Solar energy is growing fast in the United States—largely because the technology is scaling up to serve utility requirements.
The top 10 utilities’ solar megawatts grew 66 percent from 2008 to 2009, and represented an estimated two-thirds of the nation’s solar installations in 2009. A large share of that capacity came in the form of utility-scale projects—as opposed to the traditional customer rooftop market, according to a new report released May 18 by the Solar Electric Power Association (SEPA).
And one needn’t look far to find big new solar development deals. On June 3, the California Public Utilities Commission (PUC) approved 335 MW of renewable power contracts for Pacific Gas & Electric (PG&E), including a 290-MW solar farm project in Yuma County, Ariz. The contract is with NextLight Renewable Power LLC, which is in the process of being acquired by First Solar. The solar farm, called Agua Caliente Solar, will provide power to PG&E when it comes on line with an expected 2014 in-service date.
And while PG&E leads SEPA’s top 10 rankings for 2009 with the most solar megawatts (85.2 MW) added to the grid for the second straight year, other utilities also are pushing solar forward. For example, Florida Power & Light made the list in position four, and wasn’t even in the top 10 in 2008.
For insight into how solar-technology companies are advancing their designs and scaling up for the utility market, Fortnightly looked to top gurus in the solar industry. They include:
• Robert Gillette, CEO, First Solar
• Mike Hall, CEO, Borrego Solar Systems
• Alan King, Director of National Strategic Accounts and Eastern Region Sales for U.S. Operations, Canadian Solar
• Dr. Shihab Kuran, CEO, Petra Solar
• Bob MacDonald, CEO and co-founder of Skyline Solar
• Michael Splinter, Chairman, CEO and President, Applied Materials
• John Woolard, President and CEO, BrightSource Energy
Fortnightly: What’s your company’s pitch? Why do you believe your technology is the most cost effective for utility-scale solar generation?
Kuran, Petra Solar: Petra Solar is currently constructing the largest utility-scale solar project in the country—with PSE&G of New Jersey. Last year, PSE&G contracted with us to install 200,000 of our pole-mounted SunWave systems, each capable of generating 200 watts of power for a total of 40 MW.
I can’t presume to speak for the utility, but I think there are very compelling selling points for our model of distributed solar generation. Our pole-mounted systems rely on existing infrastructure. Utilities already own power and street light poles and they employ line crews that install and maintain equipment on these poles every day. These same crews consistently install our systems in less than 30 minutes using time-tested tools and techniques. Also, pole-mounted generation eliminates the need to buy or lease acreage for larger traditional solar installations. It generates power where it’s needed; at the secondary side of the distribution grid; it avoids infrastructure upgrades and interconnection fees and it minimizes transmission costs. This reduces financial and business risks. Most importantly, with our smart energy module (SEM), we inject reactive and nonlinear power to help heal the grid. In addition, given that our SEM has built in smart-grid mesh radios, the utility gets the added benefit of deploying a smart-grid communications infrastructure with the solar deployment for practically no added cost. SunWave systems have a built-in array of grid sensors. That all allows the utility to use our systems for voltage optimization, outage detection and many other grid-reliability applications. Our installed systems cost no more than other utility-scale solar systems. However, given the shovel-ready nature of SunWave, coupled with the smart-grid and grid-reliability benefits, we end up with the best ROI and the most cost-effective utility-scale solar technology option on the market today. That explains why we’re building the country’s largest PV project.
Gillette, First Solar: When you look at all the factors involved, I would have to say the most affordable, proven, utility-scale solar option available today is First Solar’s thin-film photovoltaic (PV) technology.
I say this for several reasons: We were the first solar company to break the $1 per watt barrier for manufacturing PV panels. We did this in early 2009, and at the end of the first quarter of this year, our per-watt cost was at 81 cents and continuing to fall. No one else has a lower cost per watt. In addition, we are significantly lowering our balance of system cost from about $1.40 per watt at the start of last year to a targeted 91 to 98 cents per watt by 2014.
