We occasionally revisit issues when the conversation about them is particularly heated or some new ideas spring out of the conversation. Such was the case with our last article Walking On Sunshine

In it we took a dim view of how solar power is being pushed on a market before it is market-friendly. Market-friendly implies a dependable product at an affordable price, or at least a price that most consumers are willing to pay. Solar has not quite completed that path. In full disclosure, we think solar power is a good idea, when practical and affordable.

We looked at the business models being used, and in the wake of yet another U.S. solar panel manufacturer filing for bankruptcy, we pointed out the weaknesses of most of them. One business model in particular drew our disapproval - giving away the solar panels, metering the electricity used, and billing for the electricity. Sort of the opposite of the original concept. Economically, it is a flawed concept because the company promoting this would be squeezing out red ink for 10 to 12 years before turning a profit. We don't see it surviving that long.

Several subscribers saw this in the light of a business opportunity. It is the same business model used in satellite / cable TV, cellular service, and the internet, where, for the most part the equipment is provided free or at a nominal cost, and the service is charged for. It is the scale of converting over a large enough percentage of users from traditional electricity to solar power that has been the stumbling block.

The observations made by our subscribers led to what could be a working solution, at least for the Sunbelt states. The existing traditional electric companies are in the perfect position to bring solar power into wide use. No, not the huge solar farms that eat up vast swaths of land generating very expensive electricity to feed into the grid. Instead, the traditional electric companies install solar power systems on individual homes, metering the energy, and billing for the power.

Why would this work for the traditional electric providers, but not that one individual solar provider? It would work because they are already providing electricity to the vast majority of homes in America. They have the infrastructure, the expertise, and the equipment. Most of them are cash cows with significant assets. They have an established cash flow in. In short, they are in a much better position to make this work. The pluses and minuses balance in the electric company's favor.

There is only one real minus - installation costs. On the scale that the electric company would be purchasing solar panels, they would be heavily discounted (by China, those jobs will not be had here), but there will be an investment of possibly $10 - 15K per home. Still, that cost balances well against the cost of wiring a house in the traditional manner, and the transformer required by each residence to step down the power to a usable voltage. Cash flow helps with this as well. Besides, in California, the power companies are being forced onto "clean energy" anyway.

California (as an example) has enacted environmental laws that mandate the percentage of electricity generated by "clean" sources. This strategy would be more cost effective than the giant solar farms that are the current "solution". Equipping individual homes generates revenue from the moment the system is installed. In balance, there is probably a similar time frame to recoup the investment either way, but this can be a more controlled plan to profitability.

The pluses are far more numerous. Costs associated with power line maintenance will be minimized, shrinking as whole neighborhoods are converted. Costs associated with power generation will be an ever shrinking piece of the pie. No more rolling blackouts to during high demand. Coal and diesel use will also shrink, which will lower costs to other areas of the country where solar power is not a practical solution. All of these lowered costs can contribute to lower electrical rates.

As a side benefit, this will quiet the environmentalists, for a little while anyway...

Common Sense Dictates

So from a few observations, we have put together a market-based, bottom-up, practical and profit-driven plan. That's what we like to do at The Thomas Paine Project  , not only point out the problems, but come up with solutions. It is the opposite of the heavy-handed government mandated regulations that emanate from DC (and Sacramento).

There are details to flesh out as far as implementation and speed. We will leave that to the power companies to work out. They are better equipped to come up with a viable way to proceed than we are. They are certainly better equipped than the government.

The only down side to this plan is giving up on the idea of free solar power. We examined that in the last article. There doesn't seem to be a way to bring solar out of a niche market at a profit on the current business models. They couldn't make eight foot satellite dishes for free TV profitable back in the 80's. The market, when left to itself, usually finds a way.

So we toss this idea out to Southern California Edison. You're welcome. Now we ask them to use Common Sense in implementation.

RLB