Rearch on solar panel

Solar Power: Prospects and Issues

Prepared by Roman Zytek, Senior Economist, International Monetary Fund1/

National Capital Area Chapter of the U.S. Association for Energy

Economics (http://www.ncac-usaee.org/)

This self-guided tour/research reference guide to solar power has benefited from comments and suggestions received during the author’s presentation to NCAC-

USAEE members made on December 19th, 2008

Acknowledgment:The author would like to thank the participants of the December 19th

seminar for valuable input and comments that helped design this self-guided tour

1/ Disclaimer:The views expressed herein are those of the author and should not be attributed to the International Monetary Fund (IMF), its Executive Board, or its management

Contents

•

Why talk about solar? (starts with slide 4)•

Energy transition: theory and history (19)

•

Energy cost/risk management (27)•

Solar technologies (30)

•

Photovoltaics

(PV) (39)•

Economics 101 of PV (57)

•

Government policies (68)•

Deployment strategies (73)

•

Solar energy in developing countries (78)•

Conclusions (86)

•

Annex 1: Country experiences (abstracts of selected articles prepared by Ariadna

Bankowska) (88)

•

Annex 2: Further readings (99)•

Interesting web links (105)

Thing to Remember …

Transition Takes Time It takes time for innovations and

new products to become competitive and mass marketed. This applies to energy as well,

whether we like it or not ...

Why Talk About Solar?

Why Even Bother with Solar Energy? U.S. Electricity Generation Mix

(In percent of total)

Source: http://www.eia.doe.gov/emeu/aer/txt/ptb0802a.html

F o ss il , 7 2 .0

N u c le a r , 1 9 .4

W in d , 0 .8

H y d ro , 6 .0

B io m a ss , 1 .3

S o la r , 0 .0 1 5

G e o th e rm a l, 0 .4

Solar Power …•

Solar energy contributed less than two of one hundredth of one percent (<0.02 percent) to U.S. electricity generation in 2007

•

Even at super optimistic (unrealistic?) growth rates solar power will remain only a marginal contributor to electricity generation in 2025; maybe a player by 2050

•

But …–

The industry is growing rapidly (even if only because of generous taxpayer support)

–

Policymakers explore options for promoting the sector. Bad support can be costly and undermine the sector

–

Solar power can be competitive in niche markets–

Solar power can become indispensable in the long term

Share of PV Electricity at Super Optimistic

Growth Assumptions

Share of Solar Electricity(In percent of total electricity generation)

54.6

0.01500

20

40

60

80

100

2007 2015 2023 2031 2039 2047

Assuming annual growth rates of: 2008-17=40%, 2018-27=30%, 2028-37=20%, 2038-50=10%;

2% annual growth for electricity demand

Share of PV Electricity at Just Optimistic

Growth Assumptions

T he Share of S ola r Electrici ty(In pe rcent of to tal electricity genera tion)

2 .70.0150

20

40

60

80

100

2007 2015 2023 2031 2039 2047

A ssuming annual grow th rates of: 2008-17= 30% ,

2018-27=20% , 2028-37=10% , 2038-50= 5% ;

2% annual grow th for elec tricity demand

Installation Trends-New Generation

New Solar Power Installed in International Energy Agency Photovoltaic Power Systems Program (IEA

PVPS) Reporting Countries, 1993-2007 (in M W) 2,257

0

400

800

1,200

1,600

2,000

2,400

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Installation Trends-Total Capacity

Solar Power Capacity in International Energy Agency Photovoltaic Power Systems Program (IEA PVPS)

Reporting Countries, 1993-2007 (in M W ) 7,736

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

19931994

19951996

19971998

19992000

20012002

20032004

20052006

2007

PV Installations by Country High tax incentives made the difference

PV Installations in 1992(In percent of global total)

Germany, 5

Italy, 8

Japan, 18

USA, 41

Other, 27

PV Installations in 2007(In percent of global total)

Germany, 49

Italy, 2

Japan, 24

USA, 11

Other, 14

Research Trends

Source: ScienceDirect.com search on November 12, 2008

Reference to Photovoltaic in All Journals, 2000-November 2008

228

285262

344319

366

477435

577

200

300

400

500

600

2000 2001 2002 2003 2004 2005 2006 2007 2008

Research Trends

Source: ScienceDirect.com search on November 12, 2008

Reference to Photovoltaic in Energy Sector Journals1950-November 2008

11 34 73

532

1049

1729

0

400

800

1,200

1,600

2,000

1950-59 1960-69 1970-79 1980-89 1990-99 2000-081/

Solar Power May Become Indispensable by 2050

•

10 billion people around the world•

Each using a couple of kilowatt-hours of energy per day ...

•

Will need 60 terawatts of energy …•

The equivalent of 900 million barrels of oil per day (up from about 225 million today)

Smalley, Richard E., 2005, “Future Global Energy Prosperity: The Terawatt Challenge,”

Materials Research Society

(MRS) Bulletin, Vol. 30, pp. 412-417, www.mrs.org/publications/bulletin

or http://smalley.rice.edu/

Future Energy Balance—How to Meet Demand for Renewable

Energy •

Projected 28 TW in 2050 in global energy demand

•

To stabilize CO2

requires !20 TW of carbon-free power … Twice as much carbon free power by 2050 than all power

produced today•

Nuclear? 10 TW require construction of 10,000 new plants over the next 50 years, i.e., one every other day

•

Feasible hydropower? 1.5 TW•

Wind? 2 TW on land; offshore large but costly …

•

Biomass? 20 TW require 31% of the total land on earthLewis, N.S., 2004, “Chemical Challenges in Renewable Energy,”

www.nsl.caltech.edu/files/Energy_Notes.pdf

Solar Potential•

The only renewable resource with terrestrial energy potential to satisfy a 10-20 TW carbon-free supply constraint in 2050

•

A practical solar power potential of ~600 TW –

Estimates from 50 TW to 1500 TW

•

For a 10% efficient solar farm, at least 60 TW of power could be supplied from terrestrial solar energy resources

•

U.S.: 3 TW at 10% efficiency require 1.7% of land

Lewis, N.S., 2004, “Chemical Challenges in Renewable Energy,”

www.nsl.caltech.edu/files/Energy_Notes.pdf

An Interesting Map Theoretical space needed for solar power plants to generate sufficient electric power in

order to meet the electricity demand of the World, Europe (EU-25) and Germany respectively. (Data by the German Center of Aerospace (DLR), 2005)

Also see: Meisen, Peter and Oliver Pochert, 2006, “A Study of Very Large Solar Desert Systems with the Requirements and Benefits to those Nations Having High Solar Irradiation Potential”

at: http://geni.org/globalenergy/library/energytrends/currentusage/renewable/solar/solar-

systems-in-the-desert/Solar-Systems-in-the-Desert.pdf

Risks The solar energy sector will remain volatile

•

Sharp fall in hydrocarbon fuel prices–

Concerns for global warming may soften the blow to solar from lower hydrocarbon prices

–

Expanding niche applications will give some support•

Sharp rise in input costs –

Neck-breaking additions to PV capacity my push input silicon prices even higher and further slow cost reductions of solar energy

•

Drop in demand for solar energy when tax incentives become too costly as the sector grows, while production costs are still too high to ensure market competitiveness

•

Too rapid technological depreciation makes mainstream investors adopt a wait-and-see attitude –

It is not clear which technology will win

Energy Transition: Theory and History

•

Fundamental changes in global energy systems are slow –

Substitution of wood by coal took most of the 19th

century–

Replacement of coal by oil and gas took most of 20th century

–

Replacement of oil and gas likely to take time–

Long-term forecasts proved repeatedly wrong

Gritsevskyi, A., and N. Nakicenovic, 2000 “Modeling Uncertainty of Induced Technological Change,”

Energy Policy, Vol. 28, pp. 907-921Sohn, I., C. Binaghi and P. Gungor, 2007, “Long-term Energy Projections: What Lessons

have We Learned?”

