Whither Solar Power?

With respect to the obvious natural barriers resulting from the realities of chemistry and physics, what can we expect from solar power? Can it compete with conventional power sources?

Is First Solar Facing an Efficiency Wall?

By Michael Kanellos, Greentechmedia.com

October 15, 2010


Thin film solar panels made from the material might only ever achieve efficiencies of 12 to 13 percent, says Damroder Reddy, CEO of CdTe l start-up Solexant. First Solar is already producing solar modules at 11.2 percent, and General Electric (NYSE: GE) says it will be comparable or better than that when it comes out with its own CdTe solar panels next year. Solexant, which has raised over $41 million and plans to build a 100 megawatt factory in Oregon, will start to hit 12 percent efficiencies in late 2012.

While some analysts will grouse that efficiency isn't the most important metric to look at when evaluating a solar technology, it is important. Very important, in fact. Boosting efficiency increases the power output of panels and the overall productivity of a factory. High efficiency modules also command higher premiums. A plant that produces modules with a 15 percent efficiency will simply generate more cash than an equivalent one that churns out the same number of panels with a ten percent efficiency.

Hitting an efficiency wall essentially takes away one of the tricks available to a company to undercut its competitors, so, yes, this is a big deal. It's sort of like forcing a rodeo clown to wear a truss. In crystalline silicon, maximum efficiency is close to 25 percent.

SunPower (Nasdaq: SPWRA) already produces modules at 23 percent. To get around this looming problem, it has developed a concentrator, which will effectively allow its high efficiency panels to generate more power. 3M has unveiled a film that can nearly double the power output of solar panels at a relatively cheap price, and without some of the complexities of standard concentrators.

Cad tel panels do not work well with concentrators, says Reddy.

Manufacturers of copper indium gallium selenide (CIGS) solar cells are already hitting efficiencies of 12 percent in production, and labs have developed CIGS cells that hit 20 percent efficiencies. Through a combination of factory improvements, mass manufacturing and efficiency increases, these companies hope to start hitting the 85 cents per watt sort of prices soon and drop from there.

So what will happen? Cad tel manufacturers will have to focus on dropping the balance of systems and manufacturing costs. First Solar is down at 76 cents per watt on modules coming from the factory today. Solexant says it will make its cad tel panels on flexible substrates instead of glass on roll-to-roll processes, which will be far cheaper. The capital costs for one of its 100 megawatt factories is $40 million: that's low compared to many other options. Glass-less panels also cut transportation costs.

When and if Solexant has enough capacity to produce 300 megawatts or more worth of modules a year, production costs could drop to 50 cents a watt, he said.

First Solar has shown that costs can be wrung out of manufacturing processes at a steady clip. It also says demand outstrips current supply for its products, and that it will expand to 2.7 gigawatts by 2012. Business is good. But it does appear that the cad tel industry could be entering a difficult era. Crystalline manufacturers and CIGS makers both seem to have headroom when it comes to their respective technologies. Cad tel mostly will have to look down, and there are only so many molecules you can skin out of the system.

Sun and Money

Solar-Panel Prices May Decline Less Than Expected

Sep 15, 2010

Prices for photovoltaic panels that convert sunlight into electricity may fall about 10 percent next year, less than analysts forecast, as European demand increases.

First-quarter prices will drop to an average of $1.65 a watt compared with $1.50 in the previous median estimate of five analysts surveyed by Bloomberg News. Analysts who contributed to the surveys included John Hardy at Gleacher & Co. in Connecticut and Sanjay Shrestha at Lazard Capital Markets.

This year, contracts may average $1.80 to $1.85 a watt, they forecast.

Prices have fallen for years as Chinese manufacturers such as Trina Solar Ltd. undercut European producers including Germany’s Solarworld AG. The forecast means $2.55 billion more in global revenue for manufacturers, based on expected sales of 17,000 megawatts of the devices. Sales may total $28 billion next year, calculations show, matching Exxon Mobil Corp.’s planned investment in oil and gas production in 2010.

“There will be price declines in the first half of 2011, though much less severe than last year given a healthier, globally diverse demand situation,” Hardy said in an interview.

That may increase the profit potential of the biggest low- cost producers, from Changzhou-based Trina Solar to First Solar Inc. of Tempe, Arizona, analysts said. Investors have begun to anticipate better earnings for some of the companies.

Shares Climb

Trina and Shanghai-based competitor JA Solar Holdings Co. have climbed 28 percent and 26 percent, respectively, in the last month, compared with the 7 percent gain of the 38-member Bloomberg Global Leaders Solar Index in the period. JA Solar rose 12 cents, or 1.6 percent, to $7.30 as of 12:17 p.m. today in Nasdaq Stock Market composite trading.

