Solar Revolution

Andrew MunroWaleed YousafEmilie Thomas

Travis BradfordThe MIT Press

Cambridge, Massachusetts

London England

A new path on the horizon

Solar energy will inevitably become the most economic solution for most energy applications

There will be unprecedented growth in the solar-energy industry

Economics of electricity Generation costs Distribution costs

US Electricity – 9 cents/kWh total 4.5 cents/kWh for generation 4.5 cents/kWh for distribution

The times when energy demand is the highest coincides with those when the sun shines more brightly

Solar is suited to fill the need of intermediate-load demand

Solar power technology needs to become a competitive producer of intermediate-load electricity which represents 30 to 50 percent of the total electric demand

Many grid-connected homes world wide (particularly in Japan and Germany) have already elected this option through grid connected PV systems.

Economic rational for making the switch to grid connected solar electricity will be reached in different markets with different applications at different times

Other economic advantages of solar: Modularity and Simplicity

Install only as many panels as are needed Cells can be brought online in stages Serviced piece meal Low training costs Lack of moving parts High reliability Low maintenance, Long module life. (30+ years)

The analysis used in this book does not include:Government interventionSignificant increases in oil costsTechnological breakthroughs

The shift to solar will happen in years rather than decades and will occur because of fundamental economics

Overview of Modern Energy

Global energy production has grown by around 2 percent annually over the last 30 years

The united States is the largest energy user at 26 percent of total consumption, despite only having 4.6 percent of the worlds population

To visualize the comparison between rich and poor nations, the average US citizen consumes over eight times the energy of a person in sub-Saharan Africa.

Electricity comprises only 18 percent of the final consumption, it requires 39 percent of the primary fuel supplied - losing some 65 percent of the energy content of its fuel during generation and transmission

Solar Energy a Theoretically Elegant but Unrealistic Solution?

Types of Solar Energy

The Dawn of Solar Energy

Grid-Connected market Growth Rate of over 50% per annum

Modern Electric Utility Economics

Finite deposits of Oil and Natural Gas Coal the only Supplement fossil fuel

available Daytime Electricity, the most

expensive form of electricity for utilities to produce.

Forecasting Future Energy Prices

US Department of Energy’s Energy Information Agency (EIA) predicts

2% per year increase till 2025

411 Quadrillion BTU in 2002 to 644 Quadrillion BTU in 2025

Natural Gas will supply the highest share while Nuclear will grow slowest

EIA’s Assumptions in Projections

Oil, Natural Gas, Coal and Electricity will be roughly the same price in 2025 as they were in 2003. Oil – EIA predicts production increase

from 78.2 million barrels/day in 2002 to nearly 119 million

barrels/day in 2025

Electricity Cost Comparisons

Cost per KWh generated – standard measure

Change in Industry’s fundamentals Utility adding generation capacity on the

customer’s side of the grid Consumers not requiring delivery through the

grid Cost per KWh generated + Transport Cost

= Cost per KWh as delivered to the end consumer

Electricity Cost Comparisons (Cont.)

External Costs of the generating technologies Direct Costs of Pollution

Health Care, deaths, property damage etc. Other Environmental Damage Security Costs

Protecting fuel Supplies Protecting Nuclear facilities

Natural Gas 30%-90% Coal 55%-400%

The Cost of Time

Base-Load Coal and Nuclear Power Plants Running over 7000 hours/year Shutting down only for maintenance

Natural Gas Plants Run for less than 1500 hours/year Run only at times of high demand

Compare the cost of energy with the load it replaces

Solar Energy in the Real World

What really drives adoption

COST Indirect Benefits

Reduced pollution Enhanced energy security Robust infrastructure that distributed

generation creates Marketing & Financial Benefits for

companies Relevant Information

PREMIUM

Built-In PV

Zero-energy homes / buildings On site electricity generation

Integrated in new construction 1/3 of the retrofitting cost

Developing World

Population without any electricity access Latin Am., Caribbean, East Asia: 10% South Asia: 61% Sub-Sahara Africa: 78%

Developing World: 1/3 (1.6b)

“All economic growth depends on safe, secure, reliable access to electricity”

Models for the Developing World

PV is becoming one of the most popular methods Village Solarization Home Solarization

Micro-Credit

Installation jobs (25-35% of the cost)

A level playing field?

Worldwide, Fossil-fuel and Nuclear Energy receive

direct subsidies totalling $131 billion every year

Less than $5 billion combined on renewable energy subsidies

Tools For Adoption & Acceleration

Create Incentives Feed-in tariffs Net metering Rebates Consumer tax deductions Production Tax credits

Penalizing extractive and pollutiing fossil-fuel energy

Invest in R&D

Policies around the World: Japan

Policies around the World : US

Policies around the World : Europe

Feed-in tariffs mostly 1st instituted in Denmark Very successful in Germany

Convergence of economics

Development phases

Solar Revolution

Q & A…