The Experts Have Spoken: Solar Is Cheap and Easy

Source: SunPower Corporation; 250 MW California Solar Facility.

You might think solar is for suckers. But when the International Energy Agency says wind and solar can produce up to 30% of electricity needs at little additional cost in the long term, it's time to listen. Here's what you need to know.

Studies show...
The International Energy Association (IEA) recently released a seminal study on solar and wind, and its conclusions are definitively different from its past perspectives. This latest report, The Power of Transformation-Wind, Sun and the Economics of Flexible Power Systems, describes a world where energy infrastructure not only accepts, but embraces the use of wind and solar power as powerful assets in any energy portfolio. IEA Executive Director Maria van der Hoeven discusses:

This new IEA analysis calls for a change of perspective. In the classical approach, variable renewables are added to an existing system without considering all available options for adapting it as a whole. This approach misses the point. Integration is not simply about adding wind and solar on top of 'business as usual'. We need to transform the system as a whole to do this cost-effectively. 

America isn't exactly known for its clean and green image, but our wind and solar use is actually above average. While solar accounts for just 0.2% of generation capacity (most recent data available), wind's 4.2% puts total capacity 1.4 percentage points above the international average of 3%. 

But for a real solar and wind push to gain ground, we simply need more scale. Countries like Italy, Germany, Ireland, Spain, Portugal, and Denmark all pull 10% to more than 30% of their energy from these renewable sources. Last December, Denmark snagged a new record as wind provided a whopping 55% of all electricity. 

Luckily for us, there are already several solar companies expecting major scale-ups in the coming years.

SolarCity Corporation

Source: SolarCity Corporation.

SolarCity Corporation (NASDAQ: SCTY  ) is tackling solar systems of all sizes. From residential rooftops to businesses to government buildings, SolarCity Corporation does it all. Since its beginnings eight years ago, SolarCity has soared. It exceeded its 2013 guidance of 250 MW deployed by 30 MW, dropped costs 30% on a per-watt basis, and pushed into positive cash flow for Q4. While SolarCity Corporation represents just 32% of total residential solar market share, its in-house operations in 14 states keeps quality tip-top. CEO Lyndon Reave believes that scale is the answer, and expects SolarCity to install 1 million solar panel kits over the next five years. 

SunPower Corporation
With local dealers nationwide, SunPower Corporation (NASDAQ: SPWR  ) brings solar to more states than SolarCity Corporation. The company has been around since 1985, and boasts the largest residential and commercial customer base around. SunPower Corporation has installed over 100,000 residential systems in its time, and boasts the "world's highest efficiency solar cells," delivering 44% more electricity than similarly sized solar panels. 

While SolarCity Corporation's bread and butter is residential systems, SunPower Corporation has a substantial power plant presence. The company has over 120 utility-scale solar farms and has partnered with NRG Energy (NYSE: NRG  ) to build an especially impressive 250 MW "Solar Ranch" in San Luis Obispo County, California. The facility came online last October and will power the equivalent of 100,000 homes when it's ramped up to full capacity. 

Ramping up renewables
As solar and other renewable energies ramp up, OPEC is getting hammered with more competition than ever before. Imagine a company that rents a very specific and valuable piece of machinery for $41,000... per hour (that's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report reveals the company we're calling OPEC's Worst Nightmare. Just click HERE to uncover the name of this industry-leading stock... and join Buffett in his quest for a veritable LANDSLIDE of profits!


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 02, 2014, at 2:57 PM, speculawyer wrote:

    Solar is cheap & easy. I self-installed a 6KW system on my house and with my electric car, I no longer pay for electricity OR gasoline. After the tax-credits, the system cost less than $10K and will provide me with all the power I need for the next 25 years.

    I would not want to be a utility company.

  • Report this Comment On April 02, 2014, at 7:22 PM, talon444 wrote:

    So by cheap you mean the rest of us pay for your system? If solar was truly cheap it would be selling a lot better.....without incentives.

  • Report this Comment On April 02, 2014, at 11:03 PM, luckyagain wrote:

    All energy has government subsidies. Do you really think that the US has a naval fleet in the Persian Gulf for any other purpose than defending oil shipments? The US easily spends $100 to $300 billion defending the Persian gulf so oil can be shipped from Saudi Arabia, Iraq, Kuwait and even Iran.

    As for coal, just look at what happen when it is burned. Not just environment cost of CO2 production but the residue that is dumped by power plants. This slag recently fell into a river providing drinking water for thousands of people in North Carolina. The cleanup of the river will probably take years and somehow most of the cost will fall upon the government and taxpayers.

    No form of energy production does not have subsidies and it has been that way for many years. The main difference is that subsidies for wind and solar are more visible.