We also have the manufacturing capacity to meet utility-scale demand. Our current annual capacity is about 1,300 MW, we have eight new manufacturing lines beginning production in Malaysia in the first quarter of 2011, and just last month we announced a significant expansion of our existing plant on Frankfurt-Oder in Germany that will be operational in the fourth quarter of 2011. So we have planned manufacturing capacity growth of 780 MW, and by the end of 2011, we will have the ability to manufacture 2.1 GW per year of PV panels. More than 2 GW of our panels have been installed worldwide.
We’ve also demonstrated repeatedly that we can help build or supply utility-scale projects, including: the 53-MW Lieberose facility in Germany; a 30-MW project we just sold in New Mexico; a 48-MW project under construction in Nevada; and an 80-MW project in Canada that will be the world’s largest PV project when completed later this year.
Finally, we also have a sizeable development pipeline with 2.2 GW already under power-purchase agreements that include three large California facilities: the 550-MW Desert Sunlight project, the 550-MW Topaz Solar project, and the 300-MW Stateline project. We’re in the utility-scale business, and we’re here to stay.
So, we have a proven product at the lowest cost per watt, we have utility-scale manufacturing capacity, and we have a team that’s experienced in utility scale development and project construction. I’m not saying other solar technologies don’t have some good attributes, and some of them have parts of the overall equation in place, but for a utility looking for a reliable technology that is working at utility-scale, I think you have to say thin-film PV is the proven option.
Hall, Borrego Solar Systems: Generally we believe that photovoltaic technology represents the best option for utility-scale solar generation. Just a few years ago, many wrote PV off as an option for utility-scale generation as a result of the high upfront capital cost. Two things have happened since then that I believe had led many to reconsider, and for PV to move to the top in terms of viable technology. First, is that the cost of the PV modules has dropped by 50 percent since Q3 2008. The drop was a result of increased availability of poly-silicon—the feedstock material—both because of increased production and slower rise in demand. The second thing that has happened is that the investment tax credit (ITC) has received a long-term extension. This tax credit allows an investor to recoup 30 percent of the upfront investment. PV is an ideal technology to take advantage of this tax credit as it has substantial up-front capital cost, but has lower ongoing operation cost and risk—expenses that don’t go into the tax-credit basis.
Within the PV umbrella of technologies, the market share will go mostly to standard efficiency crystalline photovoltaic modules—produced by many of the world’s top 10 PV producers—and thin film. To date, the CdTe technology has emerged as the dominant player. Amorphous silicon technologies seem to be having a harder time competing as a result in the sharp decline in price for crystalline PV.
All in all, PV has emerged as a competitive priced low-risk technology. Ultimately it will take a large portion of the utility market share that many thought would go to solar thermal.
Woolard, BrightSource Energy: We’ve selected to use a power tower approach for our solar thermal plants because the technology offers cost, efficiency and environmental advantages.
Our decision to use a power tower stems from our engineering team’s experience designing and building the nine Solar Electric Generating Stations (SEGS) in California between 1984 and 1990. These nine plants still represent more than 80 percent of the commercial solar thermal energy produced in the United States today. While built durably, the SEGS plants’ trough technology has efficiency and cost limitations that are solved during the evolution to the Luz Power Tower (LPT) 550 technology.
The power tower approach is simple—thousands of mirrors track the sun in two dimensions and reflect the sunlight to a boiler sitting atop a tower. When the concentrated sunlight strikes the boiler’s pipes, it heats the water inside to more than 1,000 degrees F. This superheated steam is then piped from the boiler to a standard turbine where electricity is generated. To conserve water, the steam is air-cooled and piped back into the system in a closed-loop, environmentally-friendly process.
