‘Wow!’ I thought. That depletes the EL supply-side strategy, leaving just industrial wind and distributed (micro-solar)–and maybe a little biomass.

I was reminded of this when I read a recent article in ClimateWire (sub. req.), by Lacey Johnson, “Boom in Solar Panels injects NIMBY Battles into Neighborhoods.”

The story begins with Barbara Katz, whose hilltop home in historic north Baltimore, amid roaming wildlife, was threatened by her neighbor’s plan to install a 600-panel solar array. Johnson reports:

“My initial reaction was, ‘Oh my gosh, this is going to be an eyesore,’” remembers Katz, who was confronted by a plan for more than 600 ground-based solar panels on her neighbors’ lawn. “No one would want this in their backyard. It looks like it’s an industrial park.”

Johnson continues:

It takes a good deal of work — and regulations — to keep suburban communities looking picture perfect, and arrays of shiny solar panels don’t always fit the vision homeowners have for their neighborhoods. All over the country, citizens like Katz have begun organizing to block renewable energy projects, throwing a wrench into some peoples’ plans to “go green.”

She reports that while the U.S. solar industry enjoyed a business boom last year due to government subsidies and falling costs, this “good news for the environment” was also “an annoyance for residents who are invested in keeping up the traditional appearances of their surroundings.”

The NIMBY (“not in my backyard”) problem has gone from landfills and power lines to wind farms and residential solar arrays, Johnson adds. In response, the solar lobby wants to differentiate their product from blight. Homeowners associations should look at “”someone’s roof looking slightly different” from “painting your house yellow polka dots,” stated one solar installer.

But for Katz, the negative externality of micro-solar is about economics too:

“The whole backside of my house faces that — the kitchen, dining room, living room, bathroom and a lovely cut stone patio,” said Katz, who believes the panels would also destroy the ecosystem of birds and animals that pass through her yard. “The neighborhood is not opposed to renewable energy and being green,” she explained. “Folks who have signed the petition are doing so because they feel it will lower the property value of their homes.”

Johnson goes on to report that many states’ “solar/wind access” policies protecting homeowner solar or wind systems are often overruled by bylaws of homeowners associations and historic districts. In Aspen, Colorado, for example,

residents are required to notify their neighbors before installing any solar array larger than 200 square feet — barely half the size of a small rooftop. Homeowners are then subject to public hearings and could pay up to $500 for a residential solar review. The regulations were adopted by Pitkin County last summer, after a family 15 miles north of Aspen, in Snowmass, complained about a blinding glare reflecting off their neighbor’s panels.

Johnson’s piece continues:

“When I saw pictures, it was really bad,” admitted Mike Tierney, the owner of a local installation company, Aspen Solar. “It would be tough if it was my house and I had to look at it every day.” He said the regulations, which create extra paperwork and expense for his customers, have already taken a toll on his business.

Ending the piece on an optimistic note, Johnson describes new efforts by scientists and architects to make “smarter” solar technology such as solar shingles (a Dow Chemical project) to “make aesthetic problems, like glare, a thing of the past.”

But can this be done in any sort of a cost-effective manner? And if not, what does this say about the resource costs (think emissions) of the whole effort?

This, indeed, is the curse of dilute energy versus the dense energies of oil, gas, and coal. It is the curse of the sun’s (dilute) flow versus the (dense) stock of the sun’s work over the ages.

With the fossil-fuel era still young, on-grid solar might have to wait for another century, if not millennium.

———————–

1. Christopher Flavin, Comments at a conference on the Department of Energy National Energy Modeling System (March 30, 1998, Washington, D.C.). Flavin would prefer distributed solar to distributed natural gas, however. Robert Bradley, “The Increasing Sustainability of Conventional Energy,” April 22, 1999, p. 10 & fn. 41).

“The release of energy from splitting a uranium atom turns out to be 2 million times greater than breaking the carbon-hydrogen bond in coal, oil or wood. Compared to all the forms of energy ever employed by humanity, nuclear power is off the scale. Wind has less than 1/10th the energy density of wood, wood half the density of coal, and coal half the density of octane. Altogether they differ by a factor of about 50. Nuclear has 2 million times the energy density of gasoline. It is hard to fathom this in light of our previous experience. Yet our energy future largely depends on grasping the significance of this differential. “

- William Tucker, excerpted from his lecture, Understanding E=MC₂

William Tucker has powerfully explained how the future of technologically advanced civilizations depends upon a sophisticated ability to convert the highest energy densities into increasingly denser power performance, and in the process compacting the time and space necessary to do productive work.

In fact, Tucker wrote an excellent book about this, Terrestrial Energy: How Nuclear Energy Will Lead the Green Revolution and End America’s Energy Odyssey. In light of the excerpt from that book recently posted at Master Resource, I thought readers of this forum might find my review from two years ago (see below) of interest, particularly if they have not yet read Tucker’s book.

The Primacy of Energy Density

Rockefeller University’s Jesse Ausubel has demonstrated that the trend in energy usage continues along a decarbonizing trajectory. Improvements in technology combined with a communal desire to live longer and more healthfully have spurred this phenomenon. Given a choice, who wants to live in a town where thousands of chimneys cast off carbon by-products like sulfuric smoke and soot? Civilization will continue decarbonizing apace, whether this aligns with climate change alarmism, or not.

Connected to Ausubel’s idea is Vaclav Smil’s credible proposition that there is a fundamental societal chain reaction cascade involved with discovering energy densities, which then produce greater power densities, each generation of which leads to even greater energy/power densities, in ways similar to that described by Moore’s Law.

For the last 150 years, we have briskly moved beyond wood and wind, fire and horses to harness the energy within the electro-magnetic force that, among other things, generates electricity, which development continues and will become crucially important as science hones in on advancing the potential of nanotechnologies and the capacity of quantum computing, making our digital world seem quaint.

But to really get at energy densities that will empower planetary and interplanetary work, which is what the future will demand, we’ll require the energy of the greatest force we know, the strong nuclear force, the one that binds together the nucleus of atoms.

Of course, this initiative is well on its way, beginning with Einstein and Bohr more than a hundred years ago, continuing through the Manhattan Project, and made manifest contemporaneously by many nuclear power stations for the production of electricity, here and abroad. But…

Prometheus Bound

There are those who think nuclear power, with its vast density, is far too dangerous for the likes of mortals to use responsibly, similar to how the Greek gods felt about giving humanity fire. This has resulted in tightly bounding the Prometheus of nuclear technology in chains of such onerous regulation that the cost of the technology, in time and dollars, has, de facto, become prohibitive. It has also produced a quavering political atmosphere in the US that prompted President Jimmy Carter to outlaw the reprocessing of nuclear waste material, leading both to large stockpiles of the stuff that would otherwise not exist and recurrent political finger pointing about where and how to store it.

The nuclear industry does itself no favors when it nonsensically insists, for reasons of cupidity and political correctness, that renewables like wind are respectable players in the energy marketplace. For this idea gives succor to those who so dislike nuclear they would substitute wind for it, as is now the case with Angela Merkel’s Germany—a palpably bizarre outcome, where the German Colossus now seeks to be powered by the mythic giants of Spain’s greatest work of fiction, at a conservative cost of trillions of euros.

Recent events have only added to nuclear’s woes. New techniques for extracting Marcellus shale deposits have substantially reduced the cost of natural gas, leading to prices as low as $3 MMBtu. Many economists believe such a price leaves nuclear uncompetitive as a baseload source of power for electricity—despite having a national capacity factor approaching 95%.

