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Article filed under Energy | Written by John Farrell | 2 Comments | Updated on Sep 15, 2011

Solar PV Economies of Scale Improve in 2010

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/solar-pv-economies-scale-improve-2010/

Installed costs for solar PV have dropped and economies of scale improved significantly in 2010, opening the door for much more cost-competitive distributed solar power. 

The data comes from the 4th edition of the excellent report from the Lawrence Berkeley Labs’, Tracking the Sun (pdf) and shows the installed costs for behind-the-meter solar PV projects in 2010.  The following merely copies Figure 11 from that report, showing the average installed cost of “behind-the-meter” solar projects in the U.S. in 2010, by project size.

This is useful and shows the significant economies of scale for solar PV in 2010, but the history is important.  For context, the following chart shows the 2010 data along with the 2009 data from Lawrence Berkeley Labs, with the grey shaded area indicating the cost decreases.  The 2010 installed cost data from the California Solar Initiative (red) is also shown, helping validate the LBNL data.  The last data point from the CSI is an outlier likely due to having too few projects in that dataset.

Two things are clear from the new data.  First, installed costs have dropped significantly, by $1 per Watt for residential-scale solar PV and by nearly $2 per Watt for megawatt-scale projects.  We can also see more clearly how the economies of scale of solar have improved, as well.

The unit cost savings between the smallest and largest solar projects (1 MW and under) jumped from $2.80 to $4.60 per Watt, a change in relative savings from 30 percent to 47 percent.  Economies of scale were also much greater for mid-size solar (30-100 kW), with the percentage savings over the smallest projects rising from 21 to 35 percent.   The following chart illustrates the change in economies of scale, showing installed costs as a percentage of the cost of a 2 kW system.

Instead of having relatively little economies of scale for solar PV projects larger than 2 kW, the 2010 data confirms that the unit cost of solar does continue to fall significantly as solar projects grow up to 1 megwatt (MW) in size.

Unfortunately, LBNL did not have sufficient data to provide context for economies of scale for larger distributed solar projects (1 to 20 MW), with only about 20 datapoints.  However, their finding was that these larger crystalline solar projects cost between $4 and $5 per Watt, showing small but significant scale economies.

The lesson is that solar economies of scale seem to be improving as the U.S. market matures, good news for distributed solar to compete with peak electricity prices on the grid.

[note: for more context, see the previous post on 2009 solar economies of scale]

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Article filed under Energy | Written by John Farrell | No Comments | Updated on Sep 8, 2011

Severe Volatility Illustrates the Risks of Using Solar RECs

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/severe-volatility-illustrates-risks-using-solar-recs/

This is a little taste of a project I’m doing comparing solar renewable energy credits (SRECs) with a state solar mandate to Clean Contracts (a.k.a. feed-in tariffs).  One metric for comparison is the risk created by market uncertainty, and there’s no better illustration of the risk and uncertainty in SREC markets that this chart.  In the past 9 months, SREC prices have tumbled in nearly every market in the U.S. 

Chart of Solar Renewable Energy Credits in Seven U.S. States August 2009 to 2011

The cause is the same everywhere – the solar industry met the state mandate, cratering demand for SRECs.  Prices won’t recover until the market slows down. 

From an Econ 101 standpoint, SRECs beautifully price market demand and are a powerful indicator of when the state-created market is saturated.  From an industry standpoint, however, they represent a real roller coaster.  It’s hard to be a solar installer when your entire market dries up for 9 months waiting for next year’s quota to roll in (in NJ and PA, legislation is being considered to accelerate the state mandate to solve the problem). 

Clean contracts (if uncapped) solve the problem, because the market doesn’t bust (of course, a solar mandate that can keep ahead of supply would also work). 

But rather than pricing market demand (as SRECs do), Clean contracts attempt to price the cost of solar.  It’s one reason why they tend to deliver lower cost solar to market than SREC markets or mandates.  And as you can see in this chart from a previous post, even Germany’s Clean contract (feed-in tariff) program more closely approximates the cost of solar in New Jersey that New Jersey’s SREC price.

It’s a serious question for policy makers to consider when creating a market for solar.  Is an SREC market that depends on a state solar mandate any more “market-based” than Clean contracts that simply provide a standard offer to solar developers?  And if the latter means cheaper solar for ratepayers, then shouldn’t that trump considerations of “markets”?

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Article filed under Energy | Written by John Farrell | 4 Comments | Updated on Sep 6, 2011

PACE Financing: A 101 and Status Update

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/pace-financing-101-and-status-update/

A short slide deck providing a “101″ on Property Assessed Clean Energy (PACE) financing, a status update on the legal challenges, and some of the policy design issues we explored in our report on Municipal Financing Lessons Learned.

PACE Financing 101 and Status
View more presentations from John Farrell

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Article filed under Energy | Written by John Farrell | 1 Comment | Updated on Sep 2, 2011

Putting the Sun to Work for Minnesota

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/putting-sun-work-minnesota/

This is the best video you will ever see supporting a state solar energy standard, submitted for a contest hosted by Environment Minnesota.

 

For more information on the solar energy standard for Minnesota, see Environment Minnesota’s website as well as Solar Works for MN.

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Article filed under Energy | Written by John Farrell | No Comments | Updated on Sep 1, 2011

PACE Financing Takes a Step Forward in Court

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/pace-financing-takes-step-forward-court/

With a ruling that the Federal Housing Finance Agency (FHFA) must do a formal rulemaking on its 2010 decision to torpedo the innovative local finance tool for energy efficiency and clean energy retrofits, a federal judge gave Property Assessed Clean Energy (PACE) financing new life.

