November 13, 2007
State Incentives Boost Home Photovoltaics

Among the American states California has the strongest incentives for installing photovoltaics .

In its Northern California service territory, PG&E charges tiered rates for electricity, between 11.4 cents and 36.4 cents a kilowatt-hour, depending on usage. (A kilowatt-hour equals the energy needed to run a 100-watt bulb for 10 hours.) Utility spokesman John Tremayne says the average PG&E customer pays about 15 cents a kilowatt-hour, including surcharges and fees.

Solar power generated with photovoltaic panels, meanwhile, will run a homeowner about 18 to 19 cents a kilowatt-hour, assuming a cost of $24,000 to install a system that produces 4,300 kilowatt-hours of electricity, over 30 years, according to Barry Cinnamon, president and chief executive of Akeena Solar Inc., a solar-power installer based in Los Gatos, Calif.

Some customers have managed to cut their installation costs to as little as $15,000 after state rebates and a $2,000 federal tax credit, which, over a 30-year period, would produce power for about 10 to 14 cents a kilowatt-hour, according to Mr. Cinnamon, who says PG&E rates in his area are around 36 cents a kilowatt-hour, after surcharges and fees.

Half of the growth in solar power in the US until 2015 is expected to come in California. The article emphasizes state government incentives as an explanation for this. But California also has electricity costs that are, at the time of this writing about 37% above the national average. So solar doesn't have to become as cheap in California as it does in really cheap electricity states (below 8 cents per kwh) like Washington, North Dakota, Idaho, or Kentucky. Also, southern California has less clouds and more sunshine than most US states (Arizona notably excepted). So the same solar panels produce a lot more electricity in San Diego than they do in Milwaukee or Bangor or Seattle.

I think it hard to project solar installation growth out to 2015 for a reason that seems obvious from the excerpt above: Solar power's cost is not enormously above existing utility power. A reduction in solar's cost by a half or two thirds would make solar pretty competitive in Arizona and southern California. By 2015 Solar's cost could conceivably fall to a point where it becomes competitive in the most sunny areas.

Share |      Randall Parker, 2007 November 13 11:19 PM  Energy Solar

odograph said at November 14, 2007 6:47 AM:

I suspect that electricity is cheap in Washington and Kentucky for different reasons. I'm more comfortable with Washington's cheap hydro keeping out solar than I am with "cheap coal.(*)"

* - cheap in states where externalities are ignored

Randall Parker said at November 14, 2007 5:07 PM:


You are quite correct as to the different reasons for the cheap electricity in Washington state and Kentucky. However, you are wrong about whether solar can contribute more to air quality in Kentucky than in Washington and here's why:

What matters is changes in marginal demand. Marginal growth in demand in Washington does not get satisfied with hydro. The hydro is all getting used already. Incremental demand growth has got to come from non-hydro sources. Where is that going to come from? Natural gas, coal, eventually nuclear. That's true in both Washington and Kentucky.

Of course incremental demand is growing, due both to population growth and rising living standards.

Nick said at November 15, 2007 4:01 PM:

The $.19 figure doesn't include interest, or time value of money.

The cost per KWH of the 24K, 4,300 khw/yr system is about $.45.

Surprsingly, that doesn't bother me. That's a pricey system even now, and PV costs really are plummeting, so I think they'll reach utility price parity very, very soon.

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