Just a brief post that backs up previous posts on PV prices ticking up as the market stabilizes. This link
is about GTM's near term PV price predictions. GTM publishes market research on the PV business. They are usually bullish and over optimistic.
This is good news for the PV business, as it means that it is finally getting to a more healthy footing after several years of disarray. This is mostly because China decided to support it's PV investments by subsidizing local demand within China. It will be interesting to see how far this goes, and also it will be interesting to see how long the recent surge in Japan lasts, now that they are adopting far more limited and realistically achievable CO2 emissions reduction goals.
The deeper reality is that PV panels at these prices produce electricity that is still too expensive without subsidy in almost all markets. What is called grid parity for rooftop solar is now achievable in a few markets, but this is only because retail electricity is an overpriced monopoly in those markets.
Solar with current subsidy levels is a stable business, but its not likely to grow to a size that will have an impact on CO2 emissions reduction. Hopefully the failure of over optimistic projections of PV price reductions based on short term extrapolations will sober up the eternal optimists and get some sense back into discussions of viable and realistic ways to reduce CO2 emissions. I doubt it.
Published By Edmund Kelly
Itâs a while since I discussed the topic of subsidies
. Itâs a difficult topic to understand, and usually provokes defensive reactions from solar energy supporters.
This recent interview
with Shyam Mehta,
a GTM PV researcher provides good current information and perspective on the PV business.
As can be seen from the chart, there were dramatic changes in the composition of PV demand from 2012 to 2013 but no overall growth in volume or revenue. Basically the PV demand went to markets where there were new or growing subsidies and left markets where subsidies declined. Overall, China probably adjusted its subsidies upward mostly to ensure their PV industry survived the drop in European demand driven by the drop in European subsidies.
This is not a well behaved or predictable market. The predictions are totally dependant on predicting subsidies. The GTM forecast is predicting that Europe will regain an appetite for increased subsidies in 2015 and beyond. Its hard to know what the basis for this is. The predicted growth in the US is based on the subsidies that are in place remaining until they diminish in 2016, when US demand is predicted to drop about 50%.
The biggest unknown is Asia. Japanâs commitment to expanding PV seems pretty solid at least for a few years. Chinaâs demand is hard to predict. If it mostly depends on propping up the local PV business they donât have much need to increase demand substantially going forward. Overall it seems a bit optimistic to be predicting an average 20% PV market growth over each of the next two years.
Long term, subsidies would be required to grow substantially to maintain a 20% growth rate, which could see prices halve by about 2025, and the cost of subsidies leveling off.
A rough estimate of the PV market in 2013 is 30GW, worth about $90B of which $50B is subsidies. If PV prices have stabilized, growth of 20%/y implies growth in subsidies to around $100B in 2017.
For the US the 2013 PV numbers are about 4GW installed, worth about $12B, of which about $7B is subsidies. The projected growth implies about $14B in PV subsidies by 2016. Thatâs about the entire alternative energy subsidies in 2013, so it will be noticed.
What is the appetite for subsidies? The US spent about $150B from 2008 to 2013, or $30B/y. A lot of that was ARRA one time expenditures. 2014 subsidies are projected to total about $12B. Solar is taking more of the pie. The current US congress would not be predicted to increase alternative energy subsidies, and could easily cut them.
This is all rather long winded, but the bottom line is the PV market size is completely defined by subsidies and projecting PV growth means realistically projecting increased subsidies. Given the pain level associated with todayâs subsidy levels, (witness Germanys's pullback) its difficult to see significant increases in world total subsidies to the level necessary to sustain substantial PV growth.
By Edmund Kelly
I have written previous posts pointing out the benefits of StratoSolar for Japan and the UK, two very densely populated countries with few indigenous energy sources and a desire for clean energy.
Though China is not as committed to clean energy the potential benefits of StratoSolar for China seem even more compelling, though for different reasons.
In general, solar and other renewables solve three problems:
1) Fossil fuels are a finite resource.
2) Burning fossil fuels damages the environment and is causing climate change.
3) Energy security. Dependence on imported energy threatens national and economic security.
Interestingly, for the US, none of these problems are currently regarded as particularly serious, and the environmental argument 2) is the only one propping up alternative energy.
China is the inverse of the US. For China 1) and 3) are already a problem today, and at Chinaâs rapid rate of economic growth the problem is only getting worse. China is now the worldâs biggest oil importer, but its oil consumption is set to a least triple by 2040, 75% of which will be imports. This puts the Chinese economy at huge risk from oil price volatility and/or supply constraints. China has a lot of coal so coal is not in as precarious a situation, but China currently imports a lot of coal from Indonesia and Australia.
