Barriers to solar energy's blockbuster promise

MENLO PARK, Calif.--Solar power hasn't swept the nation but it must and will, said members of utilities, clean-tech start-ups, venture capital firms, and academia at the Big Solar conference here Wednesday.

California will literally live up to its "Golden State" nickname and shine as a model for the rest of the country thanks to progressive lawmakers, Silicon Valley dealmakers, and innovators at state and university labs, according to the event's many optimists.

"The time has come in the United States for large-scale solar," said Ed Smeloff, senior manager of utility project sales at SunPower, a maker of solar systems including those at the nation's largest plant at Nellis Air Force Base in Nevada. "The wind is to our backs on this."

Among the bright points noted by Smeloff and others, each presidential candidate supports clean energy, of which solar is the best understood.

U.S. photovoltaics account for just 8 percent of the global market totaling 2,826 megawatts, according to a Solarbuzz report.

Demand for electricity will expand one-third by 2030, according to the Energy Information Administration. Solar producers hope their energy product will fill the gap with a minimal carbon footprint.

"The time has come in the United States for large-scale solar."

--Ed Smeloff, senior manager, SunPower

Even in California, however, conference attendees spoke of stunted growth in solar. To start, it's expensive. Laws meant to help the spread of solar and protect ecosystems may also hurt the sector, some argued. And financing plans and tax incentives designed to spur installation may bring unintended negative side effects.

Solar power is recognized as the most expensive form of energy at around 30 cents per kilowatt hour. By comparison, coal costs about 5 cents and natural gas 4 cents per kilowatt hour.

"We're looking for the biggest bang for the buck," Roy Kuga, vice president of Pacific Gas & Electric's energy supplies division, said at the event, which was held by UC Berkeley and Stanford University.

Silicon supply stunts growth
As 26 U.S. states including California are requiring some renewable energy in utilities' portfolios, more utilities are jumping on the solar bandwagon.

The limited availability of silicon has partly stalled the growth of the solar sector.

"We're struggling to provide one-third of what people want from us, and we're No. 1," according to Kristina Peterson, director of structured finance at solar module maker Suntech.

However, supplies could increase by 33 percent this year and 23 percent in 2009, according to research firm Gartner. From the world's modest 8 suppliers of silicon, 100 new providers could emerge by 2009, Peterson said.

No matter how renewables improve in efficiency and price, Kuga of PG&E said he foresees a continued reliance on the grid, especially for peak demand.

Renewables make up less than 3 percent of U.S. energy, according to the Department of Energy. They can be less reliable than tried-and-true yet carbon-intensive sources like coal. Both solar and wind depend upon the whims of weather.

Meanwhile, makers of solar systems are racing to enhance efficiency. Some look at silicon alternatives, copper indium gallium selenide (CIGS), or cadmium telluride. There's even more variety in the forms that solar systems take, from glass-and-metal panels to thin films built into windows to bobbing plastic balloons.

"It's hard to say who will succeed and who will not," Kuga said. "The guy with very little funding may have the home run technology."

Just as the mix of solar technologies continues to shift, the nation's future energy portfolio is likely to be extremely diverse.

The California Solar Initiative calls for 3,000 sun-powered megawatts by 2016. Under the California Renewables Portfolio Standard, electricity providers by 2010 must ramp up renewable sources to 20 percent of sales.

But with the federal renewable energy tax credit ending by January, many solar projects are on hold. The credits expired twice in previous years until Congress retroactively re-established them.

"It's pushed us into looking at programs in Canada and Europe," said Joseph Kastner, vice president of solar operations at MMA Renewable Ventures, which helps to finance clean-energy projects.

Legislative missteps
The West Coast, particularly California, is a stronghold for solar support from policymakers. At the same time, regional missteps are holding back solar development, according to some in the solar industry.

The Clean Energy Initiative on the California ballot this fall would require 50 percent of energy from renewables by 2050. But as it stands it would effectively kill the state's solar sector by disqualifying any project under 30 megawatts, warned Sue Kately, executive director of the California Solar Energy Industries Association.

A regulatory fast track should approve the ecological soundness of large-scale solar plants, said Marc Gottschalk, co-chair in the clean-tech practice of Wilson Sonsini Goodrich & Rosati.

Although solar panels don't create obvious hazards or polluting emissions, large installations may be left in limbo for six months to a year during a review by the California Environmental Quality Act, he explained. The National Environmental Policy Act can add more delays, said Gottschalk, also co-chair of the California Clean Tech Open.

For instance, OptiSolar plans to build the largest U.S. solar farm of 550 megawatts, but it must ensure the safety of endangered species from nearby Carrizo National Monument.

Connecting the many distributed systems to the grid is still a bridge to cross, some mentioned.

Punitive taxes are another barrier, according to Kastner of MMA Renewables, which has 27 megawatts of photovoltaics in 10 states, including the 14-megawatt plant at Nellis Air Force Base. In some cases, property taxes tripled after the solar panels went up, Kastner noted.

