New approaches are needed to ensure China’s technology ambitions don’t erode U.S. competitiveness in clean energy.

by Melanie Hart

The U.S. Department of Commerce next month is expected to issue a critical ruling on one of the biggest trade cases to hit the U.S.-China energy relationship in recent years. Seven U.S. solar companies claim that the Chinese government unfairly subsidizes Chinese solar panel manufacturers to enable those companies to sell their products at below-market prices and drive U.S. competitors out of the market. The seven companies support subsidy and dumping petitions filed by SolarWorld Industries America Inc. against Chinese solar imports in October that ask the Commerce Department to levy triple-digit tariffs on solar cells and modules imported from China.

This case highlights a major challenge facing U.S.-China clean energy relationships more broadly: how to handle the Chinese government’s deployment of massive resources toward developing renewable energy technologies, many of which are designed for export. Indeed, this is an issue that bedevils U.S.-China trade relations not just in clean energy, but also in other industrial and services sectors, which means that how this complaint by U.S. solar manufacturers plays out may well have much broader implications.

One of the biggest challenges facing renewable energy in the United States is that traditional fossil fuels are cheaper here than they are in almost any other developed country. This is primarily due to the large supply of fossil fuels such as coal and natural gas in our nation, as well as a long history of federal government subsidies for developing those energy sources. The United States has also failed to put a carbon price on fossil fuels, so U.S. fossil-fuel prices do not include the environmental and public-health damage from greenhouse-gas pollution. Relatively low fossil-fuel prices make it particularly hard for renewable energy to compete against conventional energy in the U.S. market.

Nonetheless, over the past decade U.S. companies have gotten much better at manufacturing, deploying, and operating renewable energy technologies, and as a result prices are coming down rapidly. As prices decrease renewable energy gains market share and speeds our transition toward a more sustainable energy economy.

The problem is China is particularly good at making things cheaply. At the lower end of the value chain, that is primarily due to the country’s low labor costs and massive supply chains. Also advantageous are China’s lax labor, safety, health, and environmental standards. At the higher end, that is often because the Chinese government provides generous subsidies and other forms of support for high-technology research, development, and commercialization. Low-cost Chinese manufacturing plays a large role in driving prices down for a wide range of products, including renewable energy technologies. Chinese manufacturing also plays a large role in pricing some U.S. manufacturers out of business, with many of those manufacturers claiming that the “China price” is driven by Chinese government intervention rather than natural market forces. If the Chinese government is intervening in a way that breaks trade rules then that type of rule breaking should be remedied in some way.

Determining whether China is playing by the rules requires taking a close look at their renewable energy policies—not only at the national level but also at the provincial and local levels.

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Neither California nor the Mojave will survive unrestricted emissions of heat trapping greenhouse gases, but we can harness solar energy responsibly

by Jessica Goad (with some thoughts by Joe Romm at the end)

The Los Angeles Times recently published a story on large-scale solar that gets much of the context and many of the facts about renewable energy on public lands flat out wrong.

The Times piece, called “Sacrificing the desert to save the Earth,” describes an apparent land rush for solar energy development on public lands, and raises important questions about the impacts of this technology on the Mojave Desert in California.

However, it gets the comparisons to oil and gas development completely wrong, and also omits important details about what the government has done thus far to ensure that solar on public lands does not become a real land rush.

First, much of the story is based on a comparison to oil and gas development on public lands. The Times argues that financial incentives for solar development in southern California have “sparked a land rush echoing the speculative booms” of other land rushes in the past:

Industrial-scale solar development is well underway in California, Nevada, Arizona, New Mexico, Colorado and Utah. The federal government has furnished more public property to this cause than it has for oil and gas exploration over the last decade — 21 million acres, more than the area of Los Angeles, Riverside and San Bernardino counties put together.

Even if only a few of the proposed projects are built, hundreds of square miles of wild land will be scraped clear. Several thousand miles of power transmission corridors will be created.

The desert will be scarred well beyond a human life span, and no amount of mitigation will repair it, according to scores of federal and state environmental reviews.

It is important to understand that this 21 million acres is the amount of public land that could be made available to solar energy development in six states (AZ , CA, CO, NV UT, NM), rather than the amount that will be eventually leased. (This is an arcane but important distinction when it comes to public lands, because companies bid for leases on parcels that are made available for development).  “Available” means that there is sufficient sun, the land is flat enough, none of the lands are protected (such as national parks), etc.

