Solar Cells Info

By Craig D. Rose /UNION-TRIBUNE STAFF WRITER

December 10, 2006
Source:  Union Tribune
http://www.signonsandiego.com/news/state/20061210-9999-1n10solarone.html

When the sun rises on New Year’s Day, it will signal the start of California’s most ambitious effort yet to generate electricity from sunlight. California hopes to subsidize the installation of enough photovoltaic systems, like this one atop a Qualcomm building in Sorrento Mesa, to generate 3,000 megawatts of solar electricity. That could power nearly 3 million homes on a sunny day.

The California Solar Initiative commits the state to spending more than $3.4 billion over the next 10 years to subsidize the installation of 1 million solar roofs, or about 3,000 megawatts of electricity capacity, enough at peak output to match six modern natural-gas-fired power plants. Even more important, the initiative is aimed at driving down the cost of solar-generated power to the point that it’s comparable to producing power from burning coal and natural gas. As things stand, electricity from photovoltaic systems – the technical term for rooftop solar – costs roughly twice that produced by burning fossil fuels.

If the price of producing electricity from solar could be substantially cut, it would accelerate its adoption and reduce the need to burn fossil fuels to generate electricity. Coal-and gas-fired power plants, along with autos and trucks, are leading sources of planet-warming greenhouse gases.

OVERVIEW

First of a two-part series about solar energy

Today: California is about to launch the biggest solar energy initiative in U.S. history with a $3 billion, 10-year subsidy program for rooftop photovoltaic systems. The initiative is aimed not only at installing 1 million solar rooftop systems across the state, but also at driving down the cost of converting sunlight to electricity.

Home section: Homeowners can take advantage of the state’s new solar rebate program starting Jan. 1. How should they navigate the maze of products and contractors? In Leucadia, solar pioneers can gloat over their minimal utility bills.

Tomorrow: With California’s solar subsidy program poised to follow similar programs in Germany and Japan, investment is pouring into the industry at a time when advocates say it’s poised for a breakthrough.
In fact, many scientists believe economical solar power will be a critical component in shifting the planet to clean, sustainable energy production.

And if fears of environmental catastrophe weren’t enough, fossil-fuel costs are rising sharply as world demand grows. At the same time, the long-term cost of solar electricity is falling. “It’s a ‘perfect storm’ for solar,” said Ron Kenedi, who heads the North and South American solar group for Sharp Electronics, the world’s largest producer of photovoltaic panels.

This isn’t the first time California has sensed an opportunity to develop more solar energy. But none of the previous attempts committed as much money over as long a period of time.

Although California is poised to undertake the most expensive, long-term solar incentive program in the United States, Japan and Germany already have programs that put them at the forefront of the solar industry.

Germany subsidized the installation of 837 megawatts of photovoltaic systems last year. That amounted to more than half the world market. Japan, which launched an incentive program earlier, installed 292 megawatts of photovoltaics last year.

By comparison, only 180 megawatts of photovoltaic systems have been installed in California so far.

Cost-cutting incentives

Now the state is hoping to accelerate solar installations by homeowners, businesses and public institutions. In its first phase, the California Solar Initiative’s incentives would shave about 30 percent off the cost of photovoltaic systems. That would trim the out-of-pocket cost for a typical $30,000 system by about $9,000.

The subsidies will decline on a fixed schedule as the number of photovoltaic systems grows.

By 2017, the subsidies would disappear and – state officials hope – the cost of photovoltaic systems will have been reduced through innovation, volume production and sales to a level where they’re economical for consumers without subsidies.

CALIFORNIA SOLAR INITIATIVE FACTS

The 10-year program provides funding of up to $3.4 billion for photovoltaic system purchase subsidies.

The goal is installation of 1 million rooftop systems, with the idea that increased sales volume will lead to lowered cost for consumers.

Subsidy amounts decline as the number of installations grows. Initial rebates should cover about one-third of a system’s cost.

The law requires that developers of subdivisions larger than 50 homes offer solar-electric systems as an option by 2011. The goal is to see half of all new homes in the state equipped with photovoltaic systems by 2013.

While homeowners will receive rebates tied to the installation of systems, larger systems will be subsidized based on the amount of electricity they produce.

The San Diego Regional Energy Office, a local nonprofit agency, will administer the program in this county. Local utilities will administer the program elsewhere around the state.
The solar industry says, given the certainty of a decade-long program, it can invest sufficiently to do that.

“The commitment was absolutely important for manufacturers to build up their factory capacity,” said Kenedi of Sharp.

Severin Borenstein, director of the University of California’s Energy Institute, isn’t surprised that manufacturers welcome the program. But he argues that subsidies for purchases are the wrong way to improve solar technology.

“If you subsidize research in the public domain, everyone would benefit,” Borenstein said.

Viewed from the narrowest perspective – strictly individual expenditures by homeowners – the installation of a photovoltaic system can still take a decade or so to pay off, even with state subsidies and federal tax credits.

That won’t change quickly under the initiative. In fact, a worldwide shortage of silicon is expected to inflate the cost of photovoltaic systems over the next year or two. Suppliers are ramping up production and expect to have sufficient capacity to meet demand in place by 2008.

Businesses considering photovoltaic purchases are likely to hurry their decisions because in addition to their California subsidies, companies can capture a federal tax credit of 10 percent of a system’s cost.

In fact, the state Public Utilities Commission, which will oversee much of the solar initiative, expects up to two-thirds of the subsidies – about $2 billion – will go to businesses, not residential ratepayers.

That rankles Matt Freedman, an attorney with The Utility Reform Network, a Bay Area consumer group. He noted that residential ratepayers will cover the bulk of the costs for the program.