Fukushima

And then there’s the Fukushima debacle. Although there are many who think the Fukushima nuclear event was a grand success story for the technology, because…

—Despite enduring one of the largest earthquakes ever recorded, eventuating in one of the worst tsunamis ever to hit Japan; despite decades of administrative dimwittery by Japanese nuclear bureaucrats; despite efforts by melodramatic media reports and fear mongering politicians; despite loopy projections from a medical journal that tied over 14,000 U.S. deaths to the Fukushima reactor (talk about bad science)—the Japanese Government, after screening over 160,000 people in the general population through March 2011 for radiation exposure, found no cases that affected overall health. None.

Virtually all the nearly 16,000 confirmed Japanese deaths were caused by the earthquake and tsunami. The Fukushima plant itself was antiquated and in need of upgrades—but no one wanted to spend the money. Still, radiation levels from the incident may prove not at all deleterious for people who were evacuated from the affected region and who wish to return.

U.S. Nuclear

Here in the U.S., the nation’s largest electricity grid, the PJM, has used nuclear power for nearly 40 percent of its electricity for many decades, without incident, or even much threat of incident. The US Navy’s nuclear fleet is the envy of the world.

Nonetheless, a climate of fear and new extraction techniques for energy densities appropriate for most contemporary power demand, leading to cheaper competitive fuels, will keep nuclear advances at bay for a time, at least in large parts of the West and certainly in the US.

This situation won’t last. At the time I wrote my review of Tucker’s book, natural gas was relatively expensive, for a variety of reasons, some of it even related to the market. Shale gas is a game changer today. Nonetheless, in the longer term, I don’t think it will appreciably modify the ultimate lure of nuclear, given its vast energy density, so many times greater than oil.

Moreover, it’s unclear how long natural gas prices will remain at these present low levels. And it’s uncertain how long the supply will last. Perhaps another generation or so. Perhaps another century. It will eventually be depleted.

The mining of energy density is what produces greater power density machines, as was the case for coal, gas, and oil. This tandem will cascade very rapidly in the future, creating new expectations for power that can only be met by increasingly higher power density machines, which can only be fueled by increasingly higher density energies, etc.

As Tucker explains, the highest energy densities are found in an atomic nucleus via the strong force. Solar derivatives like fossil fuels and hydro will likely continue to provide the bulk of our power density needs for several generations to come. However, although the energy densities here complement the energy densities from various chemical reactions (rockets to the moon, for example), they still pale beside those of the strong force.

Breakthroughs for safer deployment of nuclear power will not be long in coming, though, whether they’ll be in the form of enhanced thorium reactors, which would do away with uranium or plutonium, or smaller, modular “micro” nuclear plants delivering about a third of the installed capacity of current units working at scale. There are already many designs for improved fast breeder reactors. Tucker provides a sampling of the possibilities. Both China and India remain committed to a nuclear future and continue to invest in research and development that may soon lead to safer fission processes.

Conclusion

If past is prologue, what the world of the future will want is greater prosperity enabled by the highest power densities. To obtain that prosperity, culture will fabricate responsive and increasingly interactive machines powered by high-energy concentrates. Sooner than later, technology will cross a threshold of expectations that only nuclear power can meet, accelerating at warp speed the ability to do more work in less time in smaller spaces. More power means greater productivity.

Which means more clothing, food, and shelter for the entire world. It also means future Mona Lisas created by people now mired in bone-crushing poverty, as well as the exploration for Martian water. And more time to sip new blends of lunar coffees while discussing Zeno’s Paradox.

________________________________________________

Award-winning journalist Bill Tucker begins this important book with a fair-minded review of the evidence that human activity is contributing to the greenhouse effect implicated in accelerating the warming of the earth. He concludes that, while the science remains provisional and somewhat equivocal, annually dumping 30 billion tons of CO₂ into the atmosphere is likely to have some impact on climate—enough for reasonable people to be sufficiently alarmed about the practice to want it stopped, or substantially reduced. How to achieve this goal effectively while enhancing, even extending, technology that preserves the energy requirements of modernity is the subject of the book.

Energy enables modern society by heating our homes and businesses, providing for vast transportation systems, and producing electricity. Transportation, mostly in the form of automobiles, produces over 30% of our nation’s CO₂ emissions. Consumption of electricity accounts for 39% of all energy use in the United States, which includes nearly a third of the energy produced for heating and a tiny fraction now involved in transportation. However, because more than 70% of the power for electricity comes from the burning of fossil fuels, with 50% from coal alone (20% from natural gas, 2.5% from petroleum), electricity production emits 36% of all the greenhouse gasses humans dump into the atmosphere, with coal-fired plants contributing 30% of the total.

Only two of the five conventional power sources, hydro and nuclear, produce “clean” power, emitting no CO₂. As Tucker documents, though, hydro, perhaps the most effective of all power sources and still generating 7% of the nation’s electricity power, has already developed most of the best hydro sites while fomenting significant environmental damage, with each dam typically degrading hundreds of miles of sensitive watershed habitat.

The Sierra Club has opposed hydro for most of its existence because of this reason, with its founder, John Muir, fulminating about the aesthetic loss to his valley when the redoubtable Hetch Hetchy Dam was built nearly a hundred years ago. Nuclear plants, which provide 20% of the nation’s electricity, also produce at high levels without polluting the environment, but fears about radioactivity and the storage of waste material, not to mention the possibility that nuclear materials may be diverted for terrorist purposes, have given the industry such a problematic reputation that no new nuclear facilities have been built in the country for nearly thirty years.

The ten electricity grids that produce and transmit electricity in the continental US are mandated to provide reliability at affordable cost with high security. Electricity demand is today very predictable, always existing at some basic level, atop of which, as human activity ebbs and flows, mid and peak demand levels occur; each demand cycle also contains continuous demand fluctuations, as people and businesses turn their appliances on and off. Grid operators match power with demand at a better than 99% accuracy, dispatching heavy duty generators like nuclear, large coal, and, where it is abundant, hydro, to engage basic demand (which consists of about 40%-50% of a day’s electricity consumption), then deploying highly reliable but smaller units to meet mid and peak demand periods, as well as rapidly-responsive generators to balance demand flux.

Terrestrial Energy is a marvelously told tale presenting the ineluctable case for expanding the role of electricity to more than 50% of our total energy use, with nuclear as the primary supplier for basic demand, replacing coal—in the process substantially reducing our production of greenhouse gasses and other pollutants. Tucker shows this is no fantasy, since France (and Sweden) has for years harnessed nuclear for this purpose, giving France the second-lowest level of CO₂ emissions in Europe (Sweden is first). With clean burning nuclear providing much of our electricity, battery-powered automobiles (assuming significant future improvements in their performance) and other transport can simply be recharged by plugging into the grid, thus also avoiding the CO₂ from our present fleet of internal combustion engines.

Tucker not only demonstrates how nuclear facilities achieve stunning performance, given that nuclear energy is two million times more potent than the energy contained in fossil fuels, which are in turn exponentially more powerful than renewable fuels; he also demythologizes the nattering, well-intentioned concerns about their safety. He summons the ghost of Carl Sagan: we’re all “star stuff,” with radioactive heat forged in supernova explosions, then settling over everything, including our own sinew, providing Earth’s internal heat that makes life on earth possible. He shows that radioactivity is as natural as air, and that radiation is merely energy in motion—it’s all around, and coursing through us every second. The issue of concern is one of dosage.

To determine “safe” levels, Tucker examines the effects of the accidents at Three-Mile Island and Chernobyl, and looks at epidemiological studies in the wake of the nuclear bombing of Japan, providing sober context for understanding, from a scientific perspective, what the health risks for nuclear really are. Even more intriguing, he cites several studies focusing upon hormesis—the idea that chronic low doses of radiation are beneficial, stimulating the immune system. As for “waste” material, Tucker proves the concern is a bagatelle, for nuclear fuel can be almost wholly reprocessed, as France does it.

