Fuck it

Onkar is always bringing up The Daily Show. Today I found the time to catch an episode. QOTD...

"Sixty percent of the personal bankruptcies in this country come from medical bills."

Steven Brill

By bestest and most fabulous friend and ex-roommate Dave was on a work trip in Florida. He had chest pains that he figured were indicative of a flu but then they got harder. He happened to be working for a multi-millionaire who suggested his heart doctor surgeon next-door neighbor take a look at him. So the doctor friend does a quick survey of Dave and recommends an immediate emergency room visit. Well shit. Dave can't pay for an ER visit. This is his first week back at work after 3 years of industry funk. I talked to him on Skype. He was in tears - real, I'm gonna die tears. He told me he was worried of death. Fuck. Breath. Breath. He told me the plan. I put in for this insurance. I have to wait until the end of the month before I become qualified. I'll go see them then and they'll do all the things I need right now. Dave made it through the month and made it down to the hospital and is alive and well... and not bankrupt. In other roommate news. This story will fuck you up. My last month of the Navy was April of 2002. I was closing out six years. My boat had an ops voyage the week I was getting out so I was given a temp office in Bremerton. I'd show up at 8 a.m. They'd chat with me a bit about my plans and then send me home. Work situation check. I was living with a couple I'd known for a couple of years. I thought I was going to be there for a couple of weeks but Heather came up to me one day just as she was getting home from work and she said I had to go. I said.... Right now? She said, no but as soon as you get discharged. I said OK, OK, done... I'll be out of here day after tomorrow. Imagine that wacky situation on the day before your last day of prison. I don't have to imagine. So two days later I'm back in San Luis Obispo... SLO we call it... Not for efficiency in the classic sense of the word... SLO is a magical place-time. I arrive in SLO flat footed. I end up in a roommate situation with a guy by the name of Jeff and a girl by the name of Sarah. Yesterday I read the news about how my ex-roommate's twin brother was involved in a shootout double cop murder. I look at the mug shot and it's my ex-roommate. I think I actually met this guy once. Weird, Freaky, Crazy... That's my Seinfeld roommate story for the day. Here's my nightmare. Sixteen days ago Chris Dorner had a shootout walking distance from my Mom's house. Dear God... WTF... Would you hold off on that shit comes in three cliche. So I'm going to Morocco tomorrow for twelve days. P.S. I'm tired... This formatting situation sucks but Fuck it.

Greater Greed Wins



How the fuck did a blind woman with
a weapon become the mascot for
 justice? I think it's a big trick.

By the fifth centruy B.C., many parts of Greece were almost totally denuded of trees. Plato compared the hills and mountains of his native Attica to the bones of a wasted body: "All the richer and softer parts have fallen away," he lamented, "and the mere skeleton of the land remains."

With wood scares and the sources of supply so far way, fuel prices most likely rose. Fortunately, an alternative source of energy was available - the sun - whose energy was plentiful and free*. In many areas of Greece, the use of solar energy to help heat homes was a positive reponse to the energy shortage. Living in a climate that was sunny almost year-round, the Greeks learned to build their houses to take advantage of the sun's rays during the moderately cool winters, and to avoid the sun's heat during the hot summers. Thus solar architecture - designing building to make optimal use of the sun - was born in the West.

Ken Butti & John Perlin  - A Golden Thread

In the Northwest, the dams produced so much cheap hydroelectricity that hundreds of thousands of people who flocked to the region during and after the war did not bother to insulate their homes. Insulation was expensive; electricity was dirt-cheap. In 1974, $196.01 worth of power from Con Edison in New York would have cost $24 if purchased from Seattle City Light. For Decades, the Norhtwest and British Columbia have had the highest rates of electricity consumption in the World.

Marc Reisner - Cadillac Desert

"...decades of subsidy, now amounting to over 90% of cost of production have destroyed all consumer incentives to construct and operate buildings efficiently."

Mike Wood describing situation in Kuwait

The state of the matter is as follows: Where coal is dear, but there are other reasons for requiring motive power, elaborate engines may be profitably used, and may partly reduce the cost of the power.

