Archive for the ‘Solar Energy’ Category

Lawrence Berkeley National Laboratory (LBNL) Report On Falling PV Costs

Vox jpg

PV Advocate synopsis:

  • Cost of installing a PV system continues its rapid YOY decline, 5% – 15% over the last year
  • Utility scale solar has declined quicker than commercial rooftop and residential sectors
  • For the first time ever, price decline came from reduction non-module hardware and lower soft costs as module prices held consistent throughout year
  • Capacity factors have increased as a result of more tracker use, better system design and advances in module technology.
  • Full access to the original LBNL 2016 report

Note: Below was originally written and posted on Vox by writer  , david@vox.com 

The fate of the world depends on driving down the cost of solar power.

Yes, that’s a melodramatic way of putting it. But it’s not wrong. Any scenario that has humanity avoiding the worst ravages of climate change involves explosive global growth in solar power.

That’s why the US Department of Energy has a program, the SunShot Initiative, devoted entirely to driving down the cost of electricity generated by solar panels — the target is solar power with $1 per watt installed costs by 2020, a 75 percent reduction in costs from 2010.

So how’s that going?

Happily, Lawrence Berkeley National Laboratory (LBNL) releases a set of reports each year devoted to tracking solar prices; they’ve just released the latest editions. Long story short: Prices are steadily falling, more or less on schedule

There are two reports, one for each type of solar power. One is on “utility-scale solar,” which means solar systems larger than 5 MW. The other report is on solar photovoltaic (PV) systems under 5 MW.

Those are two very different markets, but I’m going to squish them together in this post, with the help of a bazillion charts.

Solar is growing, growing, growing

Here’s a good scene-setter. It shows historic and projected solar power capacity additions, by technology. (We’ll get into the difference between CSP and varieties of PV below — ignore for now.)

US solar capacity and additions(LBNL)

A few things to notice about this chart. First, there’s about 29 GW of solar installed in the US now; LBNL expects that to clear 100 GW sometime around 2020. That’s crazy-fast growth (from almost nothing in 2007!), but it will still only put solar at around 3 percent of the US electricity mix in 2020.

 Second, on a total installed capacity basis, there’s been more utility-scale solar than small solar since 2012, and that is expected to continue for at least the next five years. For all the hype around rooftop solar, big power plants remain the solar workhorse.

Third, the giant spike in utility-scale PV happening this year is an artifact that reveals how much solar still depends on policy. Everyone thought the 30 percent federal investment tax credit (ITC) for solar was going to expire this year. Contracts signed in 2016 would have been the last to qualify. So there was a huge rush to get projects on the books.

As it happens, the ITC was unexpectedly extended late last year (it will phase out over the next five years), or else the spike would have been even bigger. As it is,more than twice as much utility-scale PV capacity will be added in 2016 than in any previous year.

Prices for utility-scale solar are falling

Prices are falling for both big and small solar, though at different rates and for different reasons. Read the rest of this entry »

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Electric Utility Extincton or Evolution?

For the first time in its 100-year history, the electric utility industry in the US did not have an uptick in electron sales exiting a recession. This is due to a number of factors including the strong emphasis on energy efficiency programs over the last 10 years, growth in distributed generation behind the utility meter, demographic shifts with movement to warmer climates and an economic downward reset after the large bubble burst which led to the great recession.

Solar Energy, utility Meter

A direct connection to the customer

Combined with growth in renewable energy and independent power producers (IPP), this lack of growth has caused extensive discussionand consternation about the future of the electric utilities and their ongoing viability as going concerns in the energy industry and on Wall Street.

Recent discourse centers on the rise of residential PV due to the well-documented reduction in cost of PV systems over the last 6 years. PV deployed on homes now competes with retail priced energy from the electric utilities, which is now at cost parity in many locations.  With the emerging development of PV combined with energy storage using batteries, the conversation is about a utility death spiral that goes like this: as more and more homes deploy solar with batteries, the electric utility loses more and more revenue which requires them to raise rates which then encourages more adoption of residential PV by home owners.

While there is no question that the electric utility industry is going through a large and painful transition to a new and yet to be defined business model as a result of the aforementioned issues, it would seem highly unlikely the electric utility business model would go away completely as many pundits would suggest, for the following reasons:

1)   They possess a regulatory-granted monopoly which evolved to serve a nationwide public need for robust and reliable electric service;

2)   They have low cost of capital in an industry that requires large capital expenditures;

3)   They operate at unprecedented scale with corresponding efficiencies;

4)   They own and operate the grid infrastructure.

