Category — Solar power
“[T]here is no companion prerequisite that such renewable programs be cost-effective or deliver reliable power…. This program appears designed for the privileged few to enjoy a subsidized electric energy existence, provides those ‘green bragging rights’ mentioned by a solar installer in this courtroom last September, but little else.”
Last May, Dominion Virginia Power petitioned the Virginia State Corporation Commission to introduce a voluntary ratepayer program to support up to 3 MW from distributed solar installations. Dominion seeks to offer the public an alternative to an existing, net-metering, residential solar panel program. This voluntary test Solar Panel Program would be guaranteed for five years at a “buy all/sell all” $0.15/kWh. It would be limited to an initial maximum scale of 0.2 percent of 2010 peak load.
Solar is an intermittent power source that would require storage to be on a stand-alone basis. The Dominion program offers a solar energy buyback on a firm (non-interrupted) basis, which requires cross subsidization from conventional energies.
The $0.15/kWh price is below what the U.S. Energy Information Administration estimates to be the cost of distributed solar, which is north of $0.25/kWh. Multiple tax breaks explain the difference ($0.022/kWh production tax credit; accelerated depreciation, etc.). Solar executive David Bergeron has estimated that the as much as 90 percent of lifecycle solar costs are hidden, due to special government subsidies. [Read more →]
February 27, 2013 4 Comments
“Intermittent generation may be consistent with a liberalized market, as long as generators are required to bear all the direct and indirect costs of their production. Otherwise, competition is doomed to become an irrelevant feature of a system that becomes more and more politically driven.”
Can an intermittent source be integrated into a liberalized electricity market?
Yes, it is technically feasible, but no otherwise. If subsidies enter into play, intermittent generation might undermine the very design of the market. This is what happened in Italy with the boom of solar power, which last year alone skyrocketed from 3.47 GW to 12.75 GW, with the annual cost of subsidies increasing from 800 million euro in 2010 to 3.9 billion euro in 2011 (about $975 million to $4.75 billion at today’s exchange rate).
These very generous incentives (which have been cut back in the last year for complex legal reasons) led to an over-investment in solar power in the country.
“Perfect Storm” for Malinvestment
Italy’s perfect storm of so little electricity at so much cost had three causes: [Read more →]
July 20, 2012 5 Comments
“The range of energy possibilities grouped under the heading ‘solar’ could meet one-fifth of U.S. energy needs within two decades.”
- Robert Stobaugh and Daniel Yergin, “The End of Easy Oil,” in Stobaugh and Yergin, eds., Energy Future, Report of the Energy Project of the Harvard Business School (New York: Random House, 1979), p. 12.
”I think … the consensus … is after the year 2000, somewhere between 10 and 20 percent of our energy could come from solar technologies, quite easily.”
– Scott Sklar, Solar Energy Industries Association (1987).
“Before maybe the end of this decade, I see wind and solar being cost-competitive without subsidy with new fossil fuel.”
- DOE Secretary Stephan Chu, Address to Pew Charitable Trusts, March 23, 2011.
Yesterday’s Part I on the long history of solar power ended with two quotations from energy historian Wilson Clark in his 1974 book, Energy for Survival: The Alternative to Extinction:
“In 1908, [Frank] Shuman formed the Sun Power Company and convinced English financiers to back his efforts to build larger plants using the flat-plate collectors. In 1911, he demonstrated a plant in Philadelphia with more than 10,000 feet of collector surface. It produced 816 pounds of steam per hour and was used to operate a steam-driven water pump” (p. 365).
“Between the turn of the century and the 1930s in the United States, the first widespread commercial use of solar energy came into being with the installation of solar water heaters in California and Florida. . . . Tens of thousands of these heaters were sold in both states until the middle 1950s” (p. 370).
The rest of the century would be the story of certain tried-and-true applications (water heaters), a lot of better-but-not-nearly-good-enough technological progress, and hype and failure in the political energy era (1970s-to-present).
1930s Solar [Read more →]
March 22, 2012 6 Comments
“Not satisfied with such direct benefits as he derives from sunshine, man has developed numerous ways of utilizing solar radiation indirectly and of appropriating energies other than his own.”
– Erich Zimmermann, World Resources and Industry (Harper & Brothers, 1933), p. 43.
“Although much interest in the scientific community has been focused on solar energy at various times in history, widespread development of solar power equipment has never been achieved—primarily because of the high cost of developing solar power compared to that of technologies utilizing cheap fossil fuels.”
- Wilson Clark, Energy for Survival: The Alternative to Extinction (Garden City, NY: Anchor Books, 1974), p. 379.
Solar electricity has a long history, not unlike its cousin windpower. The infant industry argument does not apply, and solar’s diluteness and intermittency suggest that this off-grid starter energy will not be an on-grid resource this century if not far beyond.
But the hype continues. Yesterday at Climate Progress, Stephen Lacey argued in The Real Impact of Loan Guarantees: “Solar Is Now Bankable” and “Becoming Part of a Much Broader Capital Market“:
With panel prices hitting record lows and performance of projects steadily improving, solar photovoltaics have become increasingly attractive to large investors. Investment in solar has surged to unprecedented levels due to interest from large Wall Street banks, investors like Warren Buffett, and technology firms like Google.
Does Mr. Lacey want to get into the weeds of the cost and reliability of solar power, or is his just cover bluster for a politician of his liking to get over “big green lie” Solyndra?
Here are some quotations that put solar in its proper historical context, just in case President Obama does not share any during his visit today at the 48-megawatt Copper Mountain Solar 1 facility in Boulder City, Nevada. Part II tomorrow will look at solar’s history in the twentieth century–and the hyperbole of solar when energy politics entered the scene in the 1970s.
17th Century Solar [Read more →]
March 21, 2012 7 Comments
Many years ago at at a DOE/NARUC conference, I took note when Christopher Flavin of the environmental Left (EL) Worldwatch Institute commented that he didn’t support solar farms (macro solar) because of their large resource and land requirement. 1
‘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.”
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.” [Read more →]
January 27, 2012 5 Comments
“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.
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.” [Read more →]
January 6, 2012 25 Comments
“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
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. [Read more →]
December 15, 2011 4 Comments
” The Solyndra technology was far from innovative, much less game-changing. The DOE … failed to quantify the 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.
November 1, 2011 3 Comments
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.
- 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. [Read more →]
October 13, 2011 7 Comments
[Ed. note: David Bergeron is president of SunDanzer Development, Inc., a solar energy company located in Tucson. His earlier posts at MasterResource are Free-Market Solar: The Real Opportunity and Economic/Environmental Assessment of Grid-Tiered Photovoltaics: Arizona Lessons for the U.S.]
“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 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. [Read more →]
October 12, 2011 23 Comments