Why Is Solar Power Expensive?

sun setting in palm of hand

Courtesy of nothingsogoodphotography via Creative Commons

President Obama has mandated a new energy plan that requires 10% of electricity consumed in the U.S. come from renewable energy sources, such as solar power, by the year 2012. Can we make that goal? Should we with the current technologies?

Just about everyone likes the idea of using solar power to heat and cool their homes. The sun is a potentially clean, free source of energy. What’s not to like about that? We even already have working residential solar power systems on the market. So why isn’t everyone doing it already? Why is only 0.01% of the United State’s electricity generated from solar power? The answer, of course, gets down to cost.

The basic problem is that standard solar cells are expensive and not very efficient. Solar cells are typically 15% efficient. However, the sun is not always out and it is directly overhead only rarely. If you take into account these factors, the average solar cell efficiency is only a few percent. That means that the average solar cell will deliver about 4% of a kilowatt of electric power, if it has an area of 1 square yard. The average household in the U.S. uses about 1 kilowatt of electric power (or 24 kilowatt-hrs per day of energy), which is the equivalent of having 10 100-watt light bulbs turned on. So the average household would need about 25 square yards of solar cells (i.e., 25 sq yds x 0.04 kilowatt/sq yd = 1 kilowatt). Placing this many solar cells on the roof is feasible for many homes, so some people are doing it. It is environmentally clean and politically “green.” Sounds great, right? The problem for most people is the up-front and overall cost.

The price of residential solar power is variable, of course. For the sake of discussion though, I’ll use some 2008 numbers based on California usage (without worrying about issues like tax savings). For a home that uses 1 kilowatt, it costs about $14,000 to have a sufficient residential solar system installed. That means that if you invest $14,000 up-front, you don’t have to pay monthly bills for electricity (except possibly some minor fees for maintenance, but lets ignore those). The amount that an electric power company would charge you for that energy varies, but it averages about 10 cents for 1 kilowatt for 1 hour which translates into $876 per year. If you never have to replace your solar cells, that would mean that you are getting a 6.2% average on your $14,000 investment. Pretty good. The problem is that the solar cells don’t really last forever. To break even, an actuarial calculation shows that the cells would have to last 22 years. If they require repair or replacement sooner than 22 years, which is likely, then you’re actually losing money.

There is some good news though. Currently turning solar power into electricity is expensive, but using the heat directly can be highly efficient without requiring expensive solar cells. As a result, solar-powered water heaters or swimming pool heaters are more popular and economically viable. So you might want to consider those alternatives, if you want to lower your carbon footprint.

Hopefully residential solar heating and cooling will become more attractive in the future, when significantly less expensive and more efficient solar cells have been developed and mass-produced. Stay tuned for future blogs on the science of solar power, since there is a lot of interesting research currently underway.

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