Solar energy, utility monopoly

Monopoly with significant barriers to entry.

There is no question that the utility industry has historically been slow to react or plan for the current disruptions in the energy industry. They also have a dismal record when entering new markets and seeming unwilling to accept new or disruptive technology trends and business models. With the exception of a few forward-looking utilities such as NRG, the power utility providers of today have been non-reactive to very large and visible recent trends that are a direct threat to their electron sales-only model. In many instances they have been hostile and retaliatory. But the reasons above provide a very strong platform for a competitive advantage that is unlikely to see the electric utility demise anytime soon especially now that they are waking up to not only the threats but the opportunities.

Solar PV, bankability

Utility Duke Energy owned North Carolina project

Many high profile participants and pundits have been predicting that renewable energy will be larger than 50% of total generation in the future and that all clean energy generation will come from the non-utility players. While I have very little doubt that renewables and in particular solar energy will be a large piece of the generation pie (as smart grid technology and grid improvements are implemented), the electric utilities with their regulatory monopoly, cost of capital advantages, and ability to implement at enormous scale will own a much larger share of the clean energy generation than most observers realize.

Utility adoption of renewables, energy efficiency, energy storage, distributed automation grids and other new business models are beholden to the same issues that IPP’s and other non-electric utility energy market participants face – the transition away from a 100-year old, one direction, aging grid infrastructure to a smarter, automated, bi-directional grid that is hyper-efficient.  This will take time but I give the advantage to the larger electric utilities who are uniquely positioned to both steer the smart grid design and deployment and then efficiently phase their participation in the new energy economy accordingly.

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Power vs. Energy

Solar Energy Meter

Power or Energy?

A previous poston derates resulted in a few follow up emails where these 2 terms—power and energy—were used interchangeably by the writers, which is a common occurrence despite significant differences in meaning. Understanding this terminology makes understanding various solar energy concepts easier to grasp, especially when talking about derates and how they are calculated.

Power and Energy are two distinctly different but interrelated electrical principles:

  • ENERGY is the AMOUNT of power produced or used and is denoted in Watt-hours (Wh) or Kilowatt-hours (kWh)
  • POWER is the RATE that energy is produced or used and is denoted in Watts (W) or Kilowatts (kW)
First Solar Module Label Detail

A 60W Power Rated PV Module

For example,  solar energy module output is denoted in Watts – the rate of POWER they will produce under Standard Test Conditions (i.e. a 220W rated module). Installed PV systems have a POWER production output rating in Watts, but they are also typically discussed in kWh’s – the amount of ENERGY the system will produce over a period of time.  Here is an example from a SunEdison media article describing the completion of a 2.2MW system at the University of Maryland: “. . . . the 2.2MW (MW = Megawatt) rated farm will generate more than 3.3-million kWh of energy in the first year and over 61-million kWh over the next two decades.”

Rather than energy production, a simpler way to look at this terminology is from an energy use standpoint.  Utilities and their customers are all looking for ways to reduce utility bills. Emphasis is put on lower POWER appliances and the amount of time we use them.  ENERGY (the kWh charge on your bill) is calculated as follows:

Energy  =  Time X Power

An uncomplicated example is a 100 watt light bulb. One hundred watts is the POWER (rate) the bulb uses. If you leave that bulb on for 24 hours it consumes 2,400 watt-hours of ENERGY or 2.4 kilowatts.

Lowering of either or both the POWER and time, will lead to reductions in ENERGY costs. The converse is true of solar systems – increase the POWER rating of the system and multiply by a given time frame and the amount of ENERGY output will increase.

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A New Year Greeting

solar bankability

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Reality Check for DoD Energy – And Its Big!

While there has been much excitement about the sheer size of the Pentagon’s plans for deploying renewable energy, a recent study from DoD’s Office of Installations and Environment on solar applicability on bases in the California, Colorado and Nevada bases offers both optimism and caution for deploying solar in DoD agencies.

Of specific interest, 7000 megawatts (MW) of solar energy (about seven nuclear power plants) can be produced on only four military bases located in the California desert. This is enough energy to meet two thirds of the current DoD wide electricity consumption.

