Solar energy is currently a good renewable solution for peak usage period (which are usually the hottest hours of the day). The policy should focus on:
- Extend the federal incentives for the next 10-15 years. The current short term regulation creates instability for the investors and slows down the development of solar solutions. Incentives should be technology neutral. Investors need stability and predictability. The current renew/don’t renew political episodes every couple of years is bad for our country.
- Improving the solar technologies until it becomes price competitive and does not require federal and local government subsidies. It is a long process, but we can be there in 10 years. Spain is already reducing its solar subsidies.
- Removing federal roadblocks for building solar power stations. There are no free lunches – we need land for our solar infrastructure.
- Utility scale solar electricity faces the same power transmission problems as all new energy locations. Solving the transmission bottleneck is critical for renewable technologies.
- In states that mandate utilities to build/buy solar electricity, the laws and regulations should be changed to ensure the long term viability of the solar power stations. Political pressures have created bidding mechanisms that render many solar projects unsustainable. We should look at Spain for better mandating models.
Electrical utilities don’t “like” solar energy for some “good” reasons:
- They have to build natural gas based power stations that sit idle most of the time in order to account for solar based shortages (e.g., when cloud cover reduces solar output).
- The transmission lines are utilized only during day time, doubling the effective infrastructure cost. Solar technology and its economics will improve over the years. Until we develop methods for large capacity electrical storage, the limitations of solar energy will max its use at a few percent of our electrical supply and only in sunshine states .
We have to be realistic about the limitations of solar energy:
- Volcanic eruptions significantly reduce the amount of solar energy reaching earth’s surface for at least a few months.
- Some climate change scenarios forecast an increase in cloud cover which translates into reduction in solar energy. There is a limit to the amount of electricity that can be solar based and we need to realistically calculate the limit.
Residential Solar Water Heating technology is economical today. There are a myriad of federal and state tax breaks for builders and home owners. We need to:
- Provide home owner tax breaks for installing solar water heating system.
- Mandate the use of solar water heaters in new construction (in most states) and provide the buyer with installation tax break.
- Simplify and streamline the tax breaks and limit them to five years. Since the technology is already economical, it should not receive government tax breaks for a long time. It is needed now in order to increase the adoption speed.
Photovoltaic solar power is not economical yet. However, recent research directions and a few start-ups show promise. We need to:
- Regulate the sale of electricity by the home user back to the grid.
- Offer tax breaks to a limited amount of users per year (first come first served). We need to help the industry to develop.
- Once the technology is economical, we should consider similar mandates and tax breaks as with solar water heaters. We need to be realistic about the technology problems we are still facing, the high initial costs and the state of our electrical grid which is not designed for distributed electricity generation. It is a long term effort that will probably yield results, but its effect in the next 10 years will be negligible unless we have a technology breakthrough.
A longer term goal is the development of cheap large capacity storage of electricity (“battery”). It will allow the usage of generated energy based on demand and will greatly boost the economical viability of solar technology. When large capacity batteries become available, our solar and wind policies will need to change.
There are some very interesting comments listed here, and in the area of solar, I’d like to suggest that this group consider a number of fascinating developments that can change solar dramatically.
For example, consider the options to dramatically change financial rules under which solar and energy efficiency are installed:
http://marketplace.publicradio.org/display/web/2009/01/19/pm_states_model/ and
http://www.environmentmagazine.org/Archives/Back%20Issues/January-February%202009/FullerPortisKammen-full.html
Essentially here you pay for the services of energy efficiency and solar as you use it, and build clean energy equity at the same time.
As another ‘game changing’ mechanism, consider the benefits of ‘on-bill’ financing for solar and energy efficiency that makes these investments a growth and profitable area for the utilities:
http://www.statesolarincentives.net/state-solar-incentives-california-solar-energy-incentives-sdge-non-residential-on-bill-financing-program.php
We could very much use comments on these mechanisms, and suggestions/discussions of other new mechanisms!
Dan
PV is economic in places with the right policies, e.g. CA, NJ, Germany, and Japan. There are many relevant policies that we lack at the Federal level, and that should be fixed. Two examples that make PV economic: time-of-use net-metering and tiered electric rates. These policies should be Federal, not state-by-state.
For the most part these NG power plants already exist.
