The price of new power purchase agreements for wind farms and new solar projects in the US continue to defy all expectations, making some energy experts wonder why anyone would contemplate a new fossil-fuel plant.
A new report by UBS analysts in the US has crossed our desk. It is basically a write-up from a webinar hosted by UBS and Declan Flanagan, head of local renewable energy group Lincoln Energy, but it provides some fascinating insight of what is happening in that market.
The first notable conclusion is the declining cost of wind energy. Contracts in Texas, which accounts for around one quarter of all US installations, are regularly below $30/MWH, and some are at $25/MWh. Even with a tax incentive, this still put wind well below $50/MWh.
Why is this happening? New equipment is lifting capacity factors by 5 percentage points, and Texas’ excellent wind conditions mean that wind farms are getting capacity factors in the high 40s or low 50’s (per cent). Nearly half of this occurs during peak load, defying most characterizations of wind as essentially an off-peak power source.
What does this mean? Greentech Media recently quoted Stephen Byrd, Morgan Stanley’s Head of North American Equity Research for Power & Utilities and Clean Energy, speaking at the Columbia Energy Symposium in late November.
“Compare that to the variable cost of a gas plant at $30 per megawatt-hour. The all-in cost to justify the construction of a new gas plant would be above $60 per megawatt-hour.” So who would build gas?
Not as many people. Citigroup recently reported that some peaking gas plants were already being replaced by solar PV plants.
Why is this so? The UBS research note says that in Colorado, local utility Xcl has just announced new contracts for solar PV plants below 6c/kWh ($60/MWh). This, UBS said, was the lowest reported solar pricing it had seen in the US, although it confirms a recent survey by the National renewable Energy Laboratory, which found pricing in that range and with no inflation kicker, meaning that the solar plants would be producing for an effective $40/MWh by the end of their contracts.
That would match even depreciated fossil fuel plants. The variable costs of gas fired plants are likely to be at least $30/MWh, and that does not include their capital costs.
Giles Parkinson is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia’s energy grid with great interest.
The solar leasing trend has certainly taken off. Over 75% of new solar homeowners in California are now leasing solar. This finding comes from a Climate Policy Initiative report on California solar policy and consumerism that includes a comparison of California solar leasing and California solar purchases.
The report comes to a number of interesting findings, but the finding on the shift from solar ownership to solar leasing is probably the most interesting. In 2007, only 10% of California homeowners were going solar through a solar panel leasing arrangement. The shift to over 75% solar leasing in 2012 is clearly significant.
As I just noted the other day, there are some huge reasons why California solar leasing (and solar leasing in other states where it’s available) has taken off — primarily, people love $0 down payments and financial savings from Day 1.
People are going solar for financial reasons more than anything else. Many people could probably save much more money down the road by purchasing solar panels (or, at least, their families could… if they don’t outlive the long lifespan of increasingly efficient solar panels). But waiting several years to get money back on an investment is not the route many people want to take. Who knows what will happen tomorrow?
Also, it’s worth noting that solar leasing companies don’t give you a bad deal. Solar leasing companies can actually take advantage of some federal solar panel incentives that normal homeowners can’t take advantage of. From Day 1, or very close to Day 1, solar leasing customers should benefit from savings on their electricity bills that outweigh their monthly solar leasing payments. The leasing companies also take care of maintenance, doing the paperwork to collect on your solar tax credits and rebates, and other such issues.
So, at the very least, solar leasing companies are giving us a much better deal than utility companies offer. What is there to complain about?
California Solar Leasing Booming Due to Solar Incentive Changes
California’s strong solar power growth has actually taken place “in the face of declining financial incentives for solar installations at the state level through the California Solar Initiative,” as the Climate Policy Initiative (CPI) notes. The California Solar Initiative (CSI) did a tremendous job stimulating solar power growth while solar panels cost a lot. However, a rapid drop in solar panel costs combined with remaining federal solar incentives has made solar even more competitive today without support from CSI than it was a few years ago with such support. And California solar leasing options have made the attractiveness of going solar without CSI support even more attractive for many people… well, over 75% of solar customers, according to the CPI study.
