The Folly of Cheap Solar Energy
Psst. You. Hey you. Have an extra $120K in your back pocket? Yeah?! Well have I got a deal for you. Slap these here solar panels on your house, get off the grid, and for just $120,000 you can make back your investment inside of 25-30 years. Sounds like a great deal, right? Can I sign you up?
For pharmaceutical executive Abe Abuchowski and his wife, Mary Nucci, going solar meant a little pain for what they hoped would be years of gain. The couple decided in 2011 to convert their 3,500-square-foot colonial home in Hunterdon County, N.J., to solar power, and they endured a barrage of banging hammers and droning electric drills on their roof as a crew installed the photovoltaic panels. The total price tag: a daunting $120,000. Still, by the couple’s calculations, the ruckus and money would be worth it; with energy prices climbing toward the stratosphere, they’d recoup their costs in five years.
Less than a year later, Abuchowski is second-guessing the decision. Since his panels went up, New Jersey’s home-energy rates have bucked a decade-long trend and started to dip, and local utilities no longer pay top dollar for the electricity from his home grid. One culprit behind the unexpected reversal, experts say: natural gas, which is driving down power prices all over the Garden State and undercutting the alternative-energy business just about everywhere. Now, Abuchowski says, the money math looks a lot different: “It could take 25 to 30 years to recover what we paid.”*
Why have energy prices come down so much so fast? One word:
So what’s different now? To put it crudely, our economy has been fracked up. Fracking is the extraction technique that has enabled drillers to tap enormous new reserves of natural gas across the country — a 75-year supply, by some estimates, with the potential to change the economics of everything from the electricity that runs our iPads to the trucks that deliver them to our doors. And natural gas isn’t the only historical fossil that’s resurfacing; North American oil production is also bouncing back, driven by technological breakthroughs that have brought hard-to-reach sand and shale deposits into the fuel fold. “The shale revolution could transform our economy,” says Sarah Emerson, president of research and forecasting firm Energy Security Analysis, who has been covering the industry for 25 years. “The potential here is phenomenal.”*
Now you know why anti-drillers hate fracking. It deflates their renewable energy future nirvana.
*SmartMoney Magazine (Jul 9, 2012) – The Return of Fossil Fuels