For those seeking a preview about what the next several years may bring in terms of energy policy, go directly to Chapter 15, “The California Electrical Crisis.” California’s penchant for “renewables” mirrors the interest in those technologies today. Despite over 15,000 huge wind turbines and massive investments in solar technology, “the state found itself in the midst of an electricity shortage in 2000—something no other advanced nation has ever experienced.”

One consequence of more than 25 years of emphasizing renewables and conservation, following that coquettish pied piper of “soft energy,” Amory Lovins, is that Californians now pay among the highest prices for electricity in the nation, getting 41% of their electricity from expensive natural gas, while continuing to increase their carbon emissions. Tucker’s account ought to be the basis of a screenplay for a Monty Python full-length feature, with enough incompetence, venality, and wishful thinking to make the novelist/essayist Tom Wolfe happy.

Even in the United States of Amnesia, it should be enough to provide a lesson in precisely what not to do in the quest for an effective energy policy that drastically reduces CO₂.

Tucker could have been clearer about the limitations of today’s mainline “renewables”: wind and solar. Wind especially. For it’s incompatible with demand cycles, typically producing most when demand is least; its relentless skittering destabilizes the grid, making conventional generators work harder to balance it, with thermal consequences that largely subvert any CO₂ emissions offsets induced by wind energy; and it produces no effective capacity–prescribed levels of energy on demand–with the consequence that it can never take the place of any reliable conventional generators that do produce effective capacity, including coal. All conventional generators produce their rated capacities, or a desired fraction thereof, when dispatched to do so.

However, no one can be sure of how much wind (or solar) will be available at any future time. Neither wind nor solar can satisfy base or peaking demand, since they’re not dispatchable or dependable.

Any journalist who these days can gracefully weave together an accurate account of the reciprocal nature of the speed of energy (radiation), matter, time, and distance with Huber and Mills’ laws of efficiency deserves the greatest respect. He also makes use of such cultural treasures as Blondie at Tudbury’s and Jubilation T. Cornpone. Terrestrial Energy is an honest, even wise, undertaking in the best tradition of journalism in a democracy, for successful democracy insists upon an informed citizenry. It’s at risk when leaders base policy on hot air and hokum, as the recent California energy history suggests.

Those concerned about a better energy future should recommend this book to all in their circle, presenting it as well to politicians, policy wonks, environmental leaders, and media representatives. Three cheers for Bill Tucker.

“Without these subsidies … ‘On-grid PV,’ would be virtually non-existent. It only exists because the solar industry lobbied government officials to compel citizens to purchase this otherwise non-economic energy source.”

“Included in the list of failed solar companies is Solon of Germany whose corporate slogan was ‘Don’t Leave the Planet to the Stupid.’ Fortunately for taxpayers, it appears Solon will be leaving the planet.”

A recent Wall Street Journal article, Dark Times Fall on Solar Sector(December 27, 2011), surveyed the latest solar industry fallout, as well as overviewed the financial condition of the surviving companies.

But the article seems to mistakenly equate the fallout to viability as if better profits would mean sustainability. The industry is not viable, but this is unrelated to the recent fall-out. The industry was growing and profitable in the recent past and was equally non-viable then. The difference is that with profit-enabling government subsidies intact, many established U.S. and European manufacturers are now competing with China. And they cannot compete.

Risky Business

There is a measure of justice in this recent turn of events. The old adage “he who lives by the sword dies by the sword,” comes to mind. In this case, one might say, “the industry that lives by government intervention dies by government intervention.”

The U.S. solar industry has seen remarkable growth in the past six-to-eight years, principally on the backs of taxpayers and ratepayers who have been forced to shoulder a significant percent of the cost of these solar photovoltaic (PV) systems to make them appear financially viable as on-grid resources.

The solar industry has amassed a ridiculous collection of additive subsidies, which total upwards of 80 to 90% of the total lifecycle cost. They have lobbied every conceivable legislative body to garner special handouts for installing the systems and production subsidies (Net Metering) for operating the systems.

This industry is artificial. Without these subsidies this market segment called “On-grid PV” would be virtually non-existent. It exists only because the solar industry lobbied government officials to compel citizens to purchase this otherwise non-economic energy source.

In fact, they did such a good job of creating an enormous demand, that it attracted the attention of manufacturers and governments around the world, governments whose only subsidy is perhaps favorable lending to those companies that wish to sell into this artificial marketplace.

Global Subsidies, Calls for Protectionism

So now those same solar companies, which lobbied so heavily to plunder the public coffers, are through some grand act of justice being forced out of the business by Chinese manufacturers, who can produce panels at much lower cost. This industry built on government intervention in the marketplace is now dying because of possible Chinese government intervention in the marketplace. I call that just deserts.

So what is the response of the U.S. solar industry? It’s mixed, but continues on the same self-serving path it has followed. Some panel manufacturers are trying to block solar imports from China, which leads me to believe they’re not really that concerned with green house gas emissions after all.

Solar installers are against the restrictions, because the cheaper panel prices are increasing the sales of PV systems and they’re as happy as ever to continue riding the subsidy gravy train. Both segments are guilty of participating in a massive plunder of public and private moneys.

It is almost comical watching manufacturers and installers fight over the import restriction policy. The manufactures want the restrictions so that they won’t have to compete against the low-cost panels from China, and the installers like the low prices so they have more business, thus showing little concern for the U.S. manufacturers who created the subsidies in the first place. Is there no honor among the plunderers?

The oversupply of panel production is the direct result of government subsidies for solar. The article, in part, credits the oil price boom for the investment surge, but solar is not a substitute for oil. Installing solar panels does not reduce our oil imports. Solar PV offsets electricity and only about 1% of our electricity is made from oil, so I can’t believe investors invested in solar in response to high oil prices, nor for the reason of climate concerns, since solar is a very expensive means of reducing GHG emissions.

Reality Check Needed

It is far more reasonable to assume that investors invested simply based on a belief that subsidies and mandates would continue for many years. The subsidies created an artificial demand, which those investing in the industry surely understood was unsustainable. But apparently they did not correctly foresee the competition.

And fortunately for the taxpayers, who were helpless against the massive lobbying efforts of the industry, the Chinese manufacturers have come to the rescue. So if we’re being forced to buy panels, at least we can buy less expensive ones.

The best possible outcome for the U.S. taxpayers at this point is:

1) those companies most responsible for the solar subsidies lose interest because of the competition, and

2) there is a widespread realization that our utility mandates are accomplishing little except supporting the Chinese solar panel manufacturing industry.

Hopefully, these two outcomes will result in a shuttering of the political forces sustaining the subsidies and the subsidies will finally end.

PV Grid Parity: Still Illusory

One other point worth noting about this article is that the cost of PV is finally down to about $1/watt, which is the price many in the industry claimed was the price needed for solar to reach grid parity without subsidies. Well, $1/watt is finally here and solar is still far from grid parity. The truth is even if China could sell panels to installers for 1¢/watt, the systems would still be too expensive. Even with free PV, the cost of installation, mounting structure, inverters, wiring, etc. make the systems financially unsustainable.

The article concludes with the statement that “as technology advances and costs drop, solar-panel makers can supply power without a need for heavy government subsidies.” This leaves the reader some hope that on-grid solar PV will wean the world off fossil fuels, but this is wishful thinking. There is no guarantee that the prices will ever reach the point of grid parity without subsidies.

