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White Paper on Solar Energy: Economic and EcoSystems Considerations

by

WilliamT.Coyle,FumikoYamazakiandMechelS.Paggi* December,2010

*WilliamT.Coyle,formerSeniorEconomist,USDA,EconomicResearchService;FumikoYamazakiand MechelS.PaggiareSeniorResearchEconomistandDirectorrespectively,CenterforAgricultural Business,CaliforniaAgriculturalTechnologyInstitute,JordanCollegeofAgriculturalSciences& Technology,CaliforniaStateUniversity,Fresno.

Table of Contents
U.S. Solar Sector: Current Status and Future Outlook .................................................................................................. 2 Executive Summary ...................................................................................................................................................................... 2 I. Introduction .................................................................................................................................................................................. 4 II. The state of technology .......................................................................................................................................................... 5 Photovoltaics (PV) .................................................................................................................................................................... 5 Solar thermal approaches ..................................................................................................................................................... 7 III. Types of projects and study zones .................................................................................................................................. 8 IV. Distributed solar versus other electricity-generating options....................................................................... 10 Declining PV costs .................................................................................................................................................................. 10 Other cost-related factors .................................................................................................................................................. 12 Utility prices likely to rise .................................................................................................................................................. 13 Availability of sunlight key but not decisive to solars economic viability ................................................ 14 Policy affects competitiveness of PV............................................................................................................................. 15 Structure of current solar industry ............................................................................................................................... 17 Economic and other factors favor distributed over central solar power ................................................... 19 V. Project location issues ......................................................................................................................................................... 21 Threatened wildlife ............................................................................................................................................................... 21 Proximity to transmission lines ...................................................................................................................................... 22 Water use ................................................................................................................................................................................... 23 VI. Solar finance ........................................................................................................................................................................... 24 VII. Concluding points:.............................................................................................................................................................. 26 List of Figures................................................................................................................................................................................ 28 List of Tables ................................................................................................................................................................................. 28 List of Maps .................................................................................................................................................................................... 29 References ...................................................................................................................................................................................... 30 End Notes ........................................................................................................................................................................................ 32

U.S. Solar Sector: Current Status and Future Outlook Executive Summary
Growth in U.S. solar-generated electricity both from photovoltaic (PV) and solar thermal projects has been rapid in the last 5 years. Nevertheless, solars share of total U.S. electrical generation capacity and production is still minuscule, less than one percent. The principal barrier to its broader use is its high relative cost. Production costs are 8-20 cents per KWh for solar thermal and 14-30 cents per KWh for solar PV, compared to an average 5.7 cents per KWh for electricity from all sources. The average retail price was about 10 cents per KWh in 2010. Capital and installed costs for a 10 MW system capable of producing 10 MWh per year, the approximate average U.S. household electricity consumption, is about $80,000 at $8 per installed watt, but these costs are trending downward. One reason PV costs are high is the characteristic low capacity factor of solar power, constrained by limited hours of sunlight per day. Solars high capital costs are, thus, spread across fewer productive hours compared to other energy sources. The future economic viability of solar will depend on a combination of factors, primarily lower costs of production, higher electricity rates, and the availability of sunshine. Sustained policy support will be needed to assure the first two trends continue. Technological advances will be a key driver in the decline in solars cost of production and rising fossil fuel prices will make solar more economically attractive relative to competing fossil fuels and renewable alternatives. The availability of sunshine, while not always decisive (e.g. success of solar in low-sunshine countries like Japan and Germany), raises system productivity and lowers cost of production. There are two major options for solar electricity: distributed systems, in which production is close to or at the point of consumption, and centralized systems that are distant from the locus of demand. Most distributed systems use photovoltaics, either crystalline silicon cells or thin film. A variety of factors favor distributed PV over centralized PV or thermal
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options: low or no siting costs, lower maintenance and operating costs, no transmission costs, no water requirements, easily integrated with current infrastructure, and small environmental impacts. All the fast-tracked Bureau of Land Management centralized PV and solar thermal projects will occupy large tracts of land and will have a variety of impacts on water, land, wildlife, and transmission costs. Centralized systems, however, benefit from economies of scale and allow for more rapid and certain growth in capacity toward meeting, sometimes ambitious, state renewable portfolio standards.

I. Introduction
Energy is the lifeblood of the U.S. economy. With expanding energy demand, particularly in developing countries, and constrained fossil fuel supplies, real energy prices rose through most of the last decade. High energy prices along with concerns about energy security and fossil fuel impacts on the environment spurred a renewed and more intensive effort to develop and commercialize alternative energy resources, including the generation of electricity from solar energy. Solar as well as other alternatives is vying for a more mainstream role in the U.S. energy market. The future of solar will depend on meeting the following challenges: --Lowering the cost of producing electricity from solar energy; --Getting sustained and predictable policy support to aid in the technological challenges of lowering costs and in stimulating consumer demand; --Developing financial vehicles for overcoming the investment barrier of high frontend capital and installation costs for distributed systems; and --Overcoming the myriad spatial, temporal, and environmental challenges of centralizing solar power generation, including the transmission of energy from remote, undeveloped areas to population centers. Among renewable sources of energy, the cost of generating electricity from solar energy remains relatively high (Figure 1). This high cost of production explains solars modest current role in the U.S. energy system (Figure 2) and is the most important challenge facing the industry. Lowering these costs will depend on advances in both photovoltaic technology and the design of solar thermal systems.

