Solar doesn't care what utilities want

For any of you who haven't heard of Ray Kurzweil, I highly recommend reading up on his Singularity theory.  He's a fascinating guy and his ideas are even more so.  Pertinent to my interest in solar technology, one component of Kurzweil's Singularity ideas is that technology advances at an exponential rate which is profoundly disruptive to existing technology.  Just as with financial investments, past performance does not predict future returns.  People in the heart of the change often have trouble seeing that straight line forecasts often fail to capture the future impact of a particular technology. Such is the case in the solar business today.

Worth a read

Solar PV is a transformative technology that is already disrupting traditional utility delivered energy models. A recent McKinsey study sums up the current state of PV rather succinctly and charts a few forecasts into the next couple of decades.  In some market segments, PV already competes effectively on price per kWh delivered; in others, the expectation is that other generation technology will continue to dominate but not for much longer.

No one is "letting" distributed solar happen.  In fact, it's becoming adopted despite countless institutionalized roadblocks.  This interaction between Travis Bradford and Barry Cinnamon highlights a critical misunderstanding that many people have about how distributed solar will develop.  We aren't waiting for utilities to let people install systems (via interconnection & net metering policies), and we actually don't need more incentives from the federal government (maybe these have only inflated installation prices anyways).  While both these components have facilitated system installation in the short term, the greater driving trend is the narrowing gap between the retail rate for electricity and the installed cost of solar.

Net metering is serving a great purpose today in helping to grow solar but the electric utilities would like to see it go away because they lose money from it.  At a much larger solar penetration rate than we have today, they would have to raise rates to cover the lost production and distribution charge revenue.  At a TVA sponsored solar event last month, I heard multiple utility representatives talk about how this hypothetical problem should cause us to temper if not even retard current PV installations. Regardless of what happens to net metering, distributed solar is going to continue grow and because of the easily scalable nature of it, I'd bet it will be at an exponential rate as Ray Kurzweil's hypothesis would predict.  Here are three reasons why I think so:

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Solar is Easy to Install

and it's getting even easier to do so.  The only downside of solar right now is first cost.  Not only are installation prices falling and retail utility rates rising, there are many new financing options to minimize solar's first costs. There is really no reason that a person can't decide to go solar one day and have the system commissioned the next.  Any red tape would only come from utility interconnection and this is irrelevant in solar water heating or in the case of my next example.  When all the economic forces align, we will see neighborhoods transformed from zero roofs with solar to most of them in very short order.

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Real Time Consumption of Solar Production

No need for utility permission to buy less electricity by producing it locally

All commercial customers and many residential ones are on a Time of Use (TOU) or real-time pricing plan with their electric utility. This means they pay a variable rate for electricity over the course of a day depending on the wholesale rate (cheaper at night, more expensive during the day).  Since solar PV production correlates well to peak rate periods, you can size a cost effective system today to lop off real time demand from grid power without selling any excess energy back to the utility.  If the customer pays $0.25 or more during the middle of the day for electricity, a PV system sized to meet this midday load is cost effective today.  This behind the meter PV system would be invisible to the utility while saving the building owner money.  There is a huge amount of potential new solar work just for this application.

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Back Up Energy Systems

Many businesses and homes want or need back up generators to guarantee access to electricity during interruptions of grid service and they are willing to pay a premium above the retail rate for electricity to do so.  Brown outs, ice storms, lightening, squirrels, etc. knock out power on a rather regular basis in some areas.  For someone considering a generator, they'll need to figure in the cost of the fuel to power it, the transfer switch wiring in addition to generator itself.  The generator will also have to cycle regularly to keep in optimal performance shape and fuel costs could be significant depending on whether the building has access to natural gas or not.

Inverters offer energy arbitrage options in addition to battery backup functions

An alternative today is a grid tied PV system with battery backup.  This allows for the triple benefit of back up power, peak load rate shaving, and energy arbitrage (charging batteries with off peak rate electricity and using during peak times).  All this adds up to more benefit than a generator backup.  Battery technology has been improving in cost and performance just as PV technology has.  This is yet another way that a PV customer could have a cost effective system for their needs and never need to sell anything back to the utility or need any sort of special agreement to go solar.

