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CEO Column: Why don’t you like solar?

“Why don’t you like solar?” I am often asked that question. Solar power (electricity generated from sunlight) is all the rage, and people want to know why we haven’t joined the party to build solar farms and install solar panels.
I don’t have anything against solar power other than you can only use it when the sun is shining, it costs more than traditional electricity generated from fossil fuels and its cost is subsidized. 
I am always surprised by the number of people who don’t understand that electricity can only be stored in very limited cases and that solar power can only be used when the sun shines. That should be a basic premise. Solar power comes from converting sunlight to electricity through a solar panel — therefore you need sunshine to make electricity.  
Why don’t we use batteries to store the electricity until it is needed? We can to a degree, but the cost of bulk storage is very high and would increase your electric bill. Most people don’t want much of that. It is a simple but too often misunderstood concept — if the sun is not shining you don’t get any electricity.
Besides, the sun doesn’t always shine at the times we need electricity most. PowerSouth’s normal annual system peak is between 6:00 and 7:00 on a cold winter morning. At that time, the sun is not up yet so there is no solar power available, and the system peak must be met with fossil fuel generation that will run on demand. It is fine if you like solar, but you should also be willing to pay the fixed costs to maintain fossil fuel generation to keep you warm on cold winter mornings.
You may have heard that solar is now cheaper than the power you buy from your utility. That is right as far as it goes. On average, normal retail electric service costs approximately $130 per 1,000 kilowatt hours, and the normal customer in Alabama uses about 1,200 kilowatt hours of electricity per month. Therefore, your monthly power bill will be about $200 before taxes. Ads for solar power frequently publicize electricity around $100 per 1,000 kilowatt hours. 
You can do the math — $100 is cheaper than $130. 
However, that is only part of the story. The cost you pay for electricity is comprised of many elements. The fixed costs of generation plants, transmission lines, substations, distribution lines, transformers and meters, and the variable costs of fuels to run the generators are all bundled into the single retail rate of $130 per 1,000 kilowatt hours.
The cost of solar power does not include any of the fixed costs and is only comparable to the variable cost of fuel to run the generators. PowerSouth’s variable cost of fuel to run its generators averages $36 per 1,000 kilowatt hours. The remainder of your retail bill is to pay the fixed cost to deliver power to you and provide power when it is needed. That math is simple, too — the $36 fuel charge is cheaper than the comparable $100 element for solar power.  
Everyone should pay their fair share of the cost of service required to provide them electricity. If you have to be served from a generating plant that will run on demand when the sun is not shining, you should be willing to pay the cost for that plant. Unfortunately, payments are due on the plant every month, and you have to pay your share every month and not just the days you need it. If you don’t, someone else will have to pay your share.
The final thing I don’t like about solar power is that it is subsidized by the federal government with our tax dollars. That is, for every $100 of investment you or a solar provider makes on your behalf, the federal government will issue an income tax credit of $30. Tax subsidies are very big business, and solar providers are making huge profits from installing solar power systems and receiving subsidies from tax dollars you and I pay. We are subsidizing the profits of Solar City for installing uneconomical solar generation, whether we want to or not.
Why don’t I like solar? It is not dependable — it can’t be called on when it is needed. It is not as affordable as a comparable element of fossil-generated electricity by a factor of at least two times and often more. It doesn’t pay its own way, and people that install solar systems are subsidized by other retail customers and by taxpayers. Finally, solar companies are taking advantage of tax subsidies to make huge profits on inefficient generating resources from my federal income taxes.
Otherwise, I like solar power.
I hope you have a good month.

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