The data show that the Times’ comparison to oil and gas is totally incorrect. According to a Wilderness Society analysis, in just five western states (CO, NM, MT, UT, WY) over 50 million acres of public lands are already available to oil and gas development.

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Pile of leaves, or power plant?

It’s chore day. You’ve raked the leaves, taken out the recycling, and emptied out the old junk in your garage. But wait — don’t toss it all out! You have all the ingredients for your very own homemade solar system.

If new advances in “biophotovoltaics” research are any indication, you may someday be able to create your own solar “goo” from plant matter and apply it to metal or glass.

A group of researchers has found a way to break down plant matter, isolate photosynthetic molecules, and then spread those molecules on a metal or glass substrate. So theoretically, you could take a bag full of leaves and grass, pour in a mixture of chemicals to break them down, and then finish your chores by painting the liquid on your windows to produce electricity. Not bad for a day’s work.

Researchers have been working on biophotovoltaics for many years, only to be hindered by low efficiencies, rapid degradation, and difficulties in spreading the photovoltaic “goo” onto a substrate. But nine scientists have just published research on new advances that boost performance and may allow for inexpensive substrates like recycled glass and metal to be used:

To improve photovoltaic performance we increased the light absorption cross-section without changing the footprint by departing from the traditional flat electrode geometry in favor of mesoscopic, high-surface area semiconducting electrodes (TiO₂ nanocrystals and ZnO nanowires). Finally, we showed how high affinity peptide motifs¹⁰ bioengineered to promote selective adsorption to specific substrates can enhance photovoltaic performance. These materials, geometries and design resulted in simple, robust biophotovoltaic devices of unprecedented performance.

In short, the researchers have created a method to stabilize the photosynthetic molecules. And by coating a substrate with titanium dioxide and zinc oxide nanowires, they can now turn any sort of glass or metal material into a working solar cell with efficiencies better than ever before.

It’s a fascinating discovery. But don’t get too excited yet. Efficiencies are still extraordinarily low — only at .01%. They’d need to be about 10 times that in order to power a light or charge a cell phone. So for the foreseeable future, don’t expect to be painting your house with a bag of grass clippings.

However, as research advances and performance continues to improve, MIT physicist Andreas Mershin says it could be perfect for remote applications in developing countries. In the video below, Mershin explains the significance of the findings:

by Lauren Simenauer and Sean Pool, reposted from Science Progress

Policymakers and energy industry experts often talk about clean energy as though it isn’t reliable. In fact, while an MIT study recently found the existing grid would probably be up to the challenge of absorbing clean energy, intermittency does present a real challenge that renewables must address to get to high levels of penetration.

But BrightSource Energy, a major player in the market for concentrating solar power, or CSP, recently announced the installation of new thermal energy storage technology at three of its planned power plants in California. This thermal energy storage technology will go a long way toward solving the intermittency problem for concentrating solar power. BrightSource’s announcement demonstrates that we can in fact get reliable baseload power from the sun [or, even better, load-following power].

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by John Farrell, reposted from Energy Self Reliant States

Last week I wrote about the time-of-use pricing scheme that PG&E offers in San Francisco, and how solar power is worth 14% more compared to a standard flat-rate electricity plan.  In reality, it’s 36% or more.

In the interest of simplicity, I only looked at the rates PG&E charges for using up to ~250 kilowatt-hours (kWh) per month (their “baseline” rate).  But baseline rates only apply to the first 3,000 kWh consumed per year, one-third the U.S. average.  Very few customers use so little electricity.

Rather, most customers will consume electricity in Tier 2, which applies to consumption from 3,000 to 6,900 kWh per year, or even Tier 3, which applies to consumption up to 14,500 kWh.  And the electricity rates in these tiers are substantially higher.

For each peak hour kWh used in Tier 1 (the baseline), a customer pays 28 cents per kWh.  But once they’ve used up their baseline amount, each peak kWh will cost 29.6 cents in Tier 2.  If the customer hits Tier 3 rates in a given month, their peak electricity will cost 44.6 cents per kWh!

A solar array provides two benefits under this scenario.  First, it produces electricity during peak periods, and second, it also reduces overall consumption.  Thus, the electricity offset by a rooftop solar array is the most expensive, and it also can push the customer into a lower usage tier, reducing the rate paid on grid electricity.

