RELIABILITY OF RENEWABLE ENERGY: SOLAR

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1 RELIABILITY OF RENEWABLE ENERGY: SOLAR Jordan Lofthouse, BS, Strata Policy Randy T Simmons, PhD, Utah State University Ryan M. Yonk, PhD, Utah State University

2 The Institute of Political Economy (IPE) at Utah State University seeks to promote a better understanding of the foundations of a free society by conducting research and disseminating findings through publications, classes, seminars, conferences, and lectures. By mentoring students and engaging them in research and writing projects, IPE creates diverse opportunities for students in graduate programs, internships, policy groups, and business.

3 RELIABILITY OF RENEWABLE ENERGY: SOLAR INTRODUCTION Many Americans want to limit the use of fossil fuels for electricity generation. Policymakers have responded to their constituencies by mandating and subsidizing solar-generated electricity. These government policies, not market forces, distort energy markets and drive the growth of the solar power industry. Despite government assistance, solar power only provided 0.4 percent of U.S. electricity in To determine whether these mandates and subsidies are beneficial, the Institute of Political Economy (IPE) at Utah State University examined the reliability of solar power as an electricity source. If solar power is an unreliable energy source, government policies that bolster the solar industry are misguided and should be discontinued. IPE examined the economic, physical, and environmental implications of solar power to assess its overall reliability and found that solar power is an unreliable energy source, making government policies that favor it a misallocation of taxpayer dollars. The costs of making solar power reliable outweigh the limited environmental benefits. ECONOMIC RELIABILITY Solar power is not economically reliable because it cannot sustain itself in the energy market. Federal and state policymakers have enacted mandates and subsidies to assist the solar industry, making the industry dependent on government assistance. 1 Institute for Energy Research. (2014). Solar. Retrieved from _ftn1 2 U.S. Department of Energy. (2015, May 20). Renewable Portfolio Standard. Dsire. Retrieved from 3 Sarzynski, A. (2009, November). The impact of solar incentive programs in ten states. George Washington Institute of Public Policy. p. 41. Retrieved from 4 To determine this, we used the EPA s Greenhouse Gas Equivalencies Calculator. We entered the 6,100,000 metric tons of Without government mandates or subsidies, solar power becomes economically unviable. Renewable portfolio standards (RPS) are state-based mandates that require certain portions of a state s energy consumption to come from renewable sources by a certain date. Many RPS require that states use specific types of renewable energy. For instance, New Jersey has mandated that 4.1 percent of their electricity come from solar power by Mandates like RPS make the solar industry grow artificially fast and incentivize energy companies to build more solar facilities than they otherwise would have. In addition to mandates, some states have enacted subsidies to boost solar power usage, but these subsidies are financially burdening taxpayers for minimal benefits. A study from the George Washington Institute of Public Policy analyzed the effects of solar incentive programs in ten states. The study estimated that existing solar incentive programs would save 6.1 million metric tons of carbon dioxide over a 20 year period. 3 This 20 year reduction is less than what two coal power plants emit in a single year. 4 These ten states are dedicating large sums of taxpayer money to reduce negligible amounts of carbon emissions. California s solar subsidy program, called the California Solar Initiative (CSI), is one of the most aggressive programs in the country. In examining the effects of the CSI, a University of Colorado study concluded that although the program had cost California taxpayers $437 million in solar rebates alone, the CSI would only reduce emissions by about as much as is produced by a small to mid-sized natural gas power plant over the next 20 years. 5 Because natural gas is the cleanest-burning fossil fuel, California taxpayers have spent huge amounts of CO2 into the calculator s emissions data. The calculator determined that this would be the equivalent of the emissions generated by 1.6 coal-fired power plants in one year. United States Environmental Protection Agency. (n.d.) Greenhouse Gas Equivalencies Calculator. Retrieved from: 5 Hughes, J. E. & Podolefsky, M. (2014, May 6). Getting green with solar subsidies: evidence from the California solar initiative. Retrieved from iles/pv_subsidies.pdf

