Why go to Greece? For the sunshine, naturally.

Seeking Alpha, an excellent investment reporting, finance and economics blog has an interesting article about the Greek Solar energy market titled Solar: Greece Offers Bait, But Few Takers.  Apparently, despite some of the most generous feed-in tariff rates in Europe, uptake for new solar energy projects has been slow.

From the article:

Under the new program, systems that are greater than 10 kilowatts but less than 10 megawatts would have tariffs range from 40 to 50 euro cents per kilowatt hour. The government is offering to provide grants that would offset 40 percent of project costs more than €100,000.

Sadly, the reason for the sluggish response is what you’ve probably already guessed:

“It has excellent solar conditions. But bureaucracy is so high, it’s incredible,” said Daniela Schreiber, head of strategic operations at Germany-based EuPD Research, during a solar conference in San Francisco last week.

Greece first launched a feed-in tariff program in 2006, but it hasn’t been able to run it smoothly. The government had about 3 gigawatts worth of applications waiting to be processed when it announced a new version of the program in January this year.

(Here’s a link to a Greek Government PDF with the high level details of the program.)

Electricity generation and distribution has traditionally been massive, bureaucratic and slow to respond to anything.  Combine that with a government that is slow to move and you have all the conditions for entrepreneurs to go insane while waiting for approvals.  There is nothing more frustrating than applications vanishing for months on end into an opaque bureaucracy.

Still… for 55 euro cents per kilowatt hour I would be willing to put up with allot of grief and frustration, especially with you look at the amazing Greek solar resource.

Solar Resource: Greece

More details can be found at PVGIS (European solar resource data), although I found the way they model DNI to be counter-integrative after getting used to how NR-Can and NREL do it.

The powers that be here in Ontario, just having passed the new Green Energy Act, are trying to make a good faith effort to keep this sort of bureaucratic stalling from happening here.  Under the previous Renewable Energy Standard Offer Program (RESOP), there were all sorts of limits, hurdles and quotas that kept the program from really catapulting Ontario into an Renewables leadership provision, and much of that has been fixed in the new program (hopefully).  The Greek incentives are too high not to have some effect, but it’s a shame to see such an amazing program torpedoed by institutional inertia and a lack of accountability.

Developing a Solar Farm Questions Part II

In my previous post I answered some questions people had about developing a solar farm, but in this post I’m going to take a different tack.  I’ve spoken to a few people over the last few months who fit this stereotype.  They have land, they think they can get some money, and they would like to see if developing a solar farm makes sense.  There’s nothing wrong with being at the beginning, but it’s daunting when you don’t know what you don’t know.  So what I’ve told people is that there are a basic set of questions that they need to answer before they can really proceed.  Figure out what you don’t know, and you can start.  Right?

An example of an installed solar farm.

So, here are some of the questions you need to figure out if you’re thinking of developing a solar farm:

1. Is the site I’m considering close to high voltage transmission capacity?  How close?  Is there a transmission substation nearby?  Is there capacity on the lines for additional power generation to be connected?

Substations are always easier to connect to than just power lines, and in solar farm development, easier means cheaper.  People have asked me how close is close enough, and the truth is that I have no idea.  Labour costs, permits, right of ways to put in power lines and other factors will affect this, but you need to install some fairly expensive overhead power lines to connect a solar farm to the rest of the grid.  How much costs will change, but this is a cost.  So, you absolutely need to start by contacting whoever manages the actual power distribution lines in your region and find out if you can connect.  It’s sad how often the answer is “no”.  (I’ve been told annecdotally that anything over 25 km is too far away, and that really you want to be within 5 to 10 km from the connection point, with a clear line to run the power lines.  The person who quoted this to me wasn’t developing a solar farm, but it sounds reasonable.)

2. Who manages the local zoning for development in my area? What is the land classified as now? Who manages environmental impact assessments for my area? Who might have veto power over this project? What additional costs might environmental factors add to my site?