PV would reach grid parity if the total installed cost plus the net present value (NPV) of the operations and maintenance cost were at or below about $1/watt. But given that the PV panels alone cost $1/watt, and the total system cost for utility scale PV arrays is still $3.75/watt not including the NPV of O&M costs, I don’t see on-grid PV as a rational bet. Unless of course, one gets to bet with other people’s money and can ignore the moral implications.

Perhaps it will someday be necessary to wean ourselves off fossil fuels for reasons of supply limits or environmental issues. If that happens, normal market forces will rebalance both the supply and demand of energy in logical and rational ways. Till then we’ll just have to suffer through yet another economic bubble created by government intervention in markets.

Will we never learn?

As a final note, included in the list of failed solar companies is Solon of Germany whose corporate slogan was “Don’t Leave the Planet to the Stupid.” Fortunately for taxpayers, it appears Solon will be leaving the planet.

——————-

David J. Bergeron is founder and president of SunDanzer of Tucson, Arizona, a leading provider of solar-powered refrigerators and freezers world-wide. He has worked in the refrigeration and aerospace industries for 21 years and holds key refrigeration patents used by his company.

Bergeron graduated with a B.S. in Mechanical Engineering from Texas A&M University cum laude in 1982 and from the University of Houston (Clear Lake) with a Masters in Finance in 1985.

“Solar subsidies are a placebo which is giving the general public a sense of security about our energy future and is robbing the motivation of those entrepreneurs that could actually address our energy problems.”

“In the near term, perhaps our bigger concern than climate change is anthropogenic energy policy.”

In a recent Economist on-line debate, the affirmative motion “This house believes that subsidizing renewable energy is a good way to wean the world off fossil fuels” was surprisingly defeated.

In his closing remarks, the moderator softened his strident opposition to the negative case, even admitting that “subsidizing renewable energy, is wasteful and perhaps inadequate [to address
climate-change concerns].”

Beyond the Climate Debate

The debate, indeed, reopened the question whether anthropogenic greenhouse-gas forcing was a serious planetary environmental concern. But such focus short-changed what I think is the more important question for the Economist. Not only are the renewable-energy subsidies (such as for solar) wasteful and potentially insufficient, they are outright diabolical if indeed there is a looming environmental crisis.

I am not evaluating whether anthropogenic global warming is real and potentially cataclysmic; I’m arguing that if there is a valid concern about the enhanced greenhouse gas effect, not only will the subsidies not solve the problem, but may very well prevent or postpone a legitimate solutions.

Grid Solar: Radically Uneconomic, Intermittent

I’ve written before about why on-grid solar power is absurdly uneconomic and has almost no hope of becoming a viable alternative to current generation technology–or even competitive with other more viable renewable technologies. I’m asking the reader to accept this position for the sake of understanding the potential implication of my claim.

I think it is safe to say that public opinion towards solar is very positive, and there are many in the field claiming that on-grid solar is at or near grid parity.  But it only appears this way because of massive governmental subsidies/ratepayer surcharges for installing and using solar PV.  In reality, it is hopelessly inefficient from an economic sense to be a fix for our CO2 concerns.

The Real Problem of Subsidies

Here is the real problem:  Subsidies make solar appear viable today, so where is the motivation for an entrepreneur to risk money, or even focus on developing real energy alternatives when solar is “almost” there?  How can an inventor justify striving with the effort it takes to really develop something great when he is competing against a straw man technology which can provide power at almost the same cost of traditional power sources today?  But of course it really doesn’t.

The answer is he can’t justify the effort, so the next great thing is not developing, at least not with the sense of urgency it should be.  Why enter a contest when you are competing against someone with an unfair advantage?  You may be the faster swimmer, but your competitor is using flippers.

Solar subsidies are a placebo which is giving the general public a sense of security about our energy future and is robbing the motivation of those entrepreneurs that could actually address our energy problems.  Subsidies are much worse that just wasteful, they’re diabolical. They lull us into thinking we have almost solved the problem and they hinder us from seeking the real solutions.

An Analogy to Leprosy

“Necessity is the mother of invention,” and it’s fairly easy to see this is often the case.  Need is a great motivator.  We need to feel the pain of our situation to really be challenge and change it.

Leprosy maims it’s victims by robbing them of their sense of pain.  The leper can put his hand on a hot surface and not feel the heat.  He can twist an angle and will keep walking.

In the same way, on-grid solar subsidies will allow a homeowner to continue using much more electricity than he can afford (or the planet can sustain) and he will not know it.  If he felt the pain of the real cost, he would use less power.

But he does not feel it, since subsidies hide the pain, like leprosy.

Summary

Subsidies defeat market forces on both sides of the equation.  They reduce potential supply by hindering entrepreneurs from developing new energy supplies, and they increase demand by artificially keeping the price of energy down. There could hardly be a more cleverly disguised means of exasperating a potential climate issue.

If solar PV does not develop into a viable alternative, which I believe it won’t for many decades, not only will we have wasted billions of dollars; far worse, we would have defeated normal protective market forces which would have better prepared us for a potential necessary change in energy use.

In the near term, perhaps our bigger concern than climate change is anthropogenic energy policy.

Robert Howarth and Anthony Ingraffea released a study this past Spring that found emissions from natural gas produced from shale are worse than coal, based on the global warming potential (GWP) of methane. Since it was released, numerous institutions have weighed in and come to a fairly uniform conclusion: The Howarth/Ingraffea paper simply has too many errors to be credible.

New University of Maryland Study

Nonetheless, ideological opponents of shale gas have continued to wield the Cornell paper as a major weapon against this game changing source of energy. But a new study released by the University of Maryland, The Greenhouse Impact of Unconventional Gas for Electricity Production, suggests that Cornell’s paper has been intellectually superceded.

Among its findings:

“GHG impacts of shale gas are…only 56% that of coal” {p. 1}

“Methane has the ability to trap large amounts of infrared radiation relative to CO₂, but it also has a comparatively shorter lifetime in the atmosphere. As a result, methane’s 100 y GWP is much lower than its 20 y GWP.” {p. 5}

“Two factors lead to an overall carbon intensity advantage for gas during the combustion stage. First, gas releases more energy per unit of carbon emitted. Second, the technology used for combustion of gas is more thermodynamically efficient than that used for coal, enabling a larger amount of chemical potential energy in the fuel to be converted to electricity.” {p. 5}

“[A]rguments that shale gas is more polluting than coal are largely unjustified.” {p. 8}

Other Studies

By reaching the conclusion that the Howarth/Ingraffea study rests on “unjustified” premises, the University of Maryland is joining some pretty elite company, too. For example, here are some conclusions from the August 2011 Carnegie Mellon Report:

“For comparison purposes, Marcellus shale gas adds only 3% more emissions to the average conventional gas, which is likely within the uncertainty bounds of the study. Marcellus shale gas has lower GHG emissions relative to coal when used to generate electricity.”

Lead researcher Paula Jaramillo: “We don’t think they’re using credible data and some of the assumptions they’re making are biased. And the comparison they make at the end, my biggest problem, is wrong.” (as quoted by POLITICO [subs. req'd])

August 2011, Worldwatch Institute study: “[T]he life-cycle GHG footprint of gas is lower than coal under all GWPs tested” (p. 3)

“Despite differences in methodology and coverage, all of the recent studies except Howarth et al. estimate that life-cycle emissions from natural gas-fired generation are significantly less than those from coal-fired generation on a per MMBtu basis.” (p. 9)

August 2011 IHS-CERA Report: “The Howarth estimates assume that daily methane emissions throughout the flowback period actually exceed the wells’ IP at completion. This is a fundamental error, since the gas stream builds up slowly during flowback. Compounding this error is the assumption that all flowback methane is vented… Vented emissions of the magnitudes estimated by Howarth would be extremely dangerous and subject to ignition.”

