J. Peter Lynch, Advisor to Principal Solar, Inc.
By J. Peter Lynch, Advisor, Principal Solar Institute
Moving the photovoltaic (PV) industry forward and enabling it to make a significant contribution to worldwide electricity generation -- greater than 25 percent -- will require four strategic initiatives:
- Accelerating research to develop new innovative disruptive PV technology
- Developing advanced electricity storage technology
- Passing common sense legislation and/or utilize alternative financial mechanisms
- Educating the public on solar and why it is the only viable long-term source of power for the United States and the world
Innovative Disruptive PV Technology
In order to produce a technology that is truly cost effective and competitive with fossil fuels, PV technology must embody certain disruptive attributes. There are three key features, each with challenges:
1. Low Cost of Manufacturing Plant - A low cost per watt manufacturing facility
Challenge: Because expensive semiconductor technology is the current standard in PV manufacturing, it is difficult to get the capital expenditure down to the competitive level. At less than $0.30 per watt, much less upfront capital would be needed, creating lower financial risk and resulting in a greater potential for rapidly accelerating worldwide PV industry expansion.
Adequate, cost-effective storage technology is necessary for the efficient storage of electricity generated from PV devices or wind turbines -- and for PV to make a substantial contribution to worldwide electricity generation. ___________________________
2. High Efficiency - High conversion efficiency (> 30 percent), without concentration
Challenge: The highest efficiency, without concentration, is below 20 percent for a module and below 23 percent for an individual cell, which is not nearly high enough to sufficiently offset the Balance of System (BOS) costs, i.e., the other half of the cost for a completely installed PV system -- roof racking, electrical work, installation labor. Without a decrease in BOS costs, there is no way for a disruptive cost reduction to be possible. In order to compete with other heavily subsidized electricity generation, such as gas turbines and coal-fired plants, efficiencies in excess of 30 percent, without concentration, are needed.
3. Low Cost Per Watt - A low cost per watt of the manufactured product
Challenge: Over the past decade, the industry has decreased the cost of manufacturing. However, this has resulted in most of the thin film technologies being priced out of the market, with all crystalline manufacturers losing significant amounts of money. Manufacturing costs for a higher efficiency panel area need to be significantly below 50 cents per watt with the potential to go lower -- current costs at the low end are around 70 to 85 cents per watt and manufacturers are losing significant money at these cost levels.
Having only one or two of these attributes is a step in the right direction. But without all three, the industry cannot achieve the low-cost levels necessary to make PV a major worldwide energy source.
Advanced Electricity Storage Technology
Adequate, cost effective storage technology is necessary for the efficient storage of electricity generated from PV devices or wind turbines -- and for PV to make a substantial contribution to worldwide electricity generation. The one great weakness of solar energy is that it is intermittent during the day and not available at night. As a result, the electrical grid becomes the "backup" system for the PV system. Therefore, to be financially accurate, the cost of the grid must be added as part of the system. Unfortunately, the majority of electricity is generated from coal, although that is changing with the advent of cheap natural gas.
What is needed is a way to effectively store energy when the sun is shining for use at times when there is no sunlight. In the solar thermal sector of the industry some progress has been made in storing heat in specially designed salts for six to eight hours. However, in the solar PV sector traditional batteries have been the primary storage technology.
Common Sense Legislation
The solar industry needs the federal government to stop its current inane and anti-investment practice of passing solar legislation that is uncertain and time-limited -- which scares off investors. In contrast, all fossil fuel subsidies have been written directly into the U.S. Tax Code as permanent provisions. The key to investing is the ability to determine and quantify, to the greatest degree possible, all the elements of risk involved in an investment. The simplest way to address the current "certainty" disparity in the solar industry is a national Feed in Tariff (FIT).
FITs have worked in Germany for more than 10 years as a proven, cost-effective and transparent fix for removing investor uncertainty. While many American states and cities have begun to utilize FITs, a nationwide FIT is far down the road.
Educate the Public on Solar and Renewables
According to a recent survey on clean energy, 89 percent of U.S. adults agree that renewable energy sources, such as solar energy, should be a bigger part of America's energy supply in the future. Additionally, 72 percent say jobs created in the solar energy industry are better for our economy and our environment than jobs created in the coal, oil, nuclear and gas industries.
Furthermore, 80 percent of adults agree that the biggest benefits that would encourage support for solar energy are financial in nature, such as reduced energy costs (60 percent), decreased dependence on the fluctuating cost of fossil fuels (26 percent), federal/state tax credits (21 percent) and increased home value (12 percent).
New technology from disruptive new solar PV and advanced storage, along with the legislative/alternative financing methods and nationwide education must occur if the industry is to grow rapidly enough to become a significant component of the world's future energy portfolio in the next 15 to 20 years.
Advances in any of the key areas will certainly benefit the industry as a whole, but all four are necessary if PV is to take its place as the most flexible, cost effective and distributed form of energy in terms of dramatically accelerating the transition to a fully distributed post-fossil fuel economy. If these goals can be met, it's technically possible that a 100 percent, fully distributed renewable energy system worldwide would be possible within the next 50 years, making the shift to renewables one of the great transitional moments in human history -- and the greatest investment opportunity of our lifetime.
About the Author
J. Peter Lynch, Advisor, Principal Solar Institute, has worked for 35 years as a Wall Street security analyst, an independent security analyst and private investor in small emerging technology companies. He was the contributing editor to the Photovoltaic Insider Report for 17 years, an early PV publication that was directed at industrial subscribers, such as major energy companies, utilities and governments worldwide. SOLARJPL@aol.com.