What are solar panels?
The term solar panels is often used for a few different types of products that produce energy by collecting sunlight. We most commonly use the phrase to refer to the type that converts sunlight directly into DC electricity. Less frequently, people will use the term in reference to solar thermal collectors, which typically heats a liquid such as water, or solar air heaters, which heats air directly.
How does a solar panel work?
Rays of sunlight hit solar cells, pushing the electrons in the cell through the wires to create electricity. This electricity is in one direction, so it is called DC, for Direct Current. As opposed to AC, for Alternating Current, where the electrons are going back and forth 50-60 times (50-60Hz) per second. That is why for most installations, you need an inverter. An inverter changes the DC to AC and makes it usable with your home's appliances.
On one side of the solar cell, there's an overabundance of electrons and on the other side there is a lack of electrons. Manufacturers create this static imbalance of charges on the cell by doping each side of the silicon solar cell with different chemicals (phosphorous on one side and boron on the other). Wires or soldered leads are effectively connected to each side of the cell. The positive and negative wires go to whatever you want to charge or power.
Connecting the leads in itself to an electrical load, while closing the current path, does not allow to the electrons to flow, despite the positive and negative imbalance. It takes sunlight hitting the silicon in the solar cells to loosen up electrons. And as soon as they a freed up, they immediately start flowing through the wires to power your electrical loads. The more sunlight shines on the cells, the more electrons loosen up, the more electrical current flows and the more power it produces.
Are solar power systems practical for home owners?
If you own home or cabin and you have (or a tiny home who can be parked such that...) a roof that roughly points south (north if south of the equator) with no shading by trees, hills, other homes from around 9AM to 3PM, then you have some prime real estate for putting a solar system on.
The cost has dropped significantly in the last several years, making it such that, with tax incentives or rebates, a grid-tie solar system will pay for itself in just a few years. Essentially, for the price of a few years electricity, you get 25 to 35 years of electricity. In fact, solar systems will likely keep on producing electricity at a lower rate for even decades after that.
Solar power systems are not practical for locations that get lots of shade throughout the day. That said, with the advent of micro inverters and grid-tie inverters that have DC optimizers connected to each individual solar panel, some locations with a little bit of shading can still be an option.
INVERTER POWER PANELS
Since each inverter needs proper disconnects on the AC and DC side, people often choose the simplicity of one of our self-contained Inverter Power Panels. By mounting one to four inverters on a power panel, that's wired with the appropriate disconnects, you have yourself a safe, pre-wired inverter system - which can save time and costs of hiring a professional electrician.
Xantrex PROwatt Pure Sine Wave Off-Grid Inverter
Learn more about off-grid inverters with our video on the PROwatt pure sine wave inverter from Xantrex. The PROwatt is available in three sizes, 100 watt, 600 watt and 2,000 watt—and there are two versions for both North America (120V/60Hz) and international (230V/50Hz) applications. Watch and learn more about this 12 volt inverter!
Sizing an Off-Grid Solar Inverter
Choosing the right inverter for your off-grid solar system will be based on accurately calculating your electrical loadsand usage patterns. The size of the off-grid inverter you need is based on your 'peak load' requirements - all the AC loads that could be turned on simultaneously.
For example, if you will be using the 1500 watt microwave, while also running 100 watts of lighting and running a refrigerator that will draw 500 watts of power, you will need an inverter that can handle at least 2100 watts (1500 + 100 + 500). Once you have identified a minimum wattage, you will select an inverter that has the same nominal voltage as your battery bank (12, 24, or 48 VDC).
Magnum GT Microinverter for Grid-Tied Solar Systems
The Micro GT500 grid-tied microinverter from Magnum Energy. These microinverters are easy to install and are available with Magnum Energy’s MagWeb GT Communication component that allows for remote monitoring of your solar system on the web. These microinverters can also be configured to work in a grid-tied solar systems with battery backup. They are rated to handle two solar panels at a time up to 310 watts and will output 500W 240V 60Hz AC.
Sizing a Grid-Tie Solar Inverter
Grid-tie inverters connect directly to the utility grid and do not require batteries. A battery-less system is much less complex (and less costly) than a system with batteries. The one drawback is that a grid-tie solar inverter system without batteries cannot supply power to the home in the event of a power outage. For the safety of the workers working on the utility lines, the grid-tie inverter will shut down until power has been restored. If frequent power outages are not an issue, then a utility grid-tie system can be an excellent, cost effective option.
Furthermore, to qualify for most state rebate programs, you must be connected to the utility grid. We recommend you visit dsireusa.org/ to check for the most up to date list of solar and renewable energy incentives in your local area.
Sizing a grid-tie inverter can be a bit more complex than sizing an inverter intended to be used with batteries. Each inverter manufacturer offers a string sizing tool that will display the acceptable configurations for your PV array, based on the quantity and wattage of your solar panels. These string sizing tools also account for variations due to high and low temperature extremes.
Schneider Electric Conext XW+ & SW Inverters
Looking for an inverter that can provide battery backup for your home? Check out the SW and XW+ inverters from Schneider Electric! Watch our interview with Eric from Schneider where he breaks down the features of the XW+ and SW hybrid solar inverters from Schneider.
Grid-Tie Solar Inverters with Battery Backup
Hybrid inverters are intended to hook directly to the utility grid AND can still allow a battery bank to provide backup power in case of a power outage. These inverters are typically at least 2500 watts and can operate with 24 or 48 volt DC battery banks. Some inverters are now being made to work with Tesla's Powerwall battery.
Set the Stage
Every 40 minutes, the amount of solar energy hitting the Earth's surface is equivalent to the total human annual global energy demand.
Update on Investment
6-24-17: We feel that you as an investor would benefit most by funding our research into organic solar conducted at Oregon's leading Universities. This is the best usage for your $3,500,000. Huge. You as treasurer and money partner write all the checks and supervise payments to the university research teams. I would direct the flow targets for the research and when the blockages occur to a viable amorphous solar solution will do some inventing.
You would save our $25,000 need a suit fee. We would be partners in the research and products. Unicorn Horn Inc. the managing partner.
5-3-16: We are very skeptical of the companies products listed below. We suggest anyone that has invested in this company due to coming into contact to this company from this website; sell enough of their stock here in the $4-$6 zone, to be working on OPM (other peoples money). Every one coming in contact with this company from our website has huge profits.
Why the change of mind? We started with this stock trading in the .50-.95 zone. There is no deminstratable proof, that we can determine, that they will ever come up with a world changing organic solar technolgy. We were interested and still maybe are, in a technology line they are discontinuing, a kinectic energy device that does not use twirling blades to produce electricity.
We are extremely sceptical of this whole opperation, no marketable product in 17 years. Wires that show. This does not seem to be the type of breakthough organic solar we are looking for.
There are several large firms currently very close perhaps to a workable organic solar solution, which would of course change the very nature of all power here on earth. Organic solar has to be earths future.
1-8-16: Money Partner must have $3,525.000 cash for this transaction. There is problems with what has been reported by this company and what has not been shared. We are sellers above $5 and not willing to chase this stock.
Unicorn Horn's interest was sparked at much lower prices. We were very interested in looking at and perhaps aquiring their hydrokinetic energy technology. We were interested in working with their university research and development programs, in a hands on sense. That has changed with their lack of subsitive announcments.
We would still consider this company, but would reqiure lots of active support from the money partner and the realisation that this may not be anymore then a rich Canadian man's plaything.
Where does that put us currently? This company may be a pass; may not be a pass. The stock is extremely thinly traded and is very much being minipulated. The risk is very high that we would not want to invest after looking closely. That would make this effort a loss of the monies involved with going to see these folks. That would mean the $3.5 million would not be used.
9-23-15: Money Partner must have $3 million & $25,000 for this transaction. The stock has taken a rest during the last two days trading and the deal lost 2 million dollars worth of market price value. The general market has dropped close to 800 points in the last two trading days. The target company has announced interesting and perhaps world changing information. This is an extremely volital situation.
9-19-15: Money Partner must have $5 million & $25,000 cash for this transaction. The stock moved upwards again today on expanded volume. I will discuss this latest move somewhat later. Please keep in mind as you buy this common stock; there are very real dangers and while the stock tomorrow may go up rapidly again. The game is getting progressively more dangerous and is a way more complexed risk then buying a fortune 500 company.
Here is what I would suggest to the first folks that figured out what company I was referring to and bought and have now well over doubled their investment money wise. Sell 1/2 of your position into tomorrows release of information. Please relise that I have never once suggested anyone buy this companies shares as a speculation. That never was the purpose of what Unicorn Horn Inc has intended.
8-18-15: Money Partner must have $4 million & $25,000 cash for this deal. The stock has moved sharply up since I last posted on the deal. This companies common stock has been moving upwards and now has doubled in price from my first posting for a money partner on this transaction. Unfortunately the common stock looks like it may be about ready to move rapidly upwards again on the 20th of August, 2015. Very hard making a static priced deal with the base of that deal moving rapidly upwards.
5-18-15: Expenses have raised for this transaction. Negotiation fee to Unicorn Horn $25,000. I live on the highest mountain in Oregon, have not owned a suit for 35 years. To do this deal I need to dress and look the part. Dress for success. The negotiation fee covers my new wardrobe. Money Partner must have $3 million & $25,000 cash for this transaction.
3-6-15: Money Partner must have $3 million cash for this deal. The stock has moved 60% since I posted the deal. That means if the deal can be done the cash investor must have 3 million cash. The value added by Unicorn Horn to this company by adding our technological research to theirs could be enormous and change the solar landscape forever! These type of deals are difficult at best. To acquire solar technology that has a payback in less then a year is a world technology game changer. What type of return can a investor hope for? Think Microsoft when they were just starting. Keep reading for the investment, but add a million cause the stock has been moving rapidly.
Unicorn Horn Inc is Looking For
A Money Partner For a
Solar Technology & Equity Acquisition
(2-3-15) Money Partner must have $2 million cash for this deal.
This deal is dependent on stock prices. It can be done now at today's prices. Solar Stocks have been in a down trend price-wise in sympathy with dropping oil prices.
Unicorn Horn has been developing roof cap solar. We have come across some awesome technology that was invented at MIT. The R&D company that owns that technology needs money (R&D eats up capital). The R&D company has common stock.
The R&D company has developed solar cells that not only produce twice as much power per square inch as the best photovoltaic; but are also completely transparent! They are almost impossible to distinguish from a standard window. These solar cells turn even artificial ambient light; like the kind produced by street lamps into power.
These Solar cells aren't installed but rather sprayed in liquid form onto any surface for a fraction of the cost it takes to install far less efficient, bulkier standard photovoltaic panels.