Kateley, on the other hand, warned that consumers must check the fine print within the terms of financing plans for solar installations. Residential customers, in particular, should understand they may get help with installation through leases and Power Purchase Agreements, but wouldn't own the panels on their buildings.

She also raised an eyebrow when addressing venture capitalists. "You're flushing a lot of money into these systems and some of you might be a little reckless," she said, adding that because the business world may favor "shiny" photovoltaics, more common-sense solutions such as solar thermal are being overlooked.

Solar may appear the "sexiest" slice of the clean-tech sector, but the number of solar companies has contracted slightly since last year. As the industry matures, the shades come on.

This post has been changed to reflect that the true nickname for California is the "Golden State," not the "Sunshine State." Thanks to the reader who pointed this out./i>

[jomuza]

Just a minor quibble. California is the Golden State, not the Sunshine State. That title belongs to Florida.

[lesliejs]

apparently they haven't heard of the recent solar tech breakthrough that costs $0.05 per kwh. http://www.sunrgi.com/ came up with this technology.

[Norrin_Radd]

According to knowledgeable insiders (from the DOE) and other technical experts this sunrgi company (http://www.greentechmedia.com/articles/sunrgi-keeps-solar-cool-841.html) is a typical bubble company, founded on hype and bad science. Think unmanufacturable, expensive materials, and unconsidered thermal issues.

[Manhattan2]

Solar panels on fixed rooftop angles is a mistake. Solar Transfer is the only way Solar Power will ever amount to anything. Keep putting up those residential photovoltaic systems and you will forever kill the future of green energy from the sun. Look into a Solar Transfer. We promise this is the only system that will get millions interested in going solar at a reasonable cost. There are only so many people willing to loose money on solar panels. We can make solar panels more financially appealing to millions more! www.solartransfer.com check it out.

[USDecliningDollar]

You might also have your 4th grade nephew use as spell checker on your website!

[USDecliningDollar]

There is nothing to check out at your lame site! Did your nephew in 4th grade put that site together for you? All of your other sites are similarly lame.

Most real companies don't use AOL email accounts.

[fokkwp]

This country spent billions of dollars of public money building the highway system that made automobiles and refined fossil fuels "profitable". And now, trillions of military $$ to project US power into global oil fields to keep oil available and cheap. But for solar and other alternatives, we're told they have to be profitable in the "open market" - competitive against that massively subsidized fossil fuel infrastructure - without anything approaching those billions of investment of public funds. And we are supposed to be ecstatic when some university or startup company gets a few millions in funding - the kind of money we spend subsidizing oil every few hours. Stop subsidizing oil with infrastructure and military invasions for a week and suddenly even current alternatives would be so much cheaper, we'd have solar plants in every neighborhood even with existing panel technology; windmills across the Plain states; tidal generators on the coast; and innovations to replace all that with far more effective technologies in five years.

[Sue_Kateley]

Couple of corrections: The Clean Energy Initiative excludes projects less than 30 MW. My comment on power purchase agreements was specific to ensuring that customers understand the terms and costs associated with these agreements. The warning I made was to make sure they understand the terms of a Power Purchase Agreement. PPAs have been a great tool in the commercial market. In the residential market customers need to understand that they do not own the product on their roof and should take that into consideration. This applies to leased solar systems as well. Payments due at the end of the term of the PPA or lease contract should be understood so there are no surprises down the road. PPAs and leases are just a few of the financing options available to homeowners - pick the one that works best for your own circumstance.

[elsa.wenzel]

Sue--Thanks for clarifying. I apologize if I misunderstood some of your comments.

[gkaestle]

In my opinion fixed feed-in tariffs are the most powerful tools for fostering renewables such as wind and solar, both having no fuel costs. If the tariff is well designed and the effects are regularily monitored, is has proven to be more effective (wind energy in the UK vs wind energy in Spain) and more efficient than other support schemes.The reason is that the investor can minimise his risks with a reliable income estimation. This means that he needs no big surplus bonus on top of the costs of the operation and depreciation. A steady feed-in tariff is also better for the development of a green energy industry, as boom and bust phases are harmful for innovative SME in the energy sector.

Regards,
Gunnar


Held, A.; Ragwitz, M.; Wietschel, M. (2005): Evaluation of Renewable Promotion Schemes in the European Electricity Market. In: Current Development of Green IPPs: Experiences, Challenges, and Strategies, S. 41-49. Rentz, O; Möst, D.; Eßer, A. (Eds). Karlsruhe: Universitätsverlag Karlsruhe. http://digbib.ubka.uni-karlsruhe.de/volltexte/1000003546

[greenpdx]

Solar thermal anyone? Photovaltics are far too expensive. Let's start building multi-MW generating solar thermal plants in the American SW. You can heat water for steam or heat a sand slurry for a low-cost "battery" so the heat energy can be transferred at off-peak hours. Solar thermal is the only alt technology that naturally follows peak loads. Yes, transmission is going to e a problem, but let's get some people on it! The battery tech is basically here.