110 Years to Pay for Those Denver Solar Panels?

|

Yesterday, President Barack Obama signed the $787 billion economic stimulus bill after touring the solar panel installation on the roof of the Denver Museum of Nature and Science.

Obama

Since the bill is loaded up with green energy goodies, the president's handlers no doubt thought that the tour made a great photo opportunity. The implied message is that instead of "a chicken in every pot," we'll get "a solar panel on every roof" with the stimulus plan.

But as nice as those panels look, just how practical are they? Well, the Denver Business Journal looked into the project last summer and found that the 465 panel 100-kilowatt installation cost $720,000 and will produce about 130,000 kilowatt-hours of electricity annually. According to the Journal, electricity from the solar array will replace between 2 and 12 per cent of the museum's electricity demand. In fact, an internal museum report says the solar panels will supply only 1 to 2 percent of the museum's electricity needs. But, according to the Journal, here's the real kicker:

The museum wanted a solar system to support its educational mission and cut energy costs as well as the building's carbon footprint. But the payout period would have been too long to make it financially feasible.

"We looked at first installing it ourselves, and without any of the incentive programs, it was a 110-year payout," said [Dave Noel, vice president of operations and chief technology officer for the museum]. "The [museum's] board was supportive of the program, but said it had to make sense financially."

A 110-year payout? Let's hope that Noel was exaggerating, but I fear that he was not. Not surprisingly, the installation was only made possible by extensive use of government subsidy programs. Anyone want a chicken? 

NEXT: This Week in Innocence

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. I’m surprised. I thought the museum’s board would see 110 years as just around the corner.

  2. Considering solar panels have a usable lifespan of 20-25 years they would never reach the breakeven point

  3. Then I’m guessing you don’t know anyone working in development departments at an NFP, Naga. The few I know are acting like they’ll never receive another contribution again.

    And people wonder why solar power isn’t used more frequently, even if it’s been around for decades.

  4. But, but, but …

    Posters on this very board have assured me that solar panels, wind power, geothermal, etc. make fiscal sense.

    I guess just not at the Denver Museum of Nature and Science.

  5. Check out Biden’s face in that picture. He looks like Ronny Cox as Cohaagen in Total Recall.

    Give those people air, Joe!

  6. Funny because the damn things don’t last anywhere near 100 years. I’ll bet that to manufacture, install, and maintain the panels and then to replace them when they go bad doesn’t have any overall impact on the amount of energy used by the building.

  7. The [museum’s] board was supportive of the program, but said it had to make sense financially.

    You can’t look at it that way; there’s civic pride to consider.

  8. CAPTION CONTEST:

    Damn Joe, how many times do I have to tell you to keep you hand out of there…

  9. No, the relevant time span is the number of future elections where this sort of stuff keeps impressing the rubes.

  10. Sweet! I’m a rube yet I’m not impressed. Therefore I must be among the elite already. Teh AWESome!

  11. Notice there are never any “Museum Of Economics” buildings.

  12. This would not be a good topic for Reason to not ask BHO or a handler about, because it would take too much time to explain and I’m still not convinced that the museum’s timeframe is correct. So, Reason should not not ask this question, but instead should not ask this question since everyone should be able to understand it.

    I look forward to Reason not doing a public service or anything approaching activism.

    Well, gotta go, there’s a knock on the door.

    P.S. Does Reason look to Insty for clearance on what it can and cannot discuss?

  13. J sub D-Wind, geothermal, and larger solar power plants come closer to break even than small rooftop solar panels do, although most need some subsidies. Of course, all of the above pollute a lot less than natural gas or especially coal, which is why it considered to be in the public interest to subsidize such.

    Pollution is hard for libertarians to get a handle on. The default libertarian position would be to not regulate pollution in any way, as far as I can tell. In many cases (such as producing power) it is much cheaper to perform an action by polluting than not, so there is no market incentive to not pollute. In Libertarian Land, the air would be very polluted indeed.

