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What’s the deal with solar?

January 14, 2010
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I spent some time in southern Florida last month, and I’m astounded at how little solar has penetrated the “Sunshine State”.  Not a cloudy day for almost two weeks, and 12 hours of sunlight every day.  And the roofs… well almost every structure in Florida has a portion of the roof that is flat (i9deal for setting up solar panels as you get closer to the equator).  I thought that maybe the gated community associations were blocking solar panels, but then I found a new FL law that prevents any association from restricting solar installations on a homeowner’s property.  So what’s the impediment?  Again, it’s price.  Always price.

For grins, I submitted a request for an online estimate for a particular property in southern Florida.  The objective:  replace 50% of fossil electric with solar.  The estimated cost?  $80,000 ($56,000 net of the 30% federal tax incentive).  The payback period?  About 21 years!  Now if you know anything about the demographics of southern Floridians, I think you’ll agree that a 21 year payback on any investment is pretty much worthless.

Arguably, Florida offers pretty lame state incentives.  They do not apply sales tax to solar installations, nor do they assess property taxes against value increases associated with solar.  But that’s it.  On the other hand, I can’t think of another state (other than maybe Arizona or Nevada), that has such an abundance of free energy in the form of sunlight, and a perpetual demand for electricity.

And another thing:  many Floridians live on a fixed income.  They cannot manage their household finances adequately with wildly fluctuating electric costs.  Solar could provide a way for these residents to fix the cost of their electricity for decades through solar financing options.  But no one’s doing it.  The demand is probably there – but there are no solutions.

The price of a watt of electricity generated by a solar panel has dropped from $1.50 one year ago, to $.57 this past week.  But the price of installation?  It remains hefty, and unchanged – at least in Florida.  It would cost between $50-80k to outfit a 3000 sf Florida home with enough solar to cover 50% of its power bill.  Tremendous market inefficiency.   It will change, but the change isn’t here yet.

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