Wednesday, September 1, 2010

2011 Demand Prediction.

I set out a week or so ago to try my hand at putting together an estimate for 2011 Global Demand for PV Solar. I started rough, and started adding details. I put out numbers and chewed on them a bit; considering the variables that I see in the Global Economy, and in the Solar Industry.

In the case of a double-dip recession in the US, which takes us to a state of barbarism, then all bets are off. You’re on your own.

However, if we can avoid a deflationary spiral, and if the powers that be can keep the US Economy just barely growing for awhile, then I think that continued Global Growth could lead to some interesting events.

I’ll start out with the document that I found last.

This is a detailed projection on the Global Solar Industry going out to 1014 (as of May 2010) by the European Photovoltaic Industry Association. In this document you’ll find PV Histories and Projections broken down by Country, and multiple demand scenarios.

The EPIA projects the Global 2011 Solar Market to be 15,405MW.


Having found this document last, I had already put together a projection as follows.

Starting with numbers from Solarbuzz for 2009 gives:

Regional Distribution 2009 (Solarbuzz)*:

Total: 7.5GW (Revised upward in June 2010).

Germany, Italy, Czech Republic = 68% = 4.96 GW
Other Europe = 9% = .66 GW
US = 7% = .51 GW
Japan = 6% = .43 GW
Rest of World = 10% = .73 GW

And then moving on to a Regional Distribution for 2010 (my Estimation) gives:

Total: 15.2GW

Germany, Italy, Czech Rep = 60% = 9.2 GW
Other Europe = 14% = 2.1 GW
US = 6.5% = 1 GW
Japan = 3.4% = .5 GW
China = 3.4% = .5 GW
Rest of World = 12.5% = 1.9 GW

In the process I found numerous articles to provide perspective on the local conditions.

Germany, of course, is super-hot for 2010, but cooling in 2011. Italy is hot, and heating up even in the face of Reduced FITs. There is a matter of a FIT Cap in Italy, but there's also approaching Grid Parity. The Czech Republic is dead in the water, and Spain is still reeling from collapse. Elsewhere in Europe, France is having solid growth (Note the Barclays analysis at the end), Greece shows a little bit of spirit, and even the UK has announced a very profitable FIT.

The future is a tricky thing, though, and analysts are almost all predicting a crash in Demand in 2011 due to reduction of the German Market. iSupply is a dissenter on this prediction, and suggests that the German Market will reach 9.5 GW in 2011 and Global Demand will grow to 20.2 GW.

Other data points included presentations by STP and TSL, who were both kind enough to provide regional breakdowns of their sales for Q2.

In the end, I have come up with the following guess for 2011 Demand.

2011 Estimate
15.2GW * 1.21 = 18.45GW Total

Germany = 30% = 5.5 GW
Italy = 14% = 2.5 GW
Other Europe = 13% = 2.45 GW
US = 11% = 2 GW
Japan = 6% = 1 GW
China = 8% = 1.5 GW
Rest of World = 19% = 3.5 GW

This is my estimate, based upon rapid (but not earth-shattering) growth in China, as well as a not-complete collapse of the German Market.

My Rationale (for some major players) is as follows.

Germany: Germany is not going to completely crash, as some suggest. Prices ARE likely to decrease by at least 10%, which creates its own stimulative effect. In addition, the German Solar Industry is now quite powerfully entrenched, and will resist policies that put them all out of work. It's quite clear that Germany is looking for a bit of a slowdown, but with prices as they are, not only for Basic Equipment, but for Balance of System, there will still be continued opportunity to close new sales. In addition, where German players come into troubling times, they will to some extent, at least, look for opportunities to push Sales elsewhere to Europe, or the World.

With this in mind, I set Germany at a minimum of 5.5 GW on the year, compared to EPIA's estimate of 4 GW (and compared to iSupply's estimate of 9.5 GW).

