Europe Continues to Dominate Current Solar Market

Germany was able to pick up the slack from Spain and grow to ~50% of the global total. Italy, the Czech Republic, and elsewhere in Europe made up another 24% of the global market.

But Europe’s 74% global share was down from over 80% in 2008. The US remained the third largest solar market (this year after Germany and Italy) at 8% of the global market. Solar installations grew a quick 36% in the US to 485 MW in 2009. Japan ranked fourth after its market more than doubled.

Solar cell production is now close to 10 GW (less than a third of wind turbine production in 2009, but its catching up). Global solar demand may approach the 10 GW milestone in 2010 as it is expected to return to white-hot growth. This growth is less dependent on subsidies since the price of solar modules fell 38% during 2009 and prices are expected to continue to decrease in 2010. This could usher in the period of affordable solar by late 2010, especially if prices for oil, natural gas, and coal continue to trend higher.

While solar won’t be as cheap an emissions reduction option as the bicycle, its ability to compete economically with fossil fuels will be greatly enhanced in the year ahead.

Onwards in the Sustainable Energy Transition-

Dennis Markatos-Soriano

Wind Tech Advances Quicker Than Fossil Energy Tech

Many fossil energy advocates who ignore the harmful global warming effects of burning oil and natural gas pretend like technological change will allow us to increase our use of these fuels forever. But the reality is that US oil reserves and production have fallen more than 15% and 20%, respectively, since the early 1990s. And at some point within the next decade or so a similar trend will likely constrain the natural gas market even though EIA estimates of its reserves have climbed ~50% since 1993. Over the same time period, the estimate of wind power potential has climbed more than 3.5 times what the Pacific Northwest Laboratory estimated in 1993. This shows that wind technology during the period has advanced much quicker than exploration and production technology for oil and natural gas. A major improvement comes from taller wind turbines today, since wind is stronger at 80 meters than at 50 meters above the ground.

The Biggest Changes

The main sources of growth for US wind power potential came in the Great Plains, which was already known to be the heart of our resource. Texas, long the largest wind power producing state, is now estimated to be the top state for wind potential after passing the Dakotas and Kansas. In fact, it is estimated that Texas can produce from wind 15X the amount of power it consumes from all electric sources today. Another twenty states can also produce so much wind power that they could become major exporters of this electricity to other states around the country. The estimate excluded wind potential in parks, urban areas and over water — so this is a major underestimate once you consider the offshore wind potential we have off the Atlantic and Pacific coasts. Even so, the 37,000 TWh per year (~365 quadrillion Btus) listed in their onshore wind power estimate is more energy than that contained in our oil and natural gas reserves combined.

Solar Energy Potential Even Larger

The estimate of solar energy potential is more than 100X that of wind power, at over 2,000 TW. So, the issue for renewable energy isn’t any lack of supply. The challenge is for us is to continue cost reductions for wind and solar to make them cheaper than their fossil energy competitors. The year 2010 could be a breakthrough period in that regard as prices for wind turbines and solar modules fall toward grid parity.

Renewables Dominance Will Take Over a Decade

Even when wind and solar are more economical, it will take some time for them to grow from their current base of ~2% of US electricity. Manufacturers of solar modules and wind turbines will have to ramp up global production capacity from current levels of ~10 GW and ~40 GW, respectively, to at least 50 GW each before these sources of electricity can take significant market share from natural gas, oil, and coal. And we will need to continue to improve energy storage capabilities and economics along with our development of a smart grid that can adjust to the intermittency of wind and sunshine for this transition to renewables to take place smoothly over the next 10-25 years.

Now we know there is plenty of renewable energy available to keep us warm, lighted, and wired throughout the 21st century once we have moved on from our dependence on fossil fuels. Let’s make 2010 a huge step in this monumental project!

Onwards in the Sustainable Energy Transition-

Dennis Markatos-Soriano

Global Growth Shines

The global wind power market also grew at an astounding rate — clocking a 37.5% growth rate in its annual market (37 GW vs. 27 GW in 2008). China’s annual growth became the biggest in the world at 13 GW, which makes sense due to their larger electricity demand growth. At the end of 2009, China became the 3rd largest wind energy producer after the US and Germany (35.1 GW, 25.8 GW, and 25.1 GW). China will become the 2nd biggest wind producer in 2010 and may challenge the US by 2011.