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Thomas Friedman called it the democratization of energy and this is exactly what solar offers.  Individuals now have the option for the energy source of their own choosing.  Utilities have a stranglehold on options just as telephone companies did before the advent of cell phones.  How many of you even have a landline at your house anymore?  How many of you will be at the mercy of electric utilities for service in 10 years?  I think the numbers will be very similar.

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We are like tenant farmers chopping down the fence around our house for fuel when we should be using Nature's inexhaustible sources of energy — sun, wind and tide. ... I'd put my money on the sun and solar energy. What a source of power! I hope we don't have to wait until oil and coal run out before we tackle that.
         --Thomas Edison

Solar isn't a new idea

We are like tenant farmers chopping down the fence around our house for fuel when we should be using Nature's inexhaustible sources of energy — sun, wind and tide. ... I'd put my money on the sun and solar energy. What a source of power! I hope we don't have to wait until oil and coal run out before we tackle that.
                  - Thomas Edison

What does Japan's energy troubles teach us about our own?

I came across Mark Pendergrast's new e-book after reading a blog post he did recently for Renewable Energy World.  Japan has very few traditional energy resources at its disposal so it relies on fossil fuels imports and nuclear power to power its economy.  After the Fukushima nuclear disaster caused by the tsunami of March 11, 2011, popular support for nuclear power in Japan fell rather dramatically (as one would expect).  Imported fossil fuels for electricity generation, notoriously expensive anywhere in the world, became it's sole source of energy and put Japan in a tough position to re-grow its economy.

Japan's Tipping Point: Crucial Choices in the Post-Fukushima World

Japan now has a major incentive to adopt energy efficiency measures and install renewable energy systems which is what Mark wanted to explore with his book Japan's Tipping Point.  He does a great job of detailing the sustainability initiatives that have been promoted in different parts of Japan and providing commentary on their efficacy.  Despite major structural reasons to the contrary, the Japanese seem to continue thinking in a pre-Fukushima way.  The conclusion you become forced to consider is that they might not make the leap to the next generation of power infrastructure anytime soon.

I worked for a Japanese company (SANYO) a couple of years ago, based in the US to develop solar energy projects with their solar modules.  At the time, SANYO was the 7th largest manufacturer of solar photovoltaic modules and had the most efficient panel that was commercially available.  I was brought on as the solar leader of a new organization called the US Environmental Solutions Division.  The stated purpose of this division was to bundle various SANYO products with a clean energy focus together as a total solution sale.  It sounded like a great initiative at the time but ended up appearing to be more of a PR exercise to make SANYO branded products more attractive during its acquisition by Panasonic.  While I spearheaded a couple interesting projects like a solar charging station in Portland, OR, there was not much appetite for significant solar market development plans.

OMSI solar electric vehicle charging station for e-bikes and e-cars in Portland, OR

My experience with the Japanese left me with the impression that they will be hard pressed to make the difficult decisions they have to make to move off fossil fuels.  While SANYO was a world leader in solar panel production, they have now slipped out of the top ten.  The leadership seemed to be resting on their laurels for cell efficiency and this has allowed competitors to catch up to them and gobble up market share. Sharp and Kyocera have also lost ground to Chinese and Korean competition.  I saw confusion, indifference, and fear in SANYO with respect to exploring new ways to promote solar products in the US.  In a rather obvious application for solar, they wouldn't consider installing more than a token amount of their own modules on their own new solar wafer and ingot factory opened in Oregon in 2009.  This sort of project challenged their entrenched way of thinking; hype was more important than actually accomplishing something innovative and highlighted how collaboration across internal divisions was extremely difficult.

So what lessons does this teach us in the US?  As I've written before, Americans are cursed with substantial fossil fuel resources under our own soil.  With the Japanese being "blessed" with paltry resources and still unable to take decisive action towards renewable energy, things don't look so great for renewable energy in the US anytime soon.  The Japanese are not alone in their resistance to change with respect to energy.  The US with a population of almost 2.5 times that of Japan has about the same amount of installed solar PV.  US leaders continue to talk about nuclear as the hope for the future despite the obvious safety and economic troubles with it and despite no practical hope for new reactor additions anytime soon.  Wind farms get rejected for aesthetic reasons while coal continues to be our primary fuel source for electricity.

