Saturday, May 5, 2012

A New Energy Saving Initiative

Everyone these days keeps talking about having a National Level Energy plan; some folks arguing for permitting all offshore drilling and others for exploring all alternate energy sources. What about this simple step to increase the production by 2-3% almost without much effort:

A Solar Panel on Every roof

Yes, it's an ambitious target but assume out of 112M household in US, even if we achieve 25% success rate, that's still 28M new household with solar panels.
A typical family of fours typically consumes about 1 kwh energy per hour which can be met by a 5KW solar panel producing about 25 kwh a day.
A nation wide adaptation of such system would produce 700 Gwh (25 kwh/day * 28M installations)  energy every day, i.e. equivalent to  30GW new power plant of 30 GW capacity (700 per day/24 hours) right there.
In 2010, US total electrical power capacity was 1137 GW.
30 GW or 2.5% of that source will come thru this renewed effort.



Purchase and installation of solar panel is still way too expensive in US for an average family and the numbers don't' compete with the grid energy rate.
But a comparatively new price plan, i.e. leasing the panels, is catching up. Combine that with full prepay and you almost get your own system as the lease term is almost as long as the life of the panel itself. Not to mention all the support and warranty being provided by the installer throughout the lease term.

Financing and Low Rate  Loan

A 5KW system leased for 20 years thru a company called Solar city or BGI in Maryland  typically costs about five thousands. Now this is where the federal govt. can chime in and can provide further incentive on top of the 7.5K write off that they provide to the owner (in lease system, it goes to the Leaser). They can provide an affordable (say 0.5% rate for 10 years) loan to the homeowner to meet the upfront cost of prepay lease. This new loan shouldn't need any complicated paperwork and payment plan should also be as straightforward as possible. An example of that would be adding a one page form to the lease document, confirming that the lessee wants to meet the upfront cost thru federal loan. And automatically adjusting the loan premium to the tax return liability without adding that as a tax clause. That is, the homeowner will still file the tax the same way, but as soon as they are done filing, their tax liability will increase increase by say $5250 (yearly payment for a $5k loan for 10 years @0.5%) or their refund reduced by same amount. So, no complicated loan approval process, running to bank or mailing a check etc.

This new initiative will be almost cost neutral to Federal Govt even in the worst case scenario. . They do provide 28M * 5K = 140 B loan though but that's a loan at higher interest rate than currently being extended to bank (0.25%) and its the money directly extended to homeowners and directly working towards stirring the economy and creating jobs.

1 comment:

  1. It is a little confusing about how much 5KW of 20 years solar power costs? Is it about $1000 per KW since you indicated with the US loan at .5% to be $5250. In our area we can obtain 5,000 KWh per year for a 5KW Solar System. At .07/KWh cost that works out to be $7,000 over a 20 year life without factoring in solar cell loss due to age. The real savings might be closer to $1,000 over 20 years. This is just a note on potential cost savings.