Rising Price of Electricity

Although rates vary from region to region, the cost of electricity is generally increasing.

Local Electricity Costs - Prometheus Institute - Source: http://www.greentechmedia.com/articles/hunting-for-the-next-hot-solar-markets-6046.html

Prior to the current global financial crisis, analysts generally accepted that the price of electricity would double in the USA by around 2015. There is no question that electricity prices will continue to rise, however there are market forces that could slow down or accelerate the rate that prices increase. However a look at the market forces that are affecting electricity demand imply that electricity price increases will accelerate over the long term.

Off the top of my head, market forces that could slow down electricity price increases:

• Downturn in manufacturing and lower industrial electricity consumption due to the financial slow down.
• Consumer demand for certain high electricity consumption will likely decrease (plasma TVs especially).
• Restricted household budgets could increase uptake of energy efficiency or reduced consumption.
• Higher per home occupancy.
• Tax credits being proposed or passed for home improvements, especially energy efficiency improvements.
• Increasing use of high efficiency lighting.

Market forces that could accelerate electricity price increases:

• Subsidies for coal and natural gas are being reconsidered by several governments, especially the Obama administration and the Government of California.
• Increased public opposition to carbon fuel sources in general, especially coal.
• Increased “Not in my back yard” (NIMBY) activism opposing coal, natural gas, nuclear and even wind developments is restricting new electricity supply.
• Pressure and incentives to re-introduce electric cars which could massively increase demand.
• Energy efficient versions of appliances tend to be higher priced, resulting in less efficient options being selected more often.
• Increased public and political will to add a cost to emitting CO2, and the current cap and trade system that the Obama administration is looking at would dramatically affect electricity supply, both by increasing costs, and in some cases, putting certain electrical supplies out of business.

These lists are far from comprehensive and likely oversimplify market forces, but in general, the things that could decelerate cost increases in electricity tend to be more temporary with less long term consequences, where as the market forces aligning to increase the cost of electricity seem to be things that will continue to effect electricity costs long term.

All of which means that the moving target of grid parity could be coming up faster than many people think.

Five Common Misconceptions about Solar Power

Solar Power

I was originally going to make this a top ten list, but when I started adding details it was too long, so I shorted it to five, and I’ll post the other five later this week.  Some of these are going to turn into full blog posts later, as I’ve left out details that matter.

Basically, there are many misconceptions about solar power floating around, and lately I’ve been hearing them repeated even in main stream media.  Solar is still a new industry, so that’s understandable, but these misconceptions will never go away unless people start addressing them.

So, without further ado, and in no particular order – five common misconceptions about solar power.

1. Solar power needs some new additional technology to be viable
   
   I talked about this somewhat in my last post about the MIT scientists and their hydrogen battery technology.  Solar power is basically a mature technology now – this is a multi-billion dollar industry with hundreds of millions in new investments pouring in every week.  The majority of that new investment is to ramp up production of existing technology, not in new research.That said, we’re developing new technology, and we’re going to have a profound impact on the CPV solar farm market as well as the BIPV market.  There’s a big space for new technology in solar, but if discoveries and new technologies stopped happening today, the solar energy market would still be thriving 50 years from now.
2. Solar power needs storage
   
   Solar power benefits from cheap, efficient storage sure, and on an industrial scale being able to control exactly when you get power is really valuable, the truth is for most users, solar power is producing peak electricity when people need it the most.  Storage would be great for all that cheap morning power that could be stored for use for a couple of hours after sunset, but the peak demand is 2 or 3PM to 7 or 8PM.  I covered this in detail in my last post and I can leave it alone for now.
3. Solar power is too expensive to be viable
   
   Right now, if you compare the average price of electricity today, to the average price of a solar power installation today, it takes between 9 and 16 years for the system to pay for itself.  As an investment it’s lousy if everything stays as it is today.  However:
   • IF the price of electricity ever goes up (it’s expected to double in the next five years) and,
   • IF the price of oil doesn’t go down and stay down, and
   • IF the electricity market’s insulation from the higher price of oil doesn’t last forever, and
   • IF any of the cost overruns on the current nuclear power projects being built continue (here in Ontario we’ve got a project that’s only a billion over budget, and compared to some of the other projects out there, we’re doing good), and
   • IF more proposed coal fired plants get blocked by locals concerned about the mercury, other toxins and of course the carbon, and finally
   • IF we ever put any kind of price, tax or disincentive on carbon emissions.

   So, in a perfect world, it’s true, solar is just too expensive. If we don’t live in a perfect world, solar’s not such a bad bet.  Of course, the fact that solar is rapidly declining in price doesn’t hurt either.

