Solar Revolution

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Solar Revolution

  1. 1. Solar Revolution Andrew Munro Waleed Yousaf Emilie Thomas Travis Bradford The MIT Press Cambridge, Massachusetts London England
  2. 2. A new path on the horizon <ul><li>Solar energy will inevitably become the most economic solution for most energy applications </li></ul><ul><li>There will be unprecedented growth in the solar-energy industry </li></ul>
  3. 3. <ul><li>Economics of electricity </li></ul><ul><ul><li>Generation costs </li></ul></ul><ul><ul><li>Distribution costs </li></ul></ul><ul><li>US Electricity – 9 cents/kWh total </li></ul><ul><ul><li>4.5 cents/kWh for generation </li></ul></ul><ul><ul><li>4.5 cents/kWh for distribution </li></ul></ul>
  4. 4. <ul><li>The times when energy demand is the highest coincides with those when the sun shines more brightly </li></ul><ul><li>Solar is suited to fill the need of intermediate-load demand </li></ul><ul><li>Solar power technology needs to become a competitive producer of intermediate-load electricity which represents 30 to 50 percent of the total electric demand </li></ul>
  5. 5. <ul><li>Many grid-connected homes world wide (particularly in Japan and Germany)  have already elected this option through grid connected PV systems. </li></ul><ul><li>Economic rational for making the switch to grid connected solar electricity will be reached in different markets with different applications at different times </li></ul>
  6. 6. <ul><li>Other economic advantages of solar: </li></ul><ul><ul><li>Modularity and Simplicity </li></ul></ul><ul><ul><ul><li>Install only as many panels as are needed </li></ul></ul></ul><ul><ul><ul><li>Cells can be brought online in stages </li></ul></ul></ul><ul><ul><ul><li>Serviced piece meal </li></ul></ul></ul><ul><ul><ul><li>Low training costs </li></ul></ul></ul><ul><ul><ul><li>Lack of moving parts </li></ul></ul></ul><ul><ul><ul><li>High reliability </li></ul></ul></ul><ul><ul><ul><li>Low maintenance, </li></ul></ul></ul><ul><ul><ul><li>Long module life. (30+ years) </li></ul></ul></ul>
  7. 7. <ul><li>The analysis used in this book does not include: </li></ul><ul><ul><li>Government intervention </li></ul></ul><ul><ul><li>Significant increases in oil costs </li></ul></ul><ul><ul><li>Technological breakthroughs </li></ul></ul><ul><ul><li>The shift to solar will happen in years rather than decades and will occur because of fundamental economics </li></ul></ul>
  8. 8. Overview of Modern Energy <ul><li>Global energy production has grown by around 2 percent annually over the last 30 years </li></ul><ul><li>The united States is the largest energy user at 26 percent of total consumption, despite only having 4.6 percent of the worlds population </li></ul>
  9. 9. <ul><li>To visualize the comparison between rich and poor nations, the average US citizen consumes over eight times the energy of a person in sub-Saharan Africa. </li></ul><ul><li>Electricity comprises only 18 percent of the final consumption, it requires 39 percent of the primary fuel supplied - losing some 65 percent of the energy content of its fuel during generation and transmission </li></ul>
  10. 10. Solar Energy a Theoretically Elegant but Unrealistic Solution?
  11. 11. Types of Solar Energy
  12. 12. The Dawn of Solar Energy <ul><li>Grid-Connected market </li></ul><ul><ul><ul><ul><li>Growth Rate of over 50% per annum </li></ul></ul></ul></ul>
  13. 14. Modern Electric Utility Economics <ul><li>Finite deposits of Oil and Natural Gas </li></ul><ul><li>Coal the only Supplement fossil fuel available </li></ul><ul><li>Daytime Electricity, the most expensive form of electricity for utilities to produce. </li></ul>
  14. 15. Forecasting Future Energy Prices <ul><li>US Department of Energy’s Energy Information Agency (EIA) predicts </li></ul><ul><ul><li>2% per year increase till 2025 </li></ul></ul><ul><ul><li>411 Quadrillion BTU in 2002 to 644 Quadrillion BTU in 2025 </li></ul></ul><ul><ul><li>Natural Gas will supply the highest share while Nuclear will grow slowest </li></ul></ul>
