Saturday, April 24, 2010

The installed cost of the photoelectric set should not exceed the ten year payout of the feed-in tariff.

Example: A set that delivers 850 kWh/kWp in its first year will deliver approximately 9700 kWhs/kWp over ten years of work. The following examples give a rough picture of how this thumb rule predicts installed costs will trend between now and the beginning of 2011.

--If the value of the tariff is 33 cents/kWh (FiT as of July 1st) the installed cost should not exceed 8275 kWhs x .33 cents/kWh = 2730 €/kWh.

--If the value of the tariff is 26.5 cents/kWh (projected FiT as of Jan 1st, 2011) the installed cost should not exceed 8275 kWhs x 26.5 cents/kWh = 2193 €/kW.

With Chinese panel cost falling under a euro per watt it looks possible to achieve installed prices in Germany of under 2200 €/kW. One interesting question to ponder goes something like: will sunnier markets outside of Germany start producing higher rates of return for PV investment such that Germany no longer drives the market clearing price of panels?

Another interesting question is, how will Germany transform the FiT structure once grid parity is reached (installed costs of 2200-ish €/kW). Will the self-consumption premium result in smaller PV sets compared to the oversized 10 kW+ sets that have become common? Will batteries come into common use? Hmmm... Neglecting the cost of input energy and assuming a daily charge/discharge cycle, what are the LCOE for batteries over their lifetimes? Something for the EV car guys to deal with.

Wednesday, April 14, 2010

"...fluidized bed reactor technology has not delivered on its promise of lower manufacturing costs."

The funny thing is, I've heard the exact opposite from insiders as recently as a few months back. Is FBR going to take over the poly space overnight? No, but we should start to see a shift in what kind of plants get built in the medium term - i.e. over the next 5 years.

Comparing Then to Now

THEN (2004-2006): Polysilicon was bottlenecking and prices were rising. You could sell any poly you made for a handsome profit. What do you do when prices are high? Add production capacity so you can sell more... Given a choice between Siemens and FBR plants, which are the refiners going to build? One could reason that the shovel ready refinery projects with short lead times (real or perceived) had a clear advantage. That means Siemens refineries.

NOW (2009-2010): Spot market and contract prices have been trending down continuously for two years. There is excess poly supply with still more coming down the pipe. The expectation is for poly prices to trend down in the future. We're projecting more demand for PV which means more demand for poly but the confidence level of these projections isn't there yet. The only course for a refiner to take in this sort of environment is to methodically plan capacity expansions. In this sort of environment the advantage shifts from short lead times to low production costs. That means FBR refineries.

If REC or MEMC announce yet another 10,000 MT FBR plant in the next year or so (which I expect) we'll have a strong indication that FBR delivers a cost competitive product.

Saturday, April 10, 2010

Photon Consulting is the smartest kid in the Solar Analysis class. They are the only consulting house that deserves any respect - by respect I mean, when you think they're wrong you need to take a moment and think again. They will smoke you.

Perhaps there's something about using the term Photon in your moniker because the folks at Photon Magazine also deserve props. Their managing director Anne Kreutzmann is the only one I know of within the PV community who has openly spoken out against the current FiT structure in Germany. She has said the obvious. Hey guys look... The FiT is set higher than it needs to be. This high FiT is going to result in a lot more installed capacity than what has been planned for. There are two options. Option 1. Let the FiT stay where it is and apologize in the aftermath Option 2. Recognize that the FiT is too high, control it and suffer a slightly lower growth rate. Option 2 is much better because it gives the PV industry more control over its destiny.

Option 2 points towards sustainability. Sustainability jargon gets thrown around in a lot of smelly ways but the core idea behind "sustainability" is balance. Balance is something the PV industry needs in a big way. There is much too much snake oil and slick-shit advertising these days.

Thoughts on Installation costs in Germany

Many companies have claimed they have some sort of quick snap or stick on technology that lowers installation costs. That's great press but it needs to be examined. We should ask two basic questions.

Question 1: What is the underlying installation cost assumptions of these companies? Question 2: What trajectory are installation costs actually on?

Answer 1: The general assumptions are $1/Watt in installation costs. This is currently a reasonable assumption for the US.Answer 2: No one knows for sure what installation cost will be in three years but it's a fair assumption to expect the trajectory of installation costs to follow Germany's example. That means installation should fall from $1/Watt to around 40 cents/watt.

The upshot here is all these fancy technologies that claim to lower installation costs are assuming much higher installation costs than we can reasonably expect in the future. To put it another way, a 25 cent/Watt mounting structure that saves you 50% on installation labor will not be competitive for much longer.

I'm not saying all these technologies that claim to lower installation costs are bunk. Just pointing out the obvious trend in installation costs that we're seeing in Germany and how this will project into future markets.

Thursday, April 1, 2010

In 2004, bird droppings caused a three unit trip at Palo Verde and subsequent loss of the Redhawk Power Station. Losing 4 GW is a big deal - a big fucking deal as Biden would say. And upon reflection he would continue, "If a god damn DC line had been out we might have lost the fucking Western Interchange!"

I am reminded of the Palo Verde event when people mention the intermittency of photoelectricity leading to grid instability.