In actuality, right now might be one of the best times in the coming decade or so to go solar in California. Federal solar incentives are currently scheduled to expire in 2016. Solar panel prices recently fell through the floor due to economies of scale in manufacturing, oversupply of solar panels due to extreme ramp-up of solar panel production in China and other countries, and the cut-throat competitiveness that resulted. After the dramatic drop in solar panel prices mentioned above, supply has started to better match demand and prices have started to rise a little in 2013. Solar panel prices could fall again and go a little below where they were at the beginning of 2013, or they could rise a bit more — the future is uncertain. With costs near a record low, incentives still available, and solar leasing companies offering amazing 20-year leasing contracts, now is an excellent time to look into going solar.
But, as noted above, policies influence how people go solar, and how it would be best for you to go solar. Solar leasing is only legal in about a dozen states. And various states and municipalities have other solar policies that make other ways of going solar more attractive. For example, some states have “Community Solar Garden” legislation that makes community purchasing of solar power possible. Some municipalities have “PACE” legislation that allows you to go solar using a loan that you pay back through higher property tax payments. The practical result is very similar to that of solar leasing — you enjoy monthly electricity bill savings that outweigh your property tax increase, and you get to skip the high initial price of purchasing a solar panel system.
The solar leasing trend is certainly a hot one, as you can see from the California solar leasing and solar ownership study referenced above. However, there’s a lot of variation in solar policies across the US, and the best solar option for your neighbor may not even be the best solar option for you. The only thing that is more or less constant is that going solar is a smart financial decision for people all across the country, saving each of them tens of thousands of dollars. You can find out the best solar option for yourself by completing our very short form. We can help you to find what solar incentives and policies exist in your area, and we can help you examine the advantages of solar leasing versus solar panel ownership. Don’t delay and lose out on the tremendous solar options available today!
Zachary Shahan is the director of CleanTechnica, the most popular cleantech-focused website in the world, and Planetsave, a world-leading green and science news site. He has been covering green news of various sorts since 2008, and he has been especially focused on solar energy, electric vehicles, and wind energy for the past four years or so. Aside from his work on CleanTechnica and Planetsave, he’s the Network Manager for their parent organization – Important Media – and he’s the Owner/Founder of Solar Love, EV Obsession, and Bikocity. To connect with Zach on some of your favorite social networks, go to ZacharyShahan.com and click on the relevant buttons.
California’s top solar cities are inland, and with median income.
The cost of solar is so much lower than it was even 2 or 3 years ago that many people have realized it’s not great for their pocketbook if they switch to solar power. $0 down or close to $0 solar leases also don’t hurt.
Many of the leading Solar Cities in California are median-income communities like Fresno, Clovis, El Cajon, and Chico,” Rosana Francescato of Sunible writes.
According to the most recent census data, Fresno’s median annual income was just over $41,000. Yet Fresno is near the top of the Solar Cities list, at #3 in installs for Q1 2013.
In the cities with the most solar growth since 2008, TPO solar has increased substantially — an average of more than 104% from Q1 2012 to Q1 2013.
In that period, the city of Chico experienced a 153% increase in TPO solar installations.
Before rolling out the Top 25 California Solar Cities list, check out the following infographic, which Sunrun put together to display the rapid growth of solar in inland cities with median incomes… despite decreasing government incentives for solar.
It’s pretty clear — if you live in California and you own your roof, going solar is a no brainer (unless you’re insane… or have some unique issues with your roof that make going solar impractical).
Zachary Shahan is the director of CleanTechnica, the most popular cleantech-focused website in the world, and Planetsave, a world-leading green and science news site. He has been covering green news of various sorts since 2008, and he has been especially focused on solar energy, electric vehicles, and wind energy for the past four years or so. Aside from his work on CleanTechnica and Planetsave, he’s the Network Manager for their parent organization – Important Media – and he’s the Owner/Founder of Solar Love, EV Obsession, and Bikocity. To connect with Zach on some of your favorite social networks, go to ZacharyShahan.com and click on the relevant buttons.
UK public-housing contractor, Herbert T Forrest Ltd, will receive as much as $US197 million from Australia’s Macquarie Bank to fund zero upfront cost solar-power installations across Britain, reports Bloomberg.
UK distributed energy gets $197 million in financing from Australia’s Macquarie.