This R&D company is in collaboration with the government. The government has plans to adapt this technology into things like aircraft canopies. Making those canopies into power-producing elements. This technology is unique.
This company is quite real, and its technology has already been tested and confirmed to be capable of everything I just described.
(2-4-15) First off this morning this R&D company jumped 5% on 10,000 shares. Yes one of you figured out what company I am talking about and bought some. There can be no fault given to this morning's buyer; you have some money, but perhaps not the 2 million needed for Unicorn Horn's deal. It will be a great buy unless this company doesn't make it because of many reasons, going private, running out of money, etc. Unicorn Horn wants to add value and help this company. They also have some kinetic generation techniques that could dove tail into ongoing Unicorn Horn research on Hydrokinetic power generation even though there seems little connection at causal glance. There is no way a large open market million share purchase can happen in this company without the stock going parabolic (going up in price 300% to 500%) and then drifting back just like what happened this morning on 10,000 shares. This company is not liquid for large amounts of shares and or big buyers acquiring a significant stake in this company buying off the open market (needs be a private placement working hand & hand with this company). With Unicorn Horn's way this company gets drastically needed money and a R&D partner very interested in their well being and success. Buying 10,000 shares does nothing for anyone other then the investor that bought and that may backfire. Unicorn will add value to this company and all its shareholders. Win, Win.
Does that mean this R&D company will win if they get Unicorn Horn's help? No of course not. This is at best a risky venture. The possible rewards are off the chart. Read back ground on current solar trends after reading this deal, which information is directly after the description of this deal.
So then: Here is The Deal
Unicorn Horn and Money Partner are Equal Partners. Unicorn Horn is Managing Partner.
Money partner puts up 2 million cash and places it into a trust account which the money partner is sole owner. Out of that account the money partner will write checks to the R&D company once the negotiations are final (if ever). All partnership expenses; travel, entertainment etc, for this deal will be paid from the account via check written by the money partner (money partner is the check writer).
A private placement of 1 million common shares will be negotiated by Unicorn Horn (we have never met or spoken to; any of the principals of the R&D company). If successful the money partner will write a check to the R&D company for the million shares of their common stock. There will still be money left in the trust account. Unicorn Horn will then deal with the R&D company for exclusive roof cap usage of their technology (they are not looking at roof cap as their main solar effort (in fact it is not on their agenda in any of their public utterances). Unicorn Horn also wants non exclusive rights to use the technology in solar arrays, windows and any other dealer functions and uses. The money partner will write a check from the trust account if Unicorn Horn is successful in these negotiations.
That Ends this Solar Partnership Deal
Conclusion: Unicorn Horn Inc. ends up with 50% interest in the partnership assets, which include 1 million shares of common stock and will have exclusive roof cap rights to this technology and non exclusive rights to make solar arrays from this technology. Unicorn Horn would have a working relationship with the principals of this R&D company. The million shares will be sent out in certificate form after being placed in joint ownership; so will be in both the money partners and Unicorn Horns names and held at Ameritrade (no withdrawal of any stock or monies without both partners signatures). No borrowing against or selling of the shares will be allowed by either partner for the length of the partnership. The partnership can be dissolved by either partner after a 1 year written and received notification is given. Unicorn Horn has first right of refusal of the money partners 1/2 million R&D company shares priced at the time of the written partnership dissolution notice.
The Money Partner ends up with 50% interest in the partnership assets. Which include 1 million shares of the R&D companies common stock, 1/2 interest in any residue left of the original 2 million in cash (which should go into the partnership Ameritrade account), right to trade his 1/2 million R&D company shares for Unicorn Horn shares straight across (at his volition at anytime), right to use any of Unicorn Horn manufactured products for personal use without cost (includes spouse), 200,000 ten year warrants to buy Unicorn Horn common stock at $5 per share. Money partner would get ownership royalties from any products developed by using the technologies acquired from this deal with the R&D company by Unicorn Horn.
This portion of this solar partnership offering is a discussion of the possible outcomes and costs for both partners.
The R&D company has revealed a larger and more powerful prototype. Now they are up to 300% more sunlight conversion rates then the best that inorganic photovoltaic has to offer. This technology is cheaper to make, cleaner and easier to use. If this becomes the new standard, then this little company and their stock could skyrocket and start paying a dividend down the road. They have built a better mouse trap. The world needs more efficient Green Power Solutions.
Unicorn Horn Inc has cured the cause of 98% of all heart disease. Can prevent 100% of all Adult Onset Diabetes. Has obliterated obesity. Has shut off the food supply to cancers that feed from the human blood supply. These are very major accomplishments. We manufacture retail products that we 100% guarantee will accomplish the above health revitalization’s. We also intend to be instrumental in making America energy independent and Greener. The 200,000 health houses we intend to place in neighborhoods all across America will all sell and teach green energy and attempt to take 10 home neighborhood green energy mini grids off the utility power grid. That would be 2,000,000 homes self sufficient powered with Green Energy. Unicorn Horn has invented a solid Synthetic Coal-based fuel that we have cleaned up environmentally that could end all imported oil within 3 years.
Unicorn Horn Inc is the most exciting Health company of the 21st century. Unicorn Horn Inc is also a Green Energy company and to that end we are looking for a money partner to do this deal with. Unicorn Horn having the worlds most powerful and versatile solar technology will be very instrumental in making our goal of a strong, clean, Green America come to fruition.
Now let's look at the Money Partner and what he can gain and loss in this partnership.
1. The Money Partner could loss $2,000,000 or less.
2. The Money Partner would own a 1/2 million shares of the R&D company, or Unicorn Horn Inc (we would hope to convince the Money Partner to take Unicorn Horn Inc stock since then he would still own the R&D company stock since it would be a treasury cash asset of Unicorn Horn).
3. The Money Partner would have free usage of all Unicorn Horn manufactured products. What is vibrant health worth?
If one is optimistic and the best possible results occur, the Money Partner will have a major stake in the company that beats Heart Disease, Adult Onset Diabetes, Obesity and Ends America's Energy crisis. That will be worth billions. Parts of that will twink many prominent companies and individuals where it hurts; the pocket book. It will change for the better millions of American lives.
Lets now consider that the most optimistic out come occurs and multiple billions of dollars are the Money Partner's monetary reward over the next ten years. I would hope the Money Partner would be up for one more venture; put those billions to work in democratizing our solar system. I have designed a space elevator that will lift 500lbs of payload into earth orbit using a 5 hp electric engine powered by solar energy. Our solar system is the obvious next step for humanity and without economic (affordable) and environmental methods of lifting merchandise and people into earth orbit only the very richest governments and individuals are able to participate in space exploration. This would be equivalent to Henry Ford's model T as far as affordable exploring and the subsequent claiming of the riches abundant in our solar system are concerned.
Wind and Sun are available everywhere, so renewable energy can be economically harnessed at small scales across the country. This nature of renewable energy, and the exponential increase of renewable energy generation, promises to decentralize the nation’s grid system.
The greater transformation is the democratization of the electric grid, abandoning a 20th century grid dominated by large, centralized utilities for a network of independently-owned and widely dispersed renewable energy generators, dispersing economic benefits as broadly as electricity generation.
Changes are on the horizon for our century-old utility structure as solar power, energy storage, and electric vehicles open new avenues for utility customers to produce their own power and control their energy use.
Unicorn Horn Inc has designed a 10 home stand alone Mini-Grid using 100% Green Energy! We intend to show, sell, engineer and install these Mini-Grids from the Unicorn Horn Health Homes and hope to see 200,000 Unicorn Horn Mini-Grids implemented in American residential neighborhoods over the next 10 years!
John Farrell Director, Democratic Energy initiative, ILSR
It seems crazy that electric companies would have anything against customers that spend their own money to reduce their energy use with clean, local solar power. But any number of utilities are slapping excessive fees and charges on customers with solar to slow or stop them. Here are five reasons why...
1. Utilities Don't View Customer-Owned Solar Power as a Resource
Most utilities see a solar array on a customer rooftop the same as they see an energy efficient refrigerator. It means the customer buys less electricity. In some states, policies called "decoupling" tend to hold utilities harmless to these sales losses in order to encourage more investment in cost-effective energy efficiency. But with solar, utilities tend to ignore the benefits that this energy provides to the electricity system unless someone tells them to account for it.
Read a utility integrated resource plan (their 15-year plan for the electric grid), and you can see an electric utility wax eloquent about a shiny new 100 megawatt power plant that could provide energy during peak energy periods with zero fuel cost. But if instead of a big utility-built power plant we're talking about 10,000 individual solar arrays on customer rooftops, utilities lose all perspective.
In Minnesota, for example, the state legislature passed a "value of solar" program that requires the state's largest utility, Xcel Energy, to calculate how much solar energy is worth to its grid. In 2014 and 2015, the utility has reported that the value of solar energy is higher than the cost to the utility in buying it from customers via net metering. Other studies have shown similar results, including one in Maine, inMissouri, and in many other states.
Faced with compelling evidence of the value of customer-produced solar power, why haven't utilities come around?
2. The Utility Business Model Seems Broken
For most investor-owned (for profit) utilities in particular, this new data can't be squared with their old business model. In a study by the Lawrence Berkeley Laboratory, researchers found that the ratepayer impact of lots of customer-owned solar is quite small, but the larger impact falls on utility shareholders. Solar may mean modest revenue reductions for electric utilities, but by offsetting the need for new, large-scale power plants, solar's real threat is in choking off the for-profit utility's source of shareholder returns.
In short, a utility that's spent the past several decades making money by selling more electricity and building new infrastructure doesn't look favorably on a competitor. Municipal utilities (owned by cities) and rural electric cooperatives (owned by their members) don't have this dissonance between shareholders and customers, but the notion of customer-provided power as a resource is often just as shocking. There are a few exceptions (noted later) but not many.
3. It Seems Easier to Fight Than Innovate
In a competitive business it would seem mad to fight your own customers, but most utilities aren't in competition (even in states where there is competition in selling electricity to ultimate customers, the ownership of the distribution grid remains a monopoly). That means there are only a few prominent examples of utilities--such as Green Mountain Power and Farmers Electric Cooperative--working to change yesterday's business model to accommodate today's technology.
For the rest of electric utilities, they've largely chosen to fight their customers rather than accommodate the rise of distributed, customer-owned renewable energy. But that choice is because while they see distributed renewable energy as an opportunity, most have no idea how to make a business around it.
