Armed with a new sense of urgency to fix the problems of power supply, rising power costs, and increasing dependence on imported coal, the Narendra Modi-led Indian government is planning to enhance the country’s ambitious National Solar Mission. Currently, the mission entails installation of 20,000 MW of grid-connected and 2,000 MW of distributed solar power capacity by 2022.
Given the resource availability and the demand for solar power, tremendous capacity addition potential remains in India. The government has announced plans that it intends to source 3% of the country’s total electricity demand from solar power projects by 2022. To meet this target, a total installed capacity of 34,150 MW is required, the Ministry of New and Renewable Energy has determined. Thus, the current form of the National Solar Mission would fall short by at least 12,000 MW.
While the MNRE regularly comes up with innovative mechanisms to distribute and allocate solar power capacity among project developers, there are several areas that have not been addressed in the policy. Canal-top solar power projects, something pioneered in Prime Minister Modi’s home state of Gujarat, is among them. This would address yet another and more important problem faced by the country — water scarcity and over-dependence of the agriculture on monsoon.
Net metering and feed-in tariffs for rooftop solar power projects is another missing area. While the state government is likely to have the final say on this issue, the central government can certainly announce incentives to promote the implementation of this policy across the country. This policy has also been successfully implemented in Gujarat and had received financial support from international financial institutions such as the IMF.
It is very likely that the “Gujarat model” will be followed for enhancing renewable energy in India as early signs point to the same. The MNRE has scheduled an investors meet in November this year where it hopes to attract investment worth millions of dollars to boost the renewable energy sector, an approach mastered by Mr Modi during his tenure as the Gujarat chief minister.
Separate from discussions about airborne coal power plant emissions, are the high levels of water usage caused by obscenely high coal power plant water requirements. Water usage by power plants are directly proportional to the downstream water loss experienced by farmers, citizens, and other water users such as wildlife.
In some regions of the world, there exists acute competition for water resources as coal power station operators vie for water with agricultural, urban, and other users of water — while areas with plentiful water find their power plant choices aren’t constrained by water supply issues at all.
But the era of increasing water shortages and frequent drought seem here to stay in many regions, and the huge volumes of water required by some power plants is becoming a factor in the decision-making process as to which type of power plant is most suited for any given location.
Therefore, the conversation is now arcing towards the local availability of water and thence, to the most appropriate type of power station to propose for each location.
So let’s take a look at the water usage of five common types of power plants:
Coal: 1100 gallons per MWh
Nuclear: 800 gallons per MWh
Natural gas: 300 gallons per MWh
Solar: 0 gallons per MWh
Wind: 0 gallons per MWh.
While 1100 gallons per MWh doesn’t sound like much, America’s 680 coal-fired power plants use plenty of water especially when tallied on an annual basis.
The largest American coal-fired power station is in the state of Texas and it produces 1.6 GW of electricity, yet it is located in one of the driest regions on the North American continent. Go figure.
At one time as much as 55% of America’s electricity was produced via coal-fired generation and almost every home had a coal chute where the deliveryman dropped bags of coal directly into the homeowner’s basement every week or two.
But in the world of 2014, the United States sources 39% of its electricity from coal power plants and this percentage continues to decline even as domestic electricity demand is rising.
Texas Utility Going Coal-Free, Stepping Up Solar
In a recent column by Rosana Francescato, she writes;
“El Paso Electric Company doubles its utility-scale solar portfolio with large projects in Texas and New Mexico. As if that weren’t enough, the utility also plans to be coal-free by 2016.” — Rosana Franceescato
She goes on to tell us that EPE serves 400,000 customers in Texas and New Mexico and gives credit to the foresighted management team. El Paso Electric is already on-track to meet the proposed EPA carbon standard. Their nearby 50 MW Macho Springs solar power plant about to come online is on record as having the cheapest (PPA) electricity rate in the United States.
This solar power plant will displace 40,000 metric tonnes of CO2 while it powers 18,000 homes and save 340,000 metric tonnes of water annually, compared with a coal power plant of the same capacity. That’s quite a water savings in a region that has been drought-stricken in 13 of the last 20 years, only receiving 1 inch of rainfall per year.
