Energy

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Is it time to go Solar?

English: Solar panel installation at an inform...

Solar panel installation (Photo credit: Wikipedia)

We’re all about self-sufficiency and sustainability.  But, for those who don’t have money to burn, sustainability must first be applied at the individual, economic  level, avoiding debt, paying as you go, using resources wisely and demanding a good return on invested funds.   With PV panel prices over $1/watt, the ROI simply isn’t there.   And . . . when outgo exceeds income, it’s simply not sustainable.

Here is a good industry article indicating that solar panel manufacturers will go through a major consolidation this year. Shorthand:  It may finally be a good time to invest in renewable, solar energy if other fundamentals are in place.

Longhand analysis:

Consolidation is a weeding out of the smaller, less efficient manufacturers in favor of low-cost, high-volume, efficient manufacturers.  The remaining suppliers will benefit from lower supply and less intense pricing pressures.  It remains to be seen whether prices will increase in the aftermath of lower supply.  Prices may continue to decline, despite decreased market pressure, as new, more efficient technologies and manufacturing techniques are developed.  Or, consolidation may signal the bottoming out of PV panel prices. 

There seems to be some improvement in the economy, at least in some sectors.  This could release pent-up demand from homeowners who have been waiting to invest in solar out of fear over a potential job loss or from businesses waiting for better times.  If we have industry consolidation (lower supply) that coincides with higher demand, the remaining suppliers will benefit from even higher economies of scale, resulting in higher profitability and perhaps lower prices as low-cost suppliers further consolidate market-share.

By observing general trends in the silicone based high-tech sector, one could conclude that prices will continue to decline.  That is, unless there is some other major disruption in the supply chain (like war, political upheaval, etc.)  If prices begin to increase post-consolidation, this may trigger more government intervention and subsidization, which could also be an offsetting factor.  But once consolidation has occurred, companies may use subsidies to simply pad their bottom lines, further strengthening their balance sheets and staying power in the market rather than reduce prices.

Achieving self-sufficiency and sustainability is expensive.  Achieving it without bankrupting yourself requires a long-term, plodding approach.  Like Maslow’s heirarchy of needs, (remember that from college psychology or sociology classes?) one does not achieve self-actualization until the more basic needs are covered.  PV solar, is at the top of the pyramid.  Nice to be there, but not doable without a solid foundation.  First, you cover basics like food, water and shelter.  Next is energy in the form of least costly and highest efficiency.  Energy for heat and cooling falls in this category.  Passive solar or bio-mass solutions are a much better alternative.    Never try to provide these using Photo Voltaics.  That would be like trying to survive in a famine on an all-corn-fed-beef diet where it takes 15 pounds of grain to produce one pound of meat.  Inefficient and unsustainable.

Industry consolidation is just one factor to consider in determining when is the right moment to invest in Solar technology.  My sense is that now is a much better time for solar PV than a few years ago.  I’m glad I waited, opting for low-tech, high ROI alternatives in the meantime.  But the question remains, should I wait longer?  The economy looks to be improving in the short term, but the world still looks extremely fragile.  This may be the perfect moment to invest in self-sufficiency, whether it is a modest amount of solar PV or a more secure location on which to place it.

If you would like to become more self-sufficient, off-grid and better prepared, consider the benefits of doing that in a community of like-minded people who will help you get there on a solid foundation.  Inquire here.

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Extreme Consolidation in the Solar PV market expected this year

This is a good industry article indicating that solar panel manufacturers will go through a major consolidation this year.

Consolidation is a weeding out of the smaller, less efficient manufacturers in favor of low-cost, high-volume, efficient manufacturers.  The remaining suppliers will benefit from lower supply and less intense pricing pressures.  It remains to be seen whether, in the aftermath of lower supply, prices will increase.  They may continue to decline, despite decreased pressure on prices, as new, more efficient technologies and manufacturing techniques are developed.  Or, it may signal the bottoming out of PV panel prices.  Also, there does seem to be some improvement in the economy, at least in some sectors.  This could release pent-up demand from people who have been waiting to invest in solar out of fear over a potential job loss.  If we have industry consolidation (lower supply) that coincides with higher demand, the remaining suppliers will benefit from even higher economies of scale, resulting in higher profitability and perhaps lower prices as low-cost suppliers further consolidate market-share.