In Wisconsin, electric utilities have shifted more of the monthly bill onto fixed charges, reducing the incentive for their customers to save energy with solar (or any other manner). In Arizona, utilities are slapping fees on solar energy producers, to recoup their lost revenue. In over half of U.S. states (shown below in red), utilities have introduced legislative or regulatory proceedings to fight their customers over solar energy.
The state-by-state battles are part of a coordinated effort by utility executives to address what they see as "a serious, long-term threat to the survival of traditional electricity providers."
So far, utilities have lost more than they've won, but even in winning individual battles utilities may still lose the war because their "victories" in containing customer generated solar power are temporary props to an electricity system that is increasingly archaic.
4. The Electricity System is Fundamentally Changing
It's easy to pick on electric companies for overlooking the value of their customer's energy (and for lashing out with retrograde policies), but it's not entirely their fault. The 100-year-old rules of the electricity system--written by legislatures and governed by public regulatory commissions--granted most electric companies a monopoly over their area of the electric grid. Even as some states introduced competition in selling power to ultimate customers, utilities maintain over the distribution poles and wires that bring power to homes and businesses (and thus much of the power). This monopoly made sense in the 20th century to raise capital for large-scale, low-cost power generation. It worked, giving us reliable and affordable electricity (at any environmental price). It gave utilities comfortable, reliable returns on their investments from regulators at Public Utilities Commissions.
In an era of incremental change where stability was prized over innovation, this monopoly was largely in the public interest.
Consider the difference between a 20th century and 21st century electricity system. In the 20th century, power was generated in large-scale power plants at a distance from population centers, sent by large transmission lines to cities, and managed in a centralized, top-down fashion by a monopoly electric company. There was no viable alternative to this model.
Today, we can generate power on rooftops or farm fields, manage it in real-time with smart thermostats or appliances, and control it remotely with smartphone apps and automation software. In this environment, do we need a traditional, top-down electric utility?
Most utilities won't change by themselves, however. The inertia and cultural stagnation of monopoly make them much better at playing defense than offense. That has regulators in at least one state, New York, saying "no."
The Reforming the Energy Vision process just released its first orders, and among them the New York regulators are telling utilities that they will no longer own and operate distributed renewable energy resources. It's the first step toward flattening the electricity system, from a one-way, top-down grid to a massively networked and democratized energy delivery marketplace. Similar processes are underway inWashington, Minnesota, and other states.
5. Electric Utilities Use Enormous Power to Resist
Imagine how typewriter companies felt upon the introduction of personal computers, how landline phone companies felt a decade ago. Electric utility executives are in a similar position, locked in an outdated paradigm and without a strategy for reaching a different future.
The key difference is that electric companies wield enormous market and political power over their system. They have publicly-sanctioned monopolies, and huge streams of monopoly-shielded revenue they use to hire lobbyists and lawyers to dominate state legislatures and utility commissions. Open Secrets tracks electric utility lobbying at the federal level and reports that utilities collectively spent $121 million on lobbying Congress in 2014, and an additional $16.5 million in contributions to legislators. Lobbying is even more intense at the state level, where most regulation takes place. For example, Florida's four largest utilities collectively employ one lobbyist for every two legislators in that state.
In nearly every fight to align the electricity system with the technological and economic opportunity--energy efficiency, renewable energy, net metering--utilities have pitted their resources squarely against progress.
Get to the Root Cause
The best analog to today's battle for the electricity system might be the AT&T telephone monopoly. In the early years, users couldn't even connect third party devices to the telephone network and AT&T could wield its monopoly power to quash market or political competition. In the end, the government rightly recognized that breaking up the monopoly and introducing competition (for long distance service, at least) was the only way to reduce AT&T's economic and political power.
Electric utilities are right that distributed renewable energy like rooftop solar threatens their business model. But that model is increasingly out of step with the interests of the modern electricity customer, from energy efficiency to clean energy to energy management. States have papered over the inconsistencies with policies mandating renewable energy and energy efficiency--the utility leaders in renewable energy and energy efficiency almost all hail from states with the best policies--but only at great political cost and over the strident objection of utility companies.
The root cause of the battle between utilities and their (captive) customers is the utility monopoly. And the best hope for a democratic energy system may be to smash it.
Solar Investment Tax Credit (ITC)
Click here for a Fact Sheet covering the basics of the Solar Investment Tax Credit (ITC).
The solar Investment Tax Credit (ITC) is one of the most important federal policy mechanisms to support the deployment of solar energy in the United States. SEIA successfully advocated for a multi-year extension of the credit in 2008, which provided business certainty to project developers and investors. The ITC continues to drive growth in the industry and job creation across the country.
- The ITC is a 30 percent tax credit for solar systems on residential (under Section 25D) and commercial (under Section 48) properties.
- The multiple-year extension of the residential and commercial solar ITC has helped annual solar installation grow by over 1,600 percent since the ITC was implemented in 2006 - a compound annual growth rate of 76 percent. (See more solar industry data.)
- The existence of the ITC through 2016 provides market certainty for companies to develop long-term investments that drive competition and technological innovation, which in turn, lowers costs for consumers.
What is the Solar Investment Tax Credit?
The Investment Tax Credit (“ITC”) is a 30 percent federal tax credit for solar systems on residential (under Section 25D) and commercial (under section 48) properties that, under current law, remains in effect through December 31, 2016. The Section 48 commercial ITC is used for utility-scale, commercial and residential sized projects. The company that installs, develops or finances the project uses the credit. The Section 25D residential ITC is used for residential sized projects, and the homeowner applies the credit to his/her income taxes. This credit is used when homeowners purchase solar systems outright and have them installed on their homes.
How does the Solar Investment Tax Credit Work?
A tax credit is a dollar-for-dollar reduction in the income taxes that a person or company claiming the credit would otherwise pay the federal government. The ITC is based on the amount of investment in solar property. Thus, both the commercial and residential ITC are credits equal to 30 percent of the basis that is invested in eligible property that is placed in service before December 31, 2016. After this date the commercial credit (under section 48) will drop to 10 percent and the residential credit (under Section 25D) will drop to zero—unless Congress extends this deadline or changes the “placed in service” component of the law to a “commence construction” provision.
It is incumbent on every member of the U.S. solar industry to be mindful of applicable laws and remain fully compliant with all statutory and regulatory requirements of the ITC and related programs. For more information on the Section 48 credit, please review this factsheet on Cost Basis for the ITC and 1603 Applications.
History of the Solar Investment Tax Credit
The Energy Policy Act of 2005 (P.L. 109-58) created a 30 percent investment tax credit (ITC) for commercial and residential solar energy systems that applied from January 1, 2006 through December 31, 2007. These credits were extended for one additional year in December 2006 by the Tax Relief and Health Care Act of 2006 (P.L. 109-432).
In 2007, global investment in clean energy topped $100 billion, with solar energy as the leading clean energy technology for venture capital and private equity investment. The solar tax credits helped to create unprecedented growth in the U.S. solar industry from 2006-2007. The amount of solar electric capacity installed in 2007 was double the capacity installed in 2006.
The Emergency Economic Stabilization Act of 2008 (P.L. 110-343) included an eight-year extension of the commercial and residential solar ITC, eliminated the monetary cap for residential solar electric installations, and permitted utilities and companies paying the alternative minimum tax (AMT) to qualify for the credit. In 2009, under the American Recovery and Reinvestment Act (P.L. 111-5), the $2,000 credit cap on solar hot water installations was eliminated. For more information, visit DSIRE's website for more tax information on commercial and residential systems.
Why is the Solar ITC Important?
Tax policies related to renewable energy play a vital role in creating new high-wage American jobs, spurring economic growth, ensuring U.S. global competitiveness, lowering energy bills for consumers & businesses, and reducing pollution. The solar ITC is the cornerstone of continued growth of solar energy in the United States.The ITC reduces the tax liability for individuals or businesses that purchase qualifying solar energy technologies. As a stable, multi-year incentive, the ITC encourages private sector investment in solar manufacturing and solar project construction. The ITC has been tremendously successful in increasing deployment and lowering costs of solar energy. Since the eight-year ITC was put into place, solar prices have consistently fallen year after year while installation rates and efficiencies have continued to climb. The success of the ITC shows that a stable, long-term incentive can reduce prices and create jobs in solar energy.
- The ITC has fueled dramatic growth in solar installations. The market certainty provided by a multiple-year extension of the residential and commercial solar ITC has helped annual solar installation grow by over 1,600 percent since the ITC was implemented in 2006 - a compound annual growth rate of 76 percent.
- The ITC has fueled dramatic job creation. Solar employment has grown by 86% in the last four years and is creating jobs at a rate nearly 20 times higher than employment growth in the overall economy.
- The cost of solar for consumers has continued to fall. The existence of the ITC through 2016 provides market certainty for companies to develop long-term investments that drive competition and technological innovation, which in turn, lowers costs for consumers.
(Institute for Local Self Reliance)
The U.S. electricity system is undergoing the biggest change in its 130-year history, undermining the rationale for monopoly ownership and control.
Until recently, electricity service was similar to water or roads, where a natural monopoly was most efficient. Only a single, standardized electric grid was needed to connect each building. Technology options were limited to steam-powered turbines fueled by coal and oil, or large hydro dams with massive economies of scale. There was very little long-distance transmission of power, as each utility was responsible for electricity service within its own territory. Growth in demand was exploding and monopoly utilities could wield the most cost-effective financing for new power plants. These natural monopolies paid off for customers, with falling costs of reliable electricity even as demand rose rapidly.
But the 21st century electricity system is radically different.
The scale of electricity generation is rapidly shrinking, from coal and nuclear power plants that can power a million homes to solar and wind power plants that power a few to a few hundred nearby homes. Electricity demand has leveled off, so that every unit of new wind and solar power produced for the grid displaces a unit of fossil fuel energy. Batteries and electric vehicles provide new tools for distributed energy storage. Smartphones and smart appliances are giving electricity customers unprecedented opportunities to manage their energy use.*
It no longer makes sense to preserve last century’s forms of utility ownership and control in a century where cost-effective technology enables widely distribution production and ownership of electricity. And yet, a majority of state laws governing electricity service still preserve this monopoly model. Even those that do not have made little progress on democratizing the electricity system.
There have been incremental changes. In the last three decades of the 20th Century, federal regulators opened the utility market to competition from non-utility generators who used higher efficiency or renewable-fueled power plants and opened the wholesale market to competition by making the transmission system a common carrier. These moves showed that utilities did not have a natural monopoly over power generation and emphasized the public nature of the grid infrastructure by allowing fair and non-discriminatory access. Competition was introduced between big players who could own and operate large power plants.
