Solar Photovoltaic Materials & the State of Solar in the U.S.

Solar Photovoltaic Materials & The State of Solar in the U.S. T. R. Ramachandran Sep 6, 2008 UC Berkeley Extension

Acknowledgements This presentation includes information from numerous publicly available sources. In each page, any external sources that are used are clearly indicated, with a URL provided to the original source.

Outline Introduction • Eternal Sunshine • Key Messages Photovoltaic Solar Cells • How Solar Cells Work • From Cells to Modules to Solar Energy • Solar Cell History – Sales/Price/Efficiency • Solar Cells in Industry How Solar Leaders Made • Japan Solar Work • Germany Renewable Energy v. • Renewable Portfolio Standards (RPS) Solar in the U.S. • RPS - Wind v. Solar Making Solar Work in the • R&D U.S. • Incentives • Grid Connections • Net-Metering • Pricing Wrap-Up • Conclusions

Eternal Sunshine! • Solar energy still just a minuscule % of total energy worldwide • US solar market has been overshadowed by worldwide solar PV market growth • US lags leaders Japan and Germany despite having best solar resources in the world – China roughly on par with US in just 3 yrs despite being a relatively new entrant to PV solar • Theoretically, <0.0001% of U.S land area could supply entire current U.S. energy needs! Sources – SEIA & Stanford Group Company

Key Messages • Solar energy currently quite expensive compared to traditional energy sources – U.S. grid parity for solar energy expected sometime in the next decade • Worldwide photovoltaic (PV) solar market experiencing rapid growth – Higher efficiency crystalline Si PVs lead in installed capacity – Thin-film PV market share surging rapidly due to cost advantage • The U.S. has the best solar resources but has lagged Germany and Japan – Solar-friendly public policy, standards and incentives helped German/Japanese surge • Numerous states in the U.S. adopting Renewable Portfolio Standards (RPS) – However, RPS mandates inherently favor low cost sources (e.g., wind, over solar) – Solar set-asides required to drive solar power expansion • Rapid U.S. solar market growth likely under the right confluence of conditions – Appropriate Government R&D funds for solar technology & cost innovation – Solar-friendly national public policy with appropriate incentives – Clear, uniform & inexpensive national standards for net-metering and grid connections – Solar friendly electricity rates and options for customers

How Photovoltaic (PV) Solar Cells Work Basic P-N Junction based solar cell Basic P-N Junction Source: How Stuff Works Building Multi-Junction Solar Cells How the Basic Solar Cell Works Source: Cyferz (Wikipedia) via GNU Free Documentation License Source: U.S. DOE EERE

From Cells to Modules to Solar Energy Source: How Stuff Works

Solar Cell Sales/Price History Source: Jacobsson et al. (2002, Chalmers University) Solar Cell Sales Evolution Source: IIASA, 2000 via Turkenburg (Utrecht Univ.) Solar Cell Module Price Evolution

Solar Module Cost in Historical Context Source: Turkenburg (2002, Utrecht Univ.) RD&D phase 20000 1981 1983 Photovoltaics Commercialization (learning rate ~ 20%) phase 10000 USA 1992 Japan Solar PV Learning Rate 5000 1995 Comparable to Windmills (USA) US(1990)$/kW Wind/Gas Turbine (learning rate ~ 20%) 1982 2000 Industries 1000 1987 500 1963 Gas turbines (USA) 1980 (learning rate ~ 20%, ~10%) 200 100 1000 10 100 10000 100000 Cumulative MW installed

Projected Solar PV Module Cost Reduction Source: Ross (2008, CAP) Solar PV is not yet cost-competitive at current average electricity prices  Grid-parity expected in U.S. in early part of next decade

Solar PV Cost – Key Factors Source: Xu(2007, Sierra Solar) For a given solar flux/insolation, cell/module efficiency & module/system cost largely govern solar PV installed cost

PV Solar Cell Technologies Overview Source: Tezak & Stanko (2008, Stanford Group Company) Performance, Efficiency Better Cost

