By Paolo Pietrogrande
Renewable energy installations are becoming a common addition to urban landscapes. The Citibank building in New York, now a distinctive landmark in Manhattan, was completed in 1977. It has a much advertised inclined roof designed to host solar panels, which have never been positioned. The Indigo residential building downtown in Portland, Oregon shows four wind turbines on its top, generating an estimated 1% of the energy consumed in the building but constituting a very visible (and advertised) installation in the city. Even the tiny Vatican State inside of the city of Rome has its own 100 kW solar rooftop, above the Sala Nervi auditorium, sitting just few steps from Michelangelo’s Cupola.
Are these rather art installations than commercial distributed energy generation plants? Indeed they are.
Yet, half a million rooftops installed over private single home residences in Germany and three hundred thousand installed mostly on condominium rooftops in Italy are not just a show, or a fashionable response to global warming by concerned citizens. They are a source of revenue for homeowners and families. They generate the power, use what they need in the house, export the excess at predefined conditions, and─on top of all of that─receive cash incentives from their governments on the energy they have been able to generate regardless of the use they make of it.
In Italian side of Tyrol and in the Baden-Wurttemberg region in Germany, solar panels on the roof of residences and small businesses are the norm. In Germany alone, there are ten thousand registered solar installers, 100 thousand people work in the German solar business, worth in excess of US$20 Billion per year: about the size of yearly sales for a mature business such TV sets in the U.S.A.
My point is that solar energy is a mature business, at least in one part of the world. This means that solar is an established global industry, where manufacturing companies have in-house capabilities to finance basic technology research and product development. There is widespread application knowledge to deploy solar power plants in the most sophisticated grid connected systems. In a word, because hardware is well established, it does not need any more public money to develop. As a matter of fact, the industry itself has differentiated, with players from Japan, China, Europe and the U.S.A. competing globally with well established commercial products, backed by proper guarantees.
How is the U.S.A. doing in the global solar market? Not bad, considering that the United States represents only 10% of the installation market, its industry is mostly focused on export: Calisolar has the world’s lowest cost silicon manufacturing process; Unisolar, First Solar and SunPower are global leaders in specific niches of panel technologies; Power One is the second world largest producers of inverters; GT Solar is among the most reputed turnkey suppliers of solar manufacturing equipment; and Hudson Clean Energy Partners is one of the most aggressive private equities investing in solar manufacturing technology. Thus, hardware is well established in U.S.A.
Is Software as Well in Place in the U.S.A.?
To date, market has been driven by incentives of various sorts. Europe leads the installation market because of its generous incentives. So is China; slightly behind is the U.S.A., which rather than cash production incentives adopted tax credits and state incentives.
However, a utility-sized solar power plant installed in hundreds of acres of clean, flat land, near a utility substation in California still costs more per kW installed than a small family-sized 3 kW solar system installed over the garage rooftop in Germany. As American engineering contractors are less familiar with the technology, the permitting process, the securing of land rights and the interconnections are more complicated and require excessive professional advisory. The field erection is still passing through a learning curve that Europe has gone through 5 years ago. Operating and maintaining solar power plants is still a new discipline in the U.S.A. and will certainly evolve quickly. Once more projects are deployed on the ground and plants begin aging.
In my opinion, engineers, lawyers, bankers, local authorities and utilities will catch up quickly and may be helped by the experiences of European counterparties. This coming summer in Italy 12,000 MW of solar panels will deliver more than one third of the country’s domestic peak demand during weekends: from an electric grid management perspective this will be a challenging task, one that just a few years ago no one would have considered possible. One third of total energy demand met by solar!
Enel, the domestic utility having run multi megawatt solar facilities since the 90s, and being now a world leading solar energy generator, and the leading utility in smart meters that can help it manage loads, does not seem very worried about 2011’s solar peak challenge. The experience that the Italian grid operator is making will be available to all the reluctant electric utilities around the world to help modify their standards and adapt to a changing market.
Solar software (=know-how) is thus available, it is easy accessible around the world and even in the U.S.A. is further maturing now that more plants are being developed.
A typical Californian household is now paying for electricity roughly the same that it would cost them to generate the same peak energy from solar panels installed over the roof. But, while landing over Los Angeles, any passenger sitting next to the window can see thousand of swimming pools, yet very few solar panels. Why is it?
