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Net Energy Metering and the Fight for Solar’s “Backbone” Policy

Thu, 17 May 2012 18:18:10 +0000

A decision at the California Utilities Commission (CPUC) on May 24 could determine the future of distributed generation (DG) and, especially, of rooftop solar in the state.

The decision involves two questions, a legality explicitly before the commission and an implied dispute between the state’s three investor owned utilities (IOUs) and renewables advocates.

California has a net energy metering (NEM) program that allows owners of distributed generation (DG) systems of up to one megawatt in capacity, like small wind turbines, combined heat and power systems and rooftop solar systems, to reduce their electricity bills.

For the kilowatt-hours they send to the grid, system owners’ meters turn backwards as they are credited at the same retail rate they pay for the kilowatt-hours they consume.

When California established its NEM program in 1995, it imposed a 0.1 percent cap but used the ambiguous language of “aggregate customer peak demand” to define what the total megawatts of net metered systems should be divided by to calculate the cap percentage. And that calculation remained undefined, even as the CPUC expanded the cap to today’s five percent.

The differing methods used by the IOUs to calculate the bottom term of the cap equation, and the differing percentages thereby obtained, were recently observed by the Interstate Renewable Energy Council (IREC) which, among its other activities, acts as a watchdog group on U.S. net metering programs. IREC filed a motion asking the CPUC for clarity. Commission President Michael Peevey issued a proposed decision April 5.

In it, he noted the legislature had “several goals” in creating the NEM Program, “including encouraging substantial private investment in renewable energy resources and stimulating in-state economic growth.”

He pointed out several differences in how the IOUs calculate the percentage of their NEM but noted one key commonality: PG&E, SCE and SDG&E all use “coincident” peak demand. Renewables industries advocates argue vehemently for “non-coincident” peak demand.

Coincident peak demand is the designated period when all sectors (residential, commercial and industrial) reach their maximum electricity consumption together. It is the time period when the state’s consumption peaks.

Non-coincident peak demand is the sum of the peaking demand in the sectors. Residential peak is typically late afternoon, commercial peak is early midafternoon, and industrial peak can be at night. It is a larger number because that sum of peaks at different time periods is greater than the total peak demand at any one time of the day.

The installed DG capacity eligible for NEM is same. Dividing it by the peak demand number gives the cap percentage. When that number gets to five percent, the utilities are theoretically off the hook. So they want that bottom number to be smaller. Renewables advocates want just the opposite. As long as the number doesn’t get to five percent, renewables developers have what one called their “backbone” incentive in place.

The question before the CPUC is the intent of the law. Here’s what Peevey wrote: “the phrase “peak demand” is used to refer to coincident peak demand in multiple occurrences in the Pub. Util. Code…”

And, “…the words “aggregate customer” would be superfluous if the Legislature had intended “aggregate customer peak demand” to mean coincident peak demand…”

And, “Use of the phrase “aggregate customer peak demand” in § 2827 of the Pub. Util. Code to mean coincident peak demand when the phrase “peak demand” is used elsewhere in the Pub. Util. Code for that purpose would constitute the use of inconsistent and confusing terminology by the Legislature.”

These observations led Peevey to conclude that, “The Legislature did not intend “aggregate customer peak demand” to mean coincident peak demand…It is reasonable to interpret “aggregate customer peak demand” as meaning the aggregation of individual customer peak demands, i.e., customers’ non-coincident peak demands…[and] SCE, SDG&E, and PG&E should use the aggregation of customers’ non-coincident peak demands to calculate their caps on NEM participation…”

In comments filed by their attorneys, the IOUs dispute these conclusions. PG&E wrote that “the best choice for the denominator for calculation of the five percent cap is the highest peak ever achieved in the utility service territory…For PG&E, at least to date, this was 20,883 megawatts reached on July 25, 2006…”

PG&E’s filing also complicates the basic dispute by suggesting a change in the way the top number is calculated and concludes, “PG&E estimates that reversing these two decisions would reduce the amount of generation that can fit under the cap by about ten percent, although the exact amounts will vary depending on participation in each group. PG&E recognizes that this means more net metering. However…[it] is the better measure of the impact on the grid…”

By raising the issue of the impact of renewables on the grid, PG&E opened the door to the implicit debate between the IOUs and renewables advocates.