DoD Energy - "We have the Land & the Demand"

The year-long study, conducted by the consultancy ICF International, looked at seven military bases in California and two in Nevada including Fort Irwin, Naval Air Weapons Station China Lake, the Marine Corps’ Chocolate Mountain Aerial Gunnery Range, Edwards Air Force Base, Marine Corps Logistics Base Barstow, Marine Corps Air Ground Combat Center Twentynine Palms and Naval Air Facility El Centro.

It finds that, even though 96 percent of the surface area of the nine bases is unsuited for solar development because of military use, endangered species and other factors, the solar-compatible area is large enough to generate more than 30 times the electricity consumed by the California bases, or about 25 percent of the renewable energy that the State of California is requiring utilities to use by 2015.

The caution here is that assumptions are routinely made about the land-mass that is available on military installations and extrapolations to solar energy market size without any regards to mission compatibility with base question. This includes missions such as live ammunition training, maneuver training, test and evaluations and a multitude of other vital activities.  This study shows the fallacy of making high level extrapolations of land-mass-to-market size for the renewable energy industry.

According to the study, the largest amount of economically viable acreage is found at Edwards Air Force Base (24,327 acres), followed by Fort Irwin (18,728 acres), China Lake (6,777) and Twentynine Palms (553 acres).  ICF found little or no economically viable acreage on the other California bases (Barstow, El Centro and Chocolate Mountain) or the two Nevada bases because the military’s use of the land is incompatible with solar development.

As usual with any military renewable energy report, the study finds that private developers can tap the solar potential on these installations with no capital investment requirement from DoD, and that the development could yield the federal government up to $100 million a year in revenue or other benefits. Private developers can draw on California incentives and subsidies to make these projects economically feasible. But in places like Texas where there are no state subsidy programs and bases pay a blend rate of $0.05/kWh, the solar viability extrapolation may result in a much smaller market unless DoD can find common ground with developers on providing monetary benefits for energy security. More on this in my next blog.

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All the Best in New Year

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Endings and Beginnings

I took some time off from posting here as a result of a number of events.

Two dear friends passed away in late June, it was good time to step away and reflect on what is important.

In July, I ended my PV industry consulting practice and have taken a position with Suniva, Inc., an innovative American Suniva mono-crystalline manufacturer of high performance mono-crystalline solar cells and modules. As Senior Director, Federal Business Development, I lead the company’s efforts in assisting civilian and DoD agencies who are diligently working to meet aggressive renewable energy and energy efficiency mandates. With our project developer and EPC partners, we are providing knowledge, experience and products for high resiliency, highly reliable onsite solar energy generation to meet these challenging timelines.

Suniva’s very capable management team is focused on high efficiency mono-crystalline cells but without the corresponding high price which has been typical for this cell type. Using novel intellectual property developed in the U.S., the company excels at innovation both at the cell and module level and on the manufacturing floor, resulting in lower cost to compete on a global basis.

I will be back to posting weekly again going forward. I will also be posting to my twitter feed, @ peacesolar, with specific news and content for my government and business partners in the near future.

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Residential PV System Lease Now available at Lowe’s

Lowe’s Companies, Inc., the second largest do-it-yourself retailer (1,750 stores), is now offering a Sungevity solar system lease option at their stores in select

Solar PV Reaching the Masses

California locations. The company also announced that it had purchased a 20% ownership stake in Sungevity, Inc. with terms not disclosed. Lowe’s joins Home Depot in the segment that already works closely with residential solar lease companies Solar City, Inc. and SunRun, LLC. While both home improvement companies offer solar programs with a concentration on California, they also have plans for, or are operating in, Colorado, Delaware, Maryland, New Jersey, New York and Massachusetts.

No Upfront Cost - Source: SolarCity

The residential solar lease has quickly gained traction (in select states with adequate government support) as it removes the upfront cost of the PV system installation, and even though there is a monthly lease payment, the overall benefit is a lowering of the monthly residential utility bill of up to 25%. The lease company monitors the system and provides maintenance.

On the Sungevity website, the company advertises “Pay $0 down,” “Save 15% on your electricity bill from day one,” and “we’ll guarantee in writing how much energy your system will produce each year and, if we fall short, we’ll pay you for the difference.” It is fairly compelling marketing.