II. The state of technology

There are two principal approaches to converting solar energy to electricity: the direct conversion of sunlight to electricity using photovoltaic cells and the indirect conversion, by concentrating solar energy to heat water or some other liquid medium to drive more conventional electrical generating processes. Photovoltaics (PV) The direct conversion of light into electricity by a solar cell, the so-called photovoltaic effect, was discovered more than 150 years ago but has only been practically developed in the last 50-60 years. The space program in the 1950s gave impetus to the development of PV technology for providing electrical power to satellites, and later to manned space flight. Until the early 1990s, photovoltaic conversion was a soft energy option, and used primarily in local applications, not connected to the larger electrical grid system. Then, the cost of PV applications was ten times the cost of grid energy from nuclear and fossil fuels (Solar Electric Power Association, 2010). The decline in PV cost and the rise in fossil fuel prices has led to larger centralized projects, more commercial applications, and expanded gridtied residential use. There are two major classes of PVs: crystalline silicon cells and thin film cells (Figure 3). In the longer term there may be others, but given the long time it takes to develop and commercialize PV technologies, these two likely will be the market leaders for the next decade (Electric Power Research Institute, 2009). Primary research and development objectives are focused on lowering cost of production, raising conversion efficiency, and increasing reliability (National Academy of Sciences, 2009). --Crystalline silicon cells represent the most mature PV technology and have maintained a near 80 percent market share of worldwide cell production for the past three decades. They have the most highly-developed manufacturing processes. Mono or polycrystalline silicon cells are currently the most widely used, averaging
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solar-to-electric efficiencies of about 16 to 18 percent. Polycrystalline (also called multicrystalline)(poly-Si) and ribbon silicon modules are slightly less expensive but also a few percentage points less efficient, about 13-15 percent. Super monocrystalline (c-Si) modules have the highest efficiency, about 19 percent (Solar Electric Power Association, 2010). The cost of highly purified silicon remains a barrier and the manufacturing process for silicon cells is relatively slow and difficult to automate. --Thin film cells are made from thin layers of semiconductor materials, a few micrometers thick mounted on a low-cost plastic, glass, metal foil, and even fabric backing. They have potential cost advantages over crystalline cells in having lowercost more automated manufacturing processes. Their manufacture requires smaller amounts of semiconductor material and can draw on a greater diversity of nonsilicon material. Their application is more flexible, being more easily integrated into roofing and other parts of a building, as well as having other uses. But these advantages now are offset by lower efficiencies, making their costs per watt of output about the same as for crystalline silicon. Amorphous silicon modules are the most common thin film cells with efficiencies of only 6-9 percent, CIS (copper indium diselenide) /CIGS modules with efficiencies in the range of 8-13 percent, and CdTe (cadmium telluride) modules with 9-11 percent (Solar Electric Power Association, 2010). --Next-generation PVs include multi-junction, dye sensitized, and concentrator concepts. The multi-junction approach (micromorphous) stacks two or more layers of silicon or other semi conductor material, each layer designed to convert a different segment of the light spectrum. When sunlight passes through all the layers, a broader spectrum of light can be harvested, thus increasing conversion efficiency. Other technologies under development include dye sensitized solar cells (DSSC) covered with a molecular dye that absorbs sunlight much like the chlorophyll in plants (Electric Power Research Institute, 2009). Concentrator systems are not widely used with PV while they are central to solar thermal technology. Since PVs
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are more efficient under concentrated light, concentrator systems use mirrors or lenses to focus light on specially designed cells. Since they require direct sunlight, tracking systems are used to follow the sun's path through the sky during the day, and/or to adjust to the sun's varying height in the sky through the seasons. --Hybrid cells combine high efficiency monocrystalline silicon with ultra-thin layers of amorphous silicon. The monocrystalline silicon is sandwiched between amorphous thin film, achieving efficiencies greater than 15 percent. --Arraying solar cellsA solar array is a number of solar panels, or modules, arranged together to form one interconnected system. Solar arrays can be very large or relatively small, but due to their modularity can be located and oriented in almost any way to maximize exposure to the sun. The use of trackers which keep the PV panels directly facing the sun can increase panel productivity by as much as twice. The use of trackers has to be assessed in light of increased cost and mechanical complexity.1 Solar thermal approaches Unlike PVs that convert sunlight directly into electricity, solar thermal technology captures the heat of the sun. Most solar thermal applications are for low energy systems like heating swimming pools or heating building spaces but a growing number incorporate hightemperature collectors for commercial electric power generation. There are a variety of approaches used in these high-temperature applications (Figure 4). --Parabolic trough. This system uses a long parabolic-shaped trough that reflects and concentrates sunlight onto an insulated tube or heat pipe. The tilt of the trough changes as the sun moves from east to west to assure the sunlight continues to focus directly on the tube. A transfer fluid (synthetic oil, molten salt, or pressurized steam) in the tube is heated and flows to a central power plant that converts about a third of the heat to electricity. The worlds largest parabolic trough facilities, Solar Energy Generating System (SEGS), are

located in the Mojave Desert, consisting of nine plants producing 354 megawatts of power at peak output. --Power tower. This system is also known as a central tower or heliostat power plant. It is comprised of thousands of mirrors arrayed within a several square mile area, with each mirror individually tracking the sun, and focusing the sunrays onto a receiver atop a centrally positioned tower. The concentrated sunlight heats molten salt to over 1,000o F in the receiver. The high temperatures allow for the storage of heat and its use in driving a turbine to produce electricity. The storage of heat allows this system, unlike PV systems, to produce electricity night or day, and in all daytime weather conditions. --Parabolic dish. This system consists of a parabolic-shaped concentrator shaped like a satellite dish that reflects solar radiation onto a receiver mounted at the focal point of the dish. The collected heat is utilized directly by a heat engine (like the Stirling engine) mounted on the receiver which generates electricity. Parabolic dish concentrators are similar to trough concentrators, but focus the sunlight on a single point. --Linear Fresnel Reflector. This system is similar to the parabolic trough but uses modular flat reflectors to focus the suns heat onto insulated tubes through which water flows. The concentrated sunlight boils the water in the tubes, generating high-pressure steam for direct use in power generation. --Solar tower with updraft wind turbine.2 In this system air is heated under a groundcovering glass sheet. The air under the glass heats up and moves by convection up through a large chimney, powering wind turbines that generate electricity.

III. Types of projects and study zones

To date there are very few large PV or solar thermal projects in operation in the United States (Tables 1 and 2). The great majority of solar PV production comes from small distributed systems. In recent years, proposals for larger projects have grown as economic factors and policy support, including grants through the American Recovery and Reinvestment Act of 2009 and loan guarantees, make investments in larger projects more
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attractive. Another key driver is Californias requirement that one-third of its electricity be derived from renewable sources by 2020, the most aggressive renewable portfolio standard (RPS) for electricity in the United States. Since large solar thermal and PV systems are land intensive, the acquisition and development of land is a key requirement and adds significant cost compared to small distributed systems using already-owned rooftops and other spaces. To help promote large projects, the U.S. Interior Department in mid 2009 designated 670,000 acres of land to be fast-tracked as potential areas for solar energy production. Twenty-four tracts in six western states were identified as Solar Energy Study Areas. Only lands with excellent solar radiation resources, suitable slope, closeness to roads and transmission lines or designated corridors, and containing at least 2,000 acres of Bureau of Land Management (BLM)-administered public lands were considered. Wilderness and other high-conservation-value lands were excluded from consideration.3 The U.S. Department of Energy (DOE) and the Bureau of Land Management (BLM) then began preparing a Programmatic Environmental Impact Statement (PEIS) to evaluate the environmental and resource suitability of the selected lands for large-scale solar energy production and to indentify wildlife concerns, potential conflicts with natural resource and land use interests, and mitigation strategies. Public hearings were held in 2009 to help identify additional concerns about the use of these lands. 4 From the scores of applications, 14 fast-track projects were approved by the Bureau of Land Management in late 2010 (Table 3). These included four PV and 10 solar thermal projects in three states: California (9), Nevada (4), and Arizona (1). Solar developers will have to bid on BLM land for leases and would be expected to pay royalties for project income, although the legislation allows for deferral or reduction of royalties for the first five years of the lease. As planned, the fast-track projects will have an aggregate capacity of 6.1 GW and occupy more than 55,000 acres. They will average about 4,000 acres and 435 KW. When developed, these 14 projects alone would more than double existing U.S. installed PV and solar thermal capacity.
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IV. Distributed solar versus other electricity-generating options

Grid-tied distributed solar power generation is the fastest growing segment of the solar sector and foreshadows the potential for decentralization in power generation as occurred in the computer (PC) and telecommunications (cell phone) industries. Term distributed is used because the electricity generated occurs on the distribution side of the electricity system (National Academy of Sciences, 2009). These residential and commercial solar systems are connected to the grid, supplying surplus electricity during peak sunshine periods and drawing fossil fuel or nuclear-based electricity from the grid during the low sunlight and nighttime periods. From a macro perspective, there are ultimate limitations now on how much solar power, either distributed or centrally-generated, could be used by the grid because of the intermittency of solar energy and the lack of storage capacity, thus, having to rely on backup electricity from other sources to guarantee energy reliability in the broader system. Some estimates indicate that the system-wide upper limit for solar now is 20 to 50 percent of total electricity. Grid-tied PV systems range in size from a few 100 watts to a few megawatts. Investment in these systems is driven by three key economic factors: --Declining PV module and installation costs, --Rising local utility costs, and --Availability of sunlight. Policy can affect the first two factors, and thus affect investment decision making about adopting PV systems. Declining PV costs

