Solar Eclipsed: Why the Sun Won't Power Phoenix Despite an Industry Boom

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Robert A. Heinlein, author of Starship Troopers and other classics of science fiction, predicted high-efficiency solar panels in a short story published in 1940, about 14 years before the first modern panels were invented by Bell Laboratories.

"Why, we could recover more than 20,000 horsepower in any city block," blurted Heinlein's fictional inventor upon the discovery. "Do you know what that means? Free power! Riches for everybody!"

Not quite.


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As of the early 21st century, the real-life technology is far less exciting than Heinlein hoped.

Near a fire station at the corner of Cooper and Guadalupe roads in Gilbert, a 144-kilowatt solar-power generation yard surrounded by a chain-link fence transforms invisible energy particles streaming from the sun into electricity.

The installation, one of the oldest and smallest built by Arizona Public Service in the past 10 years, still is far larger and more elaborate than any home project. The facility has 10 rows of 48 panels, all mounted on burly steel supports sunk into concrete. Every few minutes, gears on the supports turn to angle the panels to better catch the sun's rays.

To get into the solar yard and give a reporter a quick tour, APS spokesman Steven Gotfried has to retrieve a padlock key from the firehouse. A couple of amiable firefighters grab the key and walk out with Gotfried, mentioning that they had wondered who owned the panels and how well they worked.

Gotfried explains that the APS panels, part of the utility's ongoing experiment with solar power, route electricity back into the grid, boosting the region's overall power supply.

"This has the capacity to power 30 homes," Gotfried says proudly.

"Oh," says one of the firefighters, visibly unimpressed.

In fact, the facility provides enough juice to power about 30 homes during daily peak-production times — the roughly six hours that the sun is near its zenith. Little power is produced when the sun is low in the sky or when clouds are overhead.

The obvious also must be stated: The plant produces zero watts at night.

Like all of APS' solar power production stations, this one doesn't store any of its produced electricity in batteries — so other sources must fill in the gaps in coverage.

There's another wrinkle in the estimate: Gotfried's per-home figure assumes each residence uses an average amount of energy. A 2,000-square-foot Valley home with two adults and two children and little concern for energy savings might easily consume much more; those 480 sun-tracking solar panels might provide daylight power for just 20 such high-usage homes.

Even on a larger scale, solar's limitations are clear.

State-of-the-art solar plants produce more electricity than this 2001 plant, and APS has built many more since then. One plant expected to come online in 2014 near Gila Bend will generate 32 megawatts. This will move APS toward its eventual goal of 200 megawatts in sun-generated electricity from solar plants it owns, which — at the 250-home-per-megawatt figure that APS uses — could power about 50,000 homes.

But, again, this will happen only during prime daylight hours and on relatively cloudless days.

Meeting the energy needs of a 2,000-square-mile metro area with 4.5 million inhabitants requires much more.

The Valley of the Sun, more than any other metropolis in the United States (perhaps even the world), ought to be awash in solar panels.

The reason it's not, and why it's not going to be anytime soon, is because of solar power's exorbitant price. For what you get, the cost has been much too high.

It's come down in a big way, but it's still too much — and will remain so for years to come.

Complex and funded massively by government handouts, solar power isn't all it's cracked up to be.

A visible sign of its shortcomings is the world headquarters of First Solar in Tempe. The solar-panel-making company inhabits a nice building by Town Lake. No solar panels can be seen on or near the building. At first, the company's spokesman tells New Times it's "silly" to ask why the building doesn't sport panels. Later, he apologizes for the jab and explains that the reason is that First Solar doesn't own the building.

The futuristic-looking building at 350 West Washington Street, owned by Lee Chesnut, California real-estate whiz and former minor-league music producer, uses high-efficiency solar shades to reduce power costs but not to generate power.

Too expensive, says Chesnut. He wants to put up panels one day, but he says he hasn't found a solution yet that pencils out because equipment on the roof makes for a tougher-than-normal installation job. Chesnut adds that he pays a premium to APS "in the range of $80,000 per year" over normal electricity fees to help fund the utility's renewable-energy projects.

