those interested:
We are a two-person household and use an average of around 270 kWh/month. Summer usage is higher than the average, at over 10kWh/day when our little Energy Star bedroom A/C unit (or even a fan) is operating regularly, along with a necessary dehumidifier in the basement — and, of course, the (Energy Star… 9-year-old) refrigerator is working overtime as the weather warms up. (In this La Nina year, we haven’t had to put the A/C in the window yet, so our usage is down a bit.)
After the $2k federal investment tax credit (Congress gotta renew that puppy!!), our system net cost including the oversized inverter was about $18k. This does not include a few hundred dollars spent having the 96 years’ worth of snow-sag jacked out of our roof and new 2x4s sistered to the old rafters to hold it flat, nor the cost of new 50-year shingles — as it happened our south roof badly needed reshingling anyway, so we took that $2.5k as a preexisting liability, tho’ anyone mounting a solar array on a roof would presumably want a fairly new surface underneath it and for some that could qualify as an unscheduled expense.
We bought used panels, so we weren’t eligible for the MN state rebate, which applies only to new equipment; having purchased the panels at a discount, we think the cost came out a bit in our favor compared to buying new panels and getting the rebate. We don’t have a battery bank — the grid is very stable here and we saw no need for the extra expense (not to mention replacement costs every 5-10 years); we buy green power at night and when it’s cloudy (wind, from Xcel Energy’s Windsource program… at a premium of about $3.50 per block of 100kWh; that’s partially offset by not having to pay a fuel adjustment charge, which would run a bit under a dollar a month I think).
Our array is rated at 3kW — highest real-world output I’ve seen from the inverter is about 2.7kW — and is composed of 36 Solarex 83-watt panels covering roughly 400 sq. ft., roof-mounted at a 1/3 slope with no adjustability [a nearby friend has a 1.6kW array on a manually adjustable rack that he usually adjusts 4 times a year, very workable for an array of that size but labor-intensive for a larger one]. This 1/3 pitch turns out to be a very good average angle for MN’s insolation, tho’ the array does not shed snow quickly — so I help it along with a wide squeegee on a long pole. My installer laughs at me because he figures the snow would come off pretty quickly once the sun came out, and I’m probably only gaining 1-2kWh per snowstorm for all my efforts, but I’m in it for every kWh I can get (I also wash down the panels regularly from spring through fall; they do pick up city dust, esp. when it’s dry) and besides, I kind of like the exercise — which is a LOT easier than shoveling… In the dead of winter, there is some mild offset for the low production caused by the shallow angle, since the panels absolutely love cold weather, which reduces the resistance in the metal components of the panels and allows the energy to move more readily onto the wires to the inverter.