Columbia Prof Talks Solar Financial and Technological Woes
Columbia Business School recently published an article that explores the uncertain future of solar energy–strange, considering we are hot on the heels of a bona fide solar feeding frenzy due in no small part to federal tax credits and 70 percent drops in prices due to low-cost Chinese panels.
Columbia professor of professional practice Bruce Usher says, “The challenge to solar has long been who’s got the money to spend up front and who wants to take the risk.” The article explains that SunEdison figured out that the solution was leasing solar systems as opposed to selling them. Their model, which is ideal for reduced risk, spread like wildfire to competitors like Sunrun, SolarCity and Vivint. According to research, “more than 70 percent of residential installations in the three largest American solar markets—California, Arizona, and Colorado—were leased.”
Usher explains the underlying catch-22 of the solar explosion (or should I say implosion?): “In the majority of states today, consumers can switch to solar and save money.” But the squirreled-away cash is a result of net-metering, a process by which customers sell electricity back to the grid. “If you can’t sell electricity back to the grid, the economics of solar are terrible. The vast majority of power generated is in a five-hour window during the day. You can’t use it all, so you need to sell it back to the grid.”
Cameron explains that these grids are clunky, expensive, and nearly obsolete but discarding it altogether isn’t really an option: “A grid connection is a guarantee of power when you need it.” The Energizer bunny just ain’t gonna cut it.
“When it comes to net metering, residential consumers shouldn’t get the full retail rate, but they shouldn’t be cut off from the grid either. The answer is somewhere in between. The government needs to set those rules today, and set them in a way that reflects the way the whole energy system in this country is changing.”
