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THE MACRO-ECONOMICS OF ALTERNATIVE ENERGY:

including home solar power systems 

There is a similarity in the economics of all alternative energy sources.  Consider hydro, solar, wind, or wave.  They all have high inputs of capital and manpower in their construction phase.  After that, their running costs are miniscule by comparison. 

A huge hydro station can be operated by half a dozen staff.  A large solar thermal installation can be operated by a few.  A home solar power system has no operating costs once installed and, in fact, can produce an income for the homeowner.  In each case, there will be maintenance costs, but they are slight compared to the capital costs at the outset.  The “fuel” is free

Coal and oil-fired power stations also have large capital costs during the construction phase, but they also have to have storage facilities for the fuel they use and transportation systems to bring the fuel to the plant. Maintenance costs can be considerable and plants are often closed for major maintenance jobs.  Unlike alternative energy sources, there is a continuous need for fuel which has to be paid for at a cost, which, in most cases, is not under the control of the plant. 

In both cases, there is a transmission system that has to be maintained or put in place.  Most developed countries have a national grid system.  Much of Europe is now included in various linked grids; Spain provides much of Portugal’s power, and Britain and France exchange electricity through a cable under the English Channel.  The more self-sufficient a country becomes in its energy supply – and this is the strength of the proposed alternative energy infrastructure – the less need for an internationally linked grid. 

(While there has been much talk about covering the North African deserts with some form of solar power generation that is still many decades away from becoming a serious proposition.)

For the homeowner, contemplating his or her own home solar power system, self-sufficiency comes with improved battery storage.  Today’s batteries are still too large and the storage technology has not advanced far since the first car battery was made.  Having a grid-linked power system has the disadvantage of your system going down if the grid goes down. That’s why improved storage technology is so important.

Jack Callon 

11 December 2007