Is the Solar Investment Worth It? ... Yes, In Scare Tactic Terms

Update: After reading this blog, check out Bloomberg News article entitled "Utilities Feeling Rooftop Solar Heat Start Fighting Back" that came out today, December 26, 2013. They seem to understand what we are talking about. The Wall Street Journal Market Watch also chimed in with their article entitled "Under Solar Heat, Utilities Put Up a Fight".

For those of us in the United States, we often ask whether or not the investment in solar energy is worth it. How long will it take until I get my money back? How much will it pay me? Why would I spend so much up front when I can just pay for what I use?

Well, for those of us who are still asking these questions, we have had the luxury to be brought up in a time and place where we haven't had the need to look too far for our energy. We are lucky enough to have the infrastructure set up to the point where even the most remote, rural location, we can likely get access to the energy grid. Can you imagine if you were paying for the cost of extending power lines to your rural ranch because you don't live near the city? If that were the case, the choice would be a no brainer. After all, it wouldn't make sense to pay for installation of the infrastructure just to be charged to use it, right?

This is the point where the argument for widespread use of privatized solar energy takes a turn in an unusual direction. Although I regret doing so, I am going to use what is popularly known as a "scare tactic" to present my case. I don't like having to promote my case in this manner, but unfortunately, it has been proven through the course of history that "scare tactics" tend to work better at getting a point across, than proven evidence and sound judgment does. So, here goes...

I've already mentioned that our infrastructure is why we still ask the question of whether or not solar energy is a sound investment. In many countries, it's not a guarantee that there is a power grid to connect to; and if there is, it is often not worth the cost of extending lines. There are also many countries where there is a decent infrastructure, but for one reason or another, the cost of energy is getting to be so high that it needs to be used very sparingly. For these reasons and many others, the rest of the world has already learned that solar energy is one of the most feasible methods of obtaining energy when it comes to cost per unit of energy consumption. So, why is it different in the United States?

In the United States, we simply run business different than most of the world. Our government is set up in a manner in which large corporations can have a very large role in policy making. Lobbyists are sent to make any argument that deepens the pockets of whatever corporation they are a part of. Energy company lobbyists have been extremely influential as many states have laws which prohibit the sale of power to the public by any entity other than a “public utility". So what?

This prevents businesses from utilizing third-party power purchase agreements (PPAs), one of the most popular methods of financing in the solar industry. Third-party PPAs are a form of third-party ownership financing, whereby a commercial business owns and operates a customer-sited renewable energy system (typically photovoltaic (PV)) and either leases the system equipment or sells the power (via a power purchase agreement) to the building occupant. This business model helps solar customers by reducing or eliminating up-front adoption costs as well as reducing the technology risk and complexity accompanied with monitoring system performance.

So then, the question now becomes, why? Why would power companies be willing to pay so much for lobbyists to fight their cause? Why would they pay so much to extend infrastructure so far into rural areas? Why would they want to prohibit the sale of third party power which would certainly ease the load on their systems? And also, what does that have to do with solar energy?

The answer inevitably boils down to money. Power companies make so much money off of their customers, and at such preposterous rates, that it is to their best interest to invest in the prohibition of third party power sale. It is not going to be beneficial to them, if people begin to understand the costs of energy production don't justify the rates they pay for energy consumption. Their rates are so high, that they can continue to bank-roll politicians who will make policy which allows them to continue to make their money.

This is also the reason power companies are willing to invest in infrastructure. They make a lot of money off of it. If they can pay for infrastructure, and they can pay for lobbyists, and they can pay for all of the overhead they accrue in operating costs, it's a given they are charging rates that are far more than it costs to produce and distribute and make a reasonable (key word there) profit. The type of profit being generated by large power companies is the type that will cause you to do whatever you can to maintain it. Sadly, their consumers pay the cost for that.

You see, in most places, the cost for energy consumption raises between 5-10% annually. It doesn't make sense considering the power plant construction is pretty rare. You would imagine there is a reason for the increase, right? It can't be the new infrastructure either; they already make their money back on that. So why are the rates continuing to increase? The answer is painful to think about.

One theory is that many power companies are raising funds for their future investment in the very same sources of power production that their policies are currently preventing the advancement of. There is a lot of investment in the current system, and it will continue to generate a profit for power companies. Eventually, those systems will be replaced by solar power and other forms of energy production, which because of rate increases we experience today, the companies should be able to construct without seeing a loss in profit margins. Meanwhile, their lobbyists ensure that nobody jumps in their place with new technology until the investments they've made in the current system have served for their entire design life.

It's obvious that the large power companies are aiming to eventually replace their antiquated methods with more efficient and environmentally responsible methods. They have already started to. They just need us to wait until they get their money's worth from what they've already invested in.

So in conclusion, you should be afraid; you should be very afraid. You should be afraid of the day you realize that you wasted your time and money paying for your power company to install the solar system you should have installed 20 years ago. You should be afraid of the rising cost of energy that you will be increasingly dependent on, and your lack of ability to do anything about it. You should be afraid of the day when your neighbor reminds you that because of their investment in a solar roof top system, they haven't paid an electric bill for years and they won't have to ever again. Or you could just avoid all of that and start learning what you can do to reduce your dependency on large corporations while reduce your footprint on the planet. This is a good time to start...