TCS Daily

Rain or Shine?

By Ben Lieberman - September 30, 2002 12:00 AM

The Solar Decathlon is underway, and teams of students from 14 colleges and universities are building solar-powered homes on the National Mall in Washington DC in an effort to promote this alternative energy source. This week judges in this Department of Energy (DOE) sponsored event will evaluate these homes and declare one the winner. Unfortunately for the participants, it rained on the Sept 26th opening ceremonies, and the skies over the Washington have remained mostly overcast since. However, the conditions may have made for a more revealing demonstration of solar energy than was originally planned.

Although the Solar Decathlon's purpose is to hawk the benefits of electricity-generating solar panels and other residential solar gadgets, the bad weather has made it hard to ignore the limitations. As fate so amply demonstrated, not every day is a sunny day, and indeed DOE's "Solar Village on the National Mall" has received very little of what it needs to run.

Since solar is not a 24/7 energy source, even a community consisting entirely of solar homes and businesses would still need to be connected to a constantly-running power plant (most likely natural gas or coal fired) to provide reliable electricity. For this reason, the fossil fuel savings and environmental benefits of solar are considerably smaller than many proponents suggest.

Washington DC gets its share of sunny days as well, but even so, solar equipment provides only a modest amount of energy in relation to its cost. In fact, a $5,000 rooftop photovoltaic system typically generates no more than $100 of electricity per year, providing a rate of return comparable to a passbook savings account.

Nor do the costs end when the when the system is installed. Like anything exposed to the elements, solar equipment is subject to wear and storm damage, and may need ongoing maintenance and repairs. In addition, the materials that turn sunlight into electricity degrade over time. Thus, solar panels will eventually need to be replaced, most likely before the investment has fully paid itself off in the form of reduced utility bills.

Few things are as politically-correct as solar energy, and it has always had its share of true believers willing to pay extra to feel good about their homes and themselves. But for homeowners who view it as an investment, it is not a good one. The economic realities are rarely acknowledged by the government officials and solar equipment manufacturers involved in the Solar Decathlon and similarly one-sided promotions. By failing to be objective, the pro-solar crowd does consumers a real disservice.

Unfortunately, Washington's solar silliness extends to the U.S. Capitol. This event comes at a time that Congress is putting the finishing touches on its massive energy bill. The bill contains a provision to revive the 15 percent tax credit for the purchase of residential solar equipment, instituted in 1978 by Jimmy Carter but later killed by Ronald Reagan in 1986.

The previous tax credit encouraged many homeowners to buy solar equipment. Most of them learned the hard way that even subsidized solar is a money pit. But today, there's a whole new generation of gullible homeowners who lack any direct experience with residential solar and may fall for the sales pitch, especially if the tax break is brought back.

Like the participants in the Solar Decathlon, they're going to get soaked.

Ben Lieberman is a senior policy analyst with the Competitive Enterprise Institute, in Washington, DC.

TCS Daily Archives