A few examples:

1. A customer uses 3,000 kWh per year (the Baseline) and has a 2 kW solar array.  The solar array provides 97% of the annual household consumption, and the value of the electricity produced by the solar array (based on the cost of grid power at the time it produces) is 22% higher than under a flat rate plan.
2. A customer uses 6,900 kWh per year (Baseline and Tier 2 power) and has a 2.5 kW solar array.  The solar array provides 53% of the annual household consumption (but nearly all of the Tier 2 electricity), and the value of the electricity produced by the solar array (based on the cost of grid power at the time it produces) is 36% higher than under a flat rate plan.
3. A customer uses 10,000 kWh per year (Baseline, Tier 2 and Tier 3) – the U.S. average – and has a 2 kW solar array.  The solar array provides just 20% of the annual household consumption (but nearly all of the Tier 3 electricity), and the value of the electricity produced by the solar array (based on the cost of grid power at the time it produces) is 253% higher than under a flat rate plan.

The chart at the top illustrates the good matchup between solar and time-of-use rates (the rates shown are for summer weekdays).  The bars show the pricing by hour, as well as the higher prices in higher tiers of consumption (for Residential Schedule E-6).  The green line shows the percent of daily solar output that falls during a particular time-of-use pricing period.

Overall, solar power is a pretty good fit with time-of-use pricing, a policy that should be used in more locales to improve the economics for local solar power.

Thanks to Mark, whose timely comment last week notified me of a change in PG&E’s residential time-of-use pricing plan.

– John Farrell is a senior researcher at the Institute for Local Self Reliance. This piece was originally published at Energy Self Reliant States.

In 2011, global investment in renewable energy surpassed fossil fuels for the first time.  And the U.S. surged back into the lead in clean investment ahead of China by about $8 billion.

So what, other than bad journalism, explains this nonsensical headline and image from the top tech magazine Wired?

Actually, it is just bad journalism, pure and simple.  Indeed, the magazine itself clearly wanted a sensationalistic headline — and even more sensationalistic photo — to get eyeballs in this highly competitive media environment.

The story simply doesn’t justify the headline. That’s obvious from the fact that the story itself includes this summary of wind energy prospects:

Outlook: Cheaper prices for turbines should result in lower costs for wind power by 2014. Though growth has slowed since 2008, this sector is still expected to cover about a third of any increased energy consumption in the US between now and 2035.

Huh?  An energy industry that barely registered any significant U.S. capacity or generation a decade ago is now  expected to provide a third of the increased energy consumption in the next quarter century — and that’s somehow a clean-tech “bust” which warrants an exploding wind-turbine image?  Amazing (and I will repost a response to the article by a leading wind expert below).

For the record, I’m not saying the wind industry doesn’t face a near-term challenge in the face of unconventional gas and a GOP Congress unwilling to support a crucial tax credit.  Climate Progress has made clear that it does (see “Policy Uncertainty Threatens 1,600 American Wind Jobs at Vestas — and 37,000 Jobs Nationwide“).  I’m saying that there has been no bust in the industry yet, there doesn’t need to be one, and, indeed, the prospects  for the industry over the next couple of decades remain very strong, as the article itself makes clear.

I asked Eilperin about the headline and images, which I thought were completely unwarranted.  She makes clear she had nothing to do with them:

“I stand by the story, which accurately portrays some of the challenges the U.S. clean tech faces in light of the current fiscal and political climate. The piece also highlight some of the industry’s bright spots, including the fact that cheaper conventional PV panels has made the expansion of distributed solar generation and utility-scale solar projects more affordable. As many magazine readers would understand, I had no input into either the display art or the headline that accompanied the piece.”

Readers know that headlines  are the most important part of any such story, seen by  at least 10 times as many people who read it — and in the internet era, it’s likely that 20 to 100 times as many people see the headline from a  respected magazine like Wired.

Wired should retract and change the headline.

I blame the editors for this — but I don’t agree with Eilperin’s assessment of the story itself.  I think it is flawed, especially its discussion of solar energy.

The piece uses Solyndra as a stand-in for the entire US solar industry and devotes over one third of the piece to the now-bankrupt company.  But Eilperin and Wired seem completely unaware of the fact that Solyndra was always a one-of-a-kind solar play that made sense only if silicon prices stayed high.  In that sense, it was obviously part of a ”portfolio” investment strategy by DOE, a hedge against their much broader strategy, which was based on silicon prices coming down.  As Bloomberg Government made  clear in a recent analysis that received virtually no coverage in the media, “the focus on Solyndra is not proportional to its impact.”  About 87% of the DOE loan portfolio is low-risk.