He, like many others in the state, are enthusiastic and hopeful about solar power's future. Polls have shown that most residents don't mind paying a little more in their electric bills for "clean" energy. It wouldn't be exaggerating to say that solar panels represent an amazing technology. When unobscured by clouds, the sun lays down about 1,000 watts per square meter on a cloudless day at noon.

Normal solar panels, at peak production, turn about 20 percent of that energy into electricity. The efficiency is much less when the sun is at a lower angle in the sky, or if there are clouds. Dust on the panels can obscure some of the photovoltaic effect. Panels also lose some efficiency when they get hot.

Turning sunshine into money isn't easy. It's a cutthroat business, full of wrangling for government funds, lobbying, and playing off fears of global warming. There also are large production and installation costs to consider. Despite their almost magical trick of converting solar rays into electricity, even the newest solar panels are light-years from "free power."

Solar power has been popular in the past few years, with thousands of Valley residents signing up with private companies to have panels installed on their roofs. But that's because the stuff practically has been given away. Homeowners — combining rebates from utilities, the state, and a federal 30 percent discount for the installation company — have received up to 70 percent off the cost of a rooftop system.

Though rooftop and commercial-scale projects have remained popular as the subsidies have been pared down in the past couple of years, experts say it will be many more years before the industry can stand on its own.

An important part of that hoped-for independence of the solar industry is the concept of "grid parity," the point at which solar power costs the same or less as coal, natural gas, or nuclear. One local expert says another $200 billion or more in solar-panel research must be spent worldwide over the next 10-plus years for that to happen.

But even then, it's still middle-of-the-day power. An as-of-yet uninvented, relatively inexpensive super-battery would be required if solar power ever is to truly rival traditional power sources. As anyone who's owned a laptop computer or cell phone knows, batteries haven't advanced at the same rapid pace as other high-tech equipment. Batteries are expensive, heavy, full of toxic materials, don't hold enough charge, take too long to recharge, and drain quickly under heavy use.

Marcia Busching, an unsuccessful "Solar Team" candidate this year for the Arizona Corporation Commission, says when building a utility-scale solar plant begins to equal the cost of building a natural-gas-burning electricity-generating plant, power companies will need to decide which one to build.

But that's not quite true: Non-solar sources remain crucial to supplying power for most of a 24-hour day, and they're expected to keep doing so for decades.

It's hard to see how this situation could change anytime soon, despite the proclamations of believers like futurist and Google engineering director Ray Kurzweil, who predicts the world's energy needs will be met by solar power in about 15 years.

Forecasts by the U.S. government show a less sci-fi future in 2040, with fossil fuels, nuclear power, and other kinds of renewable energy, like bio-fuels, relegating solar power to little more than a pricey sideshow. As a Salt River Project resource-planning guide from last year states, "renewables can supplement but not replace conventional resources."

Even with all the gnashing of teeth over climate change caused by the burning of fossil fuels, one of the biggest stories of the past few years is rapidly advancing mining technology that allows underground mother lodes of natural gas and shale oil to be tapped. Though numerous environmental concerns have been raised about "fracking," the U.S. Department of Energy predicts that this newly recognized domestic jackpot in fossil fuels will allow the country to be energy-independent within a couple of decades. (A Matt Damon movie, Promised Land, examines the uproar over fracking; it's scheduled for release in Phoenix on January 4. New Times' sister paper in Denver published an article on the extraction method, "Controversy Over Fracking Continues," Westword, September 20.)

Despite the anti-fracking sentiment, these trillions of dollars' worth of natural resources aren't likely to stay in the ground.

Meanwhile, other energy technologies keep advancing. Research is ongoing in the quest for holy-grail energy sources like nuclear fusion and low-cost hydrogen fuel cells.

Taken together, the reliance on traditional energy sources and the potential for brand-new technologies threaten to eclipse solar power, which provides only weak, intermittent, expensive power in a stingy, tough, 24-hour-a-day world.

