By Michael Kanellos Staff Writer, CNET News.com
Published: May 11, 2007, 4:00 AM PDT
One of the big problems with solar power has been that it costs more than electricity generated by conventional means. But some experts think that, under certain circumstances, the premium for solar power can be erased, without subsidies or dramatic technical breakthroughs.
A sufficiently large solar thermal power plant (also called concentrated solar power, or CSP) could potentially generate electricity at about the same cost as electricity from a conventional gas-burning power plant, experts say.
It's not easy. The plant would also have to come with a large energy storage system, be built next to others and be located close to users. To date, no one has completed a facility that comports to all of these parameters, said Fred Morse, an energy analyst who has studied the issue.
"Solar thermal is available at much more attractive prices than solar photovoltaic. The land mass isn't huge, but it does take a while to build these," said Stephan Dolezalek, a managing partner and co-head of the clean tech practice at venture firm Vantage Point Venture Partners, an investor in Bright Source Energy, which builds solar thermal plants and components.
Both Dolezalek and Jiang Lin, who heads up the China Energy Group at the Lawrence Berkeley National Laboratory, said that solar thermal is likely the most promising technology in the entire alternative-energy field right now.
When asked when solar thermal can hit parity, Lin responded "now."
Thermal by the numbers
Conventionally generated electricity ranges between 5 and 18 cents per kilowatt hour (the amount of money to get a kilowatt of power for an hour) but in most places it's below 10 cents, according to the Energy Information Agency. Solar thermal costs around 15 to 17 cents a kilowatt hour, according to statistics from Schott, a German company that makes solar thermal equipment.
A solar thermal plant would need a facility to store the heat harvested in the day by its sunlight-concentrating mirrors so that the heat could be used to generate electricity at night. "You need the kind of system that can run in the evening," Morse said. At some sites, such as Nevada Solar One, excess heat is stored in molten salt and released at night to run the turbine.
The plant, ideally, should be capable of generating about 300 megawatts of electricity. Those plants can churn out electricity at about 13 cents a kilowatt.
That's still a relatively high price, so utilities would need to group two, three or more 300-megawatt plants together to share operational resources, Morse said. "They could share control rooms or spare parts," he said. That would knock the price closer to 11 cents a kilowatt hour.
"Under 10 cents is sort of the magic line," he said.
Dolezalek puts it another way: the plants need to be around 500 megawatts in size. Most solar thermal plants right now aren't that big. The 22-year-old thermal plant in California's Mojave Desert is 354 megawatts. Utility company Southern California Edison is erecting a 500-megawatt plant scheduled to open in 2009.
By 2014, solar thermal plants located in the Southwest could crank out nearly 3 gigawatts of power, estimated Travis Bradford of the Prometheus Institute for Sustainable Development, a nonprofit based in Cambridge, Mass. That's enough for about 1 million homes.
Costs can then be reduced further by building the plants close to consumers. It costs about $1.5 million per mile for transmission lines, according to statistics from Acciona Solar Power, which owns solar thermal plants. Solar thermal plants work best in arid deserts that get little rainfall. Since some of the fastest-growing cities in the world are located in sun belts, that's less of a problem than it used to be.
But getting to that point isn't easy. Land-use hearings and permits can drag on for years while construction costs rise. The amount of land required can be an issue too: the 354-megawatt plant in California occupies 1,000 acres. Larger plants would need more land, while smaller plants result in higher costs per kilowatt hour.
Even if all of these factors could be completely optimized, solar thermal power plants would likely not produce electricity at a level that would compete with coal plants. Coal plants, however, will likely be hit with carbon taxes in the near future, which will make solar thermal more competitive. Still, at less than 10 cents a kilowatt, solar thermal would be competitive with electricity from gas-powered plants.
Utilities will also likely work hard to lower the costs of solar thermal in the coming decades, Morse added. Utilities are under mandates to increase their renewable energy sources. Citizen groups often complain about wind turbines and the wind doesn't blow at a constant, predictable rate. Several companies are intent on tapping heat from under the surface of the earth to generate power. Geothermal power, however, works best only in certain locations.
"There is an enough flat, unproductive land in the U.S. to power the U.S.," Morse said. "We just don't have the wires to get there. Eisenhower built the national highway system. Some president will build the national grid."
