Economic Analysis
Schools are strapped for funds and programs like Sports, Music and STEM often depend on donations from parents. For wide deployment of solar in schools, technology alone isn’t sufficient - the economics are just as important. We need the right economic tools and policies to make it affordable for schools.
We need to turn the question from “how much will it cost?” to “how can we improve school’s programs with money generated from solar energy?”. Below is my research studying the economics of solar panels.
1 - Decarbonizing energy production should be the priority for addressing climate change
Energy represents nearly 3/4 (73.2% to be precise) of global greenhouse gas emissions. So, if we are to reduce greenhouse gas emissions, we need to start with energy production.
2 - Prospect for solar is bright! (pun intended)
Over the last decade (from 2011 to 2021), the levelized cost of Solar has gone from the most expensive to the least expensive. Solar is now more cost-efficient in $ / MWh terms than wind, natural gas, coal and nuclear.
The laws of economics dictate that cost decreases as more solar panels get deployed and manufacturing gets more efficient. Below are the charts that show these principles in action.
Deployment of solar / photovoltaic (PV) capacity has exceeded many projections:
And as a result, the costs are declining ahead of most forecasts:
Given that solar is now the most efficient way, and still getting more efficient by the year, this is an ideal time to scale up the deployment of solar panels.
3 - Using PPA (Power Purchase Agreements) can reduce or eliminate upfront cost of installation
The price of electricity varies from state to state. For purposes of calculation, I will be using the standard California rate of $0.199 / kWh. Due to Net Energy Metering, any excess electricity is fed back into the grid at the same rate.
For any given school, the PVOUT value * $0.199 = price of electricity, measured in dollars, saved every year, if a school were to install a 1000 KWp array. Between its 9 schools, LASD installed a 1.4 MW array, so LASDs overall photovoltaic output would be greater than the calculated value.
Calculation for Los Altos School district:
Mean PVOUT = 1,550 MWh / year (assuming 1 MWp array)
Size of solar array = 1.4 MWp
Price of electricity per year = 1550 * 1.4 * 1000 KWh / year * \$0.199 / KWh = \$431,830
A recurring challenge, often inhibiting schools from realizing their aspirations of solar energy, is the price of installation. Solar panels, objectively, are a long term investment, perpetually generating electrical energy from a source of massive power, the sun. But, the initial hurdle of paying for their expensive installation can often be intimidating.
However, financial calculations demonstrate that while solar panels pose a temporary financial setback, this setback is eclipsed by their constant energy production. Through installation cost / price of electricity (calculated above) = years until financially even, you can calculate exactly how many years it takes for a solar array to “pay itself back,” to generate an amount of electric energy equal to the amount of money invested in the array. Often, this value is deceptively small, and once schools break even, they will still maintain a consistent source of income. Money that would have been spent on energy is now available for other necessities, like technology, teachers, and resources.
The solar panel installation in my local school district was funded using an economic tool called Power Purchase Agreement or PPA for short. According to the press release from Forefront, the company that installed the system:
“LASD will receive solar energy at no upfront cost, and without the use of Measure N bond funds.”
Solar power, combined with use of PPAs can turn the value proposition from “how much will it cost?” to “how can we improve school’s programs with money generated from solar energy?”. This is amazingly cool!
4 - Utility-scale and distributed power generation can co-exist and complement each other
There is some debate on whether it’s more efficient to build giant solar farms (like in the picture above) that replace gas and coal power plants with solar panel farms OR if solar panels should be installed on homes, schools and office buildings.
I looked at the current research and find that we can look at it as an AND vs an OR. According to this article: “In terms of the debate over large-scale versus distributed resources, “this study really persuasively makes the case that it’s not either/or — we need both,” said Brad Klein, a senior attorney at the Environmental Law and Policy Center.
“By doing both, and by co-optimizing those local resources and larger resources, we can save a lot of money in the long run and in the meantime create a whole lot of jobs and economic opportunity directly in communities.”
According to this MIT research:
“Curtailing output when prices are negative: During negative-price hours, a PV operator can simply turn off generation. In California in 2017, curtailment would have increased revenues by 9 percent on the real-time market compared to “must-run” operation.
Changing the orientation of “fixed-tilt” (stationary) solar panels: The general rule of thumb in the Northern Hemisphere is to orient solar panels toward the south, maximizing production over the year. But peak production then occurs at about noon, when electricity prices in markets with high solar penetration are at their lowest. Pointing panels toward the west moves generation further into the afternoon. On the California real-time market in 2017, optimizing the orientation would have increased revenues by 13 percent, or 20 percent in conjunction with curtailment.”
20% is a significant number, indicating that giant solar farms and smaller array installations in schools can complement each other. Each on their own, both would face south and produce electricity whenever the sun shines. But as the MIT study suggests, it would be advantageous to:
Use software to manage the load on the grid and to shut off feeding electricity into the grid at hours when the school would be “charged” for doing so.
Align solar panels in some schools so they are facing SW allowing them to produce solar energy during the 4pm - 7pm peak hours.
Also, by combining solar panels with battery storage, intriguing possibilities are presented. Tesla is pairing solar panels with battery storage in homes enabling electricity generated during the day to be used at night. Electricity outages are becoming more frequent due to severe weather events from climate change and the battery system can provide resiliency. With battery storage in schools, solar energy collected during the day can be used to:
Provide light and energy for activities in multi-purpose rooms and gyms in the evening
Charge electric vehicles at night
Heat or cool the classrooms so they are toasty and comfortable for students
All for free and reducing the need for gas and coal electric power plants.
What's amazing is that all of the aforementioned technology already exists. What's needed is not the invention and approval of new groundbreaking Inventions, but simply the utilization of our pre-existing technology.
5 - Call to action: Let’s turn schools into zero-carbon power plants!
According to the U.S. Energy Information Administration, in 2020, US generated 4,009 billion kWh, with 2,419 billion kWh coming from nonrenewable fossil fuel sources (60.3%) and 88 billion kWh coming from photovoltaic sources (2.2%).
Using the dataset I made, Total potential PVOUT of the country (assuming schools install solar panels worth 1000 kWp titled at 10 degrees, facing south) is 162,814,831,684.77 KWh / year = 163 billion kWh / year.
So, by simply tapping into the schools, our solar energy production would increase by 285%, and this would make photovoltaic sources contribute 4% of the total energy production instead of 2.2%. With this 1.8%, petroleum (0.4%) and other non-renewable energy sources could be replaced by the renewable energy source of solar power. Considering petroleum’s significant contributions to the circulation of dangerous greenhouse gases, a contribution that perpetually warms our climate, removing our dependency on it is imperative, and solar panel installation provides a possible solution.
This article from Stanford (summary, paper) validates the approach:
“Taking advantage of all viable space for solar panels could allow schools to meet up to 75 percent of their electricity needs and reduce the education sector’s carbon footprint by as much as 28 percent. At the same time, solar panels could help schools unplug from grids fed by natural gas and coal power plants that produce particulate matter, sulfur dioxide and nitrogen oxides – air pollutants that can contribute to smog and acid rain as well as serious health consequences including heart attacks and reduced lung function.”
As a society, we must take all possible actions to orient ourselves on the correct pathway, one that ensures global temperature doesn't rise by more than 1.5 degrees C. Installing solar panel arrays, especially in the schools prioritized by the dataset here, is a strategy to realize this goal, a strategy where students can unite to drive action.