Utilities traditionally have met renewable portfolio standards with power purchases from IPPs. But new approaches are allowing utilities to build their rate bases with investments in solar...
The future looks bright for distributed PV.
Moore’s Law is a seductive but slippery concept. Strictly speaking, it refers to the 1965 observation by Intel founder Gordon Moore that the number of transistors possible in an integrated circuit doubles about every two years. But much to Moore’s chagrin, the term often is misused. “If [Al] Gore invented the Internet,” he once joked, “I invented the exponential.”
Moore’s law is casually, and often erroneously, applied throughout the digital technology sector to any exponential increase (speed, density) or reduction (cost, size) over time. Recently, the notion has ventured even farther afield and is increasingly mentioned in relation to the cost and performance of photovoltaics (PV).
“The PV buzz isn’t really analogous to Moore’s Law, which is just an engineering statement,” says Bill Sweet, editor of Spectrum, the flagship magazine of IEEE—the Institute of Electrical and Electronics Engineers. “This PV law is about costs, and of course costs depend on a lot of things. However, when you say PV Moore’s Law, you do get a lot of attention.”
On the surface the argument is simple. Global PV production grows by about 50 percent a year, so capacity doubles about every 18 months. According to the PV version of Moore’s Law, every time capacity doubles, the cost per watt comes down 20 percent. Project those gains over time, and somewhere around 2015, PV will achieve cost parity with traditional central generation.
Of course it’s not that clear-cut. PV isn’t a single technology, but an increasingly broad range of products, making any sweeping generalizations dubious. Further, government subsidies have a substantial effect on cost and proliferation.
Still, the caveats and qualifications don’t negate the fundamental point behind the Moore’s Law fixation: Every day PV technology is getting more effective and less expensive. Researchers and manufacturers may cite different numbers, but the numbers all point in the same direction.
“When we went public we made a commitment to our investors that compared to 2006 we’d reduce our installed system cost by 50 percent by 2012, and that we’d be two thirds of the way there by 2010,” says Julie Blunden, vice president of public policy and corporate communications for the solar manufacturer, SunPower Corp. “We’re on track to meet that.”
That kind of cost reduction, coupled with PV’s site flexibility and speed to market, is transforming the way the utility sector uses solar. Utilities that once reluctantly dabbled in retail solar and sun farms only to satisfy regulatory requirements are beginning to actively pursue these markets.
Moreover, even investor-owned companies are beginning to explore the potential of utility-owned PV for distributed generation. Once shunned, distributed PV generation actually may prove to be the fastest and cheapest way to expand capacity, meet renewable standards and manage peak load.
A Gradual Thaw
In the United States, distributed generation traditionally is considered, even in the public policy domain, as residential and commercial solar, and small-scale industrial combined heat and power systems. The concept