Stealth Bomb!

Just when we thought we could relax and comfortably usher in the New Year a stealthy, between-the-holidays announcement slips out from the bomb bay doors.

On Monday, December 28th, Salt River Project proposed an increase in electricity prices about half of what it had originally proposed.

As reported in SRP proposes average $6 rate hike, the utility is proposing a 4.9 percent increase in electricity prices to pay for a new $1 billion coal-fired plant and for environmental controls at the coal-fired Coronado Generating Station.

As disappointing as it is to pay for a dirty, old coal plant – and a dirty, new coal plant – there may be a spark of hope in the announcement. SRP’s Chief Financial Executive, Mark Bonsall, is quoted as saying, "We have weighted the increase towards the highest-consumption customers because they drive our costs more.”

Please allow me to repeat that, "We have weighted the increase towards the highest-consumption customers because they drive our costs more.”

Could it be? Did Rate Crimes just receive a small gift for the Holidays? Does this foretell greater things for the coming year? Will other utilities follow this example of leadership?

Oooh Emmm Geeee!

Resolute

As the year closes, we must reflect. This blog began in late May of this year as a new platform for a message that had exhausted its prior, smaller rostrums. It was also intended to be a public record of a neglected history of what may someday be recognized as yet another great tragedy born of criminal negligence. It is hardly surprising that seemingly provincial economic manipulations would gather little attention in 2009. Few expected that during this past year our society would bear witness to the manifestations of perhaps the greatest economic crime in history; excluding human slavery, and with apologies to the Knights Templar.

This post is the 59th in 32 weeks; an average of almost two posts per week during a busy year. I completed the year having averaged nearly twenty miles a day on my bicycle; more than three times as many miles as I drove in my car. This gives me hope that I may able to discard the automobile before the earth discards me.

A retrospective of this year’s Rate Crimes posts is summarized best in the post Big Squeeze. The items listed there are the core of the Rate Crimes message. Beginning with Arizona’s repressive rate schedules that have long impeded the advancement of solar energy, the list enumerates a grim reality. However, we did indulge in a happy celebration … or two.

During the initial months, the blog’s purpose was didactic. The goal was to explain the complex details of the economic manipulations as simply as possible. Finally, in July, it was possible to publish an Executive Summary that referenced these details. After establishing this foundation, it was possible to begin asking more questions. Rate Crimes promises to continue asking questions. Your input is always welcome.

This past year, solar energy has made great strides in Arizona, and even greater strides elsewhere. There is much to celebrate. Yet, Rate Crimes must resist this urge. For reasons which should be obvious to the readers of Rate Crimes, it is too soon to celebrate in our nation’s sunniest state.

The most important pending question is, “Will 2010 finally be the year that Arizona’s long-standing repressive rate schedules are corrected?” For several reasons, this is doubtful. The most pressing practical reason for continued transgression is that 2010 is an election year. Two seats of the Arizona Corporation Commission will be termed out, and one of Arizona’s solar energy champions will be departing the Commission. The Kabuki Theatre is likely to continue to the benefit of the interests vested in the status quo, and to the detriment of Arizona’s sustainable future. At the root of all of Arizona’s energy troubles are the repressive rate schedules. It is the machination by which all other energy issues are distorted.

Still, a more troubling question remains. The repressive rate schedules are only one example of Arizona’s habit of regressive economic schemes. Even the fees that support Arizona’s solar energy incentive program are a regressive tax. Neither industries, nor states can be sustained by regressive economic systems.

Finally, Rate Crimes would like to thank the many old and new friends who have provided sustenance and inspiration this year. May we all enjoy a happy new year.

Stationary Play

When a relevant event occurs, or a relevant story is published, the general policy of Rate Crimes is to pause and to contemplate before commenting. However, there are moments when any discipline must be broken…

The day after Christmas in the San Jose Mercury News appeared a story titled, New financing schemes make solar more affordable. The article lists several companies that “are pioneering new business models and creative financing mechanisms to make rooftop solar more affordable.”

While Rate Crimes applauds efforts to bring the full benefits of solar energy to everyone, we are critical of regressive economic schemes that allow funds contributed by everyone – including our most vulnerable citizens -- to be skimmed by for-profit organizations. While innovative and equitable financing programs have been created in California and other states, the same cannot be said of Arizona.

Of course, Rate Crimes also argues that in our nation’s sunniest places, solar energy has long been more affordable (in a very direct sense) than the electricity delivered by the grid from the utilities’ toxic sources.

Can a strong, independent, and thriving solar industry can be established based upon regressive economic schemes? Untolled subsidies – both direct and from unaccounted costs – have not yet delivered affordable energy from traditional sources. Can we expect better from a system that distributes its energy primarily to more fortunate homeowners with monies from the general fund?

And, how well are the more fortunate among us caring for our increasingly limited resources?

SolarCity has about 5,000 customers. About half buy their solar systems outright, but the other half -- 2,700 customers to date -- have chosen to lease.

One of them is Roger Whitley, 58, who lives near Silver Creek High School in San Jose. With a monthly electric bill of $600, his main motivation for going solar was financial.

"The lease made it easier for us to go ahead and take the leap," Whitley said. "We have a pool, a hot tub, air conditioning, and two teenage boys with Xbox and PlayStation. The electric bill was killing me."

Unless these suburbanites have an epic photovoltaic system with an equally epic battery bank, solar electricity is not directly contributing much to the operation of their pool, hot tub, Xbox, or PlayStation. A society of solar-powered PlayStations? Perhaps, the electric bill is not the central problem here?

Happy Holidays!

Design for Solar Investment: Fitting the Inverter

The engineers that deliver energy solutions to homeowners and small businesses labor under demands much different from those experienced by the engineering teams that design large, commercial solar energy systems. For smaller systems, time, money, and effort all become more personal and immediate; if not more precious.

A solar electric energy system is an investment that can yield extraordinary returns in sunny climes. Even where the sun is less ample, energy generated from the sun can have extraordinary value. While a small solar investment may not require funds on the scale of a 401K, it is still an investment that requires significant capital even where rebate incentives apply. Regardless of the size of your solar investment, the system must have a cost-effective design in order to attain the highest possible return.

A cost-effective design will be the least expensive design that provides reliability and durability while maximizing lifetime energy production. In operation, it is important to ensure that each and every watt is pulled from the system throughout its long life in order to avoid the unnecessary purchase of electricity from the grid. Energy production is especially important at times when the cost of energy from the grid is the highest; both at any moment of any day, and in later years as energy costs continue to rise.

Even though this all seems straightforward, many designs falter with the fit of the inverter(s). Too often, the selection of an inverter is determined only by its cost and by guidelines that consider power capacity ranges, but that neglect ‘comfort’ and value. The cost and size alone of a pair of shoes will not inform you whether they will carry you happily down the long road of years. To experience real value and to reach your distant destination unblistered, you need shoes with a proper fit.

