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5 Reasons the Price of Utility Solar is Higher than Reported

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Solar-Farm-in-China-737-300x2661Last week, a report concluded that utility solar was more cost-effective than residential solar.

It implied that everyone would be better off letting utility companies produce or buy solar, with residential solar falling to the wayside. John Farrell, of the Institute for Local Self-Reliance, published an article refuting the report’s findings. Here are five reasons the price of utility solar is no less than distributed solar:

1. The study was partially funded by the Edison Electric Institute, which is a for-profit utility trade group that has previously tried and sometimes succeeded in charging their customers more to make solar seem less financially friendly.

2. The report was prepared by solar developer First Solar, which sees residential solar as a direct threat to their larger utility-size solar farms.

3. The study didn’t take into account the fact that utility solar must travel from the utility company to the user, as opposed to residential solar, which creates energy on location. Providing access to the utility company’s power often requires building expensive infrastructure and increases the price of utility solar.

4. Residential solar brings more economic benefits to the individual users of the technology, whereas utility solar brings more profit to the utility companies themselves. The report did not take this into account.

5. The low price of utility solar may seem attractive to people who want to see a switch to renewable energy as soon as possible. It may seem like a good way to make the technology mainstream, but the evidence suggests that this is not the case. For instance, in Germany, 25% of the country’s power is derived from renewable sources, with 7% from solar. 70% of the solar panels in the country are 500 kilowatts or less. For comparison, the 550-megawatt Topaz Solar Array was under construction for seven years over which 8,000 megawatts of residential and commercial solar panels were installed over that period.

Farrell asserts that he still supports large solar projects by utility companies, but that they are not more financially feasible nor better for the adoption of solar into the mainstream.

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