These are tough times for the solar industry. Companies such as Evergreen solar and SpectraWatt have filed for bankruptcy, while most famously, Solyndra, a recipient of tax dollars under the American Recovery and Reinvestment Act, closed up shop this month. On top of this, an excess supply of photovoltaic (PV) panels, especially from China, is causing price suppression; cutting the margins for those manufacturers still in business.
Timely therefore, that Renewable Energy Focus magazine hosted a webinar yesterday concerning the prospects of competing solar electric technologies. However, as editor and host David Hopwood conceded, many are asking whether it is less a question of which competing solar technology will win out, but rather, how robust the entire industry is compared with other renewable or traditional power generation industries?
The panel consisting of the CEO of solar company, Amonix, as well as the principals of solar consulting companies Navigant Consulting and SolarVision Consulting, didn’t try to sugar-coat the situation. But ultimately, they all remain resolute that solar will be a cost competitive renewable energy source in the long run. But given the current woes, what do these experts see as trends in the industry?
The competing Solar Technologies
Today, the solar market is segmented into three distinct areas of technology.
- PV – Photovoltaic, both thin film and crystalline silicon PV. This is the static roof-top technology that people are likely most familiar with.
- CPV – Concentrating photovoltaic – Amonix’s business. A technology which uses large scale sun-tracking solar panels augmented by magnifying lenses, used to concentrate the light.
- CSP – Concentrating solar-thermal power. A technology which concentrates the sun’s light to heat a fluid; driving a turbine which subsequently creates electricity.
To give these various flavors of solar some context, you’ll see PV distributed on residential and commercial buildings, while CPV and CPS are often found in large scale desert installations, whose customers are large utilities. The state of the market for each of these is as distinct as the technologies themselves.
PV tipping towards unsustainable prices
From the panel discussion, the thin end of the wedge at the moment is clearly PV. This segment has become “commoditized” and at the moment, there is considerable excess supply. Up to now, because of attractive incentives, Europe has consumed around 80% of global PV capacity, while China and Taiwan have supplied around 54% of it. Paula Mints, Principal Analyst at Navigant Consulting, explained there is so much capacity sitting around in Europe that even the Chinese are having problems.
Worryingly for PV manufacturers, the price per watt is changing on a daily basis, most recently it fell all the way down to around $1.10 from $1.35 per watt in just the last several weeks. Although a reduction in cost for solar sounds like a good thing, at this price point, Mints explains that the market is unsustainable, since manufacturers cannot make money at this price.
On the other hand, CSP is experiencing a flattening of cost, suggesting that economies of scale are limited. Dr. Andy Skumanich of Solar Vision Consulting has plotted the cost of all solar technologies using the key metric of dollars-per-watt, while comparing this with the capacity of accumulated installation. Of all the technologies, CSP is the one which is not getting relatively cheaper, which appears to be due to very high construction costs and higher operating and maintenance costs. Coupled with the fact that there is less flexibility in the size of a CSP plant, (they generally need to be very large installations to be economic) – CSP could be poised to give up ground.
And that ground could fall to CPV, which Amonix’s CEO seems bullish about. There are some key attributes which make CPV attractive; the capacity is built to order – avoiding the over supply issues that PV suffers from- while the factory manufactured panels can be deployed rapidly with just a couple of cranes and a crew of 12 people. CPV is also a more flexible system – viable from as little as 2 MW, to as big as necessary. CPV also has compelling land use benefits too. For example, since the panels sit raised upon poles, the land can be used for animal grazing. Finally, unlike CSP, CPV is getting relatively cheaper with accumulated capacity deployed. Need proof of concept? – manufacturing at Amonix is going flat out!
So, we can see that not all solar is created equally, and in today’s market, not all solar enjoys the same fate. But what lies ahead?
Is the future looking bright?
Going forward, all the experts on the panel agreed that solar suffers, as usual, from politicization. In the context of the US market, Solyndra’s demise – and the tax-payer dollars involved – have set up an adverse political context for the provision of solar subsidies. It’s easy to see how the industry will be painted by some within the Beltway as a flop. However, as Brain Robertson of Amonix pointed out – that does not change the underlying fact that solar is getting cheaper and more competitive anyway.
That said, solar does still have the problem of “intermittency” – which in lay-terms means the power goes off when the sun doesn’t shine. This is not an issue with distributed PV, but for large installations selling to the utilities, it gives those utilities the latitude to invoke curtailment: they can refuse power from solar plants to avoid intermittency disruption. As such, the industry still needs to resolve the complexities and high costs of storage. And here is where CSP might have the edge, for two reasons. First, the opportunity of hybridization exists on occasions when the sun doesn’t shine, in which case, natural gas can be used to power the turbines instead. And second, since CSP primarily generates heat, moulten salt can be used as a heat storage medium – evening out supply variation.
Manufacturers in the PV space will have a tough time in the immediate future due to the over supply problem and likely, other companies will go out of business like those mentioned earlier. But, 2012 could be an adjustment year, after which the market could stabilize.
So, to conclude, there are pros and cons abound, but overall, we can be cautiously optimistic that the sun will continue to shine on solar.