Our LPT 550 technology consistently achieves more megawatt hours per MW of installed power equipment. It’s more efficient and cost effective than other solar thermal technologies for a number of reasons. For example, by creating steam directly from the sun, we avoid the use of oil or another intermediary that can harm the environment and result in parasitic energy loss. Our heliostats follow the sun on two-axis, tracking its location throughout the day and throughout the year, achieving a much higher efficiency than other solar thermal technologies. Our plants can be fitted with auxiliary boilers, providing a reliable electricity supply during solar and non-solar hours and extended periods of solar disruption. Finally, we have lower capital costs due to commodity-based inputs; heliostat mirrors are simpler to manufacture and less costly to install than parabolic mirrors. Also, LPT requires very limited concrete foundations and fewer pipes and cabling.
LPT is also more environmentally-friendly than other solar thermal technologies. We use air instead of water for cooling—dry cooling—which reduces water consumption by 90 percent; up to 25 times less than other solar technologies. LPT’s higher temperatures allow a more efficient use of dry-cooling compared to other solar thermal technologies. LPT also has a far smaller impact on habitat and land because it places individual poles directly into the ground. By doing so, we can use land with grades of up to 5 percent, reducing extensive land grading found on sites that use other solar technologies. And because we don’t extensively grade the land, our solar fields allow vegetation to co-exist within the plant. The technology also allows us to follow the land’s natural contours, limiting disruption to sensitive habitat and ecosystems.
King, Canadian Solar: Crystalline silicon currently provides a proven track record of performance and bankability due to its established position in the solar marketplace and overall simplicity of installation. It’s the most cost-effective product option for utility-scale solar installations.
MacDonald, Skyline Solar: Because government incentives are so important in determining cost of a solar project, the answer really depends on where the project will be located. What’s true everywhere, though, is that risks are minimized with scalable projects that can be funded and brought on-line in manageable phases. The lower risk profile of concentrating PV is—or should be—much more attractive to utilities than high-risk concentrating solar thermal projects. A 50-MW CPV plant can be built and interconnected in five to 10 phases, whereas a similar-sized CSP plant would have to be built and funded as a single project. The permitting and land acquisition issues are much more manageable with a phased approach.
Fortnightly: What utility-scale projects is your company presently involved with?
Hall, Borrego Solar Systems: We’re working with a number of clients on the development of utility-scale projects. Our role in most of those projects is that of a consultant or co-developer. Our EPC business is primarily focused on distributed generation projects, but we have a consulting business that helps developers with technical and financial feasibility for larger scale projects. Most of the utility-scale projects we’re working on are 5- to 50-MW solar farms using crystalline silicon PV technology.
Woolard, BrightSource Energy: We’re actively developing a number of sites—more than 4 GW worth—in the U.S. Southwest. Our first U.S. project is the Ivanpah Solar Power Complex, located in eastern San Bernardino County, Calif.
The project will produce approximately 400 MW of power, roughly one sixth of the 2,610 MW of contracts we have with PG&E and Southern California Edison. We expect to receive final permits this summer and begin construction in the fall. Ivanpah will be the first commercial-scale solar thermal power plant constructed in California in nearly two decades. Once constructed, Ivanpah will represent the world’s largest solar energy project, nearly doubling the amount of solar thermal electricity produced in the U.S. today. It will also nearly double the amount of photovoltaic rooftops installed in 2009.
The Ivanpah complex will consist of three individual power plants that will collectively produce enough solar power to meet the demand of more than 140,000 California homes and reduce CO2 emissions by more than 400,000 tons a year. The first plant could be constructed and supplying power as soon as the end of 2012, with the other two plants constructed and put into operation as soon as possible. The three plants at Ivanpah will be the first of 14 plants we will build by 2016 to provide power to our customers Pacific Gas & Electric and Southern California Edison.
The project will provide 1,000 union jobs at the peak of construction, and earnings of more than $650 million over its 30-year lifecycle. It will also produce $400 million in local and state tax revenues over its 30-year lifecycle.
