Today, Nanosolar announced the availability of solar panels at a cost of just $1 per watt.

Apparently while everyone else in the industry was off finding ways to make solar panels more efficient (an essential task, for sure), Nanosolar decided to see what breakthroughs they could make in the areas of manufacturing. The results are stunning.

To put this one-dollar-per-watt announcement into perspective, the current cost of solar panels is, at best, over $4 per watt. So an array that formerly would have cost $50,000 might now run just $15,000 (there is equipment involved beyond just the panels) and pay for itself in 15 years. This beats the pants of the old payback period, which was: never.

Unfortunately, their production capacity is already allocated out for the next 18 months, but we’re going to have to take a more serious look at incorporating this type of technology into our home sooner rather than later, me thinks.

Let the revolution begin!

[Update 2007.12.24: I’ve heard an unsubstantiated rumor that the cost of panels will now be 90 cents/watt. (No mention of this on the Nanosolar site.) Here’s a good overview video of Nanosolar’s thin-film technology.]

The helpful folks at SESCI have pointed me to a web site that details the rebates available for those putting solar power onto the grid.

For each kilowatt-hour generated, the producer will be paid 42 cents. That rate is “set for the entire 20-year length of the contract.”

Since we only pay 10.3 cents to take the energy off the grid, that sounds like solar panels would be a LOT more affordable; even profitable! However, there are a few catches.

For example, “new contracts will be subject to review every 2 years,” which sounds a whole lot like the guaranteed term for the $0.42/kwh offer is 2 years, not 20. Additionally, to put power onto the grid, we would have to pay an $800 initial fee AND $800 per year. (There are efforts under way to reduce or eliminate this fee, but that’s how it is today.)

If we assume that energy costs will increase at a rate of 5% per year, and we will always use 4200kwh/year (for simplicity) our energy costs over 25 years will be $28,189.53 from Toronto Hydro, or $35,806.78 from Bullfrog Power. (This latter number isn’t quite fair since presumably wind power will not become more expensive to produce over time.)

Solar Panels come with the previously mentioned up front cost of $25,000 and we are assuming the cost of borrowing that money is 5%. We also have an up front cost of $800 to be a power generator and must pay $800 per year to put power on the grid. (These costs should probably also increase at a rate of 5% per year, but we’ll leave flat for this example).

[Update 2007.11.03: It seems our (relatively low-light) region would require us to purchase a $50,000 solar panel array to cover our current electricity requirements. I have not updated the numbers below to reflect this amount.]

Even if we assume we are consistently paid 42 cents/kwh over 25 years for power we put onto the grid (though I think it’s more likely it would actually drop) and we assume we would be buying power back at the market rates from Toronto Hydro, our electricity expenses on a solar home would be $49,336.80.

So the ‘incentives’ that were missing from the previous calculation actually revealed the additional costs involved in putting power onto the grid. Solar panels would appear to be 38% more expensive than just buying clean power from Bullfrog.

I believe these numbers now factor in all financial incentives, and the projected increase in energy costs of 5% per year.

Today an article in Reuters indicated that annual solar panel production will double for the next two years!

As I’ve previously discussed here, I think solar panels are not the best value for your sustainable dollars (yet). But I do think few technologies have as much potential to disrupt the way we think about… anything powered.

It’s hard to imagine what sort of changes a society would go through when power generation is so widely distributed. And since there will be no need for it to travel long distances, we should probably expect to see a rise in DC appliances. The only reason I know of to use AC is that DC can’t travel over a wide distribution network.

I may be overly optimistic, but I think the article underestimates how quickly solar will be adopted. To me, most people seem keen to both end their relationships with their utility companies and implement technologies that make them more self-sufficient.

I now think we might just have solar panels on our own house as early as 2010. (Edit: Reading that now, it probably is overly optimistic: 2012.)

Alex had mentioned that as a general guideline, energy prices are assumed to rise on average 5% per year, even though they’ve risen 7% per year in recent years. I actually find it hard to believe this would be the case over a 25 year period. This would mean energy costs would be over 3x more expensive than they are today (without factoring in inflation) by 2031.

As energy prices rise, the viability of various technologies to make energy generation more efficient rises. But if we do assume this number is correct that just removes the interest portion from our calculation and results in a monthly cost for solar panels of $83.39, which is still more expensive than simply buying the power from Bullfrog.

