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Vail Valley Voices: A new solar paradigm

Bill Sepmeier
Vail, CO, Colorado
newsroom@vaildaily.com

Referring to farming back in the 1960s, Earl Butz, secretary of agriculture for Richard Nixon, made the famous statement: “Get big or get out.”

This philosophy, given several recent changes in solar energy production pricing, private sector incentives and federal tax credits, seems to be the long-term path that solar and renewable energy has been set upon again today.

For three or four decades, most solar systems have been small things. Mounted atop remote homes at first, where there was no grid power, or on homes in sunny climates where the free hot water was easy to generate year round, rooftop solar recently experienced an explosion in sales of so-called grid-tied systems.



Utility companies that couldn’t make use of federal tax incentives to build their own solar or wind farms, but were also mandated to use certain percentages of renewable energy, began meeting their various renewable portfolio requirements through net-metering of homeowner-produced solar power after purchasing the renewable energy rights or credits they required from small producers and a legal and financial structure called the power purchase agreement.

In effect, they were paying retail rates for the energy, but they had little choice.



Paradigm shift

In fall 2008, the expiring federal solar investment tax credit was renewed, attached to the bank bailout bill that raced through Congress, which removed the $2,000 cap on solar energy investment by individuals, allowing them to enjoy the same 30 percent credit that had been in place for commercial builders and operators.



Not as widely trumpeted, but for the first time Congress allowed large utility companies to take advantage of the same investment tax credit. And so the renewable energy landscape changed in America.

Supply/demand

Simultaneously, the global supply of both silicon and amorphous solar material technology, which has been in short supply for the past three years, is projected to catch up a bit with present demand in 2009-2010, potentially bringing the cost of solar PV cell technology down from $4-$5 per watt to as low as $1-$2.50 per watt. At this price, installed rooftop PV solar power may cost about the same as utility power before any subsidy at all. If solar production capability proceeds in spite of a global recession and can absorb a potential huge new demand by utilities and today’s subsidies remain in place, rooftop solar electricity could cost the same or less than fossil fuel-generated utility power.

Jim Rogers, the so-called “green coal baron” CEO of Duke Energy, recently stated in a New York Times profile that Duke could probably buy solar technology in such quantity that costs would fall low enough to deploy some 500,000 solar systems on rooftops within Duke’s service area — at no cost to the customer.

Rogers said his company could potentially shutter a 1,000 megawatt coal plant and all of its expenses and pollution by going with solar PV systems installed across his clients’ rooftop service area, and make a good return for his shareholders by doing it.

Needless to say, this is not traditional philosophy, but times have changed.

Retail solar

If the utilities decide to deploy massive amounts of rooftop solar at no up-front cost to consumers, the independent retail grid-tied solar business model could become irrelevant quickly.

The utility demand for thousands of megawatts of PV would certainly devour today’s supplies, making it difficult for smaller shops to even buy PV modules. Some of the emerging overcapacity right now in silicon and PV module production might be absorbed entirely by a utility or two through acquisition of these factories, so that they could secure their own supply.

With the tax law change, the only real impediments to a massive utility solar rooftop deployment today are the potential hardware shortage their decision might create and a lack of qualified people to install the systems.

In the shorter-term, if rebates and incentives remain in place for everyone and the costs of hardware continue to drop, independently owned rooftop solar systems may become a more sound investment than ever before for those who can use the tax credits.

Occam’s razor

This system would need a smart grid, and problem with the current “smart grid” concept is that it’s really complicated. It’s a new Internet of things talking to things over power lines combined with a lot of new widgets and thingees and plug-in hybrid vehicles and new battery technology and a lot of other stuff that still has to be invented and tested and brought to market.

All this stuff will have to talk with everything else over the grid all the time to manage loads and diversified generating resources using technology for which basic standards are still being set.

Venture funding and development is under way, but it’s going to cost a fortune.

The biggest problem with the finished smart grid is that the regular Jane Consumer ends up with a electric service level that’s hopefully about the same as it is today. For a similar business plan “success story,” read up on “HD Radio” digital radio broadcasting development and deployment — it isn’t pretty.

Of course, without doing something, the old grid will fail as we add larger amounts of renewable energy, so there’s more incentive than the digital radio backers found in their marketplace of radio listeners.

Other choices

Of course, the utilities have other green options available that with their new access to significant tax credits might be better quick fits into their traditional business plan and which don’t require a completely new smart grid. Green generation techniques that will work well with the parts of the new grid that don’t have to be invented, like the high voltage DC (HVDC) backbone trunks needed to link western wind power farms to the rest of the country.

For example, the addition of large, concentrated solar power thermal systems (CSP) to conventional coal and gas turbine generators is becoming a fairly simple process to do today.

CSP, which heats a thermal solution to over 800 degrees Celsius using miles of parabolic reflectors, can be added to existing generators or central plants (not diversified across rooftops over an entire state or two), will be relatively easy to manage and can reduce the amount of conventional fuel needed by these coal-burning behemoths very quickly when the sun shines. The needed and relatively low-tech CSP collectors are already being mass-produced and this type of hybrid operation is already planned for testing by a consortium of western utility operators.

The addition of high temperature CSP thermal systems to existing plants won’t require tens of thousands of newly trained (expensive) people or a new end-to-end high-tech (expensive) smart grid right away, either, if existing coal plants can substantially throttle back on the coal burning and go green when the sun is shining.

Peaking the generation supply against the solar intermittence with a hybrid solar-coal plant will be fairly simple, too. You just change the ratio of coal to sun when it’s cloudy outside. Hybrid plants could be used to “peak” large-scale wind-power production supply changes, as well as provide base-load energy.

Since the CSP solar facility is located at the same plant, no complex remote control schemes are needed. If the utilities implement CSP solar in areas where they have the solar resources, you should expect to see large scale CSP-coal-gas hybrid operations implemented long before wide-scale rooftop solar PV is deployed.

This is probably the best news the independent solar industry can expect.

Bottom line

With the federal government and its list of usual suspects, the established large industry lobbyists, historical unwillingness and perceived inability to manage widely diversified programs, national grid greening will probably adhere to Butz’s time-honored rule: Get big or get out.

“Greener utilities will sell lower percentages of fossil fueled and more renewable energy at their retail rates, while buying less of it at retail price from third parties. The smart grid may have more time to develop if tax-subsidized CSP is integrated into existing grid generation quickly.

Solar equipment manufacturing will prosper no matter what, especially if the global recession’s impacts are offset by utility purchasing of massive amounts of solar technology.

Education and training of a new, green utility work force will have to expand rapidly to meet utility and remaining industry demand. But smaller shop, independent retail solar sales will plateau once utilities announce real green plans.

When the solar and renewable paradigm quits shifting, most people will probably find themselves singing The Who’s classic lyric, also from the ’60s, “Meet the new boss, same as the old boss.”

Bill Sepmeier is the managing partner of DC Power and Light Company LLC, http://www.dcpowerandlight.com, a firm that funds and operates solar andrenewable energy generation facilities.


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