  15. 17. EIA’s Assumptions in Projections <ul><li>Oil, Natural Gas, Coal and Electricity will be roughly the same price in 2025 as they were in 2003 . </li></ul><ul><ul><li>Oil – EIA predicts production increase from 78.2 million barrels/day in 2002 to nearly 119 million barrels/day in 2025 </li></ul></ul>
  16. 19. Electricity Cost Comparisons <ul><li>Cost per KWh generated – standard measure </li></ul><ul><li>Change in Industry’s fundamentals </li></ul><ul><ul><li>Utility adding generation capacity on the customer’s side of the grid </li></ul></ul><ul><ul><li>Consumers not requiring delivery through the grid </li></ul></ul><ul><li>Cost per KWh generated + Transport Cost = Cost per KWh as delivered to the end consumer </li></ul>
  17. 20. Electricity Cost Comparisons (Cont.) <ul><li>External Costs of the generating technologies </li></ul><ul><ul><li>Direct Costs of Pollution </li></ul></ul><ul><ul><ul><li>Health Care, deaths, property damage etc. </li></ul></ul></ul><ul><ul><li>Other Environmental Damage </li></ul></ul><ul><ul><li>Security Costs </li></ul></ul><ul><ul><ul><li>Protecting fuel Supplies </li></ul></ul></ul><ul><ul><ul><li>Protecting Nuclear facilities </li></ul></ul></ul><ul><li>Natural Gas 30%-90% </li></ul><ul><li>Coal 55%-400% </li></ul>
  18. 21. The Cost of Time <ul><li>Base-Load Coal and Nuclear Power Plants </li></ul><ul><ul><li>Running over 7000 hours/year </li></ul></ul><ul><ul><li>Shutting down only for maintenance </li></ul></ul><ul><li>Natural Gas Plants </li></ul><ul><ul><li>Run for less than 1500 hours/year </li></ul></ul><ul><ul><li>Run only at times of high demand </li></ul></ul><ul><li>Compare the cost of energy with the load </li></ul><ul><li>it replaces </li></ul>
  19. 24. Solar Energy in the Real World
  20. 25. What really drives adoption <ul><ul><li>COST </li></ul></ul><ul><ul><li>Indirect Benefits </li></ul></ul><ul><ul><ul><li>Reduced pollution </li></ul></ul></ul><ul><ul><ul><li>Enhanced energy security </li></ul></ul></ul><ul><ul><ul><li>Robust infrastructure that distributed generation creates </li></ul></ul></ul><ul><ul><li>Marketing & Financial Benefits for companies </li></ul></ul><ul><ul><li>Relevant Information </li></ul></ul>PREMIUM
  21. 28. Built-In PV <ul><li>Zero-energy homes / buildings </li></ul><ul><ul><li>On site electricity generation </li></ul></ul><ul><li>Integrated in new construction </li></ul><ul><ul><li>1/3 of the retrofitting cost </li></ul></ul>
  22. 29. Developing World <ul><li>Population without any electricity access </li></ul><ul><ul><li>Latin Am., Caribbean, East Asia: 10% </li></ul></ul><ul><ul><li>South Asia: 61% </li></ul></ul><ul><ul><li>Sub-Sahara Africa: 78% </li></ul></ul><ul><ul><li>Developing World: 1/3 (1.6b) </li></ul></ul><ul><li>“ All economic growth depends on safe, secure, reliable access to electricity” </li></ul>
  23. 30. Models for the Developing World <ul><li>PV is becoming one of the most popular methods </li></ul><ul><ul><li>Village Solarization </li></ul></ul><ul><ul><li>Home Solarization </li></ul></ul><ul><li>Micro-Credit </li></ul><ul><li>Installation jobs (25-35% of the cost) </li></ul>
  24. 31. A level playing field? <ul><li>Worldwide, </li></ul><ul><ul><li>Fossil-fuel and Nuclear Energy receive direct subsidies totalling $131 billion every year </li></ul></ul><ul><ul><li>Less than $5 billion combined on renewable energy subsidies </li></ul></ul>
  25. 32. Tools For Adoption & Acceleration <ul><li>Create Incentives </li></ul><ul><ul><li>Feed-in tariffs </li></ul></ul><ul><ul><li>Net metering </li></ul></ul><ul><ul><li>Rebates </li></ul></ul><ul><ul><li>Consumer tax deductions </li></ul></ul><ul><ul><li>Production Tax credits </li></ul></ul><ul><li>Penalizing extractive and pollutiing fossil-fuel energy </li></ul><ul><li>Invest in R&D </li></ul>
  26. 33. Policies around the World: Japan
  27. 34. Policies around the World : US
  28. 35. Policies around the World : Europe <ul><li>Feed-in tariffs mostly </li></ul><ul><ul><li>1st instituted in Denmark </li></ul></ul><ul><ul><li>Very successful in Germany </li></ul></ul>
  29. 36. Convergence of economics
  30. 37. Development phases
  31. 38. Solar Revolution <ul><li>Q & A… </li></ul>

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