One design philosophy that fails the rigorous test of value is the practice of incorporating an oversized inverter.

“The Inverter (the heart of the system) is always oversized. By operating the inverter below its maximum power rating, it stays cooler and extends its operating life.” [emphasis mine]
- company website

In one particular instance, following this dogma led to a system design that incorporated an oversized inverter with a retail cost of $1,200 more than the standard inverter. This additional cost represents a 47 percent increase over the cost of the standard inverter, a 6 percent increase in materials cost, and a 4 percent increase in the estimated cost of the installed system. A design that front loads system costs ignores a central principal of investment: the time value of money.

Modern inverters are designed to endure harsh environments. If the instructions for properly mounting and operating the inverter are followed, a mean time to first failure (MTTFF) of ten years is typical. Quality inverter manufacturers now provide ten-year factory warranties. The argument that cooler operation may extend the operating life of an inverter is not without merit. However, even if the site does not provide a shaded location at which to mount the inverter on a north-facing wall near the electrical service entrance, an adequate, inexpensive cooling solution is available for only about $100. A specialized fan costs dramatically less than the $1,200 additional cost for an oversized inverter.

While an approach that focuses on inverter size is faulty, it serves to illuminate a number of important, yet frequently disregarded considerations for fit. A design with an oversized inverter will provide no additional power. In fact, it may provide significantly less.

Transition Power

The inverter's lowest operational voltage (LOV) (a.k.a. startup voltage) is the input voltage at which an inverter starts and stops delivering output power and, therefore, the duration of its operational window. The match of the LOV and the output voltage of a string of (series connected) modules is a critical factor in both maximizing system power output and in determining if any value is achieved from incorporating an oversized inverter into the system.

Even though there are broad ranges of inverters with varying capacities but with similar LOV, the LOV broadly correlates with the size of the inverter. Therefore, a smaller inverter may respond sooner during transitions from low to high irradiance, and postpone a shut down during the opposite transitions.

One might assume that the power generated during these transition times is negligible, and that its value is insignificant. However, the total of transition time is determined by more than sunrise and sunset; it includes many periods of transition between shadow and sunshine. Therefore, potential energy loss during transitions is compounded. It may also be that the energy lost during these times has extraordinary value because of the structure of a rate schedule, consumption patterns, and/or climate. The value of the power generated during these transition periods accumulated over the many decades of the system’s operation can be significant.

If the primary goal is to maximize the return on investment in a solar electric energy system, then a smaller inverter with a lower cost and a lower LOV may be the better option: even if it means using a few less modules. There are also several technological constraints that favor a smaller inverter with a lower LOV.

Temperature Effects

The most obvious constraint is the effect of temperature on module performance. Photovoltaic modules are dynamic, electrical devices with imperfect efficiency. Therefore, they dissipate energy in the form of heat. Because of albedo and to a much lesser extent electrothermal generation, photovoltaic modules operate at temperatures above the ambient.

The practice of incorporating an oversized inverter increases the risk of the voltage of a string or array falling below a larger inverter’s higher LOV. This risk is exacerbated by several factors. First, a module’s operational voltage is lower than its nominal voltage. Second, a module’s maximum power voltage (Vmp) will be lower than its open circuit (Voc) voltage. Thirdly, the voltage of a module operating under high temperature is lower still. In the desert and other regions with hot climates, when outdoor temperatures are extremely high, electricity (for cooling interiors) is particularly valuable. A power loss due to a clipped power generation window during the summer is especially expensive.

When summer ambient temperatures regularly approach 50° C in the desert, then module operating temperatures can become very high. Even though morning temperatures at the onset of the power generation window may not rise this high, power transition periods can occur at any time due to weather, shading, or other factors. Furthermore, when overnight lows are above 35° C (95° F) it does not take long for module temperatures to rise in the morning.

Module Degradation

Another constraint is module degradation. The performance of silicon solar cells and other photovoltaic materials begins degrading naturally after manufacture. The degradation of materials, cells and assembled modules is accelerated when a solar electric system is installed, exposed to the elements, and energized.

The output current of each module in a string, array, or block will diminish as degradation proceeds. In contrast, the voltage (Voc) of most modules in a system will remain relatively constant as they degrade over the years. Still, over the system’s long life, module degradation increases the risk that the voltage of a string or an array will increasingly sink below the LOV of the inverter in a poorly-designed system.

The importance of degradation in system design is amplified because it is highly likely that the cost of energy from the grid – the costs that are expected to be avoided by replacement with solar energy - will increase over time.

Module Mismatch

Yet another important constraint is module mismatch. Any particular model of photovoltaic module is manufactured to tolerances that are typically specified as a percentage range that is evenly distributed around the model’s nominal peak power at Standard Test Conditions (STC). Often, this percentage tolerance is the same for models of dramatically different sizes. A 225-watt module with a ±5% tolerance will cover a range of 22.5 watts and a 95-watt module with the same tolerance will cover a range of 9.5 watts.

For many manufacturers, improvements in quality control have led to improved tolerances. A ±5% tolerance is commonly specified. Yet, a drop of 5% below the nominal peak power in the performance of modules in a string or an array can have significant negative effect on the performance of a system that are magnified by other detrimental factors.

Environmental Factors

There are also a bevy of environmental factors that can cause system performance to deteriorate in both apparent and subtle ways. Dirt, cable and contact wear, moisture incursion, tree growth, and critter nibbling can all exacerbate the technological constraints.

Risk Engineering

Even with the potential of any particular constraint to damage the performance of the system, the greatest conceptual hurdle is not the technology or the physics, but the probabilities. The probabilities of any constraint occurring must be combined with the probabilities of the magnitude of the occurrences, the probabilities of the speed of degradation, the probabilities of the constraints occurring in combination, and the probabilities of the magnifying effects of their interactions.

Anomalous modules may appear. Occasionally, a module may experience an extreme degradation. Or, an anomalous module’s degradation may express itself as a voltage drop that is apparent only during periods of power transition or under extremely high temperatures. A module may be delivered within stated tolerance, and even remain within tolerance for many years before it exposes a flaw. The probability of anomalies appearing increases with temperature and time.

Even though the risk of an anomalous module appearing increases with the number of modules, the effect of this risk on the duration of the power generation window is counteracted by the greater string voltage. This is also true of module mismatches. Therefore, the overall risk that module degradation will affect the power generation window is higher for smaller, lower voltage strings. For example, choosing to use eight modules instead of ten modules in order to save a few dollars of capital expenditure may result in a more rapid approach to the LOV and an inordinate diminishment of the solar investment.

