Had a very entertaining discussion about public policy and solar at a holiday party. The discussion had two main thrusts:
- Solar demand would evaporate without subsidies, and
- Subsidies would be better spent on R&D rather than covering a percentage of installation costs.
My response on point one was that all we need is a level playing field. The energy industry is the most subsidized industry in the world, and policy driven initiatives—such as reducing our dependence on coal, putting a real cost on carbon loading the atmosphere, or getting the US military out of the job of securing imported petroleum—as well as reducing the carbon intensity of our economy, means that solar incentives is money well spent.
Current solar value is 10% greater than unsubsidized cost, and energy payback is even greater—cSi takes <3years of energy to produce the entire installation, and will produce energy for ~25years.
Point two underestimates the importance of an installed base and agile capital markets in driving cost compression and learning rates. R&D has provided us with innovative, even exotic, technologies, but solar is driven increasingly by balance of system costs [everything but the module & inverter] that are proven out in the field and with lower costs driven by more effective installation methods. The balance of systems costs are now 20% higher than module costs—R&D in balance of systems is driven by the number of installations and how quickly you climb the learning curve. To drive learning you need to drive installations—solar is a new model of distributed energy generation, not reliant on huge transmission towers. Instead, this critical tool in our energy independence is reliant upon property owners who get the math, financiers that can capitalize the upfront costs, and agreeable utilities.
A level playing field, and recognition of the importance of cost compression and learning rates in preparing for our nation’s future. Not to much to ask for, is it?