Energy Policy,

Vol. 35, pp. 4574-4584

Long Term Energy Transitions and Projections: Theory and Experience

Three Laws of Energy Transition

•

The law of stable long-term energy costs-to- income ratio

•

Growth in economic productivity requires better quality of energy services

•

The law of growing energy productivity

Bashmakov, I., 2007, Three Laws of Energy Transitions, Energy Policy,

Vol. 35, pp. 3583-3594

Three Laws of Energy Transition

I. The law of stable long-term energy costs-to-income ratio

–

Final energy costs-to-GDP (8-10 percent for U.S.; 9-11 percent for OECD)

–

Final consumer energy-to-GDP (4-5 percent for U.S.; 4.4-5.5 percent for OECD)

–

Housing energy costs-to-personal income (2.6 for U.S.; 3.2 percent for EU-15)

–

Energy for transportation-to-personal income ratio stable

Bashmakov, I., 2007, “Three Laws of Energy Transitions,”

Energy Policy,

Vol. 35, pp. 3583-3594

U.S. Personal Expenditure on Household Energy Utilities(In percent of total expenditure)

0.0

1.0

2.0

3.0

4.0

5.0

6.0

1929 1940 1951 1962 1973 1984 1995 2006

Expenditure on electricity, gas, and fuel oil and coal Electricity Gas Fuel oil and coalExpon. (Expenditure on electricity, gas, and fuel oil and coal)

Source: Bureau of Economic Analysis, U.S. Department of Commerce

U.S. Personal Expenditure on Transportation(In percent of total expenditure)

0.0

3.0

6.0

9.0

12.0

15.0

1929 1940 1951 1962 1973 1984 1995 2006

Transportation Gsoline and oil

Source: Bureau of Economic Analysis, U.S. Department of Commerce

Three Laws of Energy Transition

II. Growth in economic productivity requires better quality of energy services–

The share of electricity in final energy consumption rose from 10.6 percent in 1971 to 18.1 percent in 2002 globally; projected at 50 percent in 2100

–

The share of natural gas in the power sector fuel mix rose from 13.3 percent to 19.1 percent

–

Carbon intensity of primary energy use declined 1.8 percent per annum in 1990-2003

Bashmakov, I., 2007, “Three Laws of Energy Transitions,”

Energy Policy,

Vol. 35, pp. 3583-3594

Three Laws of Energy Transition

III. The law of growing energy productivity

–

As energy quality improves, given relatively stable energy costs-to-

income ratios, energy intensity declines

–

Energy intensity halved in the U.S. in 50 years–

China reduced energy intensity by a factor of 4 since 1971–

Germany to reduce energy intensity by a factor of 3 by 2050

(Note: Long-term data often exclude human & animal power)

Bashmakov, I. ,2007, “Three Laws of Energy Transitions,”

Energy Policy,

Vol. 35, pp. 3583-

3594

Energy Cost and Risk Management

Justifying Solar Today Energy Cost Risk Management

•

Cost competitiveness is a conditional criterion–

Least-cost technology in electricity generation (coal)–

Least-risk technology (solar)•

Hydrocarbon energy is risky–

Coal, gas, oil prices are volatile and difficult to predict–

Global warming/environmental policy risks•

Solar energy technologies are low-to-no-risk technologies–

No price volatility for inputs–

Low risk of government environmental regulations•

Adding solar to energy portfolio reduces portfolio risk–

People invest in government bonds and stocks even though the latter seem to offer much higher rates of return; many prefer to use 30-year fixed mortgage at 6 percent than adjustable rate mortgage at 3 percent

Albrecht, J., 2007, “The Future Role of Photovoltaics: A Learning Curve versus Portfolio Perspective”

Energy Policy,

Vol. 35, pp. 2296-2304Awerbuch, S., 2004, “Portfolio-Based Electricity Generation Planning: Policy Implications for

Renewables

and Energy Security,”

SPRU, University of Sussex, Working Paper

Energy Cost Volatility and GDP•

Fossil price fluctuations are not random, but are statistically high when GDP growth and the value of other assets are low. This implies that:–

Cost estimates understate the true economic cost of fossil-based generation

–

Risk-adjusted estimates suggest 50% higher cost of gas-fired generation

–

The negative betas imply that fossil fuel price spikes •

Drive up cost of living, •

Lower consumer wealth, value of homes and other assets

•

The negative oil-GDP relationship implies the need for optimal generating portfolios to avoid exposure to fossil price risk

Awerbuch, S. and R. Sauter, 2005, “Exploiting the Oil-GDP Effect to Support Renewables Deployment”

The Freeman Centre, University of Sussex, Paper No. 129

Solar Technologies

Types of Direct Solar Power

•

Light/Hybrid Solar –

Light sent from rooftops to inside buildings (fiber optics and solar tube)

•

Thermal Solar (among them):–

Solar Hot Water

–

Concentrating Solar: power a turbine; for thermal dissociation (break water into hydrogen and oxygen)

•

Photovoltaic (PV) devices generate electricity via an electronic process–

“Electricity from your roof,”

windows, dress, backpack

Hybrid Solar (Source: yahoo.com—images)

Solar Water Heaters (Source: yahoo.com—images)

CSP Technologies

•

Parabolic troughs:

over 20 years of operating experience under real world conditions

•

Power Towers

(heliostats, receptors, and tower)•

Solar Dishes

•

Linear Fresnel CSP

(cheap mirrors are a big plus, no need for expensive bent glass reflectors)

Wolff, Gerry, Belén

Gallego, Reese Tisdale, David Hopwood, 2008, “CSP Concentrates the Mind,”

Renewable Energy

Focus,

Vol. 9, pp. 42-47

Parabolic Troughs Taggart, Stewart, 2008, “Parabolic Troughs: CSP's

Quiet Achiever,”

Renewable Energy Focus,

Vol. 9, Issue 2, pp 46-50. (Picture source: yahoo.com—images)

Solar Tower Taggart, Stewart, 2008, “Hot Stuff: CSP and the Power Tower”

Renewable Energy Focus,

Vol. 9, Issue 3, pp. 51-54. (Picture source: yahoo.com—images)

Solar Dishes Taggart, Stewart, 2008, “CSP: Dish Projects Inch Forward,”

Renewable Energy Focus,

Vol. 9, Issue 4, pp. 52-54. (Picture source: yahoo.com—images)

Linear Fresnel Ford, Graham, 2008, “CSP: Bright Future for Linear Fresnel Technology?”

Renewable Energy Focus,

Vol. 9, Issue 5, pp. 48-51. (Picture source: yahoo.com—images)

Photovoltaics

Photovotaics: Theory•

Photovoltaic: electricity directly from sunlight

• Photons (light) are absorbed by semiconducting materials (e.g. silicon) in a solar cell

• Electrons (negatively charged) are knocked loose from their atoms, flow through the material, produce electricity. The complementary positive charges, holes, flow in the opposite direction (photovoltaic effect)

• An array of solar panels converts solar energy into direct current

(DC) electricity

• The DC current enters an inverter

• The inverter turns DC electricity into 120/240-volt alternating current (AC) electricity

• Surplus electricity to batteries/grid (other users)

Photovoltaic Technology (Picture source: yahoo.com—images)

Photovoltaics: Benefits

•

Renewable•

Minimal maintenance cost

•

Non-polluting (zero CO2

emissions)•

No moving parts to break down

•

Life expectancy 25-45 years •

Small scale installations can be efficient

•

Decentralizes power generation (security)•

Power added as needed, where needed

Photovoltaics: Drawbacks

•

High initial capital cost •

Intermittent

•

Relatively low efficiency•

Requires sunlight (stronger the better)

•

Tools to manage sun/cloud volatility •

Limits on electricity storage (batteries)

•

Aesthetic issues

Photovoltaics: History•

Discovered in mid-XIXth century

•

1883: Charles Fritz’

solar cell with efficiency of 1-2% •

1954: Bell Labs photovoltaic device with efficiency of 6%

•

1955: a commercial PV cell cost $1,785/Watt•

1958: small-scale scientific applications–

Space program

–

Sensing and measuring light (cameras) •

1970s: high costs made large applications unfeasible

•

Semiconductor technology allows large efficiency gains

Key Technologies•

Discrete Cell Technology –

Single-crystal silicon

–

Multicrystalline silicon –

Dendritic web

•

Integrated Thin Film Technology –

Copper Indium Diselenide (CuInSe2) or CIS

–

Cadmium Telluride (CdTe)

Bagnall, Darren M., Matt Boreland, 2008, “Photovoltaic Technologies,”

Energy Policy,

Vol. 36, pp. 4390-4396O’Rourke, Stephen, 2008, “Solar Photovoltaic Industry,”

Deutsche Bank SecuritiesQuaschning

Volker, 2004, “Technical and Economical System Comparison of Photovoltaic and Concentrating Solar Thermal Power Systems Depending on Annual Global Irradiation,”

Solar Energy, Vol. 77, Issue 2, pp. 171-178

Photovoltaics: Discrete Cell Technology

•

Single-crystal silicon

–

Sliced from single-crystal boules

of grown silicon

–

Cut as thin as 200 microns –

Research cells: 24-percent efficient

–

Commercial modules: 15-percent efficient

Photovoltaics: Discrete Cell Technology (cont.)

•

Multicrystalline silicon

–

Sliced from blocks of cast silicon–

Less expensive to manufacture

–

Less efficient than single-crystal silicon cells–

Research cells: 18-percent efficient (May ’07)

–

Commercial modules: 14-percent efficient

Photovoltaics: Discrete Cell Technology (cont.)

•

Dendritic web–

A film of single-crystal silicon pulled from a crucible of molten silicon, like a soap bubble, between two crystal dendrites.

–

Gallium Arsenide (GaAs) A III-V semiconductor material for high-efficiency photovoltaic cells, used in concentrator systems and space power systems

–

Research cell 25+ percent efficient under 1-sun conditions, 28 percent under concentrated sunlight

–

Multijunction

cells based on GaAs

and related III-V alloys exceed 30-percent efficiency

Photovoltaics: Integrated Thin Film Technology

•

Copper Indium Diselenide (CuInSe2), or CIS –

A thin-film polycrystalline material

–

Research efficiency: 17.7 percent –

Highest completed module efficiency for full sized power modules, reaching over 11 percent

•

Amorphous Silicon (a-Si) used in: –

Consumer products: solar watches and calculators

–

Building-integrated systems: replacing tinted glass with semi-transparent modules

–

Efficiency is low: greater requirement for space, high array installed cost and weight

Photovoltaics: Integrated Thin Film Technology (cont.)