But if coal be dear in one place and cheap in another, motive power will necessarily be cheaper where coal is cheap, because there the option of using either simple or perfect engines is enjoyed. It is needless to say that any improvement of the engine which does not make it more costly will readily be adopted, especially by an enterprising and ingenious people like the Americans. AMERICA... FUCK YEAH!

William Stanley Jevons - The Coal Question 

These quotes speak to the mechanics and economics of energy. They tell the story of energy past, present and future. A story of oscillation driven by competition. A story of fundamentals.

Leges sine moribus vanae - Laws without morals are useless

This quote speaks to policy. It's not advice - it's a warning. A policy bereft of reason will lead to uselessness. I see a lot of uselessness these days in energy policy. I have faith the situation is temporary. 

Greater greed wins.

Mac Bandy - Today
 

To the Bang Bang Boogie

And They're Off - January Installs in Germany

274.67 MW were installed in Germany last month. In a rather surprising turn the sub-10 kW category actually installed over 25% more power this year than last despite the FiT reduction from 24.43 to 17.02 cents/kWh in the twelve months between January of 2012 and 2013. All other FiT tranches showed reduced installations in 2013 compared to last year but not so bad as to cause alarm. It's still early but my first impression of the numbers leads me to believe around 4.5 GW will be installed in 2013. That said, I'm optimistic that these relatively healthy installation figures will strengthen as the year progresses.

From Profit to Savings

2013 is a wildcard transition year for Germany. The market is shifting from a profit driven market to a savings driven market and, although it depends on the customer, there are more savings to be had in 2013 than there was profit to take in 2012. How is this possible? Well, system prices have fallen from 2100 to 1600 Euro/kWp in the last 12 months and electricity rates have climbed from 26 to nearly 30 cents/kWh. Even with 30% lower FiT rates, the NPVs, IRRs and MIRRs are all higher today than they were 12 months ago. From this we could naturally conclude that installations are going to be higher in 2013 compared to 2012. This would be a fair conclusion if it weren't for the loss of the +10 MW uber tranche. It's really hard to say what's going to happen. 4.5 GW makes sense. I want to say 6 GW but it's really hard to say.

There will be Blood

The reduced FiT has taken a toll on solar installers. Hungry people make hungry decisions. The profit motive is going to drive photoelectric installers into the space and water heating business. They'll do this by partenering up with HVAC companies and offering heat pump installations to photoelectric customers. It's a certainty that the solar thermal businesses in Germany are going to take a bath.

A Letter to Dr. Volker Quaschning

Greetings Dr. Quaschning,

I've attached an excel spreadsheet I built to help me study the economics of solar. It calculates standard metrics like Net Present Value, LCOE, IRR, MIRR and so on. See the Input page at the beginning of the worksheet for the calculator. I've followed the German market for many years and I've found that certain metrics tend to stay in bands. For example, you'd expect the NPV of a solar power system to be 1000 +/- 500 Euro per KW installed. The Modified Internal Rate of Return is another metric that tends to stay in a band around 10%. As you know, the FiT committees use these target bands to reset FiT rates when module prices change.

Interestingly, I've found that if you project the FiT forward from the current price down to 10 or even 5 cents/kWh that it's possible to maintain relatively attractive investment returns that stay in the required bands so long as the self-consumption rates can be pushed up to around 70% - my calculation assumes 30% displacing electricity and 40% displacing natural gas for heating. It's my understanding that 30% electrical self-consumption rates are rather normal. If there was trouble reaching this threshold an energy management system could easily do the job. As far as the 40% of generation used to displace fuel goes, I think the use of heat pumps for augmenting space and water heating would do the trick.

Do you think there's a problem with the conclusion that low FiTs can still be profitable if you have high self-consumption rates? I've used references for all my input data and I'm running two independent calculations to arrive at my conclusions.

If my conclusion is correct then I'm curious why organizations like BSW and people like Hans Josef Fell aren't shouting from the hilltops. I think it would be better to quickly transition away from relying on a politically charged Feed in Tariff and instead let the economics of PV support PV? You could set the FiT at the average day time wholesale rate or calculate a Value of Electricity Tariff. To me this would be very exciting - an engineering driven solution to a problem. No more political circus. The rest of the world would surely follow.

