Economic prospects for solar photovoltaic power

[cheesehead]

McKinsey & Company, a global management consulting firm (http://www.mckinsey.com/About_us) published a report earlier this month about the prospects for the solar power (solar photovoltaics, or PV) industry.

“Solar power: Darkest before dawn”

http://www.mckinsey.com/Client_Service/Sustainability/Latest_thinking/~/media/McKinsey/dotcom/client_service/Sustainability/PDFs/SRP_solar.ashx

(Note: It's a secured PDF -- you can download and view it, but can't copy from it. The three charts I link to are a blog's screen shots.)

McKinsey's site has an introductory article (http://www.mckinsey.com/Client_Servi...s_next_shining) that says:

Originally Posted by McKinsey & Company

. . .

“Solar power: Darkest before dawn” finds that underlying PV costs are likely to continue to drop as manufacturing capacity doubles over the next three to five years. Indeed, the cost of a typical commercial system could fall 40 percent by 2015 and an additional 30 percent by 2020, permitting companies to capture attractive margins while vigorously installing new capacity.

The research suggests that the overall solar market will continue to grow—even though subsidies are expected to dry up. This growth, over the next 20 years, will stem largely from demand based on viable stand-alone economics in five customer segments: off-grid, residential and commercial in areas with good and moderate sun conditions, isolated grids, peak capacity in growth markets, and new large-scale power plants (exhibit).

"(exhibit)" refers to this chart:

http://thinkprogress.org/wp-content/...2.14.20-PM.png

There's a blog post (http://thinkprogress.org/climate/201...tipping-point/) that has screen shots of three charts (including the one above) from the PDF:

Originally Posted by Stephen Lacey(thinkprogress.org)

A new report from the prominent global consulting firm McKinsey shows why solar photovoltaics have hit a tipping point.

As the economics of solar PV continue to improve steadily and dramatically, McKinsey analysts conclude that the yearly “economic potential” of solar PV deployment could reach 600-1,000 gigawatts (1 million megawatts) by 2020.

. . .

That doesn’t mean 1 million megawatts will get built per year after 2020; it’s just an estimate of the economic competitiveness of solar PV. When factoring in real-word limitations like the regulatory environment, availability of financing, and infrastructure capabilities, the actual yearly market will be closer to 100 gigawatts in 2020.

. . .

The McKinsey report, appropriately named “Darkest Before Dawn,” highlights three crucial factors that are giving the solar industry so much momentum — even with such a violent shakeout occurring in the manufacturing sector today.

1. Because solar mostly competes with retail rates, the economic potential for the technology in high resource areas is far bigger than actual deployment figures would suggest. McKinsey predicts that the cost of installing a commercial-scale solar PV system will fall another 40 percent by 2015, growing the “unsubsidized economic potential” (i.e. the economic competitiveness without federal subsidies) of the technology to hundreds of gigawatts by 2020.

Here the blog has this chart screen shot: http://thinkprogress.org/wp-content/...2.13.09-PM.png

2. The most important cost reductions in the next decade will come not through groundbreaking lab-scale improvements, but through incremental cost reductions due to deployment. The McKinsey analysis shows how the dramatically these cumulative cost improvements can change the economics of solar. ...

Here the blog has this chart screen shot: http://thinkprogress.org/wp-content/...2.22.41-PM.png

3. Solar is already competitive in a variety of markets today. As the chart below illustrates, there are at least three markets where solar PV competes widely today: Off-grid, isolated grids, and the commercial/residential sectors in high-resource areas. Of course, the competitiveness of the technology varies dramatically depending on a variety of local factors. But this comparison shows just how steadily the cross-over is approaching.

Here the blog has this chart screen shot: http://thinkprogress.org/wp-content/...2.14.20-PM.png


- - -

Just for the record, this is the title I'm giving this thread as I start it:

Economic prospects for solar photovoltaic power

I don't expect that to last long. :-)

[jasong]

Another thing that's important and could help things is finding better ways to transfer energy. The farther electricity has to be transferred, the more that bleeds out en-route.

Solar panels and wind turbines tend to have their optimal building spots really far away from the people who actually need the power.

Personally, I think encouraging people to use smaller cars is a good idea. Have super-small one person cars that aren't highway safe but are specifically for driving around town. My dad drives an F150. But he doesn't actually need an F150. We could get my mom a little car, which is what she'd prefer anyway, and my dad could take the van back for himself.

Another thing I've thought about is wind drag on small cars. It'd be great to have something that extracts itself from the back of the car when you get above a certain speed, something to make the car more aerodynamic. Maybe something where it's okay for it to be fragile because people won't actually ride back there, so if somebody crashes into it, it's no big deal except for expense.

