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The Negative Side of Solar Energy

The Negative Side of Solar Energy

Solar enterprises in Dallas are experiencing good times. Solar panel installation Dallas for residential buildings has entirely recovered from the Covid downturn, with analysts projecting more than 19 gigawatts of installed capacity, up from 13 gigawatts at the end of 2019. According to data from industry studies, that number might treble over the following ten years. And that doesn’t even address the potential additional effects of new laws and incentives put forth by the environmentally conscious Biden administration.

The Solar Investment Tax Credit covers 26% of solar-related costs for all residential and business clients and is largely responsible for solar’s pandemic-proof performance. For commercial installers, the tax credit will permanently decrease to 10% after 2023 and completely disappear for home buyers. Therefore, as purchasers scramble to profit while they can, solar sales will likely burn even hotter in the upcoming months.

Several factors besides tax subsidies cause the solar explosion. Thanks to numerous waves of manufacturing innovation, primarily pushed by industry-dominant Chinese panel producers, the conversion efficiency of panels has increased by as much as 0.5% annually for the last ten years, even while production costs (and consequently prices) have significantly decreased. This results in substantially lower upfront costs per kilowatt energy generated for the final user.

 All of this is fantastic news, not only for the business but for everyone who understands the necessity of switching from fossil fuels to renewable energy for the sake of the future of our world. However, there is a significant caveat that not many people are discussing.

Panels everywhere, please.

Economic incentives are quickly lining up to persuade consumers to swap their old panels for newer, more affordable, and more effective types. The sheer volume of discarded boards will eventually present a risk of existentially catastrophic proportions in an industry where circularity solutions like recycling remain woefully inadequate.

 Indeed, this is not the narrative one hears from reputable business and governmental sources. According to official forecasts from the International Renewable Energy Agency, “huge amounts of annual waste are projected by the early 2030s” and might reach 78 million tonnes by 2050. Undoubtedly, that is a startling amount. However, with so much time to prepare, it instead describes a multibillion-dollar opportunity for the recovery of valuable minerals. The hazard is concealed by the assumption that customers will maintain their panels for the whole of their 30-year life cycle in IRENA’s estimates. They don’t take into consideration the potential for widespread early replacement.

 Our study confirms this. We studied the incentives influencing consumers’ decisions on a replacement under various circumstances using real data. We hypothesized that the installation cost, compensation rate, the market price for solar energy sold to the grid), and module efficiency were three factors that were particularly important in influencing replacement decisions. We propose that rational customers make the transition regardless of whether their current panels have been in service for 30 years or if the cost of upgrading is cheap enough. The efficiency and compensation rate is high enough.

 Imagine that Ms. Brown begins reevaluating her solar alternatives in 2026, midway through the equipment’s life span. She has heard that the most recent generation of panels is less expensive and more effective and confirms this after doing some research. According to current forecasts, Ms. Brown 2026 will discover that the cost of purchasing and installing solar panels has decreased by 70% from where it was in 2011. In addition, the new-generation panels will generate $2,800 in revenue annually, which is $700 more than her current arrangement did when it was brand new. The net present value of her solar array will rise by more than $3,000 in 2011 currency if she upgrades her panels now rather than waiting another 15 years. Ms. Brown will choose an early replacement if she is acting rationally. She would have made that decision even sooner if she had been particularly astute with money. Our calculations for the Ms. Brown case show that starting in 2022, the replacement NPV will surpass that of panel retention. Although these statistics are concerning, since our analysis is limited to residential installations, they might not accurately reflect the situation. The scope of replacements might be far more significant if commercial and industrial panels were included in the equation.


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