Expert: W.A. (Bill) Stevens - 2/20/2008

Question
can you please explain the economic tradeoffs of making electricity from solar?

Answer
Mohammad -
A very good question.
When evaluated using the monetary values we place on natural resources and energy today, solar electricity is far more costly than almost all alternative sources. The reasons:
Solar energy is diffuse. In order to capture a lot of it, one has to have a very large, therefore very costly collector. To install a collector large enough to power a city would cost billions of dollars. Your electricity bill would be just as high as it is now just to pay off the cost of this collector, but the collector would only be giving you about half as much electricity as you're getting now. Why? Solar energy is not available at night, and reduces greatly when clouds pass over, so one needs also install large backup generators that either burn fuel or retrieve stored solar energy produced by a vastly oversized collector. Roughy speaking, if solar is used one has to build twice as much generating capacity (and possibly a large amount of storage capacity) in order to get the electricity one needs every hour of every day. And one also has to burn fuel in the ordinary generators about half of the time or more.  So, even though the solar part of the "fuel" is renewable, clean, and free, the total capital costs and ordinary fuel costs combined are very great. The result is that one's electric bill would at least double, and maybe triple if one uses solar electricity. If the individual consumer or local economy can afford that, Great! If not, the government would have to pay at least half of the electric bill. Otherwise solar won't get built because it's simply not economic.
As greater global concerns arise regarding the potential consequences of climate change, solar electricity will begin to move a little closer to economic competitiveness with coal based electricity. That will require the imposition of a large tax on CO2 emissions from coal and other fossil fuels. First, nuclear power will become economic, then if resistance to nuclear power develops anew, solar electricity will finally become economic. But it will be very expensive.
Good luck!
- Bill