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
The non-fossil energy from current nuclear, wind and solar are failing and will continue to fail in reducing CO2 emissions. This is borne out by all credible projections by the EIA, IEA world bank and others. Optimists in all current non-fossil energy camps rationalize why these projections are wrong, but my assessment agrees with the objective observers.
Too much of alternative energy is wishful thinking. No current choice is economically viable so the common reasoning is to pick one and argue it will get better if we support it wholeheartedly, and by implication reject the other alternatives. This makes for a polarized debate that goes nowhere.
Currently the US spends about $12B/y on green energy. With current politics its hard to see this amount growing. This amount of subsidy will support wind, solar and bio at slow growth rates if they get cheaper. This is the acceptable amount of subsidy that balances the current political realities. Realistically the subsidy level is more likely to fall, with the wind PTC on a yearly cliff and the solar ITC expiring in 2016.
Energy is too big a part of the economy with too many powerful entrenched interests for government to afford the subsidies or fight the battles necessary for any meaningful impact based on currently available technologies.
Current economic and political realities make it clear that economically viable clean energy that does not need subsidy is the only way to grow clean energy.
My point is not that we should stop supporting current non fossil fuel alternatives. What we do need to do is to invest intelligently in new non fossil technologies that might have the potential to succeed. While the debate centers on in fighting between the current alternatives, and a search for more taxes and subsidies to prop them up, a real debate on how to grow the pool of options cannot start. The air has been pulled from the room.
A new approach to fund power plant development (rather than basic research) is needed. A model I like is SPACEX. This is essentially a government funded system level startup that is succeeding. Rather than the cost plus model of government contractors, this was essentially funded with fixed priced contracts for tangible results. Unfortunately the DOE has not learned from NASA's experience, and even if it had, entrenched fossil fuel interests ensure that Congress will block any attempts at reform.
A stepped funding model that offered initially small funding for tangible results, with more funding as viability is demonstrated would allow a range of new ideas to be tested cheaply. There are currently a handful of fusion energy and advanced sustainable safe nuclear companies that could benefit from investments in the $10M/y to $100M/y range. There are some crazy wind and solar alternatives that might succeed. Were they to demonstrate they were on a path to viability, larger funding for the few that make it would be forthcoming. A yearly budget of $10B could fund dozens of new system level energy companies. The key would be to avoid long term subsidies for boondoggles. The $10B/y is just a swag. Less could easily accomplish a lot, and it all does not have to come from the US.
By Edmund Kelly
Trina Solar is the number three PV module manufacturer. This is a Trina graph from a July 2013 conference presentation. This shows the historical 1975-2012 module price history, and Trina's price projection going forward. The various annotations are very informative. The key point is they see module prices staying flat at around $0.70/Wp out until 2019 or 2020. They also see the historical 20% learning rate holding up as the best long term price predictor.
The Trina assessment is realistic, given the need for module manufacturers to restore some profitability. Until this happens they will be unable to attract investment in any significant new more efficient capacity. Long periods of price stability have been a feature of the PV module business. The most recent was the 2000 to 2008 period annotated as "Silicon Feedstock Supply" when a cartel kept polysilicon prices stable at around $400/kg and made huge profits. Polysilicon is now under $20/kg.
There are still optimistic PV module price reduction forecasts from Bloomberg, Citibank and PV analysts like NPD Solarbuzz and EPRI, but there seems to be no basis for these assessments other than projecting short term trends foreword without regard for underlying industry fundamentals. Manufacturing costs are continuing to slowly reduce, but the benefits will go to restoring realistic margins from today's unsustainable zero margins. This margin restoration is being enabled by the restoration of a balance between supply and demand as companies like Suntech go under and the Chinese government has stepped in to back stop the industry and cover for the massive reduction in European demand.
System costs have room to reduce, especially in residential and commercial markets where soft costs are high. Utility scale PV in the US is below $2/Wp, but with modules firming up at around $0.70/Wp, total utility system costs won't make it below $1.50/Wp for a long time. This is still not competitive without subsidy in the sunniest markets. This means that the market size will still be determined by the scale of subsidies which will have to grow substantially by 2020 to match the projected 30%/year growth rate and 1TWp cumulative installed capacity implied by Trina's graph.
All this means that Solar PV is not going to be a significant contributor to global energy for a long time. If this were understood it might encourage investigation of alternatives rather than continued wishful thinking.
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
Generally the world PV market in 2013 seems to be playing out according to our early expectations, as covered by this report http://mercomcapital.com/global-solar-forecast-a-brighter-outlook-for-global-pv-installations1
Europe is diminishing while China and Japan are aggressively growing their domestic consumption. China in particular has decided to support its PV industry, while looking good politically on the green front for a relatively small investment. Japan's generous FIT subsidy has increased their demand substantially. Overall the effect is to keep world demand at a pretty constant level of around 30-35GWp while prices stabilize and the industry restructures down from it's overbuilt 60GWp capacity. In the US, the fall in PV prices to around $0.70/Wp together with the existing subsidies has made PV projects profitable in sunny locations. This has produced some reasonable market growth, though many projects based on expectations of prices falling lower have been cancelled. US subsidies may not last as the Investment Tax Credit (ITC) will reduce significantly in 2016 unless there is significant change in Congress.
Prices will probably stay at this level or higher for several years as industry profitability is restored. It is hard to see a rapid growth in PV volume or prices reducing for several years from this price level and world subsidy regime, though there are several optimistic market boosters forecasting robust PV growth. http://reneweconomy.com.au/2013/deutsche-bank-says-us-solar-boom-to-reach-50gw-by-2016-18298
Citigroup and Bloomberg are equally optimistic.
