The reason for it is the stifling heatwave that has held the region in a sweaty, vice-like grip for the past several days. Temperatures in New York, Boston, Philadelphia, Washington, D.C. and Baltimore all cracked triple-digit territory for three straight days this week.
On Tuesday afternoon, the mercury in New York’s Central Park soared to 103 degrees, breaking the record set over a decade ago.
It’s safe to say that everyone is feeling the strain – including utility companies…
Consolidated Edison (ED) – the New York power company responsible for keeping the city’s air conditioners humming – is seeing near record levels of power demand. In fact, its usage reading teetered on the brink of new territory – 13,141 megawatts (mW) of continuous demand.
As millions of people scurry for any patch of shade or cool spot they can find, this week’s record-breaking temperatures serve as a stark reminder of the sun’s awesome power.
But the irony of a heatwave like this one is that the cause of the problem – the sun – is also the solution.
As the Mercury Rises, So Should Solar Energy Production
As the sun beats down relentlessly during the summer months, rather than grumble about the heat and sap traditional energy resources to combat it, there’s a greater argument for turning the sun’s power into energy we can use.
And as far as utilities are concerned, there are two big reasons in favor of this…
- Cost: Like many electric utilities, when Con Edison needs additional power, it uses plants that generally run on natural gas. But natural gas-fired plants are expensive to maintain and utilities pay top dollar for the gas when they need to run them.
- Equipment: Peak demand can overheat wires and transformers, shortening their lifespan and/or causing premature failure of crucial system components, just when they are really needed.
A New York State of Mind
Since 2008, when utilities were first able to take advantage of the same solar credits as individuals, several of them put together plans to install solar “peaking farms” of their own.
But while New York does have a solar installation incentive program for residents and businesses alike, it’s a drop in the bucket compared to what’s actually needed. For example…
- Residential Customers: Receive a lump sum payment of $1.75 per watt up to a maximum of 5,000 watts (5 kW) per site/meter. That’s roughly $8,750 – but it’s not much of an incentive when you consider that the average cost for a 5 kW system approaches $50,000.
- Commercial Customers: Receive the same $1.75 per watt, but up to a maximum of 50 kW. That won’t amount to much in the way of savings for the average commercial customer.
As if that weren’t enough, the waiting time for solar permit approvals in New York City is up to a year.
But despite the drawbacks, the city still has a huge amount of urban roofscape upon which to install solar panels.
Con Edison wants the New York Public Service Commission to approve the development of 25 megawatts of solar energy resources in New York City by 2015. However, its proposal is just the beginning. It wants to see upwards of 100 megawatts of new solar capacity installed in its service area – and wants the state to pony up $125 million in incentives to help get the ball rolling.
With the proper funding and streamlining, this could go a long way toward helping the state meet its ambitious renewable energy goals. The question is: Can New York make it happen?
It would do well to look out west because there’s already a viable solar model in place…
Via Germany and Spain, the Solar Revolution Hits Soggy Oregon
When you think of sun-soaked places, Oregon wouldn’t be high on your list.
But that hasn’t stopped the state from devising a simple solar solution. It’s called a “feed-in tariff.” Simply put, this is an incentive paid on the rate of electrical power generated, not on the cost of the system itself.
A similar model is already up and running in Germany and Spain, with both countries launching successful incentive programs in order to jump-start solar energy adoption. They now boast 67% of the entire installed solar energy capacity in the world.
Oregon’s program is off to an excellent start, too. The first phase sold out in just 15 minutes, with 75 winning contracts, according to the Statesman Journal.
Why so fast?
- Oregon is offering a huge incentive: $0.65 cents per kilowatt-hour (kWh) delivered to the grid via solar panels. But get this: the rate is guaranteed for 15 years.
- Contrast that to the cost of power in Oregon – between $0.06 and $0.09 cents per kWh – and you can see what a deal it is for panel owners.
How to Play the Solar Stock Tsunami
Having reversed over the past six months, solar stocks have jumped higher over the past few weeks.
In fact, over the past month, JA Solar (JASO) has shot up by 41%, while Trina Solar(TSL) has enjoyed a 29% surge. And both companies are boosting their businesses, too…
~ JA Solar: The firm recently announced that it will buy Shanghai Jinglong Solar Technology. This acquisition will facilitate further expansion of the company’s manufacturing area. And with industry growth projected to surge, it’s going to need all the manufacturing power it can get.
The company also announced a multi-year agreement with MEMC Electronics (WFR) to supply solar modules, beginning in the third quarter of 2010.
Commenting on the deal, JA Solar CEO Dr. Peng Fang states: “Our partnership with MEMC greatly enhances JA Solar’s position in the solar value chain, further diversifying our geographic presence and enhancing our order visibility, as well as providing us with access to its large project development pipeline. We look forward to building upon this agreement with MEMC to bring solar energy to the world.”
~ Trina Solar: The company announced a new supply agreement with Southern California Edison. It’s also supplying panels for the largest rooftop solar facility in Queensland, Australia.
The Sun is Still Rising for the Solar Industry
Some people remain skeptical about the prospects for the solar industry – one that has seen its share of false starts.
But that’s to be expected from a growing industry that’s still in its developmental stages. As I’ve said before, once the industry shakeout ends (it’s well underway) and policy makers here begin to follow Germany and Spain’s lead (they are), solar could realize its significant growth potential, which could make previous solar stock rallies seem like small blips.
If you want to participate in what could be the start of the next big solar rally, take a look at the three companies listed above.
Oh, and if you live in the Northeast, find a cool spot and lay low. Winter will arrive soon enough.