Thanks to innovative energy policy, residents of Ontario can invest in local solar power projects by buying SolarShare bonds. The $1,000 bond provides a 5% annual return over five years and the money is invested in solar power projects across the province (as the chart below shows, this beats a savings account with 0.8% interest or even a 5-year U.S. treasury, with 0.91% interest). Continue reading
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The Germans have installed over 10,000 megawatts of solar panels in the past two years, enough to power 2 million American homes (most of Los Angeles, CA). If Americans installed local solar at the same torrid pace, we could already power most of the Mountain West, could have a 100 percent solar nation by 2026, while enriching thousands of local communities with new development and jobs.
The following map shows the states that could be powered by solar if the U.S. kept pace with Germany on solar power in the past two years (installed the same megawatts on a per capita basis).
Solar Would Power the Mountain West if The U.S. Kept Pace with Germany
The spread of solar has not resulted in covering natural areas or fertile land with solar panels. Rather, 80 percent of the solar installed in Germany was on rooftops and built to a local scale (100 kilowatts or smaller – think the roof of a church or a Home Depot store). Solar in the U.S. also can use existing space. The following map shows the amount of a state’s electricity that could come from rooftop solar alone, from our 2009 report Energy Self-Reliant States:
State Potential Rooftop PV:
While the local rooftop solar potential of these states varies from 19 to 51 percent, there’s much more land available for solar without covering parks or crops. Once again, data from Energy Self-Reliant States (p. 13):
On either side of 4 million miles of roads, the U.S. has approximately 60 million acres (90,000 square miles) of right of way. If 10 percent the right of way could be used, over 2 million MW of roadside solar PV could provide close to 100 percent of the electricity consumption in the country. In California, solar PV on a quarter of the 230,000 acres of right of way could supply 27% of state consumption.
Such local solar power also provides enormous economic benefits. For every megawatt of solar installed, as many as 9 jobs are created. But the economic multiplier is significantly higher for locally owned projects, made possible when solar is built at a local scale as the Germans have done.
With local ownership, making America a 100% solar nation could create nearly 10 million jobs, and add as much as $450 billion to the U.S. economy.
The Germans have found the profitable marriage between their energy and environmental policy. It’s time for America to discover the same opportunity.
Just a reminder that while Texas swelters and its electric grid sags, rooftop solar PV alone could meet 35 percent of the state’s electricity needs. Map from Energy Self-Reliant States:
State Potential Rooftop PV:
Not only is the potential high, but the cost is low. The levelized cost of solar is just 14 cents per kilowatt-hour in Texas, when including the federal 30 percent tax credit. Cost estimates from ILSR.
Texans should start using the sun to beat the heat.
Find out why and how ILSR has been helping communities maximize the value of their local energy resources for nearly 40 years: ILSR’s Remarkable Energy Self-Reliant States and Communities program View more presentations from John Farrell Continue reading
Distributed solar has an edge in the speed with which it will respond to financial incentives, he says. The private sector will begin to install solar panels in response to a feed-in tariff much more quickly than developers of large solar projects can negotiate power-purchase agreements with utilities and win regulatory approval from the government.
Back in April 2011, ILSR Senior Researcher John Farrell gave this presentation on the potential for solar power in Minnesota to a group of solar businesses and advocates. Solar in Minnesota: Great Potential View more presentations from John Farrell. Continue reading
Update 7/26: One commenter asserts that the loss figures offered by the original author may be relevant in India, but do not reflect the U.S. grid, where losses total around 7%. EIA data seems to reflect this [xls].
Can transmission losses completely offset economies of scale for solar power plants? An article in Renewable Energy World argues against the building of multi-megawatt (MW) solar PV instead of on-site or local PV systems. In particular, the author writes:
The biggest problem with the multi-MW solar PV plant is that it loses 12-15 percent of expensive power as it passes through a series of power transformers. PV solar inverters generate power at 400 [Volts] three-phase. In large plants, this power is first boosted to 66 [kilovolts] or more with several power transformers and then stepped down to 400V with another string of transformers to suit consumer requirements. In addition, there is a further transmission loss of 5-7 percent in the power grid. Why suffer an avoidable 20 percent loss of expensive solar power?
…There is thus no ‘scale advantage’ in large PV solar plants. In reality, all multi-MW plants are basically clusters of several 500-kW plants since solar inverter capacities are limited to about 500 kW and no more. Why not have one hundred 500 kW plants instead of one giant 50 MW plant?
With 20% of the power from a large-scale solar plant lost in transformers and power lines, it could seriously alter our previous analysis of solar economies of scale. Here are the original charts, with the first chart shows our original analysis of solar economies of scale, with strong savings for scale for new projects (as reported by the Clean Coalition):
The next chart shows the economies of scale in the German rooftop PV market, as reflected in their feed-in tariff rates. The percentages show the price in each size tranche relative to the price for the smallest rooftop PV systems. Once again, there are significant savings for scale, especially when going from a project 100-1000 kW to one that is 1 megawatt or larger (15 percent).
But if there is a 20% power loss for the voltage stepping and transmission for larger solar projects, then when it comes to delivered power, small projects may perform better. Let’s assume that projects 1 MW and larger require the voltage step and transmission (and incur the losses), whereas smaller plants do not. The following two charts illustrate the difference.