•

Cadmium Telluride (CdTe) –

A thin-film polycrystalline material, deposited by electrodeposition, spraying, and high-rate evaporation

–

Small laboratory devices: 16 percent efficient–

Commercial-sized modules: 8 percent efficient

Recent Technological Progress•

Innovation yields efficiency gains:–

December 11, 2006: A concentrator solar cell produced by Boeing-Spectrolab achieved a world-record conversion efficiency of 40.7%, …

–

July 28, 2007: A consortium led by the University of Delaware achieved a combined solar cell efficiency of 42.8% from sunlight

at standard terrestrial conditions. The advance of 2 percentage points is noteworthy in a field where gains of 0.2 percent are the norm and gains of 1 percent are significant breakthroughs

–

August 13, 2008: Scientists at the US Department of Energy’s National Renewable Energy Laboratory (NREL) have set a

world record in solar cell efficiency with a photovoltaic device that converts 40.8% of the light that hits it into electricity, …

•

But …

costs of these laboratory efficiencies are high

http://www.greencarcongress.com/solar/index.html

Technological Targets•

Defense Advanced Research Projects Agency (DARPA) Advanced Technology Office’s Very High Efficiency Solar Cell (VHESC) program (started in 2005):–

The VHESC program is aimed at developing photovoltaic (PV) devices with efficiencies exceeding 50 percent

–

A novel design architecture that allows integrating previously incompatible materials technologies to maximize performance across the solar spectrum

–

Evaluating the potential of engineered bio-molecules to guide the assembly of inorganic materials in a manner not achievable with current technology, which offers the prospect for dramatic cost reductions in key materials

http://www.darpa.mil/sto/solicitations/vhesc/index.htm

Examples of Latest Technologies

•

Innovation yields rapid reduction in costs:–

Clean Hydrogen Producers Ltd. (CHP) patented the use of Concentrating Solar to crack the molecule of water (thermal dissociation) and produce hydrogen

–

Colorado State University developed a manufacturing process for thin-film solar panels that lower costs to $2 per watt, about half the current cost of solar panels (first production expected in 2008)

–

HelioVolt's FASST™

technology—ultra thin, low cost, seamlessly integrated solarized building materials, PV “power buildings”

Home Components of PV Systems

•

Cell (PV) module •

PV Balance of Systems:–

Inverter (direct current to alternating current)

–

Service panel (to household)–

Battery (for off the grid systems)

–

Charge controller (regulator; for off-grid)–

Net meter (to utility sub-station; for on-grid)

Issues in Managing Solar Electricity

•

Managing intermittent electricity flow•

Maximizing the use of PV generated electricity–

Expanding pick time demand

–

Development of storage technologies

Denholm

P. and R.M. Margolis, 2007, “Evaluating the Limits of Solar Photovoltaics (PV) in Traditional

Electric Power Systems,”

Energy Policy, Vol. 35, pp. 2852-2861Denholm

P. and R.M. Margolis, 2007, “Evaluating the Limits of Solar Photovoltaics (PV) in Electric Power Systems Utilizing Energy Storage and Other Enabling Technologies,”

Energy Policy,

Vol. 35, pp. 4424-4433

Lamont, Alan, 2008, “Assessing the Long-term System Value of Intermittent Electric Generation Technologies,”

Energy Economics, Vol. 30, pp. 1208-1231

Optimizing PV/Wind Hybrids•

Reliability of power supply –

Loss of power supply probability (LPSP) set at zero•

Cost of kWh of energy–

Levelized

cost of energy (LCE)•

Optimization techniques:–

Linear programming–

Probabilistic approach–

Iterative technique–

Dynamic programming–

Multi-objective•

The exercise involves modeling of a PV and wind generators, and of battery storage separately, then modeling system reliability, and finally building an economical model to minimize levelized

costDiaf

S., D.Diaf, M. Belhamel, M. Haddadi, A. Louche, 2007, “A Methodology for Optimal Sizing of Autonomous Hybrid PV/Wind System,”

Energy Policy,

Vol. 35, pp. 5708-5718

Economics 101 of PV

Economics101 of PV Technologies

•

Material cost vs. efficiency of PV ($/W capacity)–

Less material lowers costs and efficiency

–

Better material yields higher efficiency at a higher cost–

Combining materials yields higher efficiency at a higher cost

–

Concentrating sun on a PV panel yields higher efficiency at a higher cost

•

Government incentives drive the sector ... •

Scaling up production lowers unit costs, but ...

•

Increase in demand for inputs pushed input prices higher, at least temporarily;

•

Expect lots of volatility from the interactions between markets and government policy

Prospects for PV: An Example of Optimism (PV is an industry where projections made in 2001 proved too optimistic in 2008)

•

Thin-film modules scaled up for mass production in 100MW/year factories could be competitive at $2.2/Wp wholesale in 2007 with price declining 5.5 percent annually for 10 years

•

At the above price trend PV modules may be cost effective in 125,000 new home installations of 4 kWp per year (0.5GWp/year)

Duke, R., Williams, R., and Payne A., 2005,

“Accelerating Residential PV Expansion: Demand Analysis for Competitive Electricity Markets,”

Energy Policy, Vol. 33, pp. 1912-1929

Payne, A. Duke, R., Williams, 2001, “Accelerating Residential PV Expansion: Supply Analysis for Competitive Energy Markets,”

Energy Policy, Vol. 29, pp. 787-800

Experience Curves and Progress Ratio: Important Terminology

•

The experience curve describes how unit costs decline with cumulative production

•

Cost declines by a constant percentage with each doubling of the total number of units produced

•

A progress ratio (PR) is used to express the progress of cost reductions for different technologies

–

A PR of 0.8 (80%) means that costs are reduced by 20% each time the cumulative production doubles

Neij, Lena, 1997, “Use of Experience Curves to Analyze the Prospects for Diffusion and Adoption of Renewable Energy Technology,”

Energy Policy, Vol. 23 No. 13, pp. 1099-1107

Nemet, Gregory F. 2006, “Beyond the Learning Curve: Factors Influencing Cost Reductions in Photovoltaics,”

Energy Policy,

Vol. 34, pp. 3218-3232

PV Life Cycle Environmental Performance (Sample Results)

•

Net energy ratio –

2.7 years for multi-crystalline PV 120 W module –

5.14 years for PV laminate 136 W•

Energy pay-back time–

7.4 years for multi-crystalline PV 120 W module –

3.15 years for PV laminate 136 W•

CO2

emissions–

Depend on the energy mix of PV producers–

54.6 gCO2/kWh (E.U.) to 72.4 gCO2/kWh (U.S.) energy mix–

34.3 gCO2/kWh for PV laminate 136 W using U.S. energy mix

Pacca

S. D. Sivaraman, and G.A. Keoleian, 2007, “Parameters Affecting the Life Cycle Performance of PV Technologies and Systems,”

Energy Policy,

Vol. 35, pp. 3316-3326

Cost Developments of Home Components

•

Cell (PV) module –

Some evidence of 36-54 percent reduction in costs per each doubling of cumulative production

–

Unit prices are competitive internationally•

PV Balance of Systems (BOS)–

BOS experience curve sustained a progress ratio of 0.78 in 1992-2000

–

BOS prices depend on local standards and labor market trends

Van der

Zwaan, B & Rabl, A., 2004, “The Learning Potential of Photovoltaics: Implications for Energy Policy,”

Energy Policy, Vol. 32 pp. 1545-1554

PV System Price Indices•

Solar I Solar Electricity Residential Price Index–

Based on a standard 2 kilowatt peak system, roof retrofit mounted

•

Solar II Solar Electricity Commercial Price Index–

Based on a 50 kilowatt ground mounted Solar System, connected to the electricity grid

•

Solar III Solar Electricity Industrial Price Index–

Based on a 500 kilowatt flat roof mounted Solar System, suitable

on large buildings, connected to the electricity grid

•

All Price Indices include full system integration and installation costs; compiled monthly by Solarbuzz.com

Source: http://www.solarbuzz.com/SolarIndices.htm

Price Developments December 2008 Survey

•

Solar III Installed Industrial System on Grid (500 kilowatts)

–

Customer Price $2,474,245–

Sunny climate 21.32 cents kWh

–

Cloudy climate 46.90 cents kWh

Source: http://www.solarbuzz.com/SolarIndices.htm

PV Stock Price Index•

The Photon Photovoltaics Stock Index

(PPVX)

–

Aug. 1, 2001 at 1,000 points –

June 1, 2007 --

3,782 …

December 12, 2008—1,879

–

Calculated weekly on a euro base –

Currently, 30 stocks listed in different countries

–

More than 50 percent sales in PV prod. or services–

Weighted: six classes, with different weighing points based on the companies' market capitalizations

Source: http://www.photon-magazine.com

Stock Price Index, Cont.

