Record Utility Rates Make Solar Even More Cost Effective

Did anyone notice the juxtaposition of two utility news blurbs in the August 8th, 2007 Mercury News? Are we really that naive that we can’t follow a simple money trail?

The first article pointed out that California’s largest electrical utility saw a profit boost of 16 percent due to higher electricity rates.

The next article right below quoted the same utility’s CEO as saying that the California Solar Initiative (CSI) is behind in its goal of 3,000 megawatts of distributed (on customer rooftop) solar power. This CEO continued to say that the issue is that solar power is too expensive.


A typical 3kw residential system costs $24,000 without incentives, and will produce 4,300 kwh per year virtually maintenance-free for 30 years. That works out to costs for solar – on a residential or commercial customer’s rooftop – at 19 cents per kwh. With incentives (both from the CSI and a small federal tax credit) costs for solar are 11 cents per kwh. I don’t know how many of you live in California, but pretty much anyone with an air conditioner and a few electronic toys pays closer to 25 or 30 cents per kwh. And these prices — as this utility’s stockholders will be happy to say – will continue to rise.

Because of these high electric rates customer demand for solar power systems is an all-time high in California. Unfortunately, the new California Solar Initiative is now administered by this exact same utility – and delays to get customers connected and paid for their rebates have stretched from one month to well over six months.

And these delays are profitable! Let’s see, for a $300 monthly electric saving, that five month delay means an extra $1,500 in profit for each stalled solar customer. Multiply that by thousands of customers and you can see how much more profit a utility can generate by poorly administering the best solar program in the country.

Distributed solar power is cost effective today when it’s on a customer’s rooftop. Maybe that’s what this CEO meant – that solar power is not cost effective for him since it’s so good for his customers.