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Why overly hasty investment in solar power is a bad idea. Or, the Obama 'A' list of solar power subsidies in contrast

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  • Why overly hasty investment in solar power is a bad idea. Or, the Obama 'A' list of solar power subsidies in contrast

    People often ask me why I am so against throwing money at solar power, wind power, etc when it is 'clean', it would reduce US imported energy dependence, etc etc.

    Here's the reason:

    The average solar panel efficiency which is the present retail state of the art is approximately 10%.

    The solar power plants which Obama is pushing subsidies into via Abengoa Solar and Abound Solar will almost certainly involve efficiencies in the above stated range.

    These plants - which are slated to receive two billion dollars in federal loan guarantees - are non-trivial investments.

    The problem is this: Even as Europe and now the US is pouring money into 10% and 15% efficiency solar plants, the rest of the world will wind up building 20%, 25%, or even 30% efficiency solar plants.

    Do you think the resulting Chinese, Indian, Brazilian, and other more efficient solar plants will give those respective economies some advantage?

    And similarly, do you think there will be the will to tear down these already built solar plants and replace them with more efficient ones? Much less the future additional capital investment?

    If you really want alternative energy - and I do - the way is to incentivize the industry to improve its product towards the point where investment makes sense.

    For example: have an 'X' prize type award where the first company or companies that can demonstrate a 20% efficiency solar plant will receive $200M. ($400M will build a solar manufacturing line from scratch.)

    The prizes can be tiered - for 30% efficiency perhaps $500M can be awarded, etc etc.

    The true role of government should be to help the US alt-E industry survive first, to incentivize the industry to innovate second, and to ensure the availability of the means to proliferate once specific goals are met.

    Throwing money down lobbyist company's ratholes just guarantees future mediocrity.

    Edit 1: I forgot to add the the 2 companies in question - is it possible that Obama just chose the first 2 companies alphabetically listed?

    Edit 2: The efficiency numbers above do not refer to the solar panel efficiency itself. The solar panel efficiency is an important component, but the very act of collecting the generated electricity, transformation into another form for transmission, keeping the panels clean, etc etc all bear into the ultimate efficiency of the solar plant. Hence the 10% number.
    Last edited by c1ue; 07-05-10, 09:55 PM.

  • #2
    Re: Why overly hasty investment in solar power is a bad idea. Or, the Obama 'A' list of solar power subsidies in contrast

    What advantage will solar offer over coal?

    Comment


    • #3
      Re: Why overly hasty investment in solar power is a bad idea. Or, the Obama 'A' list of solar power subsidies in contrast

      Originally posted by touchring
      What advantage will solar offer over coal?
      Solar power isn't going to replace coal particularly for poorer countries - but solar power does have a number of advantages:

      1) Solar power, once built, doesn't require ongoing transport of input materials much less mining
      2) Solar power doesn't have ramp up or ramp down cycles
      3) In places that are hot - the peak solar energy generation times coincide with peak energy demand

      Notice that CO2 (lack of) generation isn't even a factor until after these 3 benefits of solar.

      From an industrial electricity generation perspective - a solar plant with 20% or higher efficiency should be extremely competitive in purely grid parity economic terms with a coal generation plant, modern or otherwise.

      This 20% efficiency level is very achievable with the 30% potentially possible.

      Comment


      • #4
        Re: Why overly hasty investment in solar power is a bad idea. Or, the Obama 'A' list of solar power subsidies in contrast

        Originally posted by c1ue View Post
        Solar power isn't going to replace coal particularly for poorer countries - but solar power does have a number of advantages:

        1) Solar power, once built, doesn't require ongoing transport of input materials much less mining
        2) Solar power doesn't have ramp up or ramp down cycles
        3) In places that are hot - the peak solar energy generation times coincide with peak energy demand

        Notice that CO2 (lack of) generation isn't even a factor until after these 3 benefits of solar.

        From an industrial electricity generation perspective - a solar plant with 20% or higher efficiency should be extremely competitive in purely grid parity economic terms with a coal generation plant, modern or otherwise.

        This 20% efficiency level is very achievable with the 30% potentially possible.

        I think solar power makes sense in remote places or islands where there is no grid, but these are perhaps only 0.1% of total world demand since the majority of modern people live towns and cities.

        The 4th point CO2 is not even a consideration in most large developing countries. Only money is considered, never mind about global warming, it's even ok if one third of population dies of lung cancer in the future.