On the overall energy front the US seems committed to increasing natural gas and reducing coal consumption. Nuclear is dying a natural death from high costs and competition from natural gas as some existing plants are closed and new construction projects are cancelled. Solar and wind seem like minor sideshows as the country looks forward to energy independence as the worlds biggest oil producer. Concern about CO2 emissions seems to be yesterdays problem.
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
The StratoSolar concept is usually greeted with a high degree of skepticism. The obvious way to answer this skepticism is to build it and demonstrate that the system works reliably and delivers low cost electricity. This creates a catch 22 situation: It is necessary to raise money to demonstrate viability. However, without a demonstration of viability it is impossible to raise money.
Independent investors like venture capital or private equity are unable and unwilling to quantify the risks of something that appears so different. Despite the view that venture capital invests in risky things, the reality is that they are mostly herd followers, and wonât touch anything that has un-quantified risk.
The financing problem is further compounded by the fact that there are no general energy companies that have R&D budgets to fund energy as a general category. The energy field is isolated factions, each only concerned with their own business and wary of competition. Oil and gas, coal, nuclear, wind, solar and bio-fuel are separate islands. They raise capital individually and spend it exclusively on their sector. Oil and gas have the most money to invest, but they see exploration as their R&D and other sectors as competitors.
In theory, government should see a big energy picture, but in practice democratic governments treat energy as multiple separate political constituencies and funds flow separately to each sector. The only government funded sector that treats energy somewhat broadly is research, so peer reviewed science projects get some relatively small R&D funding. This funding flows through pretty rigid highly regulated channels within academia and the national labs. The current US system provides no funding channel for possible new power system level entrants.
Compounding this difficult funding landscape is the polarization of public opinion. People are drawn into camps. Environmentalists see current wind, solar and bio-fuels as the solution and any new contender as a devious plot to undermine their support and delay or stop dealing with the climate problem. Those who think wind and solar are impractical and favor nuclear only want nuclear. Those who donât accept climate change or donât want the government involved favor burning fossil fuels. This polarization of society is reflected in possible investors, most of whom fall into one of these polarized camps. This makes it hard for anything new to get consideration.
In pursuing investment we have gradually evolved an approach that uses engineering ingenuity to reduce the cost of the first step that proves viability. This is in the hope that a smaller investment enlarges the potential initial investor pool. This is based on the expectation that seeing is believing and that crossing the divide to a minimal functioning system will give confidence to larger high risk investors attracted by potential for very large profit.
Our other approach is to try and provide data and insight, mostly via the web site and blog, that can help reduce the general impression of science fiction by explaining the concept in more detail and with more context. This unfortunately only works for those willing to make a significant effort, and is a pretty hard sell.
Overall raising money for this venture has proven to be a far more complex problem than the actual technical design.
By Edmund Kelly
All approaches to eliminating CO2 emissions rely on a transition to a predominately electricity based energy system. We have EIA projections for energy demand in 2050, so it is possible to model different fossil fuel free energy systems that meet this energy demand. This is not an attempt to predict how the future will unfold, but by showing all the pieces and their relationships it helps in understanding the impact of various technologies on the overall system.
Today there is no significant electricity storage, and fuel synthesis from electricity is equally insignificant. The need to handle intermittent energy sources, and the need to provide liquid fuel for transportation mean that both technologies are necessary at significant scale by 2050 if fossil fuels are to be replaced. The relative cost of energy from each and the sector energy efficiency and demand for either fuel or electricity will determine the relative size of storage and synthesis.
The range of possible outcomes is large and dependent on too many variables to predict. We only show centralized large scale storage but distributed storage at the destination, like batteries in transportation, residential or commercial sectors will also affect the balance of demand between fuel and electricity.
Fuel synthesis and electricity storage only exist today as small research prototype systems. Alternative energy is too expensive, and synthesis and storage add considerable expense on top of the cost of energy they take in, so there is no economic incentive to invest in either.
The fundamental enabler for storage and synthesis is cheap electricity. Today we make electricity from fossil fuel. An electricity economy inverts this and makes synthetic fuel from electricity. If the synthetic fuel has to compete with fossil fuel, it needs to be cheaper. This means electricity has to be very cheap. Todayâs $4.00/gal gasoline is $0.10/kWh. The cost of electricity plus the cost of paying for the synthesis plant have to at least match this. If StratoSolar electricity costs $0.06/kWh initially, that leaves $0.04/kWh to pay for synthesis and conversion energy losses. Thatâs about $0.80/Wp capital cost. That capital cost is a stretch for mature fuel synthesis but is not possible with todayâs technology. Investing in these technologies at the scale necessary for the decade or so needed will only happen when it is clear that electricity is cheap and will get cheaper.
So the clean energy cost target is not competing with todayâs electricity, but being considerably cheaper. Wind and solar are about a factor of two too expensive to compete with electricity in favorable markets today. That makes them four to six times too expensive to compete with fossil fuels using synthetic fuels.
Sankey diagrams are very useful for visualizing energy systems. They simultaneously show the elements of a system and their interconnectedness, along with a quantative representation of the magnitudes of the elements and the energy flows between them.
Here are sankey diagrams for two possible StratoSolar driven energy scenarios that satisfy the projected energy demand in 2050. The first scenario assumes that the sectors consume fuel and energy like they do today. The second scenario assumes that sectors adjust to consume more of the considerably cheaper electricity, and their efficiency improve because of this.
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