Thursday, May 17, 2007
Price decrease for solar modules might start consolidation in solar PV supply chain
By: Edwin Koot (Director SolarPlaza.com)
Rotterdam, 7 November 2006
The solar energy market and industry have been experiencing a price decrease in solar modules since the second half of 2006. Based on its contacts with suppliers and the activities on the Trading Floor, SolarPlaza experienced a price fall of 10% or even more compared to just a few months ago. More and more companies are offering (large) quantities of modules. It seems as if the acute module shortage which was limiting project development has vanished. Is this just a temporary development, or could this be the start of continued price decreases? Let's look at 3 major trends in the market and their possible implications.
Considerably lower sales in Germany
The German market will consume considerably fewer modules in 2006 compared to last year. Precise figures are still not available, but everybody within this market is convinced. The feed-in tariff has decreased 5% at the start of this year. At the same time the module shortage was rising to its peak with prices rising. Simple financial calculations showed that PV installations and, moreover the larger free-field power plants, were no longer as attractive as they were the year before in 2005. Simply count the new large projects inaugurated in Germany in 2006: fewer large power plants means significantly fewer MW. The impact is accordingly: with Germany being the world's largest market, a drop of 10-15% in module sales means some 100-150 MW of modules can be sold elsewhere, and the predictions that can be heard within this market are: sales of 600 MW or even less in 2006 instead of the 730 or more in 2005.
Continued strong production growth
With the continued strong global growth in production capacity and production of cells and modules, the production of modules has risen further compared to 2005. The shortage of silicon did not seem to affect this development too much. New cell manufacturers have started production and seem to be able to obtain wafers. This must be additional quantities, since no breakdown of any cell manufacturer has been reported so far. It seems the semiconductor industry has found its way to make better profits by moving to solar wafer and cell production. In this perspective it is no coincidence that semiconductor nation Taiwan now already has 7 solar cell manufacturers. So, with more cells and modules and fewer sales in Germany, where do all the modules go?
Slow growth of module sales in rest of the world
Based on our contacts and market research, these modules do not all reach Spain and Italy. Although both very promising markets, they are not yet taking up even 100 and certainly not 150 MW of modules this year. The sales in these countries will be less than 50 MW each, related to both administrative and bureaucratic issues. The world's third market, California, is just at the beginning of a new and promising era of market growth and secondly-ranked Japan is going strong but not with any serious market growth. The conclusion is that more modules should be available on the market. And this has of course an influence on the price.
What will happen next year?
Chinese existing and new manufacturers are ramping up production capacity in cells and modules. More silicon is expected to be produced next year in the world, specifically in China. Which markets will consume these silicon, wafers, cells and finally modules? Not Germany it seems. The feed-in tariff will be decreased another 5% as regulated by law. Furthermore, a revision of the German feed-in tariff is planned in 2007. Therefore, the German market can only become attractive again with much lower module prices. At least another 10% less seems necessary to create market opportunities for solar systems bringing an acceptable financial yield for investors. Without a price decrease this market will only shrink once more. One way to stimulate the growth of module sales for the industry would be a significant sales price decrease. Other indicators could enhance this development as well. There are already more than 70 cell and more than 230 module manufacturers in the world. The larger and stock-listed producers will have to show their shareholders growing numbers for sales and market shares. And as other markets have shown: if you can't sell more, you either lower prices to increase sales or you buy other companies out of the market. Both of these developments can put a serious pressure on the market prices. Small companies will have to make serious efforts to keep up with the larger corporations. The question is whether these companies will be able to get their hands on cheap wafers and cells or whether they will have the financial resources to lower their prices and margins to go along with the market.And there is another visible trend which is putting pressure on the smaller manufacturers. The growing attention for product quality and (financial) reliability and sustainability of PV companies. Like the Huerta Solares projects in Spain, more and more large multi-megawatt PV projects are being developed. In this price-unstable market, the developers purchasing modules not only want to do business with companies offering the lowest prices, they also want to be sure that the seller will still be there in 10 years to fulfil product warranties.
Further price decrease after 2007
Will the smaller cell and module manufacturers be able to survive price decreases after years of heavy investment? Will this be the beginning of a consolidation phase? The enormous growth speed of the bigger manufacturers will definitely require maximum efforts by the smaller ones to keep up within this unstable market. They could become fodder for the larger companies to strengthen their local market positions or, even worse, break down if prices fall faster and margins melt like snow in the sun. And prices could fall further after 2007. The new silicon production capacity currently being built could bring considerably more solar-grade silicon on the market after 2007. That means that, finally, the enormous surplus of cell and module production capacity can be used. This could lead to further price decreases since it is not unthinkable that the global market growth will not be high the coming 2 years.