The basic concept for solar power began to be developed in the 1800s, was refined in the 1950s, and took off in the Space Age.

Solar panels are ideal for space vehicles or locations on Earth far from electrical hookups. In cities, solar has to be foisted upon people with sales gimmicks and mandates.

In 2006, partly because of concerns about domestic-energy independence and climate change, the Arizona Corporation Commission adopted the rules we now live by, forcing all utility companies (except for Salt River Project, a quasi-governmental agency with its own board of directors) to produce 15 percent of electricity from renewable sources by 2025. APS expects to hit its goal early, though most of the sources won't be solar.

For its part, SRP's leaders decided to reach a goal of 20 percent in "sustainable" sources by 2020. Only about 2 percent of these sources will be solar, though — the other 98 percent will come from sources such as wind, hydropower, and programs that encourage consumers to use less energy.

Solar power in Arizona never has been hotter. Dozens of solar companies have popped up, and thousands of systems have been installed in the Valley. The Phoenix metro area is considered one of biggest potential markets for solar because of its 300-plus days of sunshine each year. Driving all this action are the huge subsidies offered by the feds, the state, and local utilities.

And it's happening not just in Arizona. Concerns about global warming, finite oil and gas reserves, and future energy costs have elevated solar's presence worldwide. Germany, despite its northern latitude and cloudy days, swore off nuclear power and ramped up its solar-generation system — and government funding of solar power through lucrative subsidies — to historic proportions.

During one particularly cloud-free stretch of a few hours on May 25, about a third of all Germany's power came from solar panels. While exciting to solar boosters and climate-change worriers, the record-breaking day ironically helped bring attention to critics' claims that Germany has invested too much money in the past few years on an unreliable power source. Solar has grown so fast in Germany that, according to Christopher Booker of the U.K.'s Daily Telegraph, "This makes it so difficult to keep the grid balanced that it is permanently at risk of power failures." Supporting that point is a study released this year by the Association of German Industrial Energy Companies that claims interruptions and failures in Germany's electrical grid are up by nearly a third in the past three years.

Problems integrating all the new solar power have compounded other concerns, like how a large supply of solar power has made it tougher for natural-gas plants to make money, spurring a heavier reliance on coal plants and creating more challenges for the future. By 2035, says the International Energy Agency, the cost to produce electricity in Germany is expected to be 50 percent higher than in the United States.

Worldwide interest in solar power over the past few years has resulted in an explosion of solar-panel makers, leading to a drastic drop in the price of the panels. (This article focuses on the world's main source of solar-electric-power generation, photovoltaic panels.)

These days, a typical 6,000-watt home rooftop system in the Valley costs about $24,000 to $30,000 before subtracting rebates and subsidies. That's almost half of the cost of installing a system in 1998 (well before the generous subsidies of late).

The cheaper installation costs, plus the large subsidies, have been good news for solar-seeking homeowners and businesses. So has the steep drop in solar panels themselves in the past two years. But the rapid price decreases have thrown the industry for a loop.

Innovation partially was to blame, as scientists figured out how to make better low-cost solar panels. But industry advocates accuse China of flooding the world market illegally with panels sold for less than their cost to manufacture. In November, the U.S. International Trade Commission agreed to keep tariffs on panels exported from China — but not before the unfair trade practices spurred bankruptcies of companies such as the high-profile Solyndra plant in California, costing the federal government hundreds of millions in unpaid loans.

In October, a report by GTM Research examined in Forbes magazine stated that more than half of the 300 major solar-panel makers in the world will go out of business or get bought up by other companies by 2015 because of a glut of panels on the market. A GTM analyst predicted plant closures in the United States, Canada, and Europe — leaving China as the world's "epicenter" of panel manufacturing.

It remains to be seen whether the current solar-power boom will last. The first one didn't.

In the late 1970s and early '80s, a surge in solar systems happened in Arizona and other states after the federal government began paying homeowners an amount equal to 40 percent off the price of installing rooftop solar hot-water heaters. Many disreputable contractors became involved in the program, says a 2007 analysis of solar power by Minnesota's Green Institute, resulting in potential "misuse" of federal tax credits. Still, the United States, for a time, became a world leader in those early solar hot-water heaters, which used high-tech panels to heat water directly rather than to produce electricity.

