A Modest Proposal

In these early days of the nascent solar industry, there is much discussion of how policy can best support and encourage (aka: pay for) the nurturing of this promising technology to maturity.

Most homeownners today look at solar and struggle with the combination of newness and complex financial payback, delaying what would be an otherwise fruitful investment in home improvement.

There are three common approaches proposed to alleviate this dilemma:

• Regulation: Simply require all new homes to include solar in their power system.
• Subsidy: Arrange for Local, State and Federal governments to offer tax credits, rebates or guaranteed subsidized financing for solar installations.
• Indirect Subsidy: Install cost penalties on existing energy sources by adding carbon taxes to fossil fuels.

While all of the above proposals are attractive and popular, they are tainted with inefficiencies.
Regulation agencies can never comprehend the nuances of each specific case. Inevitably, solar installations will be forced in locations where they are not practical, and government money will be spent persuading installations in conditions where it is so favorable that it would have been done anyway. Subsidies and indirect subsidies are common and inevitable, but often lead to absurdities of inefficiency.

There is another option that has gone overlooked: deregulation.

Our energy policy over the last few decades has evolved to an extent that any new home is required by law to include conservation elements above what a home owner would install on their own. Elements such a low energy lighting, special heating and robust insulation add to the cost of a new home. If the cost of compliance for a home approaches $30,000, this is approximately the cost of a typical home solar system.

The rationale for these regulations is twofold: First, reducing energy consumption means less fossil fuel pollution. Second, reducing energy consumption reduces pressure to build enormously capital-intensive energy capacity allowing the installed capacity to remain sufficient over a longer period of time.

If a home is outfitted with solar however, both of the above aspirations are satisfied. By simply waiving conservation inspired building codes for homes equipped with solar, financing for the solar installation becomes available without government intervention.

Taking this thinking further leads to some interesting effects. A home that draws its power from clean solar should be liberated from conservation constraints across the board. Homeowner habits that have become reflexive to us in a conservation minded world are no longer necessary. Air conditioning can be turned up freely on hot summer days (when the solar array is at its most productive), rooms can be flooded with light, leisure giving electric power can be used generously in the smug knowledge that it is abundant and non-polluting.

Picture such a house: free flowing clean solar electricity heating, cooling and driving lifestyle appliances to the homeowners unbridled delight.

Now picture beside it today's energy conservation compliant home: nearly windowless, confined, lit sparingly by blue-green fluorescent bulbs -and for all its effort still with an enormous carbon footprint compared to our solar home.

They cost the same to build.
Which one will be worth more?

Perhaps the best way to encourage solar adoption is to simply get out of the way.

2012: The Beginning is near!

The other day, I was at lunch with a merged group of teenagers and Ivy League MBAs. The MBA dominated conversation theme was doom. The Currency is doomed, health care is doomed, the environment is doomed, the next generation is doomed...

After lunch and the other MBAs had left, I advised the pallid student beside me that doomsaying is a hobby for some. Every few years, "The End becomes Near." I then pointed out that while there are always doomsayers, there are also a healthy number of those who say, "Um, although we're doomed as you say, do you mind if we keep trying anyway?" The latter spirit has always prevailed.

A doomsday fad we will be subjected to for the next few years comes to us from the Mayans. Apparently, on December 21, 2012, at 11:11am (MST presumably) the Mayan calendar simply ends.

In advance of the forthcoming Mayan Doom, here are some more practical predictions of what we can expect from the year 2012.


Hybrids
Today's icon of environmental responsibility, by 2012, hybrid technology engines will be as common as fuel injection is today. Hybrid cars will be a novel "green badge" through 2009, but beyond that, their achievement of substantial economy beyond mere cachet will drive ubiquity across the chasm to consumers who are concerned more with operating expense than environmental appearances. All but niche performance trophy cars will be built on hybrid regeneration technology.


Solar
Even without the innovations that are about to be unleashed on the market, solar electricity production has been growing at 20% CAGR since the 1970's with no down years. Of the four major competing technologies for production of economic solar energy (and that certain fifth soon to make itself known. Watch this blog for a future update!) One will have established itself as the leading practical solution by 2009. By 2012, global production of electricity conversion will be stampeding from coal/nuclear to solar at a breathtaking pace, achieving 15% of global production via solar cells. Most of the houses on your block will have solar systems installed. At least one solar energy technology company will land in the Fortune 50 -having climbed there faster than any company in history.