        The question is, unless Solar can save more money than coal, no large developing country will use solar (other than for experiments for their manufacturing sector so that they can export to Europe or the USA).

        http://www.vbs.tv/watch/toxic/toxic-linfen-china

        Comment


        • #5
          Re: Why overly hasty investment in solar power is a bad idea. Or, the Obama 'A' list of solar power subsidies in contrast

          Originally posted by touchring
          The question is, unless Solar can save more money than coal, no large developing country will use solar (other than for experiments for their manufacturing sector so that they can export to Europe or the USA).
          And my point is - at higher efficiency levels, solar can be grid parity competitive even at present electricity price levels even without subsidies. Not as core electricity generation, but a significant percentage of power generation is devoted to peak electricity demand needs.

          And more importantly, once a solar plant goes in, the cost is essentially 'baked in' - future commodity price increases are irrelevant at least for the 20 year effective lifespan.

          Similarly wind energy is largely not beneficial beyond a tiny fraction of total electricity generation - unless some form of storage is involved. But it can be of benefit in the marginal electrical demand instances.

          Comment


          • #6
            Re: Why overly hasty investment in solar power is a bad idea. Or, the Obama 'A' list of solar power subsidies in contrast

            Originally posted by c1ue View Post
            And my point is - at higher efficiency levels, solar can be grid parity competitive even at present electricity price levels even without subsidies. Not as core electricity generation, but a significant percentage of power generation is devoted to peak electricity demand needs.

            And more importantly, once a solar plant goes in, the cost is essentially 'baked in' - future commodity price increases are irrelevant at least for the 20 year effective lifespan.

            Similarly wind energy is largely not beneficial beyond a tiny fraction of total electricity generation - unless some form of storage is involved. But it can be of benefit in the marginal electrical demand instances.

            Ok, i see what you mean, don't waste the money now.

            Comment


            • #7
              Re: Why overly hasty investment in solar power is a bad idea. Or, the Obama 'A' list of solar power subsidies in contrast

              Originally posted by touchring View Post
              Ok, i see what you mean, don't waste the money now.
              just ran across this thread while reading: http://www.itulip.com/forums/showthread.php/21507-Der-Spiegel-Solar-PV-in-Germany-a-fail

              and just how prescient mr c1ue was in this matter, circa july2010, is pretty amazing (with the epic fail of solyndra, as well as the 'homegrown' fail of hoku scientific out here, that took millions in subsidies/investment from HI and then sent all the jobs to ID, only to ultimately fail over there... so far, anyway... sigh....)

              and we're assuming/expecting/hoping that the present group of .gov crony capitalist pals are going to somehow solve anything? (except to maybe solve their lack of their own money to throw down whatever rathole is most PC/fashionable at the moment)

              Comment


              • #8
                Re: Why overly hasty investment in solar power is a bad idea. Or, the Obama 'A' list of solar power subsidies in contrast

                More solar fun:

                http://newsandinsight.thomsonreuters...es_bankruptcy/

                April 2 (Reuters) - Solar Trust of America LLC, which holds the development rights for the world's largest solar power project, on Monday filed for bankruptcy protection after its majority owner began insolvency proceedings in Germany.

                The Oakland-based company has held rights for the 1,000-megawatt Blythe Solar Power Project in the Southern California desert, which last April won $2.1 billion of conditional loan guarantees from the U.S. Department of Energy. It is unclear how the bankruptcy will affect that project.

                Solar Trust said it ran short of liquidity after Solar Millennium AG, which holds a 70 percent stake, sought court protection in December.

                Solar Millennium then tried to sell that stake to solarhybrid AG, but that transaction collapsed when solarhybrid also sought court protection in Germany.

                Edward Kleinschmidt, Solar Trust of America's chief operating officer, in a court filing said the company has already missed two quarterly rent payments on the Blythe project, and cannot make several other payments due imminently.

                He said NextEra Energy Resources LLC has committed to provide some financing and "expressed an interest" in serving as an initial bidder for some assets.

                Ferrostaal AG owns the other 30 percent of Solar Trust of America but does not provide financial help, Kleinschmidt said.

                Solar Trust of America and several affiliates filed for protection from creditors with the U.S. bankruptcy court in Delaware. It estimated to have as much as $10 million of assets, and between $50 million and $100 million of liabilities.

                Blythe is about 220 miles (354 km) southeast of Los Angeles.

                "We have been working with Solar Trust of America for a couple of years in getting this project going," David Lane, Blythe's city manager, said in an interview. "Although the project is not in the city limits, we are the only city within 100 miles. My sense is that with the large investment in what was to have been the world's largest solar power plant, someone somewhere will buy it and build it."

                Separately, Solar Millennium said it has been sued by former Chief Executive Utz Claassen over public statements by company representatives that he claims have damaged his reputation and left him unable to find a job. Solar Millennium said the lawsuit would not directly affect its insolvency proceedings.

