The Oil Drum

At some point in time, the supply will be able to meet demand, and the prices will drop significantly.

The potential demand is huge. I just found a english version of the of the press release (pdf). Here is one important point listed....

• At a cost of $0,25/kWh, roughly 5% to 10% of residental electricity demand in the OECD is addressable by solar power, equivalent to 150 to 300 GW of solar power

In 2006 the world market was around 2.6 GW. There is still a long way to reach the 150 GW or even the 300 GW. That's the reason why I think the market will characterized for quite a long time by a much bigger demand than supply.

The PV market is still at its beginning. Just take a look with google earth over any kind of city in the OECD. There are masses of buildings which can be equipped with solar roofs. After reaching grid parity this will be actually somehow mandatory.

Sure PV will not save us from the impacts tiggered by PO. Looking to Saudi-Arabia scares me as well. But we need to look forward and every step in this direction will help a little bit.

If these forecasts are valid, shouldn't be bet on the come now and stop all additional coal power plants or augmentations to existing power plants?

With respect to cost, I am a bit skeptical since it is not sufficient to bring down the costs of the solar panels. One must also bring down the costs of the inverters and other accessory equipment. From what I have seen at Solarbuzz, little or no progress has been made on these items. Of course, with very large solar generating facilities, perhaps these costs will be a small part of the overall cost. My main concern is with small installations put on residences.

From a personal persepective, I already pay extra in order to enable my utility to acquire more wind power as part of their mix. Would not most of us pay extra, even double, to support the phaseout of coal plants?

The TXU deal will, hopefully, be part of a trend, a relative greening of the utilities. The new owners, however, will still be building 3 additional plants. Any fossil fuel plants should just be part of the minimum necessary baseload to support wind, solar, and other renewables.

We need leaders with the courage and fortitude to move forward, leaders who will tell us that we need to move away from fossil energy even if there is a certain amount of blood, sweat, and tears. We need to move forward ahead of the economics.

I would encourage everyone here to pick up a copy of "Solar Revolution" by Travis Bradford (2006). Bradford evaluates solar from the financial community's perspective and concludes that the days of the solar PV boom are not 20 or 30 years from now, but right now. Some of his key points:

- The problem that many analysts make when comparing the cost of PV to that of coal or gas is to neglect the fact that PV is distributed generation located right where the user is, which eliminates distribution losses and costs. Also, PV electricity production largely occurs during times of peak demand, so its output is inherently more valuable that a base losd plant runing 24/7.

- The key indicator to watch is not portion of current generation from renewables, which is regularly trotted out to show how insignicant renewables are compared to coal, gas, and nukes. It is much more important to look at the renewable portion of each year's new capacity additions. By some measures, wind actually was the largest in terms of new capacity addition of any power type in the US in 2006. In California, PV was actually a fairly significant portion of the new capacity addition for 2006.

- When evaluating what new capacity to add, there are a lot of huge problems with gas, coal, and nukes. From the financial community's perspective, the biggest problems with all three are the extreme risks and uncertainty of costs. What are your construction costs, fuel costs, emissions compliance costs? Can you even get a permit to build? Is there even going to be any natural gas avaiable for power generation? How long will it take to finance, permit, and build?

- Solar PV is unique in the power generation world in that you know all your costs, virturally to the penny, at the start of the project. You make power for a guaranteed period of 25 years with no uncertainty or risk. It is hard to overstate the importance of this fact. When you take risks out of the equation, the financial community can do what it does best, creative financial engineering. What you are seeing now in PV are offers for Power Purchase Agreements, where a financial investor will pay 100% of the costs to install a system and sell the output to the site customer for a guaranteed discount to the utility. Financial developments like this will have a huge impact on the ability expand the PV industry.

I can tell you from personal experience that the PV industry is absolutely booming here in California. My company's business doubled in 2006 compared to 2005. Sure PV is still in early adopter phase and starting from a small base, but at the rate its been growing it won't take long. Bradford believes that in just a couple decades, wind and solar will absolutely dominate each years new capacity additions.

There is a limited apllicability to solar - it is only useful for a few hours IF it is not cloudy during those hours. Solar will only ever prove useful for extra power, such as recharging the batteries of an electric car, or ones in the basement. If enough people add solar to their home, the local electric utility will have another 'hole' in its delivery requirements, one that is random. What will happen is that it will demand the right to charge you for the unused electricity, thus you'll be paying twice. The reason is that they can't vary their generation quickly, and have no means of predicting what load they must supply, so they must supply the normal, which costs them money.

James Gervais