I recently listened to a speaker who was touting solar energy as a means of diversifying the economy of Nevada. It certainly seems to make sense with the Las Vegas area the beneficiary of more than three hundred days of sunshine each year. As I listened to the talk I learned a number of things and realized that I had a few misconceptions about solar power.
First off – while sunshine is free the cost of solar energy is anything but. This was something that I understood going in. The cost to build the infrastructure of a solar power plant is high and makes the cost per kilowatt of solar power more expensive that coal, diesel, natural gas or nuclear at this time. When looking at the payback time for an investment in solar energy it may not seem like a wise choice. But that’s based on current costs. If the cost of other energy sources rises the payback time will be shorter. It wasn’t that long ago that we were paying more than $4 for a gallon of gas.
The idea that solar energy plants will create jobs is wrong. It will create jobs to construct them but unlike other types of power plants, very few people are needed to run the facilities once they are built. So the notion that there will be increased demand for housing for plant workers is incorrect. However, if the solar industry does expand significantly manufacturing jobs will be created at the plants that make the components.
Living in the southwest with its abundant sunshine makes you think that it is the perfect place to have solar power plants. It is, but not because of the sunshine. It’s the wide open spaces that make it appealing. In more densely populated areas of the country it could be difficult to find places to build theses power plants and the transmission lines that go with them.
I was very surprised to learn that sunshine isn’t as important as you might think. One of the world’s largest solar plants is located in not so sunny Germany (article). That country has a stated goal of producing 20% of their energy from renewable resources, primarily solar. That shows that solar technology has improved to the point that it is viable in a large portion of the world.
The Real Estate Angle
The greatest impact on real estate demand will be in areas of manufacturing. There is a major solar manufacturing plant in the works in southern Nevada. Why? It’s simple, a business friendly government, available workforce, and no state income tax. The State of Nevada is aggressively recruiting these plants and placing a large emphasis on solar and other renewable resources. Many other states with favorable tax climates are doing the same. So why not take your real estate investing along for the ride?
The use of solar energy has not been opened up because the oil industry does not own the sun. – Ralph Nader