Oil based fuels are the most expensive form of energy in the world.1 This is true, even though the cost of oil is now $45 per barrel when 2 years ago it was over $100 per barrel.
72% of all oil is used for transportation. Even more striking, according to the U.S. Energy Information Administration, 92% of transportation runs off of an oil based fuel. Oil based fuels dominate transport. To estimate how much money we could save by using solar instead of oil for transportation, I’ll compare oil to solar in light duty vehicles.
Transportation Fuel Costs: Oil
We2 are terrible at remembering historical information and using that to make smart decisions for the future. On August 1, 2016 the national average price for gasoline was $2.26, nearly a dollar per gallon less than the 10 year average.3 Taking a look at the general consensus for future gas prices, nearly all experts think that prices are heading up. Experts do not have a great track record though. So, let’s assume that fracking technology continues to progress, that carbon pricing does not materialize, that even larger scale wars do not breakout in the Middle East and that all of those things lead to current gas prices becoming the new normal.
The University of Michigan4 tracks the average fuel economy for all new cars. As of August 2016 this stood at 25.3 miles per gallon, the same as the full year average for 2014 and 2015.
With $2.26 gas and 25.3 miles per gallon, an internal combustion engine’s fuel is 8.9 cents per mile. Using the 10 year average gas price, it would be 12.5 cents per mile. For our purposes, 9 cents provides the baseline that an electric vehicle would need to beat in order for people to spend less on fuel.
Transportation Fuel Costs: Solar5
As of 2014, the cost of residential solar was less than the cost of grid electricity in 42 of the 50 most populous states.6 Since then, solar has dropped another 16% compared to grid pricing.7 The residential average cost of electricity as of May 2016 was 12.35 cents/kWh. Since national average grid prices are easily understandable, I’ll use that as a proxy for solar prices. By doing the math,8 and using just the average grid prices, you end up with 4.6 cents spent on electricity per mile traveled.
To get an accurate savings number based on solar electricity costs, it is best to run calculations on a location by location basis. However, there are already some places where solar costs are lower than just the transmission and distribution costs charged by utilities. National average transmission and distribution costs are 34% of the total unit energy cost. That means solar costs to fuel an electric car are between 1.6 and 4.6 cents. Let’s call it 3 cents.
Finally, just as we did with oil prices, let’s take a look at were solar prices are headed. The chart below shows the price of solar panels over almost 4 decades. In 1977, solar panels were 212 times more expensive than they are today. The trend is clear. The cost of solar in the U.S. is dropping. Better yet, it has a long way to go. In Australia9 and Germany10, the price of residential solar is about 50% less than in the United States.11
9 Cent Petroleum vs. 3 Cent Solar
Petroleum is 3 times more expensive than solar for powering your car. If you were to drive 13,476 miles per year, the average amount traveled in the U.S., you would spend $1,212 on gas or $404 on electricity. As soon as electric cars cost the same as internal combustion engine cars, we will see a very fast switch to electric vehicles. The switch will give us a locally based fuel, save us $800 per year and make driving a lot more fun.
The Next Step
Want to learn how to switch to clean energy even if you live in an apartment? This article shares an ideal way for anyone to access clean energy. If you are inspired to learn about other ways you can increase your clean energy usage, check out the how-to pages: Easy, Intermediate, and Total Commitment.
At ButItJustMightWork, we strive to make your life more fun, more convenient and more affordable with clean energy.
- Compared to coal, natural gas, wind and solar
- and by that I mean all of us
- Ten year average from 2006 to 2015 was $3.17 in inflation adjusted dollars
- University of Michigan Transportation Research Institute
- To really understand the numbers here, make sure to follow all of the footnotes. If you are a nerd like me, you’ll have a blast.
- North Carolina State University Study
- The cost of residential solar has dropped 13% since 2014. Meanwhile the cost of grid electricity has increased from 11.88 cents/kWh to 12.35 cents/kWh (May 2016), a 4% increase. That means solar is at least 16% less than the national average grid prices, around 10.4 cent/kWh. Since the amount of sun varies by geography and the grid cost of electricity does as well, exact comparisons are not particularly useful as national averages. This article is thus more about big picture ideas.
- The most popular affordable electric car in 2015 was the Nissan Leaf. According to the EPA rating,the 2016 Leaf gets 114 mpge (miles per gallon equivalent). The EPA uses 33.7 kWh as an equivalency to one gallon of gasoline. So the Leaf travels 3.38 miles/kWh. That puts the Leaf fuel cost per mile at 3.7 cents per mile. Charging losses can be between 15-25%. I’ll add 25% for charging losses and end up with 4.6 cents/mile.
- Australian solar prices
- German solar prices
- U.S. solar prices