Penciling Out

by Carolyn Chase


One Cut to the Chase reader wrote to disabuse me of the notion that installing solar electric generating panels on a home could be a rational economic decision.

"I guess I have to agree that there 'has never been a better time to install solar electric.'" he wrote.

He continued, "But there's a big 'but.' I was seriously considering putting on a solar photovoltaic roof and did the preliminary cost estimating. The bottom line -- I was sad to see -- was that even with some optimistic estimating, as a financial decision it will never pay for itself (unless power costs get a lot higher).

Briefly, it would cost around $17,000 to put enough photovoltaic on my roof to cover about 80% of my power cost. On the surface, that seems to hit the break-even point in about 15 years. Well, that's not terribly attractive, but still seems like it might be worth doing: After all (a) I'd be putting my money where my mouth is and -- although 15 years is a long haul, after that it would be pure gravy.

"The big hole in it comes when you realize that if I took that $17,000 and put it in a very, very conservative investment (Bank CDs, say) at only 5% for 15 years it would be worth ~$ 36,000 at the end of 15 years -- meaning that although I've finally paid back the initial investment of $17K, I'm now $19K behind where I would've been if I never put the solar in. And the longer I run out the projection, the behinder I get.

"Now I admit this analysis is only looking at straight dollars directly in my pocket (it doesn't analyze the costs of the pollution I saved, the wars that might not happen in fights over fossil fuels, the environment saved by not blowing off the tops of coal mines, etc.). But we need to be clear that buying photo voltaic is not a financial decision at this point."

I can't really argue with any of this. The bottom line being measured as it is, it will never "pencil out." Environmentalists are told this all the time about new pollution prevention technologies. Actually, it's said about all new technologies. Seat belts, airbags, calculators and computers - they were all "too expensive" when first brought to market. When you compare new technology in those terms, it will never "work out." New technologies and visions can never compete on that basis.

We are out-of-balance in a system of measures designed to be out-of-balance. "New money" can never make up the time value of old investments - especially those made without any environmental considerations. That analysis is the same kind of analysis pushed every day by polluting and destructive coal plants - and all manner of poor practices. Too often, so-called industry "best management practices" are really the cheapest thing they can get away with - not scientifically-based standards supported by continuous measurement and monitoring. We are in the main, sentimental about environmental decisions because our system of financial choice-making devalues it. Our economic measurement and reporting systems devalue pollution and environmental destruction of all kinds. Our culture devalues it. We literally can't afford to improve our practices because better practices are deemed too expensive.

At least this astute reader acknowledged straight-up that he was not financially measuring the other values involved. It was a fundamentalist analysis done on the terms of those who believe that their predicted time value of money should be the only calculation or the utterly dominant one in making such a decision. And it is certainly a responsible evaluation in most circumstances. But do we run those analysis on SUVs or swimming pools? On marriages or children? Undoubtedly, some do. I would argue that none of the most important decisions in most peoples' lives are purely financial decisions.

We also experience frequent power outages in my neighborhood - right in the city. An investment in solar generating capacity for my property can provide a measure of independence and reliability currently unavailable from San Diego Gas & Electric.

This brings up another unpriceable factor - getting some independence from our complacent and arrogant local utility, which has refused to underground ugly utility poles and wiring in neighborhoods in the City of San Diego - denying the importance of safety, reliability, aesthetics and environment - all the with collusion of local officials. Hideous wires are strung across otherwise stunning vistas. For more than 30 years, those who live and work in new developments have enjoyed the benefits of underground utility services. All utility customers have shared in the cost of this effort. Yet fully 48% of residents in the City of San Diego were still served by overhead lines as of 1995. By contrast, less than 5 percent of the customers in the other cities in San Diego County are still serviced by overhead lines. Even in the unincorporated areas of the county with many rural areas, the proportion of customers with overhead lines is only about 16 percent.

Furthermore, San Diego Gas & Electric/Sempra Energy's shortsighted practices have forced the removal of thousands of mature trees from around San Diego and Orange counties. When you refuse to underground, trees grow up into the powerlines. In trees vs. powerlines, the trees get blamed - and killed outright. That's our dominant cultural choice. That what "pencils out."

Unfortunately, quality of life is hard to get to pencil out in this day and age. Is it precisely the things that are hardest to measure financially that may be the most important for us find ways to factor in? What will it take for us to value, well, our values?

Right now, most people can't afford to try. Most agencies and businesses seemingly aren't even allowed to - if they even have the interest. Innovation and progress is only achieved with risk-taking and leadership - by those who can afford it.

Tax incentives have now put solar energy technology within reach of many successful business people and hi-tech employees. The desire for increased reliability and independence, and support for helping to build new kinds of infrastructure with new economy dollars is what has what brought Altair Energy to town. It can become Southern California chic to see solar panels along with swimming pools or tennis courts. If that's what enough of us really value.