Archive for solar energy

Visual Comparison of Electricity Generation Technologies

I just put together a couple graphs for a talk I’m giving on Monday to give people a visual feel of the various technologies for generating electricity.  These come with a gigantic caveat: the numbers are far from precise.

With changing technologies, it’s impossible to represent any of this with a single number anyway.  I’m trying to show how the technologies compare to each other, and I used four parameters:

  • Cost ($/MWh),
  • Availability (better the closer the profile of the technology matches a normal demand curve (wind is bad, baseload is okay, dispatchable is best, solar),
  • Emissions (and I count waste storage when it comes to nuclear),
  • Bubble sizes represent the size and durability of the resource (I’ve tried to combine in one number how much power we can get from the resource, but also how long supplies of fuel will last.) 

In both charts, the “best” technologies are in the upper left (low cost, low emissions, and available when we need them.)

I know that I’m going to upset a lot of people because I was too harsh with their favorite technology, so feel free and comment on the numbers I’m using, but also please provide references for where you get your numbers.  Most of these are off the top of my head, so their accuracy is admittedly questionable.   Here are the numbers I used to make the graphs.

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There is an excellently researched article on CitizenRE (also see my previous blog entry which has been in my top posts constantly since January) on Renewable Energy Access by Jeffery Wolfe of groSolar.  As the CEO of a solar installer/distributer, he is rightly worried about CitizenRE’s ability to cannibalize his business…. especially if they sign a bunch of people up, and then go bust.

This is a valid concern, both for groSolar and those of us who want the solar industry as a whole to grow and succeed.  My thought on this is if you are seriously considering installing solar on your home yourself, you should go ahead and buy it from an established solar contractor.  There are many uncertainties with CitizenRE, and the most surprising result would be if they actually get their plant running and start installing solar on people’s homes on time in late 2007.  If they do get everything working, 2009 or 2010 before a customer sees his/her solar panels is much more like it.

That does not mean, however, that no one should sign up.  As I constantly point out, rooftop PV is a lousy investment for an individual from a financial standpoint.  If you have a mortgage, do yourself a favor and use that $8,000 you were thinking of spending on PV and pay down your mortgage instead.  If you really want to spend money to do something for the planet, give your friends some CFLs, get an efficient car, use public transit, or, use that money to buy the stock of carefully selected renewable energy companies or income funds.  Buying stocks always puts your money at risk, but it will take 20-30 years to even recoup your investment when you put up a PV system.  You can do all these things in addition to signing up with CitizenRE (or future companies which I expect will be offering PV via the rental model within a year.)  If they actually come through with the panels they have promised, you and the environment will be even better off.

One other counter to Mr. Wolfe’s argument is that CitizenRE management thinks that they will eventually be up and running, and they are spending money to support the marketing effort get FRA’s signed.   It will probably take a lot longer than they are saying (these things always do) but they clearly think that they have a decent chance at pulling it off eventually.

Other good blogs to read up on CitizenRE: SolarKismet, Sietch Blog.  They’re both quite skeptical, and I think that’s healthy.  For myself, I consider money spent on solar panels to be money that could be better spent on other green endeavors.  So what if the skeptics are right?  If I want to invest in solar, I’ll buy a portfolio of the better solar manufacturers out there: they’re volatile, but I expect the payback to be a lot shorter than the 20-30 years I expect from PV on my roof.  In the meantime, signing up with CitizenRE costs me nothing.

Disclosure: I have signed up as a CitizenRE distributor.  To date, I have not signed a single FRA (Forward Rental Agreement) because I have better uses for my time than sales.    The CitizenRE links in this blog are referral links For Frank Knight, who has agreed to make a donation to an environmental charity if CitizenRE actually pulls it off and you click through one of the links here.

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Holistic Approaches to Energy Problems

H. L. Mencken said, “For every human problem, there is a neat, simple solution; and it is always wrong.”  When it comes to solving the problems of peak oil and global warming, I also think that the loudest barking is up the wrong tree.  We look for the quick fix, trying to find a substitute energy source that allows us to change the way we do things little as possible, when the real problem is actually what we’re doing, not how we’re doing it.   We need holistic solutions, not quick fixes.

Too abstract?  Here are some concrete examples:

 Problem: Peak Oil

Quick fixes: Ethanol and slight increases in vehicle efficiency standards.

Holistic solutions: Change our driving culture and infrastructure, by changing the way car use is priced from fixed charges to a per mile basis (“Pay as you drive”).   Removing subsidies to use cars when other forms of transport are available, and redesigning our cities to make them easier to get around on foot, bike, and public transport.  Like other holistic solution, all these steps increase safety and reduce congestion, reduce obesity and associated health problems, as well as reducing the use of gasoline.

Problem: Wind and Solar are intermittent resources, but coal produces too much CO2 and natural gas prices are rising rapidly.

Quick Fixes: Nuclear power and “Clean” Coal.