SSL
More than a century at the top is a good run for any technology, and so the Edison light bulb is ready to be retired with honors. But we are struggling today with an inferior replacement, the CFL which uses less power but is just as fragile and contains poisonous mercury vapor. Happily, an ideal replacement is on its way. Solid State Lighting (SSL) is made from robust, energy efficient LEDs. Until recently, LEDs have been confined to the dim lights announcing such things as your cell phone's charge. But recent advances have made super bright white LED lights practical and set them on the way to consumer applications. In 2008, LED bulbs will be launched into the consumer stage by no less a spectacle than the Beijing Olympics, "The Olympics of Light" making extensive use of the new technology. By Fall of 2008, standard consumer LED bulbs will be on the shelf and by 2012, Edison's incandescent bulbs will be in a revered place beside his also-retired phonograph record, but no longer available in stores.

The Future is Bright
These are just the technologies that we know about. In an era of exponential innovation rates, one certainty is that there will be curve-busting surprises. By 2012, the world will be a very different place. The legacy industrial infrastructure that burdens us today will be shed and reborn.
Maybe that's what the Mayans had in mind all along.

The Sure Things and The Hail Mary

Albert Einstein's photoelectric effect (PV) is the process by which the photons in sunlight are converted into electricity. It is the reverse process that is observed in familiar LED lights. The materials which exhibit this effect are small band gap semiconductors.

There are (currently) four major technical approaches to photovoltaic generation of electricity. Each has an proportional balance of advantages and risks. Each approach is a combination of light gathering (how much sunlight is collected per unit area of a cell), PV conversion efficiency (how much electricity is generated per area of sunlight) and cost (Dollars per Watt of energy produced by the cell).

Each is well represented in Silicon Valley today.


Crystalline Silicon (Ex.: SunPower)
This is a sure thing. Based on the same traditional crystalline silicon that is used in electronics, crystalline silicon solar cells have the advantage of being using extremely well understood physics as well as high volume manufacturing practices. There are literally tens of thousands of industry seasoned experts on this material in the electronics industry. This results in an early advantage in unit cost and manufacturing scalability. Crystalline silicon offers high photoelectric conversion efficiency, but is very complex and expensive to produce. Crystalline silicon cells are actually made from the "waste" wafers that are unusable for electronics.

However, Even with these seeming advantages, crystalline silicon is very complex to manufacture and after forty years of cost reduction, it is a fair concern that flat plate silicon solar cells should not expect many more major cost reductions. (or should we? watch for a future blog..)

The Bottom Line: This is what you see on rooftops today. Nearly all solar cells in existence to day are crystalline silicon based cells. Today they are less expensive than other exotic approaches, but it may be difficult to reduce cost further.

Light Gathering: 1 Sun
PV Conversion Efficiency: 15-18%
Current cost per Watt: $4.80


Amorphous Silicon Thin Film (Ex. Applied Materials)
Amorphous simply means non-crystalline. Also comprised of familiar silicon, this is a sure thing as well. Because it lacks the delicate crystal lattice structure of crystalline silicon, it is much less expensive to produce (imagine filling a sandbox with sand versus building a house of cards). For the same reason, its PV conversion efficiency is also lower -but not proportionally. Amorphous silicon based solar cells must be larger in order to generate the same amount of power, but the resulting cost will be lower. Amorphous silicon also benefits from incumbent status: It is the material used in LCD displays of which ten square miles will be produced in 2007.

However, while industry experience reducing the cost of amorphous silicon is not as mature as that of crystalline silicon, it has already seen cost fall by 20x. There is certainly still room for improvement, but the bottom of the well may not be far off.

The Bottom Line: Amorphous silicon is slightly less efficient at converting sunlight into electricity but much less expensive to produce. While the physics and manufacturing issues surrounding amorphous silicon are well enough understood that it can be produced in volume today, it is not so well understood that we should not expect further breakthroughs and cost efficiencies. All of the World's expertise with crystalline silicon for electronics can easily be ported to amorphous silicon.