    1. Many instances of pollution can easily qualify as acts of aggression against individuals harmed by it, and those individuals should be compensated for being harmed.

      It’s harder to make the case for carbon dioxide emissions, as the harm isn’t direct, and it’s certainly not clear to everyone that carbon dioxide is truly harming anyone.

  14. I saw Obama’s speech yesterday. I recall a horrible man, gloating about how his failing solar power cell business is getting a giant hand out thanks to Stimulus. I think that is him in the picture.

    A 110 yr payout on an investment is considered a good use of money. The Challenged one continues to show his limited mental capacity.

  15. Well, gotta go, there’s a knock on the door.

    Maybe it’s a Mexican dude delivering your enchiladas. Enchiladas verde, I hope.

  16. The story doesn’t make sense. I’ve looked into both solar and wind for residential installations. Pay back is in the 15 to 20 year range for the upper midwest.

    There’s got to be a whole bunch of graft or waste on top of the acquisition and installation costs for the museum.

  17. CHRIS!!!!!!!!!!!!!!!!!!!!!!

    *Shakes fist in air*

  18. Hey Lonewhacko,

    No one cares about your questions.

    Shut the fuck up!

    Yours truly,

    Taktix?

  19. 7.2 dollars/ kW is about double the going rate (typically closer to 3-4 bucks per kW.)[1]*. Also as a rule of thumb, for middle lattitudes averaged over a year, the energy output of a solar panel should be 50% of rated capacity in an 8 hr day. [2] Thus, 100Kw nominal capacity should translate into 100*0.5*8*365 = 146 MWh. 130 MWh is in the ballpark, but this installation seems substandard – and expensive.

    [1]http://www.solarbuzz.com/ModulePrices.htm
    [2]http://www.davisnet.com/product_documents/weather/app_notes/apnote_9.pdf – this reference is a little old, and refers to a specific product from a specific manufacturer. (and of a significantly smaller scale 10W vs 100kW- but the beauty, and also frequent *disadvantage*, of solar is that it scales nearly linearly.) Nonetheless, if the guy who did the Denver installation is considered cutting edge enough to be able to be part of a Presidential photo op, his stuff should be superior to any state of the art stuff from 1999.

    *the elevated price could have been caused by the ‘silica bubble’ that went along with the rest of the commodities bubbles last year – wholesale (input) prices were on the order of 3 times were they are today and 5 times above the decade long baseline. However, technical improvements were maintaining bulk panel (output) prices more or less steady (with end-user demand also providing some upward pressure)

  20. “There’s got to be a whole bunch of graft or waste on top of the acquisition and installation costs for the museum.”

    Whenever subsidies are involved, I take waste and graft as a given.

  21. kinnath | February 18, 2009, 1:53pm | #

    The story doesn’t make sense. I’ve looked into both solar and wind for residential installations. Pay back is in the 15 to 20 year range for the upper midwest.

    Does that factor in government incentives? The 110-year quote was without government assistance.

    Also, I’m not sure if Denver is the best place to install solar panels (less sunlight than in, say, Southern California).

  22. Does that factor in government incentives? The 110-year quote was without government assistance.

    No government insentives.

    $10K worth of wind generation would save me about $100 a month in electric bills. Ignoring cost of money, pay back is 8 1/3 years. Including cost of money that would be 12 to 15 years probably.

    Solar is not quite as good. Pay back in 15 to 20 years.

  23. J sub D-Wind, geothermal, and larger solar power plants come closer to break even than small rooftop solar panels do, although most need some subsidies. [italics added]

    And there’s one now! I will admit that Geotpf doesn’t outright lie.

    Pollution is hard for libertarians to get a handle on. The default libertarian position would be to not regulate pollution in any way, as far as I can tell. In many cases (such as producing power) it is much cheaper to perform an action by polluting than not, so there is no market incentive to not pollute. In Libertarian Land, the air would be very polluted indeed.

    If only our beneficent masters ran power generation, pollution would be a thing of the past.