  • Report this Comment On April 03, 2014, at 12:50 AM, ronwiserinvestor wrote:

    This expert has been saying this for the past 4 years. Solar is cheap and easy just like speculawyer says. At less than $3.00 per watt installed for a standard grid tie system, you don't even need any incentives and you especially don't need any solar lease or PPA companies for a very healthy return on investment.

    Look up Hyper X Solar. At just 60 cents more per watt than a standard grid tie system, installed before any incentives, It's will be the solar lease and PPA company exterminator. With an unbeatable price/performance ratio, $0 down solar loans with tax deductible interest, retention of all incentives and full system ownership, Hyper X Solar will spell the end of the solar lease and PPA companies. Watch out SolarCity and SunPower because Hyper X solar will be a game changer.

  • Report this Comment On April 04, 2014, at 8:38 AM, doawithlife wrote:

    Last year, 67% of the costs associated with solar in the US was associated with installation. Even with installation costing 2 times the cost of actual materials, solar power now costs exactly the same over 8 years as oil.

    What happens if you remove 2/3's of the cost by installing yourself?

    I realize American's don't know how to do anything with their hands anymore. But who's fault is that? Really sad our ineptness is now an excuse to hold back our country.

  • Report this Comment On April 04, 2014, at 9:50 AM, Dahun wrote:

    Going Green A Luxury Good For Rich At Expense Of Poor

    Prominent environmental leaders tie themselves to the White House gate to protest the Keystone XL oil pipeline on Feb. 13, 2013. Activist and actress...

    Prominent environmental leaders tie themselves to the White House gate to protest the Keystone XL oil pipeline on Feb. 13, 2013. Activist and actress... View Enlarged Image

    Saving The Planet: It used to be said that socialism was the opium of the liberal intelligentsia. But now the drug of choice for the elite is environmentalism.

    The dirty little secret of the modern green movement is that it's become a luxury good for the uber-rich who espouse policies — from carbon taxes to renewable energy standards to closing down coal plants — that impose high costs on poor people who can least afford to pay the green tab.

    A Pew Research Center poll released last week offers further confirmation of this truism. It found that only two major voting groups oppose construction of the Keystone XL pipeline: Democrats who make more than $100,000 annually and Democrats with college or advanced degrees.

    Democrats with advanced degrees oppose the pipeline 51% to 35% — further evidence that a Ph.D. is negatively associated with economic common sense.

    Democrats who earn six figures oppose the project by roughly the same magnitude. No doubt liberal millionaires and billionaires like global-warming warrior Tom Steyer are most opposed.

    This is a big and problematic rift inside the usually unified Democratic Party. For pretty much all other Democrats, a construction project that would create 5,000 jobs with $70,000-plus salaries, reduce American dependence on Middle-East oil and cut our balance of trade deficit is close to being a no-brainer.

    Pew confirmed almost all other polls that find that among Americans outside the White House and the headquarters of the Environmental Defense Fund, Keystone supporters outnumber opponents more than 2-1.

    The fact is, Keystone won't benefit millionaires or university professors much. The lower electric utility costs and the additional hiring from the oil and gas drilling bonanza throughout North America haven't materially affected their lives. Not too many lawyers or community organizers will ever stoop so low as to take one of these blue-collar jobs.

    One study has found that the natural-gas boom has saved low-income families more than $4 billion a year in utility and heating costs. For the financially pinched middle class and poor Americans, these savings are a godsend — and they want more.

    We wonder if wealthy liberals even understand that the green dictates they favor are making the rich richer and the poor poorer. Do they care?

    For a while the environmentalists could fantasize that their policy mandates would lead to "green jobs" for working men and women, but that craze went bust awfully fast. Just ask the Germans who are ditching expensive green wind and solar projects as fast as they can to save their flagging economy.

    What Rep. Nancy Pelosi and her elite Sierra Club friends don't get is that after five years of Obama's green "investments," and nearly 20 million unemployed or underemployed, most Americans are much more interested in saving their jobs than the planet.

    - Investor's Business Daily

  • Report this Comment On April 04, 2014, at 10:07 AM, Dahun wrote:

    Solar is the new darling of the green industry as they find it increasingly hard to site wind farms.

    Both solar and wind are demonstrably unreliable. Wind in a very good location produces power 25% of the time. Solar in deserts about 40% of the time and outside of deserts about the same as wind.

    Each requires back-up power that has to be quick reacting and idling for the 25% of the time wind or solar are producing or under-producing. These back-power plants are normally natural gas. Natural gas for these quick reaction back-up plants are 15% less efficient than a modern natural gas plant operating 100% of the time.

    Power produced from wind or solar even after massive grants for construction (33%) and huge tax credits for each KWH produced still has to be sold with mandates as the highly subsidized power is still 4-5 times as costly as readily available conventional power.

