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SolarPanel MIT Energy Conference 2007

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  • 1. MIT Energy Conference 2007 - Solar Power: A Path to Grid Parity? Moderator - Travis Bradford, President, Prometheus Institute 1. Manufacturing - Dick Swanson, President and CTO SunPower 2. Technology - Charlie Gay, VP & GM Solar Group, Applied Materials 3. Policy - Rhone Resch, President SEIA 4. Financing/Integration - Jigar Shah, CEO SunEdison Special Thanks to the student organizers: Keith Peltzman - Eerik Hantsoo - Joel Conkling - Anthony Fotopoulos - Carlos Molina
  • 2. Meeting the Need The Prometheus Institute for Sustainable Development Institute Research Products 2006
  • 3. Solar Revolution From MIT Press – September 2006 Based on Economic-only Projection Models Not only will we reach grid-parity, but permanently exceed it Disruptive Technological Transformation
  • 4. What is Grid Parity? Assumes Distributed (not Centralized) Solar Must correctly calculate the cost of PV, including: Component Costs (Modules, Inverters, Racking, etc.) Installation Cost Financing Costs (and terms of repayment) And must impute amount of sunlight captured in usable form: Sunlight Available Installation characteristics (angles and shading) Losses from DC capture to AC use Decide to compare with or without subsidies: Rebates, Tax Credits, Accelerated Depreciation, Tax Deducibility of Home Mortgage Interest
  • 5. What is Grid Parity ? PV presents a range of cents/ kWh (based on many variables) Compare versus range of local grid-prices Number of Locations Di str ty ibu trici ted Elec PV G rid Cents / kWh When do we achieve grid parity? How do we get there?
  • 6. Dr. Richard Swanson SunPower Corporation
  • 7. Richard Swanson Founder, President, CTO MIT Energy Conference March 10, 2007
  • 8. Solar Price Learning Curve Solar Panel Cost Drops by 19% With Each Doubling in Manufacturing Capacity 1979 $30/W 100 1979 $32/W Module Price (2002$) 81% Progress Ratio 2002 10 $3/W 2002 $3.10/W Silicon Shortage 1 1 10 100 1000 10000 Cumulative Production (MW) 8
  • 9. Now two new factors are emerging that will help continue this trend: • Efficiency as an Important Driver – Increased efficiency drives value through the entire value chain • Thinner wafers – Reduces consumption of expensive silicon 9
  • 10. Silicon Utilization Poly Grams per Cell Watt 14 12 10 8 6 4 2 0 Q105 Q205 Q305 Q405 Q106 Q206 Q306 10
  • 11. Future Cost Reduction Drivers • Thinner wafers • Higher efficiency • Improvements in crystal growth technology • Improvements in slicing technology • Improvements in cell processing technology • New lower cost silicon refining technologies • Increased manufacturing scale: 200 MW → 500 MW plant size 11
  • 12. Value Chain Cost Distribution Polysilicon Polysilicon Ingot Wafer Solar Cell Solar Panel System 2006 US Solar System Cost Allocation by Category 50% 30% 20% 12
  • 13. 50%+ cost reduction from CA system cost is achievable 60% Drop in System Cost Downstream Savings (50%) Panel Savings (50%) Cell Savings (25%) Silicon Savings (50%) Conversion Efficiency (15%) Downstream Panel Cell Silicon 2006 2016 13
  • 14. Solar Panel Learning Curve Predicts Retail Rate Parity < Decade 100 1980 Historical $21.83/W Projected Module Price ($/W) ($2002) 1990 $6.07/W 2000 $3.89/W 10 2010 $1.82/W 2013 2002 Roadmap $1.44/W 1 1 10 Silicon Roadmap Cost 100 1,000 10,000 100,000 Cumulative Production (MW) 14
  • 15. Dr. Charlie Gay Applied Materials Corporation
  • 16. Gigawatt Scale Solar Manufacturing Charlie Gay Vice President and General Manager, Solar Business The MIT Energy Conference March 10, 2007 External Use
  • 17. Enabling Industry Growth by Driving Cost Reduction…. FIRST THEN NEXT Cost per transistor 1974 2004 Cost per area 4 trillion 1,400,000 trillion 1995 2005 10 cents 5 nano-dollars 0.3 million m2 25 million m2 Cost per watt 20,000,000x Cost Reduction $30,000 / m2 $1,500 / m2 Source: SIA, IC Knowledge LLC 20x Cost Reduction Source: Display Search, Nikkei BP, Applied Materials 17 External Use