Another risk to the solar investment is the eventual repair or replacement cost if the inverter fails and the warranty has expired. Will the costs of repairing an oversized inverter be higher than repairing a smaller inverter? Years later, will an unsuspecting owner replace a failed inverter with a similar model, not realizing that the larger model is now too big for the degraded array? Will future technology solve this potential problem?

The Timing of Generation

Further complicating matters is the economic issue of the timing of generation in relation to consumption. For some, early morning and/or late afternoon generation is more important. In the absence of solar trackers, module technologies whose energy production is less dependent on angle-of-incidence have an advantage, but only if the inverter can respond. There may also be a seasonal consideration where increased cloudiness may inordinately diminish production because of a pinched power generation window.

Building an Industry

A cost-effective solution must consider all these interacting factors. System designers sometimes use open circuit voltage (Voc) as a design parameter without considering the ramifications of maximum power point tracking (MPPT), module temperature, mismatch, degradation, and environmental factors for string voltage over the life of the system. Even before degradation occurs, there can be more than a 20 percent voltage difference between Voc at standard test condition (STC) temperature of 25° C (77° F) and Vmp at module temperatures of 50° C.

When designing a system it is important to be both knowledgeable and flexible. Every situation presents unique challenges that may require unique solutions. It may be the case that future expansion is a part of the design strategy. In this case, an oversized inverter might be a valid solution. But, “always” is a very risky design strategy. A cautious “always” is better applied to product, deployment, and operational strategies. Incorporate proven components in systems. Modules should have IEC[1] performance qualification in addition to the required safety certification(s). Design systems for quick, repeatedly dependable installation. It is (almost) always a good strategy to monitor peak power and power generation —with special attention to power transition periods — throughout a system’s life. Finally, provide responsive service should the system’s performance falter. Responsible companies design and build not just superior solutions for their customers, but also work to build the reputation of our very important solar industry.

---

[1] International Electrotechnical Commission. http://www.iec.ch/

Local Solutions Globally Applied

A briefing on electricity appeared in the September/October issue of MIT’s Technology Review magazine. The briefing begins with a section titled, “Can Renewables Become More than a Sideshow?” The introduction concludes with some commendable exhortations, but the body contains two exasperating statements:

“The reality is that renewable power and other alternatives to fossil fuels, including nuclear, remain too expensive to compete with coal and natural gas."

… and …

“Renewables are unlikely to end our reliance on fossil fuels within the next 20 years.”

I responded with a letter to the editors that they were kind enough to print in the Letters and Comments section of the December issue:

LOCAL SOLUTIONS FOR GLOBAL PROBLEMS
Our September/October Briefing focused on the prospects for renewable power.

In “Solar Power Will Make a Difference—Eventually,” the author presumes that ubiquity is a condition for a valid global solution, but the maps of the “energy belts” on page 97 are clear enough evidence that each region must respond to energy issues in its own way. Solar power, particularly, is now an economical solution in our sunniest climes. This fact has been disguised by—among other factors—an energy pricing scheme that defeats the investment value of on-site solar energy and other energy management strategies. We can’t blame the tardiness of technology while we remain tardy in implementing transparent and equitable economic systems. The answer to the rather silly question in the opening section—“Can Renewables Become More than a Sideshow?”—is not only “Yes!” but “They must, and soon.”

This was all that could be said within the constraints of the allotted space. Many other thoughts can be explored here on Rate Crimes. Yet, if I had been permitted to express just one more idea in a periodical devoted to technology it would be that clever technology and honest economics cannot alone resolve our energy issues; humanity will be sustained only by a conscientious and comprehensive discipline of stewardship.

Big Squeeze

A special, existential absurdity accompanies the state of being a citizen of Arizona. The great, swelling, air-conditioned cities of the Southwest each attracts denizens with particular promises. The tag lines are expressive, “What happens in Vegas stays in Vegas”, “Entertainment Capital of the World”, “The City Different”, “America’s Finest City”.

Los Angeles flaunts itself. Las Vegas celebrates itself. Santa Fe examines itself. San Diego prides itself.

In Arizona is proclaimed, “The Valley of the Sun” and “The West's Most (Mid)western Town”. Living in Arizona comes only with the promise of easy winters amidst a prosaic culture. To those familiar with the Arizona milieu, there can be little wonder why Harlan Ellison’s 1970’s classic, A Boy and His Dog was set in a barren, post-apocalyptic Phoenix underlain by an insipid, predatory, subterranean Scottsdale; and why the smartest and most interesting creature in the story was a dog.

Ruling above ground today in Arizona are the vapid tenets and myopic vision of Goldwater “conservatism”. Scottsdale names its streets after such dogmacrats. The predatocracy is already firmly established in preparation for the apocalypse now being foreshadowed by Arizona’s most recent economic “malaise”.

Rate Crimes’ midsummer Executive Summary focused on the structural elements of the central analysis of the predatory economics. As the end of the year approaches it is time to recap and expand the list of predations relevant to clean, sustainable solar energy:

1. The long-standing and now unique system of repressive utility rate schedules that has long impeded the advancement of solar energy.
2. The shell game of hidden, regressive taxation that results from the rate schedules.
3. The further regressive taxation of the Renewable Energy Standards and Tariff scheme.
4. The rapid emergence of leasing programs and companies whose economic viability depends on an ephemeral and regressive incentive scheme.
5. The not so “choice” surcharges for electricity from the utilities’ “green” energy programs.
6. The hidden costs of traditional energy generation.
7. The multi-million dollar compensation for utility executives who have left Arizona ill-prepared for the impending energy gap.
8. The ludicrous kabuki theatre of Arizona energy politics wherein costly institutions exist only to maintain a distracting charade.

In A Boy and His Dog, the protagonist, Vic, is a virile, wide-eyed youth who enthusiastically follows an enchantress into the underworld to discover that he is absurdly valued only for what an impotent society can literally squeeze from him. Happily, his faithful and perceptive best friend comes to his rescue.

Woof!

---

Solar-Powered Coal

Arizona’s Green Divide has a less apparent extraction of wealth from captive electric utility ratepayers and taxpayers.

These unsuspecting payers are funding the installation of solar electric systems on their more fortunate neighbors’ houses; thereby assisting their neighbors to abandon them to pay for an ever greater share of increasing utility electricity costs.

These captive ratepayers are also funding the electric utilities’ acquisition of environmental (a.k.a. carbon) credits.

There is an environmental credit associated with each kilowatt-hour (kWh) of electricity produced by your RE System, which represents the environmental benefits, emissions, reductions, offsets and allowances attributable to the generation of energy from your RE System. Title to and ownership of any and all environmental credits associated with your RE System will be assigned to us when we make payment of the Credit Purchase Payment to you. Thereafter, we will have exclusive title to and ownership of all such environmental credits. The calculation, use and retirement of any and all environmental credits will be in our sole and exclusive discretion. Your acceptance of the Credit Purchase Payment operates as your waiver and relinquishment of any right, title, claim or interest in the environmental credits and entitles APS to any and all environmental credits associated with your RE System from the Effective Date of this Agreement through the date that is twenty (20) years following the Commissioning Deadline (as defined below).
- Arizona Public Service agreement

These credits allow the utilities to maintain and extend the consumption of toxic fuels. Will Arizona develop the world’s first effectively solar-powered coal mine?

