QOTD

"In 2009, at a time when the solar market was reeling from bloated inventories and cashflow concerns, Suntech was one of the few companies willing to brave the uncertain business conditions and invest aggressively in manufacturing capacity.

"This bold strategy resulted in Suntech's becoming the world's largest PV module supplier in 2011," he continues. "However, in retrospect, the company failed to invest in all the correct areas, specifically in wafer manufacturing. By failing to vertically integrate in this fashion, Suntech was caught in a cost squeeze between falling system, module, and cell pricing and steady wafer expenses - making the company uncompetitive."
 
Mike Sheppard - IHS PV Analyst

Outtakes

TONTO: Tonto want go up dem hills.
RANGER: What's up there?
TONTO: House of many sisters by warm spring.
RANGER: How many sisters ? How... How warm?
TONTO: Seven sisters... Good warm.
RANGER: Ranger want to go there.

Notes on Evolving Tariffs in China and Japan

Subsidizing solar power based on the amount of electricity generated is easier to control by the government. One-time incentives don’t give regulators much margin to ensure the quality of power plants.

Meng Xiangan, vice chairman of the China Renewable Energy Society in Beijing

Government policy is in clear support of these projects (Feed in Tariffs for large projects) while the country grapples with severe energy shortages following its shunning of nuclear power. However, this is likely to be short-lived and decline after 2014 once the current pipeline of approved projects is completed, largely because of a shortage of land in the country.

Frank Xie, IHS senior analyst for PV and solar research - commenting on Japanese market

I like the quote from Xiangan - it's clear and to the point. It would be great if the US woke up and shifted subsidies away from a front loaded (AKA: one-time) Investment Tax Credit structure. Distributing the front loaded ITC over a 10 year depreciation period for all photoelectric development (residential, commercial and utility) would accomplish this.

I like the quote from Xie as well. On one hand I don't think he goes far enough but I suppose the available land argument allows him to make his point without ruffling any feathers. In my opinion the greater reason for curtailing subsidies on mega-projects has to do with the fact that these projects never become competitive. It's better to focus deployment on residential and commercial customers who can self-consume electricity. This policy strategy has the additional benefit of encouraging the development of an energy management market which spills over into improving system efficiency.

You want a policy that gives the developer of a photoelectric system more responsibility and control over profits. The policy should evolve in stages.

1st stage. Throw money at the problem. Offer a generous FiT to get the ball rolling. Supply chains get built and/or reinforced during this stage. The market has limited information on the present and future costs of deployment. This stage of development needs to generate the info required to make people comfortable with the technology and its economics.

2nd stage. Start reducing subsidies and experimenting with self-consumption bonus policies. You'll expect system costs to fall to keep the photoelectric system profitable. Regulators can look at markets like Italy, Germany and Australia to get an idea for how fast they can reduce subsidies. Market participants can do the same. During this stage of development you can expect the installers and the industry associations to cry bloody murder when subsidies are reduced. It's all a show for the cameras. 

3rd stage. You start hitting parity with retail.  Keep reducing subsidies and fine tune the self-consumption policies. Restrict subsidies on utility type systems. During this state you kill off unsustainable developers.

4th stage. Transfer to value of electricity tariffs (VETs). If you've done things right you should have a large  potential customer base capable of economically installing photoelectric systems and you should have plenty of information available to the market detailing the expected system costs, system performance, self-consumption rates and so on.

Faucet Parity

	kWh/kWp	Euro/kWp	Interest Rate	Loan Term	DR	LCOE	NG Price	EF Ratio
Austria	900	2200	6	10	6	0.21	0.08	2.7
Belgium	850	2400	6	10	6	0.25	0.07	3.4
Denmark	800*	2400	6	10	6	0.26	0.11	2.3
France	1000	2400*	6	10	6	0.21	0.07	2.9
Germany	900	1500	3	10	4.5	0.10	0.07	1.4
Greece	1300	2600*	10	10	10	0.24	0.08	3.0
Ireland	750	2600*	8	10	8	0.36	0.07	5.1
Italy	1200	2200*	6	10	6	0.15	0.09	1.6
Luxembourg	1000*	2600*	6	10	6	0.22	0.07	3.2
Netherlands	800	1900	6	10	6	0.21	0.07	3.0
Portugal	1350	2200*	8	10	8	0.17	0.08	2.0
Spain	1300	2200*	8	10	8	0.18	0.07	2.4
Sweden	800	2100*	6	10	6	0.23	0.20	1.1
U.K.	850	1900	6	10	6	0.20	0.06	3.3

Here's a rough sketch of how the photoelectric LCOEs stack up between European countries. The Interest rates and Discount rates are very rough estimates that I hope are on the conservative side. All the remaining values are either sourced or educated guesses.

On the far right of the table there's a column labeled EF Ratio - this is the electricity to fuel price ratio. In a previous post I compared the EF ratio of retail electricity in Europe vs. natural gas prices - this table is a photoelectric version of that table comparing the levelized cost of photoelectricity to the retail price of natural gas.

The EF Ratio provides a guideline of what a heat pump's Coefficient of Performance (COP) would need to be to economically justify using photoelectricity to displace natural gas. Average COPs range from 2 to 3 so this puts most of these countries in the table at or near Faucet Parity - i.e. It would be cheaper to make hot water with photoelectricity and a heat pump than with natural gas.

Recommended Reading

Solar power gets cheaper as cost of panels drops

Read more here: http://www.star-telegram.com/2013/02/15/4624873/solar-power-gets-cheaper-as-cost.html#storylink=cpy

Electricity to Fuel Price Ratio

Every month like clockwork Vaasa ET Global Energy Think Tank puts out a Household Energy Price Index for Europe. It's a useful document. If you divide the electricity price in each country by the natural gas price you get the following table.

Electricity to Fuel Price (EF Ratio) Austria 2.58 Belgium 3.15 Denmark 2.72 France 2.08 Germany 4.12 Greece 1.95 Ireland 3.24 Italy 2.05 Luxembourg 2.58 Netherlands 2.79 Portugal 2.65 Spain 3.07 Sweden 0.89 U.K. 3.11

If the EF ratio is less than the coefficient ofperformance (COP) of a heat pump it can be more economically advantageous to use your photoelectricity to displace natural gas rather than electricity.

Mac Bandy talks about Dad

I was originallly going to name this post Mac Bandy on Dad but that sounded wrong.

I talked to my Dad today. We went over good memories. About how he taught me to swim and to shoot every gun under the sun. He told me I shot my first gun at 3 and a half. Seriously... I said what! I don't remember that. He had it all categorized. You shot a 22 pistol at 3 and a half. You shot a 9 mm at 5 and a 44 at 6. You shot a double barrel shotgun at 7. OOO RAH... Son of a Marine... It's funny listening to stories like that about yourself.

And scene...