•

A capitalization of less than €50 million has 1 WP•

€50--€200 million, 2 WP

•

€200-€800 million, 3 WP (Canadian Solar, Conenergy, ErSol, E-Ton, Evergreen, Gintech, Manz, Meyer Burger Technology, Motech, PV Crystalox, ReneSola, Roth & Rau, Solarfun

Power, Solargiga, Solon, Trina),

•

€800--€3.2 billion, 4 WP (Centrotherm, ECD, GT Solar, JA Solar, LDK

Solar, SMA

Technology AG, Solaria, Yingli)

•

€3.2-

€12.8 billion, 5 WP (Q-Cells, Renewable Energy Corp., SolarWorld, SunPower, Suntech

Power)

•

< €12.8 billion, 6 WP (First Solar)

Source: http://www.photon-magazine.com

Pricing Intermittent Solar Power•

Pricing intermittent electricity

•

Fixed prices (regulated or standing contract prices) –

Offer stability, in practice maximize revenues

•

Cost-reflective pricing (pool, spot prices)–

Currently, only temporarily very high

–

Not enough day-periods of high prices

Maine, T and P. Chapman, 2007, “The Value of Solar: Prices and Output from Distributed Photovoltaic Generation in South Australia,”

Energy Policy, Vol. 35, pp. 461-466Lively, Mark, 2008, “The WOLF in Pricing: How the Concept of Plug, Play, and Pay Would

Work for Microgrids”, IEEE Power & Energy Magazine, January/February 2009

Government Policies

Pricing Distortions in Energy Markets/Public Policy Justification

•

Market failure to account for the environmental benefits of PV (air pollution, health impact, CO2)

•

Market failure to account for non-environmental benefits –

Stable pricing–

Availability when and where needed–

Reduced resistive power losses–

Reduced electric system reserve needs–

Improved transmission and distribution (T&D) reliability–

Avoidance or deferral of T&D system investments

Duke, R., Williams, R., and Payne A., 2005, “Accelerating Residential PV Expansion: Demand Analysis for Competitive Electricity Markets,”

Energy Policy, Vol. 33, pp. 1912-1929

Public Policy

•

Regulatory–

Integration with existing supplies, grids

–

Product standardization–

Pricing, tariff regulations

•

Deployment in developing countries –

Focus on support of local distributors

–

Financing

Government Support•

Continental European feed-in tariffs (FIT) –

Long-term fixed prices paid to energy generators (can be very costly)

•

U.S./U.K Renewables Portfolio Standard (RPS)–

Minimum output target for renewables–

Typically limit cost by setting a price cap–

Seek price competition to meet the target (pick-no-winners)–

Distinction between consumption and production targets (for EU)

Lipp, Judith, 2007, “Lessons from Effective Renewable Electricity Policy from Denmark, Germany and the United Kingdom,”

Energy Policy,

Vol. 35, pp. 5481-5495Rickerson

W., Grace R.C., 2007, “The Debate over Fixed Price Incentives for Renewable Electricity

in Europe and the United States: Fallout and Future Directions,”

A White Paper prepared by The Heinrich Boll Foundation

Verhaegen, K. et. al., 2007, “Electricity Produced from Renewable Energy Sources—What Targets are we Aiming for?,”

Energy Policy,

Vol. 35, pp. 5576-5584

Recommended Reading for Policy Makers

Focus funding and support on R&D rather than on increasing deployments

See for example:Frondel, Manuel, Nolan Ritter, and Christoph M. Schmidt, 2008, “Germany's Solar Cell Promotion: Dark Clouds on the Horizon,”

Energy Policy, Vol. 36, pp. 4198-4204

Erickson, Jon D. and Duane Chapman, 1995, “Photovoltaic Technology: Markets, Economics, and Rural Development,”

World

Development, Vol. 23, No. 7, pp. 1129-1141

Deployment Strategies

Corporate/Market Policies

•

Preconfigured packages (Costco/Walmart)•

Standardization (ratings and efficiency)

•

Interconnections and permits process•

Mounting, minimally invasive technologies

•

Solar power loans (account for cash flow)•

Manufacturing financing

•

Support secondary market for equipmentThe Topline Strategy Group and Sunlight Electric (2006)

Deployment Models•

The information technology model–

Diffusion based on a variety of applications (U.S.)

–

Customization of each application•

The manufactured technology development model–

A dominant category of application is developed around the existing utility grid (Japan)

–

Mass production of standardized products

Shum K.L. and Chiro Watanabe, 2007, “Photovoltaic Development Strategy in Japan and the USA—An Institutional Appraisal,”

Energy Policy, Vol. 35, pp. 1186-1195

Deployment Policies

•

Static efficiency–

“Low-hanging fruits are harvested”

first

–

Long-term opportunities may be missed

•

Dynamic efficiency–

Lowering costs through technological innovation is encouraged by subsidies to ensure production scale

Menanteau, P., Finon, D., M-L, 2003, “Prices versus Quantities: Choosing Policies for Promoting the Development of Renewable Energy,”

Energy Policy, Vol. 31, pp. 799-812

Strategies

•

System costs and efficiencies–

Market driven decline in polysilicon prices

–

Use of thin-film technologies•

Deployment models/strategies–

A shift from small scale (home) systems to large-scale deployments to lower costs (following Japan’s model)

Solar Energy in Developing Countries

Solar Energy and Poverty Alleviation

•

Solar home systems (SHS) provide an opportunity for rural households –

Radio, TV, light, basic refrigeration, charging batteries•

The majority of users purchase small units (10-25 W)

•

Unit cost equivalent to the cost of a bicycle ($40-$100)–

Rural middle class main purchaser, not the poorest–

Electricity from PV is expensive but no other choice•

Market penetration varies–

5 percent average of the rural population–

In some areas, up to 25 percent•

PV systems replace kerosene, candles, batteries –

limited impact on marginal CO2 emissions

Market Structure in Developing Countries

•

Self-organized solar home systems (SHS) markets–

End user gets complete ownership and responsibility for SHS–

Offer variety of choices in terms of PV equipment size–

Offer individual system components–

Provide flexibility to customers–

Sold at full price plus taxes•

Donor-funded project organized SHS–

End users feel the ownership and responsibility lies with external party–

Only few, high-quality models distributed in complete kits, often incl. end-use appliances (refrigerators)

–

Distributed through few big-dealer networks in cities–

Sold at subsidized prices, exempt from VAT and import duties•

The two markets are weakly coordinated

“Solar Photovoltaics

in Africa—Experiences with Financing and Delivery Models,”

2004, Global Environment Facility, United Nations Development Programme, Monitoring and Evaluation Report Series, Issue 2, May 200

Literature review on country experiences in Annex 1

Donor Assistance for Solar Power in Developing Countries

•

Donor assistance needs to refocus to support self- organized markets

–

Financing to local banks and dealers–

Support proportional to the number of systems sold, not size of equipment

Wamukonya, N., 2007, “Solar Home System Electrification as a Viable Technology Option for Africa’s Development,”

Energy Policy, Vol. 35, pp. 6-

14

Vleuten, van der, F, and N. Stam, R. van der Plas, 2007, “Putting Solar Home System Programmes into Perspective: What Lessons are Relevant,”

Energy Policy, Vol. 35, pp. 1439-1451

Damian Miller, Chris Hope, 2000, “Learning to Lend for Off-grid Solar Power: Policy Lessons from World Bank Loans to India, Indonesia, and Sri Lanka,”

Energy Policy,

Vol. 28, pp. 87-105

Solar Energy in China

•

Huge solar resources (western regions)•

R&D of PV started in 1958

•

Entered application stage in 1970s•

Industrialized in mid1980s

•

Since 1993, 20-30 percent annual output growth, most for exports

•

Since 2000 China produces its own cell making equipment

Solar Energy in China

•

Annual production of PV cells and installed capacity still small, but ...

•

Massive capacity expansion under way in 2007- 08

•

China plans to spend $200 billion on renewable energy over the next 15 years

Yang, Hong, He Wang, Huacong

Yu, Jianping

Xi, Rongqiang

Vui, and Guangde

Chen, 2003, “Status of Photovoltaic Industry in China”

Energy Policy,

Vol. 31, pp. 703-707 Qu

Hang, Zhao Jun, Yu Xiao, Cui Junkui, 2008, “Prospect of Concentrating Solar Power in China—the Sustainable Future, Renewable and Sustainable Energy Reviews,

Vol. 12, pp. 2505-2514

Chen, Falin. Shyi-Min Lu, and Yi-Lin Chang, 2007, “Renewable Energy in Taiwan: Its Developing Status and Strategy,”

Energy, Vol. 32, pp. 1634-1646

Solar Energy in China

•

Capital raised by Chinese PV/solar IPOs:–

Trina Solar: $98+$243 million (Dec. 06 and May 07)

–

JA Solar Holdings: $238 million (Feb. 07)–

China Sunergy: $108 million (May 07)

–

Motech

Industries (Taiwan): $211 million (May 07)–

LDK Solar: 469 million (June 07)

–

Yingli

Green Energy Holding: $319 million (June 07)

China’s Solar-IPO’s Getting Bigger,”

Global Finance, July/August 2007

Solar Energy in China

•

Market barriers: –

High cost (still a niche market)

–

Low consumer density adds to installation and transaction costs

–

National policy and inter-agency coordination in support of PV is in its infancy ...