    Because of the reduced efficiency of back-up plants and the need to idle when power is being produced wind and solar use more fossil fuel, produce more carbon dioxide and pollution than a modern natural gas plant. Capital costs are tripled and manpower is more than doubled because of the need for two power plants instead of one efficient plant.

    The only advantage to wind or power is that it gives politicians a great opportunity to practice crony capitalism and give billions to their friends. It is also a very good source of kickbacks in political support and contributions.

    Citizens are 'rewarded' with higher taxes, higher power costs and corrupt government.

  • Report this Comment On April 04, 2014, at 5:18 PM, armslink wrote:

    100% Solar Energy Resource is pure Hogwash for 99.5% of the USA!

  • Report this Comment On April 04, 2014, at 5:28 PM, DanHazelwood wrote:

    I think this article reads more like a rah-rah than an analysis for investors. I think Solar in particular has a lot of potential, but as a FOOL I am not investing based on rah-rah or even sis-boom-bah.

  • Report this Comment On April 04, 2014, at 5:34 PM, swebre wrote:

    Sorry folks. This article title is the kind of stupidity you get from folks who don't understand the details.

    Two simple "Foolish" points to consider:

    1) Solar and wind currently only makes sense for most Americans due to large tax subsidies/rebates. Remove those, and the solar/wind trend would stop immediately. It will be economic someday, just not today...

    2) The fact that there is no economical storage system to keep the lights on when the sun doesn't shine or wind dies is overlooked/ignored. Again, we will get there, but not today.

    Investment recommendations aside, this is a dumb and misleading article.

  • Report this Comment On April 04, 2014, at 6:20 PM, bigjohn327 wrote:

    without the tax credits there is nothing cheap about solar......driving fossil fuels costs up through over regulation does not make solar cheap....wind power is killing the predator birds even endagered species

  • Report this Comment On April 04, 2014, at 6:35 PM, BabyBoomer1946 wrote:

    Boy, what a lot of negative thinking out there. MAN. It appears that large scale solar and wind farms make sense. Have an open mind.

    This article is not recommending that everyone have solar panels on their homes..or a wind turbine in their yards.

    On a side note. We built a new, modest home in 1978. Installed an active 2 panel solar system to pre-heat our water before it went into the water heater. Conservative estimates revealed a 7 year pay back. This is 2014. The system in still working fine. Total maintenance costs over all these years..700. One electric motor/pump replaced, and the main control box replaced (now more of a computer.)

    I am not defending any one source of energy. Lets use all we can, so we are less dependent on any one of them.

  • Report this Comment On April 04, 2014, at 8:57 PM, rmarm wrote:

    Any proponent of solar and wind will always conveniently leave out a comparison of energy density and the implications of it when comparing to fossil fuels or nuclear.

    Please do the math and find out just how much energy it takes to run your house for a full 24hrs (pick a moderate day for each season and average if you are bold), then find what amount of solar panels, windmills and batteries would be required to replace that. You will be shocked at the shortfall of solar/wind and even more shocked at the cost and land areas required. I have yet to meet any solar/wind proponents that have bothered to do this and yet they seem to think that all it takes is a few solar panels and a small windmill. Good luck with that. Fossil fuels have an energy density that is orders of magnitude greater than the alternatives.

    Further, if actually done for a whole city then the question becomes how much damage to the surrounding landscape and environment are you willing to endure to get your solar and wind? The same people who balk at urban sprawl and McMansions should be pretty upset at the fact that solar farms many times the size of the city itself would be required to replace all fossil fuel generation for that city. How about that environmentalism? OK, so we can then just cut back on fossil fuels you say? Again, contribution by solar/wind will always be by an insignificant amount until you get massive scale. No way around this: you can't rewrite the laws of chemistry and physics and there is only so much sunshine and wind in a day and even less in a winter's day.

    A better use of time, money and effort would be to continue to increase the efficiency of energy using products. But even then, just as with auto gas mileage, increased efficiency historically means more miles driven, so less is actually saved. There will be realistic limits to the gains there as well.

    Look into this by doing the math and not just believing what some article writer, politician, celebrity, talking head, or FOOL (like me) tells you. Then judge for yourself.

    Simply believing that solar and wind are capable of significantly contributing to our overall needs is a great example of a phrase I heard about raising children: at some point they all believe in magical thinking; they believe that magical things can and will happen if they just think about it or believe it hard enough. If that were true, you would have won the lottery by now, yea?

  • Report this Comment On April 05, 2014, at 1:22 AM, muirmm wrote:

    rmarm, I did the math. I bought a solar array for my roof, and the loan payment is smaller than my electric bill used to be (NOT counting the tax rebate, which could be done away with). That loan payment will end in 15 years, whereas my neighbors will continue to have to pay for their electricity. If you are connected to the grid, you don't need batteries. And the sun shines at the times electricity is most needed, so it isn't distorting the electricity supply as much as some of the detractors seem to think. Solar cannot become the source of 100% of our electricity, but no one is asking it to. Here in California, it could probably supply half our power, if backed up by hydroelectric generators to smooth out the gaps. Yes, that would require expensive changes to the existing reservoirs and generators, and decades to accomplish. But the alternatives also are expensive, too.