By observing general trends in the high tech sector based on silicone chips, one could conclude that prices will continue to decline.  That is, unless there is some other major disruption in the supply chain (like war, political upheaval, etc.)  If prices begin to increase post-consolidation, this may trigger more government intervention and subsidization, which could also be an offsetting factor, although generally, once consolidation has occurred, fewer companies may use subsidies to simply pad their bottom lines, further strengthening their balance sheets and staying power in the market rather than reduce prices.

Industry consolidation is just one factor to consider in determining when is the right moment to invest in Solar technology that moves us further in the direction of off-grid self-sufficiency while staying fiscally conservative.  My sense is that now is at least a much better time to invest in solar than a few years ago.  I’m glad I waited.  Cost per KWh is still higher than grid-supplied electricity.  But the question remains, should I wait longer?  The economy looks to be improving in the short term.

I consider small-scale home based Solar PV not for its economic efficiencies, but more for its insurance value. Long-term, the world still looks extremely fragile.  With the short-term improvement in the economy, this may be the perfect moment to invest in self-sufficiency, whether it is a modest amount of solar PV or a more secure location on which to place it.

Achieving self-sufficiency and sustainability without bankrupting yourself requires a long-term, plodding approach.  Like Maslow’s heirarchy of needs, (remember that from college psychology or sociology classes?) one does not achieve self-actualization until the more basic needs are covered.  PV solar, is at the top of the pyramid.  First, you cover basics like food, water, shelter, Next is energy in the form of least costly and highest efficiency.  Energy for heat and cooling falls in this category.  Passive solar or bio-mass solutions are a much better alternative.    Never try to provide these using Photo Voltaics.  That would be like trying to survive in a famine on an all-corn-fed-beef diet where it takes 15 pounds of grain to produce one pound of meat.  Inefficient, unsustainable.

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New Opportunity for Sustainable Energy?

One of the things that I think distinguishes Sewanee Creek from people in intentional eco-village communities is that we look at things through the practical eyes of real-world street experience. As a seasoned businessman, I recognize the importance of understanding basic economics. That’s why I have waited to invest in solar PV even though I’m driven to be energy self-sufficient. The way I see it, if the investment cost is too high to justify a reasonable return on investment, it’s not a “sustainable technology” I monitor the Solar PV industry fairly closely by subscribing to industry periodicals on the web. Just this morning, I read an article complaining about reductions in government subsidies in Germany that will potentially devastate the world’s richest Solar PV market. What does that say? To me, it says “without subsidies (rob from other more efficient businesses to pay for something less economical but politically attractive), the technology is not currently sustainable”. That’s not to say Solar PV won’t ever be sustainable. It’s actually getting there through lots of incremental innovations and scaling to reach critical mass. Just not yet.

Until then, I look for other technologies or energy sources that are truly SUSTAINABLE not only from an environmental standpoint but also from an economic standpoint. That kind of thinking is especially important right now for people who care, as I do, about the environment. Why? Because without economic sustainability, environmental sustainability amounts to a bunch of hippies around a campfire singing Kumbayah as the environment implodes.

I try to monitor a lot of information, looking for clues and inspiration for sustainable ideas. Continuously testing sustainable solutions, I invested in a Lister (diesel) generator, a wood gasifier and a micro hydro-electric generator for the creek and waterfall near my house. That experience has taught me a lot that I can share with community members with similar goals. That’s one of the many reasons people are attracted to the Village. As I often say, we’re not selling just land. We’re offering the distilled expertise of a community of like-minded, hard-headed people with similar goals. It’s been hard work bringing all of that together, but for people who are serious about learning to live more independently, the value of this kind of community is beyond priceless.