By 1983, more than 65,000 Arizona households had solar systems installed, usually on roofs, taking advantage of the federal tax credit and an additional 20 percent state credit. The handouts spurred a new solar economy, according to a 1984 analysis of the program by the now-defunct Arizona Solar Energy Commission: More than 300 solar firms opened in Arizona, employing about 2,500 people.

Between 1980 and 1982, solar tax credits had cost the state nearly $36 million. Consumers saved $60 million in utility costs, the 1984 analysis states, concluding that the program was worth the money.

But these energy-savings estimates were based on the assumption that the installed solar devices would work for 20 years. Joochul Kim, an associate professor at Arizona State University's School of Geographic Sciences and Urban Planning and one of the 1984 report's authors, says he believes most units failed after a few years and that "many homeowners did not bother to fix (the) units due to high repair costs."

The subsidies dried up by the mid-1980s — and so did the solar industry they spurred. A 1982 state consumer guide to Phoenix-area solar installers lists 70 companies. Only one, a heating and A/C firm that did solar on the side, still is in business.

Modern solar salesmen claim — some even guarantee — that their products will keep working in the Arizona heat for 20 or even 30 years. Roof shingles often don't last that long under the destructive Phoenix sun.

Neither do many companies.

Without the subsidies and government mandate, the solar boom now seen in Arizona would fizzle.

The incentives are intended to spur research and innovation that will make them unnecessary at some point. Meantime, the state is generating less solar power because of the way the handouts are distributed.

The 2006 state mandate requires that 25 percent of the renewable-energy programs run by utilities come from solar panels installed at Arizona homes and businesses.

Yet there's a common-sense fallacy to the system, if the goal is to produce more solar power overall: residential rooftop installations are less efficient, for the money invested, than large-scale commercial solar plants. The Solar Energy Industries Association reported earlier this year that average residential installations are priced at about $5 to $6 per watt, while utility-scale installations cost under $3 per watt.

In other words, about twice as much solar power could be generated for the same price if the money spent on home units went toward commercial-scale projects.

Not only are the homeowner subsidies enabling pricier energy, but the high, upfront costs of solar installation, even after subtracting the incentives, means people of lesser means often can't participate in the giveaway.

Arizona has received about $315 million from a federal program that provides a 30 percent discount off the installation of renewable-energy projects. About a third of that has gone to solar projects, while most of the rest has gone into windmills, which produce power 24 hours a day in windy areas. The 30 percent program is scheduled to be reduced to 10 percent by 2017, but industry lobbyists, including those with the national Solar Energy Industries Association, hope it will be extended.

Besides the federal incentive, the state and the utilities help make these solar deals even sweeter with direct and indirect subsidies.

Last year, for example, APS shelled out $53 million in residential "incentives" and $12 million in non-residential ones. To pay for these subsidies, APS hit its customers with a surcharge. In 2012, all residential customers paid a maximum surcharge of $3.84 in their monthly bills. (It's not a flat fee: Households that consume low energy pay slightly less.)

"The rooftop installers worked to get themselves included in the renewable-energy standard, and they have a nice carve-out," says Gary Pierce, chairman of the five-member Arizona Corporation Commission. "That's the most significant part that people pay in the surcharge on bills. The lion's share goes to rooftop."

This will change in coming years. The $12 million for non-residential solar installations will be paid each year for the next 10, while the direct, upfront incentives for home systems already are getting scaled back. APS went from paying solar buyers $3 per installed watt of solar power in 2009 (that's $18,000 for a 6,000-watt system) to the current 10 cents per watt.

All APS customers, though, will continue to pay the surcharge.

Whether the subsidies for solar panels benefit the public at large is debatable, but there's no question that some individual customers have benefited greatly.