I have one other quick question for you. Do you know why BSW is promoting the coupling of PV with battery systems rather than heat pumps? My feeling is that batteries are much too expensive and not flexible enough. It seems to me that BSW is shooting themselves in the foot.

Respectfully,
Photomofo

Dear Photomofo,

PV systems for heating purposes strongly compete to solar thermal systems.
BSW ist also the organization of solar thermal industry in Germany not only for PV.

Kind regards
Volker Quaschning
 
Hello Dr. Quaschning,

This is my conclusion as well. I understand the logic but if you have two horses in a race no good comes from handicapping the stronger. Thank you for confirming my suspicion. I believe BSW will be forced to change their stance within a matter of months.

Respectfully,
Photomofo

EPE Update - March

Economics of Photoelectricity - March Update

Lots of new stuff...

I added two particularly interesting things to this revision of  EPE.

#1. There's now a VBA calculation that runs parallel to the excel based calculations. If you go into the VBA screen you'll see the algorithms.
#2. I added self-consumption calculations of thermal energy offsets. This added element allows for the estimation of self-consumption scenarios divided between electricity and heat.

By a show of hands... How many people understand what I'm talking about here?

 

Don't be afraid. I'll try to break it down even though it's bed time for me. A photoelectric system makes electricity right. Electricity can do lots of stuff. Run blenders and blow-dryers, dodads, thingies, whatsits, flumbobs and so on.

Big picture there are electrical appliances that need power and heating applications that need power. The electrical appliances can only use electricity for power but the heating applications can use electricty and/or some sort of fuel for power - most likely natural gas but there are dozens of other possible fuels. Electricity (Fuel A) has a different price than heating fuel (Fuel B). Now, the way I set the spread sheet up is that in addition to self-consumption that displaces electricity now there are calculations that look at self-consumption which offsets fuel.

You set a price for electricity (fuel A) and you set a price for fuel B. These prices are then used to quantify the profitability of a solar power system that offsets fuel A & B separately.

OK... Maybe this still doesn't make sense. I'll read it in my morning and try to make it flow better. Good Night Sweethearts.

Thoughts on Germany

Time for solid food.

Ironic for Altmaier to call for retroactive FiT cuts in the name of solidarity while industrial customers sit the game out. A small surcharge on industrial electricity use would generate several hundred million per year that could help dilute the surcharge costs. That seems equitable to me considering renewables have helped push down industrial electricity prices over the last several years. This measure would give the FiT architects an extra 12 months of breathing room to reduce a problem that is already shrinking. Maybe Altmaier will be booted by then. He sure isn't making any friends.

Also, if you were so concerned with cost control wouldn't you zero in on off-shore wind? There's a lot of near term spending there. On-shore wind is still growing at a good clip so there's no worry of losing all the industry's momentum.

In related news, BSW has some near-term choices to make. Their support of solar thermal technologies is now bordering on self-destructive. It's one thing to suggest better support policies for solar thermal which has gotten the short end of the stick for years but you don't make it up to solar thermal by promoting sub-optimal policies for photoelectrics. I'm speaking specifically to BSW's promotion of  batteries so that photoelectrics don't encroach on solar thermal's territory. BSW should be promoting self-consumption and the easiest way to do that is to focus on space and water heating - not chemical storage. The math is clear in three dimensions. This is a tough line for BSW to walk but it's honest. If we optimize around self-consumption the industry can rapidly wean itself off the FiT. This eliminates the solar surcharge issue and provides transparency for the industry.

See: Solar Thermal is Dead for an expansive drumming of solar thermal.

Lights Mark the Spots - Everybody Loves Free Shipping

 



What spots you ask? Well... the spots to install photoelectric systems. This is basically a load map that shows you where people use electricity. See all the dark in the west of the US? If you install solar there you need to ship it - AKA transmit it. If you install solar right on top of the lights you don't need any transmission. So you see... Lights mark the spots to install solar and avoid shipping charges. Everybody love free shipping. I don't see a problem.  

Dear Mr. President

Hello Mr. President

 

I joined the Navy in 1996 to learn about nuclear power. After the Navy I went on to work at XYZ Power Plant in my home town. A few years later I got married, moved to 123 and found a job operating hydroelectric power plants. I'm a skilled power plant operator. I watch numbers, listen to my equipment and try to keep things working.