[cheesehead]

Originally Posted by chappy

http://www.telegraph.co.uk/finance/c...-military.html

"Solar power to trump shale, helped by US military

US marines go to war in Afghanistan with solar cells embedded in their rucksacks, efficient enough to recharge lithium-ion batteries for radios and greatly lighten loads"

Field patrols will soon have almost weightless solar blankets as well. These will be able to capture a once unthinkable 35pc of the sun's light as energy with thin membranes, a spin-off from technology used in satellites.

This new kit is a military imperative. Taliban ambushes of supply convoys are a major killer. The Pentagon says the cost of refueling forward bases is $400 a gallon.

http://i.telegraph.co.uk/multimedia/...3_2643879c.jpg
Commercial and Industrial Solar Costs vs. Average electricity Prices (2010-2020)

. . .

http://i.telegraph.co.uk/multimedia/...1_2643882c.jpg
Figure 2.8 U.S. PV Installation Forecast 2010-2016E

"The US Defence Department is racing ahead. This could be like the semiconductor industry in 1980s where the military changed the game," said Jeremy Leggett, chairman of Solarcentury.

Nor is the Pentagon alone. Grant lists from the "SunShot Initiative" of the US Energy Department show that America's top research institutes are grappling with each of the key issues that have bedevilled solar energy for so long.

Los Alamos - home of the Manhattan Project - is working on smart grids and better ways to capture excess electricity produced in peak sunlight hours. The Argonne labs are working on thermal energy storage to overcome "intermittency", the curse of solar and wind.

Oak Ridge is testing coatings that increase durability of solar panels eightfold. The National Renewable Energy Laboratory is working on a CO2 power cycle that could achieve 90pc thermal efficiciency [sic] and does not require water, transforming the propects [sic] of desert solar.

. . .

The US Energy Department expects the cost of solar power to fall by 75pc between 2010 and 2020. By then average costs will have dropped to the $1 per watt for big solar farms, $1.25 for offices and $1.50 for homes, achieving the Holy Grail of grid parity with new coal and gas plants without further need for subsidies.

The current average in the US ranges from $5.30 for homes to as low as $2.50 for some utilities, though the figures are hotly disputed. Germany is further ahead, down to $2.25 to $2.50 even for homes. Broadly speaking, costs are down by a quarter over the past year due to the flood of cheap Chinese panels.

http://i.telegraph.co.uk/multimedia/...4_2643883c.jpg
Two Kinds of Solar Parity

The Department expects a "nonlinear" surge in solar expansion once the key threshold is reached, "paving the way for rapid, large-scale adoption of solar electricity across the US", with solar providing 27pc of the country's power by the middle of the century. If so, solar may prove to be the bigger story than shale in the end.

. . .

... Earlier this year UBS published a report on the “unsubsidised solar revolution”, arguing that every rooftop in Italy, Spain and even Germany should have a solar cover based purely on hard economics.

"We believe the solar sector is at an inflection point," says Vishal Shah from Deutsche Bank. "It has passed the tipping point for grid parity in 10 major markets worldwide."

Deutsche Bank said the dramatic fall in the price of solar panels to between $0.60 and $0.70 per watt - lower than thought possible five years ago - has already rendered solar power competitive "without subsidies" in Japan, South Korea, Australia, Italy, Greece, Spain, Israel, South Africa, Chile, Southern California, Hawai and Chile - in some cases because electricity prices are ruinous. (Italy's solar is not efficient but electricity retails at $0.38 per kilowatt hour, compared with $0.15 in Germany and the UK).

These regions could be joined within three years by Thailand, Mexico, Argentina, Turkey and India, among others. Mr Shah said emerging markets are likely to embrace solar over the next decade for hard-headed commercial reasons, without the need for government subsidies. "Solar is now cheaper compared with diesel-based electricity generation in many markets such as India and Africa," he said.

http://i.telegraph.co.uk/multimedia/...5_2643885c.jpg
Solar is Less Expensive Than New Nuclear

This does not mean necessarily that Germany has benefited much from its head-long rush into solar, a decade too early for its own good. Households have been bled to subsidise the green dream. Around €100bn or more has been frittered away on costly feed-in tariffs. German investors have lost their shirts on a string of solar ventures that have gone bankrupt. The gains leaked out to copycat companies in China, able to undercut German rivals in their own market with cheap labour and giveaway credit.

Such are the perils of being a "first mover", a fate that Britain knows well. It is a reminder too that advances in solar technology do not easily translate into profits for solar companies. They are tearing each apart in cut-throat competition. Yet Germany surely did the rest us a favour by cracking photovoltaics at a crucial moment, and for that we have a debt of gratitude.

