Last week, there was a ribbon cutting ceremony at Carlson Orchards. State and Federal Government officials joined those celebrating the installation of a two acre, solar array for use by the local farm. The solar panels can supply as much as 70% of the orchard’s power needs. The project’s cost was $1.1 million and will save the orchard about $56 thousand per year in energy expenses.
Is this investment in a solar power system a good deal for Carlson Orchards? Absolutely, it is. They didn’t have to pay the $1.1 million investment in the project. That cost was borne by us, the taxpayers. But, what if Carlson’s had to pay for the system themselves?
From an economic point of view, they would not have made the investment. The present value of the energy savings over a 25-year period is $790,000. So, they would have to invest $1.1 million now to save $790,000, for a net present value loss of $310,000.
The overarching question is, “Are these major investments, being made by the government in similar solar power projects, worth it?” To answer in the affirmative, you would have to believe that, as a result, this form of power generation will become competitive in costs with hydrocarbon sources.
According to “green econometrics” (http://greenecon.net/understanding-the-cost-of-solar-energy/energy_economics.html) however, the cost of solar power has been about 38 cents per kWH. This compares to an average of 3 cents per kWH for hydrocarbon forms of energy, or about 13 times more expensive. That is a very large gap to overcome with any hoped for, new technologies.
So, if solar power is to have an impact, the taxpayers will have to continue to fund these projects for a very long time.
Anthony J. Marolda
Jacob Gates Road
