This [unedited] guest post is by a student in my EEP100 class (background post).
Please praise/critique/comment on its economic quality and importance to you.
Alessandro Ku says:Nowadays, we can adopt solar power at home by installing solar panels on the rooftop or on the ground. It is environmental friendly that the solar power can be converted into electricity for daily use. But in an economic point of view, is it efficient or relevant that we can now use this method nationwide?
The electricity generated by this kind of solar insert can generally cover up to one-third of electric bill of a normal family. But for the installation fee, it is roughly $20,000 which still doesn’t include any further maintenance fee. So, the saving on the electricity generally cannot cover the high fixed cost.
There is no economic benefit using these solar panels at home. However, there are social benefits that by using more renewable energy and resources and producing less pollutant would improve our environment. Because of these social benefits, some European countries are providing subsidies for the installation of solar panels.
Back to the United States, should we also subsidize the installation of solar panels? To me, I don’t think it is a perfect solution. It is true that providing subsidies will shift out the supply curve causing a higher quantity demanded at a lower price. But on the other hand, the subsidies will become one more additional heavy load for our government still suffering in the economic recession. I think we should wait because the time for the solar power is not yet mature. As technology improves, the cost will decrease that also lead to an out shift of the supply curve. We are looking forward to the day when the economic benefits and the environmental aspects can finally meet at the optimum equilibrium providing us the best outcome of all-time.
Bottom Line: Solar Power is not yet one of our efficient energy option, but with no doubt it is a good start.
Note from DZ: This post explains that solar plants (NOT home installations) costs 4-6x the cost of a traditional plant (with carbon capture) and 18x the cost of a natural gas-fired plant.
3 comments:
Wow, David. For an economist, I'm surprised you linked to that post. By "scaling-up" a solar power plant it assumes zero economies of scale. Really? And it's basically stating that capital costs are the only costs that matter. By the post's own logic, everyone should build natural gas plants, because they only cost 1/3 as much as coal plants. Finally, it doesn't take into account any externalities. The NAS just put out a report stating that the average coal plant causes indirect costs to society of 3.2 cents/kWhr, and that doesn't include climate change, water pollution, or the effects of mining coal (see the recent NYTimes series for more on coal mining and water pollution). Teacher gets a D.
@Brian -- good point on scale; I think that NG plants ARE cheaper than coal; externalities DO matter. OTOH, I just linked to it; I didn't write (or endorse) it :)
I think this is undoubtedly the best way to reduce cost cutting and also help us to reduce our dependency on other natural resources for energy..so keep going and go green.
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