April 17, 2007

Gore's Solar Panels: Bad Investment, So-So Environmentally, Good Politics

As the Zoning Appeals Board of the Nashville sub-city of Belle Meade considers Al Gore's request for a conditional-use permit to install solar panels on the roof of his mansion during its meeting Tuesday night (April 17), I thought I'd take a look at the economics of solar power for the home of perhaps the world's leading advocate for increased use of renewable energy sources as a way to combat global warming and the suspected role of mankind's carbon dioxide emissions in it.

So I went to FindSolar.com, a website promoted by the U.S. Department of Energy, and ran the "solar estimator" on Gore's house.

Based on Gore's average monthly electric power usage from Nashville Electric Service in 2006 of 18,400 kilowatt-hours (kWh) - a figure we know from public records first revealed by the Tennessee Center for Policy Research - and also based on the solar estimator's knowledge of the average amount of sun that hits the Nashville area - calculates Gore would need 8,700 square feet of solar panels in order to generate 50 percent of his home's electicity usage over the course of a year.

Never mind that Gore's home, a multi-story mansion of around 10,000 square feet, doesn't have 8,700 square feet of roof space. We're dealing in a hypothetical here...

FindSolar.com calculates the cost of such a system would be around $781,000 - although Gore would qualify for a $2,000 federal tax credit, lowering his cost to just $779,000. FindSolar says such a system could be financed over 30 years at 5 percent interest for a monthly payment of $4,193.

FindSolar.com also estimates that an 8,700 square-foot solar system, costing more than three quarters of a million dollars in cash, would increase Gore's property value by $152,560 and save Gore $320,083 in utility savings over the 25-year expected life of the solar panels.

It would take Gore 37 years to "break even" (assuming the solar panels lasted that long), according to FindSolar.com.

The upside: It would prevent the emission of 2,263 tons of carbon into the atmosphere, at a cost after utility-bill savings and increased property values, of around $306,000, not counting interest if he financed the solar panels. That's around $135 per ton of carbon not emitted.

The CarbonNeutral Company - the carbon-offsets seller from which Gore's Generation Investment Management firm buys carbon offsets for Gore and for the company's employees - sells carbon offsets at a rate of $18.40 per metric ton of carbon emissions, according to research by the Tufts University Climate Initiative.

At that price, for $303,000 Gore could by "carbon offsets" to "offset" 16,467 tons of carbon emissions - 7.2 times what the solar panels would save.

Clearly, of course, Gore isn't going to put 8,700 square feet of solar panels on the roof of his mansion. The roof isn't that big. But it hardly matters how many square feet of solar panels he installs. Carbon offsets would be cheaper. And if he purchased those carbon offsets from a company that invests most of their money in building wind power farms - or even building solar energy farms in far-sunnier locales like, say, Arizona - he would be doing more to reduce carbon emissions.

So much for the hypothetical. Now for the reality. While the hypothetical 8,700-square-foot solar array would generate 110,400 kWh of power per year, Gore's actual solar panels, if approved, will generate about 6,264 kWh per year, Gore spokeswoman Kalee Kreider told The Tennessean in early April.

Using the FindSolar calculator, we learn that a photovoltaic solar system to generate 6,264 kWh per year would cost $45,000, or $43,000 after the federal tax credit, and would increase the property value by $8,240 while saving Gore an estimated $17,288 on his electric bill over 25 years. It will still take 37 years to "break even" on the deal, and the solar panels would reduce carbon emissions by just 128 tons - at a cost of $17,472 (cost minus utility-bill savings and property value increase). That's still about $135 spent per ton of carbon reduction - for that price via the CarbonNeutral Company, Gore could offset nearly 950 tons of carbon emissions - 7.4 times as much carbon reduction.

He could do even better at some carbon offsets sellers that charge less - and especially if he went with some of the not-for-profit carbon offsets sellers that invest a higher percentage of their gross sales revenue in actual carbon-reducing or carbon-offsetting projects than the for-profit CarbonNeutral Company does.

Economically, Gore's solar panels are a bad investment.

Environmentally, Gore could do more for the environment by purchasing carbon offsets from reputable not-for-profit seller of offsets that spends most of their revenue on actual carbon-reducing projects.

Politically, though, Gore pretty much has to put the solar panels on his roof.

Wednesday April 18 Update: Gore's request for a conditional-use permit for solar panels was approved Tuesday night.