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Declining PV costs are a function of a virtuous cycle of technological development (reviewed in previous section), expanding market size, and economies of scale in PV production and installation services. Photovoltaic (PV) module prices have declined 90 percent in the last three decades, with a doubling of sales for every 20 percent decline in price (Electric Power Research Institute, 2009). Solar electricity generating costs for solar PV and solar thermal still remain high relative to fossil fuels and other renewable (Figure 1 and 5). Production costs are 8-20 cents per KWh for solar thermal and 14-30 cents per KWh for solar PV, compared to an average 5.7 cents per KWh for electricity from all sources (National Academy of Sciences, 2009). The average retail price was about 10 cents per KWh in 2010 Modules account for about half the overall costs of PV systems. Non-module or balance of system costs (inverters, 1 installation, labor, etc.) are also declining. According to the Lawrence Berkeley National Laboratory, solar photovoltaic system costs declined from an average $12 per installed watt in 1998 to $8 in 2008 a one-third decline in ten years. Non-module costs accounted for three-fourths of the decline (Wiser, et al., 2009). These estimates put the installed cost of a 10 KW residential system at about $80,000. Installed costs have been reported lower for some residential systems, as little as $5 per installed watt, with buying groups, solar leasing programs, and community solar projects. 5 The declining trend in PV production costs is expected to continue. Manufacturing costs are expected to decline for all types of photovoltaic modules. Non-silicon CdTe is the least-cost thin film module now, with production costs under $1.00 per watt. All other thin film types are expected to drop below $1.00 by 2015. Super monocrystalline silicon, the most expensive PV, could drop from about $2.50 per watt now to under $1.50 in five years (Solar Electric Power Association, 2010).

The solar inverter converts the DC electrical output of the photovoltaic (PV) module into AC current that is compatible with the commercial electrical grid.
1

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Cost estimates for electrical power generation for mid-range rooftop solar systems are 14 19 cents per kilowatt-hour and about 14 cents for commercial-scale systems. Sector-wide costs are projected to decline to about 7.5 cents per kilowatt-hour by 2020 (Blackburn et al., 2010). Current average electrical retail rates for the United States are about 10 cents per kilowatt-hour, 6 but vary with significant variation across the country, with rates higher on the coasts and lower in the interior parts of the country (Figure 6). Other cost-related factors Stable costs. While real prices of fossil fuels and electricity are rising and subject to significant variability (particularly fossil fuel prices in the last decade; see Figure 9), once the initial module and installation costs are paid, the nominal cost of PV electricity remains stable during the life time of the system. Operation and maintenance costs are low and fuel costs are zero. Thus, PV energy costs are predictable, making the PV system investment a hedge against variability and likely real increases in fossil-based electricity prices. 7 Net metering and peak pricing. Most utilities are now required to make netmetering available to their customers (Energy Policy Act of 2005). Net metering allows for the sale of surplus solar-generated electricity during peak sunshine periods when demand for electricity is greatest, and the purchase of electricity during low-sun and nighttime periods when demand tends to be less, paying the net difference. Shifting away from flat-fee pricing to varying the price of electricity throughout the day depending on its changing cost would be beneficial to solars cost competitiveness. Baseload electricity, usually generated with coal or nuclear power and available throughout the day (high capacity factors), is the cheapest. Some argue that the inherent timing of solar PV production enhances its value by coinciding with peak electricity demand during the midday when solar generating potential is the greatest (Figure 7). Assessing price of electricity this way and by
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adding transmission costs to centralized generation would make on-site distributed generation more competitive and more comparable to centralized power generation. Nevertheless such changes in pricing may have limited impact on the overall cost of solar. In one analysis, the timing of solar PV production enhances its value by 0 to 20 percent in a system with substantial excess capacity and 30 to 50 percent if the system is more dependent on price-responsive demand. But despite accounting for favorable timing and location of solar PV production, the cost of solar PV remains many times higher than the market valuation of the power it produces (Borenstein, 2008). Some utilities resist net-metering requirements because they find it unfair to provide backup infrastructure and electricity for customers who are generating much of their own electricity independent of the utility. But utilities usually charge a fee for connecting to the grid regardless of how much electricity is used. They should be compensated for the services of providing backup capacity until distributed solar systems can be fully independent by using fuel-cell generators or other means to store energy for use when the sun is not shining (Bradford, 2006). Utility prices likely to rise Next to declining PV costs, rising utility costs have been most significant in boosting the competitiveness of distributed and central solar power generation (Figure 8). The decade-long (2000 to 2010) 2 rise in fossil fuel prices (Figure 9) has been unprecedented in the last 30 years and has sustained opportunities for efficiency gains, stimulated energy conservation, and generated increased supplies from more costly, harder-to-find traditional and alternative energy sources for electricity generation. The current sustained rise in fossil fuel prices compares with previous periods when oil prices rose sharply, usually induced by discontinuities from military conflict, peaked in a matter of weeks or months, and then declined sharply. Coal and natural gas followed a
2

While energy prices were volatile during the 2000s, they generally rose during the decade except for the sharp drop in prices in 2008-09 because of the global financial crisis and economic contraction.