                The case is In re: Solar Trust of America LLC et al, U.S. Bankruptcy Court, District of Delaware, No. 12-11136.

                For the debtors: Michael Nestor of Young Conaway Stargatt & Taylor.
                $2.1 billion in loan guarantees, $200 million in cash loans from Southern California Edison, 9 employees?

                http://online.wsj.com/article/SB1000...577365668.html

                Those rights enabled the company, through a subsidiary, to borrow more than $200 million from Southern California Edison Company, the company said in court papers. Most solar-panel developers have to pay for development costs themselves.

                Southern California Edison is also financing $100 million of a second 4,300-acre project located near the flagship project.

                A third project in Nevada hasn't progressed as far as securing transmission rights.

                That project is entangled in a lawsuit in Nevada state court from a minority shareholder, Global Finance Corp., which tried to block its sale last year.

                ...

                Solar Trust owes about $20 million to unsecured creditors, according to court papers.

                The company's only loan debt of about $200,000 is owed to Citibank.

                The company's headquarters are located in Oakland, Calif., according to its website. It has nine employees.

                Comment


                • #9
                  Re: Why overly hasty investment in solar power is a bad idea. Or, the Obama 'A' list of solar power subsidies in contrast

                  even more interesting is the revelation (to me anyway) that more than a few of the recent highfliers of the solar sector have lost 90% of their market caps the past few years:

                  http://online.wsj.com/article/SB1000...688736854.html

                  • Updated April 9, 2012, 2:08 a.m. ET

                  Steve Jobs's Lesson for Solar-Power Bulls

                  Originally posted by wsj/heardonthestreet

                  he birth of the mouse is a famous cautionary tale from Silicon Valley. In it, Xerox develops an early version of the now-ubiquitous PC pointer, but Steve Jobs and Apple actually make it ubiquitous. The warning—first movers don't always end up dominating a particular field—applies to another hot technology: solar power. In June 2008, solar-panel manufacturers looked poised to conquer the world. The 12 largest had a combined market value of about $70 billion, according to Sanford C. Bernstein. Today, they are worth about $6.4 billion. One of them, Germany's Q-Cells, filed for bankruptcy last week. On the same day First Solar, which alone was worth more than $20 billion in 2008, saw its stock slump by almost 8%. The company is now worth less than $2 billion.


                  First Solar has suffered several setbacks recently, not least having to make higher warranty provisions because its solar modules may suffer "increased failure rates in hot climates" (think about that one for a second.)
                  The bigger issue for First Solar and peers is a structural shift in the industry. In 2008, governments, particularly in Europe, offered generous subsidies to boost solar power; carbon caps in the U.S. seemed not far off; and financing flowed easily. Equipment manufacturers were expanding quickly and driving down costs to make solar power competitive with rival sources like coal and natural gas.
                  One financial crisis later, public subsidies and private financing are far tighter. In the U.S., shale gas has upended the economics of electricity. Citigroup reckons that even at an installed cost of $1.50 per watt for new projects, even in the sunniest regions, solar can't compete with efficient plants burning natural gas at a cost of $5 per million British thermal units. Right now, gas costs less than half that and even utility-scale U.S. solar projects cost well north of $2 per watt.
                  Still, the solar-power industry has successfully cut the cost of equipment. The problem is how it has done it. All those juicy subsidies attracted competitors, particularly from China. The result is an industry that will likely end the year with the capacity to build 40 gigawatts of solar modules, according to Citi—which also estimates demand this year of just 24GW. The bank doesn't expect annual demand to hit 40GW anytime this decade.
                  This oversupply is driving down prices for solar panels. Bernstein puts the compound annual decline at 32% between 2007 and 2011, noting the eerie similarity with the price of computer memory, which has fallen at an annual compound rate of 33.4% since 1974.


                  Such falls are great for the technology concerned as it expands the available market. But the resulting commoditization, with competition focused increasingly on price, isn't great for the firms involved as the economic benefits leak away to others. Falling profit margins and share prices—as well as bankruptcies—are the unfortunate result.
                  Another analogy can be drawn with the U.S. exploration and production sector, which did very well to develop lots of natural-gas reserves. But the resulting oversupply has damaged the economics of the business. Value is accruing instead to those who transport and use the fuel. Increasingly, the likes of Exxon Mobil are muscling in. These bigger companies are willing and able to absorb the near-term pain of low prices in anticipation of a coming age of gas.
                  The bull case for solar power is that when prices drop low enough to compete without the aid of government subsidies, the resulting expansion of demand will boost the industry's fortunes.
                  Indeed it will. But the winners won't necessarily be the pioneers we are familiar with today. Rather, they will likely be companies with the scale to compete on price and absorb the inevitable cyclical losses that afflict most manufacturing industries prone to bouts of oversupply. A smaller group of large companies like General Electric, for example, look more like the long-term winners as solar power eventually finds its place in the sun.
                  will be almost kinda funny to see GE end up with with a major marketshare of this sector

                  Comment


                  • #10
                    Solar cells may not improve quickly.