Solar Phunny

The City of Phoenix, Arizona Public Service, SolarCity, and the National Bank of Arizona are collaborating to bring on-site solar electricity to a few of the city’s less affluent homeowners. The Solar Phoenix program will allow 1,000 Phoenix homeowners who lack the means to purchase a solar electric system to instead lease a system. The initial program will provide more than a megawatt (nameplate) of proximally-produced solar electric energy to the citizens of Phoenix. The Solar Phoenix motto is “Energizing Phoenix with Affordable Solar Power” [emphasis mine].

Rate Crimes applauds any effort to bring the full benefits of solar energy to all the citizens of Arizona, our nation, and the world. However, bringing solar energy to 1,000 homeowners’ roofs is not necessarily the same as bringing these 1,000 homeowners the full benefits of solar energy.

As described in Arizona’s Green Divide the funding for the solar rebate programs are extracted from all the electric utilities’ ratepayers. However, only a small segment of relatively wealthy homeowners have been able to reap the benefits of the REST scheme.

The Solar Phoenix program purports to bring affordable solar energy to another slender segment of Arizona homeowners. Yet, for the privilege of using their valuable roof space, the program will deliver to lessees benefits that are far more slender than the full benefits enjoyed by those fortunate enough to be able to own, rather than lease, a solar electric energy system.

Here is how the Solar Phoenix program appears to operate within the REST program:

The vast majority of taxed citizens/ratepayers are still receiving no direct benefit from their contributions. However, they are now supporting a few more neighbors, their electric utility, the City of Phoenix, the National Bank of Arizona, SolarCity, and Arizona’s solar module manufacturer, First Solar, whose modules SolarCity is using. What percentage of the ratepayer (and taxpayer) funds that are going into this regressive economic system is reaching the lessees?

As I have been explaining for the past half-decade, solar energy in the form of electricity in our nation’s sunniest state has long been less costly (affordable!) than the electricity from traditional forms of energy generation. Yes, there are considerations that confound the rapid adoption of solar energy. However, compounding hidden taxation resulting from a regressive system of rate schedules with further regressive taxation from a supposedly pro-solar incentive program, and then playing phunny with the money through suspect leasing programs is hardly a solution.

---

P.S. Aren't paintbrush circles a bit passé?

Arizona's Green Divide

There is a deep chasm in the Grand Canyon State. It is a chasm deepening so quickly as to shame the timeless workings of geology.

The Arizona Corporation Commission’s Renewable Energy Standards and Tariff (REST) rules are an inherently flawed attempt to animate a languid solar industry†. The major flaw is the process by which wealth is extracted and redistributed. Here is how it appears to operate:

Fees for the REST are assessed on each electric utility bill. All residential “ratepayers” are assessed equally based on monthly kilowatt-hour (kWh) consumption. The fee has a maximum limit. For example, a residential ratepayer is charged 0.3288 cents for each kWh consumed up to a maximum charge of $1.32 per billing period. This limit represents approximately 400 kWh of consumption.

The funds gathered by this scheme are distributed through a rebate program administered by the electric utilities. The funds are distributed to homeowners who possess the discretionary funds to purchase a solar electric energy system. These relatively wealthy homeowners gain the advantage of the rebate programs, escape electric utility costs, and therefore abandon the unfunded citizenry to pay for an ever greater portion of the increasingly expensive energy from the utilities. Furthermore, because they are escaping electricity costs, the solar overclass contributes less to future REST funding!

Can a strong, independent, sustainable solar energy industry be created based on a regressive economic scheme?

---

†Why the Arizona solar industry has so long remained listless is explained elsewhere in the Rate Crimes energy blog.

Nothing New the Sun is Under

A sustainable, solar energy future was envisioned almost a half century ago. Today, long after the technological barriers have been overcome, and many years after the economics of solar energy became transcendent in the sunniest climes, artificial barriers remain in place.

All that is required in order to repress the value of solar energy and energy conservation in sunny lands is to defeat the value of such investments in the economic sectors that are most active in the daylight hours.

The electric utilities issue rate schedules for commercial ratepayers that differ dramatically from those for residential ratepayers. In Arizona, the commercial rate schedules are structured so that they defeat investments in solar energy and energy conservation.

The Rate Crimes energy blog exists primarily to explain this problem and its ramifications. However, this is hardly the first attempt in history to draw attention to this issue.

A few years after the first energy crisis, in 1977, The Sierra Club adopted a conservation policy that addressed electric utility rate structures.

“Customers should not be discouraged from owning or installing renewable resource systems by discriminating rates or charges.” – The Sierra Club, Adopted by the Board of Directors May 7-8, 1977

In the intervening decades, numerous battles have been fought to eliminate such “discriminating” rate schedules. Many of these battles were won. Yet to this day, the nation’s sunniest state remains entrenched in its repressive habits; while community and institutional memory of the earlier warnings has apparently failed.

The Energy Secretary and Congress are now championing entrepreneurship as the source of solutions for energy generation and efficiency. Let us free these entrepreneurs from under the thumb of economic oppression.

An Accident of History

A decade ago, in response to my increasing awareness of our society’s problems of economy and sustainability, I shifted my professional focus from systems analysis, architecture, and design towards renewable energy. As both a long-time resident of sunny Arizona and an electrical engineer, I was naturally attracted to solar energy.

In my first position in the energy industry I was fortunate to work closely with the most experienced solar engineer in Arizona. Not only was I able to rapidly gain a wealth of knowledge through observation and practice, but my mentor was also a talented and generous teacher.

As my knowledge of the industry grew, I began to recognize the systemic problems that prevent solar energy from thriving in and around The Valley of the Sun. Initially, I had little more than an intuitive glimpse of these problems. The journey towards understanding the pervasive nature of these problems began early this decade with a simple and somewhat selfish question, “Does it make good economic sense to remain in the solar energy industry?”

The attempt to answer this question led to many long evenings with papers, books and spreadsheets. From this work, an economic model began to develop. The answer that began to emerge was encouraging.

As the model was tested and refined, it became apparent that with existing incentives, a low-risk investment in on-site solar electric energy in Arizona often realizes returns greater than the historical, long-term average annual returns of the S&P 500. Stated succinctly, solar energy in sunny Arizona is a better investment than the stock market. Without incentives, an investment in solar energy regularly outperforms other low-risk investments.