Modest market grow in 2007
It is uncertain what will happen with the feed-in tariff in Germany with a revision coming up in 2007. If continued as it is now, the growth will depend very much on the required lower module prices to pump up this market again. Japan is growing modestly and an explosive growth does not seem likely in the coming year. The world's third market, California, is very promising with its new incentives, but has only just started. Experience in other markets shows that it takes time to educate a market before really big sales numbers can be achieved. Look for example at Spain and Italy. Already in action with good incentives for over 1 year, they could start growing seriously, but are currently showing some uncertainties related to revisions of the feed-in tariff. Many other new markets might pop up (France, Canada, Greece), but they will not be able to consume big numbers of megawatts in their early years of development. Therefore, for the long term, the global market development looks great.
Consolidation seems likely within the coming years
Based on the above scenario, in the short term a consolidation within the supply chain could take place. Would it matter if the 'big guys' with access to large amounts of capital take over some 'smaller guys'? With continued price decreases achieved by large-scale and optimized production, solar modules will become more and more a commodity product. Therefore, in the end, concentration and consolidation in the supply chain will have a positive effect on market prices and therefore competitiveness of PV with other energy sources. And that is what all stakeholders want to achieve, because then the markets and business opportunities will really take off for PV. In the development of the solar energy market and industry, the current market phase could be the start of a new era in the development of photovoltaic energy as a major energy source. As foreseen by several industry experts, photovoltaic energy systems could even become a price-competitive energy source within the next decade.
Chinese solar industry dominance?
Within this consolidation phase, the Chinese manufacturers have an interesting advantage. As with other products (toys, computers, cars, etc.), the Chinese manufacturing industry seems to be very competitive compared to industries in western countries. Moreover, western multinationals have build up their manufacturing facilities in China, most often in joint ventures with Chinese companies. Government incentives, tax advantages, cheaper labour, plenty of capital, enormous numbers of highly educated people, and a culture and spirit to work harder and longer, provide competitive advantages that are hard to beat. Their strongly growing energy consumption and programs to stimulate domestic use of renewable energies will further enhance the Chinese solar industry. All these developments make it worthwhile to keep a close watch on what will happen in the Chinese PV industry over the coming years.
The solar industry seems to be at a turning point in its development. Global production capacity is rapidly growing and shortages in the supply chain are vanishing. Prices are decreasing again, turning the market from a sellers market into a buyers market again. The expected consolidation phase could create a good starting position for a new era heading towards solar energy as a price-competitive renewable energy source.
Rotterdam, 7 November 2006
The solar energy market and industry have been experiencing a price decrease in solar modules since the second half of 2006. Based on its contacts with suppliers and the activities on the Trading Floor, SolarPlaza experienced a price fall of 10% or even more compared to just a few months ago. More and more companies are offering (large) quantities of modules. It seems as if the acute module shortage which was limiting project development has vanished. Is this just a temporary development, or could this be the start of continued price decreases? Let's look at 3 major trends in the market and their possible implications.
Considerably lower sales in Germany
The German market will consume considerably fewer modules in 2006 compared to last year. Precise figures are still not available, but everybody within this market is convinced. The feed-in tariff has decreased 5% at the start of this year. At the same time the module shortage was rising to its peak with prices rising. Simple financial calculations showed that PV installations and, moreover the larger free-field power plants, were no longer as attractive as they were the year before in 2005. Simply count the new large projects inaugurated in Germany in 2006: fewer large power plants means significantly fewer MW. The impact is accordingly: with Germany being the world's largest market, a drop of 10-15% in module sales means some 100-150 MW of modules can be sold elsewhere, and the predictions that can be heard within this market are: sales of 600 MW or even less in 2006 instead of the 730 or more in 2005.
Continued strong production growth
With the continued strong global growth in production capacity and production of cells and modules, the production of modules has risen further compared to 2005. The shortage of silicon did not seem to affect this development too much. New cell manufacturers have started production and seem to be able to obtain wafers. This must be additional quantities, since no breakdown of any cell manufacturer has been reported so far. It seems the semiconductor industry has found its way to make better profits by moving to solar wafer and cell production. In this perspective it is no coincidence that semiconductor nation Taiwan now already has 7 solar cell manufacturers. So, with more cells and modules and fewer sales in Germany, where do all the modules go?
