This is a little something I wrote for a friend who’s doing some feasibility work on solar. It’s meant to give a general overview of market conditions and development in a simple and concise way. It’s longer than I expected, but I think it goes through many of the most important developments. There’s also a little background to climate change in the introduction. This is just one part of a whole report and will need to be further proofread when he writes the actual thing, but it’s written in pretty basic language so I thought I’d share and possibly get feedback:
Introduction
Renewable energies have become one of the most talked about concepts in the past several years. The prospect of irreversible climate change and energy security have both led to significant investment in the sector, with further support expected from governments through the implementation of regulatory tools such as Carbon Cap and Trade (e.g. Emissions Trade Scheme in Europe). Although global warming as a result of greenhouse gas emissions was noted by the famous French mathematician, Joseph Fourier, in 1826, and calculated by Svente Arhenius in 1896 (White & Labatt, 2007), the role of fossil fuels in leading global economic progress meant that such works were secondary to economic growth. With the advent of the 21st century however, and the swift development of populous countries such as China and India, the impact of climate change became an issue that began to gain increasing momentum in the political sphere. Having had the first phase of development of alternative energies in the 1970’s as a result of the Arab oil embargo, the second phase has continued to develop in the first decade of the 21st century. Policymakers are at a crossroads having to balance economic growth and potentially catastrophic damage to the climate. The incidence of the climate change email leak emphasises the political and social pressures facing policy makers (Stringer, 2009). It is therefore necessary to understand the significant resistance that interested parties may have in influencing public opinion, and the importance of being able to present a feasible alternative to the current energy mix that are by and large, accepted to contribute both to climate change and to price volatility through lack of energy security.
It is also worth noting that although renewable energies present a steady source of return for the end user (e.g. the person who installs the solar panel on their house), there’s also significant room for growth for the investor. This has been demonstrated through the consistent performance of climate change funds, which though still relatively small in asset management, have been steady performers (Ross, 2009).
There are also various analyses available of renewable energies; the models vary in detail and rigor, but these Excel based programs allow for quick adjustment of variables to yield a set of results for informed decision making (e.g. is it economical to install a new solar panel). One such program is from the Natural Resources department of the Canadian government. The program is named Retscreen and allows the user to make a comparison of preset, or user generated, energy generation scenarios. It allows the user to adjust a number of variables ranging from the energy source to the capacity and location of sources. The program includes comprehensive data such as wind speed, temperature, and humidity measurements based on ground and satellite measurements taken by NASA, to help it make a reasonable approximation of how a variety of energy sources would perform in any of its wide range of available locations. Having acknowledged the various tools available to end users for comparison of energy sources, and the incentives implemented by governments with respect to climate change, the reality of the finite nature of fossil fuels and the necessity of energy security, this paper will explore some of the outstanding technologies in the field.
Comparative Review of different green energy sources
There’s been several technologies that have received a great deal of attention from industry and policy makers, to varying degrees, in the past decade. They collectively represent the opportunity for a carbon-free future, each serving to complement the other’s weaknesses. The issue of interdependence is of utmost importance due to the intermittency and relative unreliability of energy sources such as solar and wind. The problem has been tackled before with various studies and reports written to support an overall energy structure (Jacobson & Delucchi, 2009). Although the details of such plans are unnecessary for the scope of this report, a brief description will be given to assist the reader in developing a general understanding of the energy options currently available, how they compare with one another, and the importance of integrated approaches such as that presented in the cited journal.
Solar Energy
Solar energy is by far the most abundant source of energy on the planet. The amount of sunlight the Earth receives in an hour equals to 4.3×1020 joules, which is enough to satisfy the human population’s energy demand of approximately 4.1×1020 joules for a year (Biello, Scientific American, 2008). Its effects lead to the creation and sustenance of life through the process of photosynthesis, by which plants convert sunlight into vegetal matter such as cellulose. Although photosynthesis is itself a very inefficient process, with efficiencies ranging between 0.1-2% for many crop and natural plants (Govindjee, n.d.), the sheer scale, available time, and low energy requirements for plants to develop biomass makes the process fit for purpose. The same cannot be said for human uses however; global electricity generation totalled an estimated 18.0 trillion kWh in 2006 (Energy Information Administration USA, 2009).
Modern solar power can be classified into three processes. The first comprises of the passive use of sunlight to provide hot water or space heating for domestic purposes. The second is through the use of photovoltaic technology, which uses the energy derived from sunlight to excite electrons from a suitable semiconductor material such as silicon to induce DC currents. The third is the concentrated use of solar radiation, where sunlight is focused at a central position containing water, causing the water to heat up and evaporate. The water vapour then turns a turbine to generate electricity. We will look more at photovoltaics due to the greater research and experience involved in this particular energy extraction process.