The utilities point out that of the three parts of the standard electricity bill, only one covers the price of electricity generated. The other charges cover the costs of delivering electricity through the transmission and distribution infrastructure. When NEM customers’ bills are reduced by the retail rate, they escape paying their fair share of costs for infrastructure they use as much as non-NEM customers.

And, the utilities say, it shifts costs to other ratepayers.

More on the costs and benefits of NEM in the next installment in this series.

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Guest Post: Top-Tier Chinese Solar Firms Have a Legitimate Cost Advantage

Thu, 17 May 2012 03:18:10 +0000

Tomorrow, the U.S. Department of Commerce will announce its preliminary determination on the issue of whether Chinese solar manufacturers dumped crystalline silicon photovoltaic cells and modules into the U.S. market. But it’s important to understand that, irrespective of the alleged dumping, China’s top-tier solar manufacturers do have a legitimate cost advantage over U.S.-based solar manufacturers. China’s solar manufacturers are winning for good reason: they’re more competitive than their American counterparts.

Before I get into why that is, I want to stress two points: First, Chinese manufacturers could have developed this advantage on the back of illegal subsidies from the Chinese government (though Commerce found evidence of only small subsidies). Second, the fact that China’s manufacturers have a legitimate cost advantage does not necessarily mean they haven’t dumped product into the global market.

So who cares, then? Well, it’s important to separate fact from fiction in trade cases like this. It is very easy to point a finger at China as the bad guy, but that doesn’t help anyone. It has the potential to damage the U.S.-China trade relationship (and remember, it has been in part because of low-cost solar cells and modules from China that U.S. solar installations have boomed in the past years). Blaming China also takes the spotlight off of U.S. manufacturers and U.S. policymakers — and what they can and should be doing to keep American solar manufacturers competitive in this global economy.

NREL study grossly misrepresented

Most of the arguments against the cost competitiveness of China’s top-tier solar manufacturers have relied on a presentation by Alan Goodrich at the National Renewable Energy Laboratory (NREL). The oft-espoused line is this: the NREL study proves that Chinese manufacturers have a 5 percent cost disadvantage compared to U.S. manufacturers when the cost of shipping from China to the U.S. is included. But that was, in fact, not the conclusion of the study at all.

Anyone who actually saw Goodrich’s presentation, not just the PDF slide deck, knows that Goodrich was not comparing a solar module assembled in China from solar cells made in China to a solar module assembled in the U.S. from solar cells made in the U.S. Instead, he was comparing the cost of a solar module assembled in China from solar cells made in China to the cost of solar module assembled in the U.S. from solar cells made in China. He was making the case for a manufacturer like Suntech to make its cells in China then ship them near to the U.S. location of the end customer and assemble the cells into modules there. (Which is, incidentally, exactly what Suntech does.) Watch the video and see for yourself.

China’s cost advantage: 18 percent to 30 percent

Goodrich did compare the cost of a China-made solar cell to the cost of a U.S.-made solar cell. And he found that the Chinese cell manufacturer has a core cost advantage of 18 percent to 20 percent over the U.S. manufacturer. That advantage comes largely from scale and vertical integration; Goodrich compares a 60-megawatt plant in the U.S. to a 2,000-megawatt plant in China. That scale and integration gives China’s manufacturers a 10 percent discount on all materials (“due to supplier leverage and captive production strategies”) and a 50 percent discount on equipment from Chinese equipment vendors. Labor costs are certainly much lower in China, but labor only makes up about 5 percent to 10 percent of the cost of a module, and U.S.-based manufacturers make up for higher labor costs with more highly automated plants.

An 18 percent to 20 percent cost advantage is in line with what I’ve heard from a number of other analysts and industry experts. Greentech Media’s own Shyam Mehta told me in an interview that the cost differential between U.S. and Chinese manufacturers is about 25 percent to 30 percent in 2012. Rob Wanless, Director of Business Development at SOLON Corporation, said that the cost of solar panels from Chinese manufacturers is about $ 1 per watt, and $ 1.20-1.30 per watt from U.S. manufacturers. One executive at a Chinese module manufacturer similarly suggested that China has about a cost advantage of about $ 0.20 per watt on modules and about $ 0.10 per watt on cells.

