Yesterday, the U.N. and the World Blank announced plans for a task force to address skyrocketing food prices worldwide (Forbes.com).
If you pay any attention at all to the stock market, you'll know that 2007 was a banner year for many solar panel manufacturers. Arizona-based First Solar (FSLR), for instance, returned a jaw-dropping 795% after going public in November of 2006. Whether you're patting yourself on the back, or kicking yourself for missing out on the action, one thing remains true for all: future investment opportunities abound in the solar energy market. The tricky part is, of course, searching out the good ones while avoiding the bad ones.
Hundreds of scientists at the U.S. Environmental Protection Agency have reported political interference in their work, according to a report released on April 23 by the Union of Concerned Scientists. “Interference at the EPA: Science and Politics at the U.S. Environmental Protection Agency” draws from the anonymous responses of 1,586 EPA scientists, 889 (56 percent) of whom “personally experienced at least one incident of inappropriate interference in their work over the past five years.” The replies are not a random sample: UCS sent out surveys to almost 5,500 scientists, and the 29 percent who replied are likely to be the most outspoken, with the most grievances against the administration. But, as Francesca Grifo, director of the scientific integrity program for the UCS, says, “nearly 900 EPA scientists reported political interference in their scientific work. That’s 900 too many.”
Yesterday was the 39th observance of Earth Day. Go Earth! We at GetSolar.com put up a special post in honor of it. The post is a chance to see, in it's entirety, a 1975 National Geographic article talking about the bright future of wind energy in this country. In 1975, this country was in the middle of a love affair with renewable energy that, as we all know now, ended abruptly in the '80s when we hooked back up with our long-time partner, Oil.
The EE Times reports that Google is investing in another solar start-up. Most interesting to note is that the company they're investing in, eSolar Inc., has a new method for installations based on "inexpensive computing power and algorithms. This new method of installing a solar power plant minimizes costly civil construction and the use of heavy equipment, reducing project cost and deployment time."
SolarCity, a California-based provider of solar energy systems, recently announced a new financing arrangement in partnership with Morgan Stanley. Dubbed SolarLease, the program lets customers tap the benefits of solar power without incurring the upfront costs associated with PV systems. It also promises to save you cash over the long haul: after putting money down, you'll likely face a lower total monthly payment. (In other words, your monthly lease payment and reduced energy bill will be lower than what you're currently paying your utility.) The typical lease is 15 years, with the option of a buyout at the end of the term.
Seth Godin has written a characteristically efficient post on his blog about "The (stupid) diet". He talks about the silliness of a diet where you eat all you want five days a week, and fast on weekends. He highlights how this has an obvious parallel with marketing.
Read this press release and see if you don't start humming the Jetsons theme song to yourself: Future Transportation: Powered by Electricity. Pretty standard title, right? You're thinking, Of course the future will be powered by electricity. What kind might this piece focus on--some new kind of solar, holographic maybe? No? How about...MAGNET POWER!
The typically interesting Timothy Ferris, author of bestseller The 4-Hour Work Week, has come out with a great post about the return on investment for going green. It gets to the heart of a lot of what we talk about here, but, most importantly, it emphasizes the fact that responding to climate change is above all an opportunity.
In the face of slumping housing prices and a slew of pending foreclosures, some California homebuilders are expanding efforts to incorporate solar-power systems into residential projects. The latest deal comes from a partnership between the Sacramento Municipal Utility District (SMUD) and Woodside Homes, a Utah-based homebuilder. In all, 1,487 solar-powered homes will be built in Sacramento County by 2012. This is definitely buenas noticias for builders and owners alike.
For a long time, solar has been finding itself on non-traditional surfaces in fresh, yet practical, ways. The presence of solar shingles and solar billboards attests to this. Now take, for example, a solar balloon project called Sunhope.
"Taking a dodgy accounting proposition, which is that you can somehow identify the amount of carbon that any given new bit of forest picks up out of the atmosphere and sequesters, and make that correspond somehow to emissions elsewhere," is how Greenpeace sees carbon offsetting, according to its senior climate adviser Charlie Kronick. "It can't be done. The methodology is poor, and the logic isn't very good either. Once the carbon you've put in from fossil fuels is up there, nothing is going to make it go away."