There is an awful lot of technology that is being lumped together here using the world “solar”. In some cases the comments apply to one type but not another. For example, photovoltaics (PV) and concentrated solar thermal are both “solar” but they are both different. In PV there is residential/commercial scale and utility scale. In solar thermal, there are dishes, troughs, linear Fresnel, and towers, where all but the dishes have the possibility of thermal energy storage (TES), which could allow solar to generate 365×24. There are also many types of TES (molten salt, supercritical water, and chemical, e.g. CaH2). Ausra once estimated their CSP+TES could power the entire US 365×24 at 7.8 cents per kWh from the desert southwest using 23418 km^2 of land (a square with 153 km sides). We should be prototyping such technology as soon as possible.
Though net metering has played an important role in jump-starting the PV market in the U.S., alternative compensation methods are under consideration in some jurisdictions. Moreover, one inherent feature of net metering is that the value of the utility bill savings it provides to customers with PV depends heavily on the structure of the underlying retail electricity rate, as well as on the characteristics of the customer and PV system. Consequently, the bill-savings value of net metering – and the impact of moving to alternative compensation mechanisms – can vary substantially from one customer to the next. For these reasons, it is important for policymakers and others that seek to support the development of distributed PV to understand both how the bill savings benefits of PV varies under net metering, and how the bill savings under net metering compares to savings associated with other possible compensation mechanisms.
To advance this understanding, we analyze the bill savings from PV for residential customers of California’s two largest electric utilities, PG&E and SCE. The analysis is based on hourly load data from a sample of 215 residential customers, matched with simulated hourly PV production for the same time period.
We first compute the bill savings for each customer based on existing net metering rules and retail electricity rates. Under current net metering rules and retail electricity rates, the median bill savings per kWh of PV generation ranges from $0.19-$0.25/kWh for the PG&E customers in our sample, and from $0.19-$0.24/kWh for the SCE customers, where the ranges reflect differing assumptions about the size of the PV system relative to the customer’s load. However, the distribution in bill savings value across customers is wide, with higher-usage customers receiving substantially higher-valued bill savings, as a result of the inclining block structure used within the utilities’ residential retail rates. We then compare the value of the bill savings under net metering to three potential alternative compensation mechanisms, each of which provides compensation for some or all PV production at prices based on the state’s Market Price Referent (MPR). In most cases, these alternatives yield bill savings that are lower than under net metering, though the magnitude of the reduction differs among the three alternatives and across customers. Of the compensation mechanisms considered, the lowest bill savings would occur under a policy in which all PV generation is compensated at MPR-based prices. The value of bill savings received under this MPR-based feed-in tariff is calculated to be 32-54% lower, on average, than the compensation received under current net metering rules. For high-usage customers, the reduction in bill savings under the MPR-based feed-in tariff would be substantially greater than these average figures.
The full report can be downloaded from: http://eetd.lbl.gov/ea/emp/re-pubs.htm
I was intrigued by a recent article that outlined the idea of photovoltaic module “bankability,” that is, the notion that project developers will look to proven technologies and long term module performance rather than simply the lowest cost option:
http://www.greentechmedia.com/articles/read/2011-the-return-of-the-solar-shakeout/
A trusted government certification process may help to increase market competitiveness and to allow start ups with novel new technologies to gain traction.
“A long-term Republican budget plan released this week by Representative Paul Ryan of Wisconsin calls for drastic cuts in federal spending on energy research and development and for the outright elimination of subsidies and tax breaks for wind, solar power and other alternative energy technologies.” John Collins Rudolf reports for the New York Times’ Green blog April 6, 2011.
Solyndra, Inc., a light weight solar cells manufacturer, closed its doors on August 31, 2011, firing more than 1,100 employees. Six days later, the company filed for bankruptcy. Solyndra was the first company to receive a loan guarantee from the DOE under the Energy Policy Act of 2005, receiving a total of $535 million.
Solyndra’s CFO has stated that the company’s financial problems were due in part to “pricing pressures on solar manufacturers caused by the oversupply of solar panels.” According to Solyndra, this oversupply is a result of increasing “capacity of foreign manufacturers”, which forced Solyndra to drop its prices in order to remain competitive on the global market. At the same time, they were unable to secure private investment beyond the loan guarantee to account for increasing capital costs.
