Solar Panels Can’t Compete with Cheap Shale Gas

An article published today by NPR (no less) exposes the simple truth about solar energy: It just can’t compete with shale gas economically.

The article recounts the experience of a Pennsylvania family who installed 21 solar panels with government subsidies (that is, the government sliding their sticky fingers into your pockets to help pay for it). The end result? Even with taxpayer subsidies, the payback period for solar energy is 17 years—the lifetime of the system. At best it’s break-even, but in reality, it actually costs you more money than other forms of energy.

Barbara Scott had 21 solar panels installed last March on her house in Media, Pa. Scott’s family was the first in the community, and she was prepared to evangelize, "We can have open houses and write newsletter articles and promote the idea of solar," she said. But that was before the economics changed.

With government rebates and tax incentives, Scott says, her family spent $21,000 to install the system. She figured it would take eight years to recoup that investment.

A lot of other people had the same idea at the same time, which sent the price of solar energy credits down sharply in Pennsylvania. Scott says that added another seven years to the payback period.

On top of that, Scott says, electricity rates aren’t going up as quickly as she thought they would, thanks in part to low natural gas prices.

"So that, again, adds another two years to our payback period," she says. "We’re up to 17 years, which is, essentially, the life of the system. And we haven’t even considered what happens if the system breaks or what it’s going to cost to take the system off the roof and dispose of it. "

Despite this, Scott says she’s still happy to have the panels on her house.

"But now, knowing it’s — at best — a break-even proposition, we’re not so comfortable telling other people to do it," she says.*

MDN is not anti-solar. We would like nothing better than to stick up some solar panels and tell the local electric utility to take a hike! But it has to make sense economically. And right now, it doesn’t. That is the power of cheap, abundant and clean-burning natural gas.

*WNYC/NPR (Jan 5, 2012) – Solar Panels Compete With Cheap Natural Gas

  • Anonymous

     Regarding solar; you don’t give up on the baby because it can’t yet earn its keep! Has there ever been a new technology that wasn’t more expensive than the existing method of getting it done at the time? Think horses to automobiles, slide rulers to computers ,wired phones to mobile phones,  xrays photographs to MRIs , etc. Each was initially more expensive but was eventually adopted because they offered advantages.This is true with solar PV and thermal systems. The price has dropped 70% in 3 years and is likely to reach grid parity without subsidies within a decade in many States. The newest studies suggest that the life span of systems will exceed 30 years without significant loss of efficiency.The price of electricity is fixed with a solar system; can you guarantee that will be true for the next thirty years with fossil fuels? Yes, I do support natural gas development.

  • The only real story here is that the company that installed the solar array way over-charged this woman. 21 panels is not quite a 5kW installation. In Texas, where we have cheap energy, no state  rebates or incentives, and no SREC’s, we have to be aggressive with pricing.
    Our average install runs $5 a watt, meaning the above job would have cost just under $17k after the tax credit, without any other incentives etc.
    As far electricity rates not going up as quickly as she thought… come on. We’re talking about a 10 month period of time, for installation that has a projected life 25-30 years.

    Using the following parameters:
    A current kWh charge of 11 cents
    Energy inflation rate of 3%
    Discount rate of 3% 
    30% tax credit
    $5 per watt installed cost

    You get a levelized cost of energy of 10 cents per kWh… 

    I’m not against the natural gas industry, I wouldn’t have any friends if I was… but the age of harnessing the everlasting, abundant and free fuel from the sun and wind is upon us.

  • Anonymous

    Cal Morton,
     Great Post! This site needs people like you that have experience in the solar field to set straight all the negative  inaccurate information people hear from media . Just give us the facts, warts and all; tell ,us as you see it, where the industry is going, whats new , what you are hearing that is in the pipeline [ pun intended]. Thanks.

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