The solar PV Value Propostion

The solar PV Value Propostion

Solar photovoltaics (PV) offers the U.S. a material source of high-value energy. It is an attractive part of the U.S. energy portfolio for an array of reasons which include customer value, as well as benefits from an environmental, reliability and energy security perspective.

The U.S. has pioneered and developed the technology, and public opinion of solar power is extremely favorable. Findings from market research indicate that the American people want solar energy, consistently giving solar energy a 90+% positive rating, the highest rating for any energy option.

Further, the United States has considerable energy demand and the manufacturing infrastructure to produce PV systems. The hallmarks of PV’s unique value proposition include the following:

• Economic Value: the generation of solar electricity coincides with the normal peak demand during daylight hours in most communities. It therefore mitigates peak energy costs, brings total energy bills down, and obviates the need to build as much additional generation and transmission capacity as would be the case without PV. PV combined with efficiency can realize significant economic benefits and contribute to the goal of zero-energy buildings.

• Environment: PV-based electricity is produced in a clean and silent manner;

• Resource Economics: PV harvests a free and abundant energy source and puts it to work, reducing the rate at which society is depleting the world’s increasingly scarce fossil fuel resources;

• Infrastructure Reliability and Efficiency: PV is best sited at or near the point of load, thereby freeing up utility investment in distribution systems and
enhancing the reliability and cost-effectiveness of the grid. PV can increase grid reliability, resulting in increasing value in the future as reliable high-quality power becomes more valuable;

• Energy Security – Infrastructure: Distributed power generally offers security benefits due to multiple generating sources, less transmission and distribution to disrupt, and greater security because on-site PV generation is harder to disrupt, more stable, and less brittle than full reliance on centrally generated power;

• Energy Security – Economic: A renewable resource such as PV reduces
dependence on all traditional sources of energy inputs and creates a source of
energy secure against any external supply interruption or price manipulation;

• Choice: PV gives consumers the power to choose the source of the electricity they use and to act on their stated preference for renewable energy;

• High-Value Jobs: as a sophisticated semiconductor technology, PV offers the opportunity to build an industry of high-technology companies and jobs in
science, engineering, manufacturing, and services. Table 1 indicates the high
annual growth potential for solar PV, with a consequent increase in jobs created.
The value of PV to the nation should increase dramatically over time as the
cumulative base of installed systems grows. Such volume increases are expected to reduce system costs; beyond this, the economic value will also be enhanced to the degree that national policy encourages the monetization of environmental attributes through trading mechanisms or other means. These environmentally-derived economic benefits will augment the other, system-oriented benefits of PV.

The Cost and Full Value of PV Electricity

The cost of PV electricity is significantly higher than the wholesale rate for conventional electricity, but this is not the most meaningful comparison. PV provides power at the point of demand and is thus better compared to the retail rate for electricity.

The cost of PV-generated electricity ranges from 10¢/kWh (with good solar resource and a State buy-down) to over 40¢/kWh for a low solar resource and no State incentives.1 A longer or shorter system lifetime will impact the cost of PV electricity, though lifetime data is currently limited.

Chart 1 illustrates the projected costs of distributed generation (DG) technologies in the near and medium term, as forecast by Deutsche Banc Alex. Brown; PV has the potential to rapidly approach the cost of other DG technologies. PV electricity differs in crucial ways from traditional grid electricity and from DG technologies such as microturbines; the generation of PV electricity is clean, quiet, and emissions-free.

It is also domestic, safe, renewable, and ubiquitous. As a modular distributed generation resource, PV allows mitigation of risk in planning and avoidance of increased generation capacity. As a peak-producing energy resource, PV produces high-value electricity. An operating PV system produces no air pollutants or greenhouse gases.

The economic value of the environmental benefits of PV can be calculated, but the calculation depends on the economic value of emissions avoided. Though there is no clear consensus on the cost of emissions, there is wide agreement that the value is a positive value and needs to be considered.2 In addition to the emissions value, PV has value as a domestic resource, as an inexhaustible resource, and as a distributed resource. Therefore, other factors such as reliability and security benefits, while not yet accurately quantified, are also materially positive.

The fact that these other classes of benefits are material, yet remain the subject of speculation and debate has led to Recommendation 3, below, regarding improving quantification of the full value of PV. DOE’s Office of Power Technologies is developing an assessment of the cost of externalities associated with conventional electricity generation.

These impacts include: the effect of emissionsmon human health and welfare, agricultural productivity, and infrastructure; the security costs of ensuring a reliable oil supply and a safe nuclear resource; and the potential costs of adjusting to global climate change. A preliminary survey of the literature found a value of 7.6 cents per kWh.

The favorable consumer opinion of PV has resulted in an increasing market volume for PV systems and an increasing interest in homes with PV. Initial evidence suggests that a PV system on a home can build home equity and significantly increase the resale value of the home; in new housing developments featuring homes with building-integrated PV or other PV systems, foot traffic and other metrics of consumer interest are far above average.

A recent survey in California found that 50% of consumers would be willing to pay more for a house featuring a solar or wind power system, and 60% indicated they would be more interested in a house with a renewable energy system than a house without one.

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