Although solar power is highly abundant, it is easily affected by atmospheric effects (e.g. clouds blocking sunlight can quickly reduce system output) and can have severe fluctuations in power output throughout a single day. Solar cells also generally have low efficiencies (5-10%). Although solar cell efficiencies being sold on the commercial scale are currently low, it is worth noting that significantly higher efficiencies have been achieved on the research scale, as in the case of Spectrolab’s record breaking 41.6% cell in August (Biello, News Blog: New solar-cell efficiency record set, 2009), and what may soon be commercially available solar cells reaching over 20% (SunPower Corp, 2009). Solar output can therefore be highly limited in areas where sunlight doesn’t shine with high intensity, reliably, and for extended periods. Comparing the output, the cost, and the risk of solar power to base load generation sources such as gas and coal, solar may seem highly undesirable on a $/kWh basis. A mistake that many commit however is that simple cost comparisons are often misleading. Base load generation plants, such as nuclear, coal, and gas all operate with high capacity factors (the actual output divided by the theoretical maximum) generally exceeding 75% and often over 90%. Intermediate load power plants operate between 40-60% of the time. Solar power on the other hand can generally be said to operate at less than 25% for a ground based array (Boyle, 2009). Given such low capacity factors, and coupling with low efficiencies where output is affected, it is clear that solar power suffers on cost. In order to overcome the economic obstacles of using renewable energies like solar however, many governments in the developed world have implemented various regulatory tools to promote renewable energy use. The most outstanding of these is the “feed-in tariff”, where the utility pays users for all output resulting from their installations. Feed-in tariffs in the UK are to be implemented in April 2010 and set to receive 36.5p per unit generated, with an extra 5p being awarded for every unit exported to the grid (Southern Electric, 2009) (i.e. generation alone provides an income, in addition to the savings of avoiding usage of grid electricity).Complementing the feed-in tariff measures, which saw one of its most successful implementations in Germany, there are various other tools to promote renewable energies. The setting of renewable energy and efficiency targets are one such measure. These measures can be complemented by others such as ‘tax equity’ in the United States, where companies that finance such projects can receive grants of 30% of capital cost in the form of tax breaks. The problem with tax equity however, is that the financing company must be profitable. The problem is evident when the company isn’t, and why the Lehman Brothers collapse, for example, had major repercussions for certain players in the industry (Avro, 2009). Closer to the United Kingdom, there’s the Climate Change Levy, which itself is linked to other regulatory tools such as Climate Change Agreement (and complemented by Europe-wide projects such as the European Emissions Trade Scheme), whereby companies can reduce their levy by up to 80% if they agree to reduce their carbon output (Cambridge Econometrics, 2008). The Climate Change Levy, for example, has been forecasted to cause a 2.9% decrease in overall energy demand by 2010 compared to 1999 (Cambridge Econometrics, 2005). As these measures continue to affect the economics of ‘traditional’ fuel sources such as coal and gas, and as solar technology matures while prices fall (SolarBuzz, 2009), solar is expected to become increasingly more cost-competitive. It is also worth noting that improved forecasting methods will also allow grid operators to reliably forecast output and make necessary alterations to the electricity generation fuel mix in line with demand requirements, thereby making solar, and other similarly intermittent technologies such as wind, more reliable.
Photovoltaic solar cells have had a schism in recent years, through the creation of a new cell type called ‘thin-film’. Thin-film solar cells operate similarly to traditional silicon based solar cells, but use far lesser amounts of semiconductor material. The importance of material use was highlighted from 2004-2008, as demand outstripped supply and led to a price increase of 24$/kg of solar grade silicon (high purity) to 450$/kg in 2008. Under these conditions, thin-film solar cells gained increasing market share as they provided lower cost at comparable efficiencies. The market has since suffered from a fall in demand, expanded supply, and the financial crisis, resulting in a dramatic decline in prices. This has made thin film less cost competitive; with many companies having to significantly reduce their profit margins, while others are considering re-entry into the traditional silicon market (Groom & Negishi, 2009).
Having the option of low cost manufacturing should prices increase, the major drive to improve solar power’s cost-effectiveness has been on efficiency increases. Apart from the improvements made to solar modules, there has also been much interest in micro-inverters and Maximum Power Point Tracking (MMPT) technologies, with one particular solar cell company (Enphase) having sold more than 100,000 microinverters from July 2008 to September 2009 alone (Enphase Press Release 100,000, 2009). Inverters are simple devices that convert DC current to AC. Traditional solar arrays use a central inverter that gathers all the current and transforms it into AC voltage. New microinverter technologies however, where an inverter is instead installed on each individual module, promise higher reliability with potentially increased product lifetimes (i.e. lower maintenance costs), as well as the elimination of the ‘Christmas tree light effect’, where the entire solar system’s output is affected by that of one module. Contrary to inverters, MPPT’s operate on a modular level. Solar cell modules generally operate at an optimum voltage level (i.e. their maximum power point), therefore if a module that operates best at 20V is used to charge a 12V battery for example, its output will be significantly affected. MPPT’s rectify the reduction in output by acting as a proxy between the module and the device, calculating the maximum power point, extracting power at this voltage, and feeding it into the device at the required voltage using a higher amount of current.
Considering the significant amount of research, existing commercial base, falling prices, government funding, and other regulatory tools supporting photovoltaics, the field is expected to continue to grow and form an important part of a carbon free future as both a utility and domestic scale solution.