R&D Solar Cell Efficiency Best R&D Solar Cell Efficiency Evolution Source: Kazmerski et al. (2007, NREL)

Industrial Solar Cell Module Efficiency Best Industry Solar Cell Source: von Roedern & Ullal (2008, NREL) Module Efficiency Trend

Industrial Module-to-Cell Performance Ratio Source: von Roedern & Ullal (2008, NREL) Single crystal Si Poly-crystalline Si Amorphous Si Non-Si thin films Module-to-cell efficiency ratio highest for crystalline Si modules; a-Si not far behind but CIGS/CdTe thin film modules currently lagging

Cost-Performance Tradeoff in Solar Cell Modules Source: von Roedern & Ullal (2008, NREL) Above Average Average Below average Cost is the key advantage of CIS/CdTe thin film modules; crystalline Si modules likely to dominate in efficiency/performance

Thin-film Solar Will Retain Cost Advantage Balance-of-System (BOS) Costs Higher Fraction of Total System Cost for Thin Film Modules  est. 400-600 Euros/kWp higher than for c-Si Plus, lower efficiency  larger module area Source: Baechler (2006, Phoenix SonnenStrom AG) However, TF Module Cost Reduction Opportunities Appear to be Greater Owing to Less Mature Technology That said, cost is coming down across the board

PV Cost Will Continue to Shrink Source: Xu (2007, Sierra Solar) Module cost reduction driven by competitive pressures and drive to grid- parity  ~ 10% + price drop expected next year [link 1, link 2]

Crystalline Si v. Thin-film Module Shipments (US) Source: von Roedern & Ullal (2008, NREL) Thin-film Module Shipments Growing Sharply of Late – Mainly Driven by Cost Advantage and Supply Constraints with Crystalline Si; Future Capacity Ramp Still a Question Mark Source: Ullal & von Roedern (2007, NREL)

Crystalline Si v. Thin-film Production Capacities Si-based thin films dominate in Asia; CdTe/CIS thin film modules common in Europe/NA Source: Jaeger-Waldau (2007, IES/EU) However, crystalline Si PV capacity expected to continue to dominate over thin-film module capacity for foreseeable future

PV Solar Cell Industry – Key Players German and Japanese Companies Have Strong Positions, U.S. Companies Growing in Stature Source: Tezak & Stanko (2008, Stanford Group Company)

Solar PV – Japan vs. the United States Source: Rogol (2007, MIT) • According to Rogol (2007, MIT), a variety of factors enabled a more rapid growth of solar PV in Japan compared to the United States during 1994-2003, despite lower gross solar module costs in the U.S. – Until 1994, the U.S. was #1 in solar PV (largely through exports) • Key factors enabling Japan’s PV sector over the U.S. were: – Rising Government sponsored R&D compared to declining R&D in the U.S. – Strong Government incentives and strategic energy-security driven national policy • Regulatory environment not a complicated and un-coordinated patchwork like in the U.S. – Standardized, grid-connected & net-metered solar-ready Japanese network – Much higher retail electricity (grid) prices compared to the U.S. – Much lower interest rates in Japan allowing more affordable financing – Longer time-to-parity and lower NPV/ROI for capital investments in the U.S. – Export-focused industry in the U.S. compared to Japan’s internally driven growth – Dominance of traditional energy companies in energy space in the U.S., compared to strong PV presence of semiconductor electronics giants in Japan • Recently, fears of stagnation in Japanese solar PV market have led to calls for renewing incentives that ended in 2005 [Jaeger-Waldau (2007, IES/EU); WSJ]

Strategic Energy-Security Driven PV Policy in Japan Source: EIA (2005, U.S.) Sustained Federal R&D Funds for PV Key To Establishing Japanese PV Leadership Source: Eiichi & Yoshihiko(AIST, Japan)

Electricity Rates and Incentives in Japan vs. CA Higher gross system price in Japan translated into much lower net system price through (gradually declining) incentives Source: Rogol (2007, MIT) Traditional residential electricity prices in Japan much higher than in U.S./CA

