Tuesday, May 12, 2015

Watt Price?

Quotations for energy prices or power generation costs can be confusing.  There are watts and kilowatts.  Then there are kilowatt hours.  Do not forget joules and therms.  So it was not surprising to receive a comment or rather a question on the post Meeting Solar Challenge in the Courtroom,” asking about why the cost of solar modules was quoted in watts rather than solar panel capacity that is expressed in terms of watt-peak.

The answer is simple.  As long as the information source is credible, the vernacular is left unchanged.  IHS (formerly SolarBuzz) and Deutsche Bank Research were the sources used in the solar in the courtroom article.  In my view, they are both very credible in the solar energy field.    So if the source says ‘watt’ and not ‘watt-peak’ or in terms of solar ‘module’ rather than solar ‘panel,’ then that is what is quoted. 
In this particular case it might be a question of po-TAY-toe versus po-TAH-toe.  Watts and kilowatts among other measures are recognized by the International System of Units (ISU), which has been adopted by the U.S. and most other countries.  This system is apparently quite rigid and does not allow the use of subscripts or additional symbols.  Nonetheless, investors may see terms like 'watt-peak' from those who want to enhance the ISU with their own nomenclature.  Solar power manufacturers use 'watt-peak' to highlight how well their technology performs under full radiation or ‘peak’ conditions.

For investors, who may know quite a bit about profit margin and return on equity, it can be helpful to have a ‘go to’ source for making sense out of energy and power measures.  BizEE Energy Lens provides an excellent presentation to make sense out of what is second nature to engineers, but perplexing to the rest of us.  For example, BizEE suggests thinking of “kilowatt hours” as a measure of ‘energy’ and the equivalent of a distance traveled in the more familiar concept of miles per hour.  Kilowatts or a measure of ‘power’ and can be thought of as the speed you travel.

Energy Informative also offers a great discussion of solar panel cost.  It was recently updated with 2014 and 2015 values.  For me this has been a great source to help sort out quotations for energy.  Sometimes energy costs are displayed all-inclusive of system costs or installed costs and sometimes only as the cost of a single module or panel.  It is worthwhile to get a picture of an entire solar system.  The EI presentation is also helpful in sorting out component costs of production from selling prices and wholesale prices from retail prices.

After reading information from these sources, investors should be ready for a graduate level study!  The World Energy Council provides an excellent pamphlet on energy costs:  World Energy Perspective, Cost of Energy Technologies.  It is a bit dated, having been published in 2013.  However, the 48-page presentation provides a good framework for comparing different energy sources and introduces the important concept of ‘levelised cost.’


Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.


1 comment:

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