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Generating your own solar power seems wasteful

December 8th, 2006

As mentioned previously, we aren’t going to be able to afford solar panels for our house, initially. We are planning space and wiring for them, and are confident solar technology will become quite affordable within a decade. Unfortunately, even our smallish appetite for 350kWh/mo. can only currently be sated by a $25,000 photovotaic array (factoring in the amount of sun we’d receive in Toronto).

But considering 350kWh/mo. only costs $49.221 from Toronto Hydro, I decided to run the numbers on the approximate cost of ownership for solar panels and was very surprised at the result. The disruptive force in the calculations was Bullfrog Power.

Provider Monthly
(25 year span)
(35 year span)
(25 year span)
(35 year span)
Toronto Hydro1 $49.22 $49.22 $14,776.00 $20,672.40
Solar Panels3 $146.152 $104.392 $43,844.25 $43,844.25
Bullfrog Power1 $65.52 $65.52 $18,756.00 $26,258.40

Even though I’ve skewed the numbers in support of buying solar panels, that option is still 60% more expensive, for no real benefit to the environment (considering one can buy clean power from Bullfrog).

When I first thought about writing this entry, it was supposed to be about the revolution of distributed power generation that will come with low-cost, high-efficiency solar panels. But now that I’ve run the numbers I don’t see that happening.

A relatively small power generation company like Bullfrog can already sell green power at very reasonable prices. Given the overhead involved in managing one’s own power generation, Bullfrog are in a much better position to take advantage of changes in technology than individual consumers are. When prices drop for individuals, they’ll drop even more for Bullfrog, and other power generation companies.

In fact, companies are just the sorts of long-lived entities that thrive on long term capital investments such as solar panels… when there is actually any profit in it. The fact that no power-generation company is generating with solar (at least not around here) leads me to believe that buying solar panels for home power generation is terrible investment (financially and environmentally). For those living anywhere near an urbanized area, it seems likely there will always be a company able to generate green power with the latest technology far more efficiently than any individual could.

Using solar water heaters in the home still seems like a good idea. (Water can’t be heated ‘cleanly’ by someone else and then piped into your house.) But this also raises a question: If heating our home or water via non-solar means, is it better to do it with less efficient but green electricity, or more efficient but dirtier natural gas? I will have to do a few more of these types of studies on the cost of solar water heaters for tap-water and radiant floor heating vs. electrical heaters.

At the moment, I’m thinking the answer might just be Bullfrog.



1 Factoring in GST, the cost of power from Toronto Hydro is $13.17+10.3cents/kWh (source).
The total cost from Bullfrog is $13.17+14.1cents/kWh (source).
These numbers are not this simplified at either of these sources. You will have to work through their breakdowns to come to the same numbers.
2 Monthly costs for the solar panel solution is based on being able to borrow money at 5% (which is probably too low) via our mortgage, and paying it down with the rest of the mortgage over 25 years. This seems reasonable as anyone with a mortgage is choosing to spend money on solar panels instead of paying down their mortgage. As such, 5% is the true cost of those dollars regardless of where the money comes from. The 35-year calculation is simply the cost incurred over 25 years, spread over 35 years. These numbers are actually skewed in favor of solar panels because of the generous interest rate used, not factoring in any maintenance over their lifetime, and not including the monthly charges for connecting one’s panels to the grid (which you pay even when you are providing power to it).
3 Solar panel pricing is for the CE20180SB kit from Mr.Solar and converted to Canadian dollars. (source).
Posted by Colin