Electricity & Interest Rates Helped PV in Japan CA Solar cost “premium” much less unfavorable in Japan compared to CA/U.S. Source: Rogol (2007, MIT) Interest rate environment was much more favorable in Japan during ‘94-’03 time period

Japanese Companies Built Early PV Leadership Japanese PV production dominated for almost a decade Source: Jaeger-Waldau (2007, IES/EU) Four of Top Ten Solar PV Companies in 2006 were from Japan

But…Japan Losing Ground After Incentives Ended Source: Wang (2008, Greentech Media) Since the Termination of Federal Incentives in 2005, Solar PV growth in Japan has Faltered – Prompting Calls for Renewal of Incentives

Solar PV – Germany vs. the United States Source: EIA (2005, U.S.) • According to the U.S. Energy Information Administration (EIA, 2005) a few key factors enabled a more rapid growth of solar PV in Germany compared to the United States • These factors include: – Strategic climate-change /CO2 driven national energy policy – Mandated requirement on renewable energy mix in utilities’ energy supply – Highly attractive feed-in tariffs (FIT) providing significant premium to retail rates • Higher premiums enabled better NPV/ROI and longer-term stability • Utilities allowed to pass on FIT costs to consumers, but shared over entire customer base – U.S. PURPA rates closer to wholesale market rates (far less attractive for solar adopters) – PURPA’s original focus was energy efficiency & conservation – Low interest Government loans to spur solar installations • Germany quickly became top solar market in the world with almost half of the installed PV base  but some nervousness on future of FIT regime [link]

Strategic Climate Change Driven PV Policy in Germany Source: EIA (2005, U.S.) Coherent National Policy Backed by Attractive Feed-in Tariffs (FITs) Enabled Strong German Leadership in PV Solar Energy

Renewables vs. Solar in the U.S. • Numerous states now have Renewable Portfolio Standards (RPS) – RPS spurring renewable energy growth in states’ electricity mix • According to Wiser & Barbose (2008, LBNL): – 46% of nationwide electricity sales will be impacted by state RPS policies as of EOY 07 – Renewables expected to cover 15% of new energy demand from 2000-2025 – However, this accounts for only ~6% of total projected U.S. electricity gen. in 2025 • Most state RPS focus on renewable energy mix, not solar specifically – Solar-specific RPS growing, but we have a long way to go • Focus purely on renewable energy mix benefits lowest cost renewables – Wind energy has therefore completely dominated non-hydro renewables market • U.S. only second to Germany now in total installed wind energy capacity – Solar has been lagging badly due to cost • Mainstreaming solar energy integral to “energy independence” – Distributed generation could enable true energy independence for end users • Even benefits poorer regions that are too costly to link to national grid – Modular nature of solar PV installations enables easier capacity management & servicing – Simplicity of solar PV modules allows for reduced complexity & maintenance costs

DSIRE: www.dsireusa.org September 2008 Renewables Portfolio Standards ME: 30% by 2000 VT: (1) RE meets any MN: 25% by 2025 10% by 2017 - new RE increase in retail sales by (Xcel: 30% by 2020) ☼ NH: 23.8% in 2025 *WA: 15% by 2020 2012; (2) 20% by 2017 ND: 10% by 2015 WI: requirement varies by MA: 15% by 2020 + 1% annual increase utility; 10% by 2015 goal MT: 15% by 2015 (Class I Renewables) OR: 25% by 2025 (large utilities) RI: 16% by 2020 5% - 10% by 2025 (smaller utilities) SD: 10% by 2015 CT: 23% by 2020 ☼ *NV: 20% by 2015 ☼ OH: 25%** by 2025 ☼ NY: 24% by 2013 *UT: 20% by 2025 IA: 105 MW ☼ NJ: 22.5% by 2021 IL: 25% by 2025 ☼ CO: 20% by 2020 (IOUs) ☼ PA: 18%** by 2020 CA: 20% by 2010 *10% by 2020 (co-ops & large munis) MO: 11% by 2020 ☼ MD: 20% by 2022 ☼ NC: 12.5% by 2021 (IOUs) ☼ AZ: 15% by 2025 ☼ *DE: 20% by 2019 10% by 2018 (co-ops & munis) ☼ DC: 11% by 2022 ☼ NM: 20% by 2020 (IOUs) *VA: 12% by 2022 10% by 2020 (co-ops) TX: 5,880 MW by 2015 State RPS HI: 20% by 2020 State Goal ☼ Minimum solar or customer-sited RE requirement Solar water heating eligible * Increased credit for solar or customer-sited RE **Includes separate tier of non-renewable “alternative” energy resources