Yang, H. et. al., 2003, “Status of Photovoltaic Industry in China,”

Energy Policy, Vol. 31, pp. 703-707China’s Solar-IPO’s Getting Bigger, Global Finance July/August 2007

Conclusions•

Energy transition towards higher quality energy (electricity) is

real, but the time of solar has not yet arrived ...–

Solar energy (thermal CSP and PV) are not yet competitive in the

mass market

–

Though, the persistence of high & volatile oil and gas prices boosts incentives for CSP and PV technologies even in the absence of outright government financial support of the industry

•

Major innovations are needed to make solar fully viable•

The process will take time, will be volatile•

Public assistance needs to be effective and efficient, for now focused on R&D, less on mass deployments

•

Impact on other markets to grow•

CO2

concerns and security considerations will support long-term funding for solar R&D

More on Solar is Available

•

As you can see there is a lot, and more, of research about solar energy ...

•

I have prepared a pre-selected list of some excellent references for further reading ...

•

Also, if you know of any company or association that could benefit from a presentation on one of the topics related to solar ...

•

Please contact me at [email protected]

Annex 1: Country Experiences (Abstracts of Selected Research

Articles Prepared by Ariadna

Bankowska)

Country Experiences with Energy Transitions, Solar Energy Policy and Sector Development—Abstracts of Selected Articles

Prepared by Ariadna Bankowska ([email protected])

Africa, Australia, Brazil, Canada, China and Taiwan, Costa Rica, Cyprus, Dominican Republic, East Timor, Egypt, France, Germany, Haiti, India, Indonesia, Israel, Japan, Kenya, New Zealand, The Netherlands, Saudi Arabia, Serbia, Sri Lanka, Thailand, Turkey, US, Zimbabwe

Africa

“Solar Photovoltaics in Africa—Experiences with Financing and Delivery Models,” 2004, Global Environment Facility, United Nations Development Programme, Monitoring and Evaluation Report Series, Issue 2, May 2004 PV systems provide very limited amount of electricity in developing countries. PV electricity is used primarily for operating light bulbs, radios, and TVs, but is insufficient to operate stoves, ovens, refrigerators and tools. As such PV cannot substitute for grid electricity, but it fills an important niche. To facilitate growth in PV deployment a detailed analysis of PV financing and delivery options is provided, which includes both market and donor options. Wamukonya, N., 2007, “Solar Home System Electrification as a Viable Technology Option for Africa’s Development,” Energy Policy, Vol. 35, pp. 6-14 Solar home systems (SHS) in Africa were promoted as cost-efficient and time-saving, able to meet end-user demand, alleviate poverty, and reduce emissions. However, the review of costs and benefits of SHS in Africa indicates that the promises were not fulfilled. The question arises if the public funds spent to support SHS would be better used to promote more appropriate technologies. Vleuten, van der F, and N. Stam, R. van der Plas, 2007, “Putting Solar Home System Programs into Perspective: What Lessons are Relevant,” Energy Policy, Vol. 35, pp. 1439-1451 Solar home systems (SHS) in Africa are delivered in two different ways: as a self-organized initiative by end-users, or organized externally by donor organizations and governments. Advantages and drawbacks of both systems are reviewed, based on the experience of Morocco, Kenya, and Zimbabwe. The most important conclusion is that donors should utilize already existing local solar infrastructure and companies to a much greater extent.

Australia, Canada, and Japan

Parker, Paul, 2008, “Residential Solar Photovoltaic Market Stimulation: Japanese and Australian Lessons for Canada,” Renewable and Sustainable Energy Reviews Vol. 12, pp. 1944-1958

Canada lags behind other industrial countries in photovoltaic (PV) deployment (14th out of 20 reporting International Energy Agency (IEA) countries in the installation of PV systems).

Japanese and Australian experience is compared based on capital incentives to stimulate the residential PV market. Drawing from those countries’ experience a balanced solar energy market stimulation program is proposed for Canada that combines a feed-in tariff with a declining capital incentive.

Spooner, E. D., D. Morphett, M. E. Watt, G. Grunwald, P. Zacharias, 2000, “Solar Olympic Village Case Study,” Energy Policy, Vol. 28, pp. 1059-1068 Australian solar powered suburb is analyzed, which incorporates solar PV systems, solar thermal hot water and energy efficient design. The suburb has 629 residential homes, each with 1 kW peak PV system on the roof, connected to the local grid via inverter. Technical requirements of grid connection are addressed based on “Australian guidelines for grid connection of energy systems via inverters.” Benefits of net metering are discussed, along with market barriers to PV expansion, namely market access, price, acceptance and regulation. Shum K.L. and Chiro Watanabe, 2007, “Photovoltaic Development Strategy in Japan and the USA—An Institutional Appraisal,” Energy Policy, Vol. 35, pp.1186-1195 PV deployment strategies in Japan and the US are compared. Both governments promote solar applications to address environmental and energy security issues. However, Japan had PV installation capacity three times that of the US (as of December 2003). Japan favors grid-connected standardized small residential systems, while the US installations are split among different types of applications, on and off the grid. Brazil

Martins, F.R., R. Ruther, E.B. Pereira, and S.L. Abreu, 2008, “Solar Energy Scenarios in Brazil. Part Two: Photovoltaic Applications,” Energy Policy, Vol. 36, pp. 2865-2877

Despite the large solar energy resource availability Latin America represents only 1 percent of the world photovoltaic (PV) market.

Two scenarios are proposed for Brazil. (1) Hybrid diesel/PV system would be appropriate for Brazilian Amazon region where electricity is produced at present by diesel-based mini-grids, characterized by high costs and low reliability. (2)Grid-connected PV systems would be well suited for urban centers, which have considerable solar irradiation rates and where the demand for electricity peaks at daytime and in summer.

Schmid, Aloísio Leoni, and Carlos Augusto Amaral Hoffmann, 2004, “Replacing Diesel by Solar in the Amazon: Short-term Economic Feasibility of PV-diesel Hybrid Systems,” Energy Policy, Vol. 32, pp. 881-898 The main source of electricity in Brazilian Amazon is diesel generator, with diesel transportation cost constituting a sizeable portion of total electricity costs. The alternative stand alone solar home systems are found to be inadequate and unreliable. The alternative PV-diesel hybrid system is analyzed. The hybrid system becomes economical up to 50 kW peek power with 15 percent higher transportation costs over wholesale, and up to 100 kW with 45 percent higher diesel transportation costs. China Byrne, John, Aiming Zhou, Bo Shen, Kristen Hughes, 2007, “Evaluating the Potential of Small-scale Renewable Energy Options to Meet Rural Livelihoods Needs: A GIS- and Lifecycle Cost-based Assessment of Western China's Options,” Energy Policy, Vol. 35, pp. 4391-4401 Chen, B. and G.Q. Chen, 2007, “Resource Analysis of the Chinese Society 1980–2002 Based on Energy—Part 2: Renewable Energy Sources and Forest,” Energy Policy, Vol. 35, pp. 2051-2064 Qu Hang, Zhao Jun, Yu Xiao, Cui Junkui, 2008, “Prospect of Concentrating Solar Power in China—the Sustainable Future, Renewable and Sustainable Energy Reviews, Vol. 12, pp. 2505-2514 China accounted for 44 percent of the growth in global CO2 emissions in 1990-2004. It can surpass the United States to become the world’s largest source of CO2 emissions by 2009. Except for hydro-power, which contributed 24½ percent of China’s power generation in 2004, almost no renewable sources of energy are utilized in China.

Concentrating solar power is potentially the most attractive source of renewable energy in China as it belongs to sun belt countries and has a substantial (2.6 million square km) unutilized land mass. Technology and cost are two major barriers for large-scale use of CSP technologies.

Yang, Hong, He Wang, Huacong Yu, Jianping Xi, Rongqiang Vui, and Guangde Chen, 2003, “Status of Photovoltaic Industry in China,” Energy Policy, Vol. 31, pp. 703-707 In 2000 the first production line of crystalline silicon solar cells was installed in China. Since then photovoltaic industry has been developing rapidly in China.

China-Taiwan

Chen, Falin. Shyi-Min Lu, and Yi-Lin Chang, 2007, “Renewable Energy in Taiwan: Its Developing Status and Strategy,” Energy, Vol. 32, pp. 1634-1646

Taiwan imports over 97 percent of its energy needs. Potential to utilize renewable energy in Taiwan is reviewed. At present renewable energy is not competitive with very cheap fossil-based electricity. Promotional and subsidy programs introduced by Taiwanese government are discussed.

Chang, Keh-Chin, Tsong-Sheng Lee, Wei-Min Lin, and Kung-Ming Chung, 2008, “Outlook for Solar Water Heaters in Taiwan,” Energy Policy, Vol. 36, pp. 66-72

At present only 3½ percent of households have solar water heaters, despite the government incentive programs. The initial costs and long typhoon season are considered to be major barriers for large-scale deployment of solar water heaters. The authors propose a government incentive program to promote large scale solar water heater installations for dormitories and manufacturing.

