Posted by: bmeverett | July 22, 2009

California Sunstroke

Anyone not completely comatose is aware of California’s budget woes. Sacramento has more than just a crisis; it has a CRISIS with a budget shortfall of about $26 billion in a total budget of about $92 billion. California is like a family making $66,000 in annual income and spending $92,000 a year. Unlike the federal government, states cannot print money or accumulate massive deficits over time. The only solution was deep and painful budget cuts, which included $9 billion in education, $4.3 billion in reduced support for local governments, $1.3 billion in furloughs for state workers and $1.2 billion from the prison system. The education cuts, which come on the heels of $11 billion in cuts earlier in the year, will make California 50th out of the 50 states in per pupil spending. For many schools, class size will grow substantially, while arts and music programs, physical education courses, summer school, advanced placement and special education programs will be eliminated. Assistance for college educations will decline. Folks, this is really going to hurt.
You will, however, be pleased to know that California is still on track to spend $2.5 billion on a ten-year program to add solar energy through the California Energy Initiative and the New Solar Homes Partnership. Last Sunday, the New York Times (clearly my favorite source of blog topics) proudly announced that “California sets the pace for solar power.” I’m sure that California’s lead role in green energy is a great comfort to students sitting in class with 40 of their best friends, but let’s take a hard look at what this program is actually producing.
So far, California has about 500 million watts of installed solar power. This sounds like a lot, but it isn’t. A watt is roughly the power requirement of a small Christmas tree light bulb. According to the Energy Information Administration, California has a total installed generating capacity of about 64 billion watts, so solar capacity represents slightly less than 1% of total capacity. Even that trivial share overstates solar energy’s importance. California’s total electric power demand is roughly 200 trillion watt-hours, which measures power output times the total hours in operation. Many power plants, such as nuclear and coal, can operate 95% of the time. In other words, 1 watt of nuclear capacity can produce 8,320 watt-hours of electricity (24 hours X 365 days X 95% availability). Solar power systems, however, can only work when the Sun is shining and suffer diminished capability from clouds, rain, shadows, dirt and any number of other problems. On balance, most solar systems operate effectively only 15% of the time. That means that 1 watt of solar power can only generate 1,300 watt-hours of power over the course of a year (24 hours X 365 days X 15% availability). California’s 500 million watts of solar can generate only about 657 billion watt-hours or 0.3% of the state’s total needs.
If you ask the supporters of this program, they will undoubtedly agree that 500 million watts isn’t much, but they’ll point out that the program will ultimate support the installation of about 1,800 million watts or about 1% of California’s needs. Maybe, but unlikely. The program is structured to provide subsidies of about $2.50 per watt for the first increments of capacity – about half the cost of solar panels. These subsidies decline, however, as new capacity is added, falling to only $0.20 per watt for the later increments or 4% of the cost. How is this going to work? Well, the argument goes, as the technology improves and manufacturing scale increases, the cost will come down, ultimate resulting in a solar industry capable of competing with conventional power sources without any subsidy. Behold! The era of infinite clean energy will have arrived.
Experience isn’t kind to this argument. Solar electricity today is 5-10 times as expensive as conventional power. The EIA reports that US solar photovoltaic cell production (i.e., electricity generating solar panels) increased from 88 million watts in 2000 to 518 million watts in 2007, an increase of almost 600% Over this time period, however, according to the solar energy advocacy group Solarbuzz, average prices for solar power systems dropped by less than 10%. The basic technology is reaching physical limitations. There may be entirely novel ways of harnessing solar energy, but we don’t have them yet. California’s program is basically like subsidizing a handful of S-Class Mercedes in the hope that the additional demand will drive the price down. Ain’t gonna happen.
How about the urgent need to reduce carbon emissions? California currently accounts for about 400 million metric tons per year of CO2. Assuming that solar power replaces natural gas in power generation, the reduction would be about 240,000 metric tons or less than one-tenth of one percent. This trivial impact is well within the rounding error of the emissions estimate.
It is an absolute disgrace for California to continue this program in any form while its budget is in such dismal shape. This situation highlights a basic problem of American politics. When times are good, governments add popular programs, assuming that available revenues will grow indefinitely. When this assumption proves false, as it always does, governments want to cut back all programs equally, since every program has powerful interests in support. Need to cut the budget by 25%? Just take 25% out of everyone’s budget: schools, the police, parks, the new Museum of Chewing Gum Sculpture and everything else. Prioritizing is just too difficult for elected officials. That would mean saying “no” to someone. Arnold Schwarzenegger doesn’t want to deny environmentalists this expensive little boondoggle, even if California’s children have to pay the price.



  1. This is interesting. Even though California is bleeding red ink, they are still committed to spending such a large amount of money of renewable energy.

  2. Pretty impressive post. I just came across your site and wanted to say that I have really enjoyed reading your blog posts. Any way I’ll be coming back and I hope you post again soon.

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