The global solar market didn’t grow as quickly due to the collapse of its top market of 2008 — Spain (~50% of the world market that year). But Germany rode to the rescue and extended its lead as the biggest solar power producer in the world (it may have passed 8 GW). Germans took advantage of a 40+% decrease in solar module prices and had record growth (becoming ~50% of the global market themselves).

In the US

As I wrote last year, wind was already replacing oil-fired electricity in 2008. In 2009, wind took some market share from the most polluting power source, coal. In the years ahead, wind and solar can provide for new electricity demand growth and then begin to take significant bites out of the market for the leading electricity sources, coal and natural gas.

At 35 GW, wind now produces ~2% of US electricity demand. At almost 2 GW, solar produces ~.1% of US electricity demand. Biomass and geothermal produce ~1.5% and hydro almost 7%. The big three power sources today are nuclear (~20%), natural gas (~23%), and coal (~45%). When you look at particular states, it is exciting to see that wind power already provides three states with more than 20% of their power needs (Wyoming, Iowa, and North Dakota). By 2023, wind could provide 20% of the whole country’s electricity and solar another 12.5% (based on growth rates of 17.6% per year for wind – half the recent rate – and 40.4% for solar – a slight pickup from the last few years).

The US Energy Information Administration predicts US demand growth for electricity at a rate of 1% per year through 2035. I personally think that rate is higher than necessary as electricity demand growth has fallen every decade since the 1950s and it only grew .4% per year in the ’00s. Increased efficiency efforts can help electricity demand stay flat or even fall, as Google presents in its Clean Energy 2030 Plan.

Trends in Europe as a Glimpse at Our Future?

Europe installed over 10 GW of wind power capacity in 2009. The continent now gets ~9% of its electricity from wind and wind was the top source of of new electrical capacity at 39%. Solar power was third at 16% after natural gas which supplied 26%. Adding hydro and biomass, renewable energy provided 61% of new capacity. Meanwhile, coal is on the decline, as over 3 GW were decommissioned. The US can accomplish this same feat of most new demand coming from renewables in 2010 and beyond.

Price Curves Favorable for Wind & Solar

The prices of wind and solar should continue to drop in 2010, as opposed to an increase in the price of oil, natural gas, and coal. This trend should help maintain swift growth from these sources and make them the new energy titans within a few more years.

The Human Toll of Fossil Fuels

As I discussed a few months back, our addiction to fossil fuels has a serious human toll (on top of inducing global warming and hurting air quality). The tragic blast at a Connecticut power plant that killed at least five people today is a grim reminder of this. Our transition to an efficient reliance on renewable energy will help to reduce such accidents in the future.

Nuclear & “Clean Coal” Not a Near-term Remedy

While Obama has been trumpeting nuclear and “clean coal” as a necessary bridge to a renewable energy future that he thinks is decades away, renewables are actually better situated to provide for us. It takes ten years to commission and build a new nuclear power plant. And carbon sequestration coal is not market-ready yet. In contrast, wind and solar are growing quickly, proven technologies, and falling in cost. Here’s to further record growth for wind and solar in 2010 — finally putting to rest any doubts that they can lead us to a new climate-friendly energy future.

Onwards in the Sustainable Energy Transition-

Dennis Markatos-Soriano

The solarbuzz.com module price survey reported industrial solar prices dropped .9% for September to fall below 20 cents per kWh for the first time. It’s price is more than 7% below that of September 2008. With commercial and residential solar prices remaining just above 25 and 35 cents per kWh, respectively, solar remains more expensive than conventional electricity in most markets. But that may change within the next three years. 

Price moves in US & Europe similar

Solar module retail prices reached a new record low in September, falling 1.4% (6 euro cents) to 4.28 euros per watt. This price has finally dropped below the record low back in 2003-04 of ~$4.33 when the dollar was stronger. Prices in the US also fell 6 cents (1.3%) to reach $4.39 per watt. 

Current Retail Price Drops Only the Beginning

The fall in retail prices of ~9% for a single module over the last year is only the beginning. On the wholesale side, solar modules are projected to fall as much as 50% this Fall from the third quarter of 2008. That leaves another 40% of retail price drops for the months ahead just to catch up. And wholesale module prices are projected by many to fall a good deal further over the next several months. One analyst recently projected the massive overcapacity of supply beyond recessionary demand should lower wholesale prices another 40% from today’s levels in 2010. This would translate into a module price below $1 per watt. He went further to predict prices per watt to approach 50 cents in 2011 — which would easily mean grid parity within two years if he were right and solar producers could do so profitably. The same analyst predicted that as many as half of the ~200 current solar producers will go bankrupt due to this massive price dive. 