An unlimited local source of cheap energy solves these problems. Not only does it remove the resource and security problem, it also potentially provides an economic competitive advantage. China has leveraged cheap coal energy into dominance of energy intensive industries like steel, aluminum and chemicals. If StratoSolar provides cheaper energy it can continue that strategy, with the added benefit of no pollution. It also puts China in a leadership position in a technology of world significance. Following the PV cost reduction path and investing in fuel synthesis technology could cement and enhance this leadership position.
A quick short term benefit is StratoSolar deployment in China would help some specific industries that China has overbuilt; aluminum and PV silicon. StratoSolar systems consume a lot of aluminum for the structure, and clearly use PV panels. StratoSolar systems deployed on a large scale would rapidly become the worldâs biggest aluminum and PV consumer.
Food for thought.
By Edmund Kelly
I have updated the web site main page
to show graphs illustrating the extra solar energy available at 20km altitude. The visual comparison seems to be more compelling and revealing than simply quoting numbers.
NASA has provided a convenient SSE database covering daily ground level solar insolation for the entire planet based on satellite data gathered over 20 years. Using this data and a model for solar insolation at 20km we show comparisons for significant urban locations at latitudes from 23 to 60 north. StratoSolar insolation is just a little less than top of atmosphere insolation which is widely available data, (including in SSE) and a convenient check on the StratoSolar estimates.
A perusal of these charts shows how large and consistent the benefit of StratoSolar is. Desert level insolation is commonly used to optimistically represent solar, but the combination of a desert and a large urban area is rare, and the cost of long distance transmission offsets any benefit. California does not appreciate how lucky it is in this respect. North Africa, the Middle East and Australia are about it. An optimistic world average for ground PV utilization is 15%.
The chart accompanying the graphs condenses the visual solar insolation into numbers and also provides the equivalent utilizations which are useful for estimating actual power from a given PV nameplate power.
By Edmund Kelly
Click for larger image
Most approaches to improving PV focus on reducing the cost and increasing the efficiency. StratoSolar instead, is based on exploiting a more solar rich environment. A comparison with two other approaches that try to exploit more solar rich environments may better help in understanding StratoSolar. The two other approaches are to exploit the sunshine in deserts and sunshine in outer space. Both have been investigated extensively and are sufficiently plausible to have received significant funding. The most notable desert project is DESERTEC, which aims to exploit sunshine in North Africa and transmit the electricity to Europe. Space based solar power (SBSP) was researched heavily by the DOE in the seventies, and revisited by NASA in the late nineties. A SBSP start-up company called Solaren obtained a PPA in 2012 from PG&E in California to deliver power in 2016.
In the DESERTEC case, the average PV utilization in North Africa is about 25% versus the average of less than 15% for the whole of Europe. The benefit is less than a factor of two overall. Offset against the benefit is the cost of High Voltage(HV) transmission over an average distance of 2000km. Given that this transmission is tied to the generation, its relatively easy to calculate the transmission cost. At todayâs PV costs HV transmission about matches the cost of generation. Transmission cost should reduce when HVDC transmission develops, but PV will also reduce in cost, so the ratio may not change much. DESERTEC wants to exploit Concentrated Solar Power(CSP) but CSP prices are high and not falling, so that may not work out.
For Space based power, the advantage is constant almost 24/7/365 power. Measured using the ground based PV metrics, SBSP has a utilization of 130%, due to the higher intensity sunshine in space. Offset against this is the expected 50% loss in microwave conversion, transmission and receiving which could be regarded as reducing utilization to 65%. PV efficiency would be higher at a colder operating temperature. PV panel lifetimes in space are short due to damage from cosmic rays. There would be advantages to a CSP solution in space, but the complexity is significantly higher than PV. The big problem with SBSP is the very high cost of launching the material into space, and then the assembly and maintenance costs in space.
StratoSolar can be viewed as an intermediate point between desert power and space power. Because of night-time interruption, its average utilization is around 40%, and can exceed 50% with one axis tracking. This is higher than the desert, but lower than space. Its transmission costs are low, 20km straight down versus 2000km from the desert or 35,786km via microwaves from GEO. Its equivalent of launch costs is gas bags full of Hydrogen which are very low cost. In the Stratosphere there is no weather or dust, very nearly like outer space, but there is still enough atmosphere to protect PV from cosmic rays, so without ground based weathering degradation or space based degradation, panels may have very long lives, exceeding thirty years. StratoSolar, unlike the desert, does not need water for washing or cooling, which adds to its major benefit over the desert in that it is situated near the demand for energy with few restrictions on where it can be situated.