                    This 20% efficiency level is very achievable with the 30% potentially possible.
                    I'd be very cautious about predicting what solar power may do in the future. People have been working on photovoltaics and other technologies for decades. They will not improve suddenly just because we need them too. I have yet to hear about a solar system that is economic under current market conditions, without some sort of subsidy.

                    This reference claims a 20+ year lifetime, and so does this, which surprised me.

                    Having said that, there is a start up in my area which plans to reduce the energy cost of silicon by about 40% by using non-Chokralski process. It is not pure enough for integrated circuits, but pure enough for solar cells.

                    The problem with both solar and wind is that the power you get is determined by weather, not by what the grid needs, so a lot of money must be put into storage and alternative generation capability.

                    Comment


                    • #11
                      Re: Solar cells may not improve quickly.

                      CIGS baby CIGS

                      When I was at ORNL this technology was referred to affectionately as "bug poop".

                      http://www.ornl.gov/sci/manufacturing/research/lowtemp_ferment.shtml

                      Comment


                      • #12
                        Re: Solar cells may not improve quickly.

                        Originally posted by =Polish Silver
                        I'd be very cautious about predicting what solar power may do in the future. People have been working on photovoltaics and other technologies for decades. They will not improve suddenly just because we need them too. I have yet to hear about a solar system that is economic under current market conditions, without some sort of subsidy.
                        This is correct, but the people working on the solar PV were primarily serving government and defense needs. When the cost of lifting to orbit is thousands of dollars per pound, spending hundreds of dollars for solar panels via highly customized, highly expensive fabrication is well worthwhile.

                        The people working on solar now are coming from different backgrounds and have a different focus.

                        Originally posted by Polish Silver
                        This reference claims a 20+ year lifetime, and so does this, which surprised me.

                        Having said that, there is a start up in my area which plans to reduce the energy cost of silicon by about 40% by using non-Chokralski process. It is not pure enough for integrated circuits, but pure enough for solar cells.
                        There is no question a solar cell will put out power for a long time, the question is how much at any given time during this period. Frankly the industry is too young for meaningful data.

                        Originally posted by Polish Silver
                        The problem with both solar and wind is that the power you get is determined by weather, not by what the grid needs, so a lot of money must be put into storage and alternative generation capability.
                        Absolutely true, and all points I've raised before. There are and will continue to be niches where solar makes sense, but I don't see any realistic situations in the next several decades where it can be an affordable and reliable primary source for electricity.

                        Comment


                        • #13
                          Re: Solar cells may not improve quickly.

                          Originally posted by c1ue View Post
                          Tbut I don't see any realistic situations in the next several decades where it can be an affordable and reliable primary source for electricity.
                          If you are correct on this, the political dialog and public policy on solar power is completely wrong headed. SNAFU!

                          Comment


                          • #14
                            Re: Solar cells may not improve quickly.

                            Originally posted by c1ue View Post
                            solar PV were primarily serving government and defense needs. When the cost of lifting to orbit is thousands of dollars per pound, spending hundreds of dollars for solar panels via highly customized, highly expensive fabrication is well worthwhile.

                            A lot of PV systems were for space applications, which included communications & navigation sattelites, NASA probes, etc. Although they could spend a lot of $$/watt, thier efficiencies were only marginally better than a PV you buy at Radio Shack, which is not a good sign for the future. Buy maybe the improvements will be not in efficiency, but cost reduction.

                            Comment


                            • #15
                              Re: Solar cells may not improve quickly.

                              Originally posted by Polish Silver
                              A lot of PV systems were for space applications, which included communications & navigation sattelites, NASA probes, etc. Although they could spend a lot of $$/watt, thier efficiencies were only marginally better than a PV you buy at Radio Shack, which is not a good sign for the future. Buy maybe the improvements will be not in efficiency, but cost reduction.
                              It depends on which generation of space PV you refer to. The most cutting edge ones had double and triple (or maybe more) junction PV - which is exactly what the more efficient commercial solar PV panels do.

                              So in a real sense, the real 'improvement' is what you note. To my semi-informed knowledge, there haven't been any major physics based improvements in PV - the changes are primarily in the cost of production.

                              Comment

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