What’s the Return on Investment on Solar Thermal?
I just received this terse question from a reader: “What’s the ROI (return on investment) on solar thermal?”
I responded, hoping to prompt more discussion: “That’s an interesting but impossible question to answer. What is the nature of your interest in the subject, if I may ask?”
I post this brief conversation because it’s indicative of two much larger and incredibly important issues:
1) Computing the ROI for investors in new technologies like these is impossible, as no one can pick the winners from the losers at this point. Personally, I’m betting on solar thermal, and, though many agree, there are far greater minds than mine that don’t see it this way.
2) Not to get too flippant, but what’s the ROI on saving our civilization from destruction? According to Lester Brown, whom the Washington Post calls “one of the world’s most influential thinkers,”
Ice is melting so fast that even climate scientists are scrambling to keep up with the shrinkage of ice sheets and glaciers. The melting of the earth’s largest ice sheets—Greenland and West Antarctica—would raise sea level dramatically. If the Greenland ice sheet were to melt entirely, it would raise sea level 23 feet. Melting of the West Antarctic ice sheet, the most vulnerable portion of the Antarctic ice because of its exposure to both warming air and warming ocean water, would eventually raise sea level 16 feet. Many of the world’s coastal cities would be under water; over 600 million coastal dwellers would be forced to move.
Solar thermal holds the single greatest promise of clean, abundant, inexpensive energy — in the absence of which mankind will be unable to make its way across these next critical 50 years.
I’m sure this latter point was not contemplated in the reader’s question, but some folks may find it worth considering.
Craig,
I respectively disagree with your statements that 1) “Computing the ROI for investors in new technologies like these is impossible” and 2) ‘Solar thermal holds the single greatest promise of clean, abundant, inexpensive energy”.
First one can make a fairly good estimate of ROI for many different technologies, including both high and low temperature central utility solar thermal using NREL’s Solar Analysis Model (SAM). SAM is free. open to everyone, and easy to access after “signing up” for the download. SAM has templates that are fairly representative of performance and cost assumptions on both initial and operationing expenses. The model is spreadsheet based, relatively simple to use, flexible and readily understandable.
What you don’t get is the details on how to actually go about putting a solar thermal plant in the ground. That is the “what” of the art of the science and the “how” of project development…computing likely investor returns is not difficult.
If you are saying that the ROI can be made to be anything without a touchstone in reality, then I agree with you. If you are saying that one doesn’t have the information or tools to either evaluate the technology as an investor or the ability to even access these tools, then I disagree.
As to your assertion that Solar thermal is the single greatest promise, I again argue differently. Solar thermal has its place in the mix, but its so fraught with development issues that it will not be a technology going forward beyond those projects that are already breaking ground—specially in the US. Abengoa, Solar Millennium and even E-Solar are pulling out of the US solar thermal market and/or not being able to make a go of it (all for different reasons I might add).
What made central utility solar thermal workable is storage, and hence the ability to provide firm capacity rather than the as available capacity provided by PV and wind. But that’s the case today…which is why solar thermal (CSP) is enjoying its current place in the sun. But that time has come and gone. Tomorrow will differ in that PV and Wind will enjoy, through new technology and new use of existing technology, the same benefits of firm capacity. Solar thermal is most likely giving way to PV and in a fewer instances, to Wind.
In my mind the real question is the necessity of central utility plants at all, at least in the form they are today. Distributed technology (for solar) has always made better sense. With today’s economies of scale in PV manufactureing, and the advent of newer technology coming down the pike, their will be no need to embed the cost of transmission into the cost of new remote generating facilities. While their are always exceptions, I think that this will be the rule.
If I am mistaken in thinking that you are talking CSP application and are instead talking rooftop solar thermal for pool, water heating and in a few cases, space heating, then I totally agree with you as to that being the next, best (old) thing.
Enjoy,
Barry Saitman
Second
I think your reader was probably talking about solar domestic hot water(DSH), not CSP. If I’m right, he’s talking about an old technology, not a new one, but the question is still nearly impossible to answer, since some solar thermal installations (direct heating of rooftop tanks in frost free climates) have extremely high ROIs, while solar thermal space heating tend to have poor ROIs in many climates because it is only used for a fraction of the year.
Solar Domestic Hot water systems also vary widely in price from region to region, as does climate, and household usage also complicate the analysis.
The ROI of any system can be estimated by comparison of cost of fuel NOT expended due to the alternative system in question. “Saving the Planet” while noble if not questionable (in the minds of some), does nothing to answer an economic question. This answer is at face value “evasive” at best. This type of answer is all the skeptic needs to roll there eyes. Case studies and proper computer/economic modeling WILL both answer the question appropriately AND promote this energy alternative. If it doesn’t make economic sense, then, it doesn’t make sense. Tragic, I know. The English have a term for this:”Tragedy of the commons”.