Changes in the 1990s also introduced retail sales “competition” that proved elusive. California’s near-bankruptcy due to price manipulation by Enron and others led many states to freeze or reverse retail deregulation. Even in states where retail competition has been maintained, public advocates warn it has offered little innovation in electricity service (other than promotional rates like offered by the cable industry). More to the point, retail competition does little to empower electric users, who are still just consumers of power.
The most potent change has been the growth of conservation and energy efficiency. These tools offer non-utility and cost-effective alternatives to new power plants, and as such, illustrate the unnatural nature of utility monopolies. Many states have shifted to independent, non-utility delivery of conservation and energy efficiency services (e.g. Efficiency Vermont).
Retaining Market Power
At the present, however, utilities still maintain monopoly or exercise market power over many aspects of the grid. On the transmission system, for example, planning rules make it very difficult to implement less costly, non power line alternatives to utility power line proposals (see Beyond Utility 2.0 to Energy Democracy, p21). In particular, planning is rarely integrated with distribution level planning, where distribution energy generation (like solar) can serve reliability and energy needs. Distribution planning also suffers from utility monopoly, because as utility expert and former utility manager Karl Rabago says, “utilities simply do not think things they do not own or control can be resources.” Thus, system planning rarely incorporates customer-owned solar, electric vehicles, energy storage, and many other cost-effective strategies for meeting electricity needs.
In other words, the natural monopoly has become unnatural, with utility managers wedded to costly legacy infrastructure solutions (like poles and wires) in an era of remarkable local and non-utility resources. New utility power plants and power lines will last for 40-50 years, but distributed energy resources will be competitive well within the lifetime of these legacy investments. For example, by 2022, on-site solar power could provide less costly electricity than the electric utility for at least 10% of residential and commercial customers in nearly every state. In that timeframe, electric vehicles and other energy storage options combined with powerful “apps” will give utility customers unprecedented control over their energy use.
Replacing an Unnatural Monopoly
Monopoly is no longer natural or even cost effective. But what will replace it?
For one, it must be a grid built on the principles of a 21st century electricity system. I offer five pillars of a Utility 3.0 model, or energy democracy. Three of these derive from the prominent Utility 2.0 conversation.
How will these principles be applied to the end of the natural utility monopoly?
On the transmission system, there’s a clear need for policy to re-integrate planning with the local level, where there are many more opportunities for conservation, efficiency, and distributed energy to meet regional needs than ever before. There are a few other suggestions, for federal regulators, in this post.
On the distribution system, the answer is new management and, likely, ownership. The New York Public Service Commission’s Reforming the Energy Vision process has already outlined a plan for an independent manager for the distribution system, but it may fall short of the necessary steps to make the distribution system a tool for energy democracy.
Until the turn of the 21st century, the distribution system was simply the last mile of lines bringing power one-way from utility operated power plants to customers. But now the distribution system can facilitate energy democracy. Individual and community solar arrays can produce local electricity; electric vehicles, energy storage, and smart appliances can manage energy use; networked thermostats and smartphone apps can give individuals and businesses unprecedented power as energy managers. The following graphic provides a very simplified picture.
To facilitate this network, the distribution system needs to be a common carrier, with non-discriminatory access to all. But the infrastructure of the local grid (substations, transformers, etc) also has to be vastly upgraded and smartened to enable local ownership and management of energy systems, and the transactions between these local owners. These investments, in the public interest and not the manager’s interest, necessitate complete separation from utility ownership and management as long as utility’s still have a vested financial interest in particular outcomes (e.g. a guaranteed rate of return from building new infrastructure). The grid could be owned as a commons, like the roads or municipal water supply, or not. But it must be built and operated to facilitate maximum economic opportunity for electric customers.
Maintaining an unnatural monopoly is inefficient, but failing to correct it is enormously costly. Energy efficiency and distributed energy offer electricity customers $48 billion economic opportunity, and the rules for the electricity system should allow them to seize control.
Utility Structure in America (Wikipedia)
In the United States in the 1920s, utilities joined together establishing a wider utility grid as joint-operations saw the benefits of sharing peak load coverage and backup power. Also, electric utilities were easily financed by Wall Street private investors who backed many of their ventures. In 1934, with the passage of the Public Utility Holding Company Act (USA), electric utilities were recognized as public goods of importance along with gas, water, and telephone companies and thereby were given outlined restrictions and regulatory oversight of their operations. This ushered in the Golden Age of Regulation for more than 60 years. However, with the successful deregulation of airlines and telecommunication industries in late 1970s, the Energy Policy Act (EPAct) of 1992 advocated deregulation of electric utilities by creating wholesale electric markets. It required transmission line owners to allow electric generation companies open access to their network. The act led to a major restructuring of how the electric industry operated in an effort to create competition in power generation. No longer were electric utilities built as vertical monopolies, where generation, transmission and distribution were handled by a single company. Now, the three stages could be split among various companies, in an effort to provide fair accessibility to high voltage transmission. In 2005, the Energy Policy Act of 2005 was passed to allow incentives and loan guarantees for alternative energy production and advance innovative technologies that avoided greenhouse emissions.
First Solar reprint 1stAlpha
First Solar's (NASDAQ:FSLR) thin-film technology solar modules offer cost per watt, application flexibility, sustainability, and
performance advantages over traditional crystalline silicon (c-Si) technologies. In recent years, despite plunging costs of c-Si, these advantages have propelled the firm to the head of the class among solar technology companies, particularly in the market for utility-scale solar deployments.
But First Solar's success arrives at a cost and presents an irony. As the market for the company's products grows, and as its deployments help to create a sustainable renewable energy foundation, First Solar's technology also poses new environmental threats for future generations. This irony spotlights significant challenges confronting the clean energy industry going forward.
Photovoltaic technologies are a subset of semiconductor technologies, typically associated with the rapidly evolving field of photonics, and inconceivable without many of the advances in information processing and chip manufacturing of the past half-century. While digital companies such as Intel (NASDAQ:INTC) and Apple (NASDAQ:
AAPL) present themselves as sleek, post-industrial knowledge companies, their businesses depend on the packaging of sophisticated electronics manufactured with toxic metals and chemicals. Perhaps more importantly, the consumer electronics industry has fostered an ethos of disposability and waste, in which "renewable" acquires a meaning entirely at odds with its common associations with environmental sustainability.
Like other electronics companies, businesses developing and selling solar energy components and systems maintain a
balance of positive and negative environmental impacts that shift over time. Negative environmental impacts represent external costs - often of enormous magnitude - that someone must eventually bear. The market on its own, which is far less anticipatory or prophetic than many investors believe, can certainly not anticipate and demand an accounting for these external costs, particularly as they often appear only years or decades into the future. And yet, this truly is an accounting problem - both financial and moral - a matter of contingent liabilities. Accounting statements and moral ledgers (yes, companies do have these) that do not recognize external costs of this sort are at best opaque and at worst fraudulent.
This essay explores the environmental challenges and opportunities for clean energy companies such as First Solar by focusing on: 1) First Solar's perception machine; 2) CdTe toxicity and groundwater risks; 3) First Solar's decommissioning and recycling practices; and 4) producer responsibility for environmental outcomes. But first we need to imagine the full scope of the environmental waste challenge unfolding over the next 50 years.
A Meditation on Waste
PV waste is a subset of electronic waste, which is itself a subset of solid waste, which is in turn a subset of physical waste, which is finally a subset of all waste - organic and inorganic - extruded from systems in some form that denudes them of any useful purpose. In 1997, the United Nations Statistics Division provided a
global definition of waste:
Wastes are materials that are not prime products (that is products produced for the market) for which the initial user has no further use in terms of his/her own purposes of production, transformation or consumption, and of which he/she wants to dispose. Wastes may be generated during the extraction of raw materials, the processing of raw materials into intermediate and final products, the consumption of final products, and other human activities. Residuals recycled or reused at the place of generation are excluded.
Another way to think about waste is in terms of environmental feedback loops. We might ourselves define waste as any extrusion resulting from the consumption of a given unit of energy that natural systems cannot easily reabsorb and reuse without causing harm within that system. From this perspective, PV waste and electronic waste that expose natural systems to any form of contamination break feedback loops, and to that degree, are
functionally similar to human waste that exposes humans to a broad set of life-threatening, socially harmful diseases.
When we refer to many
grid utility operations - in which communities take responsibility for building and properly using sanitation and wastewater systems, energy systems, agricultural systems, materials extraction systems, and other "higher-level" systems such as healthcare and education - we are acknowledging the importance of these systems for supporting and maintaining the environmental feedback loops upon which human life depends. The idea of the grid utility as a basis for provisioning basic human needs accepts an important reality - waste is a cost of economic life that requires accounting for. The purpose of the grid utility is to internalize - to bring back within the feedback loops that sustain natural systems - the external costs of waste.
When populations (numbers of humans) and economies (wealth of humans) grow, the velocity of GDP growth and total energy consumption accelerates. Waste factors resulting from accelerating velocity of global energy consumption multiply parabolically. Managing waste extrusion under conditions of population growth, economic growth, technology innovation, and energy consumption is one of the existential challenges of our age, encompassing global business practices, environmental risk, metals and chemicals recycling markets, political and cultural relationships, commercial regulation, global poverty, economic opportunity, and economic development.
In 2014, global consumer electronics spending will approach $4 trillion and include the sale of approximately 2.5 billion computers, tablets, and mobile phones. In the next three years, the annual
global volume of electronic wastewill increase 33 percent, from approximately 50 million tons in 2014 to more than 65 million tons in 2017, the equivalent of 1.6 million 40-ton trailers stretching 18,000 miles.
Electronic waste recycling percentages in the United States have improved considerably - from 10 percent in 2000 to nearly 30 percent in 2012. Beginning in 2011, the total quantity of e-waste that we simply discard began for the first time to decline. Nonetheless, rapid product release cycles for mobile computing, communications, and media consumption devices from technology companies such as Apple and Samsung have transformed concepts of ownership and possession, and the quantity of discarded items in units has increased far more rapidly than the quantity in weight.
Difficulties managing waste of this sort on a global scale multiply when considering solar energy systems. These systems generally are heavy, surface-intensive installations deploying sophisticated, light-sensitive electronics and significant quantities of heavy metals, rare earth metals, and other potentially toxic materials. For example, a typical First Solar PV module covers nearly 8 square feet of surface and weighs 26 pounds, roughly equivalent to a 48-inch flat-screen television.
As of 2012, First Solar has manufactured 100 million modules for its 6.5 GW of installations. Global PV capacity approached 100 GW. Extrapolations from First Solar module volumes indicate global volume modules at the end of 2012 exceeded 1.5 billion, for an installed capacity of approximately 100 GW.