So when viewed against deserts and space, both of which have received considerable attention, despite significant problems, perhaps StratoSolar can be seen as a possible contender from science fact, and not something from science fiction.
By Edmund Kelly
I have produced a short video that introduces StratoSolar as a possible solution to the looming CO2 climate crunch. Awareness of the problem is growing and some action is occurring, particularly in China. However, action on a scale necessary to solve the problem is not occurring, and as the video explains is very unlikely to occur with todayâs technologies or politics.
By Edmund Kelly
A simple question is why can’t ground PV do the same thing as the StratoSolar scenario? The simple answer is it is too expensive and it won’t get cheap enough anytime soon. The sharp drop in PV prices over the last few years have stopped, and there is no rational basis for them to fall further for a long time. A good thing about the recent price drops is it has raised awareness of PV and its potential for further improvement. A bad thing is it has created over optimistic and unrealistic assessments of PV’s chance to be a significant energy provider in the short term.
In the end, energy is all about politics and economics. StratoSolar PV panels have an average utilization of 40%. Ground PV panels have an average utilization of about 13%. Based on a simple analysis, ground PV electricity costs three times as much, and importantly this is significantly more than electricity costs today. That means that it can only be sold with the help of subsidies. As Germany has demonstrated, profitability drives investment. By providing subsidies that guaranteed profitable investment, German private industry jumped at the opportunity and installations grew very rapidly. Japan and China are following Germany’s lead.
But things are actually worse than this. Its always tempting measure solar with the best utilization from sunny places, but unfortunately with solar its all about geography. There are very few places with good solar near population centers. Southern California is a rare example.
Take Germany as a more representative example. PV utilization in Germany is around 11% from the published data. Germany could do a deal with a sunny location and build HV transmission lines to transport the power. This has numerous problems. On purely money terms, as panels have reduced in cost, and transmission lines have not, its likely that the better PV utilization in the desert will not cover the HV transmission costs. Don’t forget that the transmission lines will have the low PV utilization, which more than doubles the cost compared to conventional HV transmission lines. On top of this are the political constraints. HV transmission lines are not liked, and the countries where the panels and HV transmission lines are placed may not be the most politically stable.
Even in the US, politics and economics will favor New York, for example, building in New York rather than dealing with getting power from New Mexico via transmission lines through many states. What this means is that ground PV discriminates, and northern climes get to pay twice as much, or more for electricity. Economics will also dictate that southern climes will get most of the synthetic fuel business.
Because of the lower utilization, ground PV electricity will always cost 3X StratoSolar electricity. This factor makes StratoSolar economic for electricity, and then fuels long before ground PV. The learning curve is good but not that good. The learning curve will not continue for ever, and when it slows it will create a permanent cost barrier that ground PV will never overcome.
StratoSolar is far less variable with geography, so Germany or New York, for example could provide all their energy needs, both electricity and fuel, locally.
So to summarize, ground PV is too far from viability today, and too variable with geography to ever be an easy political choice. StratoSolar is viable today, and does not discriminate against geography. The StratoSolar capital investment for both PV plants and synthetic fuel plants will average a sustainable $0.6T/year, in line with current world energy investment. $2T/year capital investment for ground PV is a lot harder to imagine.
By Edmund Kelly
The following describes a StratoSolar deployment. The key point this illustrates is the simplicity. This is not an "all of the above strategy" with lots of moving parts and government interventions to subsidize or tax various market participants. The impact on land and existing infrastructure is indirect, and not an impediment to deployment. China in particular could adopt this strategy and replace coal without penalizing GDP growth.
This shows that meeting the 450ppm CO2 goal in a realistic time frame with a realistic cost is feasible. Ground PV is still too expensive and will always be a factor of two to three behind in cost. The political costs and delays of land use and grid upgrades will further limit the scope and time frames of what is achievable. The key enabler is economic viability without subsidy.
StratoSolar deployment sequence:
Step 1) Deploy StratoSolar initially at $1.50/Wp, $0.06/kWh. This is profitable in most markets and volume growth is not constrained by amount or availability of subsidy.
Step 2) After about 25GWp of cumulative production, StratoSolar initial learning curve takes costs down to $1.00/Wp, $0.04/kWh.