In February 2014, EPE signed an agreement for the purchase all of the electricity produced by a nearby 10 MW solar installation that will 3800 homes when construction is completed by the end of 2014. And they are selling their 7% interest in a nearby coal power plant. Now there’s a responsible utility company that makes it look easy!
Solar’s H2O advantage
The manufacture of solar panels uses very little water, although maintenance of solar panels in the field may require small amounts of water that is often recycled for reuse after filtering out the dust and grit, while other types of energy may require huge volumes of water every day of the year.
Wind’s H2O advantage
Wind turbines and their towers also use very little water in their construction and installation, although some amount of water is required for mixing with the concrete base that the tower is mounted on at installation.
In the U.S. which is facing increasing water shortages and evermore drought conditions as global warming truly begins to take hold in North America, switching to a renewable energy grid would have profound ramifications. Estimates of water savings of up to 1 trillion gallons could be possible if utilities switched to 100% renewable wind and solar power with battery backup on tap for night-time loads and during low wind conditions.
Midway through that transition, the present water crisis in the U.S. would effectively be over. Yep, just like that. Over.
China’s Looming Water Crisis
China’s looming water crisis has planners moving to taper their coal and nuclear power generation construction programmes. You can’t operate these plants without the required water, even for a day. Yet, the people who live and grow crops and raise livestock in the surrounding areas need access to undiminished water supplies. What good is a coal power plant if everyone moves away due to a lack of water?
There are very legitimate reasons nowadays to switch to solar and wind generation — and the reduction of airborne emissions used to be the prime consideration and may remain so for some time, however, massive reductions in water consumption might now prove to be the dealmaker in some regions — and the emission reductions may now be viewed as the happy side benefit! Wow, that’s a switch!
Of course, the benefits of solar and wind power will still include no ongoing fuel costs, very low maintenance and the lowest Merit Order ranking (the wholesale kWh price of electricity) of any energy.
Granted, there are locations where renewable energy doesn’t make sense, such as some Arctic or Antarctic regions. In these places solar simply isn’t worthwhile and wind levels may not be sufficient to make the economic case. Biomass may be a partial solution in these areas and there may be the opportunity for geothermal energy — although finding ‘hot rocks’ underground near population centres is much more unlikely than many people may realize.
But in the future, the vast majority of locations will be powered by renewable energy paired with a battery backup or a conventional grid connection — or both. And its a future that’s getting closer every day.
Despite an overall slump in installations in 2013, the global cumulative wind power capacity will more than double from 319.6 Gigawatts (GW) at the end of 2013 to 678.5 GW by 2020, says research and consulting firm GlobalData.
The company’s latest report* states that China, the largest single wind power market, responsible for 45% of total global annual capacity additions in 2013, is expected to have a cumulative wind capacity of 239.7 GW by 2020. China overtook the US as the leading market for installations in 2010, when it added a massive 18.9 GW of wind capacity.
Harshavardhan Reddy Nagatham, GlobalData’s Analyst covering Alternative Energy, says:
China doubled its cumulative wind capacity every year from 2006 to 2009 and has continued to grow significantly since then. Supportive government policies, such as an attractive concessional program and the availability of low-cost financing from banks, have been fundamental to China’s success.
While China will continue to be the largest global wind power market through to 2020, growth for the forecast period will be slow due to a large installation base.
The report also states that the US will remain the second largest global wind power market in terms of cumulative installed capacity, increasing from 68.9 GW in 2014 to 104.1 GW in 2020.
This will largely be driven by renewable energy targets in several states, such as Alaska’s aim to reach 50% renewable power generation and Texas’ mandate to achieve 10 GW of renewable capacity, both by 2025.
The slump in 2013 was largely a product of a decrease in installations in the US and Spain. While there are likely to be further slight falls in annual capacity additions in 2015 and 2016, overall industry growth will not be affected as global annual capacity additions are expected to exceed 60 GW by 2020.