4 public money to eliminate a relatively small amount of emissions. Federal subsidies lead to higher amounts of solar installments, but they also make the solar industry more dependent on government assistance. One of the most important federal subsidies is the Solar Investment Tax Credit, which allows users to claim up to 30 percent of the expenditures of a residential or commercial solar system on their federal income or corporate taxes. Initially passed in 2006, it is set to expire at the end of Since the tax credit was enacted, solar installations have increased an average of 76 percent per year. 6 The Solar Energy Industries Association expects a 57 percent reduction of installed solar capacity if Congress does not extend the Investment Tax Credit before it expires at the end of The United States also has the 1603 Treasury Program, which is designed to provide capital for renewable energy projects. The 1603 Treasury Program granted $7.8 billion for solar projects as of January 5, The solar industry uses money from the ITC and the 1603 Treasury Program to sustain itself, and without this assistance, solar power's growth would likely plummet. The effects of federal solar incentive programs are difficult to evaluate, but Germany provides a case study on national solar programs. German policymakers enacted aggressive solar incentives to boost the amount of solar power in the country's energy portfolio. Critics of the German incentive programs estimate that German taxpayers ended up paying $23 billion for energy that had a market value of less than $4 billion. 9 Germany enacted their solar program with the intention of making their electricity production more environmentally friendly, but Germany s solar subsidies will cut carbon dioxide emissions by only one percent over the next 20 years. As Bjørn Lomborg, director of the Copenhagen Consensus Center, explained, By the end of the century, Germany s $130 billion solar panel subsidies will have postponed temperature increases by 23 hours. 10 As Germany struggles to sustain their expensive solar industry, the United States can learn from Germany's experience that solar power has high costs with minimal benefits. PHYSICAL RELIABILITY Solar power is not physically reliable because it is intermittent and inefficient. Solar power cannot consistently meet energy demands because the sun does not always shine when people need electricity. Because sunlight is inconsistent, solar power plants are unable to operate at full capacity most of the time. A power plant s capacity factor indicates the actual energy output of a power plant compared to the energy that it could produce if it were always operating at full capacity. 11 Photovoltaic (PV) power plants have an average capacity factor of 20 percent and concentrated (or thermal) solar power plants have an average capacity factor of 38 percent. These capacity factors are low compared to traditional energy sources. For example, the average capacity factor for a coal plant is 93 percent. 12 Even when sunlight is plentiful, solar panels are inefficient at producing electricity. A solar panel's conversion rate is the percentage of light energy that is actually converted to electricity when light hits the panel. Despite advancements in solar panel 6 Solar Energy Industries Association. (2014). Solar investment tax credit (ITC). Retrieved from 7 Solar Energy Industries Association. (n.d.) Solar industry data. Retrieved from 8 Overview and Status Update of the 1603 Program. (2015, January 8). Retrieved from %20OVERVIEW.pdf 9 McGrath, M. (2013, July 9). Can Germany its energy bender shift to green power? BBC News. Retrieved from 10 Lomborg, B. (2012, February 18). Goodnight sunshine. Slate. Retrieved from ate/2012/02/why_germany_is_phasing_out_its_solar_power_su bsidies_.html 11 Capacity Factor. (n.d.). In U.S. Energy Information Administration Glossary. Retrieved from 12 National Renewable Energy Laboratory. (2013, October 17). Utility-Scale Energy Technology Capacity Factors. Retrieved from