US: Solar in the US is still tentative. There is tremendous cultural animosity against it. However, today's Prices (and Regulations) are getting tough to ignore. As Fully Loaded costs drop below $5/W, Solar starts looking realistic for certain niches. The big question mark, of course, is what will happen with the mid-term Election, and what will come of Energy Policy afterwords. I set the US Market for 2011 to be 2 GW, which is optimistic. Compared to just 2 years ago, today's prices are unbelievable, and even with a complete rout by the Republican / Tea Party, the Dems will maintain considerable power by which to support the development of Alternative Energy (the EPA and Energy Dept, for example).

China: China is a giant wildcard. So far, China has made big plans, but they've held the money tight. We know that folks like Xiaofeng Peng of LDK have made numerous trips around China and have set up Framework Agreements for the Construction of multiple Gigawatts of Solar Generation Plants, but these plants have yet to be realized. Other Chinese and International players have done likewise, with the same results.

There has been some activity, even so. EPIA suggests a potential 600 MW Market Size for 2010, which is a solid base upon which to take off from in '11 (pending access to funds). EPIA also notes that there are more than 12 GW of projects in the Chinese Pipeline.

So, where are the funds? There have been rumors. There have also been strong signals of massive expenditure across the board in Alternative Energy (700+ Billion Dollars).

Rumors suggest that the plans might be announced officially as early as September. However, nothing is Official in Government until it's "Official." Unless you have contact with the inner circle in Beijing, I don't think they're going to tell you what their plan is; that is, until they're good and ready. However, it seems to me that beyond the rumors and tidbits of leaked news, we can make another kind of observation, which is to look at what their Manufacturers are doing.

Expansion is the word of the day. While Western Analysts call for another dieoff in 2011 due to Demand Contraction, Chinese Manufacturers are all expanding like gangbusters (while hiring and training a large number of people). They're profitable right now, and would remain profitable with a further 10% decrease in ASPs. However, if Europe dries up and prices fall precipitously, then the analysts will be right; unless China steps in. Energy is a strategic asset, and I don't see China just standing by (again) as their shiny new companies collapse in the midst of a rapid growth phase.

My conclusion, then, is that evidence of China's immanent entry to the Demand side of the equation, and in a big way, is simply the fact that this particular set of favored Companies appear to be expanding in preparation for it. This goes beyond the increasingly documented fact that there are specific plans in the works by the Central Government.

So, for China in 2011, I'm suggesting that 1.5 GW is a Conservative minimum in the case that the Chinese Government does, in fact, release the money. As of 12/6/2010, this quantity has some support from analysts.

Note, however, that the amount and manner of Investment will be as carefully tuned as possible to avoid putting too much upward pressure on the price of equipment. They don't want to disrupt exports and create a bubble.

So there you have it. Take it for what you will. I'm not a Pro, I'm an Interested Observer, and I've been wrong before.

Thursday, June 3, 2010

Semi-Random thoughts on Energy, Derivatives, and Tesla.

Nuclear vs Solar:

Obama is selling Nuclear. This is one of the few issues with which I really think he's screwing up.

The question is, even with more Government support, will the nuclear industry really get off its ass and start building plants? Nuclear energy is all about politics. Very little of it is real. The financiers won't invest in plants unless they can get the Government to take pretty much ALL of the risk.

So, as far as nuclear is concerned, we might get a bill that still won't produce any new plants. It would be good to see this bill if it's posted out there; I haven't looked.

On the other hand, can Obama really sell a MAJOR wealth redistribution Bill using SOLAR ENERGY as the argument? The US CULTURE doesn't support Solar. They think its for calculators. The Culture does support Nuclear, however. They (we) have been taught how SIMPLE and CHEAP nuclear power can be for generations. The fact that the REALITY doesn't end up supporting this (when the cost of the RISK is included) is not well understood by just about everyone (IMO).

So, does Obama Sell Solar and confuse the people (failing to pass a Bill), or does he sell NUCLEAR and move WITH the cultural assumptions in order to get a bill in that will also support Solar and other Renewables / Efficiency?