    Oh wait …

    For the record, I’m not contrary to sensible regulation, monitoring and enforcement of environmental standards on industry.

    I’m no Gaia worshipper though. I’m a realist, the Greenies worst nightmare.

  24. Straight payback of 8.333 years is pretty damned good, especially if the lifespan of the turbine is much longer than that.

  25. Hey Lonewhacko,

    No one cares about your questions.

    Shut the fuck up!

    Yours truly,

    Taktix?

    Thanks good buddy. I’ll try to get it next time.

  26. Actually Geotpf, Denver has more sunny days annually than San Diego, even if the average temperatures don’t quite match up.

  27. $10K worth of wind generation would save me about $100 a month in electric bills. Ignoring cost of money, pay back is 8 1/3 years. Including cost of money that would be 12 to 15 years probably.

    Great! Problem solved. No way a profit minded capitalist exploiter would want to build a coal plant now. They only care about profit and would love not having to pay coal mining firms for their filty combustibles.

  28. Wind would almost certainly work better nearly anywhere in the Rockies, or other locations over 4000 feet. As kinnath pointed out, you can get a reasonable ROI from wind turbines even on a small scale. Trouble is, they’re big, and you get a lot of NIMBYism in urban or suburban environments.

    The 110 year return is insane, though. They could have put on a thick glass roof, gotten a greenhouse effect for heating, and had a better payoff.

  29. Great! Problem solved. No way a profit minded capitalist exploiter would want to build a coal plant now. They only care about profit and would love not having to pay coal mining firms for their filty combustibles.

    The primary issue is always peak demand. The central power generation facility needs to be big enough to handle the hottest fucking day in August when everyone has the central air cranked up. The rest of the time, the generator is grinding away at 40% of capacity.

    So while centralized wind or solar doesn’t make a lot of sense, distributed generation via wind or solar can help to cover the peak energy usage reducing the cost of the central generator and the amount of pollution caused by coal plants, yadda, yadda, yadda.

    Are the energy conglomerates ignoring an interesting business proposition, you betcha.

    Should the feds stick their nose in this, no fucking way.

  30. Does anybody else think it’s funny to watch Joe Biden tagging along everywhere Obama goes, pretending to be something other than a waste of space and cosmetic surgery?

  31. Lets not forget that solar panels will be as obsolete in 110 years (and possibly much sooner: http://www.newscientist.com/article/dn13424) as telegrams are now.

  32. Caption:

    “Hey, how come all these mirrors are not pointed at me?”

  33. Are the energy conglomerates ignoring an interesting business proposition, you betcha.

    To be fair, a whole bunch are getting in on net metering. (I’m not sure if it’s by mandate however).

  34. “Trouble is, they’re big…”

    I should have been clearer about this – most wind turbines have towers over 60 feet. Which definitely limits their urban applicability.

  35. Do we feel green?

    Yes.

    Then we’re done here. Good job on the solar panels.

  36. I can’t believe Pelosi didn’t have charges planted at this museum ready to detonate. Aren’t these guys supposed to be apart at all times unless in the White House or the Capitol building?

  37. I should have been clearer about this – most wind turbines have towers over 60 feet. Which definitely limits their urban applicability.

    Put a 30 foot tower on top of a three-story building and your there.

    The issue is that no one wants to look at them – urban, sububran, rural — no one wants them nearby.

  38. Doesn’t the government already subsidize fossil fuels more than alternative energy? I heard this on the radio, but it’s surprisingly difficult to find useful information on the internet along these lines, it also varies by state.

    I mean, we’re pretending that the industry and the “going rates” for energy are natural market rates. But they’re already riddled with complex tax breaks and subsidies.

    My point is that Obama wants to further subsidize his choice for energy, but eliminating previous government involvement would actually increase the financial viability of alternative energy sources in many cases. But no one would dare decrease government, so if we want alternative energy to be competitive, this is the only other solution (along with taxing emissions).

