The Instigator
Ore_Ele
Pro (for)
Winning
8 Points
The Contender
dylancatlow
Con (against)
Losing
0 Points

Solar Power Plant vs Investing

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Post Voting Period
The voting period for this debate has ended.
after 2 votes the winner is...
Ore_Ele
Voting Style: Open Point System: 7 Point
Started: 8/17/2012 Category: Science
Updated: 4 years ago Status: Post Voting Period
Viewed: 3,194 times Debate No: 25141
Debate Rounds (4)
Comments (26)
Votes (2)

 

Ore_Ele

Pro

I will thank my opponent (whoever they may be) for accepting this debate.

First and foremost, BOP is split between both members (each has the BOP for their side).

Second, a few assumptions that are not challengable in the debate.

1) Flat inflation rate of 3% per year.
2) In Arizona, we are looking at an annual average of 6.5 sun hours per day [1].
3) Labor rates and electric rates will follow inflation rates.
4) Solar will last for the duration of it's warranty and deteriorate at 0.5% per year.
5) Investment rates will be at a flat 5%
6) Since we are talking about an existing Power Company, things such as power lines and other infrastructure is already in place and outside of this debate.

And on to the debate...

It is 2013 in Arizona and with growing populations and the manufacturing picking up. As such, the state government has gotten together with a large power company XYZ, to get a new Solar power station built. Unfortunately, in order to balance the federal government, all energy tax credits have have discontinued and all green energy needs to sink or swim on its own. The government will ensure that property is sold for market value (after all, if people know that there is a sudden huge demand for land, price will skyrocket).

My opponent and I will be arguing to the board members of the company (the voters) on what to do. I will argue for a large scale solar power plant, while my opponent will argue that it would be better to just take the money and invest it.

Thank you.

[1] http://www.affordable-solar.com...

*if anyone would like to argue some other fossil fuel (such as natural gas), please PM me and we can work something out.
dylancatlow

Con

Investing in solar panels is essentially investing like one would with a check one gives to the bank to earn interest. The interest in this case is the accumulation of sun hours converted into energy. The state of Arizona would still be trying to save money, just through the medium of alternative energy sources. I believe using this undeveloped medium is less effective than if they just invested the money traditionally. Solar panels are EXTREMELY expensive when compared to other sources of energy. Newer technologies will develop making the solar panels of today look like the room-sized-computers of the 1950's making the investment bad by design as it will take a long time for it to pay off.
Debate Round No. 1
Ore_Ele

Pro

I thank my opponent for accepting this debate. There are a number of things that will need to be mathematically worked out, so this is going to be a long post, full of numbers. I do apologize in advance for this, but ask my opponent and readers to work through it.

First, we need to isolate all the factors for both a new solar power plant. From those factors, we can then focus on finding out costs, efficiencies, lifespans, and so on. Remember that we are looking at the total starting cost of the facility, the operating costs, and the money that it generates from the sale of electricity. So let us take a look at what we will find.

The Solar Power plant that we will look at will be considered large by solar scale, but fairly small compared to Coal or Nuclear. Our setup is looking at a 140 MW plant (I believe the current largest in the US is around 550 MW). Unfortunately, the power-plant grade solar panels are not as readily available to the open public as personal solar panels, so getting exact prices per panel and finding a large number of them to compare prices to find the best deal is not realistically possible. However, it is safe to say that they are a better deal than the smaller home grade ones (otherwise, they'd just use the home grade ones). So what I'll do is use the price and warranties of the home grade ones and I accept the handicap that comes with it. The panels that we'll be using shall be these [1]. They come to $0.95 per watt, so a 140 MW plant will cost $133 million dollars just for the solar panels, a large chunk of change. Let us also note that the panels come with a 25 year warranty and estimate that their efficiency will drop about 0.5% per year [1].

The next thing to look at will be our construction costs. New innovations from Europe have removed nearly all of the labor (replaced with machines that can install in nearly any terrain) [2]. They show that the cost is only about $1 million for a 14 MW system. Expand this out and we find an installation cost of about $10 million for a 140 MW system. That brings our total cost to $143 million.