I don't know, it's a tough decision for alot of people politically, because it involves taking a SH!T-TON of money from a select group of Industries (Carbon Emitters) and giving it to Others. It's massive Government intervention, and people don't like that (even if it's required for their long-term survival, and even if it MIGHT turn out incredibly well).

Don't know.

A thought: Remember, the Solar Industry is tiny relative to total Global Energy Demand. Some talk like the amount of Global subsidy required to create vast demand for Solar Energy Products is some impossible number. What is a dollar, and how many of them are there in the World? There are a SH!T-TONS of SH!T-TONS of them in World. They're tied up in all manner of Derivatives... like a giant cloud of Dollars up in the sky that is able to exist without really affecting life down here on Earth (maybe a light misty rain every now and then). What happens if a Financial Regulation Bill passes that adds just a tiny percentage to the costs of dealing in most derivatives, and makes some derivatives illegal? Money has to go somewhere else. Is there a downpour?

Inflation? Money that doesn't go into a derivative will go somewhere else, where the costs are more well known. Assets, Businesses, Stocks and Options, maybe cars and other Consumer Goods of Particular Value.

When Oil decides to go up (in Dollars) (It Will), then the Solar Short argument is sunk.

Blah blah blah....

Another Thought: Tesla is coming. Tesla rocks. Tesla is American. Tesla is HYPED! There's BIG MONEY that believes in Tesla, and will buy it.

When Tesla comes out, will a new generation of Big Money be born (Overnight)?

When people see people beat the odds, they want to figure out how they did it. In comes Speculation and creative thinking. If money follows thinking, then the boom can come, and it can cross borders at the speed of LIGHT.

Saturday, May 1, 2010

A very-rough calculation Comparing Solar Energy Output to the Gulf Oil Slick.

Oil is leaking out at 5,000 Barrels / Day.

Apparently the most efficient 4-stroke engines run at about 43% efficient, as well, so the previous estimation of 43% will still work.

Previous Calculations give around 14.25 kWh/Gallon of Gas.

I'm going to be very rough, because gas is only a bit less than half of the stuff that comes out of a barrel of oil ( ).

So a Barrel of oil is worth about 21 Gallons of gas, 12 Gallons of Fuel Oil, and 4 Gallons of Jet Fuel.

I've not got it in me to look up the details of the fractions of different types of fuel oil and jet fuel, so I'm just going to stick with 21 Gallons of Gas per Barrel of Oil right now.

So, 5000 Barrels of oil per day times 21 Gallons of Gas / Barrel of Oil gives 105,000 Gallons of Gas per Day draining into the Gulf.

At 14.25 kWh/Gallon of Gas, the leak is equivalent to 1,496,250 kWH / Day in Energy output.

19 Solar Panels = 1 Gallon Gas / Day @ 200W / Panel (In much of the USA).

So, it takes roughly 1,995,000 Solar Panels to produce the equivalent in Energy to 105,000 Gallons of Gas per Day.

Multiply this times 200W per Panel gives a total of 399 MW of Solar Installation in order to equal the gas content of this single spill. If we assume that the remainder of the oil doubles the energy content of the barrel of oil (which I bet is giving false advantage to Oil), then we need 798 MW of Solar to replace it. This seems like alot. Just a few years ago there wasn't this much Solar Capacity in the World. Last year the World Installed about 7 GW of Solar Energy, or a bit over 8.7 offshore platforms, and this year we're looking at the possibility of 13 GW in new Installation, or the equivalent of 16 Platforms. It goes wild from there.

Now, at $4/W Installed, 798MW of Solar Energy would cost around $3.2 Billion Dollars, which is surely much higher than the cost to produce a single oil platform. On the other hand, it's surely alot less than what this disaster is going to cost BP for this particular Rig. In any case, the Price of Solar will keep coming down, while the price of fossils is going to keep going up.

Anyway, just sayin'...

Friday, April 30, 2010

The slick...

This Oil Slick is bad. Understatement.

If they can't shut this down for 3 months, then the destruction is going to be simply catastrophic.

Political / Environmental Game-Changer.