  • 18. Scale to Enable Learning Curve 100 1980 Historical $21.83/W Projected Module Cost ($/W)* 1990 $6.07/W 10 2005 $2.70/W 1 1 10 100 1,000 10,000 1E5 Cumulative Volume (MW) Production line size 0.5 5 50 100 (Megawatts per Year): (1980) (2000) (2005) (2010F) Lines Per Factory 2 3 4 10 * 2002 Dollars Source: Navigant Consulting 18 External Use
  • 19. Cost Per Watt Expected to Scale with Fab Size Device and Glass Substrate Transparent Conductor materials Amorphous Silicon optimization >$1.42/W Jumbo size Microcrystalline Silicon Optimized supply glass chain, especially glass Back Contact and glass coating $1.00/W Line balancing $0.71/W Current thin film Projected Applied Projected Applied technology for thin film thin film 25MW fab technology for technology for ~60MW fab 1GW fab Sources: First Solar, Applied Materials, supplier quotations 19 External Use
  • 20. Strategy to Reduce Production Costs Cost / m2 Increase Watts per m2 $ Production / Watt = PVD & PECVD experience in materials Watt / m2 and uniformity Entire film stack solution to optimize interfaces, performance and yield Reduce Cost per m2 Jumbo size glass - Equipment scaling 28% lower balance of systems cost for jumbo glass vs. 1m x 1m Yield & control Jumbo Size ~2.6m x 2.2m Enhanced light 4X less cabling trapping increases cell efficiency & mounting Typical for Exhibition Tandem Plate unveiled Industry at Solar Power 2006 ~1m x 1m Average Cell Efficiency = 10.6% Thickness uniformity <5% (range) 20 External Use
  • 21. Large Area Processing Equipment 21 External Use
  • 22. Rhone Resch Solar Energy Industries Association (SEIA)
  • 23. Expanding the Solar Market in the United States Rhone Resch President Solar Energy Industries Association 23 www.seia.org
  • 24. Expanding the US Solar Market Public education Long-term state campaign incentives Long-term commitment to Long-term, meaningful R&D Federal incentives 24 www.seia.org
  • 25. California Leading the Country • California Solar Initiative – 11-year program, $3.2 billion – CPUC Commercial and Existing Residential Buildings Program (CERB) • $2.8 billion • Fund 2,800 MW • Hybrid PBI program – 50% rebate – 50% performance based incentive – CEC Residential New Construction Comp - 2007 • $350 million • New residential single and multi-family homes • Set aside for affordable housing 25 • Renewable Portfolio Standard - 20% by www.seia.org 2010
  • 26. Requirements: 23 States and Washington D.C. MN: 10% by 2015 Goal + Xcel mandate of VT: RE meets load 1,125 MW wind by 2010 ME: 30% by 2000; *WA: 15% by 2020 growth by 2012 10% by 2017 goal - new RE WI: requirement varies by MT: 15% by 2015 MA: 4% by 2009 + utility; 10% by 2015 Goal 1% annual increase RI: 15% by 2020 CT: 10% by 2010 CA: 20% by 2010 IA: 105 MW ☼ NY: 24% by 2013 ☼ NJ: 22.5% by 2021 ☼ NV: 20% by 2015 ☼ CO: 10% by 2015 IL: 8% by 2013 ☼ PA: 18%¹ by 2020 *MD: 7.5% by 2019 ☼ AZ: 15% by 2025 *NM: 10% by 2011 *DE: 10% by 2019 ☼ DC: 11% by 2022 TX: 5,880 MW by 2015 HI: 20% by 2020 State RPS ☼ Minimum solar or customer-sited requirement * Increased credit for solar or customer-sited State Goal ¹PA: 8% Tier I, 10% Tier II (includes non-renewable sources) Solar water heating eligible Source: DSIRE, www.dsireusa.org, January 2007 26 www.seia.org
  • 27. Solar RPS Programs 11 States and Washington DC WA: double credit for DG NY: 0.1542% customer-sited by 2013 NV: 1% solar by 2015; 2.4 to 2.45 multiplier for PV NJ: 2.12% solar electric by 2021 PA: 0.5% solar PV by 2020 CO: 0.4% solar electric by 2015 DE: triple credit for solar electric MD: double credit for solar electric AZ: 4.5% DG by 2025 DC: 0.386% solar electric by 2022 NM: triple credit for solar electric TX: 500 MW non-wind Solar water heating counts DG: Distributed Generation towards solar set-aside Source: DSIRE, www.dsireusa.org, February 2007 27 www.seia.org
