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On grassy pasture in western Spain, Fotowatio SL is preparing to build a solar plant to supply electricity 25 percent cheaper than a local utility charges for traditional power, a breakthrough that’s sending tremors through the global energy industry.

The Spanish developer, which was funded by General Electric Co. (GE), learned how to squeeze construction costs setting up 21 photovoltaic plants in southern Europe during the last six years. By October, its newest unit will begin beating the rate small businesses and homes pay for the first time in Spain.

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A thermosolar plant in Spain. Photographer: Markel Redondo/Panos

 

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March 20 (Bloomberg) — David Crane, chief executive officer of NRG Energy Inc. talks about the company’s strategy for promoting it solar energy technology. Crane speaks with Alix Steel at the 2012 Bloomberg New Energy Finance Summit in New York. (Source: Bloomberg)

“There are no limits for this technology,” Mariano Berges, chief technology officer at the Madrid-based company and a former natural gas utility engineer, said in an interview. “The decline in prices has been incredible.”

Solar panels costs have tumbled 80 percent in the past five years. A technology that in the 1970s was so expensive it only made economic sense for satellites and offshore drilling rigs is today a $100 billion industry that’s transforming the world’s power supply in the same way semiconductor efficiencies put personal computers everywhere, changing the way information flows.

In Hawaii and India, project developers are beginning to match the rates customers pay to Hawaii Electric Industries Inc. and Tata Power Co., and they’ll gain that edge in parts of Europe this year, Bloomberg New Energy Finance forecasts.

Obama and Army

President Barack Obama today visits the largest U.S. solar plant in Boulder City, Nevada. InNew York, Nobuo Tanaka, former executive director of the International Energy Agency, and Richard Kidd, deputy assistant secretary for energy of the U.S. Army, will debate when renewable energy can compete without subsidies at a conference hosted by New Energy Finance.

Fotowatio expects its next plant near Caceres, a city in southwest Spain founded by the Romans before Christ was born, will sell power at about 16 U.S. cents (12 euro cents) a kilowatt-hour, compared with the 21 cents utility Iberdrola SA (IBE) gets in a regulated rate that’s loaded with charges for transmission, clean-energy and coal subsidies, and a nuclear moratorium.

Chinese makers of photovoltaics, or PV, led the race to chop costs by pushing up factory capacity about 40 percent in the last year to reap economies of scale. That pushed Solyndra LLC of Fremont, California, and Berlin-based Solon SE into bankruptcy even though installations were rocketing.

Industry Suffers

Panel makers such as Baoding, China-based Yingli Green Energy Holding Co. are themselves feeling the strain of crushed margins. The Bloomberg Global Large Solar Energy index, led by Chinese PV panel maker Hanwha SolarOne Co., erased 68 percent of its market value in 2011. At the same time, annual installations jumped 49 percent to about 28 gigawatts.

Twelve of the index’s 17 members will lose money in 2012, according to analyst estimates compiled by Bloomberg. Yingli saw its gross margin reduced to 3 percent in the fourth quarter compared with 11 percent in the preceding three months and lost $510 million in 2011.

The competition is hurting suppliers as it helps the industry accelerate toward so-called retail grid parity, when homes and businesses will be able to generate their own power more cheaply than they buy it from coal- or gas-fired plants through local utilities.

That option is coming to consumers in California, Brazil and parts of China by 2015, according to New Energy Finance.

Profit in Italy

Developers in Sicily are aiming for the next landmark. That’s wholesale grid parity — plants that can make a profit selling power to the grid for the same price that coal- or gas- fired plants earn. Electricity from coal plants around the world costs 4.9 cents a kilowatt-hour on average, New Energy Finance data show.

Cautha SRL, a Milan-based developer, aims to build the first solar plant that can earn a profit without subsidies in Sicily this year, aided by the island’s wholesale price of 13.5 cents a kilowatt-hour, Managing Director Giuseppe Artizzu said.

Years of government subsidies from Germany to California have nurtured the industry worldwide, preparing the way for a “revolution” in photovoltaic power, said Paolo Frankl, renewable energy chief at the IEA, the Paris-based adviser to 28 oil-consuming nations.

“This is a potential avalanche that could make the deployment of PV very fast even in the next five years,” Frankl said in an interview.

