1 Mwh of sunshine

“A day without sunshine is like, you know, night.” — Steve Martin

I personally prefer sunshine (though perhaps with less heat here in Singapore), because, since early August this year, we are the proud owners of a Solar or Photovoltaic (PV) System at our house. 

Fellow blogger Singvestor.com recently wrote a great post on energy savings (Hunting Vampires 18 Aug 2015 http://singvestor.com/hunting-some-vampires-in-my-house/), and then encouraged me to share my experiences with our Photovoltaic System.

But before I dive into that, I would like to share some curious facts about the one and only in the center of our Solar System:

1) The sun’s diameter is about 109 times of Earth and weighs 330,000 times that of Earth’s mass.  It contains 99.86% of the mass in the solar system.  Sol is the closest thing to a perfect sphere that has been observed in nature.

2) If the sun vanished, we wouldn’t know for 8 minutes.  This could happen soon because the sun is estimated to be already halfway through its lifetime.  Don’t be too concerned before that happens.  One day the Sun might consume the Earth after it burns through all of its hydrogen and expands to become a red giant star.

3) The solar constant is equal to approximately 1,368 W/sqm (watts per square meter) on or near Earth.  Sunlight on the surface of Earth is attenuated by Earth’s atmosphere so that less power arrives at the surface—closer to 1,000 W/sqm in clear conditions when the Sun is near the zenith.  The average rate of sun energy reaching the earth is 342 W/sqm.

4) All this abundant amount of energy alone is still not enough to make Earth liveable.  Only thanks to the greenhouse effect, the average temperature on earth is currently 14 degrees Celsius.  Without the greenhouse effect, our average temperature would be minus 19 degrees Celsius.

5) Long-term secular change in sunspot number is thought to be correlated with long-term change in solar irradiance, which, in turn, might influence Earth’s long-term climate.  Interestingly, Climate Change Scenarios don’t even take those solar cycles into account to simulate their climate models.  So, how can climate models be anything but inaccurate?

6) The sun’s solar energy reaching Earth is about 11,000 times the power usage of humans per year.  That is to say, we have abundant energy available to us.

7) The Sun also powers the weather, through solar heating of the ocean and land surfaces.  As such, is responsible for all renewable energy types.  Hydroelectric and wind power are really just cleverly disguised versions of solar power.  Only tidal power is not dependent on the sun but the gravitational force of the moon.

8) Let’s harvest that abundant solar energy.  How large would a PV-installation need be to generate the energy currently consumed by us?

Sun’s solar energy reaching Earth is about 11,000 times the power usage.

Earth’s surface area is 510,072,000 sqkm divided by 11,000 = 46,370 sqkm.

That is a bit larger than the size of Denmark = 42,434 sqkm.

Or a square with a length of 215 km.

Surprisingly little space, isn’t it?

Although in relation to our “Little Red Dot Singapore”, it’s a lot—65 times the size of Singapore to be exact.

And yes, one can dissect this concept until there’s nothing left, but I still like the thought.

The potential for solar energy harvesting has just been scratched.

 

How suitable is Singapore for PV-installations compared to other regions in the world?

One main characteristic of the solar resource is its availability during day-time with a typical peak at solar noon and, especially in the tropics, the high share of diffuse radiation (~55%) and the high level of variability due to frequently changing cloud coverage.

Singapore’s location close to the equator leads to very little seasonality over the course of a full year.  That’s good, but then we do have a high number of cloudy days as well.

In total, the annual irradiation is 1636 Kwh / (sqm•a) = 4.48 Kwh/sqm/day.

Germany has an annual irradiation of about 1000 Kwh/sqm with a high seasonality (5 times higher in summer than in winter).  Still, Germany has the highest installed capacity of PV-systems in the world.  Does that make any economic sense?

 

We want to reduce the carbon footprint of our family

Question 1: How much does it cost us?

Answer 1: We wanted to maximize the utilization of our roof and thus fitted 25 modules with 2 sqm each.  The good news is that solar module prices have and are falling rapidly.

Module prices, however, nowadays make up less than half of the price of a complete solar deployment.  The bulk of the price of solar are the so-called “soft costs”— the DC->AC inverter, the labor to install the panels, the racking system to mount the panels onto the roof, the interconnection to the grid.

The best quote we obtained came up to about 18,000 SGD (there are more than 30 companies offering solar solutions in Singapore).

Question 2: What is the payback period or the Return of investment?

Answer 2: That is dependent on the yield and the future development of electricity tariffs.  The monthly yield for our system can be quite accurately forecast based on historic data for Singapore and should be around 800 Kwh.

As all that solar energy is produced in the daytime and our consumption is peaking in the evenings and nights (air-con, lights) the daytime surplus is being exported to the power grid.  Based on the readings from a two-way electricity meter, SP Power credits us based on the prevailing electricity tariff less the grid charges (5.26 cents/Kwh).

