Archive for the ‘PV Technology’ Category

Distributed Power Conversion for Solar PV Modules – Is There Value?

A Wall Street client recently asked about the impact of new distributed power conversion (DPC) products on the downstream solar industry. The PV industry rarely goes a week without a new market entrant or new product release announcement from this exciting new market segment.  Some think it’s a bubble that is going to burst as over 30 companies vie for a leadership role in DPC.

In a very broad sense, these new products take what is otherwise a dumb PV module and make it smart by placing electronics at the module level.

There are 2 types of products – DC to AC microinverters, which eliminate the need for a central inverter, and DC – DC optimizers that optimize string level output, and which work in concert with a central inverter.  A good review and comparison of these products’ pros and cons can be found here and here.

solar panel with DC optimizer

Externally mounted DC Power Optimizers

DPC products are well known for significantly reducing the harmful effects of shading on a series string by providing max power point tracking (MPPT) at the module level instead of relying on a central inverter.  They can also provide a number of other benefits.  Depending on provider, these benefits include correction for module mismatch, non-uniform module degradation, temperature coefficient difference and uneven soiling among others.   Sonme DPC products also provide detailed information on the performance of each module, the string and the overall array, along with environmental conditions monitoring.  System financiers really like this last benefit as it gives them unprecedented visualization of the system performance on a minute-by-minute basis.

DPC devices sit at the module level, either externally mounted or integrated into the junction box.  Recent entrant Sunsil, claims to do low cost DC – DC optimization at the cell level.

The question of value of these new products in lowering the levelized cost of energy (LCOE) is becoming clearer day by day. While all of these devices put a load on each module of up to 3W, the overall benefit is evolving as the technology and architectures evolve.

Solar panel microinverter

Enphase Microinverter Before Module Installation

Enphase has claimed leadership in the microinverter segment for residential installations, and clearly adds value in ease of design and installation, and increased power output. Microinverters place an enormous number of electronic components on each module and have not been proven for larger commercial and utility scale installations where reliability is paramount. These systems typically increase energy harvest on a residential installation up to 15%.

DC optimizers show clear benefits on 10kW arrays and larger. Large PV systems leak value daily due to the

solar energy, solar panels, photovoltaics

DC Optimizers for Larger Arrays

problems outlined above. Companies like SolarEdge and Tigo have first- offering products in this space. The extra cost and load of a DC optimizer product placed on every module seems to be more than offset by a large net benefit in energy harvest, lower system capex and lower maintenance costs. A thorough DC optimizer solution can provide up to a 20% decrease in the levelized cost of energy resulting in 1% – 4% IRR gain for the system owner.

While these relatively new products are showing value, challenges common to new technology remain. These include: Who has ultimate warranty responsibility when integrated into modules?  How do these products affect module and project bankability? Each product puts a load the system to operate, are there conditions when this could be a negative gain? With so many electronic parts spread out over thousands of modules in a larger array, is there a reliability issue (especially with microinverters)? Who owns the data captured from the array? How do you certify these products for safety and performance when no category exists within the current certification programs from UL and others?

These questions are being answered as the product group matures and operational history is analyzed. Clearly these new products add value and as they mature, and new, more robust product architecture emerges, it is likely they will become standard on most systems in the next few years.

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Solar Energy – Many Types, Many Applications

Recent announcements by the U.S. Department of Interior regarding approval of large solar energy installations have generated a number of questions and a lot of excitement.

Solar tower, solar energy

Solar Power Tower

On October 24th, U.S. Interior Secretary Ken Salazar approved the $6 billion Blythe Solar Project to be built on 7,000+ acres in California’s desert region. Another approval came through for the Ivanpah Solar Project, which will produce enough energy to power the equivalent of 140,000 average American homes each year. The Blythe project will be the largest solar generation installation in the world, and is based on large solar thermal system technology with the acronym CSP.  This is where the questions come up.

Solar energy can mean many things to many audiences. A good recap of various solar technology types can be found here.

Solar module

Solar PV Module Components

Photovoltaic (PV) solar uses semiconductors and other cell technologies to convert photon energy directly to electricity with no moving parts within the cell apparatus.  Cells are placed in series in modules of various sizes, and modules are designed into entire arrays for residential, commercial and larger utility scale systems.

Concentrating PV (CPV) uses various optical light concentration schemes and devices between the sun and the PV cell to produce more energy.  These systems typically require accurate 2-axis tracking of the sun.

Solar thermal technologies are used for a variety of applications. Solar thermal uses the sun to heat water for direct use in solar hot water systems, or heats special fluids for use in a heat exchanger.

Common small-scale solar thermal systems can be found on residential buildings to heat hot water rather than using electricity.

Solar Concentrating Dish with Sterling Engine

Concentrating solar power (CSP) usually refers to larger utility scale systems that flash water to steam at industrial scale to power turbines similar to those found in coal burning plants.  CSP comes in a variety of technology types including parabolic linear troughs, power towers and dish/sterling engine systems.

