Tuesday, February 15, 2011

An impulse.

There seems to be a kind of quiet certainty among Solar Investors.

There's not alot of fear, but there's also not alot of dangerous exuberance. Those old-timers that are still in, are in with solid confidence. Newbies that have come in have quietly been growing value since the trend reversed. It's just a matter of when the next move is going to come.

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 ( http://tonto.eia.doe.gov/dnav/pet/pet_pnp_pct_dc_nus_pct_m.htm ).

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.

Sunday, July 19, 2009

Business Risks and Costs of New Nuclear Power

Because I often seem to need this.

It's a great paper on the real costs of Nuclear Energy.

Wednesday, July 15, 2009

Unit Idea... PowerPeak-Lifetime25 (or somesuch).

A Solar Cell performance degrades over time. The effective lifetime of Solar Panels are right now considered to be in the area of 25 years.

The rate at which a collection of cells degrades, on average, over the lifetime may not be a nice line.

I can only guess what the curve looks like for a standard Silicon, Wafer-based, Cell but I imagine that it's close to linear. If you have good data, I'd love to see it.

On the other hand, particularly when future cells have their efficiency enhanced by things like coatings, the curve could get alot more complicated. You might have a Silicon Solar Cell that will degrade linearly over 25 years, but the cell might be coated with a product that will increase its initial efficiency by a very significant amount, but which might degrade in effect completely after only 15 years.

Depending on the cost to add the coating, etc, it might very well be financially advantageous to buy this panel with a rapidly degrading initial phase, and a slowly degrading long term component.

The way I see it is that if, for example, a 100W panel were to degrade at 1% per year over its 25 year rated lifetime, then the effective Peak Power is really 87.5W. That's the effective peak power over the panel's lifetime, of PowerPeak-Lifetime25.

In the same way, if you had a panel of the same surface area area that was 160W, but it degraded at 2% per year for 15 years, and then 1% after that till 25 years, it would have an effective PowerPeak-Lifetime25 of 140W.

This would allow the customer to know what they're really buying over 25 years, even if it would take some estimations and tricky modeling on the part of manufacturers. They'd have to try to figure out with great care exactly what the FUTURE degradation curve of their product is going to look like. No worries, they'll appreciate the challenge. :)

In any case, if you're not reflecting rates of lifetime degradation in the cost per Watt, then there is trouble on the horizon for everyone involved.

EDIT: I suppose I spoke prematurely. I assumed that there wasn't a standard name for this. There must be. I ask then, what is it?

Tuesday, July 14, 2009

White roofs to fight global warming - Chu

From money.cnn.com.

It's a fine article on the potential impact of white roofs.

What gets me is:

This is a marked contrast from previous energy secretaries, who often came from business or political backgrounds and had little experience in the energy industry itself, let alone the scientific community that many now hope will help the country move away from fossil fuels. President Reagan's first energy secretary tried hard to abolish his own department.

It just makes it hard to believe in humanity that this kind of thing is true. Sure, not many people understand Energy, or its real impact on their lives; I wouldn't understand it if I hadn't stumbled into Physics. Aw well, we've got a good Qualified Energy Secretary right now, and so I'll try to just keep looking forward. :)

Saturday, June 27, 2009

So, you want to buy a solar plant, part 2.

I thought I'd extend my calculations from So, you want to buy a solar plant, part 1, to make them a bit more realistic. You'll find the basic logic for this post at that location. Here's a recap:

(1) Outgoing$Monthly = TotalPeakPower (kW) * Cost/Wp * C1

(2) Incoming$Monthly = TotalPeakPower (kW) * Rate ($/kWh) * C2

(3) C1 = i / (1 - (1+ i)^-n)

Note: i = .0042, n = 300. Previously, I had set n to 240 for a 20 year loan, but in this case, I'll be setting n to 300 for a 25 year payoff period.

(4) C2 = Insolation Ratio * 1year * 365days/year * 24hours/day / 12months

Note: Insolation Ratio = .1875. Previously I had used .20 for the Solar Plant's local Insolation Ratio. The particular location that's being considered is in the area of Bangalore. I see from this Insolation Map that that area seems to be recieving between 4kWh/day/m2 and 5kWh/day/m2 in Solar Energy. For this estimation's sake, I'll pick the middle, or 4.5kWh/day/m2. Using previous calculations, this works out to an Insolation Ratio of 18.75%.

(5) Setting Outgoing$Monthly = Incoming$Monthly gives the break-even long term average energy price per kWh with respect to the cost per Watt of the Installation:

(6) Cost/kWp ($/Wp) = Rate ($/kWh) * C2/C1

Or conversely:

(7) Cost/kWp ($/Wp) * C1/C2 = Rate ($/kWh)

I want to take this one step further, and take into account degradation of the system over time, as well as various losses like Inverter / Substation losses. I'll try to be aggressive on this correction, to err towards the worse case. So, over the 25 years over which I'm considering, I'll say that the modules lose 1% per year, and Inverter losses are 8%. Averaging the degradation over 25 years gives a loss of 12.5%, plus the 8% Inverter loss, gives a total of a 20.5% loss.

