The NY Times blows the solar PV story

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"The NY Times blows the solar PV story"

It would seem like an easy story for the paper of discord record:

In recent months, chains including Wal-Mart Stores, Kohl’s, Safeway and Whole Foods Market have installed solar panels on roofs of their stores to generate electricity on a large scale….

In the coming months, 85 Kohl’s stores will get solar panels; 43 already have them. “We want to keep pushing as many as we possibly can,” said Ken Bonning, executive vice president for logistics at Kohl’s.

Macy’s, which has solar panels atop 18 stores, plans to install them on another 40 by the end of this year. Safeway is aiming to put panels atop 23 stores….

Wal-Mart [is considering a] program that would put panels and other renewable technologies at hundreds of stores.

All that is left for the Sunday NYT story, “Giant Retailers Look to Sun for Energy Savings,” is to explain why these bottom-line savvy companies are making such large bets on rooftop solar photovoltaics (PV), even though the power is widely thought to be expensive.

This should be incredibly easy — assuming this reporter or her editor even bothers to read their own paper. After all, just a few months ago a different NYT reporter explained it all in a story titled, “Pay for the Power, Not the Panels“:

The new financial techniques allow the solar companies to separate the capital expense of the systems they sell and the tax benefits that accrue to the buyer from the final costs of the electricity produced. In doing so, the solar companies have made it possible for more corporations and even some homeowners to kill two birds with one stone: doing good for the environment while cutting the cost of the power they consume.

[Small note to NYT: In an environmental story, maybe use a different metaphor than bird-killing.]

That’s right. Corporations are actually cutting their electricity costs by installing solar panels. But you would never know that from Sunday’s story. In fact, you’d think these companies were throwing away their money:

Booming demand in recent years has driven up the price of solar panels, and analysts say it costs far more to generate electricity from solar energy than from coal.

Coal generation costs about 6 cents for a kilowatt hour, which is enough electricity to run a hair dryer for an hour. Natural gas generation costs about 9 cents a kilowatt hour, said Reese Tisdale, a senior analyst with the consulting firm Emerging Energy Research. In comparison, “best case” for power from solar panels is about 25 to 30 cents a kilowatt hour, he said.

But retailers believe that they can achieve economies of scale. With coal and electricity prices rising, they are also betting that solar power will become more competitive, especially if new policies addressing global warming limit the emissions from coal plants.

No, no, no, and no! Un-friggin’-believable.

Readers of this story would be left with the distinct impression that major retailers are paying four times more for electricity than they should be just to satisfy some irrational green urge. The line “retailers believe that they can achieve economies of scale” wins points for unintentional humor, given the old joke about the retailer who lost money on each sale but hoped to make it up “on volume.”

Why on earth would you compare the price of coal from existing plants, which no retailer can buy power directly from, with the supposed “best price” from some uninformed “senior analyst” at an obscure, albeit cleverly misnamed, research firm?

The fact is that the retail price for electricity in most parts of the country is considerably higher than six cents per kilowatt hour, especially during the peak times when PV panels deliver most of their power. And as the NYT itself noted in its earlier story, clever firms like SunEdison have figured out how to finance solar projects so as to offer retailers a guaranteed long-term contract for electricity below their current electricity rate.

Retailers see solar energy as a way to provide certainty for their own electricity costs at a time when traditional providers are raising rates (see “AEP demands 45% rate increase for Ohio“).

Yes, you (currently) need to have government incentives to make this work, but U.S. incentives are considerably less than many major countries that see the benefits to their nations of pushing clean energy and establishing a major foothold in what is certainly going to be one of the biggest job-creating industries of the century.

And by 2015, solar PV shouldn’t need government incentives, since the price is expected to drop considerably and since we should have a price for carbon dioxide by then that starts to reflect its environmental damage.

But the bottom line is that solar is good for the bottom line right now in many states.

Let’s award the NYT five spent nuclear fuel rods on energy issues for their ongoing lame coverage of this seminal issue (see also “The NY Times’ absurd energy editorial“).

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12 Responses to The NY Times blows the solar PV story

  1. Rick C says:

    Joe,

    What is the competitivenes of PVs if you compare the cost of PVs to the cost of a new coal fired electical plant kwh to kwh? Which technology comes out ahead and by how much in kwh?

  2. Andy says:

    Joe: maybe some of this is of your (and other energy analysts) own making? After all, the comparisons of energy generation costs is somewhat moot to the consumer. I pay 14 cents a KW hour for juice from wind. That price is set by the local electricity market here in SE Texas, not by the cost of its generation. It’s kind of like buying a barrel of oil, right? The price doesn’t vary dependent upon the cost of pulling that individual barrel from the ground. Companies make more money on some “easy” (John rancher’s back 40) fields and less on “hard” (deepwater) ones.

    All that matters is can a company make money selling their “flavor” of electricity. Will wind or solar or whatever make bucks? Or will the energy company go bankrupt? Maybe leave the KW hour generation cost comparisons to those who want to figure their profit margin.

    My impression is that many renewable energy companies are privately owned and don’t give a crap about their stock dividend and so don’t have to make obscene profits like publicly owned companies. While most oil/gas/coal generators are publicly owned and live and die by their profit margin. This could allow a huge advantage to renewables who’s owners want to save the world as much as make a buck or are counting on global warming kicking us in the ass sometime soon so as to get the government’s moving towards a carbon tax.

