Clean Power solar power costs and value

Published on June 26th, 2011 | by Zachary Shahan


True Value of Solar Power

June 26th, 2011 by  

solar power costs and value

cost solar power

Note: even despite the findings of the report, that solar power’s value is much greater than typically quantified, the study was still very conservative (overly conservative, I would say) about the total value solar power provides — see the last part of this article for more on that.

I wrote recently on the costs of wind power and how they compare to the costs of traditional forms of power like coal and nuclear, especially when you take externalities and other subsidies into account. I was going to wait until I wrapped up our “comprehensive wind power page” to write on this topic for solar power, but a new report out from the Institute for Local Self Reliance pushed me into the topic a little early.

The Institute for Local Self Reliance report “identifies the combined value that solar electric power plants deliver to utilities’ rate payers and society’s tax payers.” In other words, beyond the typical things we officially assign it value for, the report looks at other clear benefits it provides and tries to calculate those to come up with an overall total value.

“Benefits that are relevant to utilities and their rate payers include traditional, measures of energy and capacity. Benefits that are tangible to taxpayers include environmental, fuel price mitigation, outage risk protection, and long‐term economic growth components.”

The final conclusion, for the state of New York at least: the value of solar electric installations is 15-40 cents per kWh (for ratepayers and taxpayers).

This clearly justifies federal incentives and government incentives for solar that are in place in many places today, because, unsubsidized, the cost of solar is 20-30 cents per kWh according to the authors (or, at most, up to nearly 40 cents per kWh according some other sources). If the incentives weren’t in place, the vast majority of people would not account for these extra benefits and societal value on their own and would not pay this price for solar power. If the costs (not adequately accounting for the value) were the price of electricity from solar, it would not compete with coal or other forms of electricity yet. And it is precisely the government’s role to step in and take care of or account for things that society as a whole benefits from but would undervalue.

Check out the following chart on the author’s calculations of solar power costs and benefits, followed by a chart from a different author on levelized cost of renewable energy.

costs vs value of solar power

levelized cost of electricity

click to enlarge

Report Conservative When Assigning Value to Solar Power, Its Value is Much Greater

Now, even in the report mentioned above, I think there are some clear benefits not accounted for if you compare it to the most likely alternative coal or even to natural gas.

For one, solar energy creates more jobs, which helps the economy as a whole. On top of that, locally owned projects also boost economic benefits (something Stephen Lacy over at Climate Progress pointed out).

jobs renewable energy

Furthermore, I don’t think the health benefits were accounted for enough, as even the authors point out. Coal is used much more in other regions (and the nation as a whole) and the environmental and health costs of nuclear and hydropower aren’t even accounted for:

Given New York’s generation mix (15% coal, 29% natural gas), and ignoring the environmental costs associated with nuclear and hydropower, the environmental cost of a New York kWh is thus 2 to 6 cents per kWh. It is important to note however that the New York grid does not operate in a vacuum but operates within – and is sustained by ‐‐ a larger grid whose coal footprint is considerably larger (more than 45% coal in the US) with a corresponding cost of 5‐12 cents per kWh. In the appendix, we show that pricing one single factor – the greenhouse gas CO2 – delivers at a minimum 2 cents per solar generated PV kWh in New York and that an argument could be made to claim a much higher number. Therefore taking a range of 3‐6 cents per kWh to characterize the environmental value of each PV generated KWh is certainly a conservative range.

So, this calculation of the true value of solar power is still a conservative underestimate.