For the Lowe’s relationship, Sungevity will provide in-store quotation kiosks in 30 California stores. The Sungevity kiosk runs their proprietary iQuote web based application, which provides users a quote for their home location within 24 hours.  After the customer inputs location and estimated energy use, iQuote accesses satellite imaging of the roof and surrounding vegetation and then ties that information in with historical solar radiation, government incentives and other variables including the cost of utility-provided power. The final quote provides a customized projection of how much money will be saved on the utility bill along with an artistic rendering of the how the installation will look. Local, certified installers who work with Sungevity, install the system.

The best investment return for a residential solar system is for the homeowner to own and operate it themselves, net meter the excess energy to the utility and secure the government solar energy incentives. But with the average residential system costing $16,000, the solar lease is a great option to having the benefits of solar without the upfront cost. As the Sungevity CEO Danny Kennedy said, ““Our goal is to take this solar offering to the masses across the country.” The big box home improvement retailers should be a great conduit for solar leasing companies to reach those masses.

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Stalking Solar Retail Grid Parity: the PV Cost Calculator

Courtesy of the U.S. Department of Energy’s Solar America Cities program, the PV Cost Calculator is a system modeling tool, which computes and then provides various visualizations of solar PV’s trend toward retail grid parity in the next few years. The calculator is designed for residential (4kW size) and small commercial (20kW) installations. Retail grid parity is when the levelized cost of energy is same as retail priced energy from the utilities in a given region.

Modeling grid parity, whether in front of (retail) or behind (wholesale) the utility meter, is a notoriously difficult endeavor due to the large number of variables. The PV Cost Convergence Calculator models a complex set of variables that are highly dependent on local issues.  It takes into account long term federal and state incentives and provides a 20 year analysis period.

The screen shot below is for a 20kW commercial system using a moderate scenario – 4% increase in conventional utility energy cost and moderate decrease of the PV system price. With this scenario, the majority of Solar America Cities are at or below retail grid parity in 2012.

Solar Grid Parity

Dotted line - utility cost with 4% annual inflation

 

The PV Cost Calculator makes a number of assumptions to simplify the calculation set and is meant as an illustration for Solar America program cities.  Another DOE agency, The National Renewable Energy Laboratory provides a sophisticated, detailed PV system modeling tool called the Solar Advisor Model (SAM). SAM makes performance predictions and economic estimates for grid-connected solar systems. The SAM model calculates the cost of generating electricity based on information you provide about a project’s location, installation and operating costs, type of financing, applicable tax credits and incentives, and system specifications. The SAM model is an invaluable tool for feasibility modeling of a proposed project and for working with project financing entities. Its also an interesting tool which we use for targeting the sales process of PV system components.

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A Netscape Moment for Solar Energy?

Netscape was an early Internet browser company that went public with startling success in 1995 and kicked off an IPO binge for companies

Netscape Moment for the Solar Energy Industry?

The Infamous IPO

associated with the World Wide Web. With the historic IPO and subsequent Netscape stock performance as a result of their 90% marketshare, bankers where screaming for any fast growing Internet companies that could have the same IPO performance and returns.  The resulting number of IPO’s was nothing short of spectacular.

Over the last 8 years, there has been much discussion about when the Netscape moment would arrive for the renewable energy industries. Many thought it would be triggered by putting a price on C02, some thought it would be a new disruptive technology company, and some thought it would be an enlargement of government subsidies.

Solar Energy Photovoltaics - Steady Growth

Building It Again and Again

It’s difficult to see how the renewable and solar energy industries will have a Netscape moment. As many Venture Capitalists and other investment organizations who did well by investing in IT are experiencing, renewable energy is a one by one, infrastructure-intensive industry requiring large up front capital with longer return on investment timelines. The classic software model – make it once and sell it millions of the times – is not applicable to renewable energy. While the ROI on renewable energy, particularly photovoltaics, is on par with IT industry returns, more patience is required.

The energy industry is also highly regulated by governments in most locales globally which creates distorted market signals and tends to holds back “irrational exuberance” in the market.