4. Grid parity is too far away, or grid parity is some specific number
   
   Grid parity is the point where generating electricity through solar power costs as much or less than the average price of generating electricity.I’ve seen people refer to grid parity like it’s some fixed number, ignoring the fact that people living next door to each other in California aren’t necessarily paying the same for their electricity.  Never mind the price difference in electricity between Seattle and San Diego or San Francisco and Cleveland.The price of electricity is variable throughout the day (highest between 2PM and 7PM) and variable depending on where you are.  So grid parity is a moving target, and since the price of electricity is going up, it’s a fun target to shoot for if you’re a solar power company.
   
   Also, remember that when solar power is producing electricity, the price is at it’s highest.  If you look at total output to average price, solar is a few years away still.  If you look at daytime output to compared to daytime electricity prices, some solar installations are at grid parity now.
5. Coal power is cheaper than Solar power
   
   Coal production in the US is so heavily subsidized in so many ways it’s frightening.  I won’t go into it here, but spend a couple of minutes at Coal-is-Dirty.com, or even just do a google image search for “Mountain top removal mining“
   
   Really, if you believe that this:

Mountain Top Removal Mine near Blair, West Virginia, original image found at: http://www.flickr.com/photos/nationalmemorialforthemountains/230179038/

and this:

A Coal Power Plant, original image from Greenpeace Public Images: http://www.greenpeace.org/raw/image_full/international/photosvideos/photos/pollutioncoalplantthailand.jpg

are cheaper than this:

Solar Panels, image licenced from Dreamstime Images.

You’re a sucker.

Ok, that’s it for now, I’ll follow up with another five later this week.

Peace.

Intersolar North America 2008 Summary – Part 1

Solar Industry

This turned into a longer post, so I’ve cut it in two.  The second part will come out tomorrow.

The organizers did an excellent job of putting together the conference, and the quality of the speakers was outstanding.  In particular, Travis Bradford of the Prometheus Institute, Hal LaFlash from PG&E and Dr. Fred Morse from Abengoa were excellent.  Some interesting take aways from the conference:

• Grid parity – It’s coming sooner than people thought, with realistic dates ranging from 2011 to 2015.  This is because:
  • The price of electricity is rising faster than expected, with the price of electricity predicted to double in the next five years.
  • And the price of solar power installations is falling faster and faster.
• Renewable Investment Tax Credit (ITC) – The ITC is really important, and it would be a major failure of leadership in the US Congress to see it die.  See my previous post on the importance of the ITC.  The consequences of a failure to renew this tax credit will mean hundreds of thousands of lost jobs in the US, electricity costing more in the long run, higher CO2 emissions and basically, solar in Europe and Asia pulling further ahead of a lagging US industry.  It will mean the difference between a booming industry and a flat one.
• Tracking - Utilities love tracking PV applications.  Tracking means more total power output for a system, but more importantly, it means more power output during the later afternoon and evening when peak demand hits.  See slide:

PV with and Without Tracking

Also, here are a couple of really good blog posts about the conference from Edgar A. Gunther, another blogger that was there.  The first features a couple of slide shows of exhibitors, and the second features extensive coverage of the Dow Corning and REC Silicon presentations including some slides and video.

More to come tomorrow.

Edit: References to the failure of the ITC were premature.

Quick Intersolar 2008 Update

Ok, going to start summarizing what I’ve learned here tomorrow and going to be posting a few things here, some of which will appear on the other blog as well.  Couple of quick notes – some that I’ll flesh out in more detail later:

• Everyone is worried that the ITC won’t get renewed or utilities will be left out.  Basically, if that happens, the solar industry in the US isn’t going to grow as explosively as people are predicting.
• The price of solar cells is falling faster than many people predicted.
• People are expecting electricity prices to double in the US in the next 5 years.
• Which means grid parity in some regions is closer than many people think.
• Most of the breakthroughs that people are really triumphing are incremental not transformative.
• The state of the art of BIPV isn’t as impressive and I’d think – it seems to be surviving as a niche on the basis of the high barriers to entry.

I’ll definitely provide more detail on all of these points and more.  Below is a very cool slide from one of the presentations about predicted growth in several solar markets.

Solar Growth by Region

I was a little surprised to see the expected market growth in Korea and Greece, although both markets have interesting challenges.  Korea’s growth is based on very aggressive government incentives and deployment, but is focused on local job creation which will prove a barrier for overseas companies. Greece’s electricity market is heavily regulated and setting up power there is a bureaucratic nightmare.

Peace and clean power!