You’d never know from the Wired piece that in 2010, America was a net exporter of $1.9 billion in solar products.   You’d never know that the U.S. solar industry grew 100% in 2010 and another 100% in 2011, making  it perhaps the “fastest growing” industry in America.

How does Wired make the case that the solar industry is a bust when there are ”over 100,000 Americans are working in the solar Industry.”

Promise:  … In 2010, the solar industry predicted that as many as 500,000 people would be directly or indirectly employed in the US solar sector by 2016.

Reality: As we head into 2012, the number is more like 100,000. Prices for conventional solar cells have fallen 40 percent in the past year, due largely to a flood of panels from Chinese manufacturers, which have benefited from plunging silicon prices and government support. The price drop has eviscerated the US solar manufacturing industry.

Seriously.  Apparently because there is one solar study that said we would have 500,000 jobs 4 years from now, the super-fast growing industry with 100,000 jobs is a bust.  For the record:

• It is a 2011 study .
• The 500,000 number assumes a 5-year extension of the crucial Treasury Grant Program.
• The 500,000 number is based on direct, indirect and induced jobs. Induced jobs roughly double the total!

Yet Wired still had the chutzpah  to use this image as its depiction of this staggeringly successful American industry:

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Image courtesy of Bosch Solar

The structural oversupply of solar modules on the global market has driven down prices for photovoltaic panels at an astonishing pace. And new analysis shows that decline will only continue into 2012.

In 2011, the average selling price for crystalline silicon PV modules was cut in half — falling from $1.80 at the beginning of the year to $0.90 in December, according GTM Research.

With a glut of silicon now on the market, buyers are starting to renegotiate contracts downward. This could help drop the average price for crystalline silicon solar modules to as low as $0.70 a watt. Brett Prior, a senior analyst with GTM Research explains how a ramp-up in silicon production activity in 2011 will impact the market over the coming year:

In 2011, in the polysilicon industry — and the solar supply chain in general — manufacturing outpaced end-use. After a half-decade of silicon demand outstripping supply, the aggressive expansion plans finally overshot. This supply/demand imbalance will push producers to lower contract prices closer to the level of manufacturing costs at $20 per kilogram, and will force higher-cost manufacturers to exit the industry. While the solar market will continue to grow at a 10 percent to 20 percent pace in the coming years, reductions in the amount of silicon used in each module means that end demand for polysilicon will grow at a slower pace. The end result is that the current roster of over 170 polysilicon manufacturers and startups will likely be winnowed down to a dozen survivors by the end of decade.

Great news for the economics of solar projects. Not so great news for smaller, high-cost silicon producers.

Silicon is the most expensive material for conventional solar modules. When the industry faced a shortage of silicon from 2005 through 2008, the prices for solar modules stayed high. Since then, manufacturing processes have evolved to use less silicon, helping drive down the cost of production. (For more on this, see: Anatomy of a Solar PV System: How to Continue “Ferocious Cost Reductions” for Solar Electricity).

The relentless price reductions are likely to open up demand in a variety of new markets in 2012, and stimulate continued development in countries that had been written off due to steep decreases in incentives. (See: Germany Installed 3 GW of Solar PV in December — The U.S. Installed 1.7 GW in All of 2011).

Global solar PV installations for 2011 are expected to tally around 24 GW — up from 17 GW in 2010. With incentive cuts in the U.S., Germany, Italy and the UK, analysts predicted a flat or down year in 2012. But the continued price elasticity in solar PV may make 2012 yet another solid growth year — with some projecting installation of up to 30 GW of PV installations.

by John Farrell, cross-posted from Energy Self Reliant States

What if electricity cost more when the sun was shining?

Many utilities are using new electronic “smart meters” to adjust the price of electricity as often as every 15 minutes, to reflect supply and demand.  And charging more when electricity is in short supply can be good news, making investments in distributed solar power pay off faster.

Time-of-use (TOU) pricing is a different billing method for electricity, where the customer pays based on the time of day of using electricity rather than a flat rate per kilowatt-hour consumed.  The premise is that electricity is more expensive when in high demand (e.g. by air conditioners in the afternoon on hot, sunny days) and that pricing accordingly will help reduce demand.