Keeping this debate to the actual facts is critically important, in no small part because the stakes of this trade case are so high. Perhaps even more important, misrepresenting the facts takes the heat off of U.S. manufacturers and policymakers. Spending their time blaming China for the U.S. solar industry’s woes allows policymakers to deflect discussions about what they need to be doing to help U.S. manufacturers stay competitive. We all know that the solar industry is but one example — if the U.S. can’t figure out a way to compete here, the long-term prospects for American manufacturing are dim indeed.

Learn more about the source of China’s cost advantage and other facts behind the U.S.-China solar trade case (and listen to interviews with Gordon Brinser and Jigar Shah) at www.chinaglobaltrade.com.

***

Molly Castelazo is the director of ChinaGlobalTrade.com, where she coordinates the development of content packages on key China trade-related issues to fulfill the organization’s mission of promoting fact, challenging misinformation, and infusing balance into the dialogue. Molly holds dual degrees in economics and political science. She began her career in the research department at the Federal Reserve Bank in St. Louis.

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Consolidation Chronicles: Sovello Joins the List of German Solar Insolvencies

Wed, 16 May 2012 12:18:09 +0000

Sovello, based in Bitterfeld-Wolfen, not far from Q-Cells, cannot pay its debts and has asked the Dessau insolvency court to restructure under its management, the company said in a release on its website yesterday.

In early 2010, Sovello, the Q-Cells-Evergreen-REC joint venture, then on the verge of bankruptcy, was sold to German private equity firm Ventizz Capital. The firm's Evergreen/Q-Cells/REC provenance does not bode well for its future.

German photovoltaic panel manufacturers are faced with reduced feed-in tariffs, increased competition from China, and a global oversupply of solar modules.

Sovello joins Germany's Q-Cells, Soltecture, Odersun, Solar Millennium, and Solon in the group of the country's extremely troubled or shuttered PV manufacturing firms. Q-Cells was Germany's — and once the globe's — largest solar manufacturer. It is now on the brink of bankruptcy.

As Shyam Mehta has said, "'Consolidation' is a nice word that refers to a lot of ugly things.”

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Consolidation Chronicles: Sovello Joins the List of German Solar Insolvencies

Tue, 15 May 2012 21:18:15 +0000

In early 2010, Sovello, the Q-Cells-Evergreen-REC joint venture, then on the verge of bankruptcy, was sold to German private equity firm Ventizz Capital. The firm's Evergreen, Q-Cells, REC provenance does not bode wll for its future.

German photovoltaic panel manufacturers are faced with reduced feed-in-tariffs, increased competition from China, and a global oversupply of solar modules.

Sovello joins Germany's Q-Cells, Soltecture, Odersun, Solar Millennium, and Solon in the group of extremely troubled or shuttered German PV manufacturing firms. Q-Cells was Germany's — and once the globe's — largest solar manufacturer. It is now on the brink of bankruptcy.

As Shyam Mehta has said, "Consolidation is a nice word that refers to a lot of ugly things.”

Go Green

Consolidation Chronicles: Sovello Joins the List of German Solar Insolvencies

Tue, 15 May 2012 06:18:12 +0000

Sulfurcell changed its name to Soltecture in 2011, but could not change its destiny.

Which, apparently, is insolvency proceedings.

According to a release, "Having extensively explored new financing options, the executive management saw no other viable option for averting the company’s impending insolvency at the present time."

The CIGS startup had positioned itself as a supplier of "architectonically attractive solutions" for solar construction — in other words, building-integrated photovoltaics (BIPV).

Soltecture joins Germany's Q-Cells, Odersun, Solar Millennium, and Solon in the group of extremely troubled or shuttered German PV manufacturing firm. Q-Cells was Germany's — and once the globe's — largest solar manufacturer. It is now on the brink of bankruptcy.

Soltecture had landed an enormous amount of VC funding. At least $ 160 million in funding came from Intel Capital along with Climate Change Capital Private Equity (London), Bankinvest Group (Copenhagen), Zouk Ventures (London), Masdar Clean Tech Investments (New York), Demeter (Paris), Vattenfall Europe (Berlin), GdF Suez (Berlin/Paris), Ventegis Capital AG, IBB Beteiligungsgesellschaft, et al. (Intel Capital's solar investment record is less-than-stellar — see SpectraWatt.)

Shyam Mehta, Senior Solar Analyst at Greentech Media Research, had tracked the firm as having produced 2 megawatts in 2009 and up to 15 megawatts in 2010. Soltecture confirmed those numbers last year when we spoke to Dr. Nikolaus Meyer, the CEO. He said that the firm's roadmap would get the company to 14 efficiency from its then-commercialized products with datasheet values in the 9 percent to 10.5 percent efficiency range.