Competitive in Germany

Solar panels have already become competitive in countries such as Germany, where the retail power price of 33 cents a kilowatt-hour makes it easier to reach parity.

It’s also the case in the sunniest regions including Spain and Sicily, where panels are more productive. India combines abundant sunshine with relatively high retail prices since many factories and homes rely on diesel generators working at 35 cents a kilowatt-hour.

Not every industry observer believes grid parity is around the corner.

Gordon Johnson of Axiom Capital Management Inc., the top- ranked solar-energy analyst of more than 30 tracked by Bloomberg, says the financial strain on panel makers reflects fundamental problems with their business rather than pressure from competitors.

There’s a limit to how much the cost of solar energy can fall because some components — the racks, cables and inverters that make the power compatible with utility grids — are not declining as fast and because PV requires backup from conventional plants during the night, he said.

Solar ‘Myth’

“Grid parity is a myth created by the solar industry to try and get subsidies from the government,” Johnson said in a telephone interview. “It’s a farce. Solar is just simply too expensive.”

Subsidy rules that guarantee above-market rates for clean energy have saddled consumers with higher bills even in cloudy places such as the U.K. Spanish power consumers paid about 60 cents a kilowatt-hour for PV electricity in 2010, almost three times the retail price, from panels mostly installed before prices fell. The government in Madrid has been paring subsidies there for four years.

Electric-car driver Ken Bookstein paid $2,700 in June for a 4.2 kilowatt photovoltaic system on the roof of his home on the edge of Portland, Oregon. After state and federal incentives, he calculates he’ll save about $9,200 on his power bills over the duration of the 20-year lease for the gear.

No Way to Lose

“There’s pretty much no way you can’t come out ahead,” the 48 year-old radiologist said in a telephone interview. “I don’t know why people haven’t jumped in to this thing in droves.”

The total cost of Bookstein’s system was about $23,000, adding in a state rebate of $6,000, a federal tax credit for 30 percent and a rebate from the local utility of up to $1.75 per watt. That’s about 35 cents a megawatt-hour compared with a retail price of 9.5 cents, according to Bloomberg’s power costing model. Power from a gas-fired power plant in the U.S. costs about 3.5 cents, according to New Energy Finance.

The system costs are in line with the U.S. market price, where rooftop generators cost about $5.50 per watt as the price is inflated by the complexities of the permitting process, said Susan Wise, a spokeswoman for Bookstein’s installer SunRun Inc.

Still, those subsidies enabled panel makers to scale up production and bring down costs. Solar power falls by 20 percent on average every time global installed capacity doubles, according to Vasilis Fthenakis, founder of Columbia University’s Center for Life Cycle Analysis.

Potential for U.S.

Fthenakis predicted in 2008 that solar radiation could supply 69 percent of U.S. power by 2050 and 90 percent of all energy by 2100. Global PV capacity jumped more than four-fold since he made his forecast.

“Some offshoot of Moore’s Law applies to solar photovoltaic technology,” David Crane, chief executive officer of developer NRG Energy Inc., said on a Nov. 4 earnings call, referring to Gordon Moore, the co-founder of Intel Corp., who observed that the cost of computing power falls by half every two years.

The IEA’s initial analysis suggests PV capacity may increase by as much as 30 percent a year through 2015 so long as the financial crisis doesn’t derail investment, Frankl said in a Jan. 27 telephone interview. The agency previously expected 17 percent growth through 2020.

‘Steady Penetration’

“It is likely that there will be solar panels on most homes in sunny places, maybe by 2020,” said Jenny Chase, chief solar analyst at New Energy Finance in Zurich. “It will be a sort of slow, steady penetration of the market.”

Fotowatio’s 10-megawatt plant near the Spanish city of Caceres will earn the government-set price of about 16 cents a kilowatt-hour for ground-based generators. That’s roughly a quarter of what Spanish plants from 2008 are making and less than the retail power price of 21 cents. It’s still more than the 7.6 cents power fetched in Spain’s last quarterly wholesale auction for peak-hour usage.

Fotowatio’s project is set to generate a gross return of about 13 percent on unleveraged investment. The plant will cost $16 million to $18.5 million compared with $79.5 million for a similar plant in 2008, Berges said. It will produce about $2.2 million of power a year, according to the European Union’s estimates of average annual sunlight.

