The Future of Solar
By: Jon Dougal
Rebates and tax incentives are the engines that drive the solar business. The Rebates or subsidies can be used in various ways as incentives while producing two very different results. Rebates here in the U.S. (just federally reauthorized) work for home owners by reducing their capital outlay for energy upgrades (by approx 30%). The now defunct PACE program which was a means of financing energy efficiency levied a lien on the mortgage of a building to be paid off over the duration of the loan, thus defraying upfront costs while realizing the benefits of efficiency, this program will be reinstated. Rebates or tax incentives therefore drive demand.
Rebates for manufacturers (as in China) produce another effect – production. Chinese manufactures get money for export, especially when there sales results in dollars. So the Chinese over produced when the American market was poised to take off in 2007-2008, but dropped dramatically in 2009-2010. Chinese made solar products will drop again in 2011.
DOING THE MATH
We could make the case that price is the bottom line for the growth of solar power. Home-owners are going to think 3 times before investing $40,000.00 in a home that they just lost 50% of over the last 2 years and with no bottom seen in the immediate future.
States and municipalities that are trying to conform to mandates for renewable power will award utility level solar projects on the basis of cost, not being concerned with where the product was manufactured.
While Germany was the initial innovator of solar panels it wasn’t very long before the Chinese, projecting a huge growth market, started manufacturing. Chinese labor rates were significantly lower than Germany’s.
2010 saw a major change in supplies of Chinese sourced solar panels. Because of price most of the glut of the previous year went to Europe and strained supply to the U.S. In Europe new solar project installations shot up from 7.2 GW in 2009 to an estimated 15.8 GW in 2010, according to iSuppli. But analysts are predicting slower growth in 2011 because incentives in these key European markets are set to fall quite a bit.
GROWTH IN 2011
The news media were alive with the information that the Pentagon was required to “buy American” this last week. While there are far too few U.S. Solar manufacturers for the demand, this new incentive could spur production and help grow the home market. Since much of solar panel manufacturing is robotic; pricing could be very competitive if the cost of delivery were included. A similar example is sending lettuce from California to New York.
The U.S. (specifically California and Arizona) solar market is set to grow very fast in coming years. There are several factors that will culminate in progressive growth. Nevada is another story. Why isn’t Las Vegas the solar capital of the world with their available land and high energy use?
The Smart Grid –
Touted as the next generation of energy management the facts are a little different.
While the sector had one of the hottest acquisition records out of the greentech world, some stimulus funds funneled billions into smart grid deployments, some of the early smart meter installations faced a serious consumer backlash in 2010, which was bewildering to utilities like PG&E.
The reality is that the utilities NEED the smart grid to CONTROL energy use. Not only does smart grid technology allow meter reading either by a patrolling truck or by a command center reading the data from the grid sent by your little black box, but it allows the utility by priority shut, off your various appliances.
So when your pool pump stops working during the hot summer day, you’ll know that the money the utility paid you to install the box also let them decide when you can draw energy. OPENADR, the Berkeley Labs open-source system for automating the way utilities do demand response. It’s already being used to control some 70 MW of capacity for big industrial and commercial customers of California’s biggest utilities, and in 2010, Honeywell bought Akuacom, maker of servers that use Open ADR. The so called smart grid will include solar panels power management of the gird making brown-outs a thing of the past.
So, what does the smart grid sector need to hit a home run in 2011?
Stimulus funds turn into infrastructure. The smart grid stimulus funds that were announced and deployed in 2010 are finally turning into construction jobs and hardware installations. There are a good $4 billion in smart meter projects in the pipeline from these funds, so expect more than just the California utilities to start putting feet on the street getting these things installed. Getting these smart grid projects under construction will be crucial to keeping the industry moving in the face of the recession and the consumer backlash.
There are many things I don’t like about China, but their new green agenda is very impressive and it’s very exciting to be in Shanghai and see it first hand; super mega-architecture, rapid transit and more green energy investment in China than any other country in 2010.
They now have super-capacitor buses, they recharge in 30seconds and can drive about 3-4miles for a new recharge (they recharge up to 7 times on a 4 mile route).
This year they will start installing 25,000 car charging stations and soon we should see lots of EVs driving around, China has got the largest subsidies for EVs in the world, US$9000 per car.
The new/old Governor of California, Jerry Brown is an alternative energy advocate and is presumed to kick start the California economy with green energy jobs, probably by Executive Order. These jobs are largely based on solar power generation.
California will unveil its first solar feed-in tariff sometime in the first quarter of 2011. The current solar incentive program is being phased out.
Rooftop solar installation in California is brisk, but in Europe, it’s been downright explosive. What’s the difference? Solar feed-in tariffs.
Solar feed-in tariffs are rates that a utility such as, SCE, San Diego Gas & Electric or PG&E would have to pay a customer for the excess solar power the customer produces with a solar installation. Such tariffs can be a powerful incentive to go solar because they turn solar panels into moneymakers, rather than just something that reduces a power bill. Plus no sick days, or health insurance.
California is set to unveil its first photovoltaic feed-in tariff in the 1st quarter of 2011 to replace its solar incentive program that is being phased out. Currently, PG&E takes excess power a customer produces and credits it to the customer’s account in a program called net metering.
Countries such as Germany, Spain and Portugal have had solar feed-in tariffs for years. Ontario, Canada pays 44 cents/kwh, Germany pays about 56 cents per kilowatt hour for power from a small-scale rooftop installation. According to the National Renewable Energy Laboratory, feed-in tariffs are responsible for 75 percent of global photovoltaic development. For example, using feed-in tariffs, Portugal gets nearly 45 percent of its electricity from solar, up from 17 percent five years ago. Travel to China, south Korea or Japan and you’ll see solar panels even on freeway median strips. The U.S. is way behind the world.
Rumor has it that California’s rate will be 24 cents per KWH. That will jump start the creation of green jobs in solar.
Compare this to the United States, which gets 10 percent of its energy from renewable sources, with California getting 14 percent.
The “Bullet” train will be electrical powered and the track will be paved with PV as well all stations and the easement along side the track to power it. Outside power will be generated by solar farms across the desert.
Get this principle – as more renewable energy comes on-line and is used where it is generated the utility’s gross billing share goes down. So they will have to increase rates.
Renewable energy is not a job killer and it doesn’t directly increase energy rates that is the decision of the utilities that get paid for distributing the energy. The investor owned utilities want to control their market and charge what they want to charge. They are mandated to make a profit on everything they spend – did you ever see an old utility truck or equipment. They get to pass on to ratepayers every dollar spent and get guaranteed profit.
As energy rates increase it becomes more obvious that solar is the best investment for the future, especially with renewed federal tax credits and state rebates.