Renewable Capacity Additions and Future Needs Uptick in Additions of Renewable Energy Capacity in RPS States Source: Wiser & Barbose (2008, LBNL) Considerable New Demand for Renewables in RPS States

RPS Cost Recovery Source: Hamlin et al. (2006, CRS) Cost Recovery for Meeting RPS Mandates Vary by State  Usually Through Utility Rates

RPS Impact on Electricity Prices Source: Chen et al. (2007, LBNL) Studies Suggest RPS-Driven Impact on Retail Electricity Prices will Generally be Small to Negligible

Price Impact Expected Mostly in Eastern U.S. Source: Chen et al. (2007, LBNL) North-eastern U.S. Suffers from Lack of Proximity to Non- Hydro Renewable Energy Sources  Higher Costs

Wind Energy Dominating New Renewables Capacity Wind Energy Has Dominated Renewables Capacity Additions Source: Wiser & Barbose (2008, LBNL) Source: Wiser & Bollinger (2008, LBNL) Wind Power Capacity Skyrocketing in Recent Years

Wind Compares Favorably Against Traditional Sources Wind Energy Growth Has Outpaced Coal and is Approaching Growth of Natural Gas Capacity Additions Source: Wiser & Bollinger (2008, LBNL) U.S. On The Path to World Leadership in Wind Power

Wind Power Dominance in RPS States is Cost Driven Source: Wiser & Bollinger (2008, LBNL) Wind Power Pricing As Competitive or Cheaper Than Traditional Sources of Power  Enables Lower RPS Impact on Electricity prices

DSIRE: www.dsireusa.org August 2008 Solar/DG Provisions in RPS Policies WA: double credit for DG NH: 0.3% solar electric by 2014 NV: 1% solar by 2015; NY: 0.1542% customer-sited by 2013 2.4 to 2.45 multiplier for PV OH*: 0.5% solar by 2025 NJ: 2.12% solar electric by 2021 PA: 0.5% solar PV by 2020 CO: 0.8% solar electric by 2020 DE: 2.005% solar PV by 2019; triple credit for PV MD: 2% solar electric in 2022 AZ: 4.5% DG by 2025 DC: 0.386% solar electric by 2022 1.1 multiplier for solar NM: 4% solar electric by 2020 NC: 0.2% solar by 2018 0.6% DG by 2015 Solar water heating counts towards solar set-aside * It is unclear at this point if solar water heating is eligible for OH’s solar carve-out. DG: Distributed Generation

Solar/DG Set-Asides and Solar PV Growth Source: Wiser & Barbose (2008, LBNL) Solar PV is Growing Modestly in RPS States with Solar/DG set-asides; CA has no RPS set-aside but Separate Solar program

RPS Set-Aside Driven Solar Growth Prospects Source: Wiser & Barbose (2008, LBNL) Modest Long-Term U.S. Solar Footprint Growth Currently Expected Based on RPS State Solar/DG Set-Asides (CA not shown)

PV Solar Growth Challenged by Grid Prices Source: Jaeger-Waldau (2007, IES/EU) Solar More Competitive in Red/Orange States, but Lower Costs, Right Incentives and Policies are Critical for Long- Term Growth and Sustainability Source: Solarbuzz (2008) Current Average U.S. Solar Electricity Prices: 37.8 ¢/kWh for 2kW systems 27.4 ¢/kWh for 50 kW systems 21.4 ¢/kWh for 500 kW systems