Figure our who can block your development, and start figuring out if they might. Start looking into environmental impact assessments as early as possible in the process and contact Green Energy friendly organizations for advice. People are constantly surprised at hidden costs here, and attention needs to be paid early and often. As for environmental factors, if you’re in desert, does your area flash flood? If you’re in Canada, does the ground freezing in the winter increase costs? What about snow?

I’ve heard solar panel sales people tell potential buyers that because they’re black, they warm in the sun and don’t accumulate snow. Total BS. First, “getting warm in the sun is code for “inefficient”. If sunlight is turning into heat, it’s not turning into electricity. Second, if you live anywhere where it snows, you know full well that what colour something is has no effect on how much snow builds up on top of it. Snow is an issue in solar farms in Canada, and I’ve heard some innovative ideas, but nothing actually deployed in practise.

3. How much sun do I actually get per year here? How many hours per month for each month, and at what intensity in kWh/m2? If possible, what is the ratio of direct to diffuse light?

Just about every country in the world has some version of this information available, in Canada it’s Natural Resources Canada, in the US it’s NREL.  However, what I strongly recommend is that you consult your local utility to find out what insolation data they recommend.  If your local power utility (or whoever manages the power grid you want to connect to) is at all interested in solar energy, then they will be able to recommend solar resource data.  If they’re not interested, don’t have solar resource data and can’t answer your questions, find out in anyone has connected a grid tied solar power project.  If no one has… yikes… good luck.  At the end of the day, if you have some sun, it’s probably ok, but the real factor is the price of electricity.  Higher price, solar makes more sense.

Calculating DNI can be harder, as not everyone tracks this data.  There are companies that will provide you with reports, and there is software you can download, but for some areas it can be a challenge to get an accurate number if you’re not in the US or Europe.  The company 3TIER will sell you a report for your area and you can download a sample report to see what they can provide.  I haven’t worked with them, and they seem to be expensive, but they look like they provide a detailed and independent report, which can make investors less nervous.  Also out there is Meteonorm, a software package you can download or order as a CD.  They let you download a sample version that has data for one city to allow you to evaluate the software.  I like this option as it’s much cheaper than 3TIER, but you would need to be sure that Meteonorm gave you all the details you felt you needed.

Busy week, so I’ll do a third part when I can.

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 Energy in Ontario

So a Canadian, an American and an Irishman were in a business meeting discussing solar energy.  It sounds like a bad St. Patrick’s Day joke, but it’s actually an honest description of my day.  I’ve met with one person from Ireland since I’ve started, and he visits me today.  What are the odds?  Seriously though, we were talking about Ontario’s new FIT Rates, and a very common question came up – “Is there enough sun in Ontario for solar energy.”

I’ve talked about this before, but I explained it better today than I have in a while.  We feel like we’re a long way from the equator and that there’s a big difference in the sunlight, but for solar energy purposes, the quantity of light is good enough pretty much anywhere in the world.  Excessive cloudiness, too much pollution and extremely high latitudes might make a small difference, but the most important factor for determining the viability of solar energy is the cost of electricity.

Germany proves this, as I’ve said before.  As of 2007, half of all the solar power in the world was in Germany, and Germany’s solar resources isn’t nearly as good as Ontario’s.  What made Germany such a solar leader was their own feed-in tariff system.  Same with Spain.  Spain doesn’t have nearly the solar resource that the US South West does, but they had a proactive feed-in tariff and solar farms popped up everywhere.  Ontario’s new FIT system, if it’s done right, will make Ontario a solar energy giant.  Which is pretty cool, really.

Natural Resources Canada - Solar Resource Map - Ontario - Link to this map.

This a screen grab from the Natural Resources Canada Map Server for the solar resource potential maps for Canada.  What that legend means is that for every kW installed, you can expect that many kWh per year in that location.  So people right down near Windsor, Niagara and up near Ottawa are really doing well, and the rest of us are sitting pretty too.  (Here’s a link to the Ontario map view above.)