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similar pattern. Following these price spikes, the rapid decline in the early 1980s made it difficult to sustain alternative energy programs, including solar PV and solar thermal project and reduced incentives for consumers to curb energy use. Unlike previous high-price periods, the current energy market is driven by strong demand-side factors, including robust energy demand from rapidly growing middleincome economies, where consumers are aspiring to a higher standard of living and exhibiting big appetites for energy. Almost two-thirds of recent global growth in energy demand has come from China and other middle-income economies. While the major fundamentals point to rising fossil fuel prices, their rise will not be in a straight upward-rising line. Fuel prices likely will be volatile as they have been in the last decade, with changes in supply and demand in response to higher prices. New fossil fuel supplies may reduce the competitiveness of solar and other renewables in the short run. An example of this are the large discoveries of natural gas in 2008 in Louisiana, Texas, Arkansas and Pennsylvania, adding to other reserves to give the United States a 100-year natural gas supply at current rates of consumption. U.S. natural gas production increased 16 percent in 2005-09, more than offsetting a 5.2 percent decline in U.S. coal production. Natural-gas prices fell by half during this period (BP, 2010). These market forces boosted the position of natural gas relative to coal (Figure 10) and other fuels. Lower natural gas prices led utilities to burn more gas. According to the Energy Information Administration, more than half of new U.S. power plants expected to be built in the next few years will be fired by natural gas (Casselman, 2009). While increased natural gas supplies may reduce the rise in fossil fuel and electricity prices in the near term, most long-term forecasts do not show fossil fuel prices returning to previous low levels. Availability of sunlight key but not decisive to solars economic viability Along with local utility rates and PV module and installation costs, the availability of sunlight (or insolation) is critical to investment decisions regarding solar power versus other electricity-generating options. The better the solar resource, the greater the system output and the lower the present value of lifetime system costs. Available sunlight in the
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populated parts of the world varies with weather conditions along with daily and seasonal cycles from about 125 to 300 watts per m2. As one would expect, solar radiation is greater in the Southwest and less in New England and the Pacific Northwest (Electric Power Research Institute, 2007). In the United States the location of large solar thermal and PV projects tends to cluster where the solar radiation is most intense (Map 1). Availability of sunlight is not always a decisive factor in making solar electricity competitive. Countries like Germany and Japan, with more limited sunlight than the United States, have more widespread use of solar electricity because utility rates are high relative to solar system costs. Electricity rates in Germany and Japan are among the highest in the world (Figure 11). Policy affects competitiveness of PV Sustained federal and state government support in the form of rebates, tax credits, mandates, and support for research and development continue to be vital to the development of the solar energy market in the United States and elsewhere. These programs primarily help to lower the cost of solar energy and enhance its competitive position relative to competing sources of energy, such as coal, nuclear, and natural gas. Some argue that government incentives are justified to level the subsidy playing fi eld for renewables vis a vis fossil fuels or for promoting certain difficult-to-quantify social benefits, such as reducing GHG emissions or enhancing national energy security. Others see public support merely as a way to encourage inevitable market forces by helping to reduce solar system costs and market risk, spur investment and competition, and hasten deployment of solar systems that will deploy eventually anyway. Government support can induce competition and the achievement of economies of scale among regional equipment manufacturers and installers (Wiser, 2009). The states with the largest PV markets appear to have somewhat lower average PV costs than states with smaller markets and less public support. There is also evidence that
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state and local policies have had impact on lowering non-module costs, and thus helping to reduce overall installation costs. In addition to support for solar R&D at universities and other research institutions, public support for solar comes in a variety of forms: --Cash rebates: These reduce the users cost by some dollar amount per kilowatt hour of certified installed solar capacity. Payments are made at once and can be as much as 50 percent of system costs. They are usually provided by state or local governments and reduce the risk of shifting future government priorities (Bradford, 2006). California recently lowered the rebate by as much as 30 percent and some local governments raised permit fees for installing solar systems to reduce exposure in an era of recession and budget deficits.8 --Tax credits: These are provided for investors, producers and consumer to reduce ones tax liability by a share of the amount spent on solar systems. The federal government instituted a 30 percent tax credit for solar systems in 2005 for two years, and then extended it in 2008 until 2016. --American Recovery and Reinvestment Act of 2009The economic stimulus program places a big emphasis on renewable energy, including solar, and builds on previous federal initiatives such as a Million Solar Roofs (Clinton) and the Solar American Initiative (Bush). It created the Treasury Grant Program (section 1603), providing owners of commercial solar property a 30 percent grant, in place of the solar Investment Tax Credit (ITC). This temporary shift from using tax credits to grants was motivated by the anticipated lack of taxable income during the 2008-09 recession which limited the usefulness of a tax credit. To date the program has committed more than $400 million for about 1,175 PV and solar thermal projects across the country, primarily in California, New Jersey, Florida, and Arizona. Applicants must begin construction by December 31, 2010 and complete construction by December 31, 2016.9

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--Feed-in tariffs: This requires a utility to purchase power from a renewable energy source at a fixed cents-per-kilowatt-hour rate for a certain amount of time, sometimes as long as 20 years. This amount often is gradually reduced to coincide with declining solar costs of production. This instrument was made popular by Germany, and later adopted by Spain, Italy and other countries. Germany is the global leader in installed PV capacity (Figure 12, Table 4). The United States is using or considering the use of feed-in tariffs in various jurisdictions in California, Washington, Florida, Vermont, and Colorado. 10 The program in Spain was so successful that it led to 2.5 GW of PV installations in 2008; 11 a year later, the program was capped at 500 MW of installed capacity and feed-in tariffs scaled back, a reminder of the limits of government budgetary support in the midst of a recession. --Renewable portfolio standards: More than 30 states impose requirements on retail electricity providers to supply a certain percentage of their electricity from renewable sources, such as solar, wind and geothermal, by a certain date. Some states require "carve-outs" for specific energy sources, like solar. Five states have voluntary goals.12 Californias renewable standard of 20 percent in 2010 and one third in 2020 is the most ambitious. Structure of current solar industry To date most solar systems are distributed and quite small. Collectively they account for a very small share of U.S. electricity generation, even among renewables (Figure 2). In the case of California, the leading state for grid tied solar capacity (Figure 13) and where there is significant public support for expanding its use, solar accounts for less than 1 percent of electrical generation and was a shrinking share until 2006 (Figure 14). One reference (Bradford, 2006) divides up the global PV market into the following segments:

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--15 percent for small independent projects like calculators, irrigation pumps, fresh water distillers, and small systems that store excess PV electricity in batteries for use at night, like yard lights and roadside phones; --18 percent for off-grid PV systems for use in isolated areas in developed and developing countries. --65 percent for grid-tied systems for residential and commercial users, usually rooftop based, ranging in size from a few 100 watts to a few megawatts. These systems use the grid as a giant storage battery, taking surplus solar-generated electricity during the day time, and drawing fossil- or nuclear- based electricity during the nighttime. --2 percent for centralized utility-sized projects, ground based and in areas where there are significant solar radiation resources. In the United States, the share of utility-sized PV solar projects is larger and growing. The top 27 PV systems (Table 1), account for about 200 megawatts of capacity, or more than 12 percent of the 1.6 GW of cumulative installed PV capacity in the United States in 2009. 13 Most of the rest are relatively small grid-tied distributed commercial and residential systems. Solar thermal, like PV, has distributed options, primarily for heating swimming pools and building spaces. Centralized solar thermal electricity projects have been more important than central PV projects. On average, they are larger than their PV counterparts and have a longer history of commercial viability, going back to the 1980s. There is keen interest in them now. Current online utility-size solar thermal projects account for more than 400 MW of electricity-generating capacity (Table 2), about twice that of large PV-based systems (greater than 2.4 MW). Solar thermal projects make up the majority of fast-tracked solar projects (10 out of 14) (Table 3) recently cleared for construction, on federal lands, primarily in the Southwest. Construction must begin by the end of 2010. Some of these projects will approach or exceed the average size of a coal-fired electrical generation plant, about 500 MW. Along with other announced solar thermal and PV projects, solar capacity in the United States
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should expand several fold in the next 5-10 years if all these projects are completed (Table 5).
Table 5 --Summary of exisiting and announced large solar projects

Item Operational California

Solar thermal project MW Average 16 11 434 367 27 33

# 27 5

PV projects MW Average 208 38 8 8

Announced California Fast-tracked California

62 42 10 7

14020 11186 5170 4221

226 266 517 603

104 42 4 2

6321 4198 922 395

61 100 231 198

Sources: Tables 1-3. See table footnotes regarding sources for announced projects. The "fast-tracked" projects are a subset of the "announced" projects.

Economic and other factors favor distributed over central solar power Like the choice between solar and other energy sources, the choice between distributed solar and central solar depends on economic and other factors. Factors favoring distributed over central: Lower siting costs: While most residential and commercial distributed PV systems are sited on rooftops, central solar production requires large expanses of land that need to be bought and developed. These can be expensive. In some cases, however, areas with good solar radiation are owned by the federal government, creating the potential for low leasing fees to keep land costs relatively low (in the case of recent fast-tracked projects). Lower maintenance and operating costs: The maintenance and operating costs for residential and commercial PV systems are relatively minimal. On the other hand, central PV and thermal systems have higher maintenance and operating costs. Tracking systems
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are complicated and have more moving parts prone to breakdown. Keeping mirrors and lenses clear of dust to keep conversion efficiency high require water and raise labor costs. Thermal systems requiremiles of pipe and thousands of joints and seals to circulate heated fluid.14 No transmission costs: While distributed solar systems are compatible with existing electricity distribution infrastructure, centralized thermal and PV systems are often in relatively remote and desolate parts of the country (e.g. Mojave desert), requiring significant new investment in infrastructure. In addition to the high cost of new lines, transmitting electricity over long distances add costs because of losses, as much as 10 percent, not incurred to this extent when production is close to the point of consumption. No water requirements: Aside from requiring large amounts of land, centralized thermal systems also require water for cooling and for cleaning dirty mirrors and lenses. Marginal versus average cost pricing: Distributed solar benefits from marginal versus average cost pricing. As the installed cost of PV systems declines relative to local fossilbased utility rates, solar users benefit from the full decline in the relative cost, while utilities buying from central solar projects average the solar-based electricity in with other more predominant fossil-based electricity. This averaging process by utilities would only have a slight effect on the average price of electricity for retail and commercial users. Fewer environmental and other challenges: Distributed solar systems are more easily integrated into established homes and buildings and the electrical grid. Since central systems require significant land resources, they have a more disruptive impact on the environment from the development of large tracts of land for the plant and for new transmission lines.