  39. Another news, the net metering is not by mandate, and it seems to only gain real traction in areas where the power utility has the freedom to trade power in an open market. the reasoning is they can make more money selling peak energy to underserved markets than it costs to have a “smart grid” for existing customers. The utlities that have less transmission capability or less eminence in energy trading have less incentive to create such systems.

    I think its a good idea, thumbs up.

  40. The default libertarian position on pollution is “property rights”. Pollution is/should be a sueable trespass and the costs of paying damages to your neighbors would be part of incentives to not pollute.
    Currently the government sets a standard and tells people who have been harmed to live with it because the pollution is within the standard. How is that better?

  41. Are the energy conglomerates ignoring an interesting business proposition, you betcha.

    Should the feds stick their nose in this, no fucking way.

    If you want an argument you’ll have to change your positions. Power companies, like all bureaucracies, possess institutional inertia. This is overcome by market forces over time. Not every bank installed ATMs as soon as they were available. They all(?) have by now.

  42. If you want an argument you’ll have to change your positions. Power companies, like all bureaucracies, possess institutional inertia. This is overcome by market forces over time. Not every bank installed ATMs as soon as they were available. They all(?) have by now.

    Yup!

  43. Yeah we need the government to heavily tax carbon emissions, and not do some pansy cap-and-trade crap. The market fails to account for pollution, so it’s the government’s job to incentivize clean energy. It’s only more expensive because policy allows it to be so.

  44. We weren’t actually arguing were we?

  45. Wind turbines! You fools! What about the birds? Apparently tens of birds get killed every year, won’t someone think of the birds?!?!

  46. Wind turbines! You fools! What about the birds? Apparently tens of birds get killed every year, won’t someone think of the birds?!?!

    I’m actually covering this topic in my upcoming book: “Silent Spring II: Blades of Death”

  47. I guess not.

  48. “The [museum’s] board was supportive of the program, but said it had to make sense financially.”

    That’s easy. Have Carl Andre sign the panels and when they’re obsolete in 25 or so years, call it installation art and ask for a bailout from the Art Czar at the Department of Endowments for the Arts. A relatively small purchase of $14 million would allow the Museum to recoup its money and the piece could be reinstalled on the White House lawn. Retitle it: Requiem for Fiscal Responsibility.

  49. A $720,000 project financed at 5% producing 130,000 kWh or electricity per year will only pay off in 110 years if the price of electricity is $0.28 / kWh or greater. At reasonable power prices ($.10/kWh) the project will never pay off.

    Even if the museum gets a sweetheart loan at 1%, it’s still an 82-year payoff.

  50. Also note that their advertised capacity factor for these cells is 14.8% — which may be rather optimistic for solar cells.

    Further consider that a solar cell system likely won’t even last 110 (or 82) years and will have to be replaced before payoff.

    Yep. great investment.

  51. Apparently tens of birds get killed every year, won’t someone think of the birds?!?!

    Even worse than wind turbines are plate glass windows. Pure avian genocide.

    Well, for a lot of the species that fly, anyway…

  52. ROI and “green” apparently are mutually exclusive concepts in some minds. There are alternatives that are a little more cost effective, I’m sure, even taking into account the intangibles of environmentally friendlier technologies.

  53. Note also that even if it pays off in 110 years, it still has an NPV of -$14,028,359.96

  54. . . . it still has an NPV of -$14,028,359.96

    Sign me up!

  55. Also note that their advertised capacity factor for these cells is 14.8% — which may be rather optimistic for solar cells.

    The capacity factor is taken into account in the conversion from 100 kW (peak) – > 130,000 kW annually. A capacity factor of 0.2 is pretty typical these days.

    But that’s what annoys me with this specific project. It’s more expensive than typical, has been used as an archetype of the technology vanguard, and yet the back of the envelope math shows that it’s operational specs are likely below average.

  56. ‘130,000 kWh annually’

  57. Yes, the capacity factor to get from 100 kW peak 0> 130,000 kWh / year is 14.8%. Back calculate it from their numbers.

