Solar Myth 7 Expanded – Solar Doesn’t need intense sun

The “Solar Myths” page is the most linked to and most read part of this blog – most hits there than most other posts put together, and it’s the post that generates the most emails and questions.  I’ve been meaning to add a few more myths and I’ve been meaning to expand a little on some of the points that I raised.  Recently I got called on Myth #7 – Solar power needs extremely intense sun to work (solar isn’t for Canada, New York, the UK etc) as needing more explanation – the points as stated are a bit thin, so I might as well expand on that one now.

First off, my point, not well made in the original, is that the price of electricity or incentives for renewable energy are more important than “solar resource” when considering the viability of solar energy.  What they’re considering here in Ontario is a case in point – they’re instigating a progressive feed-in tariff regime which will massively incentivize home solar development, commercial development and the development of solar farms.  There are many places in North America where the same solar panels would produce slightly more or much more electricity per day, but they’ll be installed here, because the incentives are here.  Now, in Ontario, the reasons are regional and complicated – basically Toronto is inching closer and closer to a severe electricity shortage,  and they want to shut down a really horrible coal burning power station that is a national embarrassment – but at the end of the day, they need every scrap of additional power they can get their hands on.

But look at a different example – using the PVWatts Calculator default settings (4 kW Peak System, 0.77 DC to AC Derate factor, latitude fixed tilt) for Newark, New Jersey and Cedar City, Utah.  Cedar City is in southern Utah and gets much more sun on average than Newark, but look at the results:

Newark, New Jersey
State Average Cost of Electricity – $0.112/kW
kWh/m2/day – 4.46
kWh per year – 4732
Value of Energy per year – $529.98

Cedar City, Utah
State Average Cost of Electricity – $0.072/kW
kWh/m2/day – 5.95
kWh per year – 6281
Value of Energy per year – $452.23

So, even though the Utah system produces over 1500 kWh per year more, or close to 30% more power per year, the higher cost of electricity in New Jersey makes the Newark system more valuable – producing just over $75 more per year.  The variability in the cost of electricity is much bigger than the variability in the solar resource.

Average Price of Electricity by State in the US

States where electricity is expensive and sun is excellent (California) will lead solar, but the second runners will be the states with expensive electricity (or incentives for solar) – NOT the states with great solar resource and cheaper power.  So it’s not surprising that California leads the US in Solar adoption, but considering the map above, it’s not a surprise that New York, New Jersey and Connecticut are the next four states with the highest per capita solar adoption.  (New Jersey and Connecticut also have state solar incentives.)

Now, what makes the price of power vary from state to state is a whole complex set of factors, but ask anyone who works in electricity and they’ll agree that that prices of electricity are going up nearly everywhere.  Prior to the financial crisis, analysts were predicting that the price of electricity would double in 5 to 7 years for most regions of North America.  Some now say that will slow down (consumption is dropping) and some say that will accelerate (collapse of financing for new power stations and for grid upgrades) but no one is saying the price of electricity isn’t going up.

Rising Price of Electricity

In my original post I used the example of Germany.  Germany does not have great solar resource – the average kWh/m2/day is very low comparatively – ranging from 2.6 kWh/m2/day to 3.7 kWh/m2/day.  There are parts of Alaska that have better averages, and the lower 48 states mostly get 5.5 to 6 kWh/m2/day or better.  Yet, until the end of 2007, 50% of all the solar panels installed in the world were installed in Germany.  If that doesn’t prove that the amount of sun ISN’T the main factor, then nothing will.  Germany decided that they wanted to create a thriving solar energy industry, partly to deal with rising costs of electricity and partly to get ahead of the world on what they saw as a growth industry.  They examined the possibilities and went with a feed-in tariff system, which made solar installation viable, especially in the south.  But those same panels could product two to three times more power (or more) in most of the USA.  They make sense in Germany because of laws rewarding solar energy.

The USA and Canada are starting to follow the same model.  The USA has the Investment tax Credit which creates large tax incentives for installing solar, and in Ontario they’re following the feed-in tariff model.  That, combined with falling solar panel prices and rising costs of electricity will lead to more and more solar installations.

Long and short, I originally raised the issue that intense sunshine as a pre-requisite for solar energy was a myth and I stand by that.  The pre-requisite for solar energy is the need for  ANY alternative energy – which isn’t driven by the sun (air conditioners notwithstanding) but by shortages or high costs of existing sources of energy.

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.

Useful Links

Very busy as we get ready for Solar Power International 2008 next week, but a couple of things caught my eye that were worth passing on.

Possibly the most useful link I’ve stumbled across lately, How Electric Power is Measured in Watts.  I’ve seen this explained before, but this explanation is simple and easy to understand, without sacrificing accuracy.

Second, if you’re as obsessed with the US election as I am, and reading this blog, you might be interested in this: Obama And McCain’s Energy Plans Compared In Detail to Help Voters in the Fall.  I’m resisting the urge to editorialize.

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.