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Solar News

Solar Calculus is Changing: Massachusetts Allows You to Sell Excess Back to the Utility



Price of Solar Panels is Dropping, Life of Solar Panels is Increasing, New Laws Allowing You to Sell Excess Electricity Back to your Utility Company

The cost of solar energy projects has been a high hurdle for many who would like to adopt solar energy. But the math is beginning to change from the expected life of solar panels to incentive programs, particularly feed in tariffs that are beginning to take hold in the United States.

The first part of the calculation as we have reported previously is that the prices for solar panels have dropped. According to a report in the BBC, the price for solar panels has dropped 30% in the last year "due to an increase in output and a drop in orders because of the recession." The other major part of this equation is that the life of solar panels may be longer than previously calculated. The BBC reports on a study by the EU Energy Institute:

Tests show that 90% of existing solar panels last for 30 years, instead of the predicted 20 years. According to the independent EU Energy Institute, this brings down the lifetime cost. The institute says the panels are such a good long-term investment that banks should offer mortgages on them like they do on homes.

What this means in the long run is that grid parity may be achievable in Italy as early as next year, and in almost all of Europe by 2020, according to the BBC report.

Here in America we are beginning to import some of the incentive structures used successfully in Europe, most notably Germany and Spain. Depending on where you live, you may no longer have to size your system so that it does not exceed your usage. Without feed in tariffs, if you exceeded your usage, you were making a grand gift to your local utility. New laws in California and Massachusetts make it possible to sell excess electricity back to the utility. Marketplace on American Public Media interviewed Massachusetts State Energy Secretary Ian Bowles:

Starting now, if you own solar panels on your home, or you have a small-scale wind turbine, and you want to sell extra power back to the grid, you'll now be able to do that at a very advantageous rate.

But there are trade-offs with feed-in tariffs. Scientific America's George Muster writing on his blog describes the trade-offs as follows:

Many solar experts agree with Cronshaw [a homeowner in Santa Barbara, California] about feed-in tariffs [that they should be implemented nationwide], an arrangement that decouples your production and consumption. You'd have separate electric meters for outgoing and incoming power, and you'd sell your power to the utility at a higher rate than you buy it for. In Gainesville, Fla., for example, the utility pays 32 cents per kW-hr for solar production, over three times the retail price of electricity. In Europe, the rate can be as high as $1 per kW-hr. Unlike net-metering, feed-in tariffs impose no limit to how much power you can sell.

In return, homeowners give up other subsidies such as tradable certificates (whose fluctuating value adds a huge element of risk to solar) and up-front cash rebates (which, because they scale up with the system size, can encourage installers to pack in as many panels as they can fit even if it compromises performance).

All this adds up to changing the calculus for solar energy in America-which makes the outlook very bright for 2010.