The 250-employee company was focused on commercial and residential rooftops, as well as building-integrated photovoltaics (BIPV). The firm looked to differentiate itself not by being a pure module supplier but rather, by developing comprehensive solutions for the BIPV, solar construction and commercial rooftop sectors. At the time, Germany's feed-in tariff rewarded rooftop solar deployments and BIPV more handsomely than ground-mounted installations.

As Shyam Mehta has said, "Consolidation is a nice word that refers to a lot of ugly things.”

Soltecture had a number of challenges aside from just being in the solar industry. The firm was going after BIPV, an as-yet-untenable market. And the firm was doing some or most of its manufacturing in Germany, an increasingly challenging place to build solar products.

What Mehta of GTM Research concluded about Odersun applies here: "It's hard to be successful in a market that does not exist."

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Checking in With CPV Semiconductor Startup Solar Junction

Mon, 14 May 2012 15:18:16 +0000

Vijit Sabnis, VP of Technology and a co-founder of triple-junction solar cell manufacturer Solar Junction spoke on Wednesday night at the monthly IEEE PV gathering at PARC in Palo Alto, California. CEO Jim Weldon, along with Jeff Allen, VP of Business Development at Solar Junction, lurked in the audience.

Sabnis gave a hopeful update on the compound semiconductor startup which aims to provide higher efficiency solar cells for the still-nascent concentrated photovoltaic (CPV) market. I say "still nascent" because despite the decades of development and hundreds of millions invested, terrestrial CPV has deployed only a few tens of megawatts in the field. Compare that to the almost routine commissioning of 50-megawatt crystalline silicon-based solar power plants.

Sabnis finds a positive in that. He asserts that no other photovoltaic technology has the headroom to improve its efficiency like triple-junction solar cells. He also asserts that because T-J cells are a smaller proportion of the system bill of materials, no other cell technology's improvement can leverage down the cost of the system like CPV.

The largest CPV deployment in North America is the 5-megawatt Hatch site in New Mexico. That site should yield its title soon to the 30-megawatt Alamosa site in Colorado, both with hardware from Amonix. SolFocus has a project in development in Mexico that could eclipse the Colorado CPV farm. Soitec has large CPV plants in the works as well including over 150 megawatts of PPAs with San Diego Gas & Electric and a 50 megawatt plant in South Africa. 

Vital stats on Solar Junction:

Founded in 2007
Headquartered in San Jose, California with 44 employees
Pilot production line is approximately 5 megawatts of 500X annual capacity on 4-inch wafers
The firm has raised more than $ 50M in equity from VC firms ATV, DFJ, NEA and strategic investor and epi-manufacturing partner IQE
Financial support from US DOE and NREL — $ 3 million PV Technology Incubator and $ 21.5 million Sunpath PV Manufacturing Initiative
Currently holds triple-junction cell efficiency world record of 43.5 percent
Transitioning from R&D to high-volume manufacturing on six-inch wafers starting late this year

Sabnis cited research that showed CPV to have the potential to achieve the lowest cost of electricity in hot, sunny, high-DNI regions with single-axis c-Si as CPV's largest competitor. Although only about 85 percent of sunlight is typically collected in high concentration systems, CPV might achieve these potential low costs with the levers of improved concentration, increased volumes, and improvements in efficiency. That's the hope, anyway.

While Greentech Media has observed Demi Moore's law in c-Si progress, Sabnis asserts that M-J solar cells are more able to harness a Moore's law cost and performance progress. He likens the multi-junction solar cell to an LED in reverse and said, "We look, feel, and smell like an LED company." He notes that Solar Junction can get two kilowatts from one 4 inch wafer under concentration at 1000 suns and could produce 200 megawatts of power from its relatively small factory floor if fully populated with equipment.

It's obvious that Sabnis is passionate about this technology saying, "This technology really excites me" and cites "the awesome performance of these solar cells." He called out the performance of M-J cells at high temperatures due to the high-voltage output of 3.5 volts (headed to 4.5 volts) compared to silicon and that CPV loses 4 percent of its output in high temperature compared to 15 to 20 percent for c-Si. Sabnis also notes that industry concentration figures have increased from 500X to 1000X and beyond.