June 2011, Cornell Professor Lawrence M. Cathles [report submitted for publication]: “[Ingraffea’s and Howarth's] analysis is seriously flawed in that they significantly overestimate the fugitive emissions associated with unconventional gas extraction…”

“[T]he assumptions used by Howarth et al. are inappropriate and…their data, which the authors themselves characterize as ‘limited’, do not support their conclusions.”

May 2011, U.S. Dept. of Energy Report: “Howarth [and Ingraffea] found a large fraction of produced gas from unconventional wells never made it to end users, assumed that all of that gas was vented as methane, and thus concluded that the global warming impacts were huge. As the [Dept. of Energy] work explains, though, 62% of that gas isn’t lost at all – it’s ‘used to power equipment.’” (Council on Foreign Relations blog, May 20, 2011)

May 2011, Wood Mackenzie Study: “Our analysis indicates that the Cornell study overestimated the average volume of natural gas vented during the completion and flowback stages by 60-65%. We conclude that the Cornell study overestimated the impact of emissionsduring well completions by up to 90%.”

May 2011, Navigant Energy Practice: “[T]he report concludes that the average well [in the Haynesville Shale] spits 250 million cubic feet of methane into the sky. That’s about a million and a half dollars’ worth of gas at today’s prices. … I have to wonder whether the authors have ever seen a working drilling / fracturing operation.” (LINK)

May 2011, Global Warming Policy Foundation, “The Shale Gas Shock” “[Howarth’s conclusion] requires unrealistic assumptions about: the quantity of methane that leaks during fracking, production and transport; the lack of methane leaks from coal mines; the residence time of methane in the atmosphere; and the greenhouse warming potential of methane compared with carbon dioxide. … And Howarth gets his numbers on high gas leakage from shale gas wells from unreliable sources, his numbers on gas leakage from pipelines from long Russian pipelines, and assumes that ‘lost and unaccounted for gas‘ is actual leakage rather than partly an accounting measure. He also fails to take into accountthe greater generating efficiency of gas than coal.” (p. 30)

May 2011, American Gas Association analysis: “Some of the major flaws include … use of data that the authors note is limited and questionable; failure to adequately consider industry control technologies; and misinterpretation of industry terms and datasuch as ‘lost and unaccounted for’ gas.”

April 2011, Clean Air Task Force’s Dave McCabe:“This paper is selective in its use of some very questionable data and too readily ignores or dismisses available data that would change its conclusions.”

April 2011, New York Times reporter Andrew Revkin: “One thing that disturbed me and some of the scientists I consulted was the big gap in the definitiveness of [Cornell’s] abstract summary and the actual paper. … I find that they are more value judgments than scientific judgments.”

John Hanger (former head, Pennsylvania Dept of Environmental Protection: “Professor Horwath’s conclusion that gas emits more heat trapping gas than carbon flies in the face of numerous life cycle studies done around the world.” (April 12, 2011)

“Professor Horwath just adopted an extreme and false assumption of no flaring that conveniently moved the result of his life cycle analysis in the direction that he wanted.” (April 12, 2011)

“Bit by bit the Howarth study is being consigned to the junk heap.” (August 25, 2011)

Natural Resources Defense Council (Dan Lashof): “Moreover, while I can see an argument for using a time horizon shorter than 100 years, I personally believe that the 20-year GWP is too short a period to be appropriate for policy analysisbecause it discounts the future too heavily.  I calculate that over a 50 year period, the GWP of methane would be in the range of 42-56, based on the IPCC and the Shindell et al. analyses.”

Howarth and Ingraffea Self-evaluation

Cornell authors Howarth and Ingraffea have also engaged in some critical self-evaluation:

Howarth: “They are limited data. These are not published data. These are things teased apart out of PowerPoint presentations here and there. So rather than try to extrapolate based on any complicated formula, we’ve ended up simply taking the mean of those values.” (Howarth presentation to colleagues, 22:30, March 15, 2011)

Howarth: “A lot of the data we used are really low quality, but I’m confident that they are the best available data.” (38:50)

Howarth: “Let me just as an aside say that, again, the quality of the data behind that number [methane emissions during well completion] are pretty lousy. You know, they’re these weird PowerPoint sort of things.” (44:15)

Ingraffea: “We are basing this study on in some cases questionable data.”  (38:20)

Ingraffea: “I hope you don’t gather from this presentation that we think we’re right.” (57:15)

Howarth: “We did not look as carefully at coal. … We didn’t put anywhere near the amount of effort into them [coal numbers], but I’m sure they are lower than natural gas.” (39:10 – 40:08)

” The Solyndra technology was far from innovative, much less game-changing. The DOE … failed to quantify the elasticity elasticity of production costs in a highly competitive market where solar panels are a commodity.”

“Given the many other companies with shaky financials that have received loan guarantees, I expect we’ll see more and larger epic fails like Solyndra in the coming years.”

- Robert Peltier, “Epic Fail, POWER, October 2011, p. 6.

The seasoned warnings against politically correct, market incorrect technologies for electric generation by POWER magazine editor-in-chief Robert Peltier are now being vindicated. Peltier did not anticipate the unseemly crony capitalism involved in such cases as Solyndra, but he knew that there was trouble ahead because of the technological problems of converting very dilute, intermittent energy into affordable, dispatchable power flows.

The special insight of Peltier on political solar is worth studying (full article here):

EPIC FAIL

Over the past 18 months, four solar energy equipment companies have closed their doors. Each one blamed poor market conditions for its economic woes, even though each had fundamental weaknesses that went unaddressed….

Solyndra announced on September 2 that it was entering Chapter 11 bankruptcy and immediately released the company’s more than 1,100 employees, with no notice. The company opened a massive $700 million dollar manufacturing facility in Fremont, Calif., earlier this year using cash from a $535 million dollar DOE loan guarantee and reportedly $1 billion in venture capital funding. The Treasury Department’s internal Federal Financing Bank loaned the money, so a loan guarantee in default is lost cash.

Solyndra joined Hopewell Junction, N.Y.–based Spectrawatt Inc. (an Intel Corp. spinoff) and Evergreen Solar of Marlboro, Mass., both of which filed for Chapter 11 bankruptcy in August. BP Solar closed its Frederick, Md., plant in March of last year.

Great Expectations

You may recall that Solyndra was praised by President Obama as a prime example of how green jobs were being created through government backing of promising renewable energy firms. During a well-publicized plant visit on May 26, 2010, the president said, “It’s here, that companies like Solyndra are leading the way toward a brighter, more prosperous future.” He went on to say that “The true engine of economic growth will always be companies like Solyndra” and that their technology was “game-changing.”

The Solyndra technology was far from innovative, much less game-changing. Its plan was to produce tubes lined with thin-film technology solar cells that are mounted in a flat panel-like rack. Solyndra publicized that this design was better than flat panels because the racks can be inexpensively mounted on a flat surface, like a roof, and because reflected solar energy from a light-colored background improves collection efficiency. However, the well-known flaw with this technology is that it is does not scale well—the production costs don’t drop much per unit when produced in large quantities like conventional flat photovoltaic panels. The DOE fell in love with the technology but failed to quantify the elasticity of production costs in a highly competitive market where solar panels are a commodity.

The cracks in Solyndra’s façade began to appear well before the president’s visit. Solyndra floated the idea of a $300 million initial public offering (IPO) in December 2009, after receipt of the loan guarantee in March of that year. The registration statement prepared by the privately owned company was examined by independent accountant PricewaterhouseCoopers. The accountants’ conclusion was that the company’s huge losses and negative cash flow raised “substantial doubt about its ability to continue as a going concern,” even after a $1.5 billion cash infusion. The IPO was withdrawn in June 2010, a month after the president’s visit, and was followed by the founder and CEO’s departure on August 19.