Making Solar Work in the United States • R&D – Federal R&D funding key to continued breakthroughs & innovations and faster cost reductions • Incentives – Reliable Government incentives critical for near-term stability & robust supply/demand chain – Stable & friendly public policy environment a must to prevent wild gyrations in industry landscape • E.g., solar set-asides in RPS with appropriately declining multi-year incentives that cover a broad range of systems • Grid Connections – Clear, safe & inexpensive national standards to allow customers to connect to the electricity grid in timely fashion are a must-have to drive solar mainstream • Net-Metering – Enabling electricity consumers to get appropriate credit for solar energy generation essential to enhance solar investment payoff • Appropriate feed-in tariffs (FITs)  no undue advantage for entrenched energy/utility giants – Easy to implement & inexpensive national net-metering standards key to driving broad adoption • Pricing – Energy policy & utility regulations should focus on energy efficiency and solar power – Create solar-friendly utility rate plans that allow reasonable returns for utilities

Federal R&D Can Impact U.S. Tech. Leadership Source: Margolis & Kammen (1999, Science) U.S. Total patents and public/private R&D Drop in U.S. energy R&D and patents just as Japan ramped their R&D in 1980-1995; U.S. lost solar PV lead in 1995 Patents and public/private R&D in Energy

Federal R&D Can Impact U.S. Tech. Leadership Source: Werner (2005, EESI) Renewables R&D funding, particularly for solar, decreased sharply in the 1980s - along with broader energy R&D funding Modest increase in funding in the early 1990s Federally funded R&D on solar energy technology plummeted about 80% in the 1980; modest recovery since then

Federal R&D Can Benefit U.S. Tech. Leadership Source: Margolis et al. (2006, NREL) DOE/Industry collaboration in the 1990s and early 2000s enabled significant successes in solar PV technology (incl. cost reduction)

Government Subsidies/Incentives for Energy Source: Koplow (2006, Earth Track) Fossil Fuel Industry Has Long Benefited from Government Incentives/Subsidies of Various Kinds

Government Subsidies/Incentives for Energy Source: Koplow (2006, Earth Track) Fossil Fuel Industry Continues to Be Largest Beneficiary of Government Subsidies in the U.S.  Artificially Deflates True Cost of Traditional Energy Sources

Hidden Costs of Subsidized Fossil Fuels Source: Koplow (Earth Track) Extrinsic Costs of Fossil Fuels Significantly Exceed Those of Solar Energy  Grid Prices Understate True Costs

Bottom-line on Government Incentives for Solar According to the Solar Alliance • Should be large in scale and appropriately long-term • Should support broad range of system sizes/types • Tied to system performance – Monitored via rigorous data collection, analysis and data sharing • Reduced over time to force cost reduction/innovation – Forces innovation to drive solar towards grid-parity • Simple, transparent and easy to administer programs • Stable & solar-friendly public policy that unlocks hidden value of solar & addresses real cost of traditional energy sources

Net-Metering Source: Network for New Energy Choices (2007) Source: Ross (2008, CAP) Net-Metering is Key to Ensuring Customers Truly Receive Full Cost-Benefits of Solar

Loss of Value Without Net-Metering Source: Wiser et al. (2007, LBNL) Absence of Net-Metering Prevents Customers from Receiving the True Value of the Solar Power they Generate

DSIRE: www.dsireusa.org September 2008 Net Metering 100 VT: 250 NH: 100 100 100 * * MA: 60/1,000/2,000* 50 RI: 1,650/2,250/3,500* * 40 25/2,000 CT: 2,000* 20 30 * * 25/100 NY: 25/500/2,000* * 25 no limit * PA: 50/3,000/5,000* 500 25 * 1,000 * * NJ: 2,000* 2,000 40 10 25 * * 25/2,000 co-ops, munis: DE: 25/500/2,000* 1,000 100 30 MD: 2,000 10/25 * 20/100 * DC: 100 100 * 25/300 varies 80,000 VA: 10/500* * 10/100 * 50 25/300 FL: 2,000* 100 (KIUC: 50) Net metering is available in State-wide net metering for all utility types State-wide net metering for certain utility types only (e.g., investor-owned utilities) * 43 states + D.C. Net metering offered voluntarily by one or more individual utilities (Note: Numbers indicate individual system size limit in kilowatts (kW). Some states’ limits vary by customer type, technology and/or system application. For complete details, see www.dsireusa.org.)

