Friday, December 28, 2007

A National Solar PV Incentive

The US congress was unable to agree on legislation that would expand incentives for solar energy in 2007, but there are compelling reasons why an expanded national solar program would generate significant benefits across the country. The primary benefit would be the investments made by business in the US solar supply chain sufficient to support significant annual capacity additions. One additional import benefit would be to signal to the world our commitment to supporting renewable/low carbon energy sources.

What would a national policy look like and how much would it cost? The US could set-up a nation wide solar production incentive set at $0.10 kWh paid annually for 20 years from installation and provide a national net metering law. This incentive would replace the current $2,000/kW federal tax credit, and it would end when the US has installed 20GW of PV, approximately 1% of US electric demand. The costs would be modest (< $100 million/yr) in the first few years of the program growing to just over $4 billion per year once all 20GW of solar were installed. If the US doubled the amount of solar it installed each year, it would take 6 years before the US could install 20GW. In total, the 20 year cost of the incentive would cost around $80 billion, less than 1% of what Americans will pay for electricity in the over this period.

Although some might suggest a higher national incentive, the $0.10 kWh level and national net metering should be sufficient incentive when combined with local or regional incentives to ensure that the US installs 20GW of PV within the decade. Anything higher on a national level might stimulate demand faster than supply can ramp up, leading to temporary supply disruptions and price increases like we currently see in solar cell feedstock’s, such as silicon, due to Germany’s high incentive level. This incentive would ensure that virtually anywhere in the US, the owner of solar panels will be paid from 18-26 cents/kwh generated (base electricity rates are 8-16 cents/kwh). Picking the middle of the range, 22 cents, a solar regime with 5 hours of average sunlight (common in the western US), an $8/W installed system price will generate a 5% annual return, about what investors expect from long term low risk investments like US bonds from these national incentives alone. The price of solar would have to fall to $5/W installed for an equivalent return in areas with as little as 3 hours of average sunlight/day. But of course states and other local regions could provide additional incentives. In fact combining a national solar incentive with California’s current incentive would provide annual returns of 10% or more at very low risk for people who install solar.

What would the US get for instituting a long term solar incentive? It would provide the kind of long term stable incentive that the solar industry has repeatedly asked for, and which Germany’s feed-in-tariff has demonstrated leads to long term reductions in the installed cost of solar. Based on the historical rate of solar cost reductions, installing 20GW of solar should put solar on the threshold of grid parity in less than 10 years time.

Friday, December 21, 2007

Grand Solar Plan in Scientific America

There is a well thought out article discussing how solar power can make a major contribution to US energy independence BY 2050! at

Its interesting to note that the authors are calling for ~$10B in annual subsidies for solar totaling $420B by 2050. This is approximately what the US pays for its electricity in a year. With that investment they suggest we could get nearly 70% of our electricity from solar energy (=35% of total energy).

I was really disappointed that we didn't get support for solar in the latest energy bill.
In case congress decides to get serious next year...

We currently get under 0.017% of our electricity from solar (~0.5GWp nameplate). A national feed-in tariff for distributed PV would really boost adoption in the US.

Tariff rate (kWh) :: % of electric supply :: Annual cost :: Total cost (for 20 yrs)
$0.20 :: 0.25 (5.8GWp) :: $2B :: $40B
$0.15 :: 0.75 (17.5GWp) :: $3B :: $60B
$0.10 :: 1.25 (29GWp) :: $2B :: $40B
$0.06 :: 2.5 (58GWp) :: $3B :: $60B
$0.03 :: 5 (116GWp) :: $3B :: $60B

Such a plan would cost ~$240B total, (each bucket would only cost $3B a year) to get a solar capacity increase of 300x.

I'd suggest 1/2 the distributed feed-in rate for utility scale PV and large solar thermal (CSP) installations. Utilities can get better prices and invest in solar at a much larger scale, plus producing centralized power only provides about 1/2 the value of distributed power because of the need to get the power to the end user.

Friday, December 14, 2007

2008 Energy Bill

Murphy's Law at work: Senate Approves Compromise(d) Legislation.

Incredible. There were 4 good things in the energy bill originally and one neutral thing.

1) 35 MPG mandate for 2020
2) 15% of electricy from renewable energy mandate
3) Tax credits (mutil-year) for wind and solar
4) Repeal of 13 billion (it was originally 21 billion) worth of subsides to oil and gas interests

Neutral*: 30 billion mandated increase in renewable fuels (mostly ethanol).

*I like the idea of growing our own fuel, but the existing increase in ethanol is having some serious negative impacts on the cost of food worlwide. I fear the effect of a five fold increase.

And what makes it into law?

Funny I should ask: The neutral thing and the 35 MGP mandate.

If the bill had originally only had these two items I never would have contacted my senators & representatives (repeatedly) to support the bill. The first good thing will happen anyway. We may not even have gasoline for transportation in 2020 b/c of Peak Oil, and there are already SUVs on the market (in the US no less) that essentially meet this "efficiency hurddle", let alone consider what is available in Europe and other countries today.

I am really pissed with the Senate leadership. They dropped the good provisions one by one because of Republican posturing and threats of a presidential veto! Make the damn republican vote against these measures and then force the president to veto the bill. Then after that CONSIDER letting something as weeny as this bill through!
Now what do we get come election time? why every republican (minus 8 senators) will claim that they supported this legislation all along!


A different approach to the W.o.D. needed

Last weekend I read one of the best articles I've seen in many years about US efforts in the "War on Drugs" in Rolling Stone. Obviously Rolling Stone comes at the issue from the left and with a unique "historical perspective" on the topic of drugs. But this article takes the subject seriously. The writing in engaging and the analysis is clear-eyed. The conclusion that the US has lost the war is all but inescapable from the facts and statistics presented. $500B spent on law enforcement/militarization, ~450,000 of Americans incarcerated (most for minor offenses), but illegal drug use has barely budged (in % terms) and various drugs (including new ones like crystal meth) remain as cheap and plentiful as ever.

And yet no matter how dismal the results of the current approach, for ideological reasons-apparently, there is no desire by policy makers at the national level to try alternative approaches. And the author describes several approaches that have proven to reduce violence at the local level, and shows how simple measures that could have prevented the meth epidemic of the past decade were obstructed by pharmaceutical lobbyists. Moreover the efforts that have proven effective (like anti-drug marketing campaigns) are no longer supported by the federal government. The author details a bunch of options available to reduce drug use and violence and supports the options with what evidence is available.

Perhaps a new administration can look at the issue and try a more sensible approach (or at least try something different from what has obviously failed in the past).

Friday, December 07, 2007

Kudos! House passes greener energy bill

Wow, I'm surprised Pelosi and the Democrats managed to push through the House an energy bill that mandates 35 MPG vehicles and a 15% Renewable Portfolio Standard (a mandate that utilities generate 11% of energy using renewable sources--the other 4% comes from efficiency) by 2020.

And yes the US needs to do much better than these numbers by then, but hurrah!

I'm still worried about what the Senate will do to this bill, but then I was worried about what the house would do just a couple weeks ago.
Senate Majority Leader Reed should likewise push for the whole bill, force a Republican to actually (physically--not just threaten) filibuster it. I bet there are 10 Republican senators concerned with either re-election (or their legacy--considering how many are not running again) that might break ranks to prevent a filibuster of this energy bill as it is. If the president wants to veto it, let him.
We will have a new one in 13 months.