How Do High Oil Prices Impact Solar?
Solar panels can do a lot of things. They can significantly reduce —and in some cases eliminate — your monthly electricity bill, savinghundreds or even thousands of dollars a year. They can add real value to your home. They can reduce your reliance on dirty sources of energy,like coal. They can even make your home look pretty.
But there’s one thing solar panels can’t really do — at least not right now. They can’t reduce our reliance on foreign oil.
How can this be?
[o]il is not what developed markets use as an input forpower generation. In some developing markets, like India and Kenya,diesel is used as a source of power generation. Indeed, solar isexpected to grow as an alternative for mini-grid community powersolutions in India, and as a replacement for diesel fuel, but that’s onthe margins and not relevant for solar…
Translation: as a general rule, we don’t use oil to generateelectricity. We use it to fuel our cars and trucks. So, no matter howmuch electricity we generate using solar panels, we won’t reduce theamount of oil we consume on a daily basis driving to work or shippingboxes across the country.
I’d argue that, as Americans, we don’t settle for the status quo. Ifsomething’s broken, we (eventually) figure out a way to fix it. In away, high oil prices are a reminder that something needs to be fixed. Recall that in July of 2008, when the price of oil touched $147 abarrel and we were facing the prospect of $4- or even $5-a-gallongasoline, everyone was buzzing about energy conservation, alternativefuels — even carpooling was on the table.
Now, with turmoil in Libya and the price of oil creeping up again, it appears there’s renewed interest in preventing the same old story fromplaying out again. Luckily, there’s good news.
While solar panels can’t reduce our reliance on imported oil today,they can — and will — do so in the future. Consider two scenarios:
- We drive more electric vehicles (like the Nissan Leaf or Chevy Volt)
- We put more natural-gas vehicles (particularly long-haul trucks) on the road
In the first scenario, our total consumption of gasoline goes down as more and more electric vehicles hit the road. If at the same time we’re able to increase the amount of electricity generated from solarresources, we’d effectively be powering a portion of our transportationfleet with solar energy. Outcome: solar power could reduce our consumption of imported oil.
The second scenario is a little less straightforward. First, it’sworth noting we have vast natural gas reserves that, thanks to recentadvancements in extraction technology, are readily accessible. Poweringmore of our trucks with domestically abundant natural gas would, allelse equal, reduce our need to import oil. If at the same time we’reable to increase the amount of electricity generated from solarresources, we could free up more natural gas for use in thetransportation sector. (About 20 percent of our electricity comes fromnatural gas, nationwide.) This scenario is akin to the plan hatched byTexas oil tycoon T. Boone Pickens, although he envisions replacingnatural gas electricity generation with wind power rather than solar. Outcome: solar power could reduce our consumption of imported oil.
In sum, solar power can in the future play a key role in reducing our reliance to imported oil, provided a few tweaks are made. High oilprices serve to remind us that these tweaks should be made sooner rather than later.
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