Next we need to look at the land to place all of this. 140 MW for panels that get 146.1 W/m^2 [1], means that we'll need 958,247.8 m^2, or about 0.96 km^2, or 236.8 acres. Let us take a look at how much land goes for when you get away from the city. Looking at [3], we can see that land is selling at about $500 an acre. This means our land cost is going to be about $120 thousand, which comes to less than 0.1% of the total cost (but we need to consider it).

Next we need to look at the annual expenses of maintaining this plant. Since the sun does not charge us for sunlight, there is no fuel cost. However, there is still your standard operating costs (maintenance, personnel, etc). Large Photoelectric plants have an O&M cost of $16.70 per kW [4, page 7]. For our large facility, this will come to $2.34 million a year for our O&M. Now, this will be an annual cost, and so subject to rising costs of labor and inflation (3% per year).

This ties up the solar power planet rather nicely.

Before we start number crunching the solar power plant, let us look at if we took that initial $143 million investment, and stuck it in some bonds or something at 5% per year. Over 25 years, we find that it has grown to $461.2 million. For the sake of fun, let us also look at if we had 10%. That would yield $1,408.5 million, or almost ten times the initial investment.

So now that we have a measuring stick, let's take a look at how solar pans out. The electric rate in Arizona can vary from place to place and month to month, but the average $0.1029 per kWh (or $102.9 per MWh) [5]. We can do the math that for 6.5 sun hours (annual average, there will be more in summer and less in winter), the plant will generate 332,150 MWh, which comes to $34.18 million. After the $2.34 million for labor, we find ourselves with $31.84 million. Of course, this money will not just be sitting in a mattress, but it will be invested into the same 5% (or 10% or whatever rate the other one is getting) option that is available. The next year, we find that the solar panels are slightly less efficient (now down to 99.5%), labor is up 3% and electric costs are up 3% and the $34.18 million just made 5%. And we repeat and add for 25 years until the solar panel warranty ends (though the panels will still be good for decades after, we need some concrete ending point).

What we find is the solar panels end up making over $1.94 billion over their 25 years. Over four times the amount that the investment would have. But 5% is pretty low, right, so what about 10%? Well, with that, solar would have made (from its profits going into that very fund) $3.795 billion, still well over twice as much as the investment. Where is the balancing point of where the investment finally overcomes solar? With these inflation rates, it is currently at 31.718%, in which case both investments would bring in over $106.35 billion over the 25 years.

Of course, if you could find a fund that provided 31.718% annually for 25 years, you could put in $10 a week for 25 years and have $1.6 million by the end of it (sounds like a solid retirement plan).

What we can see is that the rates for solar panels has dropped incredibly throughout the years and the labor costs (especially when done in large scale and not fixed to a roof) have dropped due to new technology. Solar is now effective enough that it will be a viable power source in many southern regions and we will continue to see more and more of them appear.

Thank you.

[1] http://www.affordable-solar.com...
[2] http://www.technologyreview.com...
[3] http://www.landandfarm.com...
[4] http://www.eia.gov...
[5] http://www.eia.gov...
dylancatlow

Con

dylancatlow forfeited this round.
Debate Round No. 2
Ore_Ele

Pro

Based on my opponent's new feed, he has been fairly active over the last 2 days, yet did not post an argument. I will extend my own and hope that he posts something next round.
dylancatlow

Con

dylancatlow forfeited this round.
Debate Round No. 3
Ore_Ele

Pro

/end debate
dylancatlow

Con

dylancatlow forfeited this round.
Debate Round No. 4
26 comments have been posted on this debate. Showing 1 through 10 records.
Posted by dylancatlow 4 years ago
dylancatlow
I'm headed off to Seattle for a few days! =( I will be unable to finish this probably unless I have access to a computer.
Posted by Ore_Ele 4 years ago
Ore_Ele
That's a true Scottsman Fallacy. A peaking planet is a real power plant. There are two main forms of power plants, Peaking and Base Load, but both are real power plants.
Posted by RoyLatham 4 years ago
RoyLatham
That's not a real power plant, that's a peaking plant. You should have disclosed that clearly in the challenge. To see if it's practical, all you have do is watch and see if utilities build them. I recall something about Las Vegas building a solar peaking facility, I don't know how much subsidy was involved or whether it was built.