Costa Rica Nandwani, Shyam S., 1996, “Solar Cookers—Cheap Technology with High Ecological Benefits,” Ecological Economics, Vol. 17, 73-81 Solar ovens are analyzed and compared with firewood and electric ovens. The payback period of the typical solar cooker, even if used only 6-8 months a year, is around 12-14 months. For 2005, if 5 percent of people facing fuel shortages used solar ovens, almost 17 million tons of firewood would have been saved, with carbon dioxide emissions lowered by 38 million tons. Cyprus Maxoulis, C., H.P. Charalampous, and S.A. Kalogirou, 2007, “Cyprus Solar Water Heating Cluster: A Missed Opportunity,” Energy Policy, Vol. 35, pp. 3302-3315 Solar thermal market in Cyprus has been very successful domestically. Cyprus has the highest solar collector area installed per inhabitant in the world. However, local firms failed to expand and export their equipment and expertise to other European and Mediterranean countries. Authors suggest that the whole business culture on Cyprus has to be changed, with more effort going to R&D, improvement of professional management among local players, and higher level of collaboration between individual firms Dominican Republic Erickson, Jon D. and Duane Chapman, 1995, “Photovoltaic Technology: Markets, Economics, and Rural Development,” World Development, Vol. 23, No. 7, pp. 1129-1141 The key for renewables in general and PV in particular, is to direct public assistance toward R&D activities rather than towards expanding demand for the available technology. Universities had been the most under-utilized resource of potential R&D in U.S. funding for renewables. Current international aid for PV purchases in developing countries diverts funds

from R&D and may support possibly unsustainable economic and social development in the recipient countries. East Timor Bond, M., R.J. Fuller, and Lu Aye, 2007, “A Policy Proposal for the Introduction of Solar Home Systems in East Timor,” Energy Policy, Vol. 35, pp. 6535-6545 The Government of East Timor aims to increase the rate of household electricity service from 20 percent today to 80 percent over the next 20 years. Largely rural population, living in sparsely populated remote locations, could be best served by solar home systems (SHS). There is a very limited local commercial capacity to supply and service solar PV equipment in East Timor. The government is experimenting with the introduction of small-scale solar systems (10W solar lanterns) in rural areas. A market-driven approach for SHS is unlikely to be successful. A model with subsidized capital costs, which seeks full recovery of operating costs, is recommended. The essential elements needed: commercial availability of high-quality components and spare parts; creation of a pool of skilled technicians for installation and maintenance; and development of a robust fee collection and maintenance infrastructure. Egypt Lamei, A., P. van der Zaag, and E. von Munch, 2008, “Impact of Solar Energy Cost on Water Production Cost of Seawater Desalination Plants in Egypt,” Energy Policy, Vol. 36, pp. 1748-1756 Egypt is using desalination technologies to overcome water shortage. The preferred method is the reverse osmosis, versus thermal desalination. Both PVs and solar thermal energy are used on the experimental basis. Solar energy is not cost competitive because of its high capital cost and low prices of natural gas in Egypt. Solar thermal systems are more promising, but they would be more suitable for other Arab Gulf countries, which depend more on thermal desalination. Solar energy for desalination will become more competitive with the increased scale of desalination plants, which are small at present in Egypt.

France (Corsica Island)

Diaf, S., M. Belhamel, M. Haddadi, and L. Louche, 2008, “Technical and Economic Assessment of Hybrid Photovoltaic/Wind System with Battery Storage in Corsica Island,” Energy Policy, Vol. 36, pp. 743-754

Optimum size of a stand-alone hybrid photovoltaic/wind system with battery storage used at three sites on Corsica island is discussed. Given the complementary characteristics between

solar and wind energy resources for certain locations hybrid systems with storage offer a reliable source of power.

Germany

Frondel, Manuel, Nolan Ritter, and Christoph M. Schmidt, 2008, “Germany’s Solar Cell promotion: Dark Clouds on the Horizon,” Energy Policy, Vol. 36, pp. 4198-4204

The large feed-in tariffs currently guaranteed for solar electricity in Germany are an example of misguided political intervention. Producing electricity on this basis is among the most expensive greenhouse gas abatement options. Immediate and drastic reduction in the feed-in tariffs is urged. In the early stages of development of technologies it appears to be more cost-effective to invest in R&D to improve the competitiveness of new technologies than trying to achieve cost reductions by promoting large-scale production and deployment of still expensive and often untested technologies.

Haiti Tucker, Michael, 1999, “Can Solar Cooking Save the Forest,” Ecological Economics, Vol. 31, pp 77-89 Approximately two billion people use wood for cooking. Solar cooking is one possible solution to fuel wood scarcity. Solar cookers have been marketed in developing countries based on their many benefits, such as freeing time used to collect wood, elimination of health problems associated with smoke, saving on fuel cost. However, promoting solar cookers on that basis did not lead to their widespread use. Strong cultural and gender barriers have to be addressed by larger local community involvement.

India, Indonesia, and Sri Lanka

Kolhe, Mohanlal, Sunita Kolhe, and J.C. Joshi, 2002, “Economic Viability of Stand-Alone Solar Photovoltaic System in Comparison with Diesel-powered System for India,” Energy Economics, Vol. 24, pp. 155-165

Stand alone PV systems in remote areas of India are compared with the alternative diesel-powered systems through sensitivity analysis. PV systems are found to be the lowest cost option for the daily energy demand of up to 15 kW h under unfavorable economic conditions and up to 68 kW h/day under favorable economic parameters.

Miller, Damian and Chris Hope, 2000, “Learning to lend for Off-Grid Solar Power: Policy Lessons from World Bank Loans to India, Indonesia, and Sri Lanka,” Energy Policy, Vol. 28, pp. 87-105

The study assesses the World Bank experience with loans for off-grid PV systems in India, Indonesia and Sri Lanka. PV technology is particularly applicable in remote, rural areas of those countries where grid expansion will not be feasible in the near future.

Solar home systems (SHS) are compared to petrol/diesel generators, kerosene lighting and battery charging in areas with no grid access. On a per kilowatt hour basis diesel generators are the most cost effective. However, for households with a limited budget and the demand for less electricity than from a typical generator, SHS is more cost effective and more convenient than diesel generators, kerosene lanterns and battery charging.

To increase the demand for SHS World Bank is recommending the enhancement of the follow of rural credit and transparency in grid extensions. To stimulate the supply of SHS long-term loans are recommended, along with business advisory services, elimination of taxation of PV modules and complete systems, and supply-side grants.

Israel

Mor, Amit, Shimon Seroussi, and Malcolm Ainspan, 2005, “Economic and Social Impacts from Large Scale Utilization of Solar Energy in Israel,” The Greenpeace Report for Solar Energy in Israel, Greenpeace Mediterranean, July 2005 Israel has not yet developed its domestic solar energy sector, with an exception of a high rate of rooftop solar water heating use. Benefits of rapid development of solar energy in Israel over next 20 years are estimated at $1.8 to $2.7 billion. The main emphasis is put on solar thermal generation, rather than on PV, as southern Israel has a high and consistent sunlight and Israeli companies, Luz and Solel, have demonstrated the ability to develop and operate large-scale projects overseas.

Kenya

Jacobson, Arne, 2007, “Connective Power: Solar Electrification and Social Change in Kenya,” World Development, Vol. 35, pp. 144-162

Several developing countries started experimenting with rural electrification based on solar energy. The market-based rural solar electrification program in Kenya is found to (1) benefit mainly the rural middle class; (2) disproportionately favor connective applications like television, radio and cellular telephone charging, while demand from economically productive and education-related activities is very modest; (3) increase television viewing, but has almost no impact on poverty alleviation and sustainable development.

Kuwait Hammoudeh, Sh., S. Ayyash, and R.K. Suri, 1984, Conventional and Solar Cooling Systems for Kuwait: An Economic Analysis, Energy Economics, October 1984, pp. 259-266 Five cooling systems in Kuwait available in early 1980s were compared based on their life-cycle costs and occupancy rates. Two conventional vapor compression systems and three solar, absorption and photovoltaic, cooling systems are analyses. At the time of the analysis

no solar cooling system was an economical substitute for the conventional systems. The absorption system was the most promising.

The Netherlands

Verbong, Geert and Frank Geels, 2007, “The Ongoing Energy Transition: Lessons From a Socio-technical, Multi-level Analysis of the Dutch Electricity system (1960-2004),” Energy Policy, Vol. 35 pp. 1025-1037

Implementation of renewable energy in the Netherlands is low compared to other European countries. Energy savings receive more attention than renewable energy. Renewable options were evaluated by the government based on greenhouse gas reduction and cost-efficiency. PV scored poorly on both criteria, compared to wind and biomass.

New Zealand

Roulleau T. and C.R. Lloyd, 2008, “International Policy Issues Regarding Solar Water Heating, With a Focus on New Zealand,” Energy Policy, Vol. 36, pp. 1843-1857

A good overview of international solar water heating policies is provided, including collector-area-based and performance-based subsidies, tax credits and deductions, and mandatory policies.

New Zealand has introduced a solar hot water heating subsidy program. The system is based both on performance and cost incentives, drawing from the experiences of other countries promoting solar water heaters.