Furthermore, other factors were very conservatively valued and there are also a number of factors not even considered at all (some of which I was going to mention before seeing this paragraph and list by the authors):

It is important to stress that this result was arrived at while taking a conservative floor estimate for the determination of most benefits, and that a solid case could be made for higher numbers particularly in terms of environment, fuel hedge and business development value.  In addition, several other likely benefits were not accounted for because deemed either too indirect or too controversial.  Some of these unaccounted value adders are worth a brief qualitative mention:

  • No value was claimed beyond 30 year life cycle operation for solar systems, although the likelihood of much longer quasi‐free operation is high (Zweibel, 2010)
  • The positive impact on international tensions and the reduction of military expense to secure ever more limited sources of energy and increasing environmental disruptions was not quantified.
  • The fact dispersed solar generation creates the basis for a strategically more secure grid than the current “hub and spoke” power grid in an age of growing terrorism and global disruptions concerns was not quantified.
  • Economic growth impact was not quantified beyond tax revenue enhancement.
  • The question of government subsidies awarded to current finite energy sources (i.e.,displaceable taxpayers’ expense) was not addressed.

The value of these things is HUGE. So, if someone contends that this is an unbalanced analysis, yes, it is, but unbalanced in favor of other energy sources (not solar)!

Thoughts? Questions? Concerns?

Related Stories:

  1. Solar Power Graphs to Make You Smile
  2. Solar Power Almost as Cheap as Natural Gas in Six States
  3. Unprecedented UN Report: Renewable Energy Costs to Drop, Use to Grow Substantially by 2030, but…
  4. Historic Report: Solar Energy Costs Now Lower than Nuclear Energ
  5. GE: Solar Power Cheaper than Fossil Fuels in 5 years

Third Image via Solar Power Generation in the US: Too expensive, or a bargain?
Fourth & Fifth Images via Think Progress

Check out our new 93-page EV report, based on over 2,000 surveys collected from EV drivers in 49 of 50 US states, 26 European countries, and 9 Canadian provinces.

Tags: , , , , , , , , , , , , , , , , ,

About the Author

is tryin' to help society help itself (and other species) with the power of the typed word. He spends most of his time here on CleanTechnica as its director and chief editor, but he's also the president of Important Media and the director/founder of EV Obsession, Solar Love, and Bikocity. Zach is recognized globally as a solar energy, electric car, and energy storage expert. Zach has long-term investments in TSLA, FSLR, SPWR, SEDG, & ABB — after years of covering solar and EVs, he simply has a lot of faith in these particular companies and feels like they are good cleantech companies to invest in.

  • Anteaus

    The returns from solar PV are easily quantifiable, which is at least an advantage over wind’s hard-to-predict returns. NASA has done some fairly exhaustive studies of insolation. (the average amount of solar energy striking a given area of ground, per day summer/winter, or per year) You simply need to take this figure for your region, multiply by panel area, and divide by conversion efficiency (assume 20% for argument’s sake) and you have a theoretical maximum return for your installation. The results in practice seem to bear out that this is a fairly accurate way to assess returns.

    As to the ‘real value’ this must depend heavily on whether the power is provided when it is needed, or when it is not needed. In hot climates solar aircon makes very good sense, since sun and heat ususally -but not always- go together. In colder climates the need for energy is usually out of sync with the availablity of sunshine on both a daily and seasonal basis, therefore in those climes solar power’s actual usefulness may be much less than the simple energy return value would suggest. This is where feed-in tariffs complicate the picture; because the subsidised solar array gets paid to export power to the grid regardless of whether that exported power serves any useful purpose or not.

    Conventional power producers also sometimes get paid to produce unneeded power, but the difference there is that they have been commanded to spin-up their plant in case of additional demand, demand which sometimes does not arise. The renewables installation, OTOH, does not need to be told to start-up in order to get paid for producing unneeded power. This situation means that the renewables operator is under no obligation whatsoever to consider supply and demand implications, and this creates a very distorted market.

    • Bob_Wallace

      “This situation means that the renewables operator is under no obligation whatsoever to consider supply and demand implications, and this creates a very distorted market.”

      That’s an interesting pro-nuclear/coal twist.

      How about we look at it this way –

      The wind does not blow all the time. The Sun does not shine all the time. But when the wind is blowing and when the Sun is shining we can harvest affordable, even cheap, clean electricity. And since in good wind sites the wind blow a lot energy is available from wind a lot of the time.

      Real value – the electricity we want at a good price and electricity that doesn’t harm our health and wreck our climates.

