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Tuesday, April 14, 2009

Solar Power: Is Big Really Better?

An opinion that suggests utility-scale solar projects may be the wrong way to go.

Spenser Michaels' NewsHour story today about the solar energy industry had me thinking of that old saw about "deja vu all over again."

Michaels investigated whether solar is viable in this economy. Today, solar provides less than 1% of electricity in the USA. In spite of best efforts of many individuals, groups, and governments, the global credit crisis has put a drag on any new development of solar. Solar start-ups are unable to obtain funding to develop their technologies, bring their technologies to market, or expand proven technologies.

A handful of firms, such as BrightSource Energy, have secured important contracts with large utility end-users. See the New York Times story. A few determined companies will be able to grow in this difficult market.

But if the NewsHour reporter dug back far enough into the BrightSource Energy/SCE story he might have found out that SCE and BrightSource, which I think was named Luz International some 15 to 20 years ago, announced the same idea way back when--only to have Luz go bankrupt in the early 1990s after building some 300 MWs of solar generation in the Mojave Desert.

The reasons for the bankruptcy included changes in tax codes. In the 1980s, tax incentives were available for alternative energy developers. Similar tax incentives are being offered today. History tells us these incentives will disappear.

Also, the cost of solar when compared to other forms of energy generation was high--and regulators prevented utilities from passing on the costs to ratepayers. Regulators, who today support paying for higher cost renewable energy resources, may turn on utilities and forbid them to pass the costs along to consumers again.

But could it be that the real problem is that we're looking at this the wrong way? Are large scale solar projects the problem? They depend on huge amounts of capital, which is hard to get these days. They depend on the promise of large utilities to buy the power, which is difficult to do when you already have much cheaper and reliable electricity supplies available, and when regulators are liable to turn on you.

What about distributed power generation instead? A small solar plant on your roof top, with the power going into your home can be partially funded with tax credits. Technology is getting a little cheaper, so you might be able to install solar without going to the bank. And you keep the utility and speculators out of the equation, which recent history has proven--again--is much less expensive for ratepayers and society as a whole.

Just a thought. If you agree, check out these books:





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