The first chart takes the Clean Coalition (green line) data from the Solar PV Economies of Scale chart and calculates the levelized cost of the power from each size power plant based on the sunshine in southern California. For the largest size solar power plants, the cost is adjusted for the losses due to transmission and transformer stepping.
As we can see in the first chart, the losses from transmission wipe out most economies of scale for large-scale solar, making 1 MW and larger solar PV plants equivalent to on-site solar power from a 25 kW solar PV array.
We can similarly examine the effect in the German case. Here the government sets the price paid for solar by size class, and since it’s based on output at the power plant, large-scale plants that have transmission losses get paid for their entire power output, regardless of how much usable power reaches customers. The following chart shows what German customers effectively pay for solar, assuming that 1 MW and larger facilities all experience the 20% transmission losses explained earlier.
As we can see in the chart, the cost of transmission can wipe out the economies of scale in installed costs, making large-scale solar comparable to solar PV of 30-100 kW, but without the same transformer and transmission losses.
It may be true that the installed costs of solar PV continue to fall as projects get larger, but it’s clear that relying on the price of solar at the power plant does not accurately reflect the cost to the grid or ratepayers. For some size of larger power plants (1 MW? 5 MW?), the lost power from stepping up and down voltage through transformers and from transmission may largely offset the economies of scale from building a larger power plant.
Rather, mid-sized solar (or specifically, projects that can connect directly into the distribution system without changing the voltage) may deliver the best cost per kilowatt-hour.
Energy policy matters, a lot. The Germans have a comprehensive feed-in tariff, providing CLEAN contracts to anyone who wants to go solar (or wind, or biogas, etc). The U.S. has a hodge-podge of utility, state and federal tax-based incentives. What does that mean?
Much cheaper German solar. In fact, it’s like having your favorite craft or microbrew beer at a price that beats Budweiser. From a study of U.S. solar prices reported in Renewables International:
Perhaps most surprisingly, the study found that the planned arrays larger than one megawatt have an average installed price of $4.50 per watt, with only a third of the systems in the pipeline coming in at prices below four dollars per watt. As Renewables International reported in January, the installed system price of photovoltaics in the US was easily 60 percent above the level in Germany in 2010 for equivalent system sizes (arrays smaller than 100 kilowatts).
Here’s a chart illustrating that cost differential, with the German prices updated for the 2nd quarter of 2011.
If the German solar prices are wunderbar, that makes the U.S. “furchtbar.”
A recently released solar map of New York City found enough room for solar panels on building rooftops to power half the city during hours of peak electricity use. And the city is not alone. Almost 60 million Americans live in areas where solar prices are competitive with retail electricity costs, and this kind of… Continue reading
The Golden State has covered over 50,000 roofs with solar PV in the past decade, but could it also save 30% or more on its current solar costs? Renewable energy guru Paul Gipe wrote up a study last week that found that Californians pay much more per kilowatt-hour of solar power than Germans do (accounting for the difference in the solar resource). The following chart outlines the various ways Californians pay for solar, compared to the Germans (averaged over 20 years, per kilowatt-hour produced).
While the study doesn’t explore the rationale, here are a few possibilities:
- The inefficiency of federal tax credits artificially inflates the cost of U.S. solar.
- Big banks that offer financing for residential solar leasing routinely overstate the value of the systems, increasing taxpayer costs on otherwise cost-effective systems.
- The complexity and intricacy of the state and federal incentives (4 separate pots of money!) and the lack of guaranteed interconnection means higher risk and higher cost for U.S. solar projects.
- The inconsistency in local permitting standards that increases project overhead costs.
Ultimately, the combination of these market-dampening problems in the California market has hindered the cost savings that have hit the German market. California solar installations of 25 kilowatts (kW) and 100 kW have a quoted price of $4.36 and $3.84 per Watt, respectively, according to the Clean Coalition. This compares to $3.40 per Watt on average for already installed projects of 10-100 kW in Germany.
Given a solar cost disadvantage that is present both in the value of incentives AND in the actual installed cost, renewable energy advocates in California should seriously question whether the current policy framework makes sense. The mish-mash of federal tax credits and state/utility rebates has not led to the same economies of scale and market maturity as Germany has accomplished with their CLEAN contract (a.k.a. feed-in tariff).
Switching energy policies could save ratepayers billions.
A 24-cent CLEAN contract price for California solar (to match the German contract) would replace the entire slate of existing solar incentives with an overall average cost 30% lower than the current combined incentives. If 2011 is a banner year and the state sees 1 gigawatt (GW) of installed capacity, the savings to ratepayers of a CLEAN program (over 20 years) would be nearly $3 billion.
If the CLEAN price were adjusted down to assume that projects could use the federal tax credit, then California could set the contract price as low as 18.5 cents per kWh, 5 cents less than is currently paid by California ratepayers (although requiring projects to use tax credits has significant liabilities).
Several states and municipal utilities (Vermont; Gainesville, FL; San Antonio, TX) have already shifted to this simple, comprehensive policy, with promising early results. Californians should consider whether holding to an outdated and complicated energy policy is worth paying billions of dollars extra for solar power.