Solar facilities in California have been blocked by environmentalists wishing to preserve the desert.
Posted by Ore_Ele 4 years ago
Ore_Ele
No, unless solar has to act alone, then it doesn't need a back up source. Solar can work just to assist during peak hours. Since multiple power planets add power to the same grid (rather than each individual power planet providing power), no back up is needed.
Posted by RoyLatham 4 years ago
RoyLatham
Ore_Ele, do you agree that cost analysis according to:

Cost of fossil fuel plant per year = mortgage payment + fuel cost + maintenance

Cost of solar plant per year = solar mortgage payment + solar maintenance + backup mortgage + backup fuel + backup maintenance

meets the criteria of the challenge?
Posted by Ore_Ele 4 years ago
Ore_Ele
Normally, I'd say "can you name that fallacy"? But I'd rather not argue in the comments. If you don't want to take the debate, you don't have to.
Posted by LaissezFaire 4 years ago
LaissezFaire
If solar plants were worth the cost, they would be invested in without needing subsidies. Since they aren't, and people prefer to invest in other power plants instead, they aren't worth the cost. I don't know if a solar plant would be worth it under the conditions you specify, but if it is, then that just shows that those numbers are wrong.

5% is just a random number I made up to explain my example--I don't know what the real discount rate should be. The real calculation of NPV depends on a lot of different things. You can't just use the current interest rate--you'd have to look at the yield curve over the time period of the investment (future interest rates). You'd need to have a prediction of future energy prices--including the prices of alternatives to solar power, like coal and natural gas. I don't know what any of these numbers are, but I'm sure some guys on Wall St. crunched the numbers at some point--and since people don't invest in solar power without subsidies, they must have found that solar power isn't worth it.
Posted by Ore_Ele 4 years ago
Ore_Ele
"I have no idea whether a solar power plant has a positive Net Present Value (whether it's return would be greater than investing the money somewhere else)."

That is what this debate aims to show.

"All I know is that in a free market, investors would put their money in whichever project was most efficient, solar, coal, whatever."

Yes, but investors don't magically know that info, they figure it out by comparing the costs.

"Your kind of debate, trying to figure out which specific project is best for society, doesn't make any sense to us non-totalitarians."

Where is this debate talking about what is "best for society?" This debate is entirely about dollars and cents.
Posted by LaissezFaire 4 years ago
LaissezFaire
If you still disagree that the time value of money should be considered when comparing the costs of two different projects, then I'll debate you on that. If you changed your mind, then you should change the 1st round of your debate so you don't have an unfair advantage.
Posted by LaissezFaire 4 years ago
LaissezFaire
I don't think you understand capitalists at all. The idea of a debate about which specific investment is better makes no sense. Capitalism is just getting out of the way and letting people organize themselves. I have no idea whether a solar power plant has a positive Net Present Value (whether it's return would be greater than investing the money somewhere else). All I know is that in a free market, investors would put their money in whichever project was most efficient, solar, coal, whatever. Your kind of debate, trying to figure out which specific project is best for society, doesn't make any sense to us non-totalitarians.
2 votes have been placed for this debate. Showing 1 through 2 records.
Vote Placed by Xerge 4 years ago
Xerge
Ore_EledylancatlowTied
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Total points awarded:40 
Reasons for voting decision: Forfeit
Vote Placed by imabench 4 years ago
imabench
Ore_EledylancatlowTied
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Total points awarded:40 
Reasons for voting decision: Well the potential for this to be a great debate went to hell very fast....