Saudi Arabia

Alnatheer, Othman, 2005, “The Potential Contribution of Renewable Energy to Electricity Supply in Saudi Arabia,” Energy Policy, Vol. 33, pp. 2298-2312 Saudi Arabia has both vast oil reserves and high solar radiation. When non-market benefits of renewable energy are included in the analysis solar and wind resources can provide lower societal costs than fossil fuel generated energy. Serbia

Bojic, M. and M. Blagojevic, 2006, “Photovoltaic Electricity Production of a Grid-connected Urban House in Serbia, Energy Policy, 34, 2941-2948

Serbia is considering the introduction of renewable energy sources to its energy mix. To help with the policy discussion authors calculated the electricity revenue during the life of a house in Belgrade, Serbia, and compared it with the needed PV investment. The project was economically viable only if the feed-in tariffs were set at 157 percent above the prevailing market rate and 49 percent of the PV panel cost was covered from subsidies.

Thailand

Green, Donna, 2004, “Thailand’s Solar White Elephants: An Analysis of 15 Years of Solar Battery Charging Programmes in Northern Thailand,” Energy Policy, Vol. 32, pp. 747-760

State funded solar battery charging program in over 50 villages in Northern Thailand is reviewed. Solar battery charging stations (SBCS) are used to supply power to many users for battery charging.

Field study results are discouraging. About 60 percent of the systems are no longer operational. They have been plagued by technical problems from the start, including incorrect charging techniques, rapid deterioration of PV panels, low quality or incorrect batteries, less than maximum solar exposure, not enough sun during rainy season. The technical help from government staff was inadequate or non-existent. The resulting electricity generation had minimal effect on income generation, standard of living and fossil fuel savings. The only progress was noted in improved households’ safety from fires, achieved by substituting kerosene lanterns with solar ones.

Turkey

Ozsabuncuoglu, I.H., 1995, “Economic Analysis of Flat Plate Collectors of Solar Energy,” Energy Policy, Vol. 23, pp. 755-763 In 1995 solar heating in Turkey was used primarily for water heating. A significant amount of research went to flat plate collectors used in solar water heating. However, more investment in R&D is necessary to reduce total cost of the heating system by improving efficiency and production technology. United States Byrne, John, Lado Kurdgelashvili, Daniele Poponi, and Allen Barnett, 2004, “The Potential of Solar Electric Power for Meeting Future US Energy Needs: A Comparison of Projections of Solar Electric Energy Generation and Arctic National Wildlife Refuge Oil Production,” Energy Policy, Vol. 32, pp. 289-297 The potential contribution of PV generation in the US is compared with the projected volume of oil available in the Arctic National Wildlife Refuge. Authors calculate that for the period of 2010-2070 the oil production from ANWR would range from 51 to 55 billion barrels, compared to 44 to 59 billion barrels of oil equivalent for PV energy supply. PV electricity production should be viewed as one of the sources of new energy services, and not only as a substitute for fossil fuels. New energy services include energy management (shaving peak loads of users), back-up or emergency power, environmental improvements, and fuel diversity.

Paul Denholm, and Robert M. Margolis, 2008, “Land-use Requirements and the Per-capita Solar Footprint for Photovoltaic Generation in the United States,” Energy Policy, Vol. 36, pp. 3531-3543 To supply all electricity from photovoltaics in the US the average footprint per person is about 181 m2. This value assumes the availability of long-term storage and a mix of tracking and flat-plate PV systems. Besides module efficiency and local insolation, the area required is strongly dependent on the PV array configuration. Land-based tracking arrays require much more area than flat arrays. The area required for PV to meet the total US electricity demand in 2005 is about 0.6 percent of the total area of the country. It is less than 2 percent of land used for crops and grazing, and less than the amount of land currently devoted to manufacturing ethanol from corn. Manning, Neil and Ray Rees, 1982, “Synthetic Demand Functions for Solar Energy,” Energy Economics, October 1982, pp. 225-231 A general model of consumer choice of energy-using durable goods under uncertainty and energy rationing is developed and used to derive demand functions for solar water heating equipment. The results indicate that the price of solar installations would have to fall by at least 75 percent compared to early 1980’s levels to be attractive to consumers. Taylor, Margaret, 2008, “Beyond Technology-push and Demand-pull: Lessons from California’s Solar Policy,” Energy Economics, Vol. 30, pp. 2829-2854 A very detailed history review of California’s solar policies is provided. State’s policies are divided into three categories. (1) Technology push incorporates investing in R&D and directly supporting smaller companies. (2) Demand pull includes government as customer, creating customers by using “carrots” and “sticks”, installation rebates. (3) Interface improvement represents government actions which are aimed at enhancing the relationships between innovators and technology consumers, focusing mainly on installers.

Zimbabwe

Mulugetta Yacob, Tinashe Nhete, and Tim Jackson, 2000, “Photovoltaics in Zimbabwe: Lessons from the GEF Solar Project,” Energy Policy, Vol. 28, pp. 1069-1080

Donor-driven solar energy projects can bring direct benefits to the users but tend to distort markets for energy equipment and prices, and undermine local-driven efforts.

Annex 2: Further Readings

Developments and Issues in Solar Energy Presented by Roman Zytek ([email protected]; tel.: 202-623-8856)

National Capital Area Chapter of the United States Association for Energy Economics Chinatown Garden Restaurant, 618 H Street, N.W., Washington, DC, December 19, 2008

Selected Readings

Long-term Energy Trends Bashmakov, I., 2007, “Three Laws of Energy Transitions,” Energy Policy, Vol. 35, pp. 3583-3594 Byrne, John, Lado Kurdgelashvili, Daniele Poponi, Allen Barnett, 2004, “The Potential of Solar Electric Power for Meeting Future US Energy Needs: A Comparison of Projections of Solar Electric Energy Generation and Arctic National Wildlife Refuge Oil Production,” Energy Policy, Vol. 32, pp. 289-297 Fthenakis, Vasilis, James Mason and Ken Zweibel, 2008, “The Technical, Geographical, and Economic Feasibility for Solar Energy to Supply the Energy Needs of the US,” Energy Policy, doi:10.1016/j.enpol.2008.08.011 Lewis, N.S. “Chemical Challenges in Renewable Energy,” www.nsl.caltech.edu/files/Energy_Notes.pdf Meisen, Peter and Oliver Pochert, 2006, “A Study of Very Large Solar Desert Systems with the Requirements and Benefits to those Nations Having High Solar Irradiation Potential” at www.geni.org http://geni.org/globalenergy/library/energytrends/currentusage/renewable/solar/solar-systems-in-the-desert/Solar-Systems-in-the-Desert.pdf Smalley, Richard E., 2005, “Future global Energy Prosperity: The Terawatt Challenge,” Materials Research Society (MRS) Bulletin, 30, pp. 412-417, www.mrs.org/publications/bulletin or http://smalley.rice.edu/ Sohn, I., C. Binaghi and P. Gungor, 2007, “Long-term Energy Projections: What Lessons have We Learned?” Energy Policy, Vol. 35, pp. 4574-4584 Concentrating Solar Power (CSP) Technologies Ford, Graham, 2008, “CSP: Bright Future for Linear Fresnel Technology?” Renewable Energy Focus, Vol. 9, Issue 5, pp. 48-51 Taggart, Stewart, 2008, “CSP: Dish Projects Inch Forward,” Renewable Energy Focus, Vol. 9, Issue 4, pp. 52-54 Taggart, Stewart, 2008, “Hot Stuff: CSP and the Power Tower” Renewable Energy Focus, Vol. 9, Issue 3, pp. 51-54 Taggart, Stewart, 2008, “Parabolic Troughs: CSP's Quiet Achiever,” Renewable Energy Focus, Vol. 9, Issue 2, pp 46-50 Wolff, Gerry, Belén Gallego, Reese Tisdale, David Hopwood, 2008, “CSP Concentrates the Mind,” Renewable Energy Focus, Vol. 9, Issue , pp. 42-47 “Concentrating Solar Power for Seawater Desalination,” AQUA-CSP Study Report, www.dlr.de/tt/aqua-csp