The selection of Solyndra for a loan guarantee is all the more distasteful when you realize that the DOE must have known the product stood little chance of commercialization in the first place. When Solyndra’s original loan guarantee application was submitted in 2006, the company had a couple of dozen employees and technology that the market had already rejected as uneconomic compared with flat panels. By 2009, the company had a couple of hundred employees but was shipping panels sold at about half the cost of production. During those three years, many companies considered investing in Solyndra, but there were few takers. Then Solyndra caught a break. With the loan guarantee in the bag, venture capitalists jumped in with big money, hoping for a bigger score. They believed that they couldn’t fail, especially by investing in a company that proudly wore the president’s personal seal of approval.

Just as irksome to me was the cavalier attitude of the DOE when it learned of Solyndra’s demise. That same day the DOE released a statement on its web site: “We have always recognized that not every one of the innovative companies supported by our loans and loan guarantees would succeed….” In essence, the DOE dismissed the half-billion-dollar loss as the price of doing business, and without any hint any responsibility. Apparently, failures of this magnitude are an acceptable option at the DOE.

More Failures Will Follow

The Solyndra failure highlights the government’s “push-pull-plus” marketing plan for these technologies. The “push” occurs when the government substitutes its judgment of what constitutes a good product for that of the collective free market and then uses public funds to jam the product into an unreceptive market. The “pull” occurs when the government creates artificial market demand, such as state or proposed national renewable energy portfolio standards. The “plus” is the sweetener added to the deals in the form of incentives and tax credits. A marketing plan predicated on the government injecting cash every step of the transaction is unsustainable today.

Solyndra was the first loan guarantee signed off on by the DOE under the American Recovery and Reinvestment Act, but that didn’t save the company from filing for bankruptcy protection. Given the many other companies with shaky financials that have received loan guarantees, I expect we’ll see more and larger epic fails like Solyndra in the coming years.

In Solar Energy Tough Love, I described the perverse impacts of government industrial policy on the solar energy sector in its vainglorious attempt to choose winners and losers.  That policy is failing, Solyndra aside. 

The market gods hate to be trifled with, and they respond with thunderbolts and torment.  Solar’s pain will continue until grid parity is reached. In the meantime, the solar energy sector must purge itself of government subsidies and address its weak financial performance.

So when I read the story in the trade press about SunPower’s wider Q2 losses I decided to get beyond the numbers to look at some of the market factors tormenting the solar business and holding back its true potential.

One key fact is that solar energy demand is up, but so are input costs for solar panels.  Rising demand stimulates rising production and thus excess inventory is a persistent problem and results in falling prices for PV panels.  Then there is the Feed in Tariffs (FiT) fits that cause burps and headaches as governments in Europe no longer able to afford the soaring cost of subsidies regularly adjust the tariffs—usually downward.

Changes in FiT shift demand from market to market as manufacturers adjust and seek to lose less margin on each incremental deal.  Often, as was true in SunPower’s Q2 report, revenue comes in at or close to investor expectation because demand is growing but cost and margin control has proven difficult and can quickly eat away at profits.

Key Factors

• Deal Flow is Up but VC Funding is Down. The consolidation process in solar energy is clearly underway with the mixed news on the solar investment and funding front. While the number of venture capital funded solar deals remained about the same in Q2:2011 as the previous quarter (25 vs 26) the value of those deals fell to $354 million in Q2:2011 from $658 million in Q1:2011.  Even worse, that $354 million in Q2:2011 was down from $948 million in Q2:2010 even though deal flow increased 25 vs 18) according to Mercom Capital Group.

• Bankability is limited, but deal flow schemes are abundant.  There are many vendors eager to sell solar energy systems but few of them are bankable meaning they look like what they are—a big credit risk.  So these solar firms spend much of their time dreaming up schemes to finance their deals.  Pace loans was one of those when upfront costs could be funded through government assessments like sidewalks and sewer lines.

It all sounded so logical and convenient until lien holders began to realize that the PACE loans would get priority ahead of the first mortgage in a bankruptcy since they were government bonds and that was a scheme not even Fannie Mae and Freddie Mac would tolerate.

• One of those schemes is residential solar leasing.  Think about it!   If you are a homeowner and you want to ‘do the right thing’, save the planet and stick it to your utility company.  So you decide to put a solar rooftop system on your house but it costs thousands of dollars and tax credits and subsidies don’t cover all of it.  No problem, the vendor says we will lease you the system with no upfront cost.  This sounds like a great deal until you realize that you are signing a 20 year lease on equipment with rapidly falling prices and in a market of rapidly improving technology.

This is like locking yourself into a 20-year lease on a Chrysler Sebring sitting unbought a dealer’s lot.  This also sound more than a little like the no down payment securitized mortgages that just ate all the equity in our homes.  The trade shows are filled with CEOs of solar companies touting these schemes and assuring us that default rates on solar rooftop system are very low.

This may be technically true today but it is still deceptively wrong and it will surely hit the fan.  That is why many firms are not bankable because bankers have tried every scheme in the book and they know a bad deal when they see it.

• Disruptive technology in the form of solar rooftop shingles is our friend. If these traditional looking roof shingle systems catch on and fall in price as quickly as panels they will further displace the old generation PV panels—and they are much harder to steal too!  That way the transaction is actually honest and bankable since putting on a new roof to replace an old, leaky one is a very practical thing to do and is bankable.  Using shingles that spin your smart meter backward can help mitigate the cost of the new roof, increase the value of the home and allow you to invest in the latest technology not the oldest technology.

The giants like Dow and others that make these new solar shingles have a competitive interest in driving down the price to make the solar shingles competitive with other roofing options. This is disruptive technology at its market best.  That is why more and more established roofing companies are likely to displace many of the fly by night solar panel vendors—and the sooner the better.

• Global competition is scaling Solar Potential.  The solar PV market has been a global one since China decided to commoditize it and suction up as much of the FiT subsidy money governments were willing to throw away by selling lower priced equipment into Spanish, German, Italian, Czech and other markets and a few experiments with FiT in the US.

The current EU problems with FiT volatility and the failure of the industrial policy of raising utility prices to subsidize the development of domestic renewable energy manufacturing proved a failure in the face of China’s export prowess.  So as EU markets are saturated or the FiT subsidy money fades, solar manufacturers are looking for better global markets.

• China adopts its 12th five-year plan with a focus on feeding its insatiable appetite for energy and access to resources to sustain its export growth.  The big push in this new five year plan includes new energy resources including developing unconventional oil and gas potential in China as well as energy to meet military industry, and the environmental remediation needs.  Expanding domestic production of solar technology can be expected not only to feed export growth but also satisfy some of China’s domestic energy needs as well.

• North America is likely to be the market of choice.  Why?  There are millions of sunny rooftops in America and only about 130,000 of them now have solar PV systems installed according to Sungevity CEO Andrew Birch.  California alone has a goal of a million solar roofs and wants 3 million homes using renewable energy. No doubt many of them will target California after Governor Jerry Brown announced his clean energy plan this past week calling for adding 12 gigawatts of renewable electricity by 2020 or enough to power roughly 3 million homes.

That is a lot of rooftop cheese to attract solar roof rats from around the globe. Those solar shingles I mentioned above use thin-film copper indium gallium diselenide (CIGS) cells instead of the older polysilicon.  Dow claims its CIGS solar shingles are over 10% efficient, about 10 to 15% cheaper per watt, easy to install and harder to steal.  If California is going to have a million solar roofs it wants them using the newest technology not the oldest, least efficient stuff.