5 technology, conversion rates still only range from percent for the most common types of panels. 13 Solar energy is completely ineffective at night, and it is much less effective during cloudy weather or winter months when there are fewer daylight hours. The peak demand for energy often occurs in the evening when solar energy is least productive and cannot reliably meet demand. 14 When solar power plants do not produce enough energy to meet demand, grid operators are forced to call upon reserve power plants. These reserve power plants are often traditional fossil fuel plants. Electric grid operators have to carefully manage systems with a large amount of solar capacity because solar power can potentially cause overgeneration. Baseload power sources like coal and nuclear plants provide a constant amount of electricity to the grid, but during times of peak sunlight, solar power facilities can quickly overload the grid with too much electricity. When the amount of power produced is more than can be used, grid operators have to curtail output from renewable sources to keep electricity supply and demand balanced. 15, 16 Curtailment becomes more necessary as higher amounts of intermittent solar power are integrated into the grid. 17 As the number of solar facilities grow due to government policies, solar power plants may have to be curtailed more often so that the electric grid remains stable and reliable. Through mandates and subsidies, policymakers are supporting a counterintuitive energy source because grid operators may have to disconnect solar facilities to avoid overgeneration. Rooftop solar panels have also reduced the reliability of the electric grid. In Hawaii, where solar power installations have experienced rapid growth, subsidies for rooftop solar panels had to be cut in half when residential solar installations began destabilizing the power grid. 18 Additionally, officials at the California Independent System Operator say renewable energy producers make management of the California grid more complex. Bob Foster, mayor of Long Beach and a member of the system operator board, said, "We are getting to the point where we will have to pay people not to produce power." 19 Unfortunately, the most abundant sources of solar are located far away from densely populated areas on the coasts where energy demand is highest. In the United States, the availability of solar energy is most highly concentrated in the Southwest. 20 The United States does not currently have the necessary grid infrastructure to transport remotely located solar energy to areas of high electricity demand. To efficiently utilize solar energy, utility providers and electricity companies would need to build thousands of miles of new long-distance transmission lines, which could cost billions. For example, in 2009 the California Public Utilities Commission estimated that meeting the state s 2010 and 2020 renewable energy requirements would cost $16 billion in transmission infrastructure alone. 21 To recoup these costs, utility providers will 13 Maehlum, M.A. (2015, May 18). Which solar panel type is best? Mono- vs. polycrystalline vs. thin film. Retrieved from 14 Australian Solar Institute. (2012). Solar intermittency: Australia's green energy challenge. Retrieved from 15 Trabish, H. K. (2014, October 22.) The 'epic fail' on solar's doorstep and how the grid can help. Retrieved from 16 American Physical Society. Integrating renewable electricity on the grid. p.13. Retrieved from 17 Trabish, H. K. (2014, October 22.) The 'epic fail' on solar's doorstep and how the grid can help. Retrieved from 18 Carducci, A. (2013, January 11.) Hawaii Cuts Back on Solar Power Subsidies. Retrieved from 19 Halper, E. (2013, December 2.) Power struggle: Green energy versus a grid that's not ready. Los Angeles Times. Retrieved from 20 National Renewable Energy Laboratory. (2013, September 3.) Solar maps. Retrieved from 21 California Public Utilities Commission. (June 2009). 33% Percent Renewables Portfolio Standard Implementation Analysis Preliminary Results. Retrieved from

6 pass these transmission infrastructure costs on to American energy consumers. One of the most obvious ways to address the incongruities between power supply and demand associated with solar is to develop ways to store energy on a large scale. Aside from hydroelectric facilities, grid-level energy storage is virtually nonexistent. The California Public Utilities Commission has recently mandated that three of California s investor-owned utilities add 1.3 gigawatts of energy storage to their grids by In an effort to reach this goal, an electric supply company called Southern California Edison has invested $50 million to develop 8 megawatts of power storage within lithium-ion batteries. 23 Southern California Edison, however, has warned that California s new energy storage mandate "could cost up to $3 billion with uncertain net benefits for customers." 24 ENVIRONMENTAL RELIABILITY While solar power is environmentally reliable in the sense that it does not emit greenhouse gases or other pollutants directly, solar power has hidden environmental costs that limit its environmental benefits. Concentrated solar power (CSP) plants typically require acres of land per megawatt of electricity generated and PV plants require between 3.5 and 10 acres of land per megawatt of electricity generated. Because of the large amount of land needed, CSP and PV plants can and have harmed or displaced threatened species. 25, 26 Furthermore, the concentrated heat and large cooling towers of CSP systems can singe and sometimes kill birds as they fly through the solar plants. 27 Solar plants are most often constructed in hot locations where water is scarce. PV plants require very little water to clean and maintain, but CSP plants, like nuclear and fossil fuel plants, require large amounts of water to cool their steam turbines. 28,29 To decrease water usage requirements, CSP solar developers in Idaho, Arizona, California, and Nevada are switching to a less water-intensive cooling system called drycooling that reduces the stress on local water supplies. 30 By using dry-cooling systems, CSP plants can decrease their total water consumption by about 90 percent. 31 Dry cooling systems, however, are more costly, reduce energy conversion efficiency, 32 and are 22 St. John, J. (2013, October 27.) California passes huge grid energy storage mandate. Retrieved from Macgill, Bobby. (2015, January 15). California Takes Lead in Developing Energy Storage. Discovery News. Retrieved from 24 Halper, E. (2013, December 2.) Power struggle: Green energy versus a grid that's not ready. Los Angeles Times. Retrieved from 25 Union of Concerned Scientists. (2013, March 5). Environmental impacts of solar power. Retrieved from 26 Wells, K. (2012, October 10). Where Tortoises and Solar Power Don't Mix. Retrieved from 27 Kraemer, S. (2014, September 3). For the Birds: How Speculation Trumped Fact at Ivanpah. Retrieved from 9/for-the-birds-how-speculation-trumped-fact-at-ivanpah 28 Keith, G., Jackson, S., Napoleon, A., Comings, T., Ramey, J. A. (2012, September 19). The hidden costs of electricity. 62. Prepared for The Civil Society Institute. Retrieved from: en%20costs%20of%20electricity%20report%20final2.pdf 29 Carter, N. T., Campbell, R. J. (2009, June 8). Water issues of concentrating solar power (CSP) electricity in the U.S. southwest. Prepared for Congressional Research Service. Retrieved from content/uploads/2010/08/solar-water-use-issues-in- Southwest.pdf 30 Union of Concerned Scientists. (2011, November). Freshwater use by US power plants. 2. Retrieved from freshwater-use-by-us-power-plants-exec-sum.pdf 31 Union of Concerned Scientists. (2013, March 5). Environmental impacts of solar power. Retrieved from 32 International Renewable Energy Agency. (2013, January). Concentrating solar power. 12. Retrieved from ETSAP%20Tech%20Brief%20E10%20Concentrating%20Solar%2 0Power.pdf

