Case 1: Does PV Pay Back?

And, in a sense, people are curious about photovoltaics because they understand that it takes a certain amount of energy to make a photovoltaic module and there are certain emissions tied to making those modules. There are certain both financial obligations tied to making and purchasing and installing a photovoltaic module, certainly, and so we ask ourselves or we ask in general to people who are installing for us, when does PV payback? And so that general question of when does PV payback is really interesting because we can actually break it up into three general frameworks and the first is an energetic payback, the second is when is a financial payback going to happen for the client, the third would be when is the emissions payback going to come in? So, there is a certain investment of energy and emissions into making the module, when will they return on investment? Because part of the decision-making for installing photovoltaic panels is tied to the idea that for photovoltaic technology, that solar to electric conversion is going to be a Carbon neutral strategy or actually will be a negative carbon strategy because it is replacing other technologies such as coal combustion that otherwise would emit carbon dioxide gases into the atmosphere if we didn’t have a technology like photovoltaics, so again we look at the energetic payback, the financial payback, and the emissions payback and we’re going to address those three.

Probably one of the key factors in investing in a photovoltaic module and an array of photovoltaics on your residential building or on a commercial building or on a solar farm is going to be the financial payback. So, when does this investment return and pay itself back financially? The interesting thing there is that it’s a factor of both the light conditions, the quality of light, the intensity of light in the location that you are living, and it’s a factor of the cost of the alternative energy that you are interested in replacing. And so, in the case of solar conditions, the vast majority of the United States has a truly excellent solar resource, a solar resource very similar to that of southern Europe. The solar resource of Germany, the country that has been developing some of the most photovoltaic technologies installed both residentially and commercially, they have a solar resource that's much more like that of Canada, of Ontario, of Northern Ontario even, north of Maine, okay. And so, they have a much lower solar resource, but yet they have a lot better financial return on investment. The reason that they have a better financial return on investment is because they have a large amount of incentives of government-based policies that allow for a subsidy for photovoltaic investments, and so they get a much faster return on their investment even though they have a lower solar resource. Now, in contrast, in the United States, say the continental United States, we have a very high solar resource pretty much everywhere, okay. This is not just in Arizona. This is not just in New Mexico. Everywhere has a very good solar resource. So, if I’m living in Philadelphia, I have 75% of the solar resource that I would have in New Mexico, okay, so not too big of a difference. So, we have a very strong solar resource, but photovoltaics don’t seem to be paying themselves back as fast in certain states. So, it’s not because of the solar resource, so it must be because of that financial investment, the financial subsidies that are tied to this. So, in states where the demand for electricity-- is where-- is provided by very inexpensive combustion of coal, we can have prices for electricity that are as low as five to six cents per kilowatt hour. If we, in contrast, look at a state like California or if we look in urban areas like Philadelphia, New York City, Washington DC, all of these places have much higher cost for electricity even though it’s provided by—locally, by coal and nuclear predominantly, the price of electricity is actually much higher, and so that high price of electricity means I have a very good incentive to switch to a different technology, and so I will switch to solar energy for a higher electricity price. And if, in addition to that, I have incentives for that, I’m going to actually be able to get a very rapid return on investment, something on the order of five to eight years. If we have no incentives, if we have very low electricity prices, you’re looking at a financial payback time closer to seventeen to twenty years, or more. So, you are going to see, in the United States, the financial investment, the financial return on investment, excuse me—is going to come back really depending on the cost of electricity in the location and the incentives that are available in the location, not necessarily because of a higher solar resource in that area.

So, one of the other paybacks that we were talking about was the energetic payback. And that’s taking along with us the knowledge that it took a certain amount of energy to build the photovoltaic modules. They are a high energy requirement to make silicon cells to deposit thin films of cadmium telluride that ultimately make the key material in a photovoltaic module. That high energy density to make the technology has to be replace and in a photovoltaic module, it can be replaced. So, when we deploy a photovoltaic module, it starts creating energy, and it’s going to replace that energy that was ultimately invested in manufacturing it. The interesting thing is that the time to pay that back is actually not very long. So, in the case of the majority of the united states, in the case of southern Europe, we have a fairly robust, a fairly strong solar resource throughout the year and we’ll see an energetic payback of approximately two years. If we were to go north of that into the Netherlands, into Germany, we’d see an energetic payback around four to five years. But the energy would be payed back in a fairly short period of time.

One of the remaining paybacks that we were talking about were emissions and, specifically, we’re talking about greenhouse gas emissions - so, in order to make a photovoltaic module, it’s going to require energy. That energy is very likely to be sourced from coal combustion. And so, the associated life cycle tied to the photovoltaic module is also going to be tied into CO2 emissions so that manufacturing step will embed a lot of energy and with it a lot of CO2. The photovoltaic module will create, by nature of being deployed in the sun, will create electricity that will be carbon free. So that amount of negative emissions or, you know, creating electricity without carbon dioxide emissions will ultimately pay itself back in approximately three to six years; three years when we’re talking about these kind of mid-latitude areas and throughout the continental United States or through southern Europe, and six years when we’re talking about slightly more northern latitudes in the northern hemisphere such as the Netherlands and Germany and parts of Canada.

We’ve talked about payback and we’ve actually established that there is this link between the energetic payback and the CO2 emissions payback, and the interesting thing is that the photovoltaic industry as a whole has been developing as a larger scale industry since the 1970s, and so, that means we have several decades of industrial development that might have had higher energetic requirements than they currently do now. And so, we see early on in the photovoltaic industry, very high energetic requirements to make photovoltaic modules, and by nature of coupling energy to coal combustion, high CO2 emissions associated with photovoltaics. And so, recently, researchers have looked into that entire industry to see, does the photovoltaic industry as a whole pay itself back energetically and in the terms of emissions and, specifically, if we look at the energetics, what we find is that as of today, as of 2013, we are currently at an industry that is at a net negative energy impact, right? So, we’re still working our way to pay ourselves back energetically. Now, given the current rate of growth that we’re looking at for the photovoltaic industry, researchers have found that the industry itself should be able to pay itself back energetically by 2020, so we’re looking at a, you know, on the order of less than a decade the entire photovoltaic industry will have paid itself back and will now be effectively a carbon sink just by making photovoltaic modules. So, one of the additional feature that might be tied into that industry is the photovoltaic industry becomes large enough that it now becomes tied to the manufacturer of photovoltaics itself. So, if you’re using photovoltaics to make photovoltaics, then you’re actually changing the entire dynamic of the solar industry’s energetic payback and its CO2 emissions payback and that’s something we’re looking forward to seeing how it develops.