Steven Chu

5 February 2013 — Socket parity in Europe making the cost of installing solar cheaper than grid electricity, according to the bombshell report from UBS, in the US a new solar technology that claims to be able to produce power with a levelised cost of energy of 8¢ per kiloWatt hour and outgoing US Secretary of Energy Stephen Chu tipping solar will soon be cheaper than coal.

Things are moving faster than anyone expected with renewable energy.

In its recent report “The unsubsidised solar revolution”, UBS energy analysts say that solar investment will become the norm for households in several European countries.

“Solar has turned from a heavily-subsidised marginal technology into a mainstream source of power generation. Thanks to significant cost reductions and rising retail tariffs, households and commercial users are set to install solar systems to reduce electricity bills – without any subsidies,” the analysts write.

“The economics looks set to work best in Germany, Italy and, with a time-lag, Spain. We estimate up to 18 per cent of electricity demand could be replaced by self-produced solar power in these markets.”

The report also states that “assuming gradual penetration” there will be 43 gigaWatts of unsubsidised solar in those markets by 2020, reducing demand for grid-supplied power by 6-9 per cent.

“This comes on top of shrinking demand due to energy efficiency and subsidised renewables. The rise in power tariffs should accelerate, as grid fees and subsidies would have to be divided by less consumption. This could lead to a change in the pricing model.

And when PV with battery storage also crosses the parity line, in 2014, it will offer huge savings, the analysts write.

“We are at the beginning of a new era in power markets,” the UBS analysts write.

“Purely based on economics, we believe almost every family home and every commercial rooftop in Germany, Italy and Spain should be equipped with a solar system by the end of this decade.

“Households will be able to use the electricity stored in batteries during the evening, which means pressure on spot prices during the evening hours.

“So far, solar has only been shaving the midday peak. Even worse, batteries installed in family homes or commercial buildings could also reduce the morning peak as they could be charged with low-cost electricity from the grid during night hours,” UBS analysts say.

The impact on electricity bills will be staggering.

“On our estimates for 2020, electricity bills could be reduced by 20-30 per cent, and the payback time would be five to six years for commercial solar systems and 10 to 11 years for residential systems,” the report says.

“These numbers are based on a no-subsidy scenario. However, one should not expect

straight-line growth. We think installations will accelerate in the second half of the decade as economics continue to improve.”

Meanwhile, Grist’s David Roberts reports that CleanTechnica has an exclusive on a new solar technology that claims to be able to produce power with a levelised cost of energy of 8¢ per kiloWatt hour.

“That is mind-boggling – ‘two-thirds the price of retail electricity and over three times cheaper than current solar technology’.

“If the claim proves to be true (and a lot can happen between prototype and mass manufacturing), it could revolutionise the solar industry.”

The company is V3Solar, formerly Solarphasec, and its product, the Spin Cell, solves two big problems facing solar PV, Roberts reports.

“First, most solar panels are flat, which means they miss most of the sunlight most of the time. They only briefly face direct sunlight, unless expensive tracking systems are added. The Spin Cell is a cone (and) the conical shape catches the sun over the course of its entire arc through the sky, along every axis. It’s built-in tracking.

“The second problem: Solar panels produce much more energy if sunlight is concentrated by a lens before it hits the solar cell; however, concentrating the light also creates immense amounts of heat, which means that concentrating solar panels require expensive, specialised, heat-resistant solar cell materials.

“The Spin Cell concentrates sunlight on plain old silicon PV, but keeps it cool by spinning it.

“The company’s technology claims have been confirmed by a technical review commissioned from independent consultant Bill Rever.”

Meanwhile, outgoing US Energy Minister Steven Chu, in a resignation letter, he leaves in February, says the country’s SunShot Challenge will see the full cost of utility scale solar energy drop to $US1/Watt – which equates to a levelised cost of electricity (LOCE) of 6 cents/kWh without solar subsidies.

Read the full letter here.

“This is close to the projected environmental impact assessment cost of natural gas and the anticipated LOCE on a new natural gas electricity generator a decade from now,” he wrote.

“When we first discussed this goal, industry did not take it seriously. Today, they tell me that our input challenged them to rethink their road maps and now agree that it is an achievable goal.”

“Many countries, but most notably China, realise that the development of clean energy technologies presents an incredible economic opportunity in an emerging world market.

“China now exceeds the US in internal deployment of clean energy and in government investments to further develop the technologies.

“While we cannot accurately predict the course of climate change in the coming decades, the risks we run if we don’t change our course are enormous. Prudent risk management does not equate uncertainty with inaction.

“Our ability to find and extract fossil fuels continues to improve, and economically recoverable reser­voirs around the world are likely to keep pace with the rising demand for decades. As the saying goes, the Stone Age did not end because we ran out of stones; we transitioned to better solutions.

“The same opportunity lies before us with energy efficiency and clean energy. The cost of renewable energy is rapidly becoming competitive with other sources of energy, and the Department has played a significant role in accelerating the transition to affordable, accessible and sustainable energy.

“Ultimately we have a moral responsibility to the most innocent victims of adverse climate change. Those who will suffer the most are the people who are the most innocent: the world’s poorest citizens and those yet to be born.

“A few short decades later, we don’t want our children to ask, ‘What were our parents thinking? Didn’t they care about us?’”

Mr Chu also wrote that the “overwhelming scientific consensus is that human activity has had a significant and likely dominant role in climate change”.

He also stressed the need to move on with President Barack Obama’s “EV Everywhere Challenge” with the goal to achieve plug-in hybrids or electric vehicles with a 100-mile range at the same cost of owning and operating a comparable sized internal combustion engine car with 40 miles/gallon for five years.

“The batteries developed for plug-in EVs will also revolutionize the electrical distribution system and the use of renewable energy.

“Wind energy is already expected to reach grid parity in less than a decade.

“Unless we develop new business models with utility companies and other stake holders, we will not be able to take full advantage of the accelerating pace of technology.”

Mr Chu listed a number of “tangible signs of success” including:

  • “In the last four years, the production of clean, renewable energy from wind and solar has doubled – driven in part by our administration investments in the development and deployment of the latest technologies.  Installations of solar photovoltaic systems have nearly doubled in each one of the last three years, exceeding 1.8 gigaWatts in 2011. According to AWEA, last year 42 per cent of new energy capacity in the US was from wind – more than any other energy source.
  • In addition to our approximately $25 billion annual budget, we were entrusted by Congress to make a $36 billion investment through the Recovery Act to help ensure that the clean energy jobs of tomorrow are being created here in America today. And we made this investment with a robust review process that brought a new level of expertise from inside and outside the Department to ensure that decisions were based on the merits of each applicant.
  • The Department has helped one million low income homeowners weatherise their homes. We launched the President’s Better Buildings Challenge which has secured $2 billion in commitments from more than 100 major companies, universities, hospitals, retailers, cities and states to upgrade 2 billion square feet of commercial and industrial space by 2020. To put that in perspective, that’s more than 400 times the square footage of the Sears Tower.
  • We administered a loan program authorised by Congress in the previous administration. The program generated a portfolio of loans and loan guarantees to 33 clean energy and advanced automotive manufacturing projects that will support 60,000 jobs and generate $55 billion in economic investment. Energy and infrastructure loan programs first put into action in the last four years are being replicated by numerous other countries around the world.

“The test for America’s policy makers will be whether they are willing to accept a few failures in exchange for many successes,” he wrote.

“America’s entrepreneurs and innovators who are leaders in global clean energy race understand that not every risk can – or should – be avoided.

“Michelangelo said: ‘The greater danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark’.”

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