In reality, I don’t believe there is going to be a renewable energy moment with one company setting off an IPO binge. It has been, and will continue to be, a longer, smoother growth curve with a number of significant events along the way that demonstrate value and scale. I believe we are entering that time frame now, as evidenced by recent global events:

  • The renewable energy market expanded during the global economic slowdown of the past 3 years. In the solar industry growth exceeded 40% YOY during this time.
  • U.S. Department of Energy (DOE) has conditionally committed to provide US $1.37 billion in loan guarantees to support the financing of BrightSource’s Ivanpah 400MW Solar Electric Generating System, one of the largest solar thermal systems in the world.
  • A rapid decrease in the levelized cost of photovoltaic solar energy systems is enabling $3.00/W installed cost for larger systems with $2.50/W in sight for 2012.
  • A rapid increase in global fossil fuel costs (coal, oil and gas), and the recent Japanese nuclear disaster, are allowing renewable energy to achieve grid parity sooner than industry forecasts predicted.

The solar energy Netscape moment has been happening slowly but relentlessly. The business model differences between IT and Renewable Energy combined with government regulation of energy markets suggest that the Netscape “moment” will be more like the early days of large commercial agriculture. Highly profitable companies where slowly but consistently building revenue under government regulation and the finance industry began to consistently invest in companies across the agriculture supply chain.



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Update: Continuing ASP Decline in the PV Supply Chain

Following up on my previous post last week on this subject, the average selling price (ASP) on the spot market, based on an informal survey of solar energy supply chain participants for the week ending 4/29/2011 shows:

PV Module ASP

The weakness in demand combined with seasonal inventory buildup at the distribution level (severe winter weather in Europe in particular) has continued the price pressure.

Of particular note is the pressure on the solar cell and wafer price. The lowest cell price was $0.94 per Watt, which is an all time low and has many manufacturers idling capacity until the demand situation stabilizes or the polysilicon price declines.

The price of the thin-film as a broad category had stabilized last week but this weeks price illustrates that the pressure by crystalline modules price declines requires further thin-film ASP reduction.

At these ASP’s, many in the manufacturing chain will struggle to remain profitable with the exception of poly silicon providers. Across the industry supply chain, the project developers and EPC companies are gaining enormous leverage and will reap the benefits in revenue expansion as a result of previously marginal projects becoming viable.

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A Question of Perspective

Some people consider megawatt scale wind turbines ugly and some think they are graceful.

Same holds true for solar energy system installations of any size. An interesting article today in the New York Times titled, Solar Panels Rise Pole by Pole, Followed by Gasps of ‘Eyesore’, focuses on the deployment of individual solar modules on utility poles by New Jersey’s oldest and largest utility, PSEG.

PV solar energy

An Aesthetic Enhancement to a Light Pole? - Source: Petra Solar

PSEG, led by forward thinking CEO Ralph Izzo, has been leveraging a technology by Petra Solar which allows solar energy to be inverted at the module level and feed AC energy directly into the grid at the streetlight or utility pole level. The product, which is also Smart Grid ready, takes advantage of already deployed utility assets and turns each pole into a high value energy producer.

The article centers on aesthetics of the pole mounted modules in suburban neighborhoods. While I have always thought renewable energy producing technology is attractive, it’s really difficult to understand the objection of one PV module on each already unattractive light pole. But the 508 comments by NYT readers where mostly in favor and the following 4 comments sum up many of my thoughts generally:

“You know what’s an eyesore, suburban New Jersey? Having your mountaintop blown up and dumped in your stream. Having a hydraulic fracturing well set up shop next door to you. Living a quarter-mile from an aging coal-fired or nuclear power plant. Not only are these eyesores — much, much more than your solar panels — they’re a risk to your health.

Yet this is a reality for millions of Americans. I’m as sensitive as they come about aesthetics, but get over it people. This shows a real lack of awareness and/or concern for the human and environmental costs of the way we typically generate electricity in this country.

Personally, I would pay more to live in a neighborhood with these solar panels. “

“I see those solar panels as objects of pride. The community has moved in a direction that we all need to go. It is a badge of honor (protecting the environment), and evidence of sane planning in an era where carbon fuels are destroying the earth.

Be happy and glad, New Jersey. The entire nation envies you!”

“Count me in as a New Jerseyan who doesn’t even notice the ugly utility poles directly outside of my door, and certainly barely notices the solar panels. The pole has got transformers, wires and a street light hanging onto it, in addition to cables for power and TV–it is what it is.”

“My family lives on a pleasant tree-lined street in a central New Jersey town, and we are thrilled that even this token solar project is being implemented on such a wide scale. I wouldn’t want a coal or nuclear plant next door, but a few small solar panels attached to utility poles? YIMBY – Yes, in my back yard.”

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