Thursday, October 20, 2011

Why propane users need to investigate solar

Propane is a dominant heating fuel in rural parts of the US. Propane users typically purchase a large volume of fuel all at one time. It would not be unusual for them to have to write a check for $1250 1-2 times per year.  What this means is that like with a solar water heating system, they are pre-paying for the fuel they use to heat their home and domestic water.  Unlike with natgas and electricity customers, it's not great a leap for propane consumers to understand how a solar water heating system would benefit them in the long run since they can't spread payments out over time.  Additionally, propane customers tend to come from agricultural communities were communities tend to have a longer view of financial prudence.

To give a little flavor of the economics, I modeled a 2 panel, 70 gallon tank system pitched at 30 degrees facing due south in Des Moines, IA.  Using a solar water heater with propane back up tank, the homeowner would save about $450/year in water heating costs (using $2.50 per gallon for propane).  Switching to an electric back up tank with the same solar system, would save this homeowner about $500/year.  Either system would reduce the home's greenhouse gas emissions by about 1.3 tons of CO2.  Even with only the federal tax credit, this system would have a 10-year payback or 6.5% rate of return.  If propane prices go up to $3.50, the payback is cut to just over 7 years.  If your state has any additional incentives, you'll see paybacks as low as 5 years. 

A couple of good resources for propane related information would be Build With Propane and this propane supply outlook paper.
Save now and save later with solar. With a solar system, you fix your energy costs today and hedge against rising prices tomorrow.

Friday, October 14, 2011

A little perspective about Solyndra

My summary of the Solyndra story:
  • Company launched in 2005 to create a unique thin-film (CIGS) solar module to avoid using expensive (at the time) silicon as most other solar companies use.  They took a calculated business risk to create an innovative product to address a gap in the marketplace.
Solyndra's technology & value proposition
  •  Prices of silicon collapse in 2009.
  • Almost overnight, the business case that Solyndra was trying to make completely reverses.  More efficient panels are now the same price as Solyndra's less efficient panels.
  • Solar panel manufacturing has been extremely turbulent from the beginning so Solyndra stays the course and attempts to weather the storm.
  • On May 26, 2010, President Obama gives a speech at Solyndra headquarters to tout his commitment to American job and clean energy development. This was a company that both the Bush and Obama administrations wanted to associate with for political purposes.
  • June 2010: Solyndra is producing 30MW of solar panels per year and is in a tie as the 10th largest thin film manufacturer. 
  • November 2010: Solyndra gets a $535 million loan guarantee from the 1703 loan guarantee passed in 2005 by the Bush administration.
  • Silicon prices continue to fall hitting a 6-year low in June 2011 (~$50/kg from ~$470/kg).
A solar cell nestled in raw polysilicon
  • Solyndra tries to restructure its loans again in August 2011 but is refused and subsequently loses a contract with the US Navy.
  • Bankruptcy--September 1, 2011
Solyndra was an innovative company in a dynamic market.  The founders took a big risk in a very risky business.  Like other companies in other industries, they lobbied the government for special consideration and like other companies in other industries, they got it.  Governments facilitate markets and companies participate in these markets.  My view is that clean energy companies should get special consideration because they promote technology and ideas that help society as a whole.  Special consideration doesn't mean direct investment however.

One lesson learned from this story is that governments are horrible venture capitalists.  This should be expected since unlike VCs, governmental decision makers are betting with someone else's money.  While market development is a solid roll for governments, picking specific winners like VCs try to do, should be left to private investors.
Solyndra couldn't keep up with John Boyd's OODA Loop

One lesson to not learn from this story is that solar energy can't compete with traditional energy and that solar is doomed to failure.  Solyndra failed in most part due to falling prices of solar components and a general inability to keep up with changing business assumptions.  While this was bad news for Solyndra, this is very good news to proponents of clean energy.  Solar energy is on pace to be the least expensive source of electricity for most of the world in a decade.  All this political theater over Solyndra will seem pretty silly when that happens.
"The trend is my friend."
-Old adage of market makers

Friday, October 7, 2011

Renewables face stiff competition in the energy PR war

Companies selling legacy energy products (oil, natgas, coal) are winning the public relations war over climate change.  This makes sense in a way since they have a lot more to lose than the clean energy companies have to gain.  Fossil fuel centered companies have an elaborate (and expensive) strategy to undercut the value proposition that solar & wind companies have been trying to make in the court of public opinion.  Front and center in this fight is to deny that humans have any impact on the climate and that any changes that might be occurring have nothing to do with burning carbon based fuels.

As you'll see in the chart produced by Riley Dunlap and Aaron McCright, two university sociologists, climate change denial is a well-organized, comprehensive affair.  Regardless of how you feel about this issue, I find it very interesting that so much money, human energy, and legislative time is being committed to refuting something that has an objective answer.  This tells me that the parties in the matrix below are more savvy to the fact that how we feel about an issue matters more in spurring action than whether the something is true or not. Deceptive messengers typically jaundice common sense people to the message however, and truth has a tendency of coming out in the end regardless of obfuscation efforts.

Thursday, October 6, 2011

Nothing clean about coal

Coal has been a tremendous asset for the industrialization of the world over the last 200+ years.  Over half of our electricity is produced with coal and it is a major source of American jobs.  The spin doctors at the American Coalition for Clean Coal Electricity go too far, however, when they claim that carbon capture and sequestration will make coal "clean."  Even if carbon capture wasn't an implausible fantasy on the scale of Reagan's Star Wars program, coal is dirty throughout its journey from extraction, processing, transportation, smokestack and finally fly ash disposal.  Clean coal initiatives address none of those other yucky bits.

The folks at Funny or Die realize the power of satire and ridicule to move public opinion.  Check out their little ditty about the latest "energy drink" to hit the shelves:

- I drink [use] it everyday because it's really my only choice.