Despite my conventional experience my passion is solar power - photovoltaics specifically. I've watched the solar industry grow from a 1 GW per year market in 2004 to a 32 GW market in 2012. That growth wasn't driven by US policy - it was driven by European and Chinese policy. I know the US can do better.

The problem with solar policy in the US is that state and federal governments are blindly supporting the technology with money instead of engineering. If you are in Germany, Belgium, the Netherlands, the UK, France, Italy, China or Australia you can buy a PV system for X. The same system in the US will cost you 2X. The difference in costs between the US and the rest of the world is policy engineering.

Better Policy looks like...

1. The US needs to fix the ITC. This will save the government billions and encourage healthy competition within the industry. I personally think we should start phasing the ITC out in steps ASAP but we could also put into place price caps on the ITC benefit. Either way should work. Note that the ITC for wind already has a price cap so you could use that as a reference if you decide to go that way.

2. The states need to curtail the use of variegated support policies and, within reason, harmonize their support. Louisiana and Florida for example hand out support money based on a budget - once that budget is exhausted (day 1) the industry goes into hibernation until the next budget. That's not good engineering. We need policies engineered to work all year long.

3. FERC needs to issue an order mandating that all US utilities set a Value of Electricity Tariff (VET) for solar backfeed. This will establish a price benchmark that can be used to build contracts between utilities and individuals and/or businesses installing PV. We need this price benchmark. If you have a value based price benchmark it makes policy engineering a whole lot easier.

4. Focus first on the states that matter. States with high electricity prices, congested networks and plentiful sunshine in that order.

5. The All of the Above rhetoric doesn't work. Focus on the best of the above. As far as renewables go there's wind and solar and that's it.

6. Halt the duties on Chinese solar products. They are counterproductive.

7. Most of all. Don't throw money at the problem. Reduce the problem. Can we make the product tax free? That's better than offering a tax credit on a taxed product. Can we minimize/eliminate registration fees? Where can we reduce hassle? What do we need to grease to make things easier. Use carrots and sticks, bribes and bricks to get everybody on board.

I know I've used a lot of jargon here but I hope some of this gets through.

Respectfully,

Photomofo

Neologisms

Truman's renovation of the White House - 1950.

From this day forth Value of Solar Tariffs will be known as Value of Electricity Tariffs...

Value of Electricity Tariff (VET)... OH yeah... America! Pour on the patriotism baby... pour it on... god damn that's nice... so nice... 

18 KW Light

PowerRouter

Unique solution for optimal use of self-generated solar energy

With energy prices going up and feed-in tariffs going down, self-consumption of solar energy is becoming more and more attractive. By storing surplus solar energy in batteries for later use the self-consumption of solar energy can be increased up to 70% (compared to 30% with a standard inverter). By using most of the self- generated energy at home rather than exporting it to the grid, energy bills can be reduced and system owners can become independent from rising energy prices.

Average Monthly Electricity vs. Energy Prices in Germany - October 2010 to Present

*Average Electricity Prices come from EEX. The Day values come from averaging Hours ending 6 to 18. The Night values come from averaging all other hours.

*Coal sources and assumptions: Price/MT comes from BGR. Energy density is assumed to be 23700 BTU/kg (23.7 mmBtu/MT). Heat rate is assumed to be 8.53 mmBtu/MWh. The graph shows the cost of the Coal to produce a MWh.

*Gas sources and assumptions: Price/mmBtu comes from World Bank Pink Sheets. Heat rate is assumed to be 5.69 mmBtu/MWh. The graph shows the cost of the Gas to produce a MWh.

Spot electricity prices don't tell you what contract prices are but they certainly point you in the right direction. If all my conversions are correct it appears the natural gas plant operators are in a tough spot - nothing that a few thousand fracking wells couldn't fix.

The graph also shows that, despite what the green rags would have you believe, the drop in wholesale electricity prices since late 2010 is likely due to the 25% drop of coal prices over the span.