For example, customers in Los Angeles on a TOU pricing plan have a flat rate for electricity in the fall, winter and spring.  But in the summer, they pay significantly more for electricity used during “peak hours,” when the power system is at its maximum use.  In June to September, electricity used from midnight to 10 AM (and from 8 PM to midnight) costs 4.7 cents per kilowatt-hour.  But each kWh used from 1 to 5 PM costs 16 cents. (there are other charges on the typical bill that amount to ~6.1 cents per kWh)

This pricing scheme can act as an incentive to go solar, because solar panels tend to operate at their highest capacity during summer months.  The following chart shows the solar radiation falling on Los Angeles during the various seasons.  The average insolation during June to September is 6.37 kWh per sq. meter per day, compared to 5.33 in the non-peak season.

Solar panels also tend to have higher output during the peak hours of the day.  In fact, the California Public Utilities Commission found that solar tends to have a 60% capacity factor (produce 60% of its maximum) during peak electricity periods.  The following chart from SolarStik illustrates:

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With a glut of shale gas on the market, natural gas prices continue to tumble in the U.S. And they’ll only fall more throughout the year.

According to the U.S. Energy Information Administration, average natural gas prices on the wholesale spot market dropped another 9% in 2011, falling to the second-lowest price average since 2002. And the agency expects prices to fall substantially in 2012 due to record-high inventories of supply.

In a few short years, domestic energy supply has undergone a major shift in favor of natural gas, challenging the economics of renewable energy technologies that compete directly with the resource. It’s not exactly the kind of shift that renewable energy proponents imagined. But it has helped keep electricity and heating prices low, while also shifting enthusiasm away from coal. Those are notable short-term victories — assuming renewables don’t get swept aside in the process.

The picture is mixed. Although wind development has dropped off a cliff in states like Texas, in part because of low gas prices, Bloomberg New Energy Finance believes that wind will be competitive across the board with natural gas by 2016. And in utility-scale solar, large photovoltaic projects are also keeping pace with projected prices of natural gas.

However, a study released earlier this month by the Massachusetts Institute of Technology modeled an energy scenario with and without shale gas, finding that renewables were indeed being negatively impacted:

The continued need for strong renewables prompts concerns, as the study finds that shale use suppresses the development of renewables. Under one scenario, for example, the researchers impose a renewable-fuel mandate. They find that, with shale, renewable use never goes beyond the 25 percent minimum standard they set — but when shale is removed from the market, renewables gain more ground.

We should also always remember that some of the leading (center-right) economists in the country — Nicholas Z. Muller, Robert Mendelsohn, and William Nordhaus — publishing in a top economics journal found that natural gas damages were larger than its value added for electricity generation even at a low-ball carbon price of $27 per ton. At a price of $65 a ton of carbon, the total damages from natural gas are more than double its value-added.

That means renewable energy deserves strong support by state and federal policymakers even in the face of low natural gas prices.

So will the slide in gas prices continue? Not according to some forecasts. EIA expects prices to rise again in 2013. With an increase in exports, a build out of new combined cycle power plants and continued questions about how much shale gas is actually in the ground (it’s still a lot, even on the low end of estimates), IDC Energy Insights Analyst Sam Jaffe doesn’t see how prices can stay as low as they are today:

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And the Germans did it at roughly half the price.

In the lead up to another 15% reduction in Germany’s feed-in tariff (the price paid for solar electricity fed into the grid), the German solar industry finished 2011 off with a bang — installing 3,000 megawatts of solar photovoltaic systems in December.

Let’s put those figures in perspective: In just one month, Germany installed almost twice as many megawatts of solar than the entire U.S. developed during all of 2011. Preliminary figures show Germany ended the year with roughly 7,500 MW of installations; the U.S. ended up with about 1,700 megawatts, according to GTM Research.

Oh, and I should probably mention that the Germans installed all of that solar at almost half the price. The average price of an installed solar system in Germany came to $2.80 in the third quarter of 2011. In the U.S., it was about $5.20 in the third quarter.

Why the disparity? The Germans have a much more mature solar market. The country’s simple, long-term feed-in tariff makes financing projects less expensive, and has created a sophisticated supply chain that allows companies to source product, generate leads and get systems on rooftops efficiently.

Some criticize feed-in tariffs for not creating a “market” like we imagine in the U.S. The activity we saw at the end of 2011 is representative of what happens every year in Germany: because the incentives are dropped down to meet market pricing, there is always a rush in December to install systems quickly. But isn’t that what we do in the U.S. when tax credits and rebates are about to expire?

It’s fair to criticize feed-in tariffs like those in Spain and the Czech Republic which caused an unsustainable boom before crashing down. But when looking at the numbers and pricing that the German solar market continues to post, there’s still a very compelling argument for states and municipalities to consider moderate, long-term pricing mechanisms like feed-in tariffs.