Slow growth of module sales in rest of the world
Based on our contacts and market research, these modules do not all reach Spain and Italy. Although both very promising markets, they are not yet taking up even 100 and certainly not 150 MW of modules this year. The sales in these countries will be less than 50 MW each, related to both administrative and bureaucratic issues. The world's third market, California, is just at the beginning of a new and promising era of market growth and secondly-ranked Japan is going strong but not with any serious market growth. The conclusion is that more modules should be available on the market. And this has of course an influence on the price.
What will happen next year?
Chinese existing and new manufacturers are ramping up production capacity in cells and modules. More silicon is expected to be produced next year in the world, specifically in China. Which markets will consume these silicon, wafers, cells and finally modules? Not Germany it seems. The feed-in tariff will be decreased another 5% as regulated by law. Furthermore, a revision of the German feed-in tariff is planned in 2007. Therefore, the German market can only become attractive again with much lower module prices. At least another 10% less seems necessary to create market opportunities for solar systems bringing an acceptable financial yield for investors. Without a price decrease this market will only shrink once more. One way to stimulate the growth of module sales for the industry would be a significant sales price decrease. Other indicators could enhance this development as well. There are already more than 70 cell and more than 230 module manufacturers in the world. The larger and stock-listed producers will have to show their shareholders growing numbers for sales and market shares. And as other markets have shown: if you can't sell more, you either lower prices to increase sales or you buy other companies out of the market. Both of these developments can put a serious pressure on the market prices. Small companies will have to make serious efforts to keep up with the larger corporations. The question is whether these companies will be able to get their hands on cheap wafers and cells or whether they will have the financial resources to lower their prices and margins to go along with the market.And there is another visible trend which is putting pressure on the smaller manufacturers. The growing attention for product quality and (financial) reliability and sustainability of PV companies. Like the Huerta Solares projects in Spain, more and more large multi-megawatt PV projects are being developed. In this price-unstable market, the developers purchasing modules not only want to do business with companies offering the lowest prices, they also want to be sure that the seller will still be there in 10 years to fulfil product warranties.
Further price decrease after 2007
Will the smaller cell and module manufacturers be able to survive price decreases after years of heavy investment? Will this be the beginning of a consolidation phase? The enormous growth speed of the bigger manufacturers will definitely require maximum efforts by the smaller ones to keep up within this unstable market. They could become fodder for the larger companies to strengthen their local market positions or, even worse, break down if prices fall faster and margins melt like snow in the sun. And prices could fall further after 2007. The new silicon production capacity currently being built could bring considerably more solar-grade silicon on the market after 2007. That means that, finally, the enormous surplus of cell and module production capacity can be used. This could lead to further price decreases since it is not unthinkable that the global market growth will not be high the coming 2 years.
Modest market grow in 2007
It is uncertain what will happen with the feed-in tariff in Germany with a revision coming up in 2007. If continued as it is now, the growth will depend very much on the required lower module prices to pump up this market again. Japan is growing modestly and an explosive growth does not seem likely in the coming year. The world's third market, California, is very promising with its new incentives, but has only just started. Experience in other markets shows that it takes time to educate a market before really big sales numbers can be achieved. Look for example at Spain and Italy. Already in action with good incentives for over 1 year, they could start growing seriously, but are currently showing some uncertainties related to revisions of the feed-in tariff. Many other new markets might pop up (France, Canada, Greece), but they will not be able to consume big numbers of megawatts in their early years of development. Therefore, for the long term, the global market development looks great.
Consolidation seems likely within the coming years
Based on the above scenario, in the short term a consolidation within the supply chain could take place. Would it matter if the 'big guys' with access to large amounts of capital take over some 'smaller guys'? With continued price decreases achieved by large-scale and optimized production, solar modules will become more and more a commodity product. Therefore, in the end, concentration and consolidation in the supply chain will have a positive effect on market prices and therefore competitiveness of PV with other energy sources. And that is what all stakeholders want to achieve, because then the markets and business opportunities will really take off for PV. In the development of the solar energy market and industry, the current market phase could be the start of a new era in the development of photovoltaic energy as a major energy source. As foreseen by several industry experts, photovoltaic energy systems could even become a price-competitive energy source within the next decade.
Chinese solar industry dominance?
