REFLECTION: Solar Faces An Affordability Challenge
EDITOR' NOTE: Public meetings and reporting assignments occasionally produce thought-provoking reflections and comments that don’t fit neatly into a news story. ‘Reflection Connection’ is our place for publishing interesting observations, musings and bits of wisdom. Here we have excerpted some comments made by GELD Manager Kelly during a discussion about a possible Groton-only solar rebate [See story page one.] These comments have been slightly edited for clarity and were reviewed by Manager Kelly for accuracy.
With natural gas being so affordable, solar power faces a huge affordability challenge. As recently as 10 years ago, the conventional wisdom was that the price of power was moving to 18 cents kwh, then into the low 20s per kwh. With power selling in the low 20s per kwh, solar power is viable economically.
So, everybody jumped on that solar train. In the interim, over the last 10 years, huge supplies of cheap natural gas and the technological revolution have dropped GELD’s cost for the generation portion of the power to 2.5 cents per kilowatt most of the year.
That results in solar power needing a huge subsidy to be competitive. That means the state provides some subsidy and the Federal government provides some subsidy. Without that huge pool of money, solar power is not economically viable. The only reason our solar farm at the landfill works is that the Federal government kicks in 30 percent and the state kicks in about 40 percent, with GELD paying about 30 percent of the cost - and that’s with our economies of scale and our huge solar deployment. GELD agreed to pay 5.5 cents fixed for 25 years for power from our solar farm. But, at market, GELD is buying power for 2.5 cents per kilowatt hour.
Last year, the solar farm provided a substantial reduction to our peak power demand, and because our capacity payment next year is based on last year’s power consumption, GELD is going to enjoy more than $100,000 in reduced costs next year. So, even paying 5.5 cents per kilowatt-hour, the solar farm is worthwhile because we reduced the peak.
But, there’s no guarantee the solar farm will reduce peak demand in subsequent years. As more and more solar production comes on-line in New England, and because solar power’s maximum output is between noon and 2 p.m., peak demand will be pushed back. That’s one of the reasons the batteries can be so helpful. As the sun goes down, everybody gets home and cranks up their air conditioning. So in the summer, we used to peak between 2 and 5 p.m. Now, regional solar can push the peak back to 5 or even 6 p.m.
One of the problems with the increase in solar construction regionally is that the peak power demand gets pushed further into the evening. So, ironically, more solar construction actually minimizes the benefit to GELD of our existing solar farm because it pushes the power peak into the evening.