Completing the lesson 

The Free Press features an article on how the Robinson Elementary School in Starksboro (VT) school is using its newly constructed solar panels to save money and as a teaching tool for its students:

A somewhat unexpected bonus is that some lessons have become more engaging for students than they otherwise would be, [Principal Dan] Noel said. One example….Now, a sixth-grade math class monitors and calculates the solar panels’ energy production to learn when they generate the most electricity….

Robinson, with about 160 students, reflects the town’s approach – and it has gone further than dozens of school districts in Vermont that have embraced energy-efficiency.

So far, so good.  Giving students practical applications is a great learning tool.  The school has

25 solar panels …which are capable of generating 100 kilowatt hours [sic] of power….The school paid $1,000 up front for the solar panels. The school leases them for five years, for the amount of money the school would have paid in electricity bills.

I take that to mean there is no net financial saving to the school, but it is out $1,000 in capital costs.  I’m not sure what the market price of 25 solar panels, each generating 100 kw of power is, but I would bet that it’s a lot more than $1,000. 

If I was teaching at the school and using the solar panels as a teaching tool, I’d incorporate an economics component to the math class and ask the students to figure out why, if this is such a great deal, every family in Starksboro, including the students’ families, doesn’t have solar panels like these in front of their houses.  The lesson’s questions might go something like this:

Suppose solar panels are so expensive that most people don’t buy them.  Instead, they buy electricity from their local electric company.  Then, a company in China gives you enough solar panels to power your house during sunny times.  The only thing you have to pay the company is whaterver you would have spent on your normal electric bill, so there is no additional electricity cost to your family. 

a.  Would you take this deal and why?

b.  Why would a company in China be willing to give you something at a lower price than it cost them to produce the solar panels? 

c. How long can the company in China continue to do this?

d.  Using economic concepts like opportunity costs, explain why this is or is not not a long term viable business model for the company in China.  Be sure to include a discussion of resource allocation, scarcity, and how markets and prices allocate resources. 

e.  Substitute the phrase “U.S. government” and/or “U.S. taxpayer” for the phrase “company in China”.  Does this change any of your answers above?   Explain.

Finally, I also note that it appears that even the principal doesn’t quite get the total impact of the solar panels.

On balance, the panels generate as much electricity a year as the school uses. In June and July, when the sun is strong, no children are around, and the school’s energy demands are low, the panels add electricity to the grid. In the dead of winter, when the weather is usually dark or cloudy, the school takes in electricity from the grid.

It all roughly balances out to near zero electrical use from traditional sources, Principal Noel said.

It’s not the balancing out that is the issue.  The school, and hence the grid, needs “traditional” sources of electric power when the sun does not shine, so the true cost of the solar panels should include the cost of the generating sources that are needed at those times.