When the results of the analyses were first presented in 2003, conservative numbers were used for the projections. One exception to this cautious practice was the aggressive $6.50 installed cost per solar watt that was employed in Money from the Sun. This article was featured in the 100th issue of Home Power magazine that was published in April of 2004. The intent of using that figure was to highlight a tipping point for the price of solar energy. The cost of solar energy had been trending down and $6.50 per watt was near the low end of costs in Arizona at that time.

One parameter that was always kept conservative was to project only a 2 percent annual average increase in utility electricity costs. Because the avoided cost of energy is a key determinant for the value of the solar investment, conservative estimates were rigorously maintained.

At the time, few expected that within a few years our financial system would nearly collapse, or that the costs of energy in Arizona would rise so quickly and so dramatically.

When Money from the Sun was published in 2004, the real cost of energy in Arizona was at its lowest in over a decade. This low price would soon prove to be very temporary. Within a year, prices began to trend upward as Arizona began to approach a looming energy gap.

Today, more than five years after the publication of Money from the Sun, with the (avoidable) cost of energy still rising, an investment in solar energy is better than ever. The meme of promoting solar energy as an investment is proliferating.

It may have been an accident of history that my initial work in solar economics was done during the historical low for energy prices in Arizona. It is no accident that solar energy remains chained to the anchor of toxic energy interests.

Happy Birthday, Mom

I am fortunate to have many amazing women in my life. But I doubt that I would be as appreciative of my happy circumstance if I wasn’t most fortunate to have my mother. She is the most extraordinary person I know. If you doubt my somewhat biased opinion, I can easily find innumerable people who know her less well than I do, but who will readily echo my sentiment.

She has long been a teacher by profession. Her recent retirement from teaching was a great loss to the coming classrooms of children and to her community, even though her community and her many friends continue to be enriched by her untiring works and constant, bright glow.

Before she excelled at teaching others’ children, she was the firm and gentle hand that raised me and my extraordinary siblings. She gave me the tools to endure and to thrive in our irregular world; the nature to breathe in rhythm and to sing in harmony with the world’s more sublime elements; and the strength to help shape it for the benefit of all.

She has always and naturally been above her own needs. She has given everything to me and to all her many children. Perhaps her most extraordinary gift was her seemingly natural ability to transition from parent to friend. I can only hope that each and every one of us can enjoy such perfect trust as has been my great fortune.

Lest it be said one time too few . . .

I love you, Mom.

Standards Solution

The recent tariff imposed by U.S. Customs on solar modules m ay be interpreted as an act of consumer protection.

However, not every consumer requires the same protection.
Large purchasers of solar energy systems -- such as electric utilities -- are able to protect themselves with knowledge and with their power in the market. Unsuspecting small purchasers are vulnerable to the vagaries of a solar energy industry that is often either owned by, or beholden to large energy companies. Many solar module manufacturers recognize that their immediate, most profitable market is electric utilities. These giants of central planning are proponents first of distant, megawatt solar arrays. Solar companies that are successful in this market sector must produce quality products in quantity, and be able to provide long-term support. This more profitable market sector favors the stronger solar companies.

Newer, smaller and (statistically) more ephemeral solar companies often vie for position in the remaining market sectors that are generally less profitable. Ironically, in our nation’s sunniest state, the repressive rate schedules imposed by the electric utilities help to keep the profit margins in these competing market sectors exceedingly thin.

Many of these newer, smaller companies are foreign or manufacture their modules overseas. In fact, the vast majority of solar modules are manufactured overseas. Some of these modules are substandard and irresistibly attracted to the United State’s unguarded market. Perhaps, U.S. Customs is simply ‘stepping up’?

If we want to protect more vulnerable consumers, then there are better methods than protectionist tariffs. Established, internationally-recognized performance standards exist that provide some assurance of product durability and reliability. Most quality solar module or solar collector manufacturers see these tests as mandatory for their designs. Often, they are mandatory; knowledgeable customers will demand that their purchases are qualified by these standards. ASTM International (originally the American Society for Testing and Materials) has also initiated work on a new photovoltaic module standard. So, why have the most vulnerable consumers been left unprotected for so long?

The testing regimens are quite expensive. The monetary costs for testing a single module design are on the order of tens of thousands of dollars. The costs for a family of module designs can run over a hundred thousand dollars. The tests for a series of unrelated designs can cost several hundred thousand dollars. Obviously, the larger, established solar companies are better able to absorb these costs.

However, the monetary costs of testing pale in comparison to the costs of the time it takes to complete testing. In the best of circumstances, testing can take many months to accomplish. Unfortunately, the solar testing industry is in its infancy. Testing is often performed at laboratories born of academia where they have little understanding of the demands of the marketplace and suffer from a dearth of business experience. An unprepared solar company can be overwhelmed if a crucial module design fails near the end of several months of testing, with only the prospect of another several nervous months of testing a redesign lying ahead; or if a dysfunctional testing laboratory develops a backlog and delays the delivery of the test results.

The industry’s history of boom-and-bust cycles also affects the industry’s ability to address the issue of performance standards. During booms, attention is drawn elsewhere and the swell of new ‘players’ resists anything that might act as a brake on the market. The unprepared testing laboratories have also been easily overwhelmed during booms.

Ultimately, lax protection serves the interests of energy companies who seek to perpetuate their recently consolidated control over the flow of energy by slowing the adoption of locally generated energy.

Because it is so absolutely foundational, the energy market and, more specifically, the solar energy market must adhere to Conway’s Law. The markets must operate efficiently in order for energy efficiency to be realized. Protecting every consumer of solar energy products would be another important step towards this crucial goal.

Shield Tariff

The recent tariff imposed by U.S. Customs on solar modules may be something other than an ill-considered decision based on a misconstrued technicality. The lack of technical understanding on the part of Customs so defies belief, that one is compelled to seek alternative explanations.

One might construe their decision as a thinly-veiled attempt to slow a growing trade imbalance in the crucial solar industry. Much like patchwork efficiency programs, tariffs are often a reactionary ploy to disguise embarrassing deficiencies, if not a corrective for more dangerous imbalances. This perception is reinforced by the tardy and mixed reaction of the Solar Energy Industries Association (SEIA) whose members comprise both domestic and foreign companies. Some domestic companies must be tempted to retard objections to the tariff in the interest of their competitive advantage.

Another interpretation is that the tariff is an economic shield raised to protect unsuspecting and vulnerable solar module buyers in the U.S.

There is a void of effective consumer protection with respect to solar modules sold in the U.S. Currently, only safety certification is required for solar modules to be sold in the United States. Unlike most other markets in developed economies, no performance qualification is required in the U.S. This results in the U.S. being an attractive market for substandard modules that cannot be sold elsewhere.