An (optimistic) estimate of 600+ GW of all global PV installations by 2020 therefore implies nearly 10 billion modules of this size in 6 years, a quantity which would at that time simply dwarf the global number of televisions and computer display monitors. This quantity of modules would total about 3,000 square miles of the earth's surface, an area significantly larger than the state of Delaware. Stretched end to end, a "solar road" constructed of these modules would extend 6 million miles.
Of course, PV module numbers will continue to experience parabolic growth well beyond 2020, possibly for many decades into the future. In this time frame, we can expect improvements in the materials, efficiency, weight, life-cycle, and toxicity of PV modules. However, it is fair to surmise that by 2040, solar energy systems might well encompass hundreds of billions of these modules, all of which will eventually need to be safely reclaimed and recycled.
The other factor to bear in mind when considering PV waste management is that as solar installations proliferate in many more nations around the world - particularly in Latin America, Asia, Africa, and the Middle East - regulatory, collection, process, transport, and data-gathering challenges will mount precipitously. Related cost and funding impacts will accompany this proliferation. Recycling PV modules is
The history of existing collection and recycling programs for non-PV electronic waste - consumer appliances, televisions, display monitors, computers, and mobile devices - provides important information about both the global scope of this problem and evolving methods for acknowledging, accounting for, and managing its costs. The European Union's PV Cycle program, which
recently announced cumulative collection of 10,000 tons of PV materials, also bears watching as a pioneering effort to integrate collection and recycling activities within a comprehensive life-cycle approach to PV module management.
First Solar's Perception Machine
First Solar has long touted its end-of-life collection and recycling programs, and has consistently harvested attention and praise for these programs from the
industry press. Riding the coattails of environmental purity, First Solar for many years branded itself as a different kind of company that takes the long view and does the right thing.
The differences between perception and reality are important, and we will get to that distinction, but for now, it simply merits saying that First Solar's public relations, marketing, and governmental affairs operations have been, and remain, proactive, savvy, hard-hitting, and image-conscious. The company
aggressively lobbies legislators and regulators, and responds instantly to critics of its environmental practices. First Solar means business, and its relationship management efforts - with media, customers, competitors, regulators, and critics - are all about gaining tactical advantage in the swiftly emerging global market for new energy.
Between its 2006 IPO and 2011, First Solar gained a reputation for environmental stewardship and recycling commitments under company president Bruce Sohn. A
pedigreed engineer from MIT and Intel, Sohn instinctively grasped the technical opportunity for leveraging semiconductor industry achievements as a means to more rapidly advance the environmental aims of the renewable energy movement.
During Sohn's tenure as president, First Solar conformed to the general environmental commitments and specific PV life-cycle principles of the European Union. The company established a pre-funded recycling process that firmly established its leadership in the emerging conversation about appropriate producer responsibilities for solar energy's external costs. Between July 2008 and November 2009, the company's description of itself in press releases notably
included this sentence: "First Solar set the benchmark for environmentally responsible product life cycle management by introducing the industry's first prefunded, comprehensive collection and recycling program for solar modules."
By contrast, the current First Solar CEO, Jim Hughes, is a Texas attorney with degrees from Southern Methodist University and the University of Texas, who cut his teeth at Enron. Hughes is far more from the electric utilities world than from Silicon Valley, far more a businessman than a technologist, and to this degree, reflects more fully the commitment of the company's principal owners -
Wal-Mart's Walton family - to economic and environmental deregulation, states' rights, and the managed, top-down evolution of traditional electric utilities into global alternative energy suppliers.
First Solar's commitments to utility-scale solar projects using CdTe thin-film modules plugged into centralized electric grids inevitably aligns the company with large electric power utilities. In February 2014, Jim Hughes
named Paul Kaleta, formerly the general counsel for NV Energy and for Koch Industries, to serve as executive vice-president and general counsel of First Solar, removing any final doubt that the company now approaches the development of renewable, sustainable energy resources through the eyes of the largest electric utility and energy companies.
Jim Hughes has forcefully articulated the benefits of utility-scale solar project that don't require government subsidies (although First Solar has taken them). He doesn't hew to naïve concepts that don't apply in the real world, such as "grid parity" (a term he proudly admits to banning from the lexicon at First Solar headquarters). Hughes also raised eyebrows in 2013, when he
published a lengthy, unvarnished assault on residential rooftop solar and net-metering.
The distinctions here are not absolute, of course. First Solar has in the past partnered with Solar City (NASDAQ:SCTY), and announced in December 2014 that it was re-entering the "community solar" (micro-grid) market via apartnership with Clean Energy Collective. The company has established tactical relationships with politicians from both parties. And Wal-Mart (NYSE:WMT) has itself
moved aggressively to install rooftop panels at its stores and distribution centers as another way to manage its expenses.
However, Jim Hughes himself makes clear that First Solar's rivals are not the grid utilities, but companies such as SunPower (NASDAQ:SPWR), SunEdison (NYSE:SUNE), and SolarCity that are investing in the growth of residential rooftop solar. The politics of this attack are intricate (and interesting), but for now, the significant message is that First Solar, which has had several near-death experiences in the past, has gone on the attack, and
the war it seeks is not with the power utilities or even with the fossil fuels on which most utilities still largely depend - but with the residential rooftop solar market and with concepts of autonomous power generation that existentially threaten centralized grid utilities. First Solar does not take this threat lightly. And it does not take prisoners.
CdTe Toxicity and Groundwater Risks
First Solar PV thin-film PV modules contain significant amounts of cadmium (Cd), in the form of cadmium-telluride (CdTe), about one pound for every 50 modules produced. A 50 MW utility-scale installation serving the power needs of approximately 12,000 families (or a small town) might include 600,000 PV modules spanning 250 acres, or approximately six tons of Cd. Let's call it one pound of Cd per family. First Solar installed global PV base as of 2012, totaling 100 million modules, represents the power needs of upwards of two million households, and potential exposure to one thousand tons of Cd. Despite
claims to the contrary, that's a lot of Cd.
Cd is a byproduct of base metals smelting (particularly zinc), used in the control rods of nuclear reactors and in nickel-cadmium batteries. Cd is also a carcinogen, considered extremely toxic by the EPA and the U.S. Occupational Safety and Health Association (OSHA). Potential health impacts include kidney, liver, bone, and blood damage from ingestion via settled dust or the water supply, and lung cancer from inhalation. The European Economic Community (EEC) has prohibited the sale of most products containing cadmium for health and safety reasons.
In the past decade, First Solar has sponsored an array of studies regarding the environmental and human health risks of Cd in its CdTe form. For the most part, these studies have concluded that the CdTe in the First Solar PV modules
does not pose significant risks to the environment or to humans, particularly in comparison to Cd emissions from energy sources such as oil and coal.
With these testimonials in hand, and with the imprimatur of the very establishment National Renewable Energy Laboratory, First Solar promotes the environmental safety of CdTe, and dismisses those who doubt its assurances. For years, the company has repeated the following propositions to control the debate on the relative merits of CdTe in relation to other thin-film module options:
- The acute inhalation and oral toxicity of CdTe is far less than Cd.
- First Solar's recycling program keeps the company out ahead of the risk.
- PV module construction itself produces fail-safe outcomes when stressed (with the surrounding glass, for example, impermeably fusing the CdTe in the event of a fire).
- The most important claim, which has largely been accepted without challenge, is that CdTe in the modules is water-insoluble, and which therefore presents no risk to groundwater or from rainwater.
In recent years, solar technology pioneer
Zoltan Kiss has waged a lonely battle to curb complacency about toxic risks of CdTe in PV modules. In particular, Kiss has disputed the methods used by other scientists to test the water-solubility of the CdTe in these modules. For Kiss, using distilled water to test water-solubility does not approach the real-world conditions of the water where CdTe might find itself, in which varying pH levels can produce significant leaching of the Cd into water tables.
Kiss can point to a number of studies that support his skepticism, including: a) research concerning Water Solubility of Cadmium Telluride conducted on his behalf by research scientists affiliated with the Vitreous State Laboratory of the Physics Department at Catholic University in Washington, D.C.; b) a slideshow concerning Toxic Materials in Photovoltaic Modules, authored by research scientists from Stuttgart, Germany, who work in the fields of photovoltaics, water quality, and solid waste management; and c) another paper authored by the Stuttgart scientist on
Toxic Substances in Photovoltaic Materials, presented at the 2011 International Photovoltaic Science and Engineering Conference in Fukuoka, Japan. In this paper, the authors emphasize a set of alternative propositions to those advanced by First Solar:
- Most PV modules contain toxic substances "without need."
- On a per GW basis, CdTe modules contain approximately eight times the amount of toxins held within c-Si modules.
- "Worst-case" leaching experiments on milled CdTe modules indicate leaching of up to 50 percent of module Cd within 50 days in water with pH values between 3.1 and 5.0 (the pH of rainwater is about 5.5).
First Solar supporters argue that most utility-scale solar energy systems are sited in hot, dry portions of the globe, where there is little rain and where water tables lie very deep below the surface, and that these conditions moot the conclusions of the dissenting research on CdTe water-solubility, even if they had merit. They also present evidence that however toxic CdTe in PV modules might be, it remains far less toxic than other forms of Cd used in other mineral and energy applications, and so provides a productive andrelatively safe way to reabsorb this material into the energy loop rather than simply to discard it as waste into landfills
And these First Solar supporters might be correct. Or at least insufficiently incorrect to warrant placing obstacles in the path of a solution to the challenges of greenhouse gas and global warming because of risks that everyone, including Kiss, acknowledges will likely not achieve critical mass for another decade. However, several conclusions follow from this mixed bag of data that probably also moot the First Solar position, and that at a minimum place the burden back on the company to reexamine and challenge its own assumptions about CdTe safety:
- Given the risks, the fail-safe premise doesn't pass the smell test with respect to both fire and water.
- If the risks are so minute, why has the Silicon Valley Toxics Coalition awarded First Solar zero points on the "toxicity" portion of its 2014 Solar Scorecard?
- Even if the exposure risk per module is small, the almost inconceivably large quantity of modules needed to support each GW increase in electric power capacity (approximately 10 million modules) means that the aggregate risk is very large.
Pre-Funding and Its Discontents
Like every solar technology company, First Solar's business hit the skids in 2012. Having invested in growth, the market for the company's solar panels collapsed, tearing a hole in its finances and shattering its confidence. In 16 months, the company's share price tumbled 93 percent, from $169 to $12. Facing plunging sales, public rebuke, investor lawsuits, and organizational upheaval, the company boldly pivoted its business.