    I love my solar panels. They are quiet and unobtrusive; they save me money, even without subsidy; and when I make that final payment, I will be even happier.

  • Report this Comment On April 05, 2014, at 2:11 AM, ndhosford wrote:

    The examples of the great solar deal are missing a few details. One is the implicit subsidy in the rule that the utility has to pay retail when you run the meter backwards. They should be required to pay equivalent cost to generate less the extra load balancing costs. This will eventually be recognized when the economic distortion of the current laws causes enough blackouts. There might be money making investments for a while but don't hold on to them too long.

  • Report this Comment On April 05, 2014, at 6:00 AM, kickbishopbrenna wrote:

    I see many Fools have seen through the myth..well said Dahun and swebre..Also I think you'll find Denmark's figures are skewed by them purchasing NUCLEAR generated electricity form sweden via an interconnecter. believe it or not, many modern environmentalists believe NUCLEAR is the best and cleanest solution. I know, I was amazed too.

  • Report this Comment On April 05, 2014, at 8:40 AM, Ardnassac wrote:

    The BIGGEST CHALLENGES to the human race in the NEXT 50 years will be:

    1.) ENERGY

    2.) WATER

    3.) FOOD

    All brought on by the exponential growth rate of the human race a population that seeks to share our lifestyle which requires a very LARGE amount of Energy per head.

    Easily obtained Oil, Coal, Natural gas if not already peaked will peak...Fracking will NOT cover the demand in the future..

    Dismissing alternatives is just pure prejudice and what luckyagain said is true if YOU removed the subsidies - including our taxpayer subsidized MILITARY protecting our interests - gasoline would be at least double at the pump.

    Either you REMOVE all subsidies and make it a level playing field or provide subsidies for alternatives.

    It is unavoidable...Nuclear and ALL forms of energy will be very important in the future. Increasing the efficiency of use of Energy is and will become great opportunities in the future.

  • Report this Comment On April 05, 2014, at 10:39 AM, 48ozhalfgallons wrote:

    .... "its in-house operations in 14 states keeps quality tip-top."

    Wow! Solar efficiency has indeed progressed! In house operations.... imagine that!

  • Report this Comment On April 05, 2014, at 11:41 AM, Nodakbug wrote:

    I put my e mail address in the box to get a free report and dthey come back and say it is invalid. They are crazy. It is the e mail I have used for years. athomp7614@yahoo.com. WHy is the rred line under part o the e mail address.

  • Report this Comment On April 05, 2014, at 10:19 PM, fremmons wrote:

    What a sorry article for a financial service. Opening with a series of straw men to knock down is a poor political gimmick, not a Wall Street worthy analysis. Saying "studies show.." without citations is more bush league journalism. The SEC study finding is accurate regarding public lack of acumen in financial concepts. Unscrupulous purveyors will fleece them easily. The cited IEA study describes what Power and Financial experts well know about integrating solar/wind into the power grid. It takes very careful thermodynamic and financial/business analysis to do it economically. Individual home systems are better investments too when the neighbors pay a share the investment cost. If economics truly drove our energy decisions, we would have a lot more nuclear power in our mix, even with our eyes wide open as to all potential risks accounted for.

  • Report this Comment On April 06, 2014, at 7:13 AM, msm3rd wrote:

    In reply to armslink - I live in the Northeast, installed solar panels on my roof, now pay for electricity 3 months of the year (am admittedly an electricity hog), received $1800 for the excess energy I produced last year. So I guess that you think I live in the 99% part of the country where solar doesn't work. You are misinformed.

  • Report this Comment On April 07, 2014, at 5:22 PM, JadedFoolalex wrote:

    muirmm,

    Don't think you'll be so happy when you make your final payment only to have to buy new panels again! Solar does NOT pay for itself, EVER!!!

  • Report this Comment On April 10, 2014, at 4:17 PM, lewn wrote:

    Are fossil fuels a finite source? Will the planets existence only be 2 or 3 or 4 more generations? What gets used after all the fossil fuels are gone? Do we realize how long it took for the planet to create those fossil fuels? Don't most people have kids and grandkids, what do you think about their kids and grandkids and many, many more generations to come? Do they deserve to have some use of this planets fossil fuels and natural resources too? They'll look back at how the planets resources were squandered (especially in the 20th century) and wonder what kind of people could have done this!!! It all boils down to GREED!!!! And our politicians are the very ones who have allowed this to happen!! They do nothing to help and only divide us with their partisan politics! Just remember, fossil fuels are a finite resource which take millions of years for the planet to create!!!!

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