The northern England-based company says it will use the funds over three years to install panels on residential rooftops at no upfront cost, a deal it will offer to both social-housing tenants and private homeowners.
Customers taking advantage of the deal would give up the associated subsidies – feed-in tariffs, or fixed above-market rates for clean energy – earned by the new solar systems, which would go towards repaying the bank.
As Bloomberg notes, offers like these once helped fuel a UK solar boom, until renewable energy incentives were cut in April last year. “Macquarie, which already supports Freetricity Plc’s free solar plans, is helping fuel a revival.”
Such a revival would, presumably, also be welcomed by the industry in Australia, where clean energy subsidies have been pared back dramatically over the past two years, and where the solar leasing model remains in its infancy.
The Australian Renewable Energy Agency recently said it was looking at mechanisms to attract just the sort of capital that Macquarie is now applying in the UK. While there remains debate about whether leasing schemes would be attractive to home owners with a mortgage, ARENA says there would be huge opportunity in houses with low incomes, or which are rented.
Back in the UK, Forrest says it will initially offer the PV installation deal to tenants of the public housing units it manages in northern England, the Midlands and Wales. It then plans to open it up to private homes and social housing partners in Scotland and southern England.
The company launched its clean energy unit in 2011 to benefit from the introduction of subsidies, and has installed 6,000 solar photovoltaic systems so far.
Prices for renewable energy in 2013 continue to fall. Natcore Technologies creates new wafers at lower cost which will help to lower renewable energy costs in the near future.
The solar company Natcore Technologies is set to take a huge bite out of the cost of producing solar cells while reducing the amount of manufacturing-related hazardous effluents. The key is a new low temperature laser process that Natcore plans to introduce, which will eliminate the need for a high temperature diffusion furnace.
Natcore has been working with the National Renewable Energy Laboratory and other partners to perfect its black silicon technology. Just around this time last year it announced that it completed the design of a complete low-cost black silicon solar cell production system at its New York facility, resulting in the potential for a 23.5 percent cut production costs according to an independent study cited by Natcore.
The Road To Super Cheap Black Silicon Wafers
The laser system could result in even greater savings.
In conventional solar cell manufacturing, materials are added to the surface of the cell (a process called doping) by melting them on in a furnace, which involves a considerable amount of waste heat. Typically, the furnace reaches temperatures of up to 900 degrees centigrade.
In contrast, laser doping focuses all of its energy on localized points. It takes less than a millisecond, wasting far less energy and minimizing the risk of damaging the solar cell.
According to Natcore officials, the process will also eliminate hazardous materials used in the conventional production process, including silane and phosphorous oxychloride.
Natcore isn’t saying what laser it is using, but it has identified a company that it is working with to custom-make a system for their R&D facility.
Don’t Forget Black Metals!
Black silicon refers to silicon wafers etched with billions of nano-sized holes per square inch. That creates a new level of efficiency, as described by NREL:
The holes and silicon walls are smaller than the light wavelengths hitting them, so the light doesn’t recognize any sudden change in density at the surface and, thus, don’t reflect back into the atmosphere as wasted energy. The researchers controlled the nanoshapes and the chemical composition of the surface to reach record solar cell efficiencies for this ‘black silicon’ material.
The wafer is not actually colored black, but the nanoholes make it appear darker. It’s worth noting, by the way, that Natcore has some competition in this area, for example from Germany’s Fraunhofer-Gesellschaft institute.
Meanwhile, researchers at Lawrence Livermore National Laboratory have been working on a “black metals” process that deploys the plasmonic effect to harvest energy from a greater span of the solar spectrum.
The basic concept is similar to black silicon, but instead of using nanoholes, the structures in black metal are pillar-like nanofilaments.
Projects like these demonstrate that solar tech has yet to find its bottom cost, as efficiencies continue to rise and production costs fall.
As for the “soft costs” of a solar installation including labor and third-party financing, those are also being addressed by new Department of Energy initiatives such as the Most Affordable Rooftop Solar Prize.
Tina Casey Tina Casey specializes in military and corporate sustainability, advanced technology, emerging materials, biofuels, and water and wastewater issues. Tina’s articles are reposted frequently on Reuters, Scientific American, and many other sites. You can also follow her on Twitter @TinaMCasey and Google+.