- In April 2012, responding to reduced government subsidies for solar power, declining demand for its modules, manufacturing overcapacity, and fierce price competition, First Solar laid off 2,000 employees (one-third of its workforce) and announced the closure of its factory in Frankfurt, Germany.
- In May 2012, First Solar appointed Jim Hughes Chief Executive Officer, signaling its intentions to focus exclusively on utility-scale solar power projects.
- In August 2012, the European Union Waste Electrical and Electronic Equipment (WEEE) Directive for the first time applied producer recycling mandates to PV solar modules.
- In the 4th quarter of 2012, First Solar rolled back its commitment to pre-funding the collection and recycling of its PV modules outside the European Union.
First Solar's new "damn the torpedoes and damn Europe" approach to its business under the leadership of Jim Hughes only confirmed that the company's commitment to owning the costs of PV module recycling had been mostly a market-driven (and marketing-driven) tactic, a concession to prospective European regulatory requirements in a period of time when Europe was pretty much the entire market for solar installations. When the recycling rubber finally met the road in 2012, utility-scale opportunities in friendlier desert climates provided an opportune moment for First Solar to exit Europe and to sideline its firmest environmental obligations as a producer of potentially toxic environmental waste.
In reality, the First Solar pre-funded module recycling program may never have been quite the commitment some imagined it to be, both because the pre-funding part has likely been inadequate, and because the non-financial logistics of managing accountability for these commitments are thorny.
First Solar set aside $0.04/watt to cover end-of-life recycling costs of installed PV modules, replenishing this fund on a quarterly basis through December 2012. Accrued liabilities at that time totaled $212 million, based on about 6.5 GW of installed capacity. First Solar invested its pre-funded recycling liabilities in conservative debt instruments (primarily sovereign debt, it seems). Commutation of customer recycling agreements requires return of deposited funds plus an annual rate of return of 5.3 percent. For now, we may use this return as a proxy for the CAGR First Solar receives from its fund investments. After 25 years, a 5.3 percent CAGR for the $212 million deposited by First Solar returns $770 million (without adjusting for inflation).
First Solar assumes a cost of $0.04/watt to recycle its modules, which translates to a cost of $260 million for its 6.5 GW of installed capacity at the end of 2012. If First Solar's cost assumptions and rate-of-return assumptions are accurate, the company should easily be able to absorb recycling costs, even with an inflation rate that cuts this return in half. The $0.04/watt recycling assumption (which is at the
lowest end of all estimates, some of which are now quite dated) may turn out to be exceedingly optimistic, however.
First Solar describes services covered under its pre-funded recycling commitment variously as "reclamation and recycling" or "collection and recycling." The fullest description states that estimated costs
cover"packaging the solar modules for transport, the cost of freight from the solar module installation sites to a recycling center, the material, labor, capital costs, and scale of recycling centers, and an estimated third-party profit margin and return on risk for collection and recycling services." Even under the pre-funding agreement, it appears that the customer - or some other party - will be liable for site restoration or rehabilitation. Under the most favorable circumstances, then, significant external costs of the First Solution thin-film solution remain outside the company's life-cycle accounting methods.
At $0.04/watt, the recovery cost per CdTe module works out to about $2.38/module. Can First Solar truly pay for packaging, freight, material, labor, capital costs, scale, profit margin, and return on risk for $2.38 module? Evidence is spotty, and in the absence of more transparency from First Solar (not to mention from other solar module manufacturers), we cannot know for sure what technology breakthroughs and efficiencies can emerge going forward. First Solar itself has discussed developing mobile recycling centers that can travel site to site. The company also continuously refines its collection and recycling methods. Finally, utility-scale siting presumably creates cost-reducing operational efficiencies. With a window of approximately 10-15 years before recycling efforts need to ramp, it does seem conceivable that even if costs exceed $0.04/watt in 2014, they may well descend to that level (accounting for inflation or not) within 10-15 years.
However, to accept this narrative requires a very optimistic - and hence imprudent - reading of the future. Will reclamation and recycling costs really ever reach $0.04/watt? In 2013, Abound Solar bankruptcy trustees
estimatedthat properly recycling 100,000 CdTe modules (approximately 7 MW of capacity) and cleaning up thousands of gallons of Cd-contaminated waste from Abound facilities would cost a minimum of $2.2 million, a figure that subsequently ballooned to $3.7 million. These numbers provide a more concrete basis for assessing reclamation, recycling, and rehabilitation costs.
First Solar itself admits to receiving and recycling nearly 500 tons of discarded Abound modules, which meshes closely with independent reports that the company received shipment of 28,000 modules from Abound bankruptcy trustees. These numbers do not perfectly align, but they are sufficiently within the same exponent so as to pass the smell test.
When one considers what is involved in packing up, shipping, receiving, unpacking, crushing, milling, acid-bathing, and stepping through the multitude of other tasks required to recycle and dispose properly of 100,000 CdTe modules, it's difficult to imagine even First Solar executives could define down the costs to $0.04/watt (or $280,000) with a straight face. For recycling alone, we are probably minimally looking at $0.20-$0.30/watt. The Sacramento Municipal Utility District received a $1 million (or $0.61/watt) bid to retire a 1.6 MW PV project, an estimate that can perhaps provide a reasonable outer bound for a full accounting of the reclamation, recycling, and rehabilitation costs required to retire a PV system.
Real-world reassessments of this sort pose a problem for First Solar's recycling fund financial model. Because at $0.20/watt, the cost of retiring 100 million (6.5 GW) CdTe modules will exceed $1.3 billion. The relatively optimistic 5.3 percent return we believe First Solar is using to estimate the value of its pre-funded liabilities in 25 years yields $770 million (again, without accounting for inflation), a handsome sum, yes, but nothing remotely close to the requirements for setting free 100 million modules.
And assumptions do not need to change much to render far more damage to the First Solar pre-funded liabilities financial model. To bear the full $1.3 billion ($0.20/watt) cost of module retirement and recycling in 25 years, First Solar fund would need a CAGR of 7.5 percent. At $0.40/watt, the fund would require a CAGR of 10.5 percent.
These are typically not the inflation-adjusted returns one gets over 25 years from sovereign debt. The Vanguard Long-Term Treasury Fund Inv (MUTF:VUSTX), for example, has returned an average of 8.11% annually since 1986. After taking into account inflation, however, the
real return(before investment expenses and taxes) is well under 6 percent. As the table below indicates, First Solar can only meet its most minimal recycling obligations in 7 out of 20 scenarios. With a CAGR of 6% or less, it can only meet the most conservative scenario. In 9 out of 20 scenarios, the funding deficit exceeds $1 billion.
These are not reassuring numbers. Yet, even after the 2012 decision to end pre-funding, First Solar continued to present itself as the leading environmental steward among clean energy companies. When commenting on
First Solar's offer to recycle Abound solar panels early in 2013, the company's public relations director used that opportunity to polish the company's own stewardship image. "The industry as a whole needs to demonstrate a sense of responsibility," he said. "When you make something, you should be responsible for it when it's completed its life cycle."
In August 2013, renewable energy consultant Joseph McCabe posted a
thoughtful essay about First Solar's decision to stop pre-funding recycling obligations and to no longer claim them in financial statements as accrued liabilities, a decision that he observed had largely remained below everyone's radar. McCabe voiced plausible bemusement about this decision, noting correctly that "owning the recycling might be the best long-term approach to reduced liability from manufacturing."
First Solar was neither bemused nor amused, however, and in its (perhaps overly) forceful response to the McCabe essay, Alex Heard (the company's vice-president of Environmental Health and Safety, Sustainability, and Recycling Services) served up a full platter of
marketing-speak about the company's firm commitment to "extended producer responsibility" and to environmental leadership within its industry that "stands alone" in offering state-of-the-art recycling capabilities and services "at scale."
The core message in the response of Alex Heard, however, is that First Solar utility-scale customers absolutely do not like pre-funding, which spread across the lifetime of the installation, and which unnecessarily elevate the cost of energy across that lifetime. Pivoting toward the electric utility market, First Solar did not hesitate to suspend all pre-funding going forward, and to instead give these financially "sophisticated" (as in "Wall Street-connected") customers freedom to finance these obligations (or not) in the manner that best suits their needs. Hidden in this language was an admission that the rates of return First Solar had been receiving via its pre-funded trust investments were simply inadequate to support the costs of PV module recycling.
It is more efficient to finance PV recycling through later-year project cash flows instead of upfront funding, as solar project rates of return are typically higher than the rates of return First Solar receives via its trust investments.
We know nothing about the legitimacy of First Solar cost calculations for recycling services offered on contract basis, with payments deferred 15-20 years. What we do know is that no ultimate source of accountability now exists to make sure proper funds are reserved and proper steps are taken to safely reclaim and recycle CdTe solar modules.
We can understand why in 2012, First Solar executives - experiencing enormous short-term financial, competitive, legal, and governance risk - would seize an opportunity to relieve the company of long-term environmental risk management burdens bleeding the business of cash needed immediately to survive. After all, events that might transpire in 20 years mean nothing when one faces an extinction event in the next three months. Nonetheless, the external costs associated with long-term environmental risk do not disappear in reality simply because they vanish from the balance sheet. In the final section of this essay, we will explore the First Solar predicament in the context of the obligations of businesses to account for external social costs of production from which they profit.
Producer Responsibility for Environmental Outcomes
We want to imagine clean energy companies as we do digital technology companies. We want to believe their business models are "revolutionary" and "disruptive." We understand these companies as unique, imaginative, "progressive" organizations.
Open offices, rapid development, and all those crazy workplace perks one finds at cash-rich technology companies are of course great. However, fealty to shareholders and to financial markets actually limits how deeply these companies can innovate organizationally.
Public companies (or businesses backed by private equity) can rarely acknowledge and pursue long-term social and environmental goals. Short-term financial pressures and incentives constrain how they can account for and remediate external costs of practices from which they profit. From this perspective, First Solar, which truly is a technological innovator, could organizationally not be more conventional and conservative by almost any measure one might care to use.
When Alex Heard defended the honor of First Solar, we learned two things that he may not have wanted us to learn. We learned that the pre-funded recycling trust could not pay the bills. And we learned that First Solar, pre-funded recycling trust or not - considers itself to be the industry leader in advancing the cause of producer responsibility. But First Solar cannot have it both ways. Without the pre-funded recycling commitment, accountability disappears. Without cost accountability (business costs and social costs), producer responsibility disappears.
Accounting and accountability, therefore, go hand in hand. But for most publicly traded companies, producer responsibility is inconsistent with shareholder fealty. Shareholder fealty all too often encourages businesses to separate accounting from accountability, the business ledger from the moral ledger, and when pressed to the wall, to do the expedient thing, not the right thing.