Factors favoring central over distributed: Economies of scale: The larger size of central solar systems tends to bring down per-unit generating costs. Distributed systems have higher costs because each system is a relatively

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small project, leading to higher per-unit labor and installation costs.15 Large-scale projects also help in making rapid progress toward large renewable mandates. Higher capacity factor: Central systems have the potential of achieving a higher capacity factor by the use of tracking systems that reducer per unit costs. Not practical for most rooftop systems, one- or two-axes tracking systems change the orientation of panel arrays during the day and/or season to maximize sunlight conversion efficiency. A tracking system can significantly raise the capacity factor compared to stationary rooftop systems.16 Problem of intermittency reduced: Centralized solar thermal systems have better heat storage capacity for generating electricity at nighttime, reducing the problem of intermittency common with current PV systems. Central hybrid systems are also used, combining in the same plant solar- and fossil-fuel-based electricity generation capacity to enhance reliability. The Solar Energy Generating System (SEGS) plants combine solar thermal with natural gas and the El Dorado Energy Plant in Boulder, Colorado combines thin film PVs with natural gas.

V. Project location issues

Companies proposing to develop large utility-scale solar plants face a number of issues relating to project location, including environmental impacts, proximity to transmission lines, and water use. The BLM fast-tracked projects will occupy relatively large areas, ranging from 500 to over 7,000 acres. Such large areas are likely to have impacts on fragile desert environments where many of the BLM projects plan to locate.

Threatened wildlife Desert development can interfere with migration corridors, reducing the fitness and resilience to disease of animal populations like the bighorn sheep. It can disrupt the habitats and adversely affect plant and animal wildlife.

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The desert tortoise as well as other threatened and endangered species of plants and animals have been identified in many of the selected areas for the 14 BLM fast-tracked projects (Table 6). Companies have undertaken mitigative efforts to accommodate environmental concerns, including relocation of species to adjacent land areas, adding habitat area close to the project area, moving development away from sensitive desert washes, and even scaling back the overall size of planned projects. Despite federal approval of the fast-tracked projects, challenges remain. The California Energy Commission temporarily withdrew approval and the Sierra Club is threatening legal action against the Calico Solar Energy Project for not doing more to protect the desert tortoise. In another case, a federal judge recently halted development of the Imperial Valley project, agreeing with a Native American groups claim it was inadequately consulted about the project.17 Proximity to transmission lines While distributed solar PV is well integrated with the existing grid infrastructure, central solar projects will depend increasingly on new or upgraded transmission lines. Since many of the best solar radiation resources are in remote desert locations where the density of transmission service is limited (Map 2), the availability or commitment to develop transmission lines will be key to project success. This is why California, with the most ambitious Renewable Energy Standard (RES) goals in the country, set up the Renewable Energy Transmission Initiative (RETI) in 2007 to coordinate a planning process to match transmission-line projects with potential renewable resources in the state (solar, wind, geothermal) in a least cost and environmentally sensible way to meet consumption goals. Thirty-one Clean Renewable Energy Zones (CREZ) in California with over 80 GW of potential capacity were included in the analysis, along with out-of-state resources adding another 100 GW (Californias current electricity consumption is about 280 GWh and projected to be 316 GWh in 202018).

22

In the RETI process, the 31 zones were ranked by their cost-effectiveness, which included environmental impacts, the quality of the resource, the cost of developing the resource, and the cost of transmission to demand centers in the state. Electrical generation costs for each renewable resource were based on the present value of total life-cycle costs divided by the total potential lifetime electricity generated, yielding an estimate of $ per MWh for comparing and ranking potential projects. A similar calculation was done for transmission costs. Sensitivity analyses accounted for uncertainties like changing policy and the impact of new technologies. Environmental impacts were evaluated qualitatively regarding impact on land use for locating the plant and for the connecting transmission lines, as well as the impact on wildlife. The analyses helped identify those zones with the lowest development costs and lowest environmental impacts, setting the stage for establishing priorities for developing transmission infrastructure (Black and Veatch Corporation, 2010).19 The sheer cost of transmission and distribution infrastructure is also a barrier to deployment, especially in uncertain economic times. The estimated total cost of modernizing and expanding the national transmission and distribution system is $225 billion for the transmission system and $640 billion for the distribution system, almost $900 billion (National Academy of Sciences, 2009).

Water use

The areas of the country that have the most solar radiation also have limited water supplies (Map 3). While PV solar systems use very little water, solar thermal systems are water intensive, using about twice as much water per KWh as fossil fuel facilities for washing mirrors and lenses and for cooling (Carter and Campbell, 2009). (Figure 15). If the number and capacity of solar thermal plants expanded according to the announced intentions compiled by various sources (see footnote to Tables 2-4), thermal solar production is poised to expand rapidly, an increase of more than 30 times in the next 5
23

years or so. About a third of this expansion is from the 10 recently fast-tracked solar thermal projects. Most of the planned solar thermal plants will locate in water-constrained areas of California, Nevada and Arizona. According to NREL, solar thermal systems will continue to grow in number reaching 55 GW of capacity by 2050, requiring a significant supply of water, as much as 505 thousand acre-feet per year (Carter and Campbell, 2009). The volume of water required depends on the cooling technology. Wet cooling requires more water than dry cooling. If the Western Governors Association goal of 8 GW of solar thermal capacity by 2015 were all located in Arizona, the water use would account for 1 percent of the states consumptive use of water (Carter and Campbell, 2009). This competing demand for scarce water supplies in the Southwest could lead to rising water costs, making water a significant constraint to the location of solar thermal plants in certain areas, forcing plants to make adjustments to reduce the size of its water footprint. Plants are already adjusting. Most of the solar thermal projects being proposed for California are planning to use the less water-intensive and more costly dry-cooling technology (Office of Senator Jon Kyl (2010)). Amargosa Farm Road Solar Energy Project plans to install a dry cooling process that will reduce its annual water use by one billion gallons. The Solar Two Project in Southern California will require about 10 million gallons of water for cooling and washing mirrors and lenses, more than the areas surface and ground water supplies can support. The company is proposing to build an 11.8 mile underground pipeline to use treated sewage water from the nearby town of Seeley. 20

VI. Solar finance

A key reason solar energy has made only meager progress in penetrating the U.S. energy market is high initial capital and installation costs for solar systems. While technological advances have lowered production costs for PV modules, PV and solar thermal systems remain expensive relative to other options. Household electrical