Bike & electronics charging solar canopy (concept)

Regardless, I continue to remain convinced that solar technologies will trump our other current energy options in a rather short period of time.  The cost curves of solar and it's O&M advantages with respect to everything else will win out; the environmental benefits will merely be icing on the cake.  Once we make the decision to go solar, the build out period will be much faster than most people realize.  I don't think the path to our solar future will be clear or easy however.  Some sort of major shock will have to get us all on the same page.  I would have thought Fukushima was that sort of shock for both Japan and the world.  Maybe not.  It's a naive thinker, however, who bets on things staying the same when radical change is the new normal.

Idealism doesn't drive sustainable energy development

Northern Iowa Wind Farm - (Going Green In Orange)

A recent article on Renewable Energy World asks the question how did the US grow an energy consciousness.  I can't say that I agree with the implicit assumption the title makes.  I don't think most Americans really think about energy all that much or how important our current existence is on inexpensive, readily available, easily stored energy.  The United States is blessed (or cursed) with abundant natural resources.  This has clouded our collective long term thinking with respect to energy.  We are able to look at availability of energy on a very short term basis because we've had such a consistent supply of all forms of it for so long.  When was the last time anyone pulled into a gas station and found the filling tanks were empty?  How often do blackouts occur on the power grid? When either of these disruptions happen, big challenges ensue but fortunately they haven't occurred that often.  We get the power we want, when we want it, and it doesn't really cost us that much.

Compare this to energy situation of other countries around the world.  Island nations typically have very limited energy options. Their geographic separation from adjacent countries forces them to generate electricity locally and import petroleum via tanker ship--very costly and risky for their national security.  Japan, the world #2 for installed solar, has also resorted to massive reliance on nuclear which is now showing it's flaws in the most catastrophic way possible.  Faced with limited options, people take risks that they otherwise may not have taken.

Island of renewable energy (Michaelis Energy Island)

Germany is another story as well.  As the global leader in renewable energy development with 17% of its electric power capacity coming from renewables, outsiders may think that the Germans have a particularly strong commitment to clean energy.  While environmental reasons are now one of the arguments that Germans make for continuing their current energy policy, national security issues regarding supply of natural gas were the real spark for their dramatic shift towards wind and solar.  Since the fall of the Soviet Union, Russian natural gas companies have periodically played games with the supply of natural gas flowing to western Europe.  The spark that woke up the German populace was a disruption of gas during the peak heating season over the winter of 1992-93.  Cold homes in the winter are a strong motivating force for spending more on local energy.

The main message that Americans have heard regarding renewable energy is that it's good for the environment.  This is an idealistic message that has been both polarizing and lacking in teeth to drive tangible action by even those who believe the message.  Many people immediately think Quixotic farce when they hear anything about solar or wind development--overly idealistic and impractical.  Focusing on the environmental component to renewable energy makes this a political discussion where there are perceived good guys and bad guys.  We also get a lot less personal satisfaction from an effort to conserve energy while a neighbor continues to be profligate with his consumption and waste.  Our environmental savings are easily erased by people not of the same mindset.  None of this serves the purpose of a steady state energy system where we all have access to reasonably priced energy without the negative externalities of fossil fuels.

My read on the US energy situation is that we have about 10 years or so to make some dramatic changes in our mix of energy options to avoid disruption issues that other countries have already had.  10 years is a long time in the sense that we could (and probably will) chose to continue procrastinating on making the spending decisions that we need to make.  10 years is a short time in the sense that the capital improvements we need to make could take that much time or longer to actually complete.

The RE World article I reference above makes the case that governmental policy has been the most effective change mechanism in the US.  Maybe so but our current energy mix has very little renewable energy in it other than hydroelectric.  I honestly can't tell what the spark will be to awaken the sleeping giant once again and unite our efforts behind a common cause.  Hopefully, it will be something much less dramatic than Pearl Harbor was.

The worst kind of wake up call

- Let's use our brains people and get ahead of these very foreseeable future energy challenges.