The major lesson from the Abound Solar bankruptcy was not financial, but legal. When the reality of reclamation, recycling, and rehabilitation liability emerged, no party was clearly accountable for this liability, no party wanted to assume this liability, and - most troubling - no party possessed the information and the knowledge required to fully account for this liability and to take steps necessary to remove it from the balance sheet. And so for a long time, stretching well into 2014, very little happened, leaving a significant warehouse waste hazard that only worsened with each broken window and every dented crate or barrel.
Solar First executives possess good intentions. Environmental scientists use rigorous methods. But executive assurances and scientist testimonials in this case mean little. They generally depend on best-case scenarios. They don't properly frame the long-term environmental risks of CdTe PV modules. And they evade the important question: Who assumes ultimate accountability for those environmental risks?
If First Solar is successful - if in 2020 the company is producing 5 or 10 GW of PV capacity, if the company is successful in serving the residential market through the micro-grid program of the Clean Energy Collective - the complexity of any effort to oversee, manage, and coordinate the reclamation, recycling, and rehabilitation risk map multiplies. The company may, in 2020, support hundreds or thousands of projects around the world, each with its own unique environmental footprint. Local administrative and infrastructure capacity in many of these locations be severely limited. Political unrest or instability, war and mayhem may inflame these locations. Only First Solar possesses the vision, the resources, and the incentives (if properly conceived) to make sure the environmental risks of CdTe are both effectively disclosed and properly managed.
For these reasons, First Solar needs to reframe CdTe environmental risk as political, legal, and accounting risk. Once the company reframes this risk, the logic for accepting responsibility and accountability for the environmental end game becomes obvious. Other advantages will also accrue that will then fully earn First Solar the mantle of environmental stewardship it presently tries to claim.
- Surfacing and accounting for these costs at the beginning of the production process will save enormous amounts of money - discounted value of present expenditures vast.
- By accurately accounting for these costs, and listing them as accrued liabilities, companies can far more accurately allow investors and analysts to create models that accurately measure and forecast growth and earnings.
- Environmental foresight and accountability supports decision-making and planning based on more complete information about product costs, both macro and micro.
- Producer responsibility absorbs into the present calculations about the future we want to give to our children - this future becomes what we're investing in.
- Responsibly accounting for these costs transforms how we view economic and financial activity in general, institutionalizing an ethic of care that balances the ethic of profit.
And over time, circumstances also can change. Other options beyond pre-funded liabilities may offer flexibility in how to manage accountability (for example, transparent disclosure and public finance approaches that can shift the burden of responsibility to public agencies in exchange for corporate taxation to support this burden). But no accountability can exist and evolve without risk and cost transparency. And only the moral ledger can incorporate and account for social costs of activities from which businesses profit.
Epilogue. An Inconvenient Truth.
When Abound Solar (in which Al Gore invested, and to which the US Department of Energy offered generous loans) foundered and then collapsed in 2012, leaving only its warehouse waste as a sad reminder that it once existed, Heartland Institute and
Fox News jeered the shocking, delicious irony as if it were Revelation. Government-funded clean energy contains toxic waste! Right-wing-nuts (of the libertarian variety, at least) may not hate clean energy. But they sure hate the idea that government can play a role in promoting clean energy.
So yes. Haters will be haters. And clearly, the hating on clean energy's tail waste, from any political perspective, risks being counterproductive (let's call it dog-wagging the tail waste) when the alternatives remain carbon-based power plants that spew much higher levels of toxins. Here's the problem, though. Haters will be haters. But businessmen will also be businessmen. And what businessmen think about when they wake in the morning and when they fall asleep at night is, "How can I spend less money?"
Businessmen are haters, too. They hate expenses. They hate costs. Disposition, training, experience, and incentives all conspire to create this aversive businessman bias. One way to manage costs is to trim spending through layoffs or reductions in spending on administrative overhead, marketing, and product research and development.
But cost is truth. And so another way to manage costs is simply to remove the most inconvenient truths from the balance sheet, and to pretend they don't exist. To vanquish them from the lexicon of the ledger. Which is a kind of whitewashing (or, in this case, greenwashing).
When businessmen can do no other, haters become their best friends. Because while businessmen might sleep better at night knowing they don't need to worry about accounting for long-term liabilities, haters will remind them that these liabilities, like Freud's return of the repressed, truly haven't vanished, and when they return, which they will and with a vengeance, the finger-pointing and the blame-dodging that ensues will require litigation lawyers. And when lawyers get to litigating, businesses definitely don't spend less money.
Like wishful thinking, then, kicking the can down the road is not a strategy. A strategy would be to drop the can in the trash, or even better, in the recycling bin.
Inside Obama's Climate Change Plan
New Hampshire, USA -- Today President Obama spoke at Georgetown University about his plans to broadly address climate change. Ahead of his actual talk, the White House released the gist of what he would propose.
- The EPA, working with states, industry, and other stakeholders, will establish new carbon pollution standards. "Tough new rules" will be established similar to those that exist for toxins like mercury and arsenic. These new rules, as anticipated, will target existing power plants as well as new ones.
- The federal government will make available up to $8 billion in loan guarantees for "advanced fossil energy" and efficiency projects — broadly defining upgrades that improve power system efficiency, CO2 capture, and plant availability; examples include "clean coal," synthetic gas, better high-temperature materials, and improved turbine designs.
- The Department of the Interior (DOI) will be pressed to permit enough renewables projects (e.g. wind and solar) on public lands by 2020 to power 6 million homes. The DOI also will designate the first-ever hydropower project for priority permitting, and establish a new goal of 100 MW of renewables on federally assisted housing by 2020 (while maintaining a commitment to deploy renewables on military installations).
The DOI has already been moving forward on the renewables-on-public-lands front. Last summer it broadly designated 285,000 acres of public land for solar development in six Western states, potentially home to more than 23 GW of development — enough to power 7 million American homes. And three weeks ago it approved three renewable energy projects in the southwest U.S.: the 350-megawatt Midland Solar Energy Project and the 70-MW New York Canyon Geothermal Project in Nevada, and the 100-MW Quartzsite concentrated solar energy (CSP) project in Arizona, collectively representing up to 520 MW, enough to power nearly 200,000 homes.
(Note, however, that these household-serving numbers aren't so easily interpreted — it's unclear whether it represents the delivery from peak generation of solar and/or wind combined (or either), or whether and how that's in combination with whatever other generation is required to join them. Obama's pre-released statement doesn't clarify if or how other energy sources will be incorporated into that directive.)
Other directives on Obama's speaking agenda today include making commercial, industrial, and multifamily buildings at least 20 percent more efficient by 2020; and reducing carbon pollution by at least 3 billion metric tons cumulatively by 2030 — more than half the annual carbon pollution from the U.S. energy sector — through efficiency standards for appliances & federal buildings.
That's one-third of Obama's Climate Action Plan. Another part is more related to infrastructure than energy, and deals with mitigation rather than prevention: directing agencies to better support local climate-resilient investments, strengthen communities against future extreme weather and climate impacts (using Hurricane Sandy's impact as a touchstone), create sustainable and resilient hospitals, better educate farmers, ranchers, and landowners in "agricultural productivity," and launch a National Drought Resilience Partnership to minimize vulnerability to catastrophic fire.
Yet another thrust of Obama's plan looks beyond our borders: committing to expanding new and existing international initiatives, including bilateral initiatives with China, India, and other major emitting countries; a call for an end to U.S. government support for public financing of new coal-fired powers plants overseas (with a few exceptions for efficiency in poor countries, and facilities with carbon capture and sequestration); and expanding government and local community planning and response capacities.
We'll be updating this story throughout the days ahead with analysis of the President's plan, and most importantly what happens next — how it will eventually translate into action and legislation, and what might that journey entail.
Asia Report: China Solar Shares Soar as Government Bails Out Sector
SYDNEY -- Shares in Chinese solar companies soared after the government allocated a further 7 billion yuan ($1.1 billion) of subsidies for domestic installations this year, taking the year's total to 13 billion yuan ($2 billion), according to the official Xinhua News Agency.
News of further financial support came after Xinhua reported China may double its upper limit for solar power capacity to 40 GW by 2015. Elsewhere, the Shanghai Securities News said officials may double their target for solar installations, while China’s Ministry of Science and Technology confirmed subsidies for more than 100 developers with a combined capacity of 2.8 GW. The payouts, under the Golden Sun program, are the second round announced this year.
Stocks to benefit included Trina, Yingli, JA Solar and LDK, as the actions rescue the biggest solar-panel manufacturers and their suppliers after a glut of capacity depressed prices and profits worldwide. In recent weeks, the government also extended loans to the industry through China Development Bank and allowed local authorities to extend support.
"What Beijing is doing is essentially trying to replace the diminished export sales with lower price, lower margin domestic sales," Raymond James analyst Pavel Molchanov told Reuters. "It is a backdoor bailout."
News of the subsidies came as the China PV Industry Alliance forecast a 40% drop in export volume of PV solar products and an 80% plunge in domestic orders for manufacturing equipment for PV solar products. "Up to 90 percent of Chinese poly-silicon producers have stopped production because of the falling demand,” said Wang Bohua, secretary general of the body. Even though some large companies are trying hard to keep producing, their capacity utilization is low."
IN THE NEWS
JinkoSolar to supply 81 MW to South Africa's Northern Cape: China’s JinkoSolar has signed a contract to supply 81 MW of modules to a PV plant in South Africa. The project is expected to be the largest individual PV project on the African continent.
Panasonic starts Malaysia solar-panel plant to meet Japan demand: Panasonic started solar-panel production at a plant in Malaysia to meet “robust” demand in Japan, the company said in a statement. The plant, with an annual capacity of 300 MW, will also make wafers and solar cells and increase the company’s total module production capacity to 900 MW.
Hanwha SolarOne reports quarterly loss on weak prices: Korean PV cell-maker Hanwha SolarOne’s quarterly loss nearly doubled amid a slump in prices. Hanwha cut its full-year shipment forecast, but says it hopes to see some benefits from the absorption of Germany’s Q-Cells into its wider corporate family.
German solar focus on Malaysia: Germany’s Wirsol, a solar energy provider, is expanding its footprint into Southeast Asia, with a particular focus on Malaysia. “Wirsol is looking at opportunities in Thailand, Indonesia, and some of the South Pacific Islands, but the main focus at the moment is Malaysia,” said Wirsol Southeast Asia president Gabriel Peter Salgo.
