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.

Solar Panel Pricing

Every now and then I get someone asking me what the cost of our panels is in $/kWh.  I always have to reply that we’re still in our pre-commercial phase of product development, and that we’re not able to give price quotes yet.  We have a really good idea of what we think the panels are going to cost, and we have really good data to back that up.  But until we’re able to prove it (to ourselves and our investors) it’s not responsible to start quoting prices without a long string of qualifiers.  (Put another way, is it a real price if I can’t sell you any yet?)

But I want to make a point about pricing solar panels.

First off, if you’re actually planning a specific solar farm, you really can’t make planning decisions unless you’re able to calculate your LCOE (Levelized Cost of Electricity).  That means you’re taking into account all of the variables that affect the cost of developing a solar farm (land, installation, mounting, inverters, grid connection, system efficiencies).

The best tool I’ve found for this is the NREL SAM (Solar Advisor Model) software available for free.  Calculating LCOE is enormously complex and will always be site specific.  Fair warning, using SAM is complex and frustrating, and if you’re really serious about learning how to calculate LCOE, take a course or find some good online materials to guide you.   Then have someone who really knows what they’re doing review your work.  That said, LCOE is expressed in $/kWh and is the most useful expression of cost when considering a specific solar farm.

Personally, I never trust it when solar panel providers quote $/kWh unless they’re willing to give you the model they used.  It’s site specific and there are hundreds of variables that can have a HUGE impact on the final result.  (At a conference, a speaker tried to get away with “Using standard metrics and a reasonable interest rate, we got an LCOE of…”  Pure weasel words.  Where?  What metrics and what interest rate?  Give me your model or don’t waste my time.)

That said, I hate using $/watt too.  $/watt is slightly more useful, partly because it’s one of the variables you need to calculate LCOE, but mainly because you only need to know how much sunlight they’re assuming.  But $/watt gives you the power production at peak power output.

Consider this:

You want to develop an 1 MW system, and in your region you can expect an average of 5.5 hours of good sunlight per day.

• A fixed system (that doesn’t track the sun) can generate up to 550 kWh/day.
• A two-axis tracking system will generate up to 792 kWh/day.

This is assuming the same panels, so the $/watt for the panels is the same for both systems, but the results are very different.  At noon, both systems can produce 100 kW in an hour, so $/watt doesn’t really give you the whole answer.  To get a useful number, you need to know exactly what you’re asking when you ask for a price.  When you get an answer, you need to make sure you have enough information for it to be meaningful.

When we do eventually start talking price, I want to make sure that we’re giving enough information so that people won’t have to jump through hoops to figure out what they ACTUALLY cost.

Oil at $145.45 a Barrel

Scary facts:

• When I started this blog post (10AM Thursday, July 3) oil was trading at $144.23 (source Oil-price.net).
• When I came back to finish the post (6:30PM same day) oil was trading at $145.45
• In total, oil gained $1.72 in 8.5 hours, or an average of 20 cents an hour.

By now the high price of oil is old news – people opine on the role of speculation, high demand in Asia, peak oil and $250 a barrel by this time next year.  No one serious is really saying that we’ll be seeing cheap oil any time soon, if ever again.

So, it seems like as good a time as ever to start talking about renewables.

As a society we won’t be free from oil for a long time.  We’ve built our entire modern civilization on oil – our cities, our food industry, our transportation infrastructure, literally everything in our culture is based on oil.  Even if it hit $500 a barrel, we’d still buy it.  (How scary is that!)

That volatility really crystallizes what makes solar such an amazing value proposition.  You have a fixed set of up front costs, some very predictable and very low maintenance costs, and that’s it – the fuel for the system is free.  You pay to set up the system, and it immediately starts to pay you back.

Now, right now, the best systems on the market pay you back in 10+ years, less with subsidies and incentives, but the trends are in solar’s favour.  Progressive government incentives, a growing movement to charge for carbon emissions, ever higher and more volatile electricity costs and lower and lower cost solar power systems all point to a booming industry.

That and oil hitting $145.45 by the end of this post.

[Edit: This post was originally written on Thursday, July 3, but couldn't be posted because of web hosting problems.  The price of oil today is $141.42]

– When this was published one month ago $135 was shocking enough to be a cover story.  Now it’s the good old days.