Archive for the ‘Solar Energy’ Category

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.

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 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.

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.

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.

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.

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

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.

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.

• Total SA (FP), Europe’s third-biggest oil producer, agreed to buy as much as 60 percent of SunPower Corp. (SPWRA) for $1.38 billion.

• 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.

• After 10 years of development, 140MW CapeWind received final permitting and global wind energy installed capacity is expected to reach 707GW by 2015, meeting 20% of global demand.

• 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.



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:

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.

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.

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.”

Power or Energy?

My last post on 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)

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 recent 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.

During a recent 5MW project system model review with a finance entity that is relatively new to PV systems, a question came up about why the system DC nameplate (5,867kW) was higher than the system AC nameplate (5,000kW). My answer about derates was met with blank stares and shifting chair posture.

The PV industry and its financing partners rely on simulation modeling software, which provides a fairly accurate multiple year forecast of energy production and economics, including financial payback. These models are thorough, sophisticated software packages which take into account the many variables which affect a PV system’s performance including weather, environmental conditions, technology and product performance, government subsidies, and cost of money among others.  Providers include the NREL SAM Tool, PVSyst, and RETScreen among others.

Derates are a key variable addressed in these simulation programs. Derates are the various locations and instances in a PV system where power is lost from DC system nameplate to AC power. This includes inverter loss, resistive factors, environmental conditions and issues relating to maintenance.  A list of derates considered in a simulation model below shows that derates are both in front and after the inverter and occur throughout the system.

Derates look at a component and then attribute a known or estimated negative impact on that component.  For example, an inverter performance rating is given a value of 100% and then factors in a 2% loss for an estimated performance of 98% of actual. Derates can vary widely depending on array, location, environmental conditions, and product variances, to name a few.

A few explanations of the derates listed above:

• PV Module mismatch – module mismatch is a result of slight manufacturing inconsistencies where modules of the same size are not identical. Current/voltage characteristics vary slightly from module to module.  This results in a module string (multiple models connected in series) which operates at the output level of the lowest performing module in the string.
• DC Wiring – accounts for resistive loss between the modules and the inverter.
• AC Wiring – accounts for the resistive loss between the inverter and meter.
• Soiling – this is an issue that can be minimal or severe depending on location – dust, wildlife droppings, leaves etc.
• Inverter/Transformer – losses due to power inversion from DC to AC.
• Shading – due to structures or other nearby objects.
• Availability – system availability takes into account system maintenance and utility outages, both of which result in down time. Industry standard is approximately 7 days per year.

The overall derate or Performance Ratio (actual AC power yield vs. target DC power yield), for most larger systems are usually in the 75% – 80% range.  Keep in mind that this modeling is based on Standard Test Conditions (STC), which is a laboratory standard of near perfect insolation (incoming solar radiation) and environmental conditions, which rarely occurs. While the model takes into account the derate factors and a detailed weather history for a given location, its important to note that annual fluctuations in weather conditions is an important variable which can be significantly different year to year. Overall, simulation models are quite accurate and are a fairly good gauge for finance companies to make an informed investment decision.

The U.S. PV industry continues to show strength throughout the deep recession with 2010 coming in with exceptionally strong numbers. A recent report from SEIA/GTM tilted, “Solar Market Insight: Year in Review 2010″ shows that the U.S. PV solar energy market doubled in volume, growing 67% from $3.6 billion in 2009 to $6.0 billion in 2010.

As strong as the U.S. PV market growth was in 2010, the global markets grew at 130% with over 17 GW installed, mostly in EU countries. The report points out that U.S. market share on a global basis fell slightly to 5%, but since 2005 this market has consistently been 5% to 6.5% of the global total.

Source: SEIA/Greentech Media

Compared to many countries where subsidies and location variables drive a certain segment more than others, activity in PV solar energy market segments in the U.S. is spread out evenly which leads to market growth stability. Utility, Residential and Commercial (non-residential) segments account for approximately 1/3 each broadly speaking. As we have seen in Germany, Italy and France, countries with large solar energy subsidy programs tend to have emphasis on particular market segments and have provisions which can overheat installation activity leading to boom and bust cycles and sometimes a complete market collapse.

Source: SEIA/Greentech Media

Combined with steady federal and state subsidies, strong incoming solar radiation, large number of roofs and available land, rising cost of fossil fuel generation and strong electricity demand, most industry observers believe the U.S. solar energy market will double again in 2011.

When viewing the rising cost of coal and natural gas prices as a result of increasing economic activity combined with growing cooperation on Capitol Hill regarding energy policy and rapidly decreasing PV system cost, this author believes that 2011 and 2012 will see a U.S. PV market that may well triple in volume. More on this prediction in a future post.

This is clearly the topic of the day for many of my readers who follow publicly traded solar energy stocks.

Clearly the rush is on to install before subsidies decrease! /Source: Glasstec

The basic facts:

• The recent government subsidy scheme reduction announcement in Germany and a likely reduction for the overheated Italian market by mid-summer, combined with reductions and subsidy caps in France and other smaller EU programs, have created a rush to initiate and complete projects in 2011—before the new solar subsidy schemes kick in later this year.  Consequently, the PV supply chain is currently in hyper-drive, and there has been a temporary increase in c-Si wafer and cell selling price.

• Recent manufacturing capacity addition announcements from the top 20 c-Si and thin-film solar energy producers will add another 6GW – 10GW of production capacity in 2011.

• With global demand seemingly dropping by as much as 50% due to the EU country’s government subsidy reductions, and rapid increases in manufacturing capacity, oversupply is a looming problem in Q4 2011 and into 2012.

• Demand in 2011 may reach approximately 22 GW, and manufacturing capacity is climbing to approximately 32GW (all module providers). For any industry, this is not a good supply/demand picture.

As I wrote in a previous piece, this situation has many unknowns, is highly fluid and can change rapidly. The three main unknowns are 1) when and how fast does that new PV solar energy manufacturing capacity come on line, 2) how quickly will the overcapacity drive down prices to the point that solar grid parity is achieved in many markets (creating a true market demand signal) and 3) whether countries such as the US, China and India can increase demand sufficiently to reduce the severity of the oversupply.

Solar grid parity looming /Source: Deutsche Bank

There is also much talk about developing nations in Africa and Asia increasing demand. But my recent experience consulting to a few companies targeting these regions doesn’t instill confidence. Aside from the ever-present finance barrier (especially in under-performing economies), the utility grid in most of these locations is incredibly weak or non-existent.  It’s well understood that transmission grids are the PV industry growth limitation in the US but developing nations have an even direr situation with energy infrastructure.

While it is likely that 2012 will see significant industry realignment in price, demand and competitors at the module manufacturing level, this is an industry that has defied doom and gloom predictions many times over the last 10 years. A change in any one of the many PV market variables can have significant positive impact on the supply/demand picture.

For instance, one nation with a significant new subsidy program can change the global supply situation in one quarter or a spike in fossil fuel energy cost can lead to a massive uptake of solar energy in a given locale.

Stay tuned, it should be an interesting 18 months.