Light Gathering: 1 Sun
PV Conversion Efficiency: 8-12%
Current cost per Watt: $3.99


Concentrated Photovoltaic (Ex.: SolFocus, Silicon Valley Solar)
This starts to be more of a long shot. The Concentrated PV approach addresses the high cost of the semiconductor material by using optics to focus a given area of light onto a small unit area of extremely high efficiency , but still proportionally less expensive compound semiconductor material. For example, by using 500x optical concentration (500 Suns), concentrated PV cell will generate as much electricity with 1 cm2 of semiconductor material as a standard (1 Sun) PV cell would produce with 500 cm2 of semiconductor. The idea is that the reduced cost of semiconductor material required will more than offset the added cost of optics and tracking motors (CPV cells typically must be aligned with precision toward the sun, tracking it across the sky through the day and the seasons)

However, it remains to be seen if the structural and maintenance costs of optics and motors over a twenty year lifetime outdoors will be justified by the accompanying increase in efficiency.

The Bottom Line: The principal of trading mystically delicate and expensive semiconductor material for apparently simple optics and tracking motors is reasonable, but there is a real challenge to the reliability and maintenance costs of anything that sits on a roof for twenty years. No one has been able to make this quite work yet.

Light Gathering: 2 to 500 Suns
PV Conversion Efficiency: 26%
Projected cost per Watt: <$3.00


CIGS Thin Film (Miasole, Nanosolar)
CIGS (Copper, Indium, Gallium, Selenide) is the Hail Mary, the long shot that could win the game. The preceding approaches all struggle with the manufacturing cost of their PV semiconductor material. CIGS approach seeks to reduce the cost of the semiconductor itself. Discovered in 1975, CIGS is a relatively new material, lacking the benefit of an enormous knowledge base of silicon. Despite this humble beginning, CIGS has demonstrated PV efficiency as high as 20% and thanks to a manufacturing process that requires comparatively moderate temperature and pressure control relative to silicon, it promises a dramatic reduction in energy cost. As an added benefit, CIGS PV cells are flexible, allowing cosmetic applications that are not practical with brittle crystalline silicon cells. It also greatly simplifies the demands of the panel structure -further reducing cost.

However, put simply, no one has ever been able to produce CIGS solar cells in high volume despite more than $140M of venture capital invested in Silicon Valley alone. In order to succeed, CIGS companies must develop new material physics, new manufacturing techniques and combine them into high reliability, high volume manufacturing processes. The risk is high, but the reward is its match.

The Bottom Line: CIGS has the best chance of delivering solar electricity at an price that will compete with coal. If CIGS is successful in its ambitions, it will be most important commercial development of this century.

Light Gathering: 1 Sun
PV Conversion Efficiency: up to 20%
Projected cost per Watt: <$1.00


What comes next? There's a very good bet. Watch for a future installment of The Solar Evangelist...

The Age of Economic Solar Energy Begins

Most of you reading this are entrepreneurs. A familiar entrepreneurial challenge in launching anything new is overcoming the unfamiliarity and resistance in the marketplace.

That’s not a problem with solar. Sunlight is clean and life giving. We love the Sun. We want to bask in it.

How ready are people for Solar? People not only like solar. They're begging for it.

The Solar Energy Opportunity
At more than $1 Trillion per year, electricity production is tied with global oil production and bested only by food, clothing and shelter as a share of global GDP. This is almost entirely based on coal and nuclear. And nobody is happy about that.

Disrupting and transforming this global power infrastructure to cheaper, more economical and more flexible solar energy will be the most important economic and cultural change force of our lifetimes. Our energy consumption and conservation habits based on scarcity, inflexibility and even guilt will change radically.

Solar energy’s roots begin just over a hundred years ago. Albert Einstein was awarded his single Nobel Prize not for the E=MC2 of atomic energy, but for the photoelectric effect. The first solar cells were realized in the mid 1950s and in 1975, the first terrestrial solar electric company was formed.

We find ourselves at the threshold of this new era. California in particular is uniquely equipped to take the leading role in the next generation of photovoltaic (PV) energy production.

1. Drawable talent from native Semiconductor Manufacturing, Equipment and Thin Film industries
2. Entrepreneurial Spirit, Venture Capital, Research Universities
3. The most solar-positive marketplace in the United States
4. California by itself is now the 3rd largest market for solar energy in the world as a result of Governor Schwarzenegger “million solar roofs” initiative
5. A base of existing companies such as SunPower leading the World in silicon cell efficiency.
6. Start-ups like Miasole and Nanosolar who are aimed at slashing the cost of solar power by more than half.
   
   Are you ready for one trillion dollars to change hands as Solar takes its place in our society? Everything is about to change.