“I’m concerned that there may be a significant transfer of funds from residential customers to businesses under the banner of the (photovoltaic) program,” Freedman said.

The PUC estimates that the solar subsidy program is expected to cost every household in the state $150 over the 10-year program.

Few ratepayers are likely to notice the cost, however, because the surcharge for solar – between $1 and $2 per month on average – will be added to bills without any notation.

State’s energy crisis
Interest in solar electric systems surged during the state’s failed effort at electricity deregulation in 2000-01, when rates soared and consumers coped with brownouts. The inauguration of Gov. Arnold Schwarzenegger, whose enthusiasm for solar power grew as he learned of a successful subsidy program in Germany, brought high-profile support.

“Arnold knew how well it worked in Germany – he was very familiar with it – and as a candidate we made solar a key component of the energy program,” said Terry Tamminen, a former California Environmental Protection Agency secretary who was part of Schwarzenegger’s 2003 campaign team.

The governor grew frustrated in 2005, after the state Legislature failed to pass an aggressive solar initiative. It was then that Schwarzenegger approached the PUC.

“He asked me to come to Sacramento early last fall (2005), when it was clear the Legislature wasn’t going to enact SB1 (the solar bill), and said, ‘Can you help do this at the PUC?’ ” said Michael Peevey, president of the utilities commission.

“It came from his interest in solar. The first time I met with the governor, he expressed a strong interest in solar.”

The PUC enacted a version of the solar initiative early in 2005, followed by an act of the Legislature later in the year. The Legislature broadened the solar subsidy program to municipal utilities – which aren’t regulated by the PUC – and raised the cap on the amount of power that local utilities must buy from the owners of solar electric systems.

Peevey said public support for a solar initiative is remarkable.

“We have never gotten so much interest,” he said. “We got 50,000 e-mails.”

That doesn’t surprise those who have worked in solar energy and report a near-mystical public fascination with its promise.

“People just gravitate toward this technology,” said Tom Starrs, a vice president of the Bonneville Environmental Foundation, which began as a partner of the giant northwest Bonneville Power Administration and supports the development of renewable energy.

“It’s the fact that the sun is universally available, so no one can control access to the source. Sometimes I wonder why we don’t have a National Rifle Association for solar power, because there is that kind of passion out there waiting to be harnessed.”

Certainly the sun is incomparable as an energy source. Experts estimate that capturing 90 minutes of the sun’s energy would supply everyone on the planet with all the power they use in a year.

“We used to say one hour, but the Earth’s needs have grown,” said Ilan Gur, a University of California Berkeley researcher who is studying energy technologies.

Herman Scheer, a member of the German parliament and supporter of his country’s photovoltaic initiative, says the fascination with solar is completely logical.

“Our world is at a turning point, and solar offers the best option to overcoming the global energy crisis,” Scheer said in remarks at a recent conference in San Diego.

Sunshine dollars
Solar produces the greatest amount of electricity on sunny days, frequently when the price of electricity is highest because of peak demand for air conditioning. So solar can be said to displace the need for some of the most expensive electricity.

Still, the direct impact of adding 3,000 megawatts of photovoltaics to California’s power grid is likely to be modest. The state’s major utilities now have generating resources equivalent to about 60,000 megawatts, and power needs are expected to grow.

But more than getting a million photovoltaic systems up on rooftops, the initiative aims to dramatically lower the cost of the systems to the point where they’ll be competitive with power generated from burning oil, coal and natural gas, all of which contribute to global warming.

“Each year we ramp the subsidies down, and that is intended to induce new technology and force improvements,” the PUC’s Peevey said. “The idea behind declining subsidies is that you don’t give an unnecessary and free bonus to industry.”

So state subsidies for a 3-kilowatt photovoltaic system with a retail price today of about $27,000 would decline from about $9,500 this year to zero in 2017. By then, the hope goes, the cost of such systems will have declined more than the lost subsidy.

Many in the industry argue that these cost reductions are within reach.

“It is a realistic goal,” said Marc Cortez, director of marketing for Sharp Electronics.

Cortez said prices will fall as companies such as Sharp increase solar cell manufacturing capacity. Worldwide, industry analysts expect production to more than triple by 2010.

To be sure, interest in solar was surging before California’s initiative was announced, largely because of the electricity marketplace meltdown caused by the state’s deregulation effort.

Taking advantage of a state subsidy program created before the crunch, homeowners and businesses began opting in greater numbers for solar as the crisis erupted in 2000.

In that year, the installed capacity of photovoltaic systems increased by about 70 percent. And as the crisis peaked in 2001, installed photovoltaic capacity doubled above that level.

From its inception in 1998 until this year, the state spent about $800 million on subsidies for photovoltaic systems.

‘A bill of goods’?
Solar-initiative supporters “have taken the sexiness of solar technology and sold the state a bill of goods,” said Borenstein of the UC Energy Institute.

“If you want to invest in research, invest in research,” he said, adding that he supports programs to improve solar energy technologies. “We should be putting money into new technologies, but what we’ll be doing under this initiative is enriching solar panel manufacturers.”

Freedman of The Utility Reform Network says he’s troubled by the disparity between who will pay for subsidies and who will receive them.

“The attitude of supporters is that this is fine because everyone benefits from solar,” Freedman said.

But he noted that electricity rates in California are rising quickly again and said a transfer of wealth from consumers to businesses under the banner of promoting photovoltaics should be a matter for deeper discussion.

“We should align what residents will be getting under this program with what they’re paying,” he said.

While hopes run high among solar advocates for the California initiative, industry veterans recall another high-profile effort.

In 1979, President Carter installed solar panels on the White House roof as a symbol of the country’s drive to develop renewable energy.

President Reagan had them removed in 1986.