    What do you think?

  3. Richard says:

    What really, and seriously, I mean really pisses me off about analysts and renewable energy is the absolute focus on the immediate and the lack of joined up thinking. If first generation PV costs 30 cents/kW how much does second generation built using PV power cost, or third?
    And on a tangent, wind is bad because you can’t guarantee the wind. Excuse me, but what country in the world uses a single fuel source? We can and do store fuel everywhere, whether it be coal, gas, oil or petrol, we can store energy and already do in some places. So why can’t we use a mix of renewables and storage technologies? Analysts fixated on single issues are what is preventing us moving on to better technologies.

  4. Venu G. says:

    Joe,

    I read this article around noon today and was completely dumbfounded. I’m glad you took a break from your vacation to post about it.

    What’s the point of comparing the cost per kwh for coal versus solar PV? Are they buying solar PV from the grid? Of course not. This article should have just stated the break-even time for PV and been done with it. Why else would they see their “immense, flat roofs as an untapped resource”? They would have to be pretty dumb to convert their roofs from nothing at all to PV just do they could lose money!

    [JR: Outrage never takes a vacation much as I’d like it to!]

  5. charlesH says:

    OK,

    I see two issues.

    First, retail vs wholesale rates. Retail rates are of course higher than wholesales rates. There may also be a time of day rate. Afternoon (when PV is effective) being higher than eve, night, or morning. So yes, Walmart (retail buyer) may see benefit from PV before a utiltiy company (wholesale buyer). In CA the comparison is 30c PV vs 20c retail (homeowner). Much closer than a 6c vs 30c comparison in the article.

    Second, taking capital cost and its debt service requirements out of the financial analysis? I can’t see any justification for this at all. If capital costs are not to be taken into account then nuclear blows every other alternative out of the water. Don’t you agree?

  6. Ronald says:

    Maybe something should be said about daylighting or using the sun to light interior space with the sun.

    I was in a Wal mart during a hot afternoon when most air conditioners in the city would be running full blast and the lights in the Wal mart were off. The store was lit by only skylights. I’m guessing the store was in some program with the electrical power company to use less power on just such occasions. The lighting was low, but it was more than enough to get things done . The store didn’t have many skylights either. I don’t have any special knowledge about the level of retail lighting needed, but it would seem that with more skylights, more of the store lighting could have been done with skylights.

    I drive to gas stations and they will have a canopy over the fueling area which makes sense, but they they will have the lights on even when there is bright sun light. A lighted area does make it more attractive to pump gas than a non lighted area, but I thought a canopy that allowed the light thru would be better than a solid canopy and then having the lights on. British Petroleum advertises that they will be putting PV’s at most stations, but if they handled the canopy better and not have the lights on during the day, they might be better off energy wise.

    Buildings can and should be designed better to make use of sun light. The amount of electrical energy, lights and money saved could be huge.

  7. Daylighting of buildings or under canopies is enabled by developments in low-emissivity and insulated glass and transparent materials like Lexan that are more durable than glass. Without these materials a building with large skylights would experience too much solar gain during summer days and too much heat loss during cold months of the year. As these materials continue to become more common, more sophisticated, and cheaper, we may see more buildings with larger skylights, reducing the need for lighting during the day. You already see this in newer big box warehouses that are built now with larger skylights.

  8. shop says:

    Booming demand in recent years has driven up the price of solar panels, and analysts say it costs far more to generate electricity from solar energy than from coal.

  9. Good analysis. I think media gets in trouble often when it comes to the hard numbers on stats and pricing behind renewables. It’s tough to convey them in a salient format, and getting into net-metering and peak-time electricity costs are just not in the scope of the article. They are, unfortunately, necessary to make these kinds of evaluations. The reader is simply comparing 6 cents to 30 cents, which if of course, ludicrous. You can’t make it that simple no matter how hard you try.

  10. Richard

    “If first generation PV costs 30 cents/kW how much does second generation built using PV power cost, or third?”

    That’s the whole point I think. Use the fossil fuels now to create the power systems of the future, while we still have them. So far solar is about 0.4% of total U.S. generating capacity, so it is hardly a factor in the cost of producing anything.

    Also, I think you are underestimating how fast the cost of solar has fallen and continues to fall. Solar should be at grid parity over 40% of the country in five years and nationwide in ten years. This is especially true at peak demand, when solar shines the best.

    David
    The cost of solar panels is not going up. In fact, the falling prices are hurting gross margins of solar companies.
    Yes, raw material costs are falling but many companies pre-purchased quantities at higher prices during recent shortages of poly-silicon to insure that they had enough, and are now being squeezed. Eventually lower silicon prices will translate into even lower panel prices, making solar more attractive in the long run.

    We also have several new solar companies with low cost solutions that are just getting started in commercial production, like Nanosolar for instance. They say they can build a complete solar system at $2/watt, compared with $2.10/watt for a coal plant. And that is conventional coal, not coal with expensive CCS technology. And Nanosolar won’t need no stinkin coal.

    First Solar has recently broken the $1/watt barrier for their solar panels.