Howard Lipin / Union-Tribune
Employees' cars are parked under solar trees that make up the solar grove at Kyocera International in Kearny Mesa. The grove went online in August 2005.
Posted on 12/11/2006 9:59:59 AM PST by NormsRevenge
If California's $3.4 billion solar initiative succeeds in promoting 1 million more rooftop, solar-electric systems, it could still be considered a failure.
That's because the 10-year program, set to begin next month, aims to do more than just subsidize installations. It's also intended to make solar electricity's cost comparable to the power provided by utilities. Today it costs twice as much.
If solar costs could be made competitive, the impact would be profound.
Most conventional power is produced by burning coal or natural gas, making the electric-generation industry a leading source of greenhouse gases that cause global warming.
Cheap and readily available solar electricity, or photovoltaics, would significantly reduce the need to burn fossil fuels for electricity, as would the further development of wind power and other renewable energy sources.
The California Solar Initiative will provide subsidies to homeowners, businesses and nonprofit organizations for solar-electric systems on a schedule that will progressively shrink.
Proponents hope that the cost of photovoltaic systems will decline as sales grow, and that the falling costs, in turn, will make systems attractive enough to be purchased without subsidies by 2017.
For the vast majority of homes and businesses that might consider retrofitting with photovoltaics, the payoff likely will come only after a decade or more.
Homeowners retrofitting an existing roof, for example, would spend close to $30,000 for a 3-kilowatt system, a common choice. With the rebates from the state's solar initiative, as well as federal tax credits, the out-of-pocket cost falls to about $20,000.
In some cases, where electricity usage by homeowners is heavy and customers are billed at the highest utility rates, solar investments can pay off immediately. Photovoltaic systems also can make economic sense for homes or businesses located far from existing electric grids because of high connection costs.
Solar electricity is more competitive for new construction projects, where the costs of installation is substantially lower.
Trimming production and installation costs to where solar electric system purchases make sense without subsidy will take some doing.
It won't be easy.
“Cost-cutting will have to take place at every level: manufacturing, solar panel efficiency and installations,” said Tom Geldner of the San Diego Regional Energy Office, which will oversee the solar initiative in San Diego Gas & Electric's territory.
The California Energy Commission says solar panels themselves account for about 60 percent of an installed system's cost.
Julie Blunden, a vice president of SunPower, a San Jose-based panel manufacturer, argues that the industry is on track for slashing that cost over the next decade.
“It's just not blue-sky noodling,” she said. “If you look at each step in the process, we can show you a concrete plan.”
Shortage of silicon
The industry's cost problem begins with its primary manufacturing material, silicon. It's the same material used by the semiconductor industry, but this year – for the first time – the manufacturers of solar panels will use more than chip makers.
While silicon is derived from widely available quartz or silica, a surge in photovoltaic demand worldwide has caused a shortage of the material.
“In the past, the photovoltaic market could live off the scraps and spin off production of the semiconductor business, but now PV is at the point where it can support its own production,” said Tor Hartman, a senior vice president of REC Silicon in Moses Lake, Wash.
REC is investing hundreds of millions of dollars to boost its silicon production capacity, as are other suppliers. They are not expected to catch up with solar demand, however, until sometime in 2008.
Silicon accounts for about a fifth of the consumer cost of a PV system. But solar manufacturers such as SunPower say they're confident those costs will fall once the silicon industry's investment in expanded production translates into increased output.
“We have contracts in hand that drop the price on the order of 50 percent by 2008 and 2009,” said Blunden of SunPower.
A price cut of that magnitude – if passed onto the consumer – could by itself shave 10 percent from the installed cost of a PV system.
Already, a host of companies is seeking to develop thin-film solar that requires less silicon and might provide comparable savings.
The solar industry also is betting that boosting the electricity-generating efficiency of its products can provide savings.
Panels sold today typically convert about 20 percent of the solar energy they collect into electricity. An increase to, say, 23 percent, which solar experts say is within reach, would provide a significant boost and could reduce the number of panels required for a photovoltaic system.
Most experts expect the biggest savings to come from economies of scale. Until now, a relatively limited demand for photovoltaics hasn't provided the incentive for fully automating production. Where production lines have been automated, costs have remained high because volumes are low, Blunden said.
“Increasing the scale of production drives two things,” she said. “There is the pure mathematical accounting of having fixed costs divided over more units produced. But there is also this concept of cycles of learning, and that as you get bigger you learn more about your manufacturing process.
