I believe that saving the planet is a worthwhile effort, but the challenge is rationalizing the costs. I believe that the costs can be justified, but we need to think smarter and look at things in unconventional ways.
Let's take the concept of "leverage", for instance. The conventional way to look at leverage is using debt to finance a purchase. In my Buyer's Guide Part 3 post, I showed how financial leverage (mortgage refinancing) can be used to eliminate your upfront costs and maximize your returns from solar. Now, what if we apply the same concept of leverage to CO2 emissions (carbon footprint)? Here's the leverage my solar PV has on my carbon footprint.
Annual Electricity Usage:
Dirty energy provided by Utility: 4,732 KWH
Clean energy provided by solar: 2,781 KWH
Total usage: 7,513 KWH
Annual Cost of Electricity (Year 1):
Without solar: $1,200 ($0.1597 per KWH)
Increase in cost to have solar: $48 ($0.0064 per KWH)
Total with solar: $1,248 ($0.1661 per KWH)
Increase in total cost:
4%
Carbon Footprint (CO2 emissions):
Without solar: 12,772 lbs.
Reduction from solar: (4,728) lbs.
With solar: 8,044 lbs.
CO2 reduction:
37%
Conclusion:
It costs me only 4% more to have solar, but I have reduced my carbon footprint by a whopping 37%. So, for every 1% increase in cost, I save 9.25% in CO2 emissions. In other words, I have a 9.25 to 1 leverage on CO2 emissions - this is what I term "Carbon Leverage". That is huge leverage and, ultimately, enormous value. On a higher level, the point I'm trying to make is that costs and carbon metrics should not be viewed independently of one another. On the contrary, they are mutually dependent and should be viewed holistically to truly evaluate the cost-benefit analysis. Looking at it this way, I think it would be difficult to find another value proposition (environmental or not) where you could spend $1 and get $9.25 of value in return. If you think of solar from that perspective, it's very difficult to justify NOT going solar.
A Utility really doesn't have the advantage of leverage. According to a
U.S. Department of Energy study on levelized costs, Advanced Gas Turbine technology costs $0.1035 per KWH to produce whereas Solar PV costs $0.2107 per KWH. It would cost a Utility 2x as much to source their energy from solar rather than natural gas. Using the same methodology as above, it would cost a utility 100% more to achieve a 100% reduction in CO2. The result is a Carbon Leverage of 1:1, which means there is no leverage (i.e., they need to spend $1 to get $1). No wonder utilities are resistant to going solar.
The Carbon Leverage that individuals can obtain far exceeds the leverage that utilities can achieve. That's just one of the reasons why I believe that solar PV really is more of an "individual-scale" technology than a "utility-scale" technology. But that's another topic...I'll post about it in a future installment of Rants and Rays.
Post-publishing note: I recently found that the term "Carbon Leverage" already exists, so I can't take credit for coming up with it. In a study on Clean Investment Budgets, the term carbon leverage is used in the context of incenting poorer countries by giving them higher emissions budgets. By giving them higher budgets, poorer countries are able to sell the excess emissions (like renewable energy credits) to richer nations in exchange for money/capital. This capital can then be leveraged to invest in cleaner and more efficient technology by poorer nations. Carbon leverage in this context is a financing mechanism for richer nations to transfer to poorer nations to effect global climate change. In another study by the Oxford University's Smith School of Enterprise and Environment, carbon leverage is used more similarly to how I defined it above. It's kind of cryptic, but on page 15 they talk about creating a market for renewable energy credits that would be worth less than the equivalent reduction in CO2. This would then create carbon leverage similar to my example above (i.e., since the renewable energy credits are sold at a discount, there are greater than 1:1 reductions in CO2 emissions).