Step 3) Start deploying electrolysers costing $0.50/W making hydrogen for $3.00/kg. This provides fuel for nighttime and winter electricity generation for $0.08/kWh and starts an electrolyser learning curve that will reduce the $/W electlolyser cost.
Step 4) Continue deploying StratoSolar to 1TWP cumulative capacity. Costs reduce to $0.50/Wp, $0.02/kWh. Electrolysers reduce to $0.20/W, Hydrogen reduces to $1.25/kg, nighttime electricity reduces to $0.04/kWh.
Step 5) Start liquid fuel synthesis using hydrogen and CO2. Synthetic gasoline costs $3.00/gallon. This starts a learning curve for fuel synthesis plants.
Step 6) By the 10TWp cumulative deployment point costs are down to $0.25/Wp, $0.01/kWh, $0.60/kg for Hydrogen, and synthetic gasoline costs $1.00/gallon.
This does not discuss time frames. These will depend on time to acceptance. The cumulative TWp needed to replace all world energy demand projected for 2045 is around 80TWp. The two time alligned graphs below illustrate a yearly StratoSolar goal of replacing 3% of world energy demand. Yearly StratoSolar production would need to ramp fairly quickly to 1.5TWp by 2020 and then increase slowly to about 2.5TWp by 2045 to meet increasing world energy demand. 3% is pretty aggressive, but not excessive and aligns with a 30 year plant life.
Yearly world investment never exceeds $1T/y, as costs fall with cumulative installed capacity. For reference current world energy is about 8% of GDP, or about $6T/y. The 3%/year replacement scenario shown in the graph replaces about 80% of world energy with StratoSolar by 2050 with the remaining energy coming from the current projections for nuclear, hydro and other renewables.
The CO2 emissions reduction chart below shows the CO2 reduction associated with this StratoSolar deployment scenario. We show a simple sequence with coal being replaced first, then oil, and finally gas. The reality would be along these lines but with less distinct transitions. Coal is the obvious first target as the biggest and dirtiest emitter and the easiest to replace with electricity. Oil is next as its high cost make it the easiest to replace with cost competitive synthetic fuels. Natural gas is last because it is the logical partner to solar, it’s the cleanest, and its low cost keeps it cost competitive for longer. The most striking aspect of the graph is the illustration of the scale of CO2 emissions saved.
Cumulative CO2 emissions between 2005 and 2043 are 1,800Gt with business as usual versus 820Gt with StratoSolar. By 2043 CO2 emissions could be zero, whereas business as usual is pumping out over 50Gt/year . 820Gt is well within the 450ppm CO2 goal of 1,700Gt.
Sources: History: U.S. Energy Information Administration (EIA), International Energy Statistics database
(as of March2011), website www.eia.gov/ies; and International Energy Agency,
Balances of OECD and NonOECD Statistics (2010),website www.iea.org (subscription site).
Projections: EIA, Annual Energy Outlook 2011, DOE/EIA0383(2011) (Washington, DC:May 2011);
AEO2011 National Energy Modeling System, run REF2011.D020911A, website www.eia.gov/aeo,
and World Energy.
By Edmund Kelly
in Renewables Energy Focus magazine provides more details on the state of the PV market as companies report their earnings. SPV Market Research puts the PV panel market in 2012 at 25GWp and $20B. Panel maker losses exceed $4B. This comes as Suntech the number six PV panel manufacturer declares bankruptcy.
2013 is not shaping up as much better than 2012. Major shifts in regional demand are underway, driven by where the subsidies are growing or declining. European demand is shrinking with reduced subsidy, but China has a profitable FIT and a goal of 10GW, and the generous FIT in Japan is projected to see 6GW installed. The Japanese growth will be met by Japanese panel makers despite their lack of market competitiveness, which may not help the PV business generally. Current panel prices combined with subsidies are also driving growth in the US(primarily California), which may see 5GW installed in 2013. The story is the same everywhere. Subsidies drive the market, and their amount determines the market size. The overall PV market is not likely to grow significantly in 2013 over 2012.
As prices stabilize, and even rise a bit to restore profitability, the historical learning curve of PV panel price versus cumulative volume is still holding up very well. This is important to understand as it establishes the realistic fundamentals that should drive expectations for what can be achieved by PV. There has been a tendency to take an optimistic view of PV competitiveness based on extrapolating short term trends, or localized successes (like Germany) driven by large subsidies. PV has made great strides, but is still only competitive with a large subsidy in normal geography, or with a smaller subsidy in a sunny geography like California. The historical learning curve will take many years of current production rates to get PV panel prices down to competitive levels.