  • 28. State Status Marketsize Yr to Start Thru 2015 Program Arizona ACC has secured funding, final rules in place by end of 2007 1,000 MWs 2007 California IOU program is place, municipal program in place by end of 2007 3,000 MWs 2007 Colorado Passed RPS, started program, looking to double RPS 50 MWs 2006 DC Passed RPS, putting rules in place by end of 2007 30 MWs 2008 Hawaii High electricity prices, smaller systems, state tax credits 55 MWs Current Nevada Passed RPS, current program needs to be fixed 145 MWs Current New Jersey Program increased to 1,500 MWs, rules in place by end of 2007 1,500 MWs Current New York Passed RPS, more legislation coming, program start by 2008 25 MWs 2007 North Carolina Reauthorized 35% Tax Credit, $2.5m cap through 2011 35 MWs Current Northeast States Existing, subsidy underutilized, need some rule changes 35 MWs 2007 Pennsylvania Passed RPS, announced $200MM additional dollar 750 MWs Current Texas $500MM legislation going through legislature, Austin 100 MW 200 MWs 2007 AK, DE, FL, IL, Existing programs, generally small. Need some work on 300 MWs 2007+ MN, MI, MT, NM, interconnection, net metering, customer awareness, low rebates OH, OR Totals Solar balances rural central generation from Wind, Geo, etc ~7,200 $35B MWs market 28 www.seia.org
  • 29. EPAct 2005 First Residential Tax Credit in 20 Years • 30% capped at $2,000 • Available for PV and DSWH • Only 2 years Expands Commercial Credit • 30%, no cap • Covers all equipment and installation costs • Available for all technologies • Only 2 years 29 www.seia.org
  • 30. Securing America’s Energy Independence Act (HR 550, S 590) • Provisions – Extend the Federal tax credits to 10 years (through 2016) – Thermal remains at 30% – PV credit modified to fixed $/W • $3.00/watt – Remove the residential cap of $2,000 – Provide AMT relief – Provide 3-year accelerated depreciation – Retroactive to January 1, 2007 30 www.seia.org
  • 31. Securing America’s Energy Independence Act (HR 550, S 590) • Industry activities – Expanded staff – Hired tax lobby firm – Engaged industry, expanded government affairs committee – Created a national grassroots campaign • Action alert • Targeted local media buy – Initiated a paid media campaign • For the Action Alert, Talking Points and Fact Sheets: WWW.SEIA.ORG 31 www.seia.org
  • 32. Solar Right’s Act • Remove market barriers nationwide – Create national interconnection standards – Require retail net metering in all 50 states – Remove restrictive homeowner association covenants – Prevent exploitative permitting fees – Encourage solar-friendly rate structures – Facilitate REC ownership and exchanges • Additional incentives – Remove utility exemption from ITC – Create tax credit for manufacturing facilities in the US • Still under development, original co-sponsors in House and Senate identified 32 www.seia.org
  • 33. Jigar Shah SunEdison, LLC
  • 34. The Coming “Solar Decade” Preparing your electricity market for Cost-effective distributed solar energy Jigar Shah, CEO Sun Edison LLC February 07 3/8/2007 34
  • 35. Insights on grid parity Energy Cost are going up! – “Gas production has peaked in North America" CEO - Exxon Mobil, Lee Raymond - Reuters Energy Summit 6/21/05 – “Over the past year, that Great Britain and the United States each invested roughly $800 million in electricity transmission; but the American grid is 15 times larger than the British one” Financial Times 8/18/03 – “In less than two years, the price of coal from the Eastern fields that start a couple of hundred miles south and west of Washington has climbed from a range of $25 to $28 a ton to $50 to $60 a ton.” Washington Post 4/11/05 – Double digit rate increases in AZ, CA, CO, CT, HI, MD, MA, NJ, NV – US needs 20 GWs annually – this can and will come mostly from renewables • Represents about a 2% increase per annum • US needs more peaking capacity, NOT baseload • US has still not invested enough in Transmission & Distribution • Utilities are turning to expensive technologies because it is what they know 3/8/2007 35
