Saturday, January 28, 2006

Psychology and Economics of "The Solar Decision" Ford Pinto or Toyota Prius?

Hey there future solarDwellers:

I wanted to continue on the economic vs psychological factors behind purchasing a technology such as solar energy. Specifically, I think its very possible these days, as the price of solar has come down especially over the last 10-15 years, to refute the traditional argument that solar isn't ready for mass adoption, mainly because it has been labeled as "too expensive." (I'll cover the dollars and cents comparison between tradition fossil-based electricity and solar electricity in my next post). Secondly, I argue, the "value/worth" of solar power is already very high these days and affordable, especially when compared with combination of price and negative effects of traditional fossil fuel-based utility electricity. So, finally, the key to a wider adoption and acceptance by a wider public of solar energy is simply getting the word out that: in terms of economics, it's not soooo expensive any more, and in fact, is very close in price to traditional fossil-based electricity when viewed over the long term; and, in terms of consumer psychology, solar energy should be seen as a BETTER (cleaner) source of electricity, holding an inherently higher value than coal or natural gas-based electricity.

I used the simple car metaphor in the title of this post: if electricity were a car, isn't the Prius (clean energy) worth more than Pinto (fossil-based energy)? We are so adept at making the buying decision when it comes to cars, being such a part of our daily lives, that most people EASILY see the difference in "value" and price between a Prius and a Pinto. If the purchasing experience for electricity were as present in our lives as the car buying decision, in terms of being able to evaluate and choose our source of electricity, I think a LOT more people would be purchasing solar power based on its superior characteristics. Heck, they might even be willing to pay MORE for solar based on its higher "value"!!! But there's a bonus: even though solar has so much more "value" than coal or natural gas-based, polluting electricity, it's price is VERY COMPARABLE when viewed over the long term (the 25-year life of most solar panels).

And don't worry, future solarDweller, besides covering the attractive economics in dollars and cents of solar power these days, tomorrow's post will also cover the worry of some homeowners: what if I purchase those panels, or 25-year's worth of electricity, but sell my house after 7 years? The short answer: you won't have to donate the 18 years' worth of electricity left in those panels to the buyer of your home.

--the solarDweller
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