This absence of any assurance of durability and reliability beyond module manufacturers’ warranties has profound implications. Few smaller solar energy systems today are effectively monitored. Over the years, as modules naturally and slowly degrade, many systems with substandard modules will experience accelerated performance degradation. It may actually be good fortune for a system owner to experience outright failure if the manufacturer is extant, able, and willing to meet its warranty obligations. As it is, much inordinate performance degradation is likely to linger unattended. As damaging as might be the loss of energy, the potential damage to the industry’s reputation may be tragic.

More than three decades ago in Arizona, foolhardy incentive programs led to a surge of companies offering solar domestic hot water systems as a response to rapidly increasing energy costs. Many of these “solar” companies were disreputable. Much of the technology was poor and untested. When these solar hot water systems began to fail, the systems -- and the companies -- failed spectacularly. Today, the broader solar energy industry still must deal with the echoes of this fiasco. It is a dismal memory more persistent than that of the “Alt Fuels Fiasco”. In fact, we all suffered a great loss of money, time, energy, and credence on account of those erstwhile failures of Arizona’s solar hot water industry. It is in everyone’s interest that the solar electric energy industry avoids anything even resembling such a disaster.

That’s Just Tariffic

The Solar Energy Industries Association (SEIA) “hopes to persuade Customs officials to reverse a decision to impose a 2.5 percent tariff on solar panel imports after more than two decades of duty-free trade in the product”, reports Reuters in “U.S. solar industry to challenge tariff ruling”.

The U.S. Customs Service justifies this tariff with a capricious argument that exposes a regrettable ignorance of solar technology. It also exposes a broader and more disconcerting ignorance of the solar energy industry and solar energy’s great value as both a cleaner source of energy for the world and its metaphorical power as a catalyst for cultural transformation.

All sectors of the solar energy industry have long struggled against thin margins, spasmodic markets, spectacular failures such as AstroPower’s, and impediments that include those established by entrenched interests. Despite its struggles, the industry has sustained a steady growth fueled by its bright promise.

“[GES USA] suggested that the Trinasolar TSM-175D solar module is classifiable under subheading 8541.40.6020 of the Harmonized Tariff Schedule of the United States (HTSUS). Subheading 8541.40.6020 provides for "Diodes, transistors and similar semiconductor devices; photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules…: Photosensitive semiconductor devices, including photovoltaic cells whether or not assembled in modules or made up into panels…: Other diodes: Other: Solar cells: Assembled into modules or made up into panels." However, Explanatory Note (EN) 85.41 (B) (i) states that heading 8541 does not cover panels or modules equipped with elements, however simple, i.e. diodes to control the direction of the current. As such, since the Trinasolar TSM-175D solar module does contain diodes, classification under subheading HTSUS 8541.40.6020 is inapplicable.”
- Robert B. Swierupski Director National Commodity Specialist Division, U.S. Customs and Border Protection.

In this particular case, it is easy to criticize Customs. We can hope that the industry can better inform Customs of the ramifications of its decision. However, there is significant doubt about the industry’s capabilities in such matters. The solar energy industry was late in recognizing and responding to the sudden whim of Customs. The SEIA claims poverty as the excuse for its negligence.

Certainly, the SEIA has long recognized Customs as having an important influence on the economic health of the solar industry. Customs publishes its rulings punctually. We live in an age of inexpensive automation. Furthermore, with official unemployment numbers nearing double digits, automation has a regrettably inexpensive substitute. Poverty is a poor excuse for inattentiveness. In order to avoid such embarrassing episodes in the future, the industry must invest in solutions that can effectively protect its interests.

PIRG Version

The version of energy efficiency that is promoted by nearly all interested parties in Arizona neglects the central economic constraint imposed upon Arizona’s exploited energy market.

Even though the Rate Crimes blog was created only in May of this year, its central message – that Arizona electric utility rate schedules repress the value of solar energy and energy conservation in the nation’s sunniest state – has been declared in a variety of media and venues over the past half decade.
Yet, five years after the message was first broadcast, even the strongest advocates of solar energy and energy conservation remain inattentive to this fundamental economic issue. Repressive rate schedules have denied Arizona a sustainable future and have led to the state’s failure to become the prime catalyst of the world’s solar energy future. Advocates of all cloths remain focused on limiting energy price increases while ignoring both the inequities inherent in the existing rate schedules and the dangers of hiding the real immediate and future costs of toxic fuels.

Artificially limiting today’s utility cost increases only perpetuates the economic shell game and further delays the advent of the world’s solar future. Last week’s congratulatory letter from the Director of Arizona Public Interest Research Group (Arizona PIRG) is emblematic of this flawed calculus:

October 9, 2009

Congrats! Thanks to those of you who encouraged the Salt River Project (SRP) to increase their commitment to energy efficiency, their board voted to spend millions more on energy efficiency programs and renewable energy resources at no additional cost to ratepayers. [emphasis mine]

This is certainly a success and could not have been achieved without the support of SRP ratepayers and others. As we told the media, "By voicing opposition to the proposed SRP rate hike, ratepayers scored and ended up winning more stabilized prices, greater reliability and a reduction in infrastructure costs through improved energy efficiency."

While the recent SRP vote is a victory, there is still much more SRP, Arizona Public Service, Tucson Electric Power and other utilities in Arizona need to do to increase energy efficiency. I look forward to working together to make this happen.

Sincerely,

Diane E. Brown
Arizona PIRG Executive Director

If the balance of “millions more” is not to be pried from ratepayers but rather to be derived from the efficiency programs, one must wonder why the utility did not long ago implement such efficiency measures and enjoy the profits. Why was it necessary for ratepayers to “voice opposition to the proposed SRP rate hike” before these efficiency programs were initiated? Why does the utility need to “increase their commitment to energy efficiency”? Should they not already be fully committed to energy efficiency for both their own benefit as well as the public’s? Would not having long ago provided honest rates and rate schedules been more than enough of a commitment to this end?

While Arizona energy prices remain artificially curbed, and the utilities’ rate schedules continue to repress the value of solar energy and energy conservation measures, then to impose belated efficiency programs is only a reactionary symptom of the byzantine economics of poor central planning. This continuation of a debilitating exercise in market capture imposes yet another debt burden on our children.

Advocates for energy efficiency, solar energy, and sustainability would do well to pull their heads out of the caliche and shift their priorities towards resolving the fundamental issue of repressive rate schedules and to begin transferring our investments into truly sustainable solutions.

UK-Turn

In The Followers of Texas was explained the misstep of the Goldwater Institute’s policy paper, Opening the Grid: How to Recharge Arizona’s Electricity System for the 21st Century in citing as an example of success Texas’s experience in restructuring and “deregulating” their electricity industry.

