There’s a saying in business and politics: Never let a good crisis go to waste. Bad times
sometimes make good things more possible. Now a crisis has given homeowners and businesses considering energy-efficiency projects a bigger reason to move forward.
The global oil and gas markets are disrupted, and consumers are paying the price. The Israeli/American attack on Iran has shut off about 20% of the world’s oil supply and caused nearly all shipping to cease through the Strait of Hormuz. That has triggered panic among nations dependent on imported oil, which in turn has raised global oil prices from $67 to more than $100 per barrel. Many analysts predict that oil could go as high as $200 per barrel.
Countries that rely on oil imports to power their electrical grids, homes, businesses, and
vehicles have no choice but to pay that price. Neither do oil-producing nations, as their
domestic producers will be forced to charge higher rates at home and abroad.
The most obvious result in the U.S. is higher gas prices — about 65 cents more per gallon at this writing. Diesel fuel is up by about $1.20 per gallon, which will increase the price of anything shipped by truck. Home heating oil prices in New Hampshire have risen by about $1.30 per gallon since January. Jet fuel prices have doubled, increasing the cost of airfares.
Expect less immediate but just as significant increases in the cost of electricity because New England relies heavily on liquified natural gas to fuel power plants. While the U.S. is the world’s largest exporter of LNG, global shortages due to the war will raise domestic prices as producers export more and leave less for the U.S. market.
The region’s residents and businesses have no control over rising fuel costs. Sure, everyone could drive less, heat less, and use less electricity. Energy-efficiency investments, however, can help offset surging fossil fuel costs without sacrificing quality of life. I’ll focus on solar since it is a “force multiplier” that will amplify the return on other energy-related investments.
Solar energy is crisis-proof
As climate activist Bill McKibben recently posted on his “The Crucial Years” blog, “Sunlight travels 93 million miles to reach the earth, none of them through the Strait of Hormuz.” This underscores the fact that the global oil industry has a complex and fragile supply chain. Disruptions happen when crude production is hampered by war, sanctions, or extreme weather events, to name a few scenarios. When the supply of crude declines, refineries cut back production to avoid expensive shutdowns. When refineries cut back, gasoline, heating oil, LNG, and other oil-based products become scarce and expensive.
When Russia’s invasion of Ukraine disrupted oil supplies, Europe and other vulnerable
regions turned, in part, to solar. Pakistan, for example, has more than doubled its solar-
generated electricity from 8 gigawatts to 17 gigawatts since 2023. This helps shield the
country against rising costs or the unavailability of fossil fuels.
Residents and businesses can take the same approach to reducing dependency on oil and gas products. The war in Iran has removed about 20% of the world’s LNG supply from the market. LNG plants provide about 25% of New Hampshire’s electricity. The price of LNG has risen about 80% since the start of the war. Electric bills will not show any increase until the next rate period in August, but it is likely to be significant.
Before the war, a kilowatt hour of solar-generated electricity was about three times cheaper than a kWh generated by LNG at utility scale. For residential or small businesses, the cost of solar has been steadily coming down.
According to EnergySage Marketplace, the average cost in New Hampshire to install
residential solar is $3.18 per watt (though some local installers have claimed $2.60, which is close to the national average). A 10kW system would cost $31,800. The current (pre-war) rule of thumb on payback for the solar investment is 8 to 12 years, which is down from the 20 years I was told to expect when my panels were installed in 2020.
Electrification is cheaper with solar
It’s impossible to tell the long-term effect that the Iran war will have on the price of electricity, but if it’s as low as 10%, that shaves another year or two from the payback period. Where solar really pays off, though, is when it can power further electrification of your home and business.
An electric vehicle becomes cheaper to charge, and heat pumps and heat pump water
heaters are a smaller hit on your electric bill. In Europe, for example, the impact of rising energy costs on EVs is expected to be five times less than that of gas-powered vehicles according clean energy advocacy group Transport & Environment.
Even without spiking energy costs and solar, electrification provides long-term stability and cost savings. Solar-generated electricity, combined with lower reliance on ever more expensive fossil fuels, will significantly shorten the time to see a return on your electrification investments.
To get the maximum return on investment, anyone planning a solar project should work with their installer to size the system to accommodate electrification efforts down the road. They should also consider combining solar with a battery storage system, which will minimize the need to draw electricity from the grid and serve as an effective backup during power outages.
What about incentives? The federal tax incentives are gone, but others are available through local non-profits and utilities. The Peterborough Renewable Energy Project will be hosting a free workshop to explain available energy-project funding on April 18 at 1 p.m. in the Peterborough Library’s 1833 Room.
Michael Nadeau is a member of the Community Power Committee.