It is not because hardware is not yet efficient: plenty of competitive hardware is commercially available. It is not because installers do not know how to integrate the solar energy with the system: software is mature and becoming readily available. We in the U.S.A. are lacking the real basis for widespread adoption of solar power: we lack ‘cultural-ware’, in other words, solar is not yet in our cultural background; passionate environmentalists may be aware of the benefits of replacing fossil fuels with renewable energy, technology freaks may be attracted by the challenge of domestic self-generation, forward looking sourcing managers at retail sites may appreciate the opportunity to reduce the monthly electric bill, but solar is not an option we consider when thinking a home remodeling project.
Solar culture is the foundation for the developing of a mature solar market in the U.S.A. and it will not be achieved just by educating general public on the benefits of solar energy.
Solar cultural-ware will imply that city planners do understand when solar has long term sustainable benefits (and when it does not make any economic or energy sense), how can solar be integrated in the urban landscape without reshaping it, what are the technical consequences of reconsidering construction codes and of relaxing the permitting process.
I, recently, attended at Columbia University a seminar designed by the Mayors Institute to offer a selected number of prominent Mayors the opportunity to familiarize with urban design and planning tools. To my great surprise, mayors have been offered a tutorial on how to consider the capacity extension of the distribution grid for utilities, which may help addressing the difficulties of upgrading existing infrastructures to accommodate increase in load and in demand often associated to urban upgrade projects. Addressing utilities’ needs upfront will eventually save taxpayer’s money, and will certainly reduce rate payers’ bills: more importantly, though, it puts the energy demand, the energy use at the center of the design board. Once architects and urban planners have become familiar with the technical challenges and the economic implications of energy distribution, it will be much easier to add to their competence portfolio also the capabilities and the benefits of solar energy.
Solar cultural-ware will imply that distribution utilities do redefine the familiar technical specs, defined fifty years ago to adapt to the needs of domestic users. Cultural-ware will imply that utilities do realize that a 235 watt solar panel does not imply the same hazards of a 600,000,000 watt nuclear steam turbine.
Solar cultural-ware necessitates a change in paradigm for lenders when considering the risk associated with a project, since a system consisting of individual modules is intrinsically more reliable than a gas turbine power plant, where if a component in the turbine fails, the entire plant is shut off: if a solar panel fails, after it is disconnected, it will only reduce by a fraction the power delivered by the many other ones; actually technology (hardware) is already commercially available to automatically redistribute loads among the surviving panels to minimize losses.
Finally, solar cultural-ware will imply that households are aware of the cost of energy use. How many of us in America know how much do we pay kWh? We know how much was our last monthly bill, but did we checked how much was it per kWh?
Actually do we know how much does it cost in electricity watching TV, cooling our living room or simply lighting a Christmas tree? In Portland my monthly bill translates into 11 cents per kWh; I can watch 5 hours of TV with one kWh, I can refrigerate 20 minutes my living room, or run the refrigerator for one day.
Relating the use of energy to its function, allows us to put things in perspective: it does not matter how much does one kWh cost, but how much service it does produce. Then, we will be able to associate energy to our end uses, and we will start valuing it properly: at that point, since solar is already competitive, it will be just as natural for each one of us to consider the solar energy as one of the options to deliver the service, and solar will have entered in our culture!
Cultural changes require more time to eradicate, imply progressive buy-out by role models, educators, market leaders and industry; culture is an enduring benefit for each one of us, gives us better tools to make informed choices, and, in a sentence, it is the facilitator of progress for humankind. I have personally no doubt that my grandchildren will have solar energy in their tool basket when taking informed decisions.
How fast it will happen depends on us, the leaders of this generation.
Paolo Pietrogrande is Chairman, Element Power Solar (www.elpower.com), where he is contributing with his 30 years of experience in alternative energy and corporate management and his direct supervision of the development and operation of over 4000MW of renewable energy projects around the world, inclusive of 200MW solar power plants. Pietrogrande is also a Board member of Ryanair PLC (Nasdaq: RYAA), Camco International (AIM:CAO), Amka Onlus and Link2, and sits on the advisory committees of several companies. He is a founding partner of Netplan Management Consulting and has held CEO position with Enel Green Power (power generation in Italy, North and Latin America, US$11B market cap), Executive Chairman with Gamesa Solar/9REN Group (solar contractor and clean energy investor), Chairman with Atmos Holding (Cleantech Venture Capital), and CEO with CISE (energy R&D).
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