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As in the United States, we see demand for electricity is burgeoning globally, more so in those countries not equipped to meet this growth. Which is why I am convinced with a passion that the same way wireless technologies mitigate tele-density issues globally, rendering them non-issues in India and parts of Africa, so too should PV provide an affordable answer to the problem of power generation in such areas. American PV technology along with innovative financial schemes like Power Purchase Agreements (PPS) successfully address a global problem. Enter Muni-Solar.
Flying into Kuala Lumpur International Airport one sees rows upon rows of palm oil trees like sentinels in plantations that have taken over the countryside. Barely a decade ago this was rain forest.
Here is a quote from a large palm oil producer. "Malaysia, the world's second largest producer, expects crude palm oil output to rise to 16.5 million tonnes this year from 15.8 million in 2007, as soaring prices for the commodity have led to conversion of marginal land into plantations". 'Marginal land' being the corporate euphemism for the same rain forests I saw decimated over my decade long relationship with the country. Palm oil for cooking is one thing. Using it for Bio-fuel is alarmingly another. The country tripped over itself in expanding this industry and it's a shame a reckoning is due someday soon. The only good news from this story is Malaysia's newly acquired taste for carbon credits. Their generation through solar programs was welcomed over our discussions. Many Malaysians in positions of power fully understand that while carbon credits for solar use is the right thing to do, allocating them for Bio-fuel stinks like deep-fried tofu.
In comparison, 254x254 sq kms of desert, less than 1% of global desert area if installed with Concentrated Solar Thermal (CST) panels would produce as much electricity as is currently consumed by the entire world. 110km x 110 km would produce as much electricity as consumed by the European Union in 2004. And now that we're on a roll, CST in SW American deserts could produce 7000 GW of capacity, or 7 times current total USA electricity generation capacity.
Suchitra Sriram of the Asia Pacific Energy Practice concludes that Malaysia,situated as it is in the equatorial region with an average radiation of 4,500 KWh per square meter, is an ideal location for large-scale solar power installations. Considering that Malaysia gets on an average 4.5 hours to 8 hours of free and bountiful sunshine everyday, the potential for solar power generation is very high. However she says and we know, the real harnessing of this renewable energy source is way below its actual potential.
Surging oil prices, increasing environmental awareness, growing imports of oil and un-utilized resources of renewable energy are factors driving the Malaysian Government to vigorously promote renewable energy in the country. In the Eighth Malaysia Plan, a target of five percent was set for renewable energy out of the total electricity production but the target has not been achieved. Several factors contribute to this and these issues are pretty global being as applicable to India, Indonesia, or The Philippines as they are to Malaysia. They include a lack of awareness that's closely tied to easy availability of fossil fuel and the capital cost of solar coupled with restricted access to finance.
Fossil Fuels & Awareness on Alternatives:
Visualize a dollar increase to gasoline prices and see what it does to your awareness on alternatives such as solar. The two are closely tied in a direct proportion. It behooves us however, to uncouple the two and educate ourselves on a topic that will decide our collective fate and surely that of our children and grandchildren. Using coal and oil recklessly is like unemployed family members dipping their hands into the family inheritance.
We begin our education with the understanding that fossil fuels (coal and oil) are not sources of energy like solar, but instead carriers or storehouses of solar energy. This is a key point. Read on.
An average US gallon (3.8L) of gasoline requires approximately 90 metric tons of ancient plant matter as precursor material. Coal is less, at 50 metric tons but the costs in paleo-efficency to convert ancient solar energy via intermediate agencies such as the above-mentioned precursor material (plankton, algae, biomass) into oil and coal are equally appalling.
In our convenient math, we calculate cost of oil and coal by toting up the cost of bringing it up and the cost of processing, refining, transporting, etc. We conveniently fail to add on the cost of time and energy already employed to create the raised oil/coal from its precursor material. An inconvenient truth, if there is one. The Mayans and the Easter Island inhabitants did not comprehend the nature of their fatal error and kept cutting trees until doomsday. We do not have that excuse.
The experts use "Recovery Factor" (RF) to calculate the true cost of fossil fuels. They use RF to arrive at the amount of ancient photosynthesis product consumed annually in the form of fossil fuels. The global RF for coal is 0.09. Using that RF they figure that 422 times the net amount of carbon fixed (photosynthesized) every year is required to generate the fossil fuels burnt in 1997. This is equivalent to 73 times the global standing stock of carbon in vegetation.
I can go on. Examination of paleo-productivity use over time suggests that societal use of this resource has exceeded the current rate of global carbon fixation (photosynthesis) since 1888. This means we have been living beyond our (energy) means since that year; far more serious that any national debt issue worrying us.
If we think coal and oil are cheap, it's because our addiction is being subsidized. In 2005, the Malaysian government subsidized petrol (gasoline) to the tune of Ringett 35 Billion (US$11.3 Billion) and forfeited sales tax of Ringett 7.6 Billion (US$2.3 Billion). Such subsidies are not just a Malaysian issue. They plague every country including the United States. Subsidizing the use of fossil fuel must be the dumbest collective action undertaken by Homo sapiens second only to their reckless propagation as a species. Subsidizing renewable solar use is by far the better option than subsidizing an ongoing grab at the family inheritance.
Lets now tackle awareness. It has yet to dawn on the vast majority that generating solar energy is now a proper commercial grade solution. They remain unaware a marked shift has occurred in America with PV applications having moved from almost completely off-grid to a nationwide average 60% grid-connected distributed power.