The perovskite family of materials is itself not new. Perovskite, named after Russian mineralogist Lev Perovski, refers to any material sharing the crystal structure of calcium titanate (CaTiO3), based on the general formula ABX3. When used in solar cells, A is typically a small carbon-based (organic) molecular cation, B is a metal ion such as lead, and X is a halide such as iodide, bromide or chloride. These “organo-metal halide” perovskites were studied extensively throughout the 1990s but were overlooked for solar cells until 2009, when researchers at the Toin University of Yokohama used these materials in liquid electrolyte dye-sensitised solar cells. However, the liquid electrolyte dissolved the perovskite, rendering the solar cells highly unstable. In 2012, our group in Oxford, at the same time as researchers at École polytechnique fédérale de Lausanne (EPFL) in Switzerland and Sungkyunkwan University in Korea, replaced the problematic liquid component with a stable solid-state version, paving the way for dramatic improvements in efficiency.
Organo-metal halide perovskites have several key advantages over traditional solar cell materials such as crystalline silicon, which generally require intensive, high-temperature processing. Firstly, these perovskites can be processed using very simple, low-cost methods – the perovskite precursor solution, containing a mixture of inexpensive salts, is simply cast onto the bottom electrode of the solar cell, heated gently to form the crystalline perovskite material, and sandwiched with a top electrode. This allows ‘printing’ of these solar cells using a large inkjet-style printer. We can also process them on flexible substrates, such as plastic or fabric, opening up a number of portable electronics applications. Using some tricks, we can make the solar cells semi-transparent enough to be used on window panes. Secondly, the constituent elements in the ABX3 crystal structure can be widely tuned to give a range of desired optical and electrical properties. Tweaking the halide composition, for example, allows the solar cell color to be tuned to any color of the rainbow. This gives them the huge advantage of being able to be fabricated in aesthetically-pleasing ways. This means consumers may be more willing to put them on their roofs, and building-integrated PV applications become attractive. They can even be processed as additional layers on top of established technologies such as silicon, where we can use their color tunability to harvest more of the solar spectrum and improve the current state-of-the-art panels.
While the applications are promising, there are a number of challenges these materials need to overcome before we see widespread deployment. We need to prove that these solar cells, assembled as modules, can last for several years under illumination and in the elements – the silicon industry standard is currently 20-30 years. These perovskites are particularly sensitive to moisture, so they need to be very well sealed from the atmosphere to prevent premature degradation. Presently there is insufficient stability data to indicate how long they will last, but ongoing laboratory tests on well-sealed devices under simulated sunlight over 1000s of hours are very encouraging. Another issue is the presence of trace amounts of lead in these materials. While it is perfectly possible to contain the lead throughout the entire life cycle of the panel, this low toxicological risk could still be problematic for the technology, particularly if policy stipulates against it. However, just last month both our group and researchers at Northwestern University reported the first lead-free (tin-based) perovskite solar cells, albeit with much lower stability and efficiency than their lead-based counterparts. These results are particularly promising for the technology, and with optimisation to improve stability and performance, we could see the tin analogues surpassing the lead-based materials.
With such an unprecedented increase in solar cell efficiency after only a few years of academic research, the future is certainly looking bright for these materials. The sky really does seem to be the limit – recent reports have shown that these perovskites can emit light very efficiently, also opening up light-emitting diodes (LEDs) and lasers as potential applications. By further exploiting their remarkable properties and improving their stability, we could see perovskites playing a major role in an electrified future world.
Dr Sam Stranks is a Junior Research Fellow at Worcester College, Oxford, and a Lecturer in Physics at Corpus Christi College, Oxford. He is currently working with Prof. Henry Snaith in the Department of Physics at the University of Oxford, and will commence a Marie Curie Fellowship at MIT in October 2014.
Barclays recently downgraded the U.S. electricity sector. That’s right, the whole sector. It’s now listed as “underweight,” meaning that if you were to hold a full portfolio of bonds for the U.S. economy, you might want to be a bit light on U.S. electric utilities, as they might not keep up with the broader economic growth trends.
Why? One answer is the disruptive threat of solar-plus-battery systems.
From the Barclays report:
Over the next few years… we believe that a confluence of declining cost trends in distributed solar photovoltaic (PV) power generation and residential-scale power storage is likely to disrupt the status quo.
Based on our analysis, the cost of solar + storage for residential consumers of electricity is already competitive with the price of utility grid power in Hawaii.
Of the other major markets, California could follow in 2017, New York and Arizona in 2018, and many other states soon after.