Earlier this year, it looked as if prospects were bleak for PACE in 2011, with some progress on Commercial PACE and a new director at advocacy organization PACENOW, but agonizingly slow steps on federal legislation and litigation. 

Today’s ruling means FHFA has to start over, but it does not overturn the agency’s 2010 advisory against PACE, leaving the program in limbo until the formal rulemaking is complete.  Here’s hoping PACE finally wins through, a great tool for saving energy and creating jobs at the local level.

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Clean Local Energy for Kentucky
Article, Resource filed under Energy | Written by John Farrell | No Comments | Updated on Aug 31, 2011

Clean, Local Power for Kentucky

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/clean-local-power-kentucky/

In August 2011, ILSR Senior Researcher John Farrell gave this presentation to a group of rural utilities and environmental organizations in Kentucky.  The slides illustrate the enormous renewable energy potential in Kentucky and the cost-effectiveness of clean, local power in meeting the state’s electricity and economic needs. Clean Local Power for Kentucky View more presentations… Continue reading

Article filed under Energy | Written by John Farrell | 1 Comment | Updated on Aug 25, 2011

Why ‘Market-based” is a Poor Criteria for Good Solar Policy

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/why-market-based-poor-criteria-good-solar-policy/

Updated 8/26/11 and 9/1/11

Many renewable energy advocates argue that the market for solar renewable energy credits (SRECs) is a more cost-effective tool for incentivizing solar power than a feed-in tariff (or CLEAN contract) set in a regulatory proceeding. 

Really?

This chart illustrates the installed cost of solar in New Jersey from 2006 to 2011 (as reported by the National Renewable Energy Laboratory in Tracking the Sun III and converted to levelized cost) in green, the New Jersey SREC spot market price in red, and the German feed-in tariff price (constant exchange rate, adjusted for NJ solar insolation) for rooftop solar projects 30 kilowatts and smaller in blue. (Update 9/1: the previous chart showing solar cost in $ per Watt is here).

Does a “market-based” policy do a better job of matching the actual cost of solar? 

This comes to mind: “one of these things is not like the other…”

Update 8/26: I should add that the German feed-in tariff is the only source of revenue for solar projects, whereas the SREC in New Jersey comes in addition to the federal 30% tax credit and accelerated depreciation (and net metering).  Since the two federal incentives (and net metering values) have not changed, the fact that the SREC value is rising against the tide of falling solar prices is even more absurd.

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Article filed under Energy | Written by John Farrell | 6 Comments | Updated on Aug 18, 2011

In Wind Power, is Bigger Better?

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/wind-power-bigger-better/

Update October 2012: The 2011 Wind Technologies Market Report shows weak, but consistent economies of scale in wind power projects. It seems obvious: every extra turbine in a wind farm comes at a lower incremental cost, making the biggest wind power projects the most cost effective per kilowatt of capacity. If you bet $20 on… Continue reading

Article filed under Energy | Written by John Farrell | 1 Comment | Updated on Aug 18, 2011

U.S. Could Get 20% of Its Power from Solar on Transmission Line Right-of-Way

The content that follows was originally published on the Institute for Local Self-Reliance website at http://www.ilsr.org/us-could-get-20-its-power-solar-transmission-line-right-way/

Ontario Hydro transmission line forest cutUpdate 8/23/11: While solar can be built right under high voltage transmission lines, it can’t necessarily interconnect right at the tower.  Thus, this piece should be read as an analysis of land use rather than easy interconnection.

What if the U.S. could get 20 percent of its power from solar, near transmission lines, and without covering virgin desert?

It can.  Transmission right-of-way corridors, vast swaths of vegetation-free landscape to protect high-voltage power lines, could provide enough space for over 600,000 megawatts of solar PV.  These arrays could provide enough electricity to meet 20% of the country’s electric needs.

It starts with the federal Government Accountability Office, which estimates there are 155,000 miles of high-voltage transmission lines in the United States (defined as lines 230 kilovolts and higher).  According to at least two major utilities (Duke Energy and the Tennessee Valley Authority), such power lines require a minimum of 150 feet of right-of-way, land generally cleared of all significant vegetation that might come in contact with the power lines.

That’s 4,400 square miles of already developed (or denuded) land for solar power, right under existing grid infrastructure. 

Of course, the power lines themselves cause some shading, as may nearby trees (although the New York Public Service Commission, and likely other PSCs, has height limits on nearby trees that would minimize shading on the actual right-of-way).  To be conservative, we’ll assume that half of transmission line right-of-way is unsuitable for solar. 

That leaves 2,200 square miles of available land for solar.  With approximately 275 megawatts (MW) able to be installed per square mile, over 600,000 MW of solar could occupy the available right-of-way, providing enough electricity (over 720 billion kilowatt-hours) to supply 20 percent of U.S. power demands (note: we used the average annual solar insolation in Cincinnati as a proxy for the U.S. as a whole).

Making big strides toward a renewable energy future doesn’t require massive, remote solar projects, but can use existing infrastructure or land to generate significant portions of our electricity demand.  Transmission right-of-way, providing 20% of U.S. electricity from solar, is just one piece of the puzzle, with another 20% possible using existing rooftops and a solar potential of nearly 100% from solar on highway right-of-way.  Solar can help achieve a 100% clean – and local – energy future.

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