John Beavers of Mesa says he paid about $7,200 after subtracting the subsidies for the rooftop panels installed atop his home in 2010, an amount he figures will be paid off by power-bill savings in about four years. Beavers is an electrical contractor and believes his know-how helped him get a better deal. Plus, he's an energy miser in his 2,900-square-foot house; he keeps the thermostat set at a tepid 81 degrees in summer. His hot-weather bills have dropped by 20 percent, he says, and "I pay nothing in the winter."

Experts recommend that homeowners interested in solar obtain at least three bids from solar companies because the prices vary so widely. Beavers says he obtained five.

Investing in solar should be considered like any other investment, says Hank Peck, a Tucson financial analyst. Occasionally, when clients mention they're looking at plunking down 10 or 15 grand on solar panels, he first directs them to examine "all other areas of financial planning."

He advises them to pay off any consumer debt, like credit cards or vehicle loans, before investing much money in solar panels, because otherwise anything saved from the panels in utility costs is offset by interest on the unpaid debts. If a household's financial affairs are in order (retirement plans in place, kids' college-savings funds begun) and the client plans to stay in their home for many years, Peck says, "I say great, go ahead."

Before they buy, solar customers need a roof that will last at least as long as the solar system on top — or else they'll spend thousands more taking it down, then putting it back up on a new roof. Customers also may want to consult a roofing company before embarking, because if the solar company mounts the system poorly, the roof could leak.

Leased systems, in which homeowners don't own the equipment on their roofs, also have become popular. California-based Solar City, one of the biggest installers in the country, with five outlets in Arizona, advertises a plan in which customers pay nothing down and receive benefits from their energy savings immediately. Such something-for-nothing plans rely on the hefty subsidies to work. This year, Consumer Reports advised people to be wary of solar marketing that sounds too good to be true, calling it one of the country's biggest modern scams.

Some firms have been suspected of cheating to stay ahead. Solar City is among three targeted by the U.S. Treasury Department in an ongoing investigation into whether installation costs are inflated to get more money from the government. The 30 percent federal discount is based on installation cost, so the higher it is, the more money the federal government pays.

Lyndon Rive, co-founder and CEO of Solar City, denies any costs have been inflated, adding that his company installs systems for $4.50 to $5.50 a watt, which meets government guidelines.

Solar advocates note that the popularity of rooftop systems has continued in the past year — even as Arizona incentives shrink. Last year, the APS incentive dropped from $1 per watt of installed solar power to 10 cents per watt, or about $600 for a six-kilowatt system. Yet the demand stayed strong, which meant more solar systems were being installed overall.

It appears that Arizona utilities could ditch their direct, upfront payments to customers installing solar panels, and the solar companies would survive just fine, as long as they and, in turn, their costumers still received the 30 percent federal subsidy.

It sounds good, but there's a catch: The hidden, indirect subsidies that the solar industry hopes also will remain in place to help keep solar attractive to people. Industry representatives fought against one change recently made by the state Corporation Commission. Until late this year, solar users didn't have to pay the renewable-energy surcharge most everyone else has to pay. Now they do.

Solar customers and businesses still don't pay sales tax on equipment. Utilities say they don't pay fees charged to all other utility customers — for maintaining and building the likes of transmission lines and transformers, for programs that help low-income utility customers, for environmental cleanup, and for storage of nuclear waste. When solar customers generate more power than they use during a year, they're reimbursed for that power at the full retail rate for electricity paid by customers.

The deficits have to be made up somewhere and result in higher electricity costs for everyone, according to APS. Seeing solar become more popular, the utility's leaders are growing concerned about these "cross-subsidies," and they told the Corporation Commission in a December 6 report that "APS believes that a sustainable [rooftop] solar policy must include an equitable distribution of costs and benefits across all customers."

Another way to put it: Solar customers should start paying their fair share for the infrastructure and for everything else that goes along with providing power.

Rooftop solar still is just a neat experiment for businesses. The vast majority of firms — those in Phoenix included — haven't regarded the technology as ready for prime time.

For now, companies tout their token projects to customers who care about such things, while using electricity from additional energy sources at most of their buildings.