Whatever you think about that episode, it is now behind us. Solar technology is advancing on every front with the rush of history. A team at Oxford University is working on perovskite, a cheap and abundant material that may slash the costs of solar panels by 75pc to under $0.20 per watt. While normal silicon layers are 180 micrometres thick, perovskite can capture the same amount of sunlight with one micrometrr, according to MIT Technology Review.

In Australia, the University of New South Wales is probing a mix of screen-printing techniques and use of semiconductors that boost solar efficiency to 50pc. Labs in Wisconsin have found ways to undercut silicon with carbon nanotubes. That alone does not do much to lower the "soft costs" of solar installation, now the biggest barrier, but Germany's experience has shown that scale can work wonders.

The race is on: somebody, somewhere, is soon going to deliver grid parity with a clarity that silences all critics. Then we can all forget about subsidies for solar, and tax it instead, a future cash cow.

. . .

[chris2be8]

The biggest variable is what time of day and year you have most demand for electricity. Germany has most demand in winter, after the sun has set, so they need enough conventional generating capacity to meet peak load without any help from solar power. Which makes solar power uneconomic unless it's nearly free. The same is true of anywhere else at a similar latitude.

In the tropics and subtropics demand is highest during the day. So you can meet most of the daytime peak without needing a conventional backup. That makes a big difference. And a sunny climate helps a lot as well.

In the USA they could generate solar power in the southwest and transmit it to the consumers in the rest of the country (and in Canada). That would not be cheap but at least the whole country is politically stable. In Europe they would have to cross several borders and the Mediterranean sea. And would you like to have to rely on Egypt to supply your electricity?

Chris

[firejuggler]

Egypt? not atm at least. Otherwise, why not.

[xilman]

Originally Posted by chris2be8

The biggest variable is what time of day and year you have most demand for electricity. Germany has most demand in winter, after the sun has set, so they need enough conventional generating capacity to meet peak load without any help from solar power. Which makes solar power uneconomic unless it's nearly free. The same is true of anywhere else at a similar latitude.

You assume uneconomic storage between production and consumption. That may be the case; it may not.

[cheesehead]

Originally Posted by chris2be8

The biggest variable is what time of day and year you have most demand for electricity. Germany has most demand in winter, after the sun has set, so they need enough conventional generating capacity

... or enough storage capacity ...

to meet peak load

with the help of power derived from stored solar energy, rather than

without any help from solar power. Which makes solar power uneconomic unless it's nearly free. The same is true of anywhere else at a similar latitude.

Why didn't you mention that energy storage could solve the problem you describe?

In Europe they would have to cross several borders and the Mediterranean sea.

... when one omits any mention of energy storage methods, that is.

Once energy storage methods are introduced into the discussion, border considerations recede in importance.

And would you like to have to rely on Egypt to supply your electricity?

Would you like to introduce the use of energy storage methods to solve the problems you mention?

[kladner]

I have seen proposals for solar concentration installations in the Sahara. These lend themselves to molten salt storage for night generation. The next link was to be very high voltage DC transmission lines across the Mediterranean. DC transmission is made feasible by modern technology, and is much lower loss than AC transmission.

Of course, the thought of a careless ship dragging an anchor through the installation and blacking out a big chunk of Europe is worrisome to say the least. It has been bad enough when data cables have been taken out.

[chalsall]

Originally Posted by kladner

The next link was to be very high voltage DC transmission lines across the Mediterranean. DC transmission is made feasible by modern technology, and is much lower loss than AC transmission.

It would have to be ***VERY*** high DC voltage, and is only more efficient than AC when the cable is routed through water (or some other inductive medium).

[ewmayer]

Friend just forwaded the following to me:

The positive sides of doping

Flexible thin film solar cells that can be produced by roll-to-roll manufacturing are a highly promising route to cheap solar electricity. Now scientists from Empa, the Swiss Federal Laboratories for Materials Science and Technology, have made significant progress in paving the way for the industrialization of flexible, light-weight and low-cost cadmium telluride (CdTe) solar cells on metal foils. They succeeded in increasing their efficiency from below eight to 11.5 percent by doping the cells with copper, as they report in the current issue of “Nature Communications.”

[chappy]

High Voltage DC has much less line loss than AC, and creates less heat which equals less sagging in the lines. Also means less insulation is needed which reduces cost. The greatest advantage from a transmission system operations standpoint is that there is no need to synchronize the grids.

We've just passed the 10 year anniversary of the largest black out in North American history which was caused by heat-induced line sag.

About the only downside is that it's hard to deal with power fluctuations such as lightning strikes. Meaning that they are better off run underground (which increases cost, or underwater which adds other dangers.