According to the authors’ calculations, it will take the University of Southern Maine 27 years
to recoup its investment in the 8-kilowatt solar array installed at the Abromson Community
Education Center in 2005. The energy payback period is just five years.
The process of transition-
ing to renewable energy
will depend more on goals
such as sustainability, which
define the future generation,
rather than comparison with
systems do not always hold up. The first law
of thermodynamics, however, is rigid: Energy
can be neither created nor destroyed, merely
transformed. Oilmen, economists and policymakers now recognize that this limitation in
energy properties will especially apply to the
21st century world, in which concentrated fossil fuel resources are becoming less available
and environmental degradation looms large. A
wide range of professionals, including human
ecologists, economists, sociologists and geologists, assert that human reliance on cheap and
abundant energy from fossil sources simply can
not be sustained.
already constrained
and aging sources designed
to meet the goals of the
20th century.
34 November/December 2009 SOLAR TODAY
solartoday.org
system,” refers to all other energies required
to install the panels as a functioning electrical
generator (wiring, railing, inverters, transportation, labor).
In our estimation of sustainable economics, the energy bottom line is more important
than the fiscal. As we are now seeing, the long-trusted business models that apply value to real
Incentives aren’t enough
to narrow the Gap
Taking a longer view, it is easy to see why
we must make the switch to clean energy
sources available in perpetuity. Yet, with
prospects for immediate climate change leg-
islation from Congress dimming, integrating
this potential into existing market structures
brings a reality check. The table, “Compar-
ing Financial vs. Energy Payback,” (page 33)
lists the simple payback (SPB) and energy
payback (EPB) times estimated for PV arrays
installed at eight colleges and universities
between 2003 and 2006, along with model
assumptions and sources. Although these cal-
culations are for systems installed before the
past year’s PV oversupply situation and the
resulting drop-off in PV module prices, they
present clear patterns.
Such calculations carry uncertainty; nevertheless, a disparity exists between the financial
and the energy return for a PV system. Energy
payback occurs in an average of just under five
years, while for the simple (dollar) payback,
the wait averages 27 years. Since energy to
run computers, make tea and charge cellular
phones is the real objective, this raises the
questions: Why do we wait five times longer
to reward net-energy growth? If there is any
merit to producing energy from a source that is
sustainable, why is there financial disincentive
to do so? And how might this discrepancy be
compensated for?
To look at the latter question first, in the
United States, many states and utility companies have recognized the value of renewable
energy generation to the extent that they offer
rebates, grants, tax-exemptions and, more
recently, feed-in tariffs (where the utility company buys renewable kilowatt-hours from its
customers at a premium rate). These incentives combine to lower the initial capital investment in a renewable system and drive down
the simple payback time. Yet these programs
are suffering as state and utility budgets absorb
the cost of the recession, and so the renewable
energy industries that depend on subsidies to
generate demand for renewables have been
constrained as well.
That said, even the most fortuitous combination of incentive programs is rarely enough
to get the financial payback near to the energy
payback time. Of the eight PV arrays examined,
we found only one, at Loyola Marymount in
Los Angeles, where government and utility
incentives at the time were generous enough
to cut the costs of the system 90 percent, to
within a five-year period of cost recovery. On
average, incentives (not included in our table)
covered 51 percent of the initial price of these
systems and reduced the simple payback time
to around 16 years, or roughly three times the
energy payback.
In order to achieve some agreement of
energy and financial paybacks, more needs to
happen, but it’s unlikely that this solution will
come in the form of a 90 percent direct-to-pocket subsidy. The more effective answer will
likely have to come in a variety of approaches
including renewable generation feed-in-tariffs
to distribute the award for generation over
