This paper was submitted for Managerial Decision Making taught by Dr. Eric Malmberg. The rising cost of fuel has greatly affected the entire world. Prices of basic commodities such as food, clothing, education, and health care are rising. There have been efforts exerted to address this issue and governments are trying their best to apply methods that will alleviate this economic problem that has affected every sector of society. One of the initiatives that have been in place to address the energy crisis wrought by the growing cost of oil is using solar power to generate electricity in homes and buildings. There are alternatives presented regarding this recommendation: building all houses from 2013 with solar power, giving tax credits for those who use solar power, and increasing electricity charges for those who refuse to install solar power systems. My contribution to this paper was to present our act of choice as well as how to implement and control if homes by 2013 onwards would be built with solar power generation systems.
One day in the future our resources we currently use to draw power from will decrease and eventually deplete. For several years, the search for alternative options has been at the forefront of politicians, homeowners, and environmentalists. There are three major alternative sources of power that have received attention: wind, solar, and geothermal. Wind power has been in existence for many years. Windmills and sailing boats are all examples of how power or energy is drawn from the wind that is created by the earth’s rotation. Solar power is energy drawn from the sun. On a small scale, a calculator operates from light, it powers on when it can draw energy from a light or sun as its source. Geothermal is when energy is drawn from the earth’s internal temperature that generates heat. Almost, if not all, areas of the economy and the businesses are affected by the oil price increases that have taken effect. In the United States alone manufacturers seem to feel the most hurtful effect as the domino effect of the price of oil impacted their businesses.
The domino effect is seen everywhere as prices of all commodities skyrocket as well. Services are being subject to increase since businesses can justify their move because of the demand of workers for higher pay to survive. The basic needs such as food, shelter, and clothing are undergoing some tragic and sad changes – that means increase in prices. Fuels to run transportation are on the rise, naturally, thereby making the fare for travel (boat, airplane, buses, cars, trains, etc.) doubly expensive. Meanwhile, U.S. shoppers, who helped propel most of the expansion, may cut back as gasoline and home-heating costs rise. One of the solutions to an energy crisis is the use of solar power. Out of the three alternative sources of power, solar energy has picked up speed and is currently being used in many households and buildings across the world. For that reason, our research is on solar power and in the following we will state our objective, find our alternatives, list the pros and cons of these alternatives, state our act of choice, discuss our implementation, and
follow & control.
The objective is to reduce electricity cost for residents by seeking an alternative source of energy through solar power due to the fact that electricity prices are increasing and our resources are decreasing. Making sure that people are aware of solar power will help them convert. First, people must understand the term and it’s history.
Historically, the first photovoltaic affect was observed by Henri Becquerel in 1890. In 1984, the first solar electric generating station (SEGS) was built in California’s Mohave Desert. From that point forward countries and states in America began installing solar panels and systems. According to the Solar Energy Industries Association, “Currently Germany and Spain are the country’s leading the way in solar power.” (www.seia.org) Here in the United States California is the state has utilized solar power the most. There are four ways to source the energy from the sun into power: photovoltaics which is the conversion of light to electricity, solar thermal which is through the use of heating and cooling systems, utility scale which is the concentration of solar power and through lighting. Solar cells uses in PV devices are made out of crystalline silicon and are mounted on top of roofs or on the sides of a house or building. Concentrating solar power (CSP) plant produce electricity by using mirrors and lenses to concentrate the sun’s power.
There are three alternatives to reducing electricity costs through the use of solar power. The first alternative is to build all new houses after 2013 with the option of solar power. This alternative could also include new apartment buildings as well. Building new homes with this option already in the prices of the house would save the homebuyer the hassle of getting a company to come out and install a PV device or solar panel after the fact.
The second alternative is to offer tax credits and incentives to homeowners
whom would like to upgrade their current residence to include a PV device or solar panel. A tax break would provide a financial relief to take care of a portion of the costs due to the upgrade.
The third alternative is an increase in electricity charges for those who continue to use traditional means of electricity through chemical combustion or nuclear fission. There can be a standard flat charge that the Department of Energy can negotiate with the electricity companies to charge customers. This could be a way to discourage people from using harmful, polluted energy. Building Homes with Solar Power
Deciding to switch to solar power for the home is one way to lessen the effect of the household on the environment. With the use of photovoltaic cells, the household can take advantage of the free solar energy every day without contributing to the pollution, and more importantly, reducing electric bills. However, solar power may not be available for everybody due to some issues on the cost of installation and the other disadvantages that would be later discussed. Generating electricity by using the solar panels pose some risks compared to the traditional way of getting power. According to Cox (1981, 0. 39), knowing the benefits and detriments of solar power can help one in deciding about using it in the household.
