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San Ramon Valley Unified School District installs 10k photovoltaic panels at five schools

In a move that is proving to be controversial with some, some California school districts are looking to a high-tech way to save money, even if the payback won't be achieved until well over a decade later. CNN is reporting that some California school districts are looking to low-interest federal loans to install solar panels on schools.

CNN singled out the San Ramon Valley Unified School District, which has installed roughly 10,000 photovoltaic panels at five of its 35 total schools at a cost of $23 million. Under the most optimistic projections, the photovoltaic panels would offset energy usage at the schools by 67 to 75 percent. 

According to spokesman Terry Koehne, the San Ramon Valley Unified School District will pay back the loans courtesy of the energy savings from using the solar installations. However, this won't be a quick payback for the school system -- it will take roughly 16 years to break even on the photovoltaic panels.

Koehne, however, points to the upside of embarking on this expensive venture; "It's pure profit after that. And following that, we're going to start realizing savings of $2 (million), $3 (million), $4 million a year."

Like many schools across the nation, California schools are facing a serious budget crunch. Less money means fewer teachers, fewer teaching assistants, and more students per classroom. By making this move now, the school district is hoping that the future payoff will allow it use its resources more wisely. 

Lower production costs, thanks to stiff competition from Chinese companies, is causing a surge in the adoption of solar panels. One of the causalities of the race to the bottom in panel costs was Silicon Valley-based Solyndra. The company received a rushed $535 million loan courtesy of the Obama industry during 2009 in order to bolster its operations.

However, the company two years later filed for bankruptcy and axed over 1,000 employees. Interestingly, an email that was sent out before final approval of the loan was granted rightly projected that the company would run out of money by September 2011. 



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RE: Bad economic analysis once more
By rs2 on 9/18/2011 11:09:54 PM , Rating: 3
I don't know about the 8-year return, but you certainly seem to be making a number of logical errors and omissions in your analysis.

For one thing, it's not like the $23M that is spent on the solar panels instantly disappears with nothing left to show for it. It becomes $23M worth of solar panels. Or even if we assume an instant depreciation of 50%, then $11.5M worth of solar panels. This increases the property value of the school, because which would you rather purchase, a normal building, or an equivalent building that includes enough solar generation capacity that you never have to pay another utility bill?

So really this is better viewed as an investment rather than a simple expenditure. An investment that doubles in value after 16 years. Now that's not great (it's about a 5% annual return), but it's good enough to stay ahead of inflation and less risky than investing in stocks (and what business would a school have investing in stocks anyways?), and certainly better than what you would get with bonds or as interest from any major bank right now.

So in 16 years the school will have gotten all of their investment capital back, they will have a continuing revenue stream from the solar installation, and they will still have the asset of the solar installation itself, which increases the school's property value and/or can be sold off (though probably not for anywhere near the original purchase price) if desired.

In that light I find it hard to see what you don't like about this plan. Unless you just plain don't like solar energy. But that's just silly. Even ignoring all the "green" aspects of the solar installation there are still plenty of sound reasons for doing it. And there are certainly worse things that the school might do with the money.


By Solandri on 9/19/2011 8:45:28 AM , Rating: 2
Just a minor quibble. I pretty much agree with your analysis. But...
quote:
So really this is better viewed as an investment rather than a simple expenditure. An investment that doubles in value after 16 years. Now that's not great (it's about a 5% annual return), but it's good enough to stay ahead of inflation and less risky than investing in stocks (and what business would a school have investing in stocks anyways?), and certainly better than what you would get with bonds or as interest from any major bank right now.

You have to bear in mind that schools are funded by the government, so any money they spend is money extracted from the private sector via taxes. So the correct comparison here isn't vs. a school investing that money in stocks. It's vs. taxing the citizens and companies a little less so that money stays in their hands and helps the economy grow.


RE: Bad economic analysis once more
By Keeir on 9/19/2011 11:49:24 AM , Rating: 2
Errr... a second minor quibble.

School Buildings are rarely (though somethimes) turned over to private industry to be used as is. In my area in the past decade, 7 schools properties have been auctioned off... in each of the 7 cases, the schools were torn down after several years of enviromental studies on thier replacement structures.

Removing the panels and selling them may also not be easy. Knowing the government, they will hire a firm to remove them and hire another firm to sell them. I doubt even if they removed them 2 years after installing them, they would get 20 cents/dollar.

quote:
In that light I find it hard to see what you don't like about this plan. Unless you just plain don't like solar energy.


Ummm... I think some people just don't trust small local government to run a large investment of this type or to have done the economic studies throughly enough to have confidence in the 16 year period.

When I hear a Government project has a 16 year projected payback period, my brain processes 25-30 year payback period after construction overruns, bad contracts, upgraded wiring, a fancy control system that isn't needed, and poor placement of the panels on the roof.


RE: Bad economic analysis once more
By Spuke on 9/19/2011 12:10:40 PM , Rating: 3
At the size of the typical solar arrays for commercial or even residential buildings, "fancy control systems" are about all you can get. Besides, if they're going to be spending 10s of thousands of dollars on panels with my tax money, I want the fancy control system, expensive efficient panels and whatever else to get the most from the money spent. All of the local school districts have solar panels. Instead of putting them on the buildings where roof space is somewhat limited and shadows could be an issue, they put them over the parking lots. So not only do they gain MUCH more sq ft and no shading issues, they also keep cars out of direct sunlight. We're in the desert (CA) and I've been in one of those parking lots in the summer before the panels, I really appreciate the shade now. It's MUCH cooler.

I have no issues at all with these projects. Quite frankly, I'm shocked that they would do anything at all to try and save us some money. This IS California you know.


RE: Bad economic analysis once more
By Keeir on 9/19/2011 12:42:51 PM , Rating: 2
Errr... its nice they are shading the cars.... I thought that perhaps it would be better to shade the building and reduce air conditioning costs.... but I admit to having never seen the numbers.

quote:
Quite frankly, I'm shocked that they would do anything at all to try and save us some money. This IS California you know.


Yep. But keep in mind, this a local government offical in California claiming the project will save you money...


By Cerin218 on 9/21/2011 3:35:01 PM , Rating: 2
Have we spent ourselves into prosperity yet? CA is a state that is somewhere around 24 BILLION in debt. So where is the logic in spending yourself deeper into debt for a possible reduction of future cost? You only save money if you aren't in debt to begin with. Like when I replaced the windows in my house. it cost me 11K. I save roughly 75 dollars a month in my energy bill. so over the course of the year I might save 1,000 dollars. If I had paid for the windows on credit, it would take 10 YEARS to break even on the investment. So I wouldn't be "saving" money. Because I paid cash, that 1K is my savings per year. That is money I don't have to spend right now, and can spend on other things. THAT'S savings. Buying on credit then pretending you are saving money is the why this country is 14 TRILLION in debt and getting worse. And the morons running this country that believe we can spend ourselves into prosperity make me want to puke. So when all you morons squeal tax the rich, it's because you want to take money from them to waste on stupidity like this school district is doing. The problem isn't that the government doesn't take enough, it's that it wastes money that it does take on stupidity like this. It's called sustainability, and debt spending isn't sustainable.

So I don't see what you DO like about this plan. Unless you aren't happy that the government only takes 33% of your income to waste on stupidity. But people like you are exactly why California and this country in general are failing. Pay for the things you need in cash, THAT is investment. Don't steal from everyone else to pay for what only a few people will benefit from. How will a school in CA benefit me by using my tax money to subsidize their solar experiment?


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