Holistic Solutions: Shift our demand for electricity to times when it is available, by using time of use pricing, energy storage and demand alignment, and distributed energy storage such as plug in hybrid vehicles.

Investing opportunities:On thing that’s striking about these examples is it’s much easier to find investment opportunities in the quick fixes than in the holitistic solutions.  To invest in ethanol, you can just buy ADM or one of the multitude of ethanol stocks that have been going public recently, but I have yet to come up with a satisfactory way to invest in better urban planning (except buy a house in a walkable community, which is something I’m planning on doing this summer.   Stapleton is the community.  I currently live there, but I’ve been renting and waiting for the end of the housing bubble.  I actually don’t think that housing is going to go up again any time soon, but I’m tired of waiting.) 

The investment landscape is a little better when it comes to energy management.  Itron and Siemens both have divisions that help utilities manage their grids better, and there are many battery and other energy storage companies to choose from.  Still, it’s a lot harder to pick through battery companies than to just buy a nuclear powered utility or uranium miner.

Holistic solutions, by their nature, have weak boundaries… the benefits tend to be diffuse, and spread over society as a whole, so it is difficult to charge fairly for them.  This, I think, is why there are so few companies pursuing them when they can pursue a quick fix that they can charge for up front.  

Companies have an obligation to their shareholders to make money.  It’s our job, as human beings, to work towards regulations that make it easier for companies to make money with holistic solutions that actually solve the problem than it is to make money with quick fixes that just cover the problem up.

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No Fun at Solarfun (except for the insiders)

Here’s an excellent aritcle on by Kevin Kelleher comparing two recent Chinese solar IPOs: Trina Solar and Solarfun Holdings.  The only investors having fun at SolarFun were the insiders who managed to allocate themselves a pile of below market cost stock right before the IPO.

Not only does management seem more interested in packing away loot for themselves, but they also haven’t spent too much time looking for ways to deal with a well known problem for solar manufacturers: securing silicon.

 This just re-emphasizes the point that doing your homework when trying to pick stocks can pay large dividends (and help avoid losses.)  Honest and competent management can make the difference between a wildly profitbale company and a real dog.

 Thanks to Phil van Hake for the link.

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Solar panels for the price of the electricity

Many of us would like to have put solar photovoltaic (PV) panels on our home, and generate our own Citizenre Corporationelectricity.  Until now, I’ve always told people that they have better uses for their money.  Even with the recent extension of the federal tax credit until the end of  2008, and (in Colorado) the rebates being offered by Xcel Energy in order to meet their Amendment 37 requirements for customer sited solar electric, the return on investment for the electricity generated at current prices (about $8 per watt for the panels & system; $4.50 per watt rebates from Xcel, and a $2000 federal energy credit), a 4 kW system only returns 1.4% per year in electricity savings.  (I got these numbers from a workshop presented by Jeff Lyng, who will be vice-chair of The American Solar Energy Society next year, and calculated the return from those.  Jeff was speaking as a consultant for Xcel on their solar rebates program.)   To me, it makes more sense to invest in renewable energy or energy efficiency companies, which are likely to yield a higher return (or put the money in a CD and use the interest to buy RECs or give away CFLs).

Until now.  CitizenRE is offering to install photovoltaic panels on you house, and charge you only for the electricity.  Better yet, the price you will pay is equal to the same price (or less) than your utility charges.   If you like, you can lock in your current price for electricity for up to 25 years (although 5 is standard.)

You do still have to get power from your utility company… there is no provision for battery backup, and they require a $500 deposit which you don’t get back until the end of the contract.  Also, you are only renting the panels from CitizenRE, but you are responsible for damage to them from other than normal wear (as you would be for any other rental), so they suggest that you include them in your homeowner’s policy.

Still sounds pretty good, doesn’t it?  Here’s the big catch: they are signing people up now, but they plan to manufacture the panels at their own plant, which will not start operation until at least September 2007 (and, being a cynic, I’d expect further delays.)  Realistically, don’t be surprised if you don’t have your panels until mid-2008.  But for people who don’t have an extra $10,000 burning a hole in their pocket, you probably weren’t going to get a system until 2008 or later anyway.

This is probably not the only place you’ve heard about them… I’ve read several other blogs (here, here, here, and here. ) about them so far, and part of the reason for that is they are using a multi-level marketing scheme (MLM) (although they don’t like to call it that).  I don’t think any of the blogs I linked to back there are MLM-ers… I also came across several blogs like that (most of which had clearly been started for the sole purpose of selling CitizenRE), and decided not to do them the favor.  I’m not generally a fan of MLM, but I have to admit that it’s probably the best way to reach a lot of homeowners quickly.   As part of my research for this blog, I decided to sign up (it was incredibly easy… I did have to get 4/5 on a quiz, but three of the questions were general ones about solar and electricity, so I only had to guess right on one out of two, which I managed on the first try (but I could have tried again after 2 hours)… they have tutorials for people who are serious about this stuff, but who has time for that?)