• Global potential for solar energy is attracting the giants accelerating the technology learning curve process to give the giants competitive advantage over China.  China’s contribution will continue to be commoditizing the older technology and driving down its cost, but that is not the game the giants want to play. They seek scale, market diversity and ongoing business relationships for services and aftermarket solutions. Selling integration solutions that solve business problems for their best Fortune 1000 customers is the value-added proposition most are following.

• Utilities are driven and constrained by regulatory requirements. The most profitable solar projects today are still the utility scale solar farms. But utilities have been reduced to procuring energy and capacity in power purchase agreements to satisfy renewable portfolio standards and emissions reduction goals.

The Grid Parity Imperative

Solar energy is still the only distributed generation technology capable of displacing the central station utility business model.  Achieving that ambitious goal will require grid parity prices to compete with natural gas, improving solar technology efficiency, and bigger scale players with bankable integrated solutions. Consolidation is rapidly weeding out the smaller players in this sector and that is good.

Customer Aggregation will be the distributed energy business model of choice.  We are seeing it first on the commercial and industrial side of the market with vendors offering demand response, energy efficiency and constant energy management to game the net metering and open access rules.  But the menu will expand to include microgrids, combined heat and power, waste heat recovery, energy storage, renewable energy supply options and the expertise to put it all together and manage it to reduce total energy spend.  As customer aggregation catches on it will accelerate the move toward a truly distributed clean energy economy as it wreaks havoc on the traditional utility business model.

But residential rooftop solar with higher efficient solar shingles is a game changer if the combination of better technology, stronger market participants, and customer aggregation as the business model that brings scale and diversity to solar to drive it to grid parity prices.  Customer aggregation designed to scale a portfolio of residential customers across the three interconnected grids will bring customers new bundled solutions, give them a champion to help eek out savings and bring an end to the separate sale of commodity energy thus ending the traditional utility control over the gateway to customers.

Conclusion

Solar energy must flare off its toxic dependence upon subsidies, industrial policy lobbying and political correctness and embrace the full potential of competitive global markets, integrated grid parity-priced solutions and customer engagement to deliver good value, good service, and good outcomes for both customers and the environment.

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Related Articles by Gary Hunt

• Solar Energy Tough Love (insightadvisor.wordpress.com)
• Solar FiT Crisis Continues in Spain and Italy (insightadvisor.wordpress.com)
• Lessons from Evergreen Solar (insightadvisor.wordpress.com)
• Is Solar Powered Energy Really Worth Considering (mydecorarticles.com)
• N.J. hits new record for solar energy installations, officials say (nj.com)
• Can you depend on solar energy (wiki.answers.com)
• Solar Leasing Companies Head Eastward. Popsicle Anyone? (huffingtonpost.com)
• The First Solar Powered Town? Residents Push for 30% Renewables by 2015 (Video) (treehugger.com)

“The economic case for grid-tied PV is indeed quite hopeless, and the sooner we stop the misguided subsidies the sooner we can focus on actually addressing our legitimate energy and environmental concerns.”

The U.S. Energy Information Administration (EIA) recently published an excellent report on the projected cost of electricity generated by different technologies: coal, natural gas, nuclear, and various others, including renewables.

Levelized Cost of Energy

Their Levelized Cost of Energy (LCOE) calculation combines upfront cost with recurring cost to estimate the average cost of power produced by these technologies. Here is the EIA cost datafor coal, natural gas, and solar PV.

At first glance, it looks like PV could be competitive with coal or natural gas plants if the PV cost were to drop below 10 cents/kWh. But there is an important difference between PV and the traditional technologies which makes this simple cost comparison invalid.

But first, take a look at the cost of electricity from a coal plant. The total cost is projected to be 9.5 cents/kWh per the EIA study. About 6.5 cents of this is capital cost[1] and about 2.5 cents is the cost of the coal. Looking at the natural gas plant, one can see the capital cost is about 2 cents, and the fuel cost is about 4.5 cents.

Solar has no fuel cost element but significant capital investment.

Intermittency = Backup Required

But here is the rub. If you plan to power a city with PV, it is not sufficient to simply build a large PV array, because PV only produces power during the day. At night and during cloudy weather, a back-up power source is needed since there is no practical way to store the PV energy.

So the city must also build a conventional coal or gas plant, which will sit idle on many sunny days. The real cost of the PV is not just its cost, but also the cost of the back-up plant. Coal and natural gas plants do not need back-up like PV does.

So what is the real value of PV?It is principally the fuel savings which occur when the traditional plant can reduce output during sunny days. Or stated another way, PV is worth avoided fuel cost. The main point is that PV is not competing against the LCOE of coal or natural gas plants; it is competing against the variable operating cost of these plants, which is 2-4.5 cents.

Here in Tucson, we use coal and the fuel avoidance value is less than 3 cents. For PV to actually be cost effective today, it would need to have an LCOE of about 3 cents. Since it is currently about 21 cents, it has a long way to go before it makes sense for the citizens of this city, despite industry propaganda and political pandering.

Zero PV Panel Cost: Solar Still Uneconomic

But to further demonstrate how nonsensical this technology is, even if PV manufacturers drove the cost to $0/watt for PV panels, the cost of the aluminum mounting structure, copper wiring, labor, inverters, and maintenance result in a LCOE around 10 cents.

So even with free PV panels, the total system is still three times too expensive to be viable on-grid . The economic case for grid-tied PV is indeed quite hopeless, and the sooner we stop the misguided subsidies the sooner we can focus on actually addressing our legitimate energy and environmental concerns.

Installing grid-tied PV is not just a waste of time and money, but a waste of copper, aluminum, labor, land, and capital. We are neither ahead nor green. This wasteful activity is unsustainable, mining the materials used in these unnecessary systems is damaging the environment, and the entire endeavor is a burden on the economy. There is hardly a clearer case of special interest run amok, besides perhaps ethanol subsidies.

On-Grid No, Off-Grid, Yes

PV is fantastic for people that live where there is no access to the electric grid, but it is wishful thinking to believe it can replace conventional generation methods or even be cost effective for on-grid application.

Other renewables– geothermal and biomass– will likely become viable before PV because they do not require back-up power. But today, conservation is by far the best way to economically reduce pollution and CO2 emissions.

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[1] EIA includes a 3 percentage point cost of capital increase for coal-fired plants without carbon capture and sequestration equipment to represent the difficulty in getting coal-fired plants permitted today. That 3 percentage point increase in the cost of capital for coal-fired plants makes the capital component larger than that of current coal-fired projects.

Fossil Fuels: Ancient Storage

In Batteries from the Carboniferous, I noted that fossil fuels are Nature’s ancient method of storing solar and photosynthetic energy in the ground. Inadvertently, fossil fuels have served as a multimillion year old storage battery, which sat in the ground because no species had learned to use it efficiently until human beings figured out how in recent centuries.

Because using it releases a number of pollutants, however, fossil fuels are a somewhat imperfect battery.  These pollutants are: particulate matter, sulfur dioxide, nitrogen oxides, various hydrocarbons and carbon monoxide (the latter two if combustion is less than 100% efficient). [Note: CO2 is not in my list of pollutants. It is the stuff of life, rather than a pollutant. You, dear reader, are 18% carbon, virtually all of which originates in CO2 in the atmosphere. Don’t try to go without carbon!]

An Analogy

In order to figure out whether burning biomass rather than fossil fuels would reduce atmospheric CO2 emission, consider the following analogy.

Whether you pay your electricity bill out of your savings account (analogous to carbon in fossil fuels) or your checking account (analogous to carbon in newer biomass), your total wealth (checking + savings, analogous to total carbon in fossil fuels and newer biomass) is the same assuming the bill is paid out with equal efficiency, i.e., all fees are equal, whichever account you use.