  • 36. Challenges to grid parity • Cost of Solar panels – Qcell, Suntech, others have announced cost reductions of 50% expected by 2010 for traditional crystalline – First Solar announced costs have dropped to less than $1.35/Wp • Finding labor – To install 10,000 MWs of solar by 2012 we will need 40,000 additional job-years, maybe 10,000 NEW people in the solar industry – Sales, marketing, finance, accounting, construction, safety, quality • Leveling the playing field No standby charges (Net metering) Streamlined Utility Interconnection Incentives tied to the Value of Distributed Generation Fair Utility Rate Design 3/8/2007 36
  • 37. What SunEdison is doing: Getting Ready • Vision: – Make solar a meaningful worldwide energy source – Deliver electricity at or below existing retail prices • Make it easier to switch: First provider to offer solar energy as a turn-key service – No capital outlays – No impact on existing services – No ongoing customer maintenance costs • Gain Scale: Largest solar energy service provider in North America – Over 30MWs of 100% renewable electricity installed since 2004 – Largest solar panel purchases for the US market – 160 Employees in 5 offices (California, Colorado, New Jersey, and Maryland) • Raise Financing: Strongest financial position of any solar services provider – Over $180M in arranged shelf financing – Over $30M in equity financing 3/8/2007 37
  • 38. What SunEdison is doing • Assessing the value of solar to utilities and consumers: – Ratepayers, Utility, Industry, State/Local gov’t, Federal gov’t – Utility savings: Energy, Capacity, T&D Investment, Reliability – Local Economic Development: Tax Revenue – Environmental Benefits: particulate emissions, water usage, etc • Debunking Myths – US has the lowest energy prices among OECD countries – There is not enough space to supply the nation with solar power – Solar power will always need incentives – Solar power makes the grid unstable – Solar power is maintenance-free – Coal is a low cost, stable energy source – Nuclear energy is the lowest cost energy source • Developing a supply/demand curve – For solar to grow folks need to continue to invest, for this to happen we have to show that there is demand for the product – more than just studies 3/8/2007 38
  • 39. Question 1: How important is achieving grid parity, what price per installed Watt does that represent, and when will we get there? What are the best tools (other than the ones you are currently pursuing) to accelerate the point of crossover? Higher Efficiency – Manufacturing Scale – Vertical Integration Next-generation Technologies – Policy and Incentives Financial Innovation – New Business Models
  • 40. Question 2: What would slow the achievement of grid-parity? What economic risks persist for wider commercialization of distributed solar?
  • 41. Question 3: What opportunities exist in financial innovation to accelerate grid-parity? What opportunities exist in delivery innovation to accelerate grid-parity? (e.g. Building-integrated PV, New Construction vs. Retrofit)
  • 42. Question 4: How are emerging low-cost global producers going to impact the drive to grid-parity? How are non-US customers and government incentive programs going to impact the drive to grid-parity in the US?
  • 43. Question 5: Beyond economics, what are the remaining obstacles to faster deployment of PV? How will they be addressed?
  • 44. Question 6: How will solar at grid-parity impact the broader energy and electricity market?
  • 45. Audience Questions:
  • 46. MIT Energy Conference 2007 - Solar Power: A Path to Grid Parity? Moderator - Travis Bradford, President, Prometheus Institute 1. Manufacturing - Dick Swanson, President and CTO SunPower 2. Technology - Charlie Gay, VP & GM Solar Group, Applied Materials 3. Policy - Rhone Resch, President SEIA 4. Financing/Integration - Jigar Shah, CEO SunEdison Special Thanks to the student organizers: Keith Peltzman - Eerik Hantsoo - Joel Conkling - Anthony Fotopoulos - Carlos Molina