“If you produce 15 units, you get 15 chances to learn. When you produce 1,500, you get far more learning opportunities.”
With California's solar initiative adding to demand already created by government subsidies in Germany, Japan and elsewhere, manufacturers are scrambling to ramp up panel production.
SunPower, which now produces 75 megawatts of solar panels annually, plans to increase its output to 108 megawatts by the end of the year. The company expects to double that next year, then substantially increase it again in 2008.
SunPower hopes to be manufacturing 370 megawatts of panels annually by 2008, or enough to produce about 90,000 rooftop systems, each with a peak capacity of about 4 kilowatts.
Another key cost breakthrough could come by integrating solar panels into building materials. Instead of mounting solar panels above an existing roof, photovoltaics would be part of the roofing material itself, eliminating the need for a support structure.
“You'd simply be using less stuff,” Blunden said.
Cheaper installations
If consumer costs for photovoltaics are to fall sharply, the price of installations must come down. Right now, installation can account for half the final cost of a photovoltaic system.
Michael Powers, a vice president of Stellar Solar, an installation company in San Diego, says there's one sure way to cut installation costs.
“If builders made homes solar-ready with conduits for wiring (easing a later retrofit for photovoltaics), the customer could save thousands,” Powers said.
SunPower's Blunden says the installation business itself is a candidate for consolidation that could bring efficiency and lower cost.
“We have a very fragmented market with hundreds of installers,” she said. “Most are not big enough to afford central warehousing, and are inefficient market buyers and don't have financing vehicles (for consumers) because they're too little.
“Either you roll up all these installers into one big business, which some are doing, or someone offers central services,” she said. “There's a substantial opportunity to lower the cost of installations.”
The California Energy Commission agrees.
“The installation side is one of the areas where we would anticipate economies taking place,” said Drake Johnson, manager of the renewables office at the commission.
Tiered utility rates
Andy Black, owner of OnGrid Solar, a San Jose company that provides software to assess the economics of buying PV systems, says prospective customers should keep in mind that utility rates have risen more than 5 percent annually over the past two decades. During the same period, photovoltaic prices have fallen by an average of 7 percent annually, he said.
California's tiered utility rates make a solar investment more worthwhile for some customers than others.
The tiered rates are lowest for baseline use and rise as usage increases. Within the SDG&E system, for example, the average cost per kilowatt hour is about 17 cents, but high-volume electricity users pay as much as 28 cents for some of their electricity.
The rate structure is designed to encourage conservation. A photovoltaic system replacing electricity that would have been purchased at the highest rates is producing more value for a customer than a system that replaces lower-cost power.
For some heavy power users, solar advocates say, going to photovoltaics makes sense right now.
Although that may be true for some individuals, a prominent critic of California's Solar Initiative remains unconvinced that subsidies are an efficient way to stimulate innovation across the industry.
Severin Borenstein, director of the University of California's Energy Institute, fears that any breakthroughs achieved by individual manufacturers as a result of the subsidy program will remain proprietary innovations for one company and won't be broadly shared by the industry.
He favors investments in research that would fall into the public domain.
“We should be putting money into solar technology,” Borenstein said. “But what we'll be doing with the state initiative program is enriching solar manufacturers.”
Public Utilities Commission member Geoffrey Brown, who voted against the solar initiative, also expressed skepticism about the prospect of lower costs for photovoltaic systems.
“I certainly hope costs will come down,” Brown wrote in opposing the program, “but it is a leap of faith to assume this will happen.”
Employees' cars are parked under solar trees that make up the solar grove at Kyocera International in Kearny Mesa. The grove went online in August 2005.
SunPower Solar ping
The heavy subsidies of PV systems in Germany and Japan inflated the cost of PV panels dramatically for the past couple of years. Their subsidies are about to end so panel prices were expected to come back down. I guess this program will see to it that they stay inflated, once again government getting in the way of the free market
Please Freep Mail me if you'd like on/off
CA: Solar energy's day is dawning
San Diego Union-Tribune ^ | December 10, 2006 | Craig D. Rose
Posted on 12/10/2006 6:46:21 PM PST by calcowgirl
U.S. National Renewable Energy Laboratory 2001 #6 - Solar Energy reflecting station
not sure how much power they generate, but Christmas would be fun stringing them with lights.
ROFL!.
The dark, overcast skies in the pic are sure to help too.
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