An illustration of the horrible economics of residential rooftop solar power
Robert Bryce explains in an editorial at the Wall Street Journal on 4/18/17 the lousy economics of rooftop solar panels: Thanks for Giving Me Your Tax Money.
Mr. Bryce appreciates each of us for giving him our money. Of course, it was done through the tax system so it wasn’t much of a gift. Anyone who did not go along with funding his lark would have to spend some time in jail.
He explains he installed a 8,540 watt solar system on his roof. That means the 28 panels generate 301 watts each.
I have been wanting to see financial results from an actual rooftop installation. Mr. Bryce provides a set of actual numbers.
Here is the breakdown of the actual cost:
- $7,758 – federal tax subsidy
- 6,593 – subsidy from city owned utility
- 18,100 – his out-of-pocket costs
- 32,451 – total cost
That means you and I covered 44% of the cost.
He says his system is generating about 12
mWh MWh of electricity a year.
Hmm. That would be about 32.9 kWh a day. For a system with 8,540 watt capacity, the potential, or faceplate capacity is 205.0 kWh each day. So what’s the capacity production on his system?
Let’s look at cost per capacity
- $2.12 / watt installed, his cost – (18,100 that he paid / 8,540 watt capacity)
- $3.80 / watt installed, actual cost – (32,451 actual cost / 8.54 kW capacity
- $23.75 / watt actual production – ($3.80 / watt for the 16% actual production)
Is this affecting his electricity bill?
Yes, quite nicely, thanks to all the other consumers in his area.
He is getting paid for the electricity at four times the wholesale rate.
- $106.00 /
mWhMWh – what he is ‘earning’ for all production he doesn’t use
- $ 24.62 /
mWhMWh – average wholesale price in Texas
Breakeven is the point at which a project recovers all the cost. Until that point, you would have been better off not undertaking the project. After the breakeven point, you are making money.
What does Mr. Bryce calculate as his breakeven?
Even with the massive subsidy from the feds and state for construction and the massive subsidy from other consumers for whatever his system produces that he doesn’t use, it will take him 14 years to make back his $18,100.
Let’s toss in the up-front subsidies of $14,351.
If it takes 14 years to get breakeven on $18,100, it would take another 11 years for breakeven on the subsidies. So when does society hit breakeven?
Wealth transfer to the wealthy
Article says the California PUC reports that people who install solar systems have household income 68% higher than the average in the state. That means these subsidies are wealth transfer going from average people to wealthy people.
How does Mr. Bryce feel about this? He says…
I’m a prime example of the “green” economy: I’m socializing the costs of my scheme and privatizing the profits. And I’m feeling virtuous while doing so.
What a deal!
Other than with a rooftop solar system, how else can you:
- Transfer to society the costs of your project.
- Take the financial rewards for yourself.
- Be allowed to feel smug and self-righteous while doing so.
Update: There is a lot of traffic coming to this post. Welcome! There are also a lot of comments compared to what is typical for my blog. Just a reminder, all comments are moderated. I will approve all comments that are civil. Just so we all know what the rules are, I am the sole source for determining what is civil.
Update 12/18/17 – This post has received over 2,700 views during 2017. That makes it the fourth most viewed page on my blog for the year. Thanks for reading!