Fresh & Easy, a grocery chain of 177 stores in California, Nevada and Arizona, owned by British retailing giant Tesco, is one of the corporations that uses environmentalism as a marketing tool, its website touting that it works hard to help the planet. Solar has been part of Fresh & Easy's strategy for the past few years. In 2008, the company installed one of the world's largest rooftop solar plants on its California distribution center. Last year, it announced that 10 of its stores had solar panels. The project cost more than $13 million after rebates, according to company spokesman Brendon Wonnacott, with the expectation that the investment will pay for itself in 10 years.

Asked when the company plans to put panels on the rest of its stores, Wonnacott stated, "Well, we'll wait and see. That would be a very, very large investment."

Tesco announced this month it may close its Fresh & Easy stores in the United States because they're not making enough money.

Arizona State University, taking advantage of the 30 percent federal subsidy, a 10 percent state subsidy, and utility incentives, now boasts more than 10 megawatts of peak-time solar power (enough to power 2,500 average Valley homes), mostly at its sprawling Tempe campus. Various private solar businesses invested about $90 million in the projects, and ASU agreed to pay the solar firms a fixed rate over 20 years for power generated by the systems. The university says it expects this arrangement will save money — as long as typical utility costs increase by 40 percent over the 20 years. APS says it can't predict whether that will be the case.

Rooftop solar projects have one major advantage over utility-scale solar projects — they're built on land that's already developed. Some see the Southwest's Sonoran and Mohave deserts as ripe for paneling-over. But one person's wasteland is another's treasured ecosystem. In some cases, environmentalists have been forced to choose between developing desert lands and reducing reliance on fossil fuels. The Sierra Club, long a champion of desert preservation, gave its blessing last year to a solar-farm project on undeveloped federal land just west of 163rd Avenue and south of Pecos Road.

"We think it is critical that we transition to using renewable energy resources, with a major emphasis to reduce climate change," says Sandy Bahr, director of the Sierra Club's Grand Canyon chapter. "That being said, we're not interested in seeing every inch of Arizona covered with solar modules. Every rooftop would be great."

As stated, this would take a very large investment. It would also take an unrealistic societal shift in which people choose solar no matter what the cost — plus a few new inventions, such as better batteries to store large amounts of solar-generated power.

Down-to-earth predictions show that solar will provide only marginal help in getting Arizona through the next two or three decades. Coal, natural gas plants, and the Palo Verde Nuclear Generating Station will continue to provide the overwhelming majority of the state's electricity.

The limping economy means that a big, new power plant isn't needed for a while, because demand for power isn't growing. Arizona now generates about 25 percent more power than it needs, selling the excess to California and other states. Yet APS predicts that electricity consumption will double in Arizona by 2025, with an increase of about 50 percent in new customers.

When a major new source of power is needed, something experts predict will happen by 2037, it probably will be nuclear, says Corporation Commission chairman Pierce.

That makes sense, and not just because nuclear power's output can dwarf that of solar's. The conservative leadership in Arizona tends to be less enthusiastic about renewable-energy sources. Busching's "Solar Team," for example, pushed an expansion of the 15 percent mandate on renewables by 2025 — but that seems less likely to happen now, with an all-Republican corporation commission.

What the world needs is a new technology that generates plenty of power 24/7, at a low cost and without much or any pollution.

With no great alternatives on the horizon, the latest prediction by the U.S. Energy Information Administration is that renewable energy sources will grow from providing about 13 percent of the country's overall electricity needs to 16 percent by 2040. The EIA analysis shows that solar power will grow, but it will provide only about 1.8 percent of America's needs.

Naturally, Solar City's CEO, Lyndon Rive, is more optimistic. Extrapolating from the current rate of solar installations, he predicts that in 20 years, 20 percent of Phoenix-area homes and about 8 percent to 10 percent of the state will be largely solar-powered.

Which means nuclear and fossil-fuels will still rule.

Even in sunny Phoenix, solar power won't be anywhere near meeting most of the Valley's energy demands.

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