Shedding Light on Solar

Tag : Computer System Components

Q: If computer chips keep getting cheaper, why are solar chips soexpensive?
A: Computer chips are getting exponentially smaller in size, and,therefore, require less material to produce the same output. Solarpanels, however, must capture the sun's irradiation with theirsurface, so they can't be reduced to microscopic proportions. "Youcan either make [the solar panel] thinner, or make it capture lightbetter, but you can't be endlessly shrinking the circuitry," saysRob Stone, managing director and senior research analyst at Cowen& Co.
There are higher-efficiency panels on the market designed toextract more power from the same surface area. Some of the mostefficient panels in production, from Sunnyvale, Calif.-based SunPower Corp., can yield about 220 watts of power from one square meterwhen 1,000 watts of sunlight is shone on it, up from 140 watts to150 watts for the average panel five years ago.
Still, the rate of improvement in efficiency is nowhere near thatfound in the chip industry, and prices for solar panels haven'tdeclined in the past five years because most manufacturers arepaying multiple times more for raw materials than they were in2002.
The vast majority of solar modules are made of polysilicon, amaterial processed out of sand in big chemical plants. Ever sinceGermany implemented large incentives for solar installations in2003, the demand for polysilicon has outstripped supply, allowingmanufacturers to charge anywhere from $70 per kilogram forpolysilicon under long-term contracts to more than $400 perkilogram on the spot market, even though it costs them only about$40 per kilogram to make.
Industry watchers expect the supply of polysilicon to improvedramatically over the next two years because new companies areentering the market and established players are expandingproduction. That should result in a dramatic decline in the priceof solar cells and modules, they say.
A much cheaper alternative already exists: solar panels made ofvarious nonsilicon semiconductor materials that are typicallyspread on a sheet of glass or stainless steel. These so-calledthin-film panels are easier to make, so it doesn't cost as much toproduce them. First Solar Inc. of Phoenix makes thin-film solar panels for about $1.25 perwatt, which is about two times less than the average cost of makinga polysilicon panel.
The problem with thin film is that it captures less of the sun'senergy per square meter than polysilicon, so it takes a largerpanel to generate the same amount of energy. As a result, thin-filmpanels usually are too large to fit on residential rooftops and areused more often in power-plant applications.
Q: Will manufacturing get any cheaper?
A: To create solar panels, manufacturers typically cast polysiliconinto large slabs, then slice those into thin, wafer-like disks,then add semiconductor junctions, coating and grid wires. Thesecells are then wired together into a panel encased in aweather-tight package.
Module makers are trying to reduce the amount of polysilicon theyuse by cutting thinner wafers, decreasing the amount of powder thatresults from wafer sawing, and by mixing in recycled polysilicon.Several companies have reduced the amount of polysilicon in wafersto between six and eight grams per watt, compared with the industryaverage of about 12 grams only a couple of years ago. Somecompanies also are experimenting with wafers made from lessexpensive raw materials such as metallurgical-grade polysilicon.
Q: What about installation?
A: As the efficiency of solar panels increases, installation costsshould fall, because the amount of surface area needed to generatethe same amount of power shrinks. Companies are working on otherimprovements, too.
Some are reducing the number of parts needed to mount rooftoppanels. A new panel designed by Akeena Solar[MFA] Inc., of LosGatos, Calif., can be installed with 70% fewer components than atraditional panel. Although installation is faster and less laborintensive, Akeena charges a 5% premium for the Andalay panelsbecause demand for them is high and the panels, which have fewerseams, are more attractive.
Inverter prices, meanwhile, are hovering at about 50 cents perwatt, but some companies are incorporating components thatpreviously required separate purchase and installation.
Q: I understand there are subsidies available. How much are they?
A: Homeowners can get a one-time federal tax credit of as much as$2,000 on an installation, but that is scheduled to expire thisyear. A proposed extension, now under deliberation in the Congress,would extend the credit's cap to as much as $4,000 and open it upto individuals who make enough money to qualify for the alternativeminimum tax.
Some states, such as California, New York and Connecticut, havetheir own subsidies. California, for example, offers a subsidy forresidential solar of as much as $2.50 per installed watt, dependingon a system's expected performance. Some states, however, have noincentives for solar power.
Q: Do I have to pay the full price at the time of installation?
A: No. Loans are available, and some banks and other lenders havespecial programs designed for solar-energy systems. Severalinstallers in California, for example, have formed partnershipswith financial firms such as Morgan Stanley and Sun Run Generation LLC to offer homeowners leasing deals.Homeowners make an up-front payment that is significantly less thanthe cost of installing a solar system and then buy the power theyuse without ever purchasing the solar equipment itself.
Customers lock in a fixed electricity price -- 13.5 cents perkilowatt-hour in the case of Sun Run and its installer partners inCalifornia, which is about three cents cheaper than PG&E'saverage rate. Sun Run, however, says its average customer paysabout 24 cents per kilowatt-hour for grid-supplied electricity.Solar users typically have larger homes than average utilitycustomers and pay higher rates in California because of higherusage.
Q: When will we see a significant drop in solar costs?
A: Many module makers predict their selling prices will decline 10%to 20% next year, mostly because of the rush of new polysiliconsupply that is expected to be produced. "We're in the process of adramatic readjustment of system prices in the next couple ofyears," said Julie Blunden, vice president of public policy atSunPower.
David Chen, head of clean technology investment banking at MorganStanley in California, predicts the industry will reach grid parity-- the point at which the cost of solar energy is competitive withconventional grid-supplied electricity without subsidies -- by2012, "which will open up the floodgates for vendors that can pricecompetitively."
While panel prices may fall in the next year or two, consumerswon't necessarily benefit by putting off a switch to solar, some inthe industry argue. They say a substantial portion of what aconsumer pays for a system today is reduced by governmentsubsidies, and those subsidies are designed to decline as the costof solar power approaches grid parity.
Nat Kreamer, president of Sun Run, says that for homeownersinterested in leasing deals, the sooner they get solar panelsinstalled, the sooner they can lock in the price of power. Theprice that Sun Run and others charge for electricity in two yearsmay be much higher than it is today, he says.
Q: After all this, how much money can I expect to save on myelectric bill, and how long will it take to recoup my investment?
A: The rate of payback depends on where the homeowner lives and howthe installation was financed. Tax credits and solar incentivesvary by state, as do utility rates, so residents living in a placelike California, where solar rebates are hefty and utility ratesare high, may get a quicker payback than homeowners living in otherparts of the country.
In addition, solar systems in regions with consistent sunshine willproduce more power, thus cut a homeowner's electricity bill morequickly. In some states, if a system produces more electricity thanis required by the household, homeowners can use the surplus as acredit toward the cost of power purchased on cloudy days or atnight, a process known as net metering.
In California, a state with hefty rebates, the average payback timefor a residential PV system purchased by a homeowner is seven to 10years, according to the California Energy Commission. It could betwice as long in states without local incentives or consistentlysunny weather.