Developers have rushed to complete solar-energy projects ahead of planned declines in government incentives in Germany and Spain. At the same time, smaller markets expanded in France, the Czech Republic and the U.S. Increased orders will extend to 2011, when the analysts forecast sales to increase 20 percent.

Demand growth in Europe and North America will outpace higher production in Asia, Hardy and Shrestha said.

Evidence of currently reduced supply can be found in inventories and in some order terms.

Solar inventories fell 19 percent in the second quarter to 84 days and shipments “remained strong” in the third quarter, Hardy said.

Prepaid Contracts

JA Solar, a China-based manufacturer of solar cells and modules, last week agreed to supply 500 megawatts to customers in 2011 at undisclosed prices. The customers, who weren’t named, prepaid a portion of the contracts, JA Solar said.

“We’re a little surprised by the prepayments,” Paul Clegg at Mizuho Securities USA in New York, said in an interview. “That’s a bullish signal -- it indicates developers are concerned that shortages next year could drive prices higher.”

Spot prices for solar modules in Europe, of about $1.90 per watt, are trading higher than contract prices, indicating that demand continues to outstrip supply, said Dan Ries, an analyst at Collins Stewart in New York. That’s boosted sales from July to August at the six largest Taiwan-based cell makers, he said.

Concerns that sales in Germany, which accounts for about half the global market, will drop next year have faded as developers expand projects in France, Italy and North America.

“Demand in non-German markets appears to be much stronger than investor expectations,” Vishal Shah, an analyst at Barclays Capital in New York, said in a note to clients. “Activity in Germany has picked up over the last two weeks.”

Forecasts Tempered

Some analysts tempered their forecasts, saying that governments could change incentives and Asian factories can ramp up new production quickly.

France could set a cap on new solar installations next year that would limit growth in that market, and the Czech Republic can control solar costs and development through its licensing process, said Jenny Chase, head of solar research for Bloomberg New Energy Finance in Zurich.

“While European markets are stronger than we had thought, next year there continues to be a lot of uncertainty,” Chase said in an interview. “Chinese companies can add capacity very quickly to meet demand, which could push prices lower.”

Wind, Sun and Oil are Free

The Energy Illiterates fail to understand where the money for energy supplies goes. For some reason they think crude oil is expensive but the wind and sun provide their benificent energy free of charge. For some reason they think because they can feel the wind in their faces and the warmth from the sun that kilowatt hours of electricity are waiting around for a good green utility to send that energy to homes all over America.

It's the energy conversion process that costs, and it costs a lot. Moreover, even if we were able to achieve the theoretical peak conversion efficiency, the cost of wind and sun energy would cost many times the cost of crude oil at $80 a barrel. It's that simple.

The Price of Wind

The 'clean energy revolution' is expensive

The ferocious opposition from Massachusetts liberals to the Cape Wind project has provided a useful education in green energy politics. And now that the Nantucket Sound wind farm has won federal approval, this decade-long saga may prove edifying in green energy economics too: Namely, the price of electricity from wind is more than twice what consumers now pay.

On Monday, Cape Wind asked state regulators to approve a 15-year purchasing contract with the utility company National Grid at 20.7 cents per kilowatt hour, starting in 2013 and rising at 3.5% annually thereafter. Consumers pay around nine cents for conventional power today. The companies expect average electric bills to jump by about $1.59 a month, because electricity is electricity no matter how it is generated, and Cape Wind's 130 turbines will generate so little of it in the scheme of the overall New England market.

Still, that works out to roughly $443 million in new energy costs, and that doesn't count the federal subsidies that Cape Wind will receive from national taxpayers. It does, however, include the extra 6.1 cents per kilowatt hour that Massachusetts utilities are mandated to pay for wind, solar and the like under a 2008 state law called the Green Communities Act. Also under that law, at least 15% of power company portfolios must come from renewable sources by 2020.

Two weeks ago, U.S. Interior Secretary Ken Salazar approved Cape Wind, placing it in the vanguard of "a clean energy revolution." A slew of environmental and political outfits have since filed multiple lawsuits for violations of the Endangered Species Act, the National Environmental Policy Act, the Outer Continental Shelf Lands Act, certain tribal-protection laws, the Clean Water Act, the Migratory Bird Treaty Act and the Rivers and Harbors Act.

There's comic irony in this clean energy revolution getting devoured by the archaic regulations of previous clean energy revolutions. But given that taxpayers will be required to pay to build Cape Wind and then required to buy its product at prices twice normal rates, opponents might have more success if they simply pointed out what a lousy deal it is.