One advantage of building homes with solar power in 2013 compared to the traditional methods of electricity generation is its impact on the environment. While most power is from burning coal that creates a huge amount of carbon dioxide, solar power actually produces zero air pollutants. According to Roman (2012, p. 23), electricity that is produced by solar panels does not pose any harm to the environment at all. In the lifetime of a solar power installation in the household, it would make a big difference in the family’s contribution to clean air.
Another benefit of a solar power generation installation in the household is the fuel costs that can be saved. From the source of fuel to the electric companies, it needs a lot of money to produce power. Fossil fuel markets are highly dependent on the global events as well as the local supply concerns.
As of December 2010, the average cost of consumer electricity was 11.04 cents per kilowatt-hour, this according to the U.S. Energy Information Administration. On the other hand, using solar panels would generate electricity that does not impose any cost from the time it is used up to the end of its life. Households that use even a small solar panel just to augment the power needs will experience the benefit when they receive their monthly power bills.
On the downside, installation and repair costs of solar panels can be a burden, and many households cannot afford to have one. Generating power using solar cells is indeed free but it is the purchase, installation, and maintenance that can bore a hold in the pocket. More so if the household would decide to generate all its electric power from the sun as its main source. Installations of solar panels can run to the tens of thousands of dollars. You may be granted loans and tax cuts by the local government, the initial cash outlay of switching from the traditional power generator to solar will still be high. Repairing and maintaining this power source can also be very expensive.
Maede (2011) points out another disadvantage of using solar power to run home electricity – it can only be used when the sun is up because the photovoltaic cells cannot product current if there is no direct sun. To remedy this, there is a need for a back-up power source or use batteries to create power at night or bad weather. In addition, the reliability of the solar panels would greatly rely on the climate. According to the National Renewable Energy Laboratory, there is a variation of the amount of sun power that can be derived depending on the location. Offering Tax Credits for Solar Panelled Homes
Homeowners who are planning at using solar panels to generate electric power has gotten a big help from the US$787 billion economic stimulus package that was signed by the President Obama. This means that homeowners will enjoy a federal tax credit that is 30% of the cost of the new solar equipment that they have installed even if they already received some funding from other sources. In many states, homeowners are given rebates for the solar systems
that they have installed. Solar financing programs are available in states that allow homeowners to pay the solar power system in instalments for as long as 20 years. This would encourage other homeowners who are wary about using solar power to generate electricity. A regular solar power system would produce approximately 3 kilowatts. According to Vote Solar advocacy group in California, it would cost nearly US$25,000 for a complete system.
For households that have installed solar power systems in 2009, tax credit can now be claimed. This tax credit of US$500 maximum (2007) has been increased to US$1, 500 by the economic stimulus bill. This tax credit covers up to 30% (from 10%) of the total cost of related solar power projects that would be ascertained after a review. Moreover, the current economic stimulus bill erases most of the limits to each home improvement which now includes heating equipment. However, this tax credit does not cover labor. Increasing Electric Charges for those who Continue Traditional Means of Power Generation
There are many reasons why some homeowners refuse to use solar energy. First, they say that they cannot afford the initial cash outlay or the purchase of a solar power system for their homes. They claim that the upkeep and maintenance could be equally costly as well. Second, they say that their location would not allow them to get enough sunlight to produce the power needed. Third, they reason out that their climate is erratic and rains and clouds would be difficult for them to generate enough sunlight. Fourth, they do not know where and how to start with the installation procedure for a solar power system in their homes. For these people who remain to be ignorant about the effectiveness of solar power, they would choose to continue relying on the traditional ways of getting power – through chemical combustion and nuclear fission. The latter methods may provide enough energy source but the consequences of their continued use are really detrimental in the end.
An advantage of this alternative is that people would think twice and consider installing solar power systems in their homes. This would be beneficial for everyone and the environment in the long run.