Both CPV and CSP require strong solar resources like those you’d find in the desert region of the United States or in North Africa. These technologies are not suitable to higher latitudes and intermittent cloud cover.

With the price of PV modules and installation costs plummeting over the last 2 years, PV is disrupting many long held assumptions about application suitability. High thermal heat CSP technology may not be competitive in many applications, as the installed cost and LCOE is higher in many instances than PV. A good review of the situation from Michael Kannelos at Greentech Media can found here.

CSP requires large installation sizes, frequent maintenance due to a large number of moving parts, and uses large amounts

CSP Linear Trough

of water resources in many instances. But CSP has excellent storage capability and still produces useful cycling well into the evening.

The other issue with CSP is large capital costs. In order to reach competitive kWh cost, these plants need to be large and cost in the $ billions, creating large financing heartburn.

PV has the advantage of being a direct photon to electricity generator with little complexity. Heating water and then using the heat energy to drive a turbine or sterling engine has built-in complexity in energy production, efficiency and maintenance.

Additionally, PV is modular and can be installed in stages. This reduces the financing heartburn as bulk capitalization is lower, allows the array to scale on a defined timeline, and allows for rapid installation.  In this regard, solar bankability may be more common for PV in the future.

Generally, all of these technologies have advantages and disadvantages depending on application.  And with global electricity demand 20X more than planned capacity, the time is now for large adoption strategies to be implemented.

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The Developing Solar LCOE Toolkit and Solar Energy Bankability

solar panels, solar bankability

Less Subsidies = More BOS Focus

Solar energy subsidy incentive schemes are being reduced globally, and PV module prices continue to drop at astonishing rates. This intersection of policy and market economics is creating extensive focus on lowering the LCOE metric via improvement in the balance of systems (BOS) costs. With lower subsidies, project developers are under greater pressure to deliver strong return on money to project financing entities, the ultimate masters of the solar energy industry.

While the PV industry is closing in on the elusive equalization with grid retail and wholesale energy cost,

Quick mount Solar Panel system

Zep's Patented Auto-grounding, Drop-in Mounting Solar Panel Install Solution

creating projects with return on capital that financing companies will commit to financing en masse is requiring reexamination and upgrading of every component in the BOS category. This includes upgrading project development processes, system design tools and process, installation methods, shipping and logistics, array conduits and components, solar panel racking, inverters and monitoring systems, and operations and maintenance.  New technologies that harvest more energy from a PV system like distributed DC-DC optimizers, are key.

solar energy robotic installation, solar bankability

Gehrlicher Solar Panel Install Robot

A number of new tools are evolving which are creating a new LCOE-lowering ‘toolkit’ for project developers. Good examples include new system modeling software, robotic installation, simplified racking, easier-to-install combiner boxes and the aforementioned DC-DC optimizers.

Looking to the future, this developing LCOE toolkit will have a substantial impact on the solar bankability of all sizes of PV projects. It’s likely that a new level of performance, monitoring and cost will create projects which will confer more confidence and visibility in their financial performance, and be placed in a higher bankability bracket than other projects which are done using outdated BOS methods and products.

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Solaria – An Old PV Technology Idea is New Again

Back when polysilicon was in short supply and priced at $400 per metric ton (MT) in late 2006, many startup and early stage PV technology companies built their business plans on the assumption that this material would not go down much in price. One such company is Solaria which has had over $70M in investment capital from the VC community and strategic investment from German solar manufacturing powerhouse, QCells.

solar cell, solaria, solar energySolaria has a unique low concentration lens built into top glass of the module which is then placed on a 1 axis tracker. The concentration allows for less silicon cell material to be used in the module to produce the same or more energy than from a conventional module and at lower cost.  A smart solution to the market place conditions at that time.

Fast forward to 2009, polysilicon prices have dropped to average $50MT and commodity crystalline module prices have declined more than 50%. This situation has created substantial heartburn for companies like Solaria where the cost/performance ratio is seemingly eliminated especially when having to rely on trackers.

But good entrepreneurs adjust and innovate further and Solaria have done just that. A recent large investment coupled with an order for their distinctive modules from a tier 1 project developer has brought the company back from the brink. While pricing and other details have not been released, this will be an interesting story going forward.

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The Pain and the Joy of the PV Module Price Decline, or Why I Wish I was Close to 1GW Manufacturing Capacity Already . . . .