King, Canadian Solar: We just completed a solar farm in Italy, bringing utility-scale solar power to the Umbria region, and we have numerous projects installed around the globe from a 3.5-MW solar array in Germany to a 15-MW installation in Mahora, Spain. Canadian Solar is currently involved in the bidding and design process of several hundred megawatts of utility-scale projects in the United States with a group of high-quality EPC companies.
Kuran, Petra Solar: In addition to our $200 million contract with New Jersey’s PSE&G, Petra Solar is also engaged with more than 40 other utilities around the country and the world that are interested in our pole-mounted, distributed solar generation model. Right now, we have demonstration projects with utilities in New Jersey, Florida, Texas, Hawaii, Ohio, New York, and Ontario, Canada. Many other locations will be announced soon.
MacDonald, Skyline Solar: We have bid on three projects in the Western United States. We have also been approved for Phase 1 of the DOE loan guarantee program and are currently completing our Phase 2 application.
Gillette, First Solar: Under development right now, we have nearly 2,000 MW of projects: 155 MW in Canada; 48 MW in Nevada; 52 MW in New Mexico; 1,630 MW in California; and 30 MW in China, with plans for 2,000 MW.
Fortnightly: What primary technology challenges affect the performance and cost of utility-scale solar generating facilities?
Gillette, First Solar: Many believe that the primary challenge for utility-scale solar is intermittency or the variable nature of solar energy electricity production. But with the right investments in the transmission grid, this shouldn’t be a significant challenge for most utilities, as the production of solar energy matches peak customer demand. Weather patterns are predictable, and with modern information technology, variations in solar energy caused by clouds can be predicted with great accuracy and dealt with by schedule coordinators. Even in Germany, which isn’t known for a constant, sunny climate, the integration of large amounts of intermittent solar energy hasn’t been a problem because Germany has made the right investments in its transmission grid.
From a policy perspective, which is as important and perhaps even more important to solve than the technology challenges, we need to create viable long-term markets for solar electricity, and the best way to do that is through government policy initiatives, such as feed-in-tariffs or guaranteed rate structures for a specified period of time. These types of relatively short-term investments have been used successfully in other countries—most notably Germany—to develop viable long-term markets. In the United States, California’s renewable portfolio standard is providing a similar public policy stimulus to grow the solar market from a subsidized phase to a sustainable scale.
Woolard, BrightSource Energy: The challenges of utility-scale solar production vary by technology. For PV, the challenge is reaching higher capacity levels because these technologies inefficiently convert the sun’s rays into energy. This low capacity factor means that projects must be sized larger to achieve the same level of output of power as more efficient technologies, like solar thermal. Of course, this means that the cost of these types of PV plants will also increase as more inputs are added. It also means more land will be needed to produce the energy. PV must also find ways of making the energy produced at utility scale more firm and dispatchable. As intermittent renewables become a greater part of the mix, the issue of reliability will increasingly become a greater focus for utilities and grid planners. Those technologies that can offer low-carbon, cost-effective and reliable resources will ultimately serve as a primary power resource.
Along the same vein, solar-thermal providers must also continue to drive efficiency improvements in order to lower the overall cost of solar. The Holy Grail in solar thermal power production is creating high temperature and high pressure steam. By reaching these high temperature and pressure levels, the solar thermal power plants experience tremendous efficiency gains because they can follow the requirements of the latest turbine technologies. An often used analogy can be found in the computing industry. The most efficient solar power plants must be like today’s leading personal computers in that they must use the latest turbines, the equivalent of the most efficient microprocessors in computing. Otherwise, these plants would be functioning like a modern computer with a 486-MHz microprocessor, where all of the efficiency and power advantages are lost.
MacDonald, Skyline Solar: The non-dispatchable nature of utility-scale solar is a significant hurdle. By combining large-scale CPV with short-term energy storage solutions, solar will be better able to deliver the reliable performance that utility customers depend upon. Another challenge is reducing the complexity and cost of installation. By pre-engineering our systems, Skyline moves labor hours from the field to the factory. At the same time, our systems are remarkably easy to install.