Instead, I spent my research time reading the Forward Rent Agreement (FRA) contract their customers have to sign, which is where I got some of the above caveats (also note that they do reporting through a land telephone line, so if you sign up, you have to maintain telephone service for the duration of the contract.  That might be a problem for me, since I use Voice over IP.)

I also browsed through their marketing material, which was available after I took their little test.  After all, if putting solar on your own home is not a good financial proposition, why are they paying their associates $150 for each sale, plus 4% or more of the electricity sold in order to put panels on your house for you?  Here’s what I concluded:

  1. They will have lower costs than an individual homeowner.  Most of us have to pay contractors around $8 a watt for our systems.  Since they will be hiring their own dedicated installers, and install only equipment that they manufacture themselves, they think they can do it for around $4.50 per watt, a price which (In Colorado Xcel territory) would be covered completely by Xcel’s Solar*Rewardsprogram referenced above.
  2. As a business, they can deduct 30% of the full amount of the installation cost under the production tax credit, and it is not capped at $2000, as it is for homeowers.
  3. Also as a business, they are eligible for accelerated depreciation, which basically amounts to an added massive tax deduction.
  4. They get interest on your $500 deposit.  Not much, but if you have 1000 deposits, it starts adding up to real money.   1/15/07: Via PeakEnergy and The WorldWatch Institute I read that interest on the deposit is credited to the consumer.  Checking the associates’ website, it says: “Deposits are invested into 1 year treasury notes. Interest is compounded for the benefit of the customer.”

Starting to come clear?  By my ballpark estimate, if it costs them as much as $6 a watt to install a system in Colorado, they will be able to collect at least that much back under the various tax programs and rebates, and any money they collect from you, the customer, will be pure profit.

So it sounds like a legit business model to me.  In fact, when you look at the above, it’s somewhat surprising that no one has done it before.  If you still want to sign up (and if you want solar on your roof, this seems like the best financial deal currently on offer).

I don’t want to sign up anyone myself… I already have two full time jobs as an investment advisor and environmental activist, but if you use this link, for Frank Knight, who has agreed to make a donation to an environmental charity for any referrals (but not untl you get panels and he gets paid.  Contact me if you have a particular charity you would like to see the money go to.

If you want to become an associate, here’s the link for that.

If you think this whole thing is a scam, and want a random associate, go directly to CitizenRE (there will still be as sales commission paid to some associate, but it will be someone assigned at random.)

I never thought I’d be telling people they could put solar on their roof (in an economical way) so soon.  Keep in mind, this does cost more than your normal electricity bill, because you pay for insurance for the panels, as well as losing the interest on your security deposit, but if you don’t plan on moving, and expect electricity prices to go up a lot, you may come out ahead anyway, because they let you lock in your electricity rate for the duration of the contract (up to 25 years, at your option.)

By the way, I think I read an article recently about a company that’s doing the same thing with solar hot water in Canada (only charging for the price of natural gas not used), but I can’t seem to Google it.  If you saw it too, please let me know.

(Note: apparently you can avoid the deposit if you sign a 25 year contract.  I’m not sure  if that’s a better deal or not… how many of us stay in one house (or even two) for 25-years?  Also, five to ten years from now, the technology will probably reach the point where it does make sense to borrow the money and put up your own panels.  I guess I’m just not a big fan of 25 year contracts for anything.  Mortgages, for instance.)

12/14 I’ve been thinking about this some more, and here are a couple other things to be wary of:

  1. They say they’ll start production of panels in September 2007.   But these things always take longer than expected.  If you sign a contract with them, you’re basically saying that you’re not going to use your roof for anything else while you wait.  At best, you’ll have your panels a year from now, but at worst, they might end up stringing you along for years, when you could have gotten solar from some newer outfit that came along in the meantime… if this model really works, it won’t bee too long before they have competition.
  2. Don’t expect to make money as an associate (salesperson) before 2009, or even later.  A lot of associates are already paying (out of their own pockets) for classified ads, but they don’t start earning any money until systems are installed on homes.  And who is to say that your sales are going to be the first in line… as far as I can tell, they can install systems in whatever order they choose, which means that the location with the highest rebates will probably get all the first panels produced.  Basically, the better a financial deal this is for the customer, the later they are likely to get their systems.  If you are considering signing up as an associate, treat it like a hobby, and don’t pour a lot of money into it.  Frank may be kicking in $75 to charity for each referral I give him, but at least he’s not putting a lot of money in up front… he does not pay unless he is paid.

You may also hear about the CitizenRE offering under the product name ReNu, as well as a couple of thier marketing websites, and  The /xxxx at the end of the url is the associate’s ID which they use to track which associate brought in that particular customer.

2/14/07: Given the recent growth in controversy about CitizenRE, I’ve written a followup article here. 

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