Statistics are like Speedos

Cost, not capacity, is the crucial statistic for renewable energy

Mac Bandy

Genius shows you the steps. It doesn't climb them.
Ridiculous can be amazing.

Retail Electricity vs. FiT Rates vs. LCOEs in Germany

Average Price vs. NPV vs. MIRR Trends in Germany

*All averages are capacity weighted
*Assumptions: 11 Euro/kWp O&M with a 2% inflation rate, .50% degredation rate, 30 year system life, replace inverter in year 15, replacement cost 150 Euro/kWp, 1% Electricity price inflation rate, 10 cents/kWh post FiT renumeration rate, 20% self-consumption, 10 year loan term, Linear depreciation - 10 year, 4.5% discount rate
*Self-consumption kicker profits have not been calculated yet - this will shift the NPV and MIRRs up.
*System costs, interest rate, percentage financed and kWh/kWp performance come from data set.

QOTD

Macquarie says rooftop solar juggernaut is unstoppable

“Traditional wisdom suggests that steep subsidy cuts can bring the solar build-out under control again,” the Macquarie analysts note. “We disagree, though, as the ever-increasing prices for domestic and commercial customers as well as rapid solar cost declines have brought on the advent of grid parity for German roofs. Thus, solar installations could continue at a torrid pace.”

See Saw Scene

Back in the days of yore many factories were built with sawtooth roofs like the the one seen to the right. The idea of the roof design was to let diffuse light into the building to minimize the need for expensive artificial lighting. What happened to all the sawtooth roofs? Well... Once artificial lighting got cheap enough it no longer made sense to spend the extra money building a sawtooth roof.

There are many historical examples of solar energy sources being supplanted by alternative fossil fuels. Here's a short list.

• Natural gas displaced solar water heaters
• Electric pumps eliminated wind driven pumps on farms
• The Cheap Energy Revolution resulted in many buildings becoming less efficient (particulary noteworthy in the Pacific Northwest)

These days we're seeing a new twist on this old theme.

• Photoelectrics are displacing solar water heating systems
• Photoelectrics are displacing building efficiency measures

Germany is running straight into both of these issues at the moment and as far as I can tell they aren't doing a very good job addressing the new status quo. It's understandable, the BSW has their hands tied to some degree. As an organization composed of all sorts of solar companies (photoelectric and solar thermal) they can't very well start advocating for photoelectrics to take over the water heating market. Unfortunately, this is exactly what they should be doing. Water tanks are the most cost-effective device on the planet to store solar energy. Rather than focus on the low hanging fruit BSW is advocating for battery storage - an inappropriate option at this stage of development. Meh... Whaddaya gonna do? They'll figure it out.

You Can't Eat Your Song and Dance Part 2

 

The developed world subsidizes farmers at the rate of $1 billion per day to grow crops, often resulting in excess food which is stored in warehouses. This creates a huge distortion on the international food markets, forcing many farmers in the developing world out of the market and into subsisting on foreign aid. It is a travesty that the developed world uses tax payer dollars to subsidize food production, preventing otherwise viable farm businesses throughout the developing world from surviving, and making them more dependent on international aid.

Dr. Richard Swanson - A Vision for Crystalline Silicon Solar Cells - February 2004 

"We'll have weaned ourselves off of subsidies. We will have arrived as an industry."

Dick Swanson Retiring From SunPower, But Not Done - October 2012

These are telling quotes from Dr. Swanson. In the first he points out how subsidies distort international food markets. In the second he relates the end to subsidies with the beginning of an industry. Here's a gem from another SunPower alum.

Whenever Washington disrupts a market by dumping subsidies into it, Wall Street will find a way to pocket a majority of the money while the intended subsidy beneficiaries are harmed by the resulting market turmoil.
 
T.J. Rodgers - Subsidizing Wallstreet to Buy Chinese Panels  - December 2011 

I like Swanson and Rodgers but it's impossible to reconcil these statements with all the subsidy whoring that Sunpower has done over the years. It's all talk, no walk. Between the Loan Guarantees and their TPO business they can hardly say they've been free-market champions. The subsdies SunPower has benefited from are the very sorts of subsidies that Swanson characterized as travesties - i.e. these solar subsidies undermine otherwise viable solar markets.