      Wind and solar can provide well more than 50% of our ‘normal’ electricity. And all the electricity we need to power our personal transportation (cars and light trucks).

      For those times the wind isn’t blowing hard enough and the Sun not shining we’re developing other renewable generation (geothermal, tidal, etc.), using hydro and perfecting storage.

      Conventional power producers are going extinct.

  • Pingback: History of Solar Power()

  • Pingback: What are Solar Feed-in Tariffs & Incentives for, Really? - CleanTechnica()

  • Pingback: Solar Startup Looking to Cut Costs of Solar Panels 50% | Planetsave()

  • Pingback: Solar Startup Looking to Cut Costs of Solar Cells 50% | Planetsave()

  • Felipe cisneros

    am looking for free panel solar for santa anita la mision bituing rosarito and ensenada mexico here energy cost to much am try to installer home goverment not help the eco system charge to much for watts thanks

  • Amit Sarkar

    I agree with practically everything you say about our stupidity as a nation to effectively subsidize the past at the cost of the future. Every president from Nixon to Obama that I can remember SAID we must reduce our dependence on evil foreign oil (by that they mean our friends in Canada, North Sea and Saudis, really!) but has DONE nothing. On the contrary, we continue to invade other oil exporters (Iran is next), subsidize Big Oil and divert food production to ethanol at taxpayers’ expense.

    So, in the U.S. I don’t share your optimism that we will do the right thing any time soon, which will benefit the other 99%, even though we are supposed to be a democracy.

    • Anonymous

      Done nothing is not accurate.

      President Obama recently achieved a major increase in future gas mileage requirements.

      He has done a lot to push the adoption of EVs, including funding several new EV battery plants. The US government is purchasing a large number of electric vehicles.

      He has pushed the US military to find a route away from oil which is being highly successful. The US military is probably doing more than just about any other country/organization in the world to create a limited oil future.
      He has supported wind, solar and transmission projects which will furnish the power we need for oil-free transportation.

      He created the Cash for Clunkers programs which got a number of our most inefficient cars off the road.

      He has made public appearances aimed at raising awareness of EVs and PHEVs.
      He’s also supported oil production within the US. This is a mixed bag, but realistically we will need oil during our transition away from oil. We can’t ‘cold turkey’ on oil without destroying our economy and that would
      destroy the renewable energy future.

  • Pingback: About Solar Power / Why Solar Power | CleanTechnica()

  • Pingback: Falling Solar Panel Costs are Great for Buyers, Bad for Producers (sort of) | CleanTechnica()

  • Pingback: Solar Power Could Produce >50% of Global Electricity, IEA Report Concludes | CleanTechnica()

  • Pingback: Eos Rechargable Zinc-Air Battery: Energy Storage “El Dorado?” | CleanTechnica()

  • Pingback: World’s Largest Solar-Powered Ship Completes Atlantic Crossing – Gas 2.0()

  • Pingback: Now is the Time to Go Solar | CleanTechnica()

  • Pingback: Plastic World (Infographic) – Green Living Ideas()

  • Pingback: Plastic in Our Oceans, & How to Keep it Out {Infographic} – Blue Living Ideas()

  • Ray Mimms

    And now you’re deleting negative comments from your blog. Man, you’re REALLY in search of the truth. Keep patting yourself on the back; inaccurate posts will only get you so far. I guess if you can make a living off the banner ads, then mission accomplished?

  • Ray Mimms


    while (alive) {
    search Internet for data that supports my preconceived notions;
    make bad data into pretty graphs;
    post pretty graphs to my blog;
    sell Verizon and Toyota ads;

  • Anumakonda Jagadeesh

    Excellent analysis on Solar Power Mr. Zachary Shahan. Congratulations.

    Dr.A.Jagadeesh Nellore(AP),India
    Wind Energy Expert

    • Anonymous

      Thanks. A big thanks to the folks who actually created the report 😀 But i tried to dig into it & add onto it more than normal 😀

  • Pingback: Birth Defects MUCH More Common Near Mountaintop Removal – climate change and environmental news()

Back to Top ↑