Consumers & Installers Will Reap Benefits

These lower prices should translate into huge savings for consumers and solar installers in the years ahead. Lower prices will drive greater demand and help wean the solar industry off of current governmental incentives. While the profits of solar producers from First Solar to Solarworld to China Sunergy will be squeezed, the price drop will allow the Solar Age to emerge in the 2010s as solar chargers for our laptops, cell phones, and other aspects of our daily lives will become second nature.

Onwards in the sustainable energy transition-

Dennis

Price per Watt Dips Quickly

The price of a single solar module in Europe fell 2.2% (10 euro cents) to 4.34 euros per Watt. The August price was almost 8% below that of August 2008 and represents a new record low. And remember, this price survey is for single modules, so large orders would get lower prices.

In the US, prices fell 2.4% (11 cents) to $4.45 per Watt. The August price is now less than 3% above the record low set a few years ago. The price of solar electricity fell almost 2% to reach a new record low in all three categories:

Residential fell below 36 cents per kWh for the first time at 35.89 cents, commercial fell below 26 cents for the first time at 25.77 cents, and industrial slid to 20.07 cents per kWh.

The eight-year survey witnessed two new monthly records: number of lower prices for modules and the rate of decline (described above). A total of 176 modules had lower prices (12.7% of the survey) compared to the previous record of 126 (9.2%) in May of this year. The previous record change was an increase in prices at 142 modules in August 2005.

And Demand Poised to Grow

Solarbuzz also reported that more solar projects are moving again, a sign that demand should pick up quickly in the months ahead. Economic recovery, green governmental policy, and more attractive prices are the main drivers of this increase in demand.

Bottom line: While solar electricity prices remain higher than most conventional electricity markets, they are getting more and more competitive as the months roll by. September should be an exciting month as prices continue to decline and finally reach a record low in the US. Combining further solar price reductions with a return of tight oil market this winter should help the price of solar reach its most attractive point ever relative to other energy sources.

Onwards in the Sustainable Energy Transition-

There are significant costs to such a transition for this island nation and its 12,000 citizens. But when your highest point is less than 5 meters, you don’t have the luxury to procrastinate on emissions reduction. The more the US, China, and the EU can develop and improve renewables, the easier we can make the sustainable energy transition for our neighbors in the developed and developing world. Here’s to continued advances in solar technology that brings it to grid parity by the early 2010s so that we can all replace our older, dirty fossil fuel-based energy system.

Onwards to further climate progress-

photo by Jerry Markatos

I’m happy to report that Sustainable Energy Transition (SET) is now getting the bulk of its cell phone’s energy needs from solar power! After 250 blog posts over the past year, it’s nice to look back at this piece of tangible progress for SET’s operations. Thanks to Connect2Earth.org, a green online community supported by WWF, IUCN and Nokia, who gave SET the solar charger – we are further walking our talk.

SET’s Green Practice

SET operations have been green from the beginning. Our office has large south-facing windows, allowing daylight to provide all necessary light during business hours and providing warmth during the cold New York City winter. On hot summer days, a light curtain helps keep the office cool while still letting enough light come through. And my transportation to local and regional meetings has been mainly by bicycle, train, or bus.

A Step in the Solar Direction

Since June, SET has added solar power to its green credentials. Our new solar charger is a Solio Classic Universal Hybrid Charger which retails for $100. The charger provides a majority of the power needs for my cell phone. But since I use a smartphone that requires a bit more power than some models, I need to charge it through conventional sockets around once per week. For my next phone, I’ll aim to get a more energy efficient model. And then I aim to get a larger solar charger that can power my laptop by 2010. Once that is complete, SET will be both energy independent and completely mobile (able to power up the laptop and phone even on bike trips or from remote locations).

Again, this progress as the first year of SET comes to a close is encouraging – here’s to much more in our own operations and by impacting the communities and institutions around us. A huge thank-you to Connect2Earth.org – be sure to check out their site which is full of excellent environmental info, blogs, and discussions with fellow environmentalists throughout the world!