24

consumption averaged about 11,000 KWh in 2009. Producing this amount of electricity would require a 10 KW capacity PV system. At $8 per watt, total capital and installation costs would be about $80,000. Solar costs are almost all incurred at the frontend. Annual maintenance costs are minimal and fuel costs are zero. Such high initial costs are a significant barrier to investment. In addition to the PV system costs, government incentives and local utility rates affect investment decisions. Potential metering credits are also a factor. Homeowners have traditionally used home equity loans, cash from home mortgage refinancing, and cash with government incentives to purchase PV systems. A new set of financial tools have emerged to help investors overcome the high initial cost of solar systems (Coughlin and Cory, 2009). These include third party solar leasing, residential power purchase agreements, and property tax assessments. In a leasing arrangement, a company installs and owns the PV system on a homeowners roof. The homeowner puts no money down and pays a leasing fee that rises yearly by a certain percentage for a set period, usually for 15 years or more, uses the electricity, and benefits from any surplus production. At the end of the lease period, the homeowner has the option to buy the system, extend the lease, or have the system removed. Net electricity costs to the homeowner can be reduced under such an agreement, depending on a variety of contractual details and local market factors (Coughlin and Cory, 2009). The Power Purchase Agreement (PPA), commonly used for commercial and public sector solar projects and similar to a lease arrangement, is being increasingly used for residential systems. In the PPA, the power provider agrees to buy, install, own, operate and maintain the PV system, while the homeowner agrees to host the system on his roof and buy the
25

power generated by the solar panels for a set period, for 8 to as many as 20 years,21 with some money down and flat or yearly increases in the electric rate, which is less than the rate from the grid. The agreement is transferable if the home is sold. Like in a lease arrangement, at the end of a PPA, the homeowner has the option to buy the system, extend the arrangement, or have the system removed (Coughlin and Cory, 2009). In the property tax assessment approach (used in Berkeley and Palm Desert, California; and Boulder, Colorado), the public entity raises money by issuing long-term bonds, lends the proceeds to homeowners to pay for the installation of a PV system, and then gets repaid through an added annual property tax assessment which remains in place until the system is paid off. The liability conveys with the property when sold. Finally, some homeowners can collectively finance a large PV system by pooling resources, with the added help of a local utility in some cases. A community can also jointly negotiate a lower per- watt price for the installation of many individual systems.

VII. Concluding points:

Three concluding points emerge from this solar energy survey: Expanding the use of solar-generated electricity in the United States will depend fundamentally on reducing its cost. Relative to other sources of energy, solars cost ($ per KWh) remains relatively high even among renewables. Future technological advances discussed in this paper will help reduce module costs. Financial instruments will help consumers overcome the large up front capital and installation costs by stretching out payments over time. Rising fossil-based utility rates will also help to make solar more attractive. But as long as most consumers do not perceive a significant economic advantage in adopting solar, it will remain a minor player in the energy market. For an average household, paying $80,000 for a solar system (10 MW would produce 10 MWh, average household electricity consumption in 2008) is a high barrier even if future energy costs are zero.
26

Government policy has played an important role in the development of the U.S. solar market through rebates, tax credits, grants, feed-in tariffs, and renewable portfolio standards. These policies can help lower the cost of solar and raise the cost of competing alternatives (higher taxes on fossil fuel in Europe and Japan). The government role has had dramatic results in Germany and Spain with the use of the feed-in tariff. This can also work in the other direction. The dramatic expansion in Spains solar market came to a sudden halt when limits were placed on its feed-in tariff program. In California rebates are being reduced and installation fees increased in some locales because of budgetary constraints. In an era of government deficits, can public support for the solar sector be sustained? And is that support crucial? There is strong evidence that solar module and installations costs are declining on the one hand, and that real utility rates are rising on the other. But it is also evident that the price of natural gas, a key source of electrical power in the United States, has also declined in the last five years relative to other fuels. Finally, plans for rapid expansion of central solar projects, especially in the solar-rich southwest, raise questions about environmental tradeoffs. Solar thermal and solar PV systems are much lower emitters of life cycle CO2 than fossil fuels (Figure 16). On the other hand, solar thermal power is more water-intensive than fossil-fuel based electricity. In the United States, water scarcity is coincident with solar radiation abundance. Central solar and PV projects and new connecting transmission lines are also land intensive, potentially adversely affecting fragile desert environments where certain plant and animal species are threatened. Expansion of central solar projects also raises questions about the advantages of distributed solar PV systems that are low CO2 emitters, compatible with existing electrical infrastructure, and have benign impacts on land and water resources.

27

List of Figures
Figure 1The Cost of Electricity from Various Energy Sources Figure 2Solars Miniscule Role in US Electric Power Generation, 2008-09 Figure 3Two Major Types of Solar Cells Figure 4--Types of Solar Thermal Systems Figure 5Comparative Costs of Different Energy Technologies Figure 6--U.S. Electricity Rates by Region, 2010 Figure 7Peak-Load Pricing Will Make Solar More Competitive Figure 8--U.S. Average Real Electricity Rates Rising in Last Decade Figure 9Real Energy Prices: Steady Upward Rise in 2000s Except for Natural Gas Figure 10U.S. Natural Gas Market Changing; Recent Discoveries Raise Production, Lower Prices Figure 11Electricity Rates, Selected Countries, 2008 Figure 12Steep Growth in Global Cumulative Installed PV Power, Few Players Figure 13California Leads in Cumulative Grid-Tied Solar Capacity, as of 2009 Figure 14California Electric Generation: So Far Small Role for Solar and Other Renewables Figure 15Water Intensity of Electricity by Fuel and Generation Technology Figure 16Lifecycle CO2 Emissions Low for Solar in Electricity Generation

List of Tables
Table 1Major Operational PV Solar Projects Table 2Major Operational Solar Thermal Projects Table 3Fast-Tracked PV and Solar Thermal Projects Table 4Cumulative Installed Photovoltaic (PV) Power, by Country Table 5Summary of Existing and Announced Large Solar Projects Table 6Fast-Tracked Solar Projects and Threatened Species 28

List of Maps
Map 1Major U.S. Solar Thermal and PV Projects Cluster in Few Regions, Mainly Southwest Map 2Californias Major Electric Transmission Lines Map 3Water Constraint Index

29

References
BP Statistical Review of World Energy (2010). Black and Veatch Corporation (2008). Renewable Energy Transmission Initiative, RETI Phase 1B. Resource Report. Draft. August. Black and Veatch Corporation (2010). Renewable Energy Transmission Initiative Renewable Energy Transmission Initiative. RETI Phase 2B. Final Report Number 149148. May. Blackburn, John O. and Sam Cunningham (2010). Solar and Nuclear Costs The Historic Crossover, Solar Energy is Now the Better Buy. NC WARN: Durham, North Carolina. July. Bradford, Travis (2006). Solar Revolution, The Economic Transformation of the Global Energy Industry. MIT Press: Cambridge, Mass., and London England. Borenstein, Severin (2008). The Market Value and Cost of Solar Photovoltaic Electricity Production. University of California Energy Institute: Berkeley. February. California Energy Commission website: http://www.energy.ca.gov/ Carter, Nicole T. and Richard J. Campbell (2009). Water Issues of Concentrating Solar Power (CSP) Electricity in the U.S. Southwest Congressional Research Service Rept., R40631. June 8. Casselman, Ben (2009). U.S. Gas Fields Go From Bust to Boom. Wall Street Journal. April 30. Coughlin, Jason and Karlynn Cory (2009). Solar Photovoltaic Financing: Residential Sector Deployment. National Renewable Energy Laboratory. Technical Report NREL/TP-6A244854. March. Department of Minerals and Energy, Republic of South Africa (2003). White paper on Renewable Energy. November. Electric Power Research Institute (2009). Solar Photovoltaics: Status, Costs, and Trends, An EPRI White Paper. Palo Alto, California. December.