As discussed in my previous post, photovoltaic (PV) module prices have dropped by 50% or more over the past 18 months. Recent Wall Street guidance by Tier 1 crystalline (c-Si) companies says that they will easily reach a manufactured cost of $1/Watt by mid 2011.  First Solar, the leading thin film manufacturer, already has an aggressive cost structure at $0.80/W currently (and is heading to $0.74/W in 2011).  Together, these two price drivers make the launch of a new solar energy PV modules product extremely difficult.

solar energy, photovoltaic thin-film, solar cells

Thin-film on Glass Production

Many new thin-film photovoltaic companies have been caught off-guard by the steep economic downturn and the lack of access to technology development and expansion capital. During this time, mature PV module companies greatly expanded their manufacturing capacity, lowered non-material production costs and increased yield ( Grade A salable product) resulting in the cost advantages described above. Thin-film companies’ strategic models created 4- 8 years ago used assumptions that c-Si companies would never achieve a manufactured cost below $1.50/W and they are now scrambling to compete with these new solar energy market dynamics.

Unfortunately for many of these promising companies, the days of doing incremental 50MW to 100MW capacity expansions annually is over. While expansion capital is hard to secure in the best of circumstances, the real problem is the manufacturing economies of scale required to reach production costs below $1W. Most successful companies with aggressive <$1/W cost structures are close to, or exceed 1GW of production capability.  Going from less than 100MW total production to 1GW has never been done before in the PV industry (although Solar Frontier is bravely in that process now). The operational scale-up risks of not “getting it right” is quite high, not to mention that finding approximately $1.3B in capital to finance that scale of production is almost impossible to secure. To overcome this GW scale necessity, new thin-film companies need exceptional (>12% efficient) solar cell technology combined with very lost-cost manufacturing machinery costs. This is a very rare combination, as semiconductor machinery is very high-cost and production line solar cell efficiencies are 6% – 11% depending on technology type. A good piece on this situation from Vinod Khosola can be found here.

photovoltaic thin-film, solar energy

Thin-film Production Line

Products based on amorphous silicon (a-Si) photovoltaic technology are under the most pressure, as solar cell efficiencies are generally below 10% and manufacturing costs are well above $1.45 on average. Recent scaling back announcements from early stage Sunfilm and Signet Solar are examples of this pressure, as is ENER’s running at substantially less than 50% of full production capacity with negative gross margin sales data. These are well run companies that unfortunately have been caught by exceptional market dynamics.

The PV module industry is heading toward the perfect storm of commoditization and temporary oversupply. Downward sales price pressure will continue while solar energy module supply in 2011 will exceed demand by more than 50%. M&A activity along with bankruptcies will be on the rise. And this is happening before the hyper-efficient electronics manufacturing giants such as Samsung, Foxconn and others drive down costs further as they become fully operational in the fast approaching $100B global PV marketplace.

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The Challenges to Developing PV Power Plants

There are 6,500 megawatts (MW) of PV project development currently in process across the United States.  Clearly the PV industry is poised for strong growth but the hurdles for PV project developers are numerous, and many of these MW

solar energy, solar project development, photovoltaics

How long before this technician could go to work?

may not be implemented. These hurdles include extensive permitting regulations which vary widely at the local, regional and national levels, interconnection standards that vary across thousands of utility companies, and locating new transmission lines for large projects to name a few. A good example of the challenges and complexity for PV project developers can be found here.

A recent article regarding new transmission lines for a large solar farm in Colorado for the utility company Xcel Energy highlights one of these challenges. With an objection to the new 140 mile transmission line by one landowner, PV project developers are now unable to secure project financing until this issue is cleared up. This could take months or years. This type of project roadblock can happen as a result of any number of matters that must be checked off by developers.

While German PV project developers work under a national set of standards and can implement projects in as little as 6 months, their American counterparts face a cornucopia of various technical and installations standards, permitting requirements, and environmental requirements, which can result in a year or more of wrangling before most large projects can simply break ground.

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Price/Performance Improvement Enabling Thin-Film on Rooftops

Historically, the residential and commercial rooftop solar energy market sectors have been dominated by solar modules using crystalline silicon wafers. Recently, the utility Southern California Edison began implementing the first phase of a 500MW project plan which is mainly supplied via 1MW installations on large (larger than 100,000 ft2) roofs. The program, which demonstrates the unique distributed generation nature of PV, is using First Solar thin-film product for some of the installation sites along with crystalline vendors including efficiency leader Sunpower . Once the exclusive domain of crystalline wafer modules only, the cost and efficiency of high performance thin-film product like First Solar’s produces acceptable internal rate of return for system owners on rooftops where many variables line up for this technology type. An article today in USA today features a good overview of the program and a picture of installers placing First Solar modules into service.

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Both Sides Now: The Thin-Film/Crystalline Debate

A financial industry client recently asked whether “thin-film” PV product can ever compete with highly established crystalline PV technology based product which currently has 85% market share.  His question was prompted by a spate of recent press articles that talk about the 50% drop in module sale prices in the last year, with claims of margin pressure on the thin-film category.  A good summary of the situation, here.

Like all things related to solar energy generation, there are many factors to consider.  First, thin-film is a broad term; there are many technology types with different performance capabilities, cost points, and structures which factor heavily in a comparison to crystalline products.

Read the rest of this entry »

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