| SOLAR ENERGY – A
GLOBAL OVERVIEW Available Energy There is no shortage of solar energy. Every day, the sun radiates 3,000 times more energy onto the Earth’s surface than we use (96,000 versus 321 terawatt hours). The delay in realizing the solar revolution is the cost. In the mid-1970s, photovoltaic modules cost $70/watt. Today, because of improvements in efficiency and the benefits of larger-scale production, they cost $3.50/watt. To compete with conventional electricity, they need to sell for $1/watt (7 cents/kWh). When this happens, there will be an explosion in the production and use of solar energy around the world. Solar energy is clean, produces no CO2 emissions, and once installed, the energy is free. Solar Technologies
Market Progress Driven by government policies, falling prices, concerns about climate change, and consumer demand, global solar production is expanding by 35 - 40% a year. (1999 – 201 MW; 2000 – 288 MW; 2001 – 391 MW). Japan is the unquestioned leader, with strong government policies and support, and a national target of 5,000 MW by 2010. Switzerland has the highest amount of solar per capita, followed by Japan, Australia, Norway, Germany and Holland. Globally, solar represents less than 0.1% of the world’s primary energy supply, but once the price becomes competitive, the potential will be enormous.
The Solar Players The five main players are Sharp, Kyocera, BP Solar, Shell Solar, and Astropower. Sharp has just built the world’s largest multi-crystal silicon plant in Japan, aiming produce 200 MW of solar cells by the end of 2002 (20% of the world’s demand). According to a 1998 study by KPMG, commissioned by Greenpeace, a factory that is able to produce 500 MW a year will be able to reduce the price to $1/watt because of efficiencies of scale, opening up a potential market of 160 million households (320,000 MW, or 320 GW, if each household bought a 2 kW system). For thin-film solar cells, the per-factory volume needs to hit 100 MW a year to compete with conventional energy. United Solar (USA) has just opened the world’s largest thin-film amorphous PV plant in Rochester Hills, Minnesota, which is able to roll out 30 MW of solar film a year. Solar Finances The price of solar energy is determined by the cost of the solar modules and the accompanying equipment (a 50:50 split), the interest paid on the capital, and the amount of sunshine received, calculated over an assumed life of 20 years. A typical 2 kW rooftop system costs $16,000 ($8/watt). In a hot sunny climate averaging 5.5 hours of sunshine a day, with a 5% interest rate, the price of solar is around 30 cents/kWh. If electricity costs 20 cents/kWh, the payback period is 30 years. If electricity costs 10 cents/kWh, the payback is 60 years. The perfect combination is a high price of electricity (eg Japan) and a low price for solar (by developing a mass market). When solar falls to $1/watt and electricity costs 20 cents/kWh, the payback will fall to 7 years. Jobs and Economic Development According to a study by the US-based Renewable Energy Policy Project, the installation of solar PV systems can create seven times more jobs that windfarms – 35.5 person-years per MW. For every million dollars invested in solar electricity, between 5 and 15 jobs are created, compared to 1.5 jobs in oil and gas exploration. In 2000, the City of Chicago, ComEd, the local power utility, BP Solar and the state of Illinois struck a deal with Spire Solar Chicago, a PV manufacturing facility, whereby the City and ComEd would buy $8 million worth of solar systems for installation over 3 years, and Spire Solar Chicago would establish a PV production and assembly business in Chicago to produce 3 MW of solar panels a year, generating 10 million kWh of electricity and displacing 12,500 tons of CO2 per year. Government Policies In Japan, the government has established a strong research program and a "70,000 solar roofs" incentive program. Their intention is to build a self-supporting market with mass production by 2005, flood the global market with cheap solar product, and force other competitors out. With Sharp’s new 200 MW factory, they appear to be on target for solar modules that sell for $2 or $1/watt by 2005. The US solar industry has produced a solar roadmap which seeks to reduce the cost of modules to $3/watt by 2010, and $1.50 by 2020 (too late for the Japanese solar assault). The most effective policies include (a) production incentives, such as Germany’s guarantee of 48 cents/kWh to solar producers, falling by 5% per year; (b) net metering, which ensures that a customer can sell surplus solar energy on hot summer afternoons back to the grid for a fair price; (c) "renewables portfolio standards", by which governments require utilities to produce a set amount of energy from renewables (eg Arizona’s 1% from solar by 2002), (d) rebates and buy-downs, such as Japan’s 70,000 Roofs program, and Los Angeles $5/watt rebate (financed by a "Public Benefit Charge" on all utility bills); (e) subsidized loans, and (f) tax credits and incentives. In San Francisco, following a successful public campaign and referendum, the city borrowed $100 million in solar bonds to finance the installation of 12 MW of solar on public buildings, which will pay for itself out of the saved cost of not installing a new power plant, costing taxpayers nothing. A May 2001 Gallup poll found that 91% of Americans supported investments in new sources of energy such as solar, wind and fuel cells, while only 6% were opposed. Solar in the UK Solar activity is still small in the UK, averaging 1 MW a year. In May 2001, a government programme of solar grants was announced covering up to 50% of the installed cost of a domestic solar system, 65% of a public installation and 40% of a commercial solar system, with £20 million available until 2005. The government hopes to see solar panels on 100,000 homes, and has also launched a Large Scale Building Trial of photovoltaic systems, with £3m to finance 12-15 building-integrated solar installations larger than 20 kW on public and private buildings. Solar in Developing Nations Around the world, 400 million households people live without electricity, obtaining their evening light from kerosene lanterns or batteries. Where microcredit schemes exist, the cost of purchasing a small 50 watt solar panel is the same as kerosene, and the US-based Solar Electric Light Fund works in many countries to encourage their installation. India is the third largest producer of solar cells after Japan and the US, and had installed 500,000 small solar systems (58 MW) by 2000. The Future In 2001, the world’s total solar production represented around 0.04% of global power generation. The critical price breakthrough that will trigger the worldwide solar revolution is only 3-5 years away, however, if Japan’s success continues. Progress could be accelerated if the world’s nations agreed to form a global solar compact, speeding up the growth in demand in order to hasten the fall in price. The implications of solar energy selling at a competitive price within a very few years will be very profound, and ought to be considered by every government and economic development agency. Some Useful Organizations:
Written by Guy Dauncey, Victoria, B.C., Canada, author of "Stormy Weather: 101 Solutions to Global Climate Change" (New Society Publishers, July 2001, distributed in the UK by Jon Carpenter Books, Oxford). www.earthfuture.com July, 2002 |