The policy paper uses more than Texas as an example to promote its agenda, “Texas, Pennsylvania and Britain have recently restructured their electricity industries to achieve remarkable improvements in both conventional and renewable generation capacity.“

Yesterday, the Financial Times reported that the United Kingdom government’s Committee on Climate Change recommends that the deregulation of the UK energy market should be reversed. The article quotes, "We are questioning whether we have gone too far in deregulating the energy market," said David Kennedy, chief executive of the committee, which advises the government on cutting greenhouse gases. "The strongest way [to achieve lower emissions from utilities] is mandatory investment in low-carbon power." [emphasis mine]

Mandatory investment in clean energy is precisely what the Goldwater Institute opposes. Fortunately, their lawsuit against the Arizona Corporation Commission failed. Unfortunately, The Goldwater Institute has decided to appeal the judge’s ruling.

If the Goldwater Institute instead would invest the money spent on litigation on clean energy generation and energy efficiency it would be a lasting gift to Arizona’s citizens.

Silly Blogger

The President recently bemoaned the state of discourse in our society, "I am concerned that if the direction of the news is all blogosphere, all opinions, with no serious fact-checking, no serious attempts to put stories in context, that what you will end up getting is people shouting at each other across the void but not a lot of mutual understanding," said President Obama.

On August 5th, “Rate Crimes: Impeding the Solar Tipping Point“ was published on Robert Rapier’s excellent R-Squared Energy Blog in preview of the story’s publication on the renowned The Oil Drum two days later.

The preview was posted on R-Squared at 5:26 PM that evening. As of today, there have been just over 50 comments. Half of these were responses from Rate Crimes. The other half was contributed by eight others.

It is difficult to recommend the commentary except as an example of reactionary, dismissive, misrepresentative, and denigrating blather that was responded to as respectfully as possible. The hope had been to subject the Rate Crimes analyses to a crucible. Sadly, the comments for the preview consist almost entirely of unconsidered and ad hominen attacks. The first comment was a knee-jerk response that was posted only a little more than an hour after the article’s publication. This first commentator very obviously did not delve into the Rate Crimes analyses before he felt the need to cast aspersions, misrepresent this blog’s message, and ask a question that was answered in 2004. Throughout two days of commentary, this willful scramble towards ignorance barely hit a hurdle.

It is certain that there are many thoughtful, learned, and astute readers of the R-Squared Energy Blog. The blog consistently offers well-considered analysis and commentary on a wide range of topics related to energy and sustainability. But what thoughtful readers would foolishly interject themselves into the midst of a negatively noisy commentary proffered by a conspiracy of dunces? Only a few brave souls dared to venture a thoughtful comment and the only benefit Rate Crimes gained from the commentary was from an astute observation of a mislabeled graph.

Much careful labor has been done to develop the Rate Crimes analyses. Too often, this labor has been performed in solitude and without the invaluable gift of shared effort, or even thoughtful criticism. Only recently has there been published an important validation of the methodology that I developed earlier this decade. Even though my expectations for enlightenment from a blog posting were not high, I had hoped for a response more valuable, or even more thoughtful than an unsubstantiated, “I think you and your blog are exceedingly silly.”

The recent events surrounding the health care “debate” have exposed our society’s civility gap. Too many are ready to deliver judgment without careful consideration for either persons or ideas. The response you are now reading was intentionally delayed in order to gain perspective and to give careful consideration to an issue that is perhaps even more important than the hardly-silly issue of the long-standing repression of solar energy.

Rate Crimes exists to bring transparency to the economics of energy. All thoughtful commentary is welcome.

Energy Shavings

Over $2.7 billion in formula grants are available under the Energy Efficiency and Conservation Block Grant (EECBG) Program. The U.S. Department of Energy (DOE) awards these federal taxpayer funds to units of local and state government, Indian tribes, and territories to develop and implement projects to improve energy efficiency and reduce energy use and fossil fuel emissions in their communities.

To date, Arizona has been awarded over $28 million in future EECBG projects.

Arizona is trending strongly towards a black energy future because of a decades-long imposition of rate schedules that repress the investment value of solar energy and energy conservation measures in the commercial sector. The rate schedules shift an inordinate burden of energy costs into the captive small business sector; where then the costs are passed through to Arizona consumers. This effectively creates a hidden, regressive tax. Because of the inequity of Arizona’s Renewable Energy Standard and Tariffs (REST) rules, wealthy homeowners have the ability to more easily escape rising energy costs, while less fortunate renters are left to carry a doubly inordinate burden of rising energy costs piled upon a hidden energy tax.

If conscientious renters wish to support clean energy, they are further insulted by incurring a surcharge for such energy from the electric utilities. Furthermore, the densely packed renters are subsidizing the higher energy costs that result from the outspread infrastructure built to satisfy the developers, builders and owners of the houses dispersed across the distended sprawl of the Phoenix metropolitan area.

The DOE states, “Transparency and accountability are important priorities for the EECBG program and all Recovery Act projects.” The DOE can award tens of millions of taxpayer dollars to a misbuilt megapolis that is fundamentally and structurally inefficient and unsustainable. Yet, Rate Crimes, one of the few entities attempting to bring transparency and accountability to energy policy in our nation’s sunniest state, does not qualify for even the tiniest grant.

Sunny Arizona remains a final remnant of repressive electric rate schedules that induce extravagant consumption. The utilities profit from increased consumption. State and local governments gain from the concomitant increase in (regressive) tax revenue. The utilities magnify energy costs in the captive small commercial sector which must consequently increase their charges to consumers for goods and services. Again, the state and local governments gain from increased sales taxes. There are no real brakes on this machine. Ineffectual deceptions such as the Residential Utility Consumer Office (RUCO) serve only to disguise the dim reality. Arizona citizens serve to move money into the pockets of politicians and into the bank accounts of the shareholders of privately held utilities.

Now, federal taxpayer funds are being injected by the DOE into this cryptic and broken system. Until the Arizona rate schedules are repaired, yet another source of public funds will be shaved off.

A Nice Day

The friendly symbol of sunny well-wishing should be an appropriate companion to solar energy.

In his September 15th Op-Ed in the New York Times, Have a Nice Day, Thomas L. Friedman deplores the fact that the photovoltaic manufacturing industry in the United States is lagging. He notes that California-based Applied Materials, one of the world’s leading providers of solar module manufacturing equipment and fabrication solutions does nearly all of its business outside the U.S! Mr. Friedman does us all a great service by bringing this critical issue to more widespread attention. Yet, his listing of “the three prerequisites for growing a renewable energy industry” neglects the more fundamental issue that Rate Crimes exists to explain.

Mr. Friedman’s “prerequisites” are the same as those upon which the Arizona Renewable Energy Standards and Tariff (REST) rules and most other such programs are founded. However, the nation’s solar future —and even the still inadequate programs inspired by the Arizona REST rules—will continue to be delayed while the long-standing, repressive rate schedules in the nation’s sunniest state go unchallenged and unchanged. More than reparative rules, the marketplace for energy is in need of transparency and equitable accounting.