Hall, Borrego Solar Systems: Standard non-concentrating PV is a proven technology and has the lowest risk and longest track record of all of the solar technologies. With utility-scale PV systems using crystalline silicon technology, the biggest risks are likely with the mechanical tracking system and the inverter, which converts DC to AC power. However, I don’t believe either of these risks are sufficient to be an obstacle to financing a project. Other technologies have greater challenges. For example, PV systems that use concentrators have issues related to the dissipation of heat, which many companies are trying to solve.
King, Canadian Solar: One of the biggest challenges facing the performance and cost of utility-scale power generating facilities takes place prior to construction, during the design phase, and that’s properly sizing the facility using existing design tools. It’s necessary to consider degradation factors of individual panels, inverter efficiencies, line losses and other critical sizing and design factors.
When properly sized, installed and maintained, crystalline utility-scale solar-generating facilities face minimal technology performance challenges.
Kuran, Petra Solar: The bottom-line is that we haven’t been able to make quantum improvements in the overall efficiency of PV generation. PV cells have gotten cheaper, but they’ve become only incrementally more efficient. With that as a given, however, I think there are more technological challenges with traditional solar than with our pole-mounted model. Traditional solar has yet to prove itself an asset on the grid; it tends to be a liability. Solar today lacks the smarts to interact intelligently with the grid. By making it smart, we make it contribute to the reliability of the grid. According to a recent study by Navigant Consulting, coupling solar and smart grid enables up to 70 percent more deployment of solar.
Fortnightly: What do you see as the most promising areas of near-term development for solar technologies? How are they addressing performance and cost challenges?
Hall, Borrego Solar Systems: The cost of solar has dropped substantially over the last two years, and we expect to see another 10- to 20-percent drop in system costs over the next two years. Costs are coming down as a result of manufacturing scale as well as better practices and technologies being used in system integration. A large barrier to adoption right now is the small number of utility-scale plants operating in the United States, and the lack of track record. Once the technology has a real track record at the utility scale, the cost of capital will drop substantially, making the energy price significantly more competitive.
King, Canadian Solar: One of the most promising areas of near-term development in solar is technology that eliminates the need for string inverters; such technology reduces the space required for string inverter placement, improves the quality of the power produced and lowers the overall cost and complexity of the installation.
Integrating these more advanced monitoring technologies will maximize uptime of systems and help control O&M costs.
MacDonald, Skyline Solar: We see upgradability, a core feature of Skyline’s high gain solar systems, as an extremely promising feature. Many potential PV customers could save money today by going solar, but hold off because they expect cell performance to improve in the next few years. Our upgradable design solves that problem—customers can go solar today without having to worry about missing out on future technology improvements. Five or 10 years from now, when much more efficient and affordable cells are available, our customers can easily swap out the Skyline modules for new ones at a reasonable cost. Our reflectors, posts, trackers and other non-silicon components won’t need to be changed. In the United States, we expect customers will achieve a good return on an upgrade even if the ITC has reverted from 30 percent to 10 percent.
Gillette, First Solar: For us, most promising is the continued drive to reduce costs in our modules and balance-of system components. The bottom line is that solar electricity has to be clean, sustainable and affordable—if solar isn’t affordable, it ultimately won’t survive in the marketplace, so we have a relentless primary focus on ensuring the levelized cost of energy from our proven technology is competitive.
Of course we’re looking at technological improvements and enhancements we can make—and we’re even looking at other technologies—but we believe the most promising near-term thing we can do to support and promote solar is reduce cost, and continue to prove solar electricity can reach grid parity and compete directly with traditional generation and other alternative sources.
We’re in the utility-scale solar business, and we recognize what that requires and what the market will tolerate, and it’s not promises—it’s delivering power reliably and affordably, so that’s what we are focused on.