Thus reports The Independent in a piece that takes a negative--or is the word I'm looking for "realistic"?--view of the current fad of purchasing carbon offsets. If you're not quite sure why this term rings a bell, you might have run across it in any of the following places: supermarket checkout lanes, travel websites, in-flight programming, celebrity gossip shows, etc., etc. It's all the rage. The idea is that you can purchase, for a small sum (usually under $50), enough planted trees or wind power to somehow negate the carbon that you put into the atmosphere by traveling, or just by living. I've had a number of friends ask me about it, and when I give them that answer, they look at me like I'm crazy and say, "But that doesn't make any sense!"
That's because it doesn't make any sense. On a very basic level, I see how carbon offsets appeal to simple mathematical logic. If you plant--or preserve from deforestation--enough trees to sequester one ton of carbon, then you've wiped your hands of the one ton of carbon you just put into the atmosphere by driving around town for a week. Right? The problem is that you are still responsible for that one ton of carbon, because carbon sequestration is not that simple. This is not an equation of (+1)+(-1)=(0). It's more like (+1)+(0)=(+1). One reason for this is that planting trees is hardly a carbon-neutral process; and in some cases, the carbon offset craze has resulted in damage to the very forests purchasers think they're protecting, with the construction of new tree plantations and service roads. Offsets are not limited solely to reforestation; the portfolios of the companies selling offsets include many clean energy options.
What makes carbon offsets a particularly bad investment right now is lack of regulation. Most companies offering offsets are firmly for-profit. It's a largely untapped market of about $100 million, with no oversight, and one in which buyers have no industry standards to guide them and must, instead...take the seller's word for it. The level of research necessary on the consumer side to achieve a full understanding of the situation is far higher than that to which most consumers are willing to commit. So we take a quick look at the plastic card in the Whole Foods aisle that says "Offset 200 miles of driving by purchasing this $5 card!", and we throw it in with our organic kale. Now we don't have to feel guilty about not walking or taking the bus to the store--driving is carbon neutral!
Even the companies selling offsets, it seems, are not always fully aware of the intricacies of their transactions. BusinessWeek reports that one of the largest offset sellers, TerraPass (responsible for the offsets given to Academy Award attendees this year), had no idea that the methane capture system they were supporting at a garbage dump was the result of necessity and legislation, not a spontaneous commitment to carbon reduction. So basically, TerraPass was making money by buying methane "credits" from the waste management company, essentially subsidizing a $13 million private company, and then reselling these "credits" at a higher price in the name of doing good for the environment. The thing is, the waste management company was burning the methane anyway. (Methane is a greenhouse gas that far outclasses CO2 in terms of heat-trapping; burning it turns it into C02, a better gas to release into the atmosphere.) No new projects were started, no trees were planted. The world was seeing exactly as much carbon released, and exactly as much carbon sequestered, before and after all that money changed hands. (+1)+(0)=(+1).
The example I listed above, of choosing to drive to the store instead of walk, is actually a serious threat to progress on the climate change front. If we believe that by purchasing enough "good" energy, we're entitled to keep using as much "bad" energy as we want, we'll never reduce our consumption. And reducing our consumption, coupled with a shift to renewable energy sources, is the only way we'll see the rise in the level of carbon in the atmosphere ever start to even out. Carbon offsets are dangerous as an investment, but they're also a danger to real change.
This is not to say that they're all bad. In general, I'm all for anything that raises awareness of the need for climate change action. Carbon offsets, with their celebrity varnish, are helping in that respect. And if offset sales achieved greater transparency, and the providers themselves had to answer to a regulatory body (whether industry-generated or governmental), they might start to do some real good. If you're going to purchase offsets, just keep in mind that nothing you purchase can change the amount of carbon you are personally responsible for. And you might want to take a look at this consumer's guide to carbon offsets, published by the Voluntary Carbon Offset Information Portal, a joint initiative of Tufts Climate Initiative and the Stockholm Environment Institute.