30

Electric Power Research Institute (2007). Solar Photovoltaics Expanding Electric Generation Options. An EPRI Technology Innovation White Paper. December 2007. page 13. Lovins , Amory B (1977). Soft Energy Paths: Toward a Durable Peace. Penguin Books. National Academy of Sciences, National Academy of Engineering, and National Research Council (2009). Committee on America's Energy Future. America's Energy Future: Technology and Transformation. Washington DC. Office of Senator Jon Kyl (2010). Water Policy Considerations. Deploying Solar Power in the State of Arizona: A Brief Overview of the Solar-Water Nexus. May. Solar Electric Power Association (2010). Executive Summary. PV Technology Characterization Review. Washington DC, September. Sovacool, Benjamin K. (2008). Valuing the Greenhouse Gas Emissions From Nuclear Power: A Critical Survey. Energy Policy, vol. 36. Elsevier: Amsterdam. U.S. Department of Energy, Energy Information Administration (2010). Renewable Energy Consumption and Electricity, Preliminary Statistics 2009. Washington, D.C. August http://www.eia.doe.gov/cneaf/alternate/page/renew_energy_consump/pretrends09.pdf U.S. Department of Energy, Energy Information Administration (2010). Non-renewable Energy: Monthly Energy Review. Washington DC, March. Wesoff, Eric (2010). Can the U.S. or California Institute a Feed-In Tariff? The Renewable Portfolio Standard in California has failed. The way to grow the PV market in the U.S. is with a Feed-in Tariff, according to the FIT Coalition. April 15. Article in: http://www.greentechmedia.com/articles/read/can-the-u.s.-or-california-institute-a-feedin-tariff/ Wiser, Ryan, Galen Barbose, and Carla Peterman (2009). Tracking the Sun, The Installed Cost of Photovoltaics in the U.S. from 1998-2007. LBNL-1516E. Lawrence Berkeley National Laboratory. February.
World Bank, Commodity Price Data.

Zweibel, Ken, James Mason and Vasilis Fthenakis (2007). A Solar Grand Plan. Scientific American. December 16. Solarbuzz website (2010).

31

End Notes

1 2

Research Institute for Sustainable Energy (RISE); http://www.rise.org.au/info/Applic/Array/index.html

http://www.thegreentechnologyblog.com/2009/solar-thermal-generated-electricity-future-dominatingtechnology SustainableBusiness.com News (2009). DOI Designates Solar Energy Zones http://www.sustainablebusiness.com/index.cfm/go/news.display/id/18475. June 30.
3

Website for Solar Energy Development Programmatic EIS, Information Center. http://solareis.anl.gov/documents/maps/studyareas/Solar_Study_Area_CA_Ltt_7-09.pdf
4

Farrell, John, (2010). Distributed, Small-Scale Solar Competes with Large-Scale PV. Renewable Energy World.Com, http://www.renewableenergyworld.com/rea/blog/post/2010/11/distributed-small-scalesolar-competes-with-large-scale-pv. November 10.
5

U.S. Energy Information Administration (2010). Electric Power Monthly (http://www.eia.doe.gov/cneaf/electricity/epm/epm_sum.html). November 15.
6

Hoff , Thomas E., Richard Perez, Gerry Braun, Michael Kuhn, and Benjamin Norris (2006). The Value of Distributed Photovoltaics to Austin Energy and the City of Austin, Study to Determine Value of Solar Electric Generation To Austin Energy. Clean Power Research, L.L.C. March 17.
7

Balchunas, Michael (2010). Permit Fees: A Hot Issue for Owners of Solar Power. The Solar Home & Business Journal. http://solarhbj.com/2010/01/solar-permit-fees-hot-issue-000050.php. January 15.
8

Solar Energy Industries Association web site http://www.seia.org/cs/federal_issues/treasury_grant_program

9

Wesoff, Eric (2010). Can the U.S. or California Institute a Feed-In Tariff? The Renewable Portfolio Standard in California has failed. The way to grow the PV market in the U.S. is with a Feed-in Tariff, according to the FIT Coalition. April 15. Article appears in: http://www.greentechmedia.com/articles/read/can-theu.s.-or-california-institute-a-feed-in-tariff/
10

Electric Power Research Institute (2009). Solar Photovoltaics: Status, Costs, and Trends, An EPRI White Paper. Palo Alto, California. December.
11

Pew Center on Global Climate Change web site: Renewable & Alternative Energy Portfolio Standards. http://www.pewclimate.org/what_s_being_done/in_the_states/rps.cfm
12 13 14

BP energy database

Lesser, Jonathan and Nicolas Puga (2008). PV vs. Solar Thermal, Distributed solar modules are gaining ground on concentrated solar thermal plants. Public Utilities Fortnightly. JULY www.fortnightly.com

32

Katie Fehrenbacher (2008). Pros & Cons: Distributed Rooftop Solar vs. Desert Solar Thermal http://gigaom.com/cleantech/pros-cons-distributed-rooftop-solar-vs-desert-solar-thermal/
15

Woods Institute for the Environment, Stanford University (2010). Distributed vs. Centralized Power Generation. Large-Scale Solar Technology and Policy Forum. April 8-9.
16

17

Balchunas, Michael (2010). Imperial Valley Solar Project Dealt Setback by Federal Judge. The Solar Home and Business Journal. Dec. 13. http://solarhbj.com/news/imperial-valley-solar-project-dealt-setback-by-federal-judge01223

California Energy Commission (2009). California Energy Demand 2010-2020, Adopted Forecast. CEC-2002009-012-CMF. December.
18

Maki, Sally and Ryan Pletka (2010). California's Transmission Future. RenewableEnergyWorld.com August 25.
19

Streater, Scott (2010). RENEWABLE ENERGY: Developer proposes 30,000 solar dishes in Calif. desert. E&E Publishing LLC. February 18. http://www.eenews.net/public/Landletter/2010/02/18/1
20 21

http://www.solardave.com/index.php/ppa-power-purchase-agreements-video/

33

Figures 1-16

Figure 1--The Cost of Electricity from Various Energy Sources

2007 Cents per kilowatt-hour

35
30 25 20

15
10 5 0

These cost ranges are for centralized power production, including the solar options. Transmission and distribution costs are not included in the estimates. When PV is installed at the point of energy use, such as on a residential rooftop, it may have a more competitive cost from the point of view of the consumer. All costs are in 2007 dollars. The dashed horizontal line was the average cost of electricity production in 2007, 5.7 cents per KWh. NGCC--Natural gas combined cycle CCS--Carbon capture and storage CSP--Concentrating solar power High and Low refer to high and low natural gas price scenarios.

Source: National Academy of Sciences, National Academy of Engineering, and National Research Council (2009). America's Energy Future: Technology and Transformation. Committee on America's Energy Future; Washington DC. Figure 2.10.