  58. The C.F. is less technology dependent for solar cells than it is weather- and latitude- and climate-dependent.

  59. Howcome home solar panel sellers advertise that you can make enough energy from your rooftop panels to put power back into the grid and get money from the power company? Are they straight up lying?

  60. They’re not lying, per se; once your batteries are charged up, all that power you’re not using during the day (when you’re at work) can be sold as an IPP into the grid. The metering equipment is ridiculously expensive. And somehow you have to negotiate the deal with your power company. And there are plenty of regulatory issues. So, while not a straight up lie, it’s really close. caveat emptor, b*****s.

  61. They’re not lying, per se; once your batteries are charged up, all that power you’re not using during the day (when you’re at work) can be sold as an IPP into the grid. The metering equipment is ridiculously expensive. And somehow you have to negotiate the deal with your power company. And there are plenty of regulatory issues. So, while not a straight up lie, it’s really close. caveat emptor, b*****s.

    Agreed!

  62. There are two different goals for residential: going off-grid versus controlling peak demand.

    They require entirely different solutions and have entirely different business cases.

  63. “There’s got to be a whole bunch of graft or waste on top of the acquisition and installation costs for the museum”

    Really? You mean all theat money DearlyBeloved Leader wants to throw at “renewable energy” might just be one big rip off? I am shocked.

  64. So, according to Chris, Reason should be an activist organization.

    Hm.

    Considered and rejected. Thank you for spamming the message boards yet again.

  65. You been somewhere else all day John?

  66. The metering equipment is ridiculously expensive

    The Hawaii Electric company pays the cost if you have a < 10 kW system. You do have to pay for an approved load break disconnect device from the grid.

    And somehow you have to negotiate the deal with your power company.
    Any company that does it has standard plans, which depend on how much capacity you have yourself; I agree there’s no point in negotiating with a company that doesn’t have it. But then again there’s no point in negotiating with KFC to try to get a hamburger either

    It is normally true that you are unlikely to generate enough power so that the company is paying you; they are in the power business after all, and have economies of scale on their side – plus it’s their entire raison d’etre. Also, the HECO plan specifically will only give you ‘store credit’ rather than cash back.

    One thing that has be fixed lately, which helps makes it more economical to the end user, is that all the taxes and fixed fees are paid *after* the net – you sell the electicity to the grid for the same price they sell it to you. Before, with HECO and many systems, you paid full retail price for *all* the electricity you received, but could only sell it back at the wholesale price – which wasn’t a very good deal.

  67. I’ve looked into both solar and wind for residential installations. Pay back is in the 15 to 20 year range for the upper midwest.

    If the museum were an 1800 sq. ft. single family house, your payback figure would be apt. And it still might be. Since this museum is 4 floors loaded with electronic displays, 110 years is probably in line with your estimate.

  68. If the museum were an 1800 sq. ft. single family house, your payback figure would be apt. And it still might be. Since this museum is 4 floors loaded with electronic displays, 110 years is probably in line with your estimate.

    No, the solution should scale up reasonably well from residential to commercial with commercial having a better pay back. Otherwise, it’s a fucking failure.

  69. “Doesn’t the government already subsidize fossil fuels more than alternative energy? I heard this on the radio, but it’s surprisingly difficult to find useful information on the internet along these lines, it also varies by state.”

    I’ve heard boosters of alternative energy make this claim before, some guy who owned a solar related business that I heard being interviewed on TV a while back claimed that.

    But I’ve never heard any of them go into specifics about it.

    I suspect a lot of it is based on claiming the royalty rate that oil and gas companies pay on fossil fuels extracted from leased government lands is too low.

    And if that’s the case, it’s total BS because none of those people are any sort of authority on what the royalty rate should be in the first place.

  70. “Pollution is hard for libertarians to get a handle on. The default libertarian position would be to not regulate pollution in any way, as far as I can tell.”

