THE REAL VALUE OF SOLAR ELECTRICITY

By November 20, 2016blog

Written by Nani Pradeepan, P.Eng.

Electricity is a commodity regardless of the how it is generated from different resources by different suppliers. But like many commodities, the cost of electricity varies depending on the time and location it is delivered.

Utilities pay as low as $0.04/kWh for electricity generated in centralized plants but the average charge to consumers is $0.17/kWh. Why such a big range between wholesale generation costs and retail selling price? There are costs involved from generation to retail sales – generation, transmission and distribution. Services associated with generation, transmission and distribution are provided by monopoly utilities which are not under any competitive pressures hence the cost associated with these services can only go up.

By investing in clean solar power system, people can gain greater control over their energy bill while making the electric system more efficient and contributing to the environment.

Listed below are some of the benefits a rooftop solar system offer to customers and utilities.

Avoided Energy Costs – Generating electricity from rooftop solar makes it possible to buy less electricity from a utility. Because this electricity is generated locally and does not have to be transmitted hundreds of miles from a centralized power plant, energy losses that happen along the way can be avoided. This means less electricity needs to be generated by centralized power plants, and the costs of generating that electricity can be avoided.

Avoided Infrastructure Costs – By reducing demand for utility-provided electricity, the rooftop solar system cuts down on the amount of costly infrastructure necessary for generating, transmitting, and distributing electricity. Power plants need sufficient capacity to meet the electricity demand from all customers. This also requires transmission and distribution infrastructure to deliver that electricity to the customers’ homes and businesses. When electricity is produced on site from solar power system customers require less electricity from central power plants and results in less investment in generation, transmission, and distribution capacity and related costs can be reduced.

Avoided Emissions – By reducing amount of electricity needed from a centralized power plant, the rooftop solar panel also helps to avoid emissions coming from those plants.

All of these avoided costs have value in the form of environmental and electric system benefits. I can’t think of a single reason why we cannot transition to a more consumer and environment friendly solar power system to generate electricity locally.

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