Supporting wind energy is great. Supporting methane gas reduction is great. Supporting reforestation initiatives can be great. But the only way you can reduce the carbon footprint of your trip to London is to not fly to London. It's sad--but it's true.Sources: The Independent, "The Great Carbon Con"
BusinessWeek, "Another Inconvenient Truth"
Voluntary Carbon Offset Information Portal
Often times when home owners look at solar electric systems for their homes, the number of years to “payback” (time to recoup the initial capital investment) emerges as an important criteria in the decision process. Simply put: the longer the time period to payback, the less attractive the investment appears. Or is it?
A simple payback analysis is performed by arriving at the system cost after rebates and incentives have been deducted, which is your “net system cost”. This is the actual cost to the consumer of functioning solar electric panels installed and generating electricity. Next you take the annual savings in utility bills for the first and subsequent years until that number adds up to be equal to your “net system cost”. The number of years of savings it takes to equal the cost of the system is your “Payback”. When adding up the annual savings, it is important to include energy inflation; this captures an important aspect of a renewable energy system, while fossil fuel generated electricity tends to get more expensive every year, a solar electric system produces electricity at a relatively fixed cost over the typical 25 year life time of a system.
Simple enough, but what’s missing here? Several important pieces of the puzzle are missing in a simple payback analysis (we will look at two). First, the answer (number of years) only looks at the number of years and amount of money saved up to break even, not after break even, when the fun and the savings really kick in. A typical residential solar system in California might earn 2 to 3 times it’s initial cost over the lifetime of the system. For this reason a total lifetime analysis is more useful in gaging the financial return of a solar electric system. You may ask: “But what if I move before the full 25 years of the system are used up and I don’t get to reap the benefits of all the back end savings?” That is an excellent question (and the subject of a future post) to which the short answer is: the value of the remaining lifetime of the system should be added to the value of the home.
Another missing piece is the “cash flow” of purchasing a solar electric system using a loan and comparing the monthly cost of the loan to the monthly savings on the utility bill. In a market like California, depending on the interest rate of the loan (roughly 8%) and the length of the loan, homeowners can see a “positive monthly cash flow” right from almost the beginning. This is because the homeowner saves more on the utility bill every month (averaged over the whole year, 12 month cycle) than the monthly cost of the loan. All things being equal, if you can lower your monthly energy outlay, that would be a good thing. This aspect is not captured in a “thirteen year” payback number. Andy Black does some great work in the area of solar financial payback.
So even though a solar panel system may take quite a few years to pay for itself, it is a long term hedge against energy inflation, and depending on financing options, may start lowering your monthly energy spend very early in the system lifetime. If solar technology is to gain widespread adoption in the US and abroad, it must make financial sense. Years to payback is just one type of analysis when researching the viability of solar, and because of the limitations of what data it captures and communicates, it may not be the best.
Following up on Adam's down-to-earth post about the basics of installing solar, there's a great piece out today from The Star about the concrete benefits in using a solar water heater for a pool. For anyone with a pool that they need to worry about heating, getting solar has been a sensible and cost-effective solution for quite some time, and the technology is only improving. The article explains that the heater allows its user to save money, operate the pool longer, and have less environmental impact, relative to propane or gas heating. While this isn't new news, the case for a solar water heater is so strong that it bears repeating like this from time to time. Anything that is cheaper, providing more benefit, and more responsible than the other options has an iron-clad case for being the best solution available to consumers.
With so much news coming out about cleantech and renewable energy, climate change, politics and the price of oil, it's easy to get overwhelmed by "the big picture." This can be either a depressing or inspiring experience, depending on your general outlook. We here at Getsolar lean towards optimism, and we all share a belief in innovation and our collective will to tackle the big issues, but we totally understand that sometimes it feels like we're not moving towards our energy goals fast enough.
Much as my personal politics prevent me from saying this with too much enthusiasm, I am in some ways quite happy that the Supreme Court denied Al Gore the presidency. If it weren't for him, who would be the galvanizing figurehead for the fight against climate change? I feel like he really has the right idea about how to get us--as Americans, and as citizens of the modern, consumer-oriented world--interested in joining him on the front lines. As announced on 60 Minutes and reported by the New York Times, the Alliance for Climate Change, a nonprofit founded by Gore, is launching a "three-year $300 million advertising blitz to recruit 10 million advocates to seek laws and policies that can cut greenhouse gases." The blitz kicks off today, but you can view the initial ad on this child site of the ACC.