Winter is Coming

The industrious Ant knew to prepare for the days of necessity - the Grasshopper just wanted to sing and dance and bullshit. Remember what happened to the Grasshopper? He died.

Solar advocacy has traditionally been all about singing for supper. It's time for Plan W. No more singing and dancing and no more bullshit. The EPIA, BSW, Sierra Club, Greenpeace and all the SEAs should understand by now that solar doesn't need to sing for supper anymore. Solar has a better skill - generating competiviely priced electricity. Leave it alone and let it work.

Dear Solar Advocates,

Stop manufacturing bullshit whitepaper studies and public opinion polls 
Drop the whining about fossil fuel subsidies and carbon pricing
Roll over the competition with lower prices

Respectfully,
Photomofo

20 Man Crew - 2 MW per Day

MIRR Follow Up

MIRR = Modified Internal Rate of Return: a metric used to rate the efficiency of an investment.

So I'm talking to my work buddy Mike and I say... There's this website I go to that has data in a spreadsheet type format. Would you know how to write a program that could pull data from these spreadsheets? Yeah I could do that... That would be fun. Two hours later I've got a seed program.

I took the seed and wrote additional code that directed the seed here and told it to download this and that. Go to one of the offers and you'll see what I mean about how the form is structured. Bing Bang Boom The program downloaded 7100 individual system breakdowns dating back to mid-2010. The program captured data on system price, system size, module size, module cost, expected performance in terms of kWh/kWp, financing rates, borrowing percentages and so on.

I ran the relevant data through an economic analysis that calculated LCOEs, IRRs and MIRRs for all the systems - the MIRR graph is to the right. The graph is plotted by date. June 2010 data starts at the top and then 4500 data points later we're down to January 2013. It completely trips me out how the MIRR line hugs around 10% so strikingly. This is crazy. The FiT rates fell from 34 to 17 cents/kWh from the start to the end of the data set. The data covers systems of different sizes receiving different FiT rates. Average system costs fell from 3000 to 1500 Euro/kW during the span! How could this metric hold consistent throughout that multi-directional madness? Must be magically magnetic man.

MITCH: Did he just pour on the corn?
BUTCH: That was definitely a corn foul.
CONSUELO: WTF are ju jokers talking about?

I admit I have my reservations. I massaged the data some. Could be my calculations have some bugs. And ya know it may be something about MIRRs I don't understand. Sure looks interesting though. Hope it stays interesting upon cross-examination.

*About 2500 systems were scrubbed due to gibberish and/or incomplete data. The scrubbed systems were evenly dispersed in the set.

Ermhagherd

QOTD

Soft costs is a euphemism for middle men.

BOTEs

A multicrystalline cell measures 156 mm on a side and there are 60 per module. Average module power is about 200 Watt so you need 5 modules per kW. There are 100 GW of photoelectrics installed Globally. That's one hundred million kW made up of around 30 billion solar cells. Solar modules would cover nearly 750 square kilometers if laid flat, Photoelectrics currently supply a little over one half of one percent of the world's demand for electricity. We should hit the1% supply mark in a little over a year.

25% Growth Adds Up

In 10 years over 1000 GW of photoelectrics could be installed globally supplying over 5% of the world's electricity and generating a trillion dollars in economic activity. A Generation from now over 15% of the world's electricity could come from sunshine - Over 30% in 30.

The Sociopathic Intern - Boastradamus

The Christmas party was going smoothly until the sociopathic interns' Ayahuasca Cookies kicked in. Emily Kane had two before she started speaking.

In the Military you're a name on a list that's tacked up on a wall. The list tells you to move to South Carolina to work your ass off in a city that has the worst drinking water quality in the nation. Yum... Today you're my Army and I'm going to divide you up and send you off to yummy places and you're going to like it. Four Teams. Four Missions.

Team A - Keep making the digital cameras.

Team B. We've got an arc of projects ahead of us. You're going to apply your Pompotous advertising knowledge to produce the Fuck out of our products and our brand. We're going to call our cameras, Kameras from now on. Harder K like an Asian would say it. All our products are going to get corny Asian themy names from now on. Everybody loves Asian Corn. Your goal is to make this company The Domino. Which domino is The Domino? Which else? The moving one! Boom-boom-boom... Produce our Products.... Boom-boom-boom. Make us a Top Shelf Brand that everybody knows is worth it. Make us The Domino!