This advantage might disappear if there were financial incentives offered for providing solar power to the grid, but so far I’ve been unsuccessful at finding any. I had heard that the price paid for adding power to the grid was significant, but have also heard from someone else that those incentives are no longer available.

In addition, when those subsidies were offered, there was no commitment as to their term. An incentive that can be withdrawn at any moment is not much of an incentive at all. I’ll have to investigate further.

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.

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.

FOLLOW-UPS TO THIS POST ARE NOW AVAILABLE (Follow-up 1, Follow-up 2).

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While solar panels are not something we’re considering in the immediate future, we’re still keeping an eye on it as an emerging technology.

An article in the July, 2007 edition of Wired magazine had me performing the obligatory ‘of course’ slap to my forehead as I read about The Sunflower: an array of mirrors that collect light over a few dozen square feet, and concentrate it up to a single, highly efficient solar panel. (So, instead of having to invest in many solar panels to collect light over that much area, you only have to buy mirrors and motors to control them.)

This setup is actually being designed for residences and apparently cuts the cost of going solar by 30%. That’s still outside our budget at the outset of this project, but great to see innovations driving their price further down.

Technology Review also published this article a few months later, along the same lines.

A press release from LED Lighting Fixtures today announced they had received confirmation from NIST that their prototype “PAR 38 self-ballasted lamp” produces as much light as standard 65-watt incandescent bulb (658 lumens) while consuming just 5.8 watts of power.

As pricing is still unavailable it’s hard to say if this is finally the bulb that will make LEDs practical for the general public.

I continue to be quite confident LEDs are the future of lighting and dearly wish we had just skipped development of mercury-laden compact-fluorescent bulbs and had put that effort behind LED technology.

Since we hope/plan to have solar panels one day (which produce DC voltage) and since LEDs operate most efficiently on DC power, we’re hoping to run DC wiring to our outlets and ceiling fixture in anticipation of one day making the switch to more DC powered fixtures and appliances.

In a previous post about using Bullfrog instead of buying Solar Panels, I used 5% as the amount by which energy costs would increase each year. I also noted that it was probably unfair to apply this rate to Bullfrog since the costs of wind power and especially solar power would likely decline over time.

Oddly enough, energy prices seem to have dropped for both Toronto Hydro AND Bullfrog Power. I didn’t make careful note of the energy cost breakdown last time, so here it is for future comparison:

Other than the rate for power from Bullfrog, the energy pricing information comes from Toronto Hydro’s web site. In addition to the above amounts there is a flat ‘customer charge’ of $12.68 ($13.44 with GST) per 30 days.

So the standing question is whether you can afford a small markup to your electricity bill to know that your power usage is coming from low-impact hydro, wind and solar sources, instead of nuclear, high-impact hydro, and coal? It seems like a ridiculously small price to pay, to me.

Our fifth design meeting continued to refine the garret and the access to it. It now includes an area which will be open to the ground floor and should act as a large chimney to allow hot air to rise and vent out, in the summer. We decided a curved, narrow but fixed staircase would be the best way to access the garret (instead of a pull-down staircase that would be less stable). The area will also include a narrow walkway through open ‘chimney’ to get to the attic space at the front of the house.

I took this opportunity to discuss my previous ideas about the economics of solar panels with Alex. He had read the article and suggested I’ve messed up the math in a couple of ways:

1. I didn’t include the usual 5% rise in energy costs (5% is used even though energy costs have actually averaged 7% in recent years).
2. There was no allowance given for the financial incentives offered by the utilities.

I’ll continue the discussion of these factors in the follow-up to the solar panel post.

Our fourth design meeting was really good.

The plans are quickly becoming solidified, but that didn’t stop us from making significant changes here and there. The small storage room at the top of the house wsa turned sideways, at Alex’s suggestion. It will now allow quite a bit of light into the main stairwell, and the room will not block the light from getting to solar panels on the south roof.

We had also sent Alex a variety of photos from our neighbourhood showing what style of houses we liked, and which we didn’t. This was definitely a big help in shaping the ‘face’ our house would have. Taking photos of interiors and exteriors that capture your interest will be extremely useful as you move through your design process.

I would really like to post some schematics to show everyone, but I’ve promised the architect I wouldn’t show unfinished work (which I can completely understand — I hate doing that, too). As such a lot of the discussion about why we chose to position everything where we did, will have to wait a few more weeks.