Some critics have cited Solyndra’s failure as a proxy for the Obama Administration’s “green jobs” agenda, and as a bellwether for the prospects of the industry as a whole. The House Committee on Energy & Commerce, which is investigating the events surrounding Solyndra’s loan and decline, has produced emails suggesting that during the loan review process OMB and DOE were aware of Solyndra’s challenges, but were pressured by the Administration to approve the loan in time for an appearance by the President at a Solyndra factory.
What implications might this scandal have on the long-term prospects of the renewable energy industry? How might it impact the future of clean energy financing?
Is there sufficient reason for government support of the renewable energy industry? Can renewable energy succeed in America without government backing? Is this episode an example of the dangers of “picking winners,” or does Solyndra’s experience speak more to the realities of a competitive global marketplace?
Over the last 36 months, over 100 new US renewable energy and energy efficiency manufacturing plants have opened in the United States. According to a report by Ernst & Young. Global private sector investments in the renewable energy sector reached a record $243 billion in 2010, an annual increase of 30%.
A new report released in September (2011) by The Pew Charitable Trusts stated, “Globally, 2010 clean energy finance and investments grew by 30 percent to a record $243 billion. The United States received $34 billion in equity last year, a 51 percent increase from 2009.” But a 51% increase isn’t shabby. A new report shows that the US is central to the global solar supply chain. In 2010, US solar firms achieved a positive trade flow of $1.9 billion (USD) globally, according to Solar Energy Industries Association’s (SEIA) and GTM Research’s US Solar Energy Trade Assessment 2011. Photovoltaic (PV) components accounted for more than 99% of the year’s exports, with solar heating and cooling (SHC) claiming the remainder of the positive balance. For the US PV manufacturing industry, 2010 was a record year. Exports totaled more than $5.6 billion, with PV polysilicon feedstock and capital equipment leading all components at $2.5 billion and $1.4 billion, respectively. The leading destinations for US-sourced PV components were China and Germany. A new US solar employment report just released by The Solar Foundation shows real net growth in US jobs in the US solar industry. The Bureau of Labor Statistics is developing a green jobs statistical database to track industry sector growth. (http://www.bls.gov/green/#overview
/>).
The bad press on the recent bankruptsy’s of EvergreenSolar and Solyndra is distorting the status of the US solar industry and by default, all the green industries. Evergreen’s demise was no surprise. Bloomberg News reported, “Since 2010, Evergreen has been the worst-performing company on the Bloomberg Global Leaders Solar Index.
Solyndra’s failure also was not a surprise to many of us, whose production exceeded $3/watt and whose product was brittle and had larger-than-industry standard breakage. Solyndra’s failure has nothing to do with solar or green industries. Many of us pleaded during passage of the Stimulus Bill not to have USDOE issue loan guarantees, but rather provide technology due-diligence “only” to federal agencies such as ExImBank and USDA which have issued loan guarantees successfully for decades.
The solar and renewable industries sales went up during the economic meltdown. Sales and manufacturing capacity are increasing, not as fast as China, but steadily increasing. Component manufacturing, installation and service jobs have also increased dramatically in the United States.
It’s hard to watch, but I have been following these political and media follies for many decades. The Republicans are correct to dig into the failure of Solyndra by looking at the effectiveness of the USDOE guarantee program. But beyond that, the partisan salvos are a tad unfair. (Note: Republicans have successfully pushed and won $65 billion worth of loan guarantees for nuclear energy). Just because Obama has wrapped himself in the green flag, some of the Republicans are seeing red and going after as an excuse ‘not’ to go green, which is also not only horrendous public policy, but just plain silly.
So the Solydra episode is a political issue, and really has nothing to do with the solar and green market.
Scott Sklar
President The Stella Group, Ltd.
While tragic in the loss of respect for the administration(s) and the jobs of its employees, the projected capacity of around 600 megawatts annual production is relatively small in scope to US let alone Global production of Electricity.
The real potential for PhotoVoltaic (PV) power generation in the US Desert Southwest and the Sunbelt. PV Covered parking for 20 million cars at 200 sf / space could absorb 4 billion sf of PV. At 5 W / sf that could produce 20,000 megawatts of peak power or the equivalent of 18 – 1,100 megawatts nuclear reactors.
The PV Technology will move forward without Solyndra and probably for the better.
Karl Boldt