Who Has the Most Cost-Effective Solar CLEAN (Feed-in Tariff) Program?

 
In a new report on U.S. CLEAN (Clean Local Energy Accessible Now) programs, I provide a comparison of solar CLEAN Contract (feed-in tariff) rates across the United States.

Comparing published rates is not particularly helpful, however, because contract lengths vary (from 15 to 25 years) and the solar resource also varies widely. For international comparisons (e.g. Germany), it’s also necessary to account for the currency exchange rate and the federal tax incentives that are routinely factored into U.S. solar CLEAN prices.

Here’s a look at the methodology for normalizing the CLEAN rates for comparison, and two maps illustrating those prices. The maps illustrate how Germany’s mature solar market means Germans pay much less for solar than those in U.S. CLEAN programs, especially when accounting for the federal taxpayer subsidy of local CLEAN programs.

First, below are the published solar CLEAN prices for all U.S. programs that support residential solar, including Germany’s program.  Contract prices are paid per kilowatt-hour (kWh) for the specified contract term.

Residential Solar CLEAN Rates (Germany and U.S.)

Location Price per kWh Contract Term
Germany 19.5 euro cents 20 years
Vermont 27.1 cents 25 years
Hawaii 27.4 cents 20 years
Gainesville 24 cents 20 years
Consumers Energy 26 cents 15 years
NIPSCO 30 cents 15 years

 

The first step is to convert all prices to U.S. dollars. I use an exchange rate of 1.3 USD to euros.

Residential Solar CLEAN Rates (Germany and U.S.; USD)

Location Price per kWh Contract Term
Germany 25.4 cents 20 years
Vermont 27.1 cents 25 years
Hawaii 27.4 cents 20 years
Gainesville 24 cents 20 years
Consumers Energy 26 cents 15 years
NIPSCO 30 cents 15 years

 

The next step is to normalize all contracts to 20 years. So, we adjust prices down on shorter contracts and up on longer contracts to get an equivalent 20-year price (in net present value).

Residential Solar CLEAN Rates (Germany and U.S.; USD, normalized to 20 years)

Location Price per kWh Contract Term
Germany 25.4 cents 20 years
Vermont 31.7 cents 20 years
Hawaii 27.4 cents 20 years
Gainesville 24 cents 20 years
Consumers Energy 20.9 cents 20 years
NIPSCO 24.1 cents 20 years

 

Next, we account for the variability in sunshine, normalizing to the solar insolation in Gainesville, FL (5.3 average annual kWh per sq. meter per day). Jurisdictions with weak sunshine relative to Gainesville will have their prices drop (because they can pay much less per kWh) and places with better sunshine will have their prices increase. Germany sees the greatest adjustment, because the solar resource quality there (in Munich) is just 3.28, compared to 5.3 in Gainesville.

Residential Solar CLEAN Rates (Germany and U.S.; USD, normalized to 20 years, Gainesville insolation)

Location Price per kWh Contract Term
Germany 15.7 cents 20 years
Vermont 25.9 cents 20 years
Hawaii 28.6 cents 20 years
Gainesville 24 cents 20 years
Consumers Energy 16.9 cents 20 years
NIPSCO 21 cents 20 years

 

At this point, we’ve removed all of the disparities between U.S. solar CLEAN programs and can see that some programs (e.g. Hawaii) pay 40% more for solar than the lowest cost U.S. CLEAN (Consumers Energy).

Residential Solar CLEAN Rates (Germany and U.S.; USD, normalized to 20 years, Gainesville insolation)

But participants in the U.S. programs are likely, if not expected, to take advantage of the 30% federal tax credit for installing solar. In Germany, on the other hand, there are no other financial incentives. So, an accurate comparison to Germany would inflate U.S. solar prices by 30%. This apples-to-apples comparison shows that the Germans are paying 50% less for residential solar than comparable U.S. programs.

Residential Solar CLEAN Rates (Germany and U.S.; USD, normalized to 20 years, Gainesville insolation, no federal tax credit)

Location Price per kWh Contract Term
Germany 15.7 cents 20 years
Vermont 37 cents 20 years
Hawaii 40.9 cents 20 years
Gainesville 34.3 cents 20 years
Consumers Energy 24.1 cents 20 years
NIPSCO 30 cents 20 years

The implications of this are remarkable. Solar PV modules and arrays are sold on a world market, so hardware is unlikely to account for the price difference. Rather, the maturity of the German market has significantly reduced the installation and balance of system costs for small-scale solar.

That’s actually a very hopeful sign for the U.S., as these jurisdictions are using CLEAN Contracts to accelerate the growth of their solar market and capture those same cost savings. Our report provides more detail on these U.S. CLEAN programs, including some lessons learned that may help them mimic the success of Germany’s solar feed-in tariff.

This post originally appeared on ILSR’s Energy Self-Reliant States blog.



CleanTechnica

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