The renewable energy sector has grown rather quickly here in the United States double digit growth for solar and wind energy , but recent competition from natural gas has homeowners shying away from solar panels. Although fossil fuel prices are sometimes volatile depending on a myriad of factors including resource availability and mining dilemmas, one fossil fuel has been on a steady price-decline. Natural gas has experienced so much of a price drop that the expensive solar panel markets are suffering.
NPR ran a story yesterday regarding this classic situation of supply and demand.
For homeowners, the demand for natural gas has not gone up because there are renewable energy sources now available. However, the natural gas supply has gone up with a lot of the Marcellus Shale and other similar projects seeing a lot of success around the U.S.
Since 2005, the U.S. has seen a 30 percent increase in the amount of natural gas in our country. Experts say the new drilling techniques are largely responsible for this surge: fracking and horizontal drilling. With supply up and demand stagnant, prices have consequently fallen.
For those who have already installed solar panels in their homes (before the economics changed), they are now questioning how wise that decision may or may not have been.
In one case, Barbara Scott of Media, Pa had 21 solar panels installed last March. Government rebates and tax incentives included, Scott's family spent $21,000 for their new solar energy system. Ms. Scott anticipated that it would take about eight years to gain back the money lost in that investment.
That prediction was rational at the time, but economics in the energy sector has changed. As of right now, Scott experts it will actually be a 17-year-long payback period, assuming the system doesn't need costly maintenance in that time-frame.
Although Scott's is proud to have been the first family in her community to invest in the solar panels, she is hesitant about telling others to do the same. It's simply not as fiscally responsible as the natural gas alternative.
Caperton [director of clean energy investment at the Center for American Progress] says what's more interesting is to think about the wind, solar and even nuclear plants that are not being built now because producing with cheaper natural gas is more attractive to investors.
But natural gas prices could rise again quickly. If that happens, solar panels may seem like a good investment once again.
Until then, it sounds like natural gas is staying strong in its role of holding our economy together by creating jobs and keeping energy costs low.
*Indented excerpts courtesy of WNYC.org.
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Poster Comment:
With gas at $3/BTU we should begin to see NG-electric generators coming onto the market.