Getting Net-Metering Right Source: Network for New Energy Choices (2007) Need National/Federal Standards for Net-Metering  NJ Net-Metering Rules Considered Best Model Currently

Feed-In Tariffs Source: Ragwitz & Held (2007, Fh-ISI) Feed-in Tariffs (FITs) Very Common in EU and Key to Germany’s Solar Revolution  Need to Assess How to Use FITs Appropriately in the U.S.

Grid-Connections Source: Network for New Energy Choices (2007) Need National/Federal Standards for Interconnections  NJ Net-Metering Rules Considered Best Model Currently NOTE: Appropriate grid upgrades for transmission/distribution needed

Basics of Electricity Pricing Based on kW usage beyond a certain baseline, typically for commercial customers  annual, Distribution / billing / monthly or time-of-day (TOD) servicing costs DEFINITIONS Source: Wiser et al. (2007, LBNL) Based on kWh usage  flat, seasonal or time-of- use (TOU) Source: Pacific Power Rate structure, customer load and PV system size can significantly impact economics of solar PV deployment & value of PV to end customer (Wiser et al., 2007, LBNL)

Impact of Demand Charges on PV Value Source: Wiser et al. (2007, LBNL) – 24 commercial PV systems in CA At high PV penetration, PV At low PV value drops with penetration, PV high demand value is largely charges largely preserved even because of with high customers whose demand charges peak demand occurs during periods with low PV output Typical time-of-Day (TOD) based demand-charges can unlock more PV value for customers unless they have flat or inverted load profiles  Energy-charge based rate design may be preferred over demand-charges

Impact of Energy Charge Rate Structure on PV Value Source: Wiser et al. (2007, LBNL) – 24 commercial PV systems in CA Time-of-Use (TOU) based energy-charges with significant peak-to-off-peak differentiation provide greatest opportunity to unlock PV value  Rate choices & solar-friendly rates are desirable to unlock PV value

Electric Decoupling Key to Energy Efficiency Source: Oldak (2007, EEI) Electric Decoupling involves decoupling energy revenues/profits from sales so as to not incentivize higher per capita energy consumption

Electric Decoupling in California Source: The Solar Alliance Electric Decoupling Provides Utilities Flexibility & Lowers Their Risks when Investing in Renewable Energy Sources

Electric Decoupling and Energy Efficiency Source: The Solar Alliance Electric Decoupling is an Excellent Public Policy Instrument to Drive Energy Efficiency

Conclusions • Solar energy currently quite expensive compared to traditional energy sources – U.S. grid parity for solar energy expected sometime in the next decade • Worldwide photovoltaic (PV) solar market experiencing rapid growth – Higher efficiency crystalline Si PVs lead in installed capacity – Thin-film PV market share surging rapidly due to cost advantage • The U.S. has the best solar resources but has lagged Germany and Japan – Solar-friendly public policy, standards and incentives helped German/Japanese surge • Numerous states in the U.S. adopting Renewable Portfolio Standards (RPS) – However, RPS mandates inherently favor low cost sources (e.g., wind, over solar) – Solar set-asides required to drive solar power expansion • Rapid U.S. solar market growth likely under the right confluence of conditions – Appropriate Government R&D funds for solar technology & cost innovation – Solar-friendly national public policy with appropriate incentives – Clear, uniform & inexpensive national standards for net-metering and grid connections – Solar friendly electricity rates and options for customers

Solar Photovoltaic Materials & the State of Solar in the U.S.

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