7 less effective in locations with temperatures consistently above 100 degrees Fahrenheit. 33 As water scarcity becomes more of a concern in some locations, CSP systems may unduly strain water supplies for an inefficient and costly energy source. While solar power s water needs are an environmental concern, solar power is more environmentally friendly in other regards. Solar power produces much lower emissions than other traditional energy sources. Recent studies by the National Renewable Energy Laboratory have estimated that the mean greenhouse gas (GHG) lifecycle emission rate for CSP plants is 44 times less than that of coal plants, and 19 times less than coal for PV plants. 34 Carbon emissions do not tell the whole story, however, as harmful chemicals such as silicon tetrachloride and hydrochloric acid are used in the manufacturing and production of PV solar panels. 35 When PV panels are not recycled or properly disposed of, PV parts may contaminate the environment. Almost half of the world's PV panels are manufactured in China where factories have been found to dump silicon tetrachloride waste on fields near their PV facilities, poisoning the soil and causing health problems for nearby residents. 36 According to a 2012 Worldwatch Report, China exported 95 percent of its solar modules to other countries 37 which proclaim solar to be environmentally friendly. These countries, however, fail to recognize that they are essentially supporting dangerous waste disposal practices in China. demand. The financial investments of public money needed to make solar power a reliable energy source outweigh its limited environmental benefits, so government policies that favor the solar industry are a misallocation of taxpayer dollars. The solar industry is heavily dependent on government assistance for its success. Solar power in Germany and the United States indicate that solar incentive programs are extremely costly and the resulting environmental benefits are minimal. These costs are generally passed on to taxpayers and electricity consumers. Although solar power does not directly produce emissions, it has hidden environmental costs that make it less eco-friendly than people assume. Solar power relies on traditional energy sources like fossil fuels to provide backup power when sunlight is not available, diminishing the positive impact of solar. Solar power also impacts land and wildlife, uses large amounts water in arid regions, and can be harmful to the environment in the manufacturing process. Gridlevel energy storage can overcome many of the problems with intermittency and inefficiency, but storage is currently economically unviable. For these reasons it should be markets, not mandates or subsidies, that determine whether solar power will become a reliable energy source within the next few decades. CONCLUSION Solar power is an unreliable energy source because it is intermittent, inefficient, and cannot meet electricity 33 Union of Concerned Scientists. (n.d.) Environmental impacts of solar power. Retrieved from 34 Keith, G. Jackson, S. Napoleon, A. Comings, T. Ramey, J, A. September 19, The Hidden Costs of Electricity. Prepared for The Civil Society Institute. p. 6. Retrieved from en%20costs%20of%20electricity%20report%20final2.pdf These numbers were obtained by dividing the mean greenhouse gas emissions from CSP plants and PV plants against that of coal plants. 35 Galland, A. (2012). Clean & green: Best practices in photovoltaics. 21. Retrieved from 36 Mulvaney, D. (2014, August 26). Solar energy isn t always as green as you think. Retrieved from 37 Worldwatch Institute. (November 2012). India s National Solar Mission: A Market Analysis of Phase 1. Retrieved from Note%20India%20Solar%20Market%20Analysis%20Phase%201 _FINAL_0.pdf