India has 30 gigawatts of mainly diesel generators that could be replaced with cheaper solar power tomorrow, according to Tarun Kapoor, joint-secretary at the Ministry of New andRenewable Energy. Chinese industrial companies will see photovoltaic panels compete with their tariffs in 2013, the country’s National Development and Reform Commission said.

By 2015, residential systems will reach grid parity in rich areas from Arizona to Japan, and in developing nations like Brazil and Mexico, according to New Energy Finance.

“We’re right on the brink now,” said Chase. “Slowly but surely, PV will creep into the energy mix of places with high residential electricity prices, changing the way homeowners use and produce energy.”

To contact the reporters on this story: Ben Sills in Madrid at bsills@bloomberg.net; Marc Roca in London at mroca6@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

American solar panel manufactuers welcome Obama administration decision, saying it exposes unfair trade practices

• Suzanne Goldenberg, US environment correspondent
• guardian.co.uk, Tuesday 20 March 2012 19.39 EDT

 

Chinese companies have acknowledged receiving cheap loans and other government support. Photograph: Ben Birchall/PA

The Obama administration, which regularly champions America’s clean energy industry, has delivered modest support for home-grown solar panel makers complaining of unfair competition from China

In a much-anticipated decision, the commerce department on Tuesday said it would impose tariffs of 2.9% to 4.73% on Chinese-made solar panels, after finding the Beijing government was providing illegal subsidies to manufacturers.

The commerce department could impose heavier penalties in May, when it is due to decide whether China is dumping solar panels at prices below their actual cost.

But Tuesday’s move did not suggest the Obama adminstration is willing to risk a trade war with China in support of struggling solar panel manufacturers.

Domestic solar panel makers, who had requested the tariffs, welcomed the decision, saying it had helped expose unfair Chinese trade practices.

“Today’s announcement affirms what US manufacturers have long known: Chinese manufacturers have received unfair and WTO-illegal subsidies,” Steve Ostrenga, an executive who is a member of the Coalition for American Solar Manufacturing, said in a statement. “We look forward to addressing all of China’s unfair trade practices in the solar industry.”

Solar installation companies, whose business relies on Chinese-made panels, expressed relief that the small tariffs would not drive up costs.

“This is a huge victory for the US solar industry and our 100,000 employees,” said Jigar Shah, president of the Coalition for Affordable Solar Energy. “Given all our expectations, this is really good news.” read the rest…

RICHLAND — The Tri-Cities’ infamous “400 days of sunshine” now are helping power Kadlec Regional Medical Center with the recent installation of an array of solar panels on the Richland hospital’s roof.

The solar panels, along with two miniature wind turbines, were part of a multi-million dollar energy efficiency project Apollo Solutions Group pitched to the hospital to help Kadlec save money on its energy bills.

Apollo secured $2 million in stimulus funding, along with $900,000 in cash incentives from the Bonneville Power Administration and Richland’s city government, to do the project, which also involved changing out 6,000 lightbulbs and replacing Kadlec’s aging boiler system with a more modern and efficient one, said Jason Rose, the hospital’s director of plant operations.

“(Apollo) really looked at the holistic picture of the hospital — opportunities within the hospital where we could save energy,” he said. “It was a fun project. It probably wouldn’t have been feasible without Apollo’s assistance.”

Kadlec paid $4.5 million out of its own pocket for the project, but Rose said it was the time investment by Apollo officials that really was invaluable.

The project almost didn’t happen when the stimulus money originally was awarded to another recipient.

“It took the wind out of our sails,” Rose said.

But then the recipient backed out when it was unable to meet a deadline, and the Kadlec project was back on.

The wind turbines and solar panels provide only a small fraction — about 10 kilowatts — of the hospital’s power, but because of the overall revamp, Kadlec expects to save about 30 percent on its energy bills.

“That’s huge for an organization this size,” Rose said.

And Apollo in its contract guaranteed those savings — or it will write the hospital a check, Rose said.

“They’re standing behind what they do,” he said.

Patients shouldn’t see any changes, other than maybe a little difference in the lighting.

“That’s kind of the beauty of this is we’re able to do all of these savings without changing the patient experience,” Rose said.

– Michelle Dupler: 582-1543; mdupler@tricityherald.com

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