34

Figure 2Solars Miniscule Role in US Electric Power Generation, 2008-09

Percent of renewables category

Total production = 3,950 Billion KWh

55.4 Coal 45%
Other 1%

70.8

Wind Solar thermal, PV Geothermal

0.9 15 17.7 0.8

Natural gas 23%

Nuclear 20%
Petroleum based 1%

15.2
Hydro 7%

18.1

Other biomass
Wood and wood-derived

Renewables 4%

37.3

36.2

2008

2009

Source: Energy Information Administration

Figure 3Two Major Types of Solar Cells

Crystalline silicon cells Thin film cells

mono

poly

Thin film silicon

CIS/CIGS1

CdTe2

Amorphous

Microcrystalline

Hybrid HIT cells

Micromorphous (tandem cells)

1Combination of copper, indium, gallium, sulfur, selenium 2Cadmium telluride

Source: Adapted from Solarpraxis AG.

35

Figure 4--Types of Solar Thermal Systems

Parabolic trough.

Linear Fresnel Reflector

Parabolic dish system. Each dish has own heat engine to generate electricity.

Power tower

Photos from Department of Energy and http://www.thegreentechnologyblog.com/2009 /solar-thermal-generated-electricity-future-dominating-technology

Figure 5--Comparative Costs of Different Energy Technologies

36

Figure 6--U.S. Electricity Rates by Region, 2010

New England Middle Atlantic East North Central West North Central South Atlantic East South Central Mountain Pacific Contiguous California Alaska and Hawaii 8.1 8.7 11.4 13.8 21.1 7.9 9.6 9.0 13.7 15.1

U.S. Total 0 5

9.9 10 15 Cents per Kilowatthour, Including Taxes 20 25

Source: Energy Information Administration http://www.eia.doe.gov/electricity/epm/table5_6_b.html

37

Figure 7--Peak-Load Pricing Will Make Solar More Competitive

Bradford, Travis (2006). Solar Revolution, The Economic Transformation of the Global Energy Industry. The MIT Press: Boston, Mass. and Cambridge, England.

Figure 8--U.S. Average Real Electricity Rates Rising in Last Decade

Cents per kilowatt hour, including taxes
12

10

0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Nominal Real
Source: Energy Information Administration

38

Figure 8--U.S. Average Real Electricity Rates Rising in Last Decade

Cents per kilowatt hour, including taxes
12

10

0 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Nominal Real
Source: Energy Information Administration

Figure 9--Real Energy Prices: Steady Upward Rise in 2000s Except for Natural Gas

Real prices for coal and oil above early 1980s levels

Natural gas price declines on new U.S. discoveries

39

Figure 10U.S. Natural Gas Market Changing; Recent Discoveries Raise Production, Lower Prices

Note: US natural gas ,West Texas Intermediate oil, And Australian coal.

Source: World Bank

Figure 11--Electricity Rates, Selected Countries, 2008

Denmark Italy Ireland Germany* UK Spain Japan Poland Singapore France Turkey New Zealand Norway Peru Mexico Thailand South Korea Taiwan Canada** Indonesia US 0
*--2007 **--2006

39.6 30.5 26.7 26.3 23.1 21.8 20.6 19.3 19.0 16.9 16.5 16.4 16.4 13.4 9.6 9.4 8.9 8.6 7.8 6.1 11.3 10 20 30 Cents per Kilowatthour, Including Taxes 40 50

Source: Energy Information Administration

40

Figure 12--Steep Growth in Global Cumulative Installed PV Power, Few Players

Giga watts 12 Country shares in 2009

10
Germany

Spain Japan US

Germany 42%

6
4

Spain 15% Japan 13%

2
0

US 7%

Other 24%

Source: BP Statistical Review of World Energy, June 2010

Figure 13California Leads in Cumulative Grid-Tied Solar Capacity, as of 2009

Cumulative Capacity in 2009 Calif. 1,102 N.J. 128 Nev. 100 Colo. 59 Ariz. 50 Fla. 39 N.Y. 34 Hawaii 27 Conn. 20 Mass. 18 Others 78 Total 1,653 MW Two-thirds in California.
Source: Solar Energy Industries Association (2010). US Solar Industry, Year in Review 2009. April 15. p.5.

Grid -Tied Capacity

Colo. 3% Nev. 6% NJ 8% Calif 67% Other 16%

41

Figure 14--California Electric Generation: So Far Small Role for Solar and Other Renewables
Energy sources for electrical generation in California
1000 GWh
350 300 250 200 150 100 50 Share (%) of total electric generation 0.34 0.32 0.30

Solar share very small but rising since 2006.

0.28 0.26 0.24 0.22

Other Imports 26.1%

Specified Coal Imports 4.6% Solar 0.3% Wind 1.7% Biomass 1.9% Geothermal 4.3%

Nuclear 10.6%

In-state Coal 1.3% Other 0.3%

Gas 39.3%

0.20 1997 1999 2001 2003 2005 2007 2009** 1998 2000 2002 2004 2006 2008
Electric generation Solar share

Hydroelectric 9.8%

Source: California Energy Commission website

Figure 15--Water Intensity of Electricity by Fuel and Generation Technology

Carter, Nicole T. and Richard J. Campbell (2009). Water Issues of Concentrating Solar Power (CSP) Electricity in the U.S. Southwest Congressional Research Service Rept., R40631. June 8.

42

Figure 16--Lifecycle CO2 Emissions Low for Solar in Electricity Generation

Technology Coal Coal Heavy oil Diesel Fuel cell Natural gas
Coal Coal Heavy oil Diesel Fuel cell Natural gas Nuclear Biomass (7) Geothermal Biomass (6) Various generator types without scrubbing Various generator types with scrubbing

Capacity/configuration/fuel

Estimate (gCO2e/kWh)
1050 960 778 778 664 443 66 41 38 35

Technology
Various generator types and turbine types Hydrogen from gas reforming Various combined cycle turbines Various reactor types Short rotation forestry reciprocating engine 80 MW, hot dry rock Short rotation forestry steam turbine

Nuclear
Biomass (7) Geothermal Biomass (6) Solar PV Biomass (5) Biomass (4) Biomass (3) Biomass (2) Biomass (1) Solar thermal Hydroelectric (run-of-river)

Solar Photovoltaic
Biomass (5) Biomass (4) Biomass (3)

Polycrystalline silicon
Waste wood, steam turbine Forest wood, reciprocating engine Short rotation forestry co-combustion with hard coal

32
31 27 23

Biomass (2)
Biomass (1) Solar thermal Hydroelectric Biogas

Forest wood steam turbine

Forest wood co-combustion with hard coal 80 MW, parabolic trough 300 kW, run-of-river Anerobic digestion 1.5 MW, onshore 3.1 MW, reservoir 2.5 MW, offshore

22
14 13 13 11 10 10 9

Biogas
Wind Hydroelectric (reservoir) Wind

500

1000
gCO2 /kWh

1500

Wind Hydroelectric Wind

Source: Benjamin K. Sovacool (2008). Valuing the Greenhouse Gas Emissions From Nuclear Power: A Critical Survey. Energy Policy, vol. 36. Elsevier: Amsterdam. Page 2950.

43

44

45

46

47

48

Map 1--Major U.S. Solar Thermal and PV Projects Cluster in Few Regions, Mainly Southwest

> 100 MW 1-99 MW

PV operational PV planned Thermal operational Thermal planned

Source: Tables 1-3

49

Map 2

Areas of high solar radiation, less densely served by transmission lines

50

Map 3--Water Constraint Index

Source: Office of Senator Jon Kyl (2010). Water Policy Considerations. Deploying Solar Power in the State of Arizona: A Brief Overview of the Solar-Water Nexus. May. Page 11.

51