Onwards in the Sustainable Energy Transition-

The Details

After 2008 witnessed a US emissions fall of almost 3% (due mostly to oil demand decreasing in response to higher prices), all fossil fuels are contributing to this year’s emissions drop. Coal has the biggest drop, now estimated to be ~6.9% due to lower industrial demand and low-priced natural gas replacing some coal in the electricity sector. Oil demand is revised downward from June to a fall of 3.3% for the year. And natural gas was revised downward to a consumption level 2.3% below 2008. All of these drops translate into energy-related emissions that are 4.3% below last year.

1990 Levels Not Far Away

Such a drop would make 2009 emissions just ~6.5% above 1990 levels and already 7.5% below 2005 levels. It would make 1990 emissions levels within reach by 2015 and the Waxman-Markey goal of 17% below 2005 achievable by 2017 (rather than 2020) by just reducing emissions 1% per year going forward.

Room for Further Reductions in 2009

And I believe the EIA may still underestimate 2009 reduction in fossil fuel energy demand. Its prediction that oil demand will fall 3.3% is slower than the current consumption decrease rate above 5%. And coal demand is also falling faster than 8% so far this year (rather than the ~6.9% EIA predicts). Continuing current demand trends could send emissions down more than 5% in 2009.

Looking Ahead

The EIA predicts some rebound in energy demand in 2010, but only a fraction of this year’s drop. In fact, the .8% expected recovery in electricity demand in 2010 could be provided in full by wind, solar, and geothermal rather than switching the fossil fuel plants back on.

Bottom line: US greenhouse gas emissions are falling quickly in 2009 and bringing us within close reach (a few years) of 1990 levels. This fact means that the Senate can comfortably promote Waxman-Markey’s goal of 17% below 2005 levels by 2020 or even strengthen it back to 20% below 2005 levels by 2020. We need their leadership to get climate legislation to the President’s desk. Renewable energy and efficiency are ready to simultaneously drive economic growth, create jobs, and lower our nation’s emissions. I will keep you updated on progress as it happens.

Onwards in the Sustainable Energy Transition-

US & Europe Details

In the US, the average price per watt for a single module fell 1.1% or five cents to $4.56 per watt. This price is 5.4% below last year, but remains ~5% higher than the record low reached in 2004. In Europe, the average price fell .9% or four cents to 4.44 euros per watt. This price is a new record low and 5.5% below last year.

In kWh, the price for industrial solar electricity fell .8% or .16 cents to 20.4 cents per kWh. Prices are now the lowest since October 2004 (almost five years) and only .5% from the record low set in June 2004. We should see a new record low by the end of the summer based on current price trends.

Keynesian Price Stickiness

Prices on the individual retail side aren’t falling as quickly as the wholesale numbers I wrote about yesterday: ~5.5% vs. 40+%, respectively. Longterm contracts and general Keynesian price stickiness will eventually shakeout and the lower equilibrium will emerge by the end of 2009/beginning of 2010. And a quick note: these survey prices are per individual module. Average customers generally buy multiple modules that integrate into panels, so the price per watt for most projects is discounted for the bulk purchases to currently below $3 per watt. Still, the Solarbuzz price survey is useful as a comprehensive view of the individual retail sector and gives insight into the trends of the whole industry.

I’ll let you know as further developments occur.

Onwards in the Sustainable Energy Transition-

Competing with Thin Film’s First Solar

The cost leader for solar has recently been First Solar, who lowered their production cost per watt to 93 cents during the first quarter. But the lower efficiency of First Solar’s modules (at ~10.9% vs. 14-22% for silicon-based cells) means that selling its modules at $1 per watt is equivalent to Yingli Green Energy, JA Solar or Sunpower selling its modules for $1.30-$2 per watt. I thought sub-$1.75 per watt was unrealistic for crystalline silicon producers in 2009. But LDK’s revised second quarter guidance means that such prices are expected per silicon-based watt throughout the rest of the year.

Prices Less than Half 2nd Quarter 2008

Such a price translates into less than half the price of just a year ago. If installation costs can fall in a similar trajectory, relative prices versus fossil fuels will be similar to last year at this time. And once economic recovery begins to lift the price of natural gas in coming months, solar will become competitive and demand will soar.

The Strong Will Thrive

Solar companies who are strong enough to weather the next few months by lowering their cost of production will emerge highly profitable as the recession subsides. In the meantime, the second half of 2009 may witness serious consolidation throughout the solar industry as impaired financial markets fail to provide enough capital for smaller players. But the stronger producers (such as First Solar, Sunpower, and Suntech) appear poised to thrive as solar becomes mainstream and grid parity expands into several markets by 2010.

Onwards in the Sustainable Energy Transition-