Costs of solar photovoltaic panels substantially eclipse benefits, says study by UC Energy Institute director
Berkeley — Despite increasing popular support for solar photovoltaic panels in the United States, their costs far outweigh the benefits, according to a new analysis by Severin Borenstein, a professor at the University of California, Berkeley’s Haas School of Business and director of the UC Energy Institute. “Solar photovoltaic (PV) is a very exciting technology, but the current technology is not economic,” said Borenstein. “We are throwing money away by installing the current solar PV technology, which is a loser.”
In his January working paper, “The Market Value and Cost of Solar Photovoltaic Electricity Product,” Borenstein also found that, even after considering that the panels reduce greenhouse gases, their costs still far outweigh their social benefits.
Borenstein’s paper is online (pdf alert).
The bottom line, Borenstein argues in his paper, is that solar PV panels are not ready for widespread installation…. He favors more state and federal funding for research and development. “We need a major scientific breakthrough, and we won’t get it by putting panels up on houses,” he said….
His analysis deconstructs the argument that solar panels produce power at the location of the end-user and therefore can reduce the costs of transmission and distribution infrastructure investments. Examining 26,522 solar PV systems in California, Borenstein found they are not concentrated in locations where they would reduce transmission congestion and reduce the
need for investment in transmission infrastructure.
“Solar PV is not clustered in the most valuable locations,” his paper concludes.
Borenstein took his analysis a step further by calculating the discounted net present value (a financial tool to calculate the value of a dollar in the future compared to its value now) of power produced by a 10 kilowatt solar photovoltaic system and then compared that to the cost of installing and operating such a system over its lifetime. He found the cost for an installation ranges from nearly $86,000 to $91,000, while the value of the power produced ranges from $19,000 to $51,000….
Given that a coal-fired electricity generation plant produces about 1 ton of carbon dioxide per megawatt hour, Borenstein estimated that the price of greenhouse gas reductions would have to range from about $150 to $500 per ton of greenhouse gases to make the current solar PV technology a worthwhile investment when greenhouse gas reductions are considered.
But Borenstein noted that policymakers are considering a far lower price - $20 per ton of greenhouse gases - as the maximum that industry could be charged in proposed tradable emissions permit programs.