But I digress. Let’s get back to energy solutions. As I said, I invested in a Lister Diesel generator and several of my vehicles run on diesel.
Diesel has some wonderful properties for self-sufficient, off-grid living.

  1. It can be stored for up to 8 years without deteriorating, while regular gasoline is only good for a few months.
  2. You can make bio-diesel from waste oil products or vegetable oil.
  3. Diesel engines produce more torque than gasoline engines and deliver better gas mileage in vehicles
  4. Until a few years ago diesel was a lot cheaper than gasoline.

But number four has changed big-time for a lot of market-driven reasons that I won’t go into here. The price of diesel is now a lot higher than gas and rapidly heading north. So, as markets change, so must strategies, including those for sustainable off-grid living. Lately I’ve been re-thinking my plans to use the Lister generator to make my own electricity. Diesel is no longer an economically attractive solution, at least for now.

This morning, right after I read the Solar industry newsletter, I read another newsletter from an investment consulting firm that recommends buying stock in a natural gas company.  FYI, I’m no longer in the stock market. I simply believe it’s a playground for insider trading, rigged against the small guy. That’s me. So, while I won’t be using the investment advice, there is valuable information to be found in diverse sources if you are creative enough to connect the dots. Here are some excerpts that caught my eye.

A New Energy “Megatrend” Is Starting … Get in Now
Friday, February 24, 2012

“We will see natural gas as a transportation fuel inside of five years.” The latest bust has brought natural gas prices down from about $4.80 per trillion cubic feet (tcf) to $2.65 per tcf in the past nine months… And …it isn’t over yet. … wouldn’t be surprised if natural gas prices hit $2 in the short term. That’s about a 25% decline from current prices.

If this forecast proves correct, that’s an even stronger argument behind the buildout of a new transportation network based on natural gas. At $2 per tcf, natural gas would be more than 65% cheaper as a transportation fuel than gasoline. Trucking companies are adapting right now. Waste Management, UPS, Coca-Cola, and Wal-Mart are buying trucks with engines that run on natural gas. Clean Energy Fuels is building natural gas fueling stations across every major highway in America. Soon, Ford and GM will be selling cars that run on the clean fuel.

The U.S. is now “the Saudi Arabia of natural gas.” That’s remaking the country’s energy industry. The glut of gas supplies has led to a historic collapse in prices. Over the past six months, natural gas is down 40%. And it’s not likely to soar soon…
Looking at the numbers, the U.S. consumed roughly 24 trillion cubic feet (tcf) of natural gas in 2010. Based on estimates provided by the Potential Gas Committee, a nonprofit organization, the U.S. has roughly 2,170 tcf of natural gas reserves. Dividing 2,170 by 24 means the U.S. is sitting on a 90-year supply.
At current prices, natural gas as a transportation fuel is now 50% cheaper than regular gasoline. This fundamental shift in prices is causing some of the largest trucking fleets in the U.S. to switch from using diesel engines to ones that run on natural gas. These companies include Wal-Mart, Ryder, Coca-Cola, and Waste Management.

Hmmm.  Maybe T. Boone Pickens was right.

Off-grid preppers know that living the independent, sustainable lifestyle requires you to build in resilience. Interpreted into every day life, that means

  1. Redundant systems. If something fails, you need backups.
  2. It also means a little personal know-how about a lot of things and enough confidence and energy to build or fix stuff.
  3. Finally, because things change, you need to be aware, flexible creative and resourceful.

Looks like it may be time to take a hard look at natural gas as another energy system. I’ll be working with others at the Village and sharing what we find out.

BTW:  This was posted on our internal board called “Friends of Sewanee Creek”.  There was some spirited discussion that followed.  I’ll post that as a comment to this post.  If you are interested in joining our private site, contact me here.