Australia takes a shine to solar energy research: Australia’s energy minister, Martin Ferguson, announced more than A$83 million ($85 million) for an eight-year research project as part of the United States-Australia Solar Energy Collaboration (USASEC) launched in 2010. The research will focus on concentrating solar power technologies, which will aim to reduce the cost of the technology to between 9 Australian cents and 12 Australian cents a kilowatt hour, and be able to compete with fossil fuels — possibly as early as 2016.
US promotes geothermal power development in Indonesia: The U.S. Trade and Development Agency awarded a $546,766 grant to PT Teknosatria Energi Geothermal (TEG) to partially fund a feasibility study for a 30-MW geothermal power project at the Cibuni site in West Java, Indonesia.
ON THE HORIZON
Asia-Pacific solar markets to reach $11.1 billion by 2016 – report: Asia-Pacific solar markets are expected to reach $7.6 billion in 2011 and then expand to $11.1 billion annually by 2016, according to Frost & Sullivan, driven by feed-in tariff policies.
What Australia’s clean energy industry wants for Christmas: Renew Economy asked corporate leaders from the clean energy industry what they wanted for Christmas. Policy certainty was the number one issue, and it may arrive a few days early with the RET review. Oh, and lunch with our new clean energy Czars, and an electric bike.
A DEEPER LOOK
Asia must wake up to the reality of climate change: Bloomberg View’s William Pesek writes New York's brush with developing-nation status is an even bigger warning for Asia than it is for the United States. The deadly floods and crippling power outages following hurricane Sandy made for more than graphic television. They made a mockery of the climate-change deniers. Just ask residents of lower Manhattan as they referred to neighbourhoods such as pricey Tribeca as ''Little North Korea.'' The Asia reference is fitting, because that region is where the real wake-up call should be.
Mitsubishi deal is a hard sell for Vestas in China: Dominique Patton of Recharge writes the Mitsubishi investment in global wind leader Vestas is being seen by many as a good deal for the Danish firm — but the view from China is not nearly so positive. China’s distrust of the Japanese goes back centuries and resentment over atrocities committed in the past frequently flares up during diplomatic disputes. Tension has surged once again as both sides square off over the Diaoyu islands (known as Senkaku in Japan), considered by both to be sovereign territory.
By Bloomberg News - Dec 12, 2012 1:18 PM PT
Chinese solar manufacturers including Yingli Green Energy Holdings Co. (YGE) and Trina Solar Ltd. (TSL)jumped after three separate reports indicated the government is adding financial support for an industry struggling with falling prices.
China allocated 13 billion yuan ($2 billion) in subsidies for domestic solar companies this year, the Xinhua News Agency reported. The Shanghai Securities News said officials may double their target for solar installations. The Ministry of Science and Technology confirmed subsidies for more than 100 developers including Trina and Yingli.
The moves throw a lifeline to the biggest solar-panel manufacturers and their suppliers after a glut of capacity depressed prices and profits worldwide. In recent weeks, the government also extended loans to the industry through China Development Bank Corp. and allowed local authorities to extend support.
Yingli rose 18 percent to $2.14 at the close in New York, the most since Feb. 9. Trina increased 10 percent, and JinkoSolar Holding Co. climbed 19 percent. GCL-Poly Energy Holdings Ltd. (3800), which makes polysilicon that’s the main raw material for solar panels, gained 11 percent in Hong Kong.
“The government is providing subsidies to save the industry,” Wang Xiaoting, an industry analyst for Bloomberg New Energy Finance in Beijing, said in an interview today.
Even with the government support, falling prices are driving down margins and manufacturers aren’t making profits, said Aaron Chew, an analyst at Maxim Group LLC in New York.
“The stocks are generally oversold and given up for dead. When you get positive news like this they rip,” Chew said in an interview today.
Subsidies may help boost shipment volumes as the manufacturers struggle in an “extremely price-competitive” market, said Ben Schuman, an analyst at Pacific Crest Securities LLC in Portland.
“We think it is extremely unlikely that anyone can come close to making money at that level,” Schuman said in an interview. “I don’t see this as evidence that the government has ‘picked winners’ or that the industry is rationalizing,” he said.
China, the world’s biggest maker of solar modules, chose developers with a combined 2.8 gigawatts of capacity to receive subsidies, according to a statement from the Ministry of Science today.
The payouts, under the Golden Sun program, are the second round announced this year. Generators in Jiangsu, a coastal province, will gain the most from the aid as 374 megawatts of capacity, including developments by China’s biggest module maker by market value Hareon Solar Technology Co. (600401), will be located there.
The government may pay at least 15.4 billion yuan for the projects if they are completed by the end of June, Wang said.
China began offering financial assistance for projects under Golden Sun for utility-scale projects in 2009.
The total capacity chosen in 2012, including 1.7 gigawatts selected in the first round, is seven times more than previous years, said Lian Rui, a Beijing-based analyst at research company NPD Solarbuzz.
“China uses the program to offer cash sooner to developers, rather than preferential power prices, to boost installations,” Lian said.
Separately, Xinhua said China allocated a total of 13 billion yuan this year from central government funds for domestic solar installations.
The funds will be spent on solar power demonstration projects with 5.2 gigawatts of capacity, Xinhua said, citing an unidentified official from the Ministry of Finance. China will provide an incentive of 5.5 yuan a watt for projects whose developers will consume the power for their own use.
The subsidies will be raised to 18 yuan a watt for residential systems and 25 yuan a watt for independent photovoltaic power plants, the government-owned news agency said.
China started offering the subsidies since 2009 to bolster the use of solar power. The nation chose 4.5 gigawatts of solar projects eligible for subsidies under the Golden Sun program this year.
The government will focus on selecting large-scale projects and big companies for demonstration projects, Xinhua reported. Two phone calls to the ministry’s Beijing-based press office went unanswered.
Yesterday, the Shanghai Securities News reported the government may boost its target for expanding solar capacity to 40 gigawatts between 2011 and 2015 from 21 gigawatts previously. It cited unidentified industry officials.
Report: Residential Solar PV Installations Hit All-Time High in Q3 of 2012
By Vince Font, Contributing Editor
December 11, 2012
Salt Lake City, UT -- Residential installations of solar PV hit a record high in the third quarter of 2012, according to a new report published by GTM Research and the Solar Energy Industries Association (SEIA). The US Solar Market Insight: Third Quarter 2012 reports that more than 118 MW of solar PV capacity was added to the United States residential sector in Q3, a growth of 12 percent since last quarter and the strongest showing ever in a single quarter.
Chief among the reasons for the boom in residential solar PV adoption was cost. According to the report, the third quarter of 2012 saw the continuation of a drop in prices for solar power, with average residential system prices falling nearly 25 cents per watt – from $5.45 to $5.21. In comparison with the second quarter of 2012, residential system prices reflected a 4.4 percent drop in price, with installed costs falling by 15.3 percent.
The added availability of solar leasing opportunities and innovative third-party ownership models was also said to have had a significant impact on the high rate of residential solar PV adoption. GTM Research solar analyst Andrew Krulewitz said that despite falling costs, paying for rooftop PV installation remains a financially untenable option for many homeowners – a situation that an increasing number financing alternatives and leasing options are helping consumers overcome.
“The ability to lower one’s energy costs with no money up front is very appealing to many homeowners,” Krulewitz said. “It also takes the worry of monitoring of the system and ensuring that it’s working properly out of the equation.”
The overall solar PV market in the United States grew 44 percent over Q3 2011, with a total of 684 MW installed in the third quarter of 2012. This gain represents the third largest increase on record for the US market and brings the total installed capacity for the first three quarters of the year to 1,992 MW. In 2011, the total for all four quarters was 1,885 MW.
California was ranked the number one state in the country with the biggest gains in solar PV, adding 194 new installations in Q3. Arizona and New Jersey followed in second and third place, with 192 installations and 69 installations, respectively. Massachusetts, which ranked fourth, is credited alongside California for a strong showing in the non-residential commercial market, which improved on last quarter’s numbers by 24 percent and added 257 MW of capacity.
The report also shows that although no new concentrating solar capacity was added during Q3, there were some considerable developments in the marketplace, including progress in the construction of two sizable CSP projects: Abengoa’s Solana Generating Station near Phoenix and Brightsource’s Ivanpah project in California’s Mojave Desert. Once completed, the Ivanpah project is projected to double the amount of solar thermal power produced in the United States.
The US Solar Market Insight: Third Quarter 2012 reports that there are now more than 271,000 solar PV installations in the United States capable of generating 5.9 GW of electricity. Including concentrating solar facilities, the total US capacity now stands at 6.4 GW. The report also predicts that Q4 will likely lead to further record installations as developers push to meet year-end deadlines, ending with an overall 70 percent growth rate over 2011.
China Quadruples 2015 Solar Energy Target to Aid Demand, Prices
By Bloomberg Editors
July 2, 2012
BEIJING -- China, the biggest supplier of solar power panels, quadrupled a domestic installation goal for sun- derived energy projects to 21 gigawatts by 2015 to help absorb excess supply of panels and support prices.
The target includes 1 gigawatt of solar-thermal power plants, Shi Lishan, deputy director of the administration’s renewable energy division, said by phone today. The plan will be issued “soon,” he said.
China had planned 5 gigawatts of capacity in the five years through 2015 and 20 gigawatts by 2020. The government has considered an increase since last year as solar panel makers led by Suntech Power Holdings Co. and Trina Solar Ltd. suffer from cuts in European subsidies and a global supply glut that drove prices lower.
“With a significant tumble in photovoltaic prices, the timetable for mass use is ahead of time,” said Lian Rui, a senior analyst for the research company Solarbuzz. “The new target is still very conservative; we expect the installation to surpass 30 gigawatts.”
Solar module prices have plunged about 42 percent to the current $0.87 a watt from a year earlier, squeezing profit margins of manufacturers, according Bloomberg New Energy Finance data.
China has offered financial assistance for projects under the so-called Golden Sun program since 2009 to stimulate renewable energy. The nation in May chose GCL-Poly Energy Holdings Ltd., Yingli Green Energy Holding Co. and about 100 other developers of projects with 1.7 gigawatts of combined capacity to be eligible for a subsidy of 5.5 yuan a watt under the program in 2012.
In January, Suntech Chief Executive Officer Shi Zhengrong and Trina CEO Gao Jifan said China may double its installations of solar panels this year, absorbing excess production that depressed prices and profit margins in 2011.
JinkoSolar Holding Co. expects the domestic market to account for as much as 12 percent of sales this year, double that of a year earlier, Chief Executive Officer Chen Kangping said in April. Yingli Chairman Miao Liansheng said in May China will account for 30 percent of revenue this year, while Germany and the U.S. currently make up about 80 percent of its sales.
Copyright 2012 Bloomberg