Until such change occurs, Mr. Friedman’s sarcastic, “Have a nice day” must be accompanied by a new symbol:

Made in China

Mr. Friedman exposes a sad irony, “So, right now, our federal and state subsidies for installing solar systems are largely paying for the cost of importing solar panels made in China, by Chinese workers, using hi-tech manufacturing equipment invented in America.”

It must first be admitted that we should be grateful for the efforts and foresight of China and Germany. They have sustained a critical industry while vested interests in the U.S. have repressed its advancement. However, there is a doubly sad irony.

Rate Crimes has discussed before the risks of using modules of unproven design and how the United States lags in assuring product quality. Not only should the nation immediately declare repressive energy pricing schemes to be illegal, but it should require more than safety certification. In addition, performance certification should be required for any and all photovoltaic modules sold in the United States.

Won’t that be a nice day!

The Followers of Texas

The Goldwater Institute’s 36-page policy paper of July 21st, Opening the Grid: How to Recharge Arizona’s Electricity System for the 21st Century begins with a promising first sentence. It is no secret that Arizona’s effectively unregulated, monopolistic electricity industry “is ill-equipped to meet the state’s growing demand for energy.” There is an impending, precipitous gap between the projected energy demand and what energy provision has been prepared or planned.

However, the paper abruptly steps into something squishy and pungent with its second sentence. The authors state, “Nor, is [the electricity industry] well-suited to contain the higher costs that are likely to result from renewable energy mandates.” Apparently, the authors – two university economics professors – have missed the fact that in sunny Arizona, on-site solar electricity is an increasingly superior investment in comparison with the purchase of electricity generated from traditional, toxic fuels at gargantuan, centralized plants. This, despite the existence of repressive rate schedules that result in hidden taxes; as well as the existence of unaccounted subsidies (water, liability, etc.) that have artificially (and temporarily) maintained the illusion of inexpensive electricity from the traditional power sources.

As a central piece of evidence for its arguments, the persistently dogmatic Opening the Grid heaps hefty praise on Texas for the deregulation of their retail energy market. Even a quick glance at Texas’s energy mix shows that little has changed since their deregulation began in 2002; other than a small, but significant increase in the amount of wind power.

The landscape of Northern Texas has enjoyed abundant wind resources since it was formed. Modern wind technology has been available for decades. Only recently was Texas’s increase in wind power generation finally inspired as a reaction to the increasing costs of the traditional, toxic fuels; and by the Renewable Electricity Production Tax Credit (PTC). Because of its reliance on expensive natural gas, Texas’s cost of electricity is among the highest in the nation. The PTC is a federal tax incentive that runs counter to the fundamental tenet of the Goldwater Institute.

In its second paragraph, the Goldwater Institute’s policy paper claims that, “Texas, Pennsylvania and Britain have recently restructured their electricity industries to achieve remarkable improvements in both conventional and renewable generation capacity”. Opening the Grid is three dozen well-written pages of dogmatic arguments based on, at least, one false premise.

If the dogma of the Goldwater Institute is unquestioningly accepted, our energy policy will remain short-sighted and reactive. Following Texas will only get us deeper into a sticky status quo. Any Texan will tell you, “When following the herd, be careful where you step.”

Success will depend – for more than just Arizona - on Arizona’s ability to achieve a unique, long-range vision; and to then act proactively and with constancy. Such behavior is commonly recognized as leadership.

Solar Price Drop Soup

An article published on August 26th in the New York Times, titled “More Sun for Less: Solar Panels Drop in Price”, delights in the recent lowering of the cost of solar electric modules and praises the benefits for consumers.

While the brief article provides some of the causes of the recent 40 percent drop in prices, and also discusses some of the ramifications, it neglects to deliver the most important message: buyer beware!

A homeowner interviewed in the article is ecstatic about his $23,000 savings (on an original price of $100,000), “I just thought, ‘Wow, this is an opportunity to do the most for the least’”. Such savings would certainly appear to be a good thing. It may also be that the solar company increased its margin and made a few extra dollars. All good, so far.

The source of the problem is mentioned without analysis in the article, "'A ton of production, mostly Chinese, has come online,' said Chris Whitman, the president of U.S. Solar Finance, which helps arrange bank financing for solar projects." The problem is that increased production of modules does not equate to an increase in the proportion of quality modules. Not all modules are the same. Some manufacturers, some designs, are better than others. With a surge in production, with the arrival of numerous new companies, and with increased competition in the market, it is likely that the number of substandard manufacturers and module designs will also increase.

Modules from nearly every manufacturer now carry a 25-year warranty. The terms of these warranties are based on a number of factors, not the least of which is the competitive advantage enjoyed by experienced, large, and/or well-capitalized manufacturers who establish the de facto warranty standard, yet run a relatively low risk compared to their smaller, emerging competitors who must provide a similar warranty. A warranty is really only as valuable as the strength of the company backing it.

The only way to be assured that a module design might be reliable and durable is to subject it to a test regimen that includes advanced aging techniques. Such testing is an expensive endeavor, made doubly so because it is time-consuming. Established manufacturers often perform their own tests. However, all photovoltaic module manufacturers who intend to sell their product into the world market must obtain a performance qualification to international standards from an independent testing laboratory.

However, there is contention that even the most rigorous advanced aging tests in the existing standards only reflect about a decade of a module’s active life. More than half the module’s life is unaccounted for by these tests. Furthermore, the performance qualification examines only the module design. The performance standards do not include manufacturing standards or factory inspections.

As troubling as are the limitations of the current standards, it should be highly troubling that in the United States only safety certification is required for solar modules. No performance qualification is required for modules to be sold in the United States! This imbalance leads to the United States being a magnet for modules that are safe, but suffer from substandard performance.

A 23 percent cost savings greatly improves the economics of a solar investment. It can also cover a lot of future performance problems. However, risking $77,000 to potentially substandard modules is an inordinate risk. Buyers should be aware of the real value of the warranties. They should also demand that photovoltaic modules have at least the IEC performance qualification for the design. If the module manufacturer cannot provide a valid certificate of performance, then . . . buyer beware.

Note: It is important to verify the authenticity of any certificate of performance qualification. The industry has experienced forged certificates. The testing authority, as indicated on the certificate, will be able to provide confirmation of the certificate’s authenticity.

Note: The title of the New York Times article is guilty of using a common misnomer. The term “panel” is appropriate for the boxy solar thermal collectors for domestic hot water systems. A solar electric collector is a package of interconnected photovoltaic cells. These packages are modular components of one or more strings or arrays in photovoltaic systems. Therefore, even though there is often confusion in the common parlance, they are appropriately called solar modules. Distinguishing between the technologies provides greater clarity.