Kuran, Petra Solar: The most promising area of emerging development lies in the coupling of solar generation and smart-grid technology. If we are to succeed in creating utility-scale solar generation, first we must be able to meld new power sources into our existing electric grid in a transparent manner. Second, we must ensure we’re moving toward managing that grid effectively and efficiently, in ways that haven’t been done heretofore. We’re on our way to making solar generation an integral part of the grid.
In terms of addressing cost challenges, there’s no instant solution. But in the longer term, as we increase the level of solar utilization, we ultimately will lower the cost of energy generation.
Woolard, BrightSource Energy: Our efforts at the Solar Energy Development Center in Israel’s Negev Desert represent a very critical step in the evolution of solar performance and cost. The facility, a 6-MW thermal power tower system, is producing the world’s highest quality steam from solar—as measured by high temperature, verified by independent engineering firms. This breakthrough is being well-received in the marketplace as indicated by Bechtel’s joining as our commercial engineering partner on the Ivanpah project, as well as the DOE’s $1.4 billion conditional loan guarantee for Ivanpah, and Alstom’s decision to invest $55 million dollars in BrightSource as part of our recent more than $150 million equity financing round.
Fortnightly: What are the most interesting ‘blue sky’ technologies for utilities to watch? What advancements might change the game for solar energy in the next five years?
Hall, Borrego Solar Systems: There are a number of companies working on PV technology using CIGS [Copper indium gallium (di)selenide]. This material has the potential to be both low cost and high efficiency. Unfortunately, many companies have been working on this technology for decades and there’s still a very small volume of product commercially available. Much of what’s available isn’t competitively priced. Also there are a number of companies working on new, more efficient ways to convert the DC power to AC. These range from producers of micro-inverters to novel approaches to max power point tracking (MPPT). To date, these technologies have been used primarily on smaller-scale distributed generation systems, but as their cost decreases and reliability improves, they could be game changers on the utility side as well.
Kuran, Petra Solar: This is truly blue sky, but if we were to see significant cost reduction of gallium arsenide (GaAs) PV cells to where Si cells are today, then grid parity would be well within reach. That would almost double today’s PV module efficiency to the 35 percent to 45 percent range. A similar reduction in the cost of the balance of the systems is required. Alternatively, a significant value add to the balance of the system can enhance the ROI and would change the game. We’re focused on the latter.
MacDonald, Skyline Solar: We’re excited about several technologies. At the cell level, we think there will be great advances in performance and the potential for significant cost reductions. In terms of energy storage, we’re bullish on flow batteries. These are very large chemical batteries with liquid electrolytes. They can help with the dispatchability issue mentioned earlier, and also will help store energy produced in the morning and deliver it to the grid in the afternoon or early evening when it’s more valuable. We’re participants in a flow battery RD&D grant proposal under consideration by the California Solar Initiative.
King, Canadian Solar: I don’t see any blue sky technologies that will be commercialized, bankable and ready to install in the next five years.
The most important game changers for the solar industry in the next five years will be political and financial, not technological. Once we in the United States have overcome the limitations placed on the industry by ineffective energy policy and an indecisive Congress, market competitiveness will force manufacturers to constantly improve efficiencies, take costs out of systems, embrace and fund new technologies and bring them to commercial reality.
Woolard, BrightSource Energy: The optimistic news is that we don’t necessarily need blue sky technologies. We have the capabilities today to offer cost-effective and reliable solar power. As we look forward, storage enhancements offer additional opportunity for solar. Solar thermal storage technologies—like molten salt—have been commercially proven. Over the next five years, we’ll see the cost of these technologies decrease and enhance our ability to provide more solar energy throughout the day.
Gillette, First Solar: Energy storage is a key to the future. We need greater ability to store electricity reliably. It’s a key to the increased use of alternatives and to reducing our dependence on oil. But as much as I support technology and technological advancements, I also believe we need to maximize what we have now. We have to work to improve our existing technologies, make them more sustainable and affordable, and maximize the benefits to society. We need blue sky and we need reality, and we need them in balance.