An alternative that can be imposed for those who refuse to use solar power is to increase their electric charges. Doing so would result a possible uprising by those who felt that they are pressured and forced to use solar power. Indeed, there are really households that would find the costs of installation and maintenance too much for their budget. Smith (2011) says that another disadvantage for this alternative is that many households and businesses may suffer in that they cannot keep up with the high electric bills. They would feel that they are shouldering the brunt of the fuel cost of everyone else. Act of Choice
Building all new homes starting in 2013 and onwards with solar power would give more benefits. Although there are disadvantages to this move, still the advantages outweigh them. This choice is supported by the positive evidences that existing solar powered homes show. Implementation efforts for this choice are enumerated to further encourage those who are not fully convinced of this program. Implementation
Amidst the discouragements and negative points given by those who are against solar powered houses, some efforts need to be in place to persuade them otherwise. Reducing cost of solar power systems
The cost of solar power systems should be lessened so that more people can afford it. The government should control the pricing of equipment and labor that private companies dictate and impose. Many say that even after the incentives and tax cuts offered by the government for using solar power systems in their homes, expenses are still high. On the average one system
installed would be priced between US$10,000 to US$30,000, excluding labor. We cannot blame if many households would refuse to have one installed. Offering more financing options
More financing options for those who would build homes in 2013 onwards in their solar power installations are a good step to lessen the burden of cost. Although there are existing financial supports like private companies selling these solar systems in instalment, it would still be too expensive
for some. Solar system installers should design financing programs patterned after loans and mortgage companies. This would require only a very minimal initial cash outlay and monthly amortization. This would be a big help for homeowners in producing big amounts for installations. Leasing solar panels
Rental and leasing programs for solar panels can be created to enable households to spend very minimal amounts. Lowe monthly rates should be made available to those who would not want to permanently own any solar power system. The electric bill savings from renting solar panels against the leasing fee should be proportionate so that household will still save more even after paying the monthly rental rates for the solar panels. Encouraging power purchase agreements
This is an existing program to encourage use of solar power in homes and it would be best to improve and review this effort because many households can opt for this procedure. This is application to bigger houses or buildings wherein a private solar installer company would put solar panels on the roof – which remains in their ownership. Higgins (2009, p.25) writes that electricity would be generated and the homeowner or building owner would simply pay a flat rate per generated power. They would agree and sign a contract that stipulates the details of the length of service and the rates. This would be beneficial for the homeowner since they would not be affected by any increase of electricity generated if the contract is good for 10 or 20 years, for example. Moreover, the solar power installer would not require any upfront cost. Educating and informing people about solar power generation
When people refuse to install solar power systems in their homes because of their location (cold climate), they should be educated and informed that solar panels are not affected by the temperate of a region. Germany which is located in the north of the U.S. (and has colder climates) is the leader in solar power usage. Cold climate is not an issue because what matters is that there is plenty of sunshine. Using grid-ties and net metering
Nocera (2009, p. 388) writes that some people think that they would literally be in the dark during night time and during sunless days if they
use solar power in their homes. With the use of grid –ties, houses and buildings with solar power systems, solar panels are connected to the utility grid. When the solar panels are fully exposed to the sun, the electricity generated from them would fully empower the entire home or buildings. During cloudy days or during the night, electricity continues to work because these panels are connected to the electrical grid.
Net metering is a procedure that would alleviate people’s fear that they will be “powerless” during the night or cloudy/rainy days. This concept stresses that when the solar panels generate much electricity on sunny days, the extra or unused electricity is fed back to the electric grid which can actually turn back the electric meters, thus reducing the monthly bill that you pay for it. Consequently, the electric company will acknowledge and consider the electricity from your solar panel that is sent back to the grid. Follow Up and Control
People could give many reasons to install a solar system in their homes and building and similarly, to refuse using it. With the aforementioned recommendations enumerated to push for the building of houses with solar power systems from 2013 and onwards, this alternative is aimed at encouraging more people to be more environment-friendly and at the same time to give them a good way to save.
Efforts to follow up and control on implementing the decision to build houses with solar power can be designed to further boost the initiatives. One way is for the government to pass a bill for solar power systems to be a must in homes and buildings built in 2013 and onwards. Regular evaluation programs can be designed to check on the viability and effectiveness. Hotlines should be available to entertain emergency inquiries on repairs and troubleshooting. Another way to use as a control measure is to form agencies that would look into the over-all management of solar power usage and pertinent concerns. These agencies would be responsible in addressing problems that may crop up with regards solar power systems. Moreover, they would set the local control measures and implement the regulations and laws that would cover solar power use.
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