Energy Costs and Financing

It is difficult to compare the costs for energy from various sources, but it is an important issue. In Arkansas we are blessed with (or cursed by, depending on your point of view) relatively low electrical energy costs. We pay about eight to nine cents per kilowatt- hour (kWh) which is about three cents below the national average of twelve cents. In some locations and at some times of the day the costs can go over 25 cents per kWh. These costs do not include externalities such as damage to health and the environment, risks associated with global warming, political instability and direct subsidies to insure risky technologies.

It has been estimated that the inclusion of these costs could raise a monthly electric bill by two to five times. An average Arkansan’s electric bill would be closer to five hundred dollars rather than slightly over one hundred dollars per month.

Clean renewable energy from for example photo voltaic systems (PV, solar electric panels) can be prohibitively expensive when you compare the costs without consideration of the external costs of traditional electricity production. It would seem only fair then to subsidize PV systems and that is happening to a limited degree.

5.4 kW solar array

5.4 kW solar array

The federal government provides a thirty percent tax credit for residential and small commercial systems which makes these systems more competitive with traditional energy sources with their hidden subsidies. Recently the state of Arkansas through the Arkansas energy office has begun an additional subsidy based on energy produced by renewable energy systems. For program details see: http://arkansasenergy.org/.

The current program from the state provides for on-bill financing for qualified energy efficiency improvements that consumers can install on their premises: energy efficiency measures, distributed generation (e.g., solar photovoltaic, combined heat and power), and demand response (DR) technologies.

shade trees same energy

shade trees same energy

Consumers typically have extensive experience making utility bill payments, it is already a routine part of their lives. It is also conceptually attractive to make an investment where the energy savings that result are reflected in the same bill as the payments on the loan that funded the investment. This method of financing is particularly attractive for projects which have long pay back times. If the original owner sells the property, the financing remains with the improved property.

Low-E glass saves energy

Low-E glass saves energy

Because we have relatively low electric costs here in Arkansas, the payback for subsidized systems can be on the order of a couple of decades for large projects such as PV systems. In locations with much higher electric rates, say 25 cents per kWh, the payback would be much sooner.

The question then becomes, do you want to continue wars, and general global political instability because of our reliance on oil imports? Do you want to continue to support scraping the tops off of mountains to get at “cheap coal”. Do you want to continue to contribute to the degradation of the environment from oil spills? Do you want to contribute to the degradation of health through air pollution? To the deaths of miners and drillers? Global warming and ocean acidification?

You can walk away from all that now, but sustainable clean energy supplies are a future you can make happen now.  

 

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