To put things in perspective, PV on a world average has less than a 15% utilization. StratoSolar is 40% utilization on average. For ground PV panels to match StratoSolar, prices will have to more than halve from current levels to about $0.30/Watt. This will take a long time, perhaps decades. Itâs a catch 22 for ground PV. Prices will only fall with volume, but volume will only happen with lower prices.
StratoSolar competitive energy pricing has the potential to fundamentally change the energy market by driving PV volume installation now.
By Edmund Kelly
Analysis of the PV market in 2012 have continued to roll in. They vary considerably in their estimates of PV capacity installed, several estimating capacity installed exceeded 30GWp. A recent report from NPD Solarbuzz was less optimistic.
According to the market research firm, PV demand in 2012 reached 29GW, up only 5% from 27.7 GW in 2011. Notably, the growth figure is the lowest and the first time in a decade that year-over-year market growth was below 10%..âDuring most of 2012, and also at the start of 2013, many in the PV industry were hoping that final PV demand figures for 2012 would exceed the 30GW level,â explained Michael Barker, Senior Analyst at NPD Solarbuzz..âEstimates during 2012 often exceeded 35GW as PV companies looked for positive signs that the supply/demand imbalance was being corrected and profit levels would be restored quickly. Ultimately, PV demand during 2012 fell well short of the 30GW mark.â
As usual, the industry and analyst projections going forward are for things to improve dramatically. A more sober analysis would say that the market will continue its painful restructuring with slow to modest growth. The analyses tend to focus on GW installed but a look at the dollar numbers is more revealing of the state of the industry and its likely future.
This graph shows a simple analysis of relevant dollar numbers rather than GW installed numbers for 2010, 2011,2012 and an estimate for 2013 based on a forecast of an increase of 20% in GW installed, which may be optimistic.
The Total line shows the total world dollars spent on PV systems, which includes PV panels and Bulk of Systems (BOS). This line has been relatively constant at between $50B and $60B. Over this timeframe the combined reduction in panel and BOS costs has offset the decline in subsidy.
The panel line shows that revenue to PV panel makers has been declining significantly. The increase in GW has not offset the fall in PV panel prices, and the revenue decline will continue in 2013.
As is known the PV panel business has a capacity to produce about 60GW/year, but demand is about 30GW/year. This has led to severe industry restructuring and low panel prices that in many cases are below the cost of production. There is no new investment in capacity, so the current panel prices are unlikely to fall significantly if most manufacturers are already losing money.
The subsidy line shows an estimate of the amount of total world subsidy. This, as is well known has been declining, but the decline has been dramatic. Germany alone pumped in over $100B over 2009-2011, but is now well below $10B/year. China has stepped in energetically, and there is support in Japan and the US, but it still only adds up to half of what Europe used to support, and the overall subsidy amount continues to decline.
The PV business is still driven by subsidies. They have declined from about 60% to about 40% of the business, but are still necessary, as current PV systems do not make electricity at competitive costs despite the dramatic PV panel price decline. The overall net effect of panel price declines and subsidy declines has been a market with fairly constant overall revenue.
If worldwide subsidies increased that would drive growth which would use up the excess panel manufacturing capacity which would lead to profit and investment in new more efficient capacity and panel price declines that would reduce the need for subsidy. If subsidies continue to decrease, there is little room for PV-panel prices to decline further, and so the overall business will shrink. None of this is coordinated at a world level, so it could go either way. The prospects for increased subsidies overall worldwide seems low, given the current economic focus on austerity in Europe and the US.
This has been a long article to get to the simple conclusion that the PV business is unlikely to grow dramatically in the near future and current PV panel prices are likely to prevail for at least several years. Also, optimistic projections for PV panel price reductions based on projecting the recent dramatic drop forward are not realistic, and estimates based on the historical long term trend are likely to prove more accurate.
PV at around 30GW/year installation is a tiny fraction of world electricity generation (5000TW), never mind world total energy. The only way to get a dramatic growth in PV is to either get PV to produce electricity at a cost that generates sufficient profit to attract private investment, or massively increase world subsidies. StratoSolar offers the profitable investment path. Our current design if deployed today with current PV cells would generate electricity for $0.06/kWh with very conservative platform cost estimating. This is profitable without subsidy in almost all markets.
By Edmund Kelly