Best of a bad lot

Democracy is about majority rule. The candidate with the most votes wins the election. A newcomer to the whole idea of democracy – a school child, for example – might infer that the winner is best candidate: the most qualified, the most experienced, the most popular, the most effective, or some or all of the above.

It doesn’t always work out that way.

Oftentimes during election campaigns, you realize that you don’t particularly like any of the candidates. In fact, you actually detest one or two of them. When you head to the polling station, you aren’t actually voting for a particular person. Instead, you’re voting against all of the candidates except one. You’re voting for the least bad alternative.

It’s like that with solar energy.

Don’t get me wrong. Solar energy has many terrific selling points. With minimal capital investment and a rapid installation process, you can start producing power. Solar arrays are completely scalable, and can be sized precisely to the application – from a single panel powering a roadside sign, to a multi-megawatt solar farm covering several hectares.

Solar energy can be generated right where it is used, eliminating the construction cost, maintenance overhead, and losses inherent in long-distance electricity transmission infrastructure. Once installed, photovoltaic systems produce zero emissions. They have no moving parts, and so are extremely reliable and require minimal maintenance. Panel manufacture is energy-intensive, but the panels generate many times more energy than that during their usable life.

All is not sweetness and light, however. The manufacture and end-of-life disposal of solar panels suffer from the same environmental perils as the semiconductor industry. The production process uses toxic metals that must be handled carefully to keep them from leaking into rivers and other water bodies. And like consumer electronics, clapped out solar panels are nasty things if not disposed of properly. Fortunately more and more manufacturers are offering recycling services, and third parties are getting into the act – one man’s trash is another man’s treasure.

Then there’s the cost. At present, solar cannot compete with most other energy sources on an installed cost-per-watt basis. However, this is mainly because most traditional energy sources carry costs that aren’t included in the price. They appear cheap, but the price you pay is only the first installment; there are more costs hidden in the fine print, and they’re brutal. Economists call this an “externality”. More on this below.

So solar is not perfect. But let’s look at the alternatives.

In Ontario, Canada, the three main sources of energy are hydroelectric, nuclear, and thermal. So let’s focus on these three.

At first glance, hydroelectric power is pretty sweet. It’s always been expensive to construct a dam. But once it’s built, the water is free and maintaining the turbines is cheap.  However, the best locations for large-scale hydro projects are already tapped. Further, hydroelectric projects can wreak havoc on river ecosystems, and the flooding when a river becomes a reservoir has displaced entire communities. The cost of managing these social/environmental impacts is rising, and may even kill some projects outright.

Next up is nuclear. It’s reliable, and it doesn’t produce greenhouse gases. But it is incredibly costly. Nuclear plants are the most expensive of all, and the costs don’t end with the construction. Uranium mining is an unpleasant business. Operating the plants always costs more than the builders anticipate. Spent fuel rods remain incredibly dangerous for thousands of years, and that’s a horrible legacy to leave our descendants. Even the low-level waste from refurbishing or decommissioning reactors is a hazard, and a tempting target for terrorists seeking to build a dirty bomb.

Then there’s the risk of accident. Three Mile Island, Chernobyl, and now Fukushima Daiichi all loom large in the mind of the public, and currently China is the only country with plans to build new plants. Germany is getting out of the business entirely. Few private companies are willing to accept the risk associated with nuclear plants, so often state agencies or corporations have to assume the risk instead. That means that when things go wrong, it’s the general public that foots the bill. This is an externality, as mentioned above – the price you pay does not reflect the total cost.

Thermal power plants generate power by burning fuel – usually the non-renewable kind, like coal or natural gas.  Their main attraction is that they are one of the few methods of power generation that can be brought online in a pinch to deal with spikes in demand that happen when, for example, everyone cranks the air conditioning during a heat wave. They cost a fair chunk of change to build, but the fuel is cheap and that means the power is too.

However, the thermal power party may have the biggest hangover of all. Burning fossil fuels produces greenhouse gases, and this leads to global climate change. That is yet another externality. When a hurricane wipes out New Orleans, the companies that run coal-fired generating plants and gas station chains aren’t presented with the bill. Instead, the population at large gets nailed with higher taxes and insurance rates.

So solar’s competitors suffer from many disadvantages. They generally cost a bundle just to get into the game, and the investment earns no return during the long period of construction and startup. That’s a huge financial risk. Nuclear and thermal require fuel, and the price of that fuel varies, which presents another short-term financial risk. Since there’s only a limited amount of fuel in the earth’s crust, the long-term price trend will always be upward; that’s not even a risk, that’s a certainty.

Finally, the power is usually generated a long way from where it is used, so there’s a big infrastructure cost to get the power to market. If you want to compare apples to apples, the sunk cost of high-voltage transmission lines should be included when evaluating competing energy sources.

That’s why developing countries will likely leapfrog us – when they electrify outlying villages, they will likely skip over central power generation completely and jump straight to on-site generation with wind and solar. This is analogous to the way that they have largely skipped landline telecommunications, and jumped right to mobile phones.

Solar does have its downside, make no mistake. But when you make an honest, thorough comparison, it’s the best of a bad lot.

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