Do we need a massive government program to generate breakthroughs to make solar energy cost-competitive?
"Do we need a massive government program to generate breakthroughs to make solar energy cost-competitive?"
[UPDATE: DOE link below fixed!]
Almost certainly not and absolutely not. I give two answers here because there are two very different types of solar energy:
- Solar photovoltaics, PV, which is direct conversion of sunlight to electricity. It is well-known, high-tech, uneconomically expensive in most parts of this country (but poised to resume dropping sharply in price), and intermittent (power only when the sun shines).
- Solar thermal electric or concentrated solar power (CSP), which uses mirrors to focus sunlight to heat a fluid to run a turbine or engine to make electricity. It is, as I’ve blogged, “The solar power you don’t hear about.” It is relatively low-tech, competitive today (and poised to drop sharply in price), and can be made load-following (matching the demand curve during the day and evening) and possibly baseload (round-the-clock).
No Clean Tech Breakthroughs Needed? Think Again
For solar PV to be cost-competitive, the price per ton of CO2 would have to be $220.
The Center for American Progress’s Joe Rom [sic!], like much of the environmental establishment [sic!!], believes that a price on carbon dioxide can do much of the heavy lifting for deploying clean energy technologies. But the price carbon dioxide would have to reach for technologies like solar to be cost competitive is far higher than voters, far more concerned about higher energy prices than global warming, will allow.
Okay guys, you don’t want to be called delayers — I obliged. I am most certainly not part of the environmental establishment. I am not even an environmentalist [yes — I occasionally write about polar bears — what can I say, those are by far my most heavily trafficked posts, and polar bears are cute, according to my legion of ‘tween readers.]. I am a physicist, an energy technologist, and climate policy analyst.
As for being part of any “establishment” — “a pejorative term used to refer to the traditional ruling class elite and the structures of society which they control” — let me tell you, the elites don’t blog. They don’t have to, they actually control events, which I obviously don’t. Take U.S. energy and climate policy … please! [Sorry, couldn’t resist.]
But I digress. The key question is — Does solar energy need technology breakthroughs funded by a major government program of the kind B.I. advocates? The answer is clearly “no.”
SOLAR PV IS A BIG WINNER IN THE MEDIUM-TERM (post-2020)
Absent major subsidies, solar PV is simply not a big-time winner (in terms of kWh delivered cost-effectively) in rich countries with built-out electric grids in the near term. I don’t agree with the Scientific American article (here) that Shellenberger cites (but does not endorse), which calls for a massive $400 billion 40-year plan for solar. I have been meaning to blog that it has many weaknesses, in my mind. No energy efficiency. No wind. Heck nothing but PV and CSP, and it looks to be mostly PV, which needs expensive storage.
That said, I used to be far less bullish on PV, until I heard a number of presentations earlier this year, from the PV industry, the Department of Energy (DOE) office I once helped run, solar financing experts, and academics. Now I think it might make a major contribution post-2020, maybe even more than 1,000,000 MW (peak), which is a half a wedge, by 2050.
The good news: Massive amounts of private sector money — through the stock market, big companies, and venture capital funds — as well as big government subsidies (not R&D) and/or mandates — have juiced up the technology development process as well as the manufacturing learning curve. The SciAm article claims we need a big government program because:
To provide electricity at six cents per kWh by 2020, cadmium telluride modules would have to convert electricity with 14 percent efficiency, and systems would have to be installed at $1.20 per watt of capacity. Current modules have 10 percent efficiency and an installed system cost of about $4 per watt.
Let me tell you what the experts say. First, DOE itself acknowledged that
- market viability [is] eclipsing ‘science’ results
- private funding now available for R&D
- cost trajectories are increasingly secure.
Because of that, DOE now wants to focus on R&D partnerships, technology validation, and market creation/preparation, including improving the regulatory environment for distributed energy.
[You can see a detailed 2008 DOE presentation on solar, mostly PV, here. It is well worth a look if you are interested in PV.]
The industry experts said they will deliver installed PV electricity below ten cents per kWh by 2020 from multiple advanced technologies if we just keep going down in the projected manufacturing learning curve and keep getting better economies of scale from steadily growing deamnd. Mostly what is needed is demand pull from more state renewable standards and, ideally, a federal renewable standard. Continuing the 30% solar investment tax credit (ITC) would help (and not cost a lot of money). As would a serious price for carbon dioxide — but nowhere near an outrageous one like $220/ton. Even $14/ton of CO2 would make a difference. The European price, ~$36/ton would be even better, adding over 3 cents per kwh to coal, which is already getting very pricey (see below)
And we don’t need to be in a hurry to cram overly large amounts of PV into the U.S. economy because …
CSP IS A HUGE WINNER IN THE SHORT-TERM (now!)
CSP is already in much better shape than PV, with half the costs, no production bottlenecks, cheap storage, and near-baseload power — and also massive amounts of private sector money flowing in. So if the PV folks don’t need a big government-funded push for breakthroughs, you can be sure the CSP folks don’t.
As I noted earlier (“Breaking the technology breakthrough myth“), I will be blogging at length about concentrated solar power in a couple of days. None of the industry executives I spoke to believes they need breakthroughs — and they certainly don’t want massive government-funded research and development efforts of the kind B.I. is talking about. They would like the solar ITC renewed this year for eight years (not a lot of money) and a serious price for carbon dioxide as soon as possible. A federal renewable standard would also help.
CSP is competitive with new gas-fired plants now at current gas prices. It should beat new coal by 2015, even without a carbon price, but certainly $30/ton of CO2 would more than do the trick. CSP could provide more than one wedge, if the nationa and the world get serious about beating 450 ppm.
COAL IS VERY EXPENSIVE
Conventional power plants have risen in price “130% since 2000, and 27 percent in the 12 months to October 2007 alone” (see here). New coal plants are going “north of $2,500 per kilowatt” fully installed (see also here). [You would have to add another $2000 per kw for carbon capture and storage, assuming that even proves toll on a wide scale.] And, of course, coal prices have soared. Finally, financing costs are sure to rise as Wall Street increasingly sees the risk of backing coal that doesn’t capture and store carbon dioxide emissions.
“Fast, Clean & Cheap,” by Shellenberg et al. says that in 2010 the price for pulverized coal will be 4.84 cents per kWh. They say that cost (and the costs of PV and CSP) come from the Energy Information Administration Annual Energy Outlook 2007. I couldn’t find that number, but I did find the EIA’s assumptions (here), which seem to suggest they were using a capital cost for coal of $1290/kw — maybe half the current cost. I don’t know what coal price they were using, but it was a lot lower than today’s cost.
I think it would hard to finance, build, and deliver fully installed new coal plants for significantly less than 10 cents per kWh today, even with no carbon dioxide charge.
So, it looks like CSP now — and PV soon — are in very good shape. They certainly don’t need a a big government spending program aimed at generateing breakthroughs in order to make them cost-competitive in time to play a very large role in beating 450 ppm.
One final note: In the DOE presentation I link to above, they describe the “Solar America Initiative,” launched in fiscal year 2007 whose goal is to “accelerate supply growth & adoption of PV/CSP technologies.” It looks to be well funded as of this year thanks in large part to the new Congress. It is obviously a terrific idea. Steady increases in the future are certainly welcome, but I don’t see the need for some new multi-billion program. Certainly more R&D funds aren’t needed.