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Photovoltaic Technologies (PV) Bagnall, Darren M., Matt Boreland, 2008, “Photovoltaic Technologies,” Energy Policy, Vol. 36, Issue 12, pp. 4390-4396 O’Rourke, Stephen, 2008, “Solar Photovoltaic Industry,” Deutsche Bank Securities Quaschning Volker, 2004, “Technical and Economical System Comparison of Photovoltaic and Concentrating Solar Thermal Power Systems Depending on Annual Global Irradiation,” Solar Energy, Vol. 77, Issue 2, pp. 171-178 Modeling Technological Progress in the Energy Sector Baker E. et al., 2008, “Advanced solar R&D: Combining Economic Analysis with Expert Elicitations to Inform Climate Policy,” Energy Economics, doi:10.1016/j.eneco.2007.10.008 Gritsevskyi, A.,and N. Nakicenovic, 2000, “Modeling Uncertainty of Induced Technological Change,” Energy Policy, Vol. 28, pp. 907-921 Experience Curves Gerlagh, Reyer, 2007, “Measuring the Value of Induced Technological Change,” Energy Policy, Vol. 35, pp. 5287-5297 Neij, Lena, 1997, “Use of Experience Curves to Analyze the Prospects for Diffusion and Adoption of Renewable Energy Technology,” Energy Policy, Vol. 23, No. 13 Papineau, Maya, 2006, “An Economic Perspective on Experience Curves and Dynamic Economies in Renewable Energy Technologies, Energy Policy, Vol. 34, Issue 4, pp. 422-432 Van der Zwaan, B & A. Rabl, 2004, “The Learning Potential of Photovoltaics: Implications for Energy Policy,” Energy Policy, Vol. 32, pp.1545-1554 Energy Pay-back, Net Energy Ratio, and CO2 Emissions for PV Alsema, E.A. and E. Nieuwlaar, 2000, “Energy Viability of Photovoltaic Systems,” Energy Policy Vol. 28, pp. 999-1010 Pacca S. D. Sivaraman, and G.A. Keoleian, 2007, “Parameters Affecting the Life Cycle Performance of PV Technologies and Systems,” Energy Policy, Vol. 35, pp. 3316-3326 Demand/Supply Analysis for the U.S. Duke, R., Williams, R., and A. Payne, 2005, “Accelerating Residential PV Expansion: Demand Analysis for Competitive Electricity Markets,” Energy Policy, Vol. 33, pp. 1912-1929 Payne, A. Duke, R., Williams, 2001, “Accelerating Residential PV Expansion: Supply Analysis for Competitive Energy Markets,” Energy Policy, Vo. 29, pp. 787-800 PV Grid Limits/Wind-PV hybrid optimizations Denholm P. and R.M. Margolis, 2007, “Evaluating the Limits of Solar Photovoltaics (PV) in Traditional Electric Power Systems,” Energy Policy, Vol. 35, pp. 2852-2861

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Denholm P. and R.M. Margolis, 2007, “Evaluating the Limits of Solar Photovoltaics (PV) in Electric Power Systems Utilizing Energy Storage and Other Enabling Technologies,” Energy Policy, Vol. 35, pp. 4424-4433 Diaf S., D.Diaf, M. Belhamel, M. Haddadi, A. Louche, 2007, “A Methodology for Optimal Sizing of Autonomous Hybrid PV/Wind System,” Energy Policy, Vol. 35, pp. 5708-5718 Lamont, Alan, 2008, “Assessing the Long-term System Value of Intermittent Electric Generation Technologies,” Energy Economics, Vol. 30, pp. 1208-1231 Government Policies Dukert, Joseph M., 2004, “Coping with the Federalist Reality in North American Energy Trade,” Paper presented at the Foreign North American Energy Security Conference, Monterrey, Mexico, April 1-2, 2004 Frondel, Manuel, Nolan Ritter, and Christoph M. Schmidt, 2008, “Germany's Solar Cell Promotion: Dark Clouds on the Horizon,” Energy Policy, Vol. 36, pp. 4198-4204 Kenichiro Nishio, Hiroshi Asano, 2006, “Supply Amount and Marginal Price of Renewable Electricity under the Renewables Portfolio Standard in Japan,” Energy Policy, Vol. 34, pp. 2373-2387 Lesser, Jonathan A. and Xuejuan Su Design of an Economically Efficient Feed-in Tariff Structure for Renewable Energy Development, Energy Policy, Vol. 36, pp. 981-990 Lipp, Judith, 2007, “Lessons from Effective Renewable Electricity Policy from Denmark, Germany and the United Kingdom,” Energy Policy, Vol. 35, pp. 5481-5495 Menanteau, P., Finon, D., M-L, 2003, “Prices versus Quantities: Choosing Policies for Promoting the Development of Renewable Energy,” Energy Policy, Vol. 31, pp. 799-812 New Renewable Energy: A Review of the World Bank’s Assistance, 2006, Independent Evaluation Group, The World Bank Parker Paul, 2008, “Residential Solar Photovoltaic Market Stimulation: Japanese and Australian Lessons for Canada,” Renewable and Sustainable Energy Reviews, Vol. 12, pp. 1944-1958 Rickerson W., R.C. Grace, 2007, “The Debate over Fixed Price Incentives for Renewable Electricity in Europe and the United States: Fallout and Future Directions,” A White Paper prepared by The Heinrich Böll Foundation Roulleau T. and C.R. Lloyd, 2008, “International Policy Issues Regarding Solar Water Heating, with a Focus on New Zealand”, Energy Policy, Vol. 36, pp.1843-1857 Solomon, Barry and Thomas Georgianna, 1987, “Optimal Subsidies to New Energy Sources,” Energy Economics, July Taylor, Margaret, 2008, “Beyond Technology-push and Demand-pull: Lessons from California’s Solar Policy,” Energy Economics, Vol. 30 pp. 2829-2854 Verbong Geert and Frank Geels, 2007, “The Ongoing Energy Transition: Lessons from a Socio-technical, Multi-level Analysis of the Dutch Electricity System (1960-2004),” Energy Policy, Vol. 35, pp. 1025-1037

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Pricing Intermittent Electricity, Policies, Pricing Distortions Duke, R., Williams, R., and A. Payne, 2005, “Accelerating Residential PV Expansion: Demand Analysis for Competitive Electricity Markets,” Energy Policy, Vol. 33, pp. 1912-1929 Lively, Mark, 2008, “WOLF at the Door: Valuing Intermittent Wind Power For Electricity Dispatchers?” 28th USAEE/IAEE North American Conference, New Orleans, Louisiana, 2008 December 4-6. http://www.usaee.org/usaee2008/submissions/OnlineProceedings/MarkLivelyUSAEE2008PaperRev.pdf Lively, Mark, 2008, “The WOLF in Pricing: How the Concept of Plug, Play, and Pay Would Work for Microgrids”, IEEE Power & Energy Magazine, January/February 2009. Mills, Andrew, Ryan Wiser, Galen Barbose, William Golove, 2008, “The impact of Retail Rate Structures on the Economics of Commercial Photovoltaic Systems in California,” Energy Policy, Vol. 36, pp. 3266-3277 “Projected Costs of Generating Electricity (2005 Update)—World Alliance for Decentralized Energy’s (WADE’s) response to the report of the International Energy Agency and the Nuclear Energy Agency, August Rafaj, P. and S. Kypreos, 2007, “Internalization of External Cost in the Power Generation Sector: Analysis with Global Multi-regional MARKAL Model,” Energy Policy, Vol. 35, pp. 828-843 PV Deployment Models Klein, J., R. Erlichman, 2006, “What the Solar Power Industry Can Learn from Google and Salesforce.com,” The Topline Strategy Group, Sunlight Electric www.sunlightelectric.com Shum K.L. and Chiro Watanabe, 2007, “Photovoltaic Development Strategy in Japan and the USA—An Institutional Appraisal,” Energy Policy, Vol. 35 pp. 1186-1195 PV and Capital Asset Pricing Model (CAPM) Perspective Albrecht, J. 2007 “The Future Role of Photovoltaics: A Learning Curve versus Portfolio Perspective” Energy Policy, Vol. 35, pp. 2296-2304 Awerbuch, S., 2004, “Portfolio-Based Electricity Generation Planning: Policy Implications for Renewables and Energy Security,” SPRU, University of Sussex, Working Paper Awerbuch, S., 2005, “The Role of Wind in Enhancing UK Energy Diversity and Security: A Mean-Variance Portfolio Optimization of the UK Generating Mix,” available at http://www.awerbuch.com Awerbuch, S. and M. Berger, 2003, “EU Energy Diversity and Security: Applying Portfolio Theory to Electricity Planning and Policy-Making,” International Energy Agency, available at http://www.awerbuch.com Awerbuch, S. and R. Sauter, 2005, “Exploiting the Oil-GDP Effect to Support Renewables Deployment” The Freeman Centre, University of Sussex , Science and Technology Policy Research (SPRU), Paper No. 129 (January 2005), http://www.sussex.ac.uk/spru/ Capital Markets Reports O’Rourke, Stephen, 2008, “Solar Photovoltaic Industry,” Deutsche Bank Securities

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“Solar Photovoltaic Supply and Demand Update,” November 12, 2008, FBR Capital Markets Data Sources Jager-Waldau, A., 2006, “PV Status Report 2006: Research, Solar Cell Production and Market Implementation of Photovoltaics,” European Commission, Directorate-General, Joint Research Center Photon Photovoltaics Stock Index (PPVX): http://www.photon-magazine.com/ppvx/index.htm Solar electricity PV-based prices: http://www.solarbuzz.com/SolarPrices.htm “Trends in Photovoltaic Applications—Survey Report of Selected IEA Countries Between 1992 and 2007,” 2007, Photovoltaic Power Systems Programme, International Energy Agency (IEA), August 2008 United States Solar Atlas, http://www.nrel.gov/gis/solar.html

Interesting Web Links

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Solar Energy Industries Association http://www.seia.org/•

European Photovoltaic Industry Association http://www.epia.org/

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http://www.solarbuzz.com/

(provides monthly updates on price developments)

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Photon Magazine http://www.photon-magazine.com/•

Company database: http://www.enf.cn/•

Renewable Energy Access http://www.renewableenergyaccess.com/

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National Renewable Energy laboratory http://www.nrel.gov/pv/•

Solar America Initiative http://www1.eere.energy.gov/solar/solar_america/index.html

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Database of State Initiative for Renewables

and Efficiency http://www.dsireusa.org/