For Sabnis, "The most exciting thing is what the future holds and the headroom." He cited several studies showing 70 percent theoretical efficiencies from a 5- or 6-junction cell. More practically he sees 50 percent cell efficiency achievable in three to five years which could get DC module efficiencies to over 40 percent.

The secret sauce in the Solar Junction recipe is the firm's dilute nitride technology. According to Sabnis, "If you add little bit of nitrogen, you can reduce the bandgap and lattice constant of that material." He also notes that the addition of indium provides a tunable bandgap infrared material with "a fully lattice-matched platform." Lattice mismatch can cause microcracks or dislocations that serve as minority carrier recombination sites.

Sabnis said that the competition had given up on dilute nitrides but Solar Junction went from ten percent to 43.5 percent efficiency in two years as measured at NREL and Fraunhofer ISE on cells from off the production line. Quantum confinement structures, such as quantum dots or wells, can manage lattice mismatch but efficiency will top out at about 42 percent with that technology, said Sabnis.

The company is collaborating with LPI to develop a demonstration vehicle, utilizing best-in-class cells and packaging, of a unique 4-element fresnel lens that could reduce overall tracker costs, while providing very high module efficiencies.

So — great technological progress at the CPV cell level is being made by Solar Junction (and competitors Semprius, JDSU, Encore, and Spectrolab), but system vendors have to cut cost at the systems level in order to compete with the plummeting cost of single-axis c-SI.

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Checking in With CPV Semiconductor Startup Solar Junction

Mon, 14 May 2012 00:18:08 +0000

Vital stats on Solar Junction:

Founded in 2007
Headquartered in San Jose, California with 44 employees
Pilot production line is approximately 5 megawatts of 500X annual capacity on 4-inch wafers
The firm has raised more than $ 50M in equity from VC firms ATV, DFJ, NEA and strategic investor and epi-manufacturing partner IQE
Financial support from US DOE and NREL — $ 3 million PV Technology Incubator and $ 21.5 million Sunpath PV Manufacturing Initiative
Currently holds triple-junction cell efficiency world record of 43.5 percent
Transitioning from R&D to high-volume manufacturing on six-inch wafers starting late this year

Go Green

Checking in With CPV Semiconductor Startup Solar Junction

Sun, 13 May 2012 09:18:11 +0000

Vital stats on Solar Junction:

Founded in 2007
Headquartered in San Jose, California with 44 employees
Pilot production line is approximately 5 megawatts of 500X annual capacity on 4-inch wafers
The firm has raised more than $ 50M in equity from VC firms ATV, DFJ, NEA and strategic investor and epi-manufacturing partner IQE
Financial support from US DOE and NREL — $ 3 million PV Technology Incubator and $ 21.5 million Sunpath PV Manufacturing Initiative
Currently holds triple-junction cell efficiency world record of 43.5 percent
Transitioning from R&D to high-volume manufacturing on six-inch wafers starting late this year

Go Green

Checking in With CPV Semiconductor Startup Solar Junction

Sat, 12 May 2012 18:18:09 +0000

Vital stats on Solar Junction:

Founded in 2007
Headquartered in San Jose, California with 44 employees
Pilot production line is approximately 5 megawatts of 500X annual capacity on 4-inch wafers
The firm has raised more than $ 50M in equity from VC firms ATV, DFJ, NEA and strategic investor and epi-manufacturing partner IQE
Financial support from US DOE and NREL — $ 3 million PV Technology Incubator and $ 21.5 million Sunpath PV Manufacturing Initiative
Currently holds triple-junction cell efficiency world record of 43.5 percent
Transitioning from R&D to high-volume manufacturing on six-inch wafers starting late this year

Go Green

Checking in With CPV Semiconductor Startup Solar Junction

Sat, 12 May 2012 03:18:15 +0000

Vital stats on Solar Junction:

Founded in 2007
Headquartered in San Jose, California with 44 employees
Pilot production line is approximately 5 megawatts of 500X annual capacity on 4-inch wafers
The firm has raised more than $ 50M in equity from VC firms ATV, DFJ, NEA and strategic investor and epi-manufacturing partner IQE
Financial support from US DOE and NREL — $ 3 million PV Technology Incubator and $ 21.5 million Sunpath PV Manufacturing Initiative
Currently holds triple-junction cell efficiency world record of 43.5 percent
Transitioning from R&D to high-volume manufacturing on six-inch wafers starting late this year

Go Green