As is the case with WiFi, the establishment utilities will keep slamming solar technology until they adapt it themselves. The similarity between WiFi and PV as disruptive technologies is fascinating.
If the PV industry grew by 25% per year in the USA as predicted, PV will offset 10million metric tons of CO2 per year by 2027, equivalent to the annual increase in US fossil fuel electricity generation. This means the emission rate will become negative thereafter as the PV contribution grows. If this can happen for the USA, it can certainly happen in Malaysia, India and elsewhere.
To quote Tom Cheyney in his article, The skinny on silicon thin-film PV: NanoMarkets' report runs the numbers, and then some (Photovoltics international Dated 27 March 2009), "The clusterbomb of companies like Sharp, Sanyo, and ECD Uni-Solar ramping hundreds of megawatts of tandem/multijunction thin silicon lines along with the turnkey trio of Applied Materials, Oerlikon, and Ulvac offering start-ups a lower-risk entry to high-volume PV module making--with the polysilicon shortage thrown in as a market sector accelerant--has given SiTFPV the kind of disruptive status that only its true believers once dreamed of".
He's saying that in a relatively short period PV technology has moved from crystalline silicon to thin-film. Even in thin film, single-junction is now passé and since 2000, tandem-junction (largely aSi/microcrystalline silicon) has become the convention. Now, triple junction (for example: aSi/micro-crystalline silicon and nano-crystalline silicon) is taking over. With triple-junction we are talking of 15-16% efficiencies without factoring for tracking or optics for concentration (CPV). This is Moore's Law being applied successfully to PV technology that in turns gets investors, financiers and their ilk all excited and financing further development as well as production in what is the most virtuous of virtuous cycles. This is how it ought to be and it is.
There are two driving forces working on solar power generation technologies; increasing efficiency and lowering cost. In addition to the developments in thin-film PV, we see increasing energy conversion efficiencies through:
- Increased solar cell spectral sensitivity by using broader or different regions of solar radiation.
- Better matching solar emissions and producing higher absorption efficiencies.
- Using higher fraction of sunlight that eliminates losses through excessive cell heating of the silicon.
- Concentrated PV: here passive optical elements are used to concentrate sunlight on PV cells resulting in more energy output while using fewer, smaller, cells. Also, because they can be smaller, we can use more efficient (costly) material than the silicon based products that currently make up large-scale production.
CAPITAL COST AND ACCESS TO FINANCE:
Here too, the two issues intertwine.
First cost. In 1980 PV cost $50 per Peak Watt. In 2008 it was $3 per peak Watt.
In CA with net metering (meaning the solar power system has an inverter and is connected to the electricity grid) we see costs below $0.11/kWh, which is on par with some utility delivered power.
The TFPV energy payback is 1 year. Meaning, after 1 year it will generate more energy than went into making it in the first place. Compare this to fossil fuels after calculating paleo-productivity. In addition, TFPV life expectancy now is 30 years.
Nothing however has made Muni-Solar more a reality around the globe, than that all-American innovation, the Power Purchase Agreement or as it's fondly called, the PPA.
PPAs allow the user capital free access to equipment over a long term (eg.25 year) contract to buy electricity at a fixed price, lower than what's being charged by utilities, pay only for what you use and no worries about price increases. Besides conventional RoI allocations, the financier in turn has access to tax rebates, federal & state subsidies as well as carbon credits.
In 2007, of the American commercial and institutionalized solar market an estimated 50% was developed under PPAs, up from 10% in 2006. In 2008, it was 80%. PPAs have not only outstripped conventional commercial PV sales but have expanded the market as people who otherwise wouldn't have considered solar have acquired the necessary equipment.
There was a bit of a worry when the government tax credits were about to expire but in October 2008 Congress approved H.R.1424 reauthorizing the 30% federal tax credit for solar projects. Two major changes were made that have positively impacted the market:
- The prohibition in the original version preventing Utilities from enjoying ITC was removed.
- Residential caps were removed.
The user in most cases is the city municipality, the special economic zone (SEZ), the industrial or university campus or the building cooperative. The solar advantage to these entities in countries like India, The Philippines and Indonesia plagues as they are by brownouts, are huge. Connecting to the grid however is a challenge. While Malaysians don't know what a brownout is, the Malaysian government has set some pretty ambitious goals for themselves including advanced nation status by 2020. These goals behoove them to seriously consider solar power. On-grid connectivity in Malaysia is easier to engineer.
Now if the user does his math, self-financing is a better option than using financing instruments like a Malaysian version of the PPA. Except for the upfront capital cost. Mitigating that is a huge advantage. Secondly, by using the PPA the entity gets all the benefits of Federal and state subsidies, tax exemptions and carbon credits through the low rates it pays even though the entity has no resources or expertise to chase these concessions.
These are also the reasons why Muni-Solar also makes sense to the financing organization. If self-financing makes sense to the user, it makes more sense to the financier to finance the user. Also, such financing organizations are well versed in keeping track and chasing institutional subsidies, tax breaks and concessions all of which they purvey for profit.
In the USA, a meaningful ROI for Muni-Solar stems from:
- State and federal subsidies.
- High electricity rates
- State and local policies that support solar installations around 200kWatts or larger.
Not surprisingly more than any technological advances in PV, financial techniques such as the PPA are being reported as the driving force behind the growth of the solar energy industry in America. Malaysia and other countries should look at these financing models and use them at least until technological advancements render them unnecessary.