From the electrical company’s point of view, its revenues are also the same.

Although paying it from your checking account makes your savings account larger, you are no better or worse off, on net. So, it makes no difference which account you use, either to your net wealth or the electrical company.

What willmake a difference is being able to decrease your electricity bill or increasing the amount you bring in to your checking account. But if the total bill is the same, it makes no difference which account you use.

Similarly, what carbon is no longer tied up in fossil fuels and in newer biomass ends up in the atmosphere (minus what is dissolved in the oceans and re-used in photosynthesis). Thus, it makes little or no difference to the atmosphere whether one uses new biomass or old biomass (aka fossil fuels).

That using biomass is any more sustainable than using coal, for instance, is based on compartmentalization (between checking and savings accounts). What is more “sustainable” (or “sustainable” for a longer time) — note the quotes, I use the word advisedly, but that’s another story — is either to reduce the use of energy or to generate biomass more rapidly (without displacing something else that would generate equal or more biomass).

Finally, note that for the combustion phase, it is possible to burn fossil fuels more efficiently than biomass. Hence, the former ought to reduce CO2 emissions overall. But a more sophisticated analysis ought to consider life-cycle consequences (including CO2 released in extraction, preparation, transportation, etc., of the two forms of biomass).

Conclusion

Biomass may be renewable, politically correct, and fossil-fuel displacing. But it is unlikely to reduce atmospheric CO2 concentrations much, if at all.

“Federal officials, aware that solar power breakthroughs have shined and faded almost as often as the sun, say the Enron project could introduce commercially competitive technology without expensive Government aid.”

Allen Myerson, Solar Power, for Earthly Prices, New York Times, November 15, 1994.

The nation’s largest natural gas company is betting $150 million that it can succeed where the Government has so far failed: producing solar power at rates competitive with those of energy generated from oil, gas and coal.

The Enron Corporation plans to build a plant in the southern Nevada desert that would be the largest operation in the country making electricity directly from sunlight, producing enough to power a city of 100,000 people. It is expected to begin operating in late 1996.

Grand promises in the late 1970′s about the potential of virtually pollution-free, endlessly renewable energy sources like solar energy faded into an embarrassed hush. But several of the nation’s leading solar power experts say Enron’s optimistic goal is probably reachable.

The reason is that during the last decade, the cost of solar power generation has quietly declined by two-thirds. Far from depending on some wondrous breakthrough, the experts say, Enron can offer commercially competitive solar power by inexpensively mass-producing solar panels, and then employing thousands of them in the Nevada desert.

Even the most optimistic supporters of solar power have doubted that they would see commercially competitive production until the next century. The Worldwatch Institute, an environmental group in Washington, said earlier this year that solar cell electricity, now as low as 20 cents a kilowatt-hour, might reach 10 cents by 2000 and 4 cents by 2020.

Yet Enron is pledging to deliver the electricity at 5.5 cents a kilowatt- hour in about two years. That would beat the average cost of 5.8 cents currently paid by the Government for the electricity it uses. The national average retail price is 8 cents.

Several legal and political obstacles remain, and for competitive reasons Enron will describe its technology only in general terms. But solar energy researchers who had consulted with Enron were willing to elaborate on the available technology and the financial calculus.

Enron’s 100-megawatt plant would be more than a dozen times the size of any other that employs photovoltaic, or solar power, cells, which use the energy in sunlight to shake electrons loose from molecules of silicon or other substances. Size is key, according to Sigurd Wagner, a professor of electrical engineering at Princeton University.

“If a good group of people puts a plant of that scale in, it will have a real consequence on costs,” he said. “It’s not going to go down by just a little bit, but by a factor of two.”

To reduce the price further, the company is counting on available tax breaks and inexpensive financing.

As for whether Enron’s goals are realistic, Professor Wagner said, “They’re pushing it, but they’re not far off.”

The company, based in Houston, has already won preliminary backing from the Department of Energy, which tentatively plans to buy Enron’s solar power as long as the rate is truly competitive with the power from conventional sources.

“I’m confident we can make some commitment for a Federal entity to purchase or at least broker some purchase of solar power,” said William H. White, the Deputy Secretary of Energy.

Government officials say Enron’s success will encourage the spread of solar power generation here and abroad.

“If they can do this, they’re going to have lots of business,” said Tony Catalano, director of the Energy Department’s photovoltaic division. “This is going to be very competitive in the U.S. and lots of other places in the world.”

Enron has asked the Government to buy or guarantee a market for its power, with annual increases of 3 percent, for 30 years. It also depends on leasing Government land, receiving Federal tax benefits for renewable energy and financing construction with tax-free industrial development bonds.

Mr. White proposes having the department’s Western Area Power Administration, whose grid connects Hoover Dam and other projects with large public power authorities, buy the power generated by the solar plant. That power would only be available in daylight hours, which are also the hours of peak demand, especially for air-conditioning.

Previous efforts to promote solar power as a clean alternative to fossil fuels have foundered, despite the Government’s spending of hundreds of millions of dollars on solar research. Solar power has remained too expensive, while fossil fuel prices have declined.

While solar cells can economically provide the tiny charges needed by watches and pocket calculators, their larger applications are mostly in remote places beyond the reach of the world’s power grids.

Federal officials, aware that solar power breakthroughs have shined and faded almost as often as the sun, say the Enron project could introduce commercially competitive technology without expensive Government aid.

“This establishes the benchmark we want and restarts a stalled solar industry,’ said Robert H. Annan, the solar energy director in the Department of Energy.

In fact, the solar industry has already grown, with the shipments of solar cells up more than tenfold since 1980, as repeated technological advances have lowered their cost.

Even after Federal officials agree to buy solar power, they will have to formally solicit bids to see if anyone can beat Enron’s offer. Among more than 30 informal proposals so far, no one has.

Enron’s chief strategy officer, Robert C. Kelly, says that producing solar power follows from Enron’s generation of electricity from natural gas, a cleaner fuel than coal or oil. But Enron will not be running a charity. Asked how soon solar power could generate earnings, he said: “Now. We’re a very impatient company in terms of profits.”

Limited production of solar power cells at an adjacent factory, to be run by a partner whom Mr. Kelly would not identify, will keep the $150 million power plant from reaching its full capacity for about a decade.

The necessary technology is on display in Mr. Kelly’s office, where a square glass panel about the size of an art book, its surface shimmering with metallic greens, blues and violets, rests on a gleaming steel rack. He is cautious about saying anything more than that the panel was produced by another company and used what people in the business called a thin-film design.

Silicon has been the film of choice, but several companies are achieving much higher efficiencies, and lower costs, with other substances or more than one silicon layer. A partnership between Energy Conversion Devices Inc. of Troy, Mich., and the Canon electronics company of Japan plans to open the world’s largest thin-film solar cell plant in Newport News, Va., next year. Their cells will have two layers of silicon and one of germanium. The Enron and Canon ventures together would double the nation’s output of solar cells.

Zoltan J. Kiss, the founder of Energy Photovoltaics Inc. of Princeton, N.J., said he had been negotiating with Enron about the production of copper indium diselenide cells, which he said had triple the efficiency of single-layer silicon cells.

Enron, which has built one of the world’s largest gas-fired power plants in Britain, says it can also realize economies in the rest of the solar power plant’s design.

Paul Maycock, a leading solar energy consultant, said a few of the solar cell technologies he had evaluated for Enron could achieve the company’s goals, but only with sufficient production.

“Yes, it can be done,” he said. “It’s the dream we’ve all had: that someone would take the risk of building a very large factory.”

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