Solar power's economic hurdle

At one extreme of the debate on renewable energy is a group that says it isn't economic; at the other extreme is a group saying it's vital, in order to save the planet. In the gray area between these views, there have been surprising developments of late. These suggest that one form of renewable energy-solar power-has broken the viability barrier. A traditionalist view was recently put by Robert L. Bradley Jr., president of the Institute for Energy Research, Houston, in a report called

Oct. 20, 1997

3 min read

David Knott
London
[email protected]

At one extreme of the debate on renewable energy is a group that says it isn't economic; at the other extreme is a group saying it's vital, in order to save the planet.

In the gray area between these views, there have been surprising developments of late. These suggest that one form of renewable energy-solar power-has broken the viability barrier.

A traditionalist view was recently put by Robert L. Bradley Jr., president of the Institute for Energy Research, Houston, in a report called "Renewable energy: not cheap, not 'green'."

"Current state and federal efforts to restructure the electricity industry," thundered Bradley, "are being politicized to foist a new round of involuntary commitments on ratepayers and taxpayers for politically favored renewables, particularly wind and solar.

"Even improved new-generation renewable capacity is, on average, twice as expensive as new capacity from the most economical fossil fuel alternative. The uncompetitiveness of renewable generation explains the emphasis pro-renewable energy lobbyists on both the state and federal levels put on quota requirements, as well as continued or expanded subsidies."

Green math

At the radical end of the spectrum is campaign group Greenpeace, which has published a report intended to justify its call for a worldwide phasing out of burning fossil fuels.

Chris Rose, Greenpeace deputy executive director, said, "Existing climate policies are just a stab in the dark. This study finally shows how far you have to limit world use of oil, coal, and gas in order to protect the climate.

"It's basic mathematics. This report calculates that the world can only afford to burn another 225 billion tons of carbon-about a quarter of known reserves-before causing dangerous climate change."

Whether the traditionalists like it or not, radicals have helped change the public view of energy economics. Now extra cost is thought worthwhile, if produced electricity is from an environmentally friendly source.

Profit seekers

The petroleum companies most sensitized to public opinion, at least here in Europe, are Royal Dutch/Shell and British Petroleum Co. plc.

Both companies have been hit by public outcry-Shell over Brent spar, BP over West of Shetland development. Both are investing in solar power.

Last month, a Shell executive declared that by 2020 renewable resources could be providing 5-10% of the world's energy and possibly 50% by 2050 (OGJ, Sept. 29, 1997, Newsletter).

BP earned £50 million ($80 million) from sales of solar panels last year and expects to rake in £600 million/year ($960 million/year) by 2010. Shell intends to invest £250 million ($400 million) over 5 years in solar power technology.

Also, BP Solar won a contract to supply 500 solar power units for the athletes' village to be built in Sydney for the Olympic Games in 2000. The village will be able to generate 1,000 MW of electric power.

I have a soft spot for renewables and always hoped they would prove feasible. Shell and BP can't afford soft spots. If they are putting money into solar, I'm sure they expect to profit, with or without subsidy.