Rooftop solar – Part 2: When is it a good idea?

The previous post discussed some hard realities about much-loved rooftop solar panels. Despite this necessary reality check, however, rooftop solar can still be a good way in which to cut your personal carbon footprint in a socially just manner. Two important factors are covered: location and subsidies.

The first factor, location, has a very large influence on the value of solar power. For example, if you live in a location at high latitudes where electricity demand is highest in the winter when solar power generation is close to zero, rooftop solar is not a good idea. If, in addition, cloudy weather is common, it becomes and even worse idea. Check out this page for a more technical study finding that almost no solar PV should be deployed in north-west Europe even if technology costs fall by another 60% and the CO2 price rises to €20/ton.

On the other hand, if you live in a very hot location where solar insolation is very high and very well aligned with peak demand from air conditioning, rooftop solar becomes a much better idea. Although it is doubtful whether solar power will actually close any thermal power plants, it may be able to partially defer investment in future expensive natural gas peaker plants. It can also help protect the electricity system against demand overshoot stemming from air conditioning during extreme heat waves.

Palmer - Solar alignment with peak

In the longer term, the value of long-lived solar PV systems in very sunny regions could potentially be enhanced with an hour or two of affordable battery storage shifting output from the noon peak to the afternoon/evening when demand is typically highest. The example above clearly shows why this would be beneficial.

Battery technology is not yet affordable for this purpose, but could be within a decade or so. However, if storage remains uneconomical and too much solar PV is subsidized into existence, it could cause substantial problems for the electricity system via the rapid evening ramp required by the so-called “duck graph” (below).

California duck graph

When considering the second factor, subsidies, it is important to consider that any subsidy payment that you receive must be taken from someone else and this wealth transfer can sometimes be very unfair. Overly generous subsidy programs can be badly exploited by wealthy homeowners plastering their entire roofs full of solar panels, ultimately driving up electricity prices for poor families that spend a sizable chunk of their disposable income on energy (e.g. Germany).

It is also important to remember that net-metering (where your meter runs backwards when your solar panels produce more electricity than you consume) is also a form of subsidy because the value of rooftop solar is much less than the value of retail electricity. Since solar power (without large amounts of energy storage) displaces little, if any, power generation or distribution infrastructure, increases in net-metering forces utilities to distribute these fixed capital costs over fewer units of electricity sold. In this way, net-metering forces people without solar power (who now have to buy more expensive electricity) to subsidize people with solar power (who now consume less grid electricity).

Doing the math behind subsidization can be tedious, but it is a good rule of thumb that you should not exploit subsidies to install solar power if your country/state gets more than 1% of its electricity from solar PV. Below 1% the effect of solar PV on the entire system is negligibly small and can be safely ignored. Currently, only a few countries in Europe together with Australia and California get more than 1% of their electricity from solar PV.

So, in summary, rooftop solar is a good idea only in sunny locations where subsidies (investment tax credits, feed-in tariffs or net-metering) are either completely absent or where solar PV penetration remains below 1%. As shown in the map below, this still leaves many opportunities for the deployment of rooftop solar by environmentally conscious individuals.


Filed under: Consumption patterns – The green economy

4 thoughts on “Rooftop solar – Part 2: When is it a good idea?”

  1. I wonder if battery stoage is needed to deal with the difference between supply peaks at noon and demand peaks in the afternoon. Wouldn’t it be more efficient to position the solar panels in a southwest direction to catch the afternoon sun, instead of south? While the total electricity yield may be slightly reduced, you would avoid the cost and energy losses of battery storage, which is never 100% efficient.

    1. Yes, this is already done in some instances, but the economic benefits to solar plant operators are uncertain. It also depends significantly on the local demand profile. In some areas, demand peaks in the afternoon, implying that such a strategy can be very useful, while in other areas it peaks in the evening, leaving storage as the only solution.

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