Team C. You're going to build miniature digital music players and tiny phones and handheld computers. We're going to expand our product line for several years but then things are going to converge on an everything device - An E-thing. ETs do more than phone home. When I say everything I mean everything. Your phone is a camera, a translator, a chess grandmaster, an AED, a color R2-D2 3D projector with Bose sound that is able to project a three dimensional Hypnotic Sensei Doctor capable of giving lifesaving tutelage (using the AED feature where required), a grief councillor, a Taser,  a laser pointer, a thermostat...  We'll have to make a Swiss Army Version... It will be cherry Red, metal ribbed but able to get on an airplane... Got it yet? Chop Chop.

Team D. It's 2001... Space is Calling... You're going to be our Sun Gods. Deep Space Skunkworks R&D division. The ideas you build here are going to change the world. We're going to use our printing technology to lower the cost of solar manufacturing. We're going to change how solar panels are made. Think large solar sheets held vertically to the ground and stationary - the process tools will move around either side simultaneously. We'll print the same sort of computer chips that our digital Kameras have onto our solar wafer wall - the designs won't process images - our Sun Chips will handle each cell's network communications, power conditioning, fire and grid protection, maintenance and so on. The goal is to have an everything version of the Sun Chip that costs less than a penny per watt. When we unstealth we're going to rebrand as Clear Power with a tag line of Boldly Going.

See how the engine works? Spark. BAM! Expansion... Power Stroke... Convergence. Spark BAM! Repeat. See the Cycles? Each supplies the Existence Theorem for the next. We did this so we can do that. Why is everyone dancing? Who invited Donkey Kong?

Photoelectricis in Saudi Arabia vs. Norway

During the summer the Saudi Arabians guzzle about a million barrels per day not to drive or to manufacture petrochemicals but to generate electricity. In round numbers that's 100 million dollars a day in potential oil sales. If you assume a 40% conversion efficency you can get right around 666 kWh from a barrel of oil. A BOTE calculation reveals that the opportunity cost of the electricity generated from oil is in excess of 15 cents/kWh. If the Saudis could find something like say photoelectrics that produced electricity for 7.5 to 10 cents/kWh they'd clearly save a lot of money.

The same value substitution logic used with Saudi Arabia can be applied to Norway. Norway gets 99% of their electricity from their hydroelectric dams. Hypothetically, if the value of the electricity from their dams exceeded the cost of the electricity from solar it would be in their best interest to install solar.

One might reasonably ask... How could the value of hydroelectricy ever exceed the cost of solar? It's a fair question but remember that 10 years ago oil sold for under $30/barrel and photoelectrics cost four times what they do today. A lot can change in 10 years.

What could change in electricity markets to make Norway's hydroelectricity more valuable than solar electricity? Here are two general possibilities.

1. Hydoelectric dams can be used to provide regulating services in addition to generic kilowatt-hours. In high variable power scenarios you need a lot of regulation - high demand for regulation services raises the value for those services. Is it enough to make hydro more valuable than solar? Probably not but it will make things interesting.

2. Electricity pricing dynamics have changed significantly over the last decade as wind and solar resources have entered the market. It's difficult to project how these dynamics will evolve over the next decade but we can speculate. An often overlooked dynamic when it comes to solar vs. conventional power is that solar makes conventional power more expensive by stealing market share. In 2012 solar stole an additional 7 TWh of market from conventional power plants in Germany. This means the production costs at the effected conventional power plants actually went up due to their fixed costs being divided by lower production. If this trend continues we can imagine a lot of Combustion Turbine power plants going out of business. When you take those CTs out of the equation it changes the supply/demand picture - prices during the winter peak or the summer shoulder periods could become quite peaky with fewer CTs left to compete for that market. This is where hydro from Norway swoops in and makes a go of it.

This is all meant to be a thought exercise... The product (solar in Norway for example) isn't important here. The process (value substitution) is what I'm trying to get at.

MIRRs in Germany - May 2010 to Present