The Dark Side of Solar Power Purchase Agreements

As I’ve mentioned elsewhere, I recently signed a contract to put solar Photovoltaic (PV) panels on the roof of the GubMints home.

Are you thinking about rooftop solar? Here’s the drawbacks I carefully weighed in the decision process:

You’ve just become a Commodities Trader. You just signed a contract to purchase a finite amount of electricity for 20 years, at a price that ratchets upward every year at a negotiated rate. This is the textbook definition of a ‘Commodities Option Contract’. In other words, you’ve just placed a bet that the electricity price you locked in today is cheaper than what it will become over the next 20 years.

Think you’re ‘Green’ by installing rooftop solar? Think you’re saving the planet? Think again.
Solar Panels aren’t exactly pooped out by Unicorns. It takes energy to produce them- A LOT of energy.

• First, you have to extract silica rocks and sand from the earth and store them somewhere.
• Next, you have to transport the raw materials to China, which is where all the PV factories are.
• Then, you have to heat the silica rocks and sand to about 3,000 degrees F to create pure silicon cylinders called ingots.
• Then, you diamond saw these silicon ingots into disks of desired thickness (‘Wafers’).
• Then, you grind the disks down further to precise desired thickness.
• Then, you etch and combine (etch) the silicon disk with a conductive pure material like copper or silver and etch the photovoltaic silicon wafers.  This is all done in a ridiculously climate-controlled industrial ‘clean room’.
• Then, you gang multiple silicon wafers in an array and bolt them in an extruded aluminum frame- The finished photovoltaic panel.

Get my point? I haven’t even addressed the transport and installation of your rooftop panels yet.  In short, your panel might produce enough energy during its 20 year life cycle to offset the energy that was required during the manufacturing process. The most credible study is the one recently completed by Stanford University. It states:

There is a 50% probability that the PV industry stopped being a net consumer of electricity by 2011… in the worst case scenario, the PV industry does not become a net electricity producer until 2015.

…the payback year has a 50% likelihood of occurring between 2012 and 2015 with the probability increasing to almost certainty by 2020. Thus, the PV industry should pay back electricity consumed in its early growth only by the end of this decade.

…Or in other words, in the history of all solar panel production, the panels in existence just might pay back the energy consumed in their manufacture by the year 2020.

Solar Panels kill birds.   Industrial Solar Projects in the Mojave Desert are being mistaken for big lakes by migratory birds.

The birds swoop down to take a dip in what they think is water, but instead get tangled up in the nets and fences that the power companies put up to keep migratory birds away from the ‘bird magnets’ that they just constructed. There are no reports yet of migratory birds crashing in to residential PV panel installation, but keep in mind that it’s the same industry players involved in the use and manufacture of rooftop PV panels who are involved with the issues taking place at Solar Farms in the deserts.

You may have purchased $15,000 in scrap metal and bolted it to your roof. It’s possible that tomorrow morning may see the invention of Photon-Activated Cold-Fusion Roof Tiles made out of transparent aluminum, rendering your present PV system useless in comparison. In this scenario, your rooftop PV system becomes an obsolete hunk of silicon and aluminum.

Your PV system may not increase your home value at all.  Solar companies pimp the arrays as enhancing your home’s value, but it’s possible they won’t.  In light of everything mentioned above, a breakthrough in energy production- either at the Utility end or the rooftop end- could render your system obsolete and/or useless.

You’ve got some red tape to deal with. In addition to signing the PPA contract, it is likely you’ll have to bribe inform your neighbors about the installation of your PV system and get their blessing in the form of their signature.

Disclosure: In spite of the drawbacks above, I have signed a PPA with a household-name Solar provider.  The benefits the Solar PPA in my case far outweigh the risks, and I have detailed the benefits here.

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