In the 100+ year history of the electric utility industry, there has never before been a truly cost-competitive substitute available for grid power.
We believe that solar + storage could reconfigure the organization and regulation of the electric power business over the coming decade.
If that language sounds familiar, it’s because Barclays’ logic is very similar to that of our recent report, The Economics of Grid Defection, in which we forecasted the declining costs of solar plus storage and the time—coming soon—when those systems could reach parity with grid-sourced retail price electricity in a growing number of markets, including Hawaii, California, and New York.
In fact, the Barclays report cites RMI as a key source in several of its analyses that lead to this conclusion.
Barclays believes we’re entering a post-monopoly world in which distributed energy resources will take a place alongside large-scale central generation as a critical energy resource and a widely available and affordable customer option.
In a surprisingly strong prediction for analysts, Barclays views this transition as inevitable:
“Whatever roadblocks utilities try to toss up—and there’s already been plenty of tossing in the states most vulnerable to solar, further evidence of the pressures they’re facing—it’s already too late.”
If you’re a utility, or an investor who’s got money in utilities, that’s some ominous language. Admittedly, a downgrade suggests two possible outcomes in the near future: 1) analysts tend to move in herds, so expect more news on the U.S. electric sector soon, and 2) capital is likely to get a bit more expensive for utilities, as millions of dollars shift out of the sector.
It’s not all bad news. As we discussed recently in “Caveat Investor,” this should ultimately lead to a stronger, more resilient power sector with stronger overall valuations, but the transition is likely to be volatile. The Barclays report suggests we’re about to enter that volatile transition phase.
So, what are the major trends we can learn from this, and what does a utility downgrade mean for the future of distributed renewables?
1) Distributed energy is hitting the mainstream. Historically, it’s renewables’ creditworthiness that has been challenged (while utilities have been considered rock solid), but now this trend appears to be reversing. We’ve seen declining costs of capital in solar (as recent securitizations demonstrate), new financial instruments emerging for related technologies, and lower costs overall. Despite this progress, there is still a large gap between the market acceptance of renewables and the market acceptance of central, fossil-fueled generation. The recent downgrade suggests that people are starting to take distributed renewables seriously, and that utilities and renewables are entering a period of equal (or at least comparable) market strength.
2) Issuing new bonds for thermal fossil generation will become more expensive. While many people focus on the construction costs of new assets (central and distributed generation alike), it’s more often the cost of capital that determines project viability. Traditionally, utilities have almost always been the lowest-cost provider of new energy resources, and part of this advantage has rested on ready access to and favorable terms from the bond market. If that advantage is eroding, then expect new players to be able to compete for providing the nation’s energy, including providers of much smaller, distributed generation.
3) Distributed storage, when combined with already mature trends in generation and energy efficiency, compounds the disruptive threat of consumer-scale investments in energy. Many people have worried that declining demand (through energy efficiency) and distributed generation are putting enormous stress on the traditional business model for investments in central generation. That has not changed at all. So why does the emergence of storage, something that doesn’t reduce consumption or increase generation, suddenly give the markets concern? Simply put, the addition of storage gives customers the option to entirely disengage from their relationship with the utility. While most customers won’t choose to leave, and for good reasons, the threat of grid defection creates consumer leverage that will slow recent upward trends in utility rates out of competitive necessity.
4) These trends are likely to accelerate. As capital shifts from central to distributed generation, this just improves the economics of distributed resources even further, through scale benefits as well as lower cost of capital. Few people would say that we’ve even come close to market saturation for any customer segment for renewables and efficiency. As the traditional electric sector becomes a more challenging place to park capital (or even just a less certain place), more investors will start to notice that investments in distributed resources have similar risk-reward profiles, and this movement of capital will be self-reinforcing.
Barclays took a fairly surprising stance for an industry not traditionally known for looking years into the future. That’s a great sign for the markets, which need to start responding to global, long-term trends. And while the Barclays report isn’t likely to move markets in the next 6 or 12 months, it does signal an important shift under way—distributed generation is likely to be an affordable and accessible choice for more and more customers alongside traditional utility-provided electricity. More options means more competition and increased relevance of the customer. And that’s an upgrade for users of electricity everywhere.