    Part of it depends on whether one accepts the greenies attempts to redefine pollution to include carbon dioxide emmisions that they claim creates global warming as opposed to the traditional particulate matter definintion of it envisioned when pollution control laws were enacted.

    I don’t accept the greenies definition of it.

  71. “I can’t believe Pelosi didn’t have charges planted at this museum ready to detonate.”

    Would you really credit her with that level of intelligence? I’m personally surprised that Ms. “Well, it feels like 500 million jobs” can put together sentences.

  72. Hmmm

    As i’ve just spend the last week trying to scrounge money off the EU for photovoltaics research I’ll drop my 50 cents

    Subsidizing people to use crap technology is a shit idea

    photovoltaics are right now

    a crap technology, its a real cool idea but you do hav to think about the whole cost thing and from what I’ve read youre talking aout 5 times he price of any other type of renewable and maybee 10 ten times the price of a fossil fuel

    I?not been arsedto read that stimulus shit but I’d say that

    investing in photovoltaic research will eventually see a return on your money

    subsidizing inefficient technology will delay photovoltaics developement and essentially be pissing your money away

  73. as a colleague reminded me a few days ago

    if you really wanna get carbon neutral energy

    just build loads of dams eh?

    Resevoirs are great places to get high – have picnics – sail boats etc

  74. Does that picture look like Obama is busting ass right in front of Biden so that he has to walk through it to anyone else?

  75. Well, I did the math for a solar panel construction at a valve company and it turns out, they are not very profitable, but they can break-even after 15 years (assuming you have a fictive pice of 19 cents/kYh).

    At the moment you have to pay to pay 6000-7000 Dollar/kWh, which is quite better than a few years ago. Mind however, it will never be a really profitable business model!

  76. shetroll | February 18, 2009, 2:47pm | #

    The default libertarian position on pollution is “property rights”. Pollution is/should be a sueable trespass and the costs of paying damages to your neighbors would be part of incentives to not pollute.

    Lets say I get sick because there are one million people driving cars in the city I live in with no pollution controls on them. I am, under libertarian thinking, supposed to sue each individual car owner for the little tiny bit each helped cause my illness. Of course, I also have to prove each was the actual cause of my illness.

    I don’t think so. Now, with power plants and factories, the number of defendants is reduced, but I still have to prove that power plant A caused my illness and not factory B or cars C thru ZZZZZZ. It’s not realistic in the slightest.

  77. You guys aren’t working the problem correctly. You need to think like a good environmentalist, such as Al Gore:

    1. Buy shares in solar cell company.
    2. Lobby government for tax breaks for solar cell purchase.
    3. Use tax breaks to convince museums and various stupid people to give you hundreds of thousands of dollars.
    4. Call your investment in the company a ‘carbon offset’, and use it to justify upgrading your cramped CitationJet to a nice comfy Gulfstream V. Those trips to Davos are a bitch if you don’t have the headroom.
    5. Watch value of solar cell company increase because of federal subsidy.
    6. Sell your shares at a profit.

    Everyone wins!

  78. Argh. Idiots. There better be a hell when I die or I am creating one.

    How about you wait 5-10 years for materials science to improve and you might actually have decent solar panels at a much lower cost?

  79. The museum must’ve had some of the same brilliant minds behind this one as RTD had with Fastracks.

  80. @JB – If you wait years for solar to improve, then you’ll not be supporting the improvement of them. It’s like buying a computer — yes, there are going to be better computers out next year, but you can’t perpetually wait for “the best” technology; the technology is already better than it’s ever been, and it will only improve.

  81. Nice that US president is aware of the need of the people for Solar Power Generator . I hope that the solar power will continue to develop world wide

  82. 110 year payback? Probably an honest appraisal of ALL the costs, as opposed to ignoring many of them. Yet I still wonder if it included replacing the panels whenever they wear out? And people wonder why the deficit keeps going up when such people use the government “incentives”…

Please to post comments

Comments are closed.