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Intersolar: Lower Prices on Solar BUT Barriers To Growth

Bill Roth | Thursday July 22nd, 2010 | 0 Comments

The Intersolar Conference held in San Francisco was a dramatic demonstration of the Green Economic Revolution’s potential for delivering lower prices, a cleaner environment, economic development and jobs.

I worked the after-conference receptions (tough duty in behalf of the common good!) to gain candid information on solar’s current pricing and future. I was blown away by how low solar prices have fallen. I can’t name names due to confidentialities but I heard concrete examples from solar power developers that utility scale PV panels are selling for around $1.75-$1.85 per watt. This is approximately 60-70% LESS than the price for panels just four years ago! Inverters are now priced around 40+ cents per watt. Completed solar power plants are coming on line at $3.50 to $4 per watt.

The spark behind this dramatic price drop is worldwide competition. The Intersolar Conference filled THREE huge conference floors within the Moscone Center with solar technology vendors including what appeared to be an entire floor of Chinese companies offering solar panel and solar hot water heating technologies. Also represented was an impressive array of manufacturers from Japan, Europe and the U.S. including a really cool technology developed by DEGERenergie, a German company that enables a solar panel to so effectively track the sun’s UV radiation that it increases a solar system’s output by 40+%. Watch this video on how clever use of software and a computer chip is increasing the supply of clean energy!

But there is a dark cloud hanging over the bright future for solar and the smart grid. A common theme expressed in private conversations and public panel discussions was a view of utilities as the 800-pound gorilla standing in the way of progress.

Again and again attendees at the conference mentioned to me (off the record, of course) that utilities were making the adoption of solar power and the smart grid a difficult, expensive and risky process. Mentioning the words “Power Purchase Agreements” to Intersolar Conference attendees sparked expressions of frustrations over a process that was described as exceedingly complex, expensive to negotiate and of high risk to solar power development companies while offering them only razor thin profits. I also heard over this two-day conference a lot of whispering about companies building highly debt-leveraged solar projects anchored to very low profit margin Power Purchase Agreements in the quest to build stock valuation. I have been here before and the result was called Enron.

I also heard remarkably candid conversations regarding government subsidies and how they were twisting the commercialization of solar power. The common theme was that the solar industry was pricing to harvest the highest prices from governments offering the highest subsidies. The the unspoken rule seems to be that the industry will shape its prices based upon the size of government subsidy, charging the countries that offer the most attractive subsidies higher per unit prices. While countries offering lower subsidies benefited from more competitive prices they also were faced with supply constrictions measured in either the availability of supply or the timing of delivery that limited the number of projects that could be built.

These insights add to my conviction that a carbon tax or similar pricing mechanism clearly and cleanly applied at the meter will significantly reduce the potential for self-serving gaming by utilities and solar power providers while also reducing the need for taxpayer subsidies. Such a pricing system, enabled by an open sourced smart grid flowing timely and easy to use information to consumers, would empower consumers to identify their least cost, highest value sustainable options among investments in conservation, energy efficiency, solar and other renewable energy resources.

In summary, The Green Economic Revolution is now in its early growth stage as economies of scale on a global scale are driving per unit costs down and increasing consumer choices. At the same time, so much more could be achieved on behalf of job creation and solving environmental challenges if the incentives of legacy players aligned with the innovations offered by cleantech companies who seek to freely compete for revenue growth.

Bill Roth is the founder of Earth 2017 and author of The Secret Green Sauce.


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