Within this consolidation phase, the Chinese manufacturers have an interesting advantage. As with other products (toys, computers, cars, etc.), the Chinese manufacturing industry seems to be very competitive compared to industries in western countries. Moreover, western multinationals have build up their manufacturing facilities in China, most often in joint ventures with Chinese companies. Government incentives, tax advantages, cheaper labour, plenty of capital, enormous numbers of highly educated people, and a culture and spirit to work harder and longer, provide competitive advantages that are hard to beat. Their strongly growing energy consumption and programs to stimulate domestic use of renewable energies will further enhance the Chinese solar industry. All these developments make it worthwhile to keep a close watch on what will happen in the Chinese PV industry over the coming years.
The solar industry seems to be at a turning point in its development. Global production capacity is rapidly growing and shortages in the supply chain are vanishing. Prices are decreasing again, turning the market from a sellers market into a buyers market again. The expected consolidation phase could create a good starting position for a new era heading towards solar energy as a price-competitive renewable energy source.
China's solar energy electricity cost expected to equal to conventional one by 2010
27 November 2006 Xinhua News Agency
NANJING - With the continued fall in solar cell cost, the cost of electricity generated from solar energy is expected to drop to less than one US dollar/kWh in China by 2010, reaching or approaching to that of conventional power, predicted Zhang Yaoming, academician of Chinese Academy of Engineering Sciences on an international seminar held here on Nov. 17.
Now, the cost is 10-75 yuan/kWh in China.
Thanks to the drastic progress in technologies, the output of solar cells has increased by degree, and the cost of its components decreased by a big margin.
According the academician, the cost of solar energy-generating electricity was as high as 200 yuan/kWh in China in 1977; and plunged to 40-45 yuan/kWh in 1980s when China's photovoltaic industry just started out. At the end of 2000, the cost of electricity generated from mono-crystalline silicon solar cell was 42-47 yuan/kWh, that of non-crystalline silicon solar cell, 23-25 yuan/kWh.
As the solar cell price declines all the way worldwide, the prices of thermal power and hydraulic power are rising due to the exhaustion of fuels, environmental pollution and transport fee of raw materials. By 2020 when the cost dives to 6 US cents/kWh, solar energy-based electricity will be fully of economic base and commercial value to replace the oil-fuelled electricity, Zhang stated.
NANJING - With the continued fall in solar cell cost, the cost of electricity generated from solar energy is expected to drop to less than one US dollar/kWh in China by 2010, reaching or approaching to that of conventional power, predicted Zhang Yaoming, academician of Chinese Academy of Engineering Sciences on an international seminar held here on Nov. 17.
Now, the cost is 10-75 yuan/kWh in China.
Thanks to the drastic progress in technologies, the output of solar cells has increased by degree, and the cost of its components decreased by a big margin.
According the academician, the cost of solar energy-generating electricity was as high as 200 yuan/kWh in China in 1977; and plunged to 40-45 yuan/kWh in 1980s when China's photovoltaic industry just started out. At the end of 2000, the cost of electricity generated from mono-crystalline silicon solar cell was 42-47 yuan/kWh, that of non-crystalline silicon solar cell, 23-25 yuan/kWh.
As the solar cell price declines all the way worldwide, the prices of thermal power and hydraulic power are rising due to the exhaustion of fuels, environmental pollution and transport fee of raw materials. By 2020 when the cost dives to 6 US cents/kWh, solar energy-based electricity will be fully of economic base and commercial value to replace the oil-fuelled electricity, Zhang stated.
Polycrystalline Silicon Production Capacity in China
At present there are only 3 major companies in China that are able to produce polycrystalline silicon in volume, and they are Luoyang China Silicon (300 Ton), Sichuan Emei Semiconductor(200 Ton), and Sichuan Xinguang Silicon (1260 Ton). And all of these companies are planning to increase their production capacity now. What's more, there are many polycrystalline silicon projects are under construction or planned in China, take all the polycrystalline silicon projects in account, the total production capacity is over 20,000 Ton already.
It is expected that in 2010, the supply of polycrystalline silicon will surpass the demand, and the price of polycrystalline silicon will be reduced, then the solar electricity will be much cheaper, and much popular.
It is expected that in 2010, the supply of polycrystalline silicon will surpass the demand, and the price of polycrystalline silicon will be reduced, then the solar electricity will be much cheaper, and much popular.
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