Of course the higher the electricity tariffs, the faster the return of investment.

Overall, we expect monthly savings of around 200 SGD, resulting in a payback period of about 8-9 years.

There are no recurring costs, no maintenance charges and the modules come with a 25 years power performance warranty (at least 80% of original output) whereas the solar inverter comes with a 10 year warranty.

As of today, our PV-system has produced exactly 1 Mwh of electricity.

Let’s see how it works out for us in the real world compared to all the paper calculations that we have done.

 

I hear some critical voices which I would like to address as well

Because despite all those positive aspects of solar, it’s certainly also subject to the same “no free lunch” limitation that applies to all other energy sources.  Although solar electricity generally does not directly result in greenhouse gas emissions, it does have other environmental consequences:

1) Land Usage for installations.

2) Water Usage: Concentrating solar thermal plants require water for cooling and they are often in arid regions.

3) Hazardous Materials: The PV cell manufacturing process includes a number of hazardous materials, most of which are used to clean and purify the semiconductor surface.

4) Life-Cycle Global Warming Emissions: Manufacturing, transportation, installation and decommissioning.  Most estimates of life-cycle emissions for Photovoltaic Systems are between 30 and 70 grams of carbon dioxide equivalent per kilowatt-hour.

Most panels pay back the original investment of energy after just two years of operation.

For us, those “downsides” are rather negligible compared to other carbon burning energy sources.

 

Speaking of the future, here are more solar facts for those of you who would like to learn more:

1) While costs are dropping for drilling oil and natural gas, the cost of solar energy is dropping even faster.  The real revolution is in the dramatic fall in the cost of producing a kilowatt of power using solar energy.

Thanks to technological advancements, solar power is already cost-effective in some sunny regions: in Dubai, a long-term power purchase contract was signed recently for US 5 ct/Kwh.  Projects under construction in Brazil, Uruguay and other countries are reported to produce at costs below 7 ct/Kwh.

By comparison, electricity from new coal and gas-fired plants costs between 5 and 10 ct/Kwh.  And in Germany, right now, large solar plants deliver power for less than 9 cents, compared to as much as 11 cents from nuclear.

2) Let’s look at some more data.  Here are the costs of the solar Power Purchase Agreements (PPAs) signed in the US over the last several years.  PPAs are contracts to sell electricity, in this case from solar Photovoltaic Plants, at a pre-determined price.  Most utility-scale solar installations happen with a PPA.

In the US, the price embedded in solar PPAs has dropped over the last 7-8 years, from around 20 ct/Kwh to a low of around 4 ct/Kwh.

The most important question, for solar, is what will future prices be?  Any projection here has to be seen as just that—a projection.  Not reality.  History is filled with trends that reached their natural limits and stalled.

Obviously, quite a bit can happen between now and then.  But the meta-observation is this: Electricity cost is now coupled to the ever-decreasing price of technology.  That is profoundly deflationary.  It’s profoundly disruptive to other electricity-generating technologies and businesses.  And it’s good news for both people and the planet.

3) This lower energy cost trend will spur economic growth in ways we can only imagine now.  Growth that maybe no longer measured by the conventional GDP-yardstick.

What do I mean by that?

For simplicity sake, let’s say you buy $5,000 worth of electricity a year from your local utility.  That is $5,000 of GDP.  Now let’s say you spend $18,000 to put in a solar system that allows you to get off the grid.  That is a one-time boost to GDP of $18,000.  But now you no longer pay $5,000 a year to the utility, so as long as you are on the solar system, you are no longer contributing to GDP.  Further, if you buy an electric car and charge it, you are no longer buying gas, and thus the portion of your money previously spent on fuel is no longer contributing to GDP.

Yes, your money is available to be spent elsewhere, but you could also save it or invest it.  You will be using the same amount of electricity, so your lifestyle will be the same, but it will not be measured in GDP.  There is a growing debate among economists, as to how we should be measuring GDP and growth in future.

4) Does cheap shale mean solar, wind, and other alternative energy sources will lose momentum?  I don’t think so.  Governments around the world still want to reduce carbon emissions.  For that matter, so do I.  I prefer not to see the air I am breathing, thank you very much.

 

Now after having read up to here (thank you for honoring me with your time) the one or the other might have the question “And what does all of this solar stuff have to do with investing?”

Well, sunshine can move billions.  Because if the sun is shining in the morning, the stock market will rise during the day.  Not always, but often.  There is a clear proven correlation.

 

 “Sunshine is helpful for thinking.  It warms up the brain cells.” — Shannon Wiersbitzky, The Summer of Hammers and Angels

“He grinned at her, and she grinned at him, and it seemed to Maria that suddenly the sun came out.” — Elizabeth Goudge