I'll reflect this in my equation by going back to another equation from Part 1 (one of the roots of the (6), above):

(8) TotalPeakPower (kW) * Cost/kWp * C1 = TotalPeakPower (kW) * Rate ($/kWh) * C2 (Hours/Year)

Just prior to (6), I had canceled TotalPeakPower out of my equation. Essentially, these equations should give a rough estimate of the Levelized Cost of Energy irrespective of the total size of the Installation. Of course, there are alot of variables involved when changing scale, and these aren't reflected here. Consider this to be more along the lines of an ideal solar farm. It costs the same per Watt to add a thousand Watts of capacity, or a hundred thousand Watts.

Remember that on the lefthand side of the equation is the initial cost per Watt of the system, while on the righthand side of (8) is the income per unit energy. So, essentially, the "TotalPeakPower" on the left is the ideal TotalPeakPower, while the TotalPeakPower on the right is the effective TotalPeakPower as reflected in the Energy produced over the lifetime of the system, by which income is derived.

So, I'll throw in some subscripts.

(9) TotalPeakPowerideal * Cost/kWp * C1 = TotalPeakPowereffective * Rate ($/kWh) * C2 (Hours/Year)

In the ideal case, TotalPeakPowereffective = TotalPeakPowerideal, but in this case, there's a 20.5% loss, so:

(10) TotalPeakPowereffective = .795 * TotalPeakPowerideal

Plugging (10) back into (9) gives:

(11) TotalPeakPowerideal * Cost/kWp * C1 = TotalPeakPowerideal * .795 * Rate ($/kWh) * C2 (Hours/Year)

So, I can now still cancel out the TotalPeakPowerideal, and I'm left with a correction to the income side of the equation, which reflects system degredation losses and Inverter losses.

The final result is:

(12) Cost/kWp * C1 = (Rate ($/kWh) * C2 (Hours/Year)) * .795

Taking a case, let's say your installation is going to cost $5.25/W, or $5250/kW.

Solving (12) for Rate gives:

(13) Rate ($/kWh) = Cost/kWp * C1/.795C2

C1 = i / (1 - (1+ i)^-n) = .0058 (i = .0042, n = 300 (25 years))

C2 = .1875 * 8760 Hours/Year / 12 Months/Year = 137 Hours/Month

C1/.795C2 = .00005325

Rate ($/kWh) = $5250/kWp * .00005325 = $.28/kWh

Monday, June 15, 2009

Wondering about Intel.

The New york Times told us the other day that Taiwan Semiconductor Manufacturing Company is planning to enter the Solar Cell market.

What I want to know is, where is Intel? These guys know the Silicon Wafer as well as anyone else. Are they passing up an opportunity?

Wait, looking up "Intel Solar" brings up SpectraWatt. SpectraWatt was formed by Intel in June '08. Their plan was to build a manufacturing plant in Oregon to start deliveries in mid-2009. In January of '09, SpecraWatt halted construction of their Oregon plant, and on April 9th of this year they announced their intention to build a headquarters and manufacturing plant in New York.

Ok, so deals went sour in Oregon, I don't know the details, can't say much about that, but still, I gotta say WTF? Come on, INTC. Do you REALLY want into this market? After a year with pretty much nothing to show for it, you are now planning to manufacture 60MW by 2010, and 120MW annually within a couple of years after that. Even if the Implementation had gone flawlessly, this tiny output demonstrates a lack of vision, at the very least. SpectraWatt will have to do better than this if they want to compete in this market.

So, it looks then like Intel has actually moved to enter the Solar Market. They've just done so in a half-assed noncommital sort of way.

Of course, they've got cash. Maybe, like HP, they've discovered that the bottom line doesn't necessarily support building new manufacturing plants in the US. They could buy a heck of alot of Asian production, all in one fell swoop. There won't be too many opportunities to buy into the Asian industry on the cheap, though.

My guess then is that they're not actually idiots; they know what's up, and they're just being sneaky. It's too bad, though, that this Leading US Company is taking so long to get into the game.

Presentation - GT Solar

Here's a newish presentation by GT Solar (dated 6/5/09). Thanks to Parabequ of Yahoo for the find.

Also, here's a nice brief on the process of manufacturing Polysilicon.

It's tough stuff to make. The technology has been kept pretty carefully under wraps for years, but it's breaking out with help from the folk's at GT Solar. Note page 13 of the presentation and the estimated price per Kilogram of $25. If this works out to be true, then it will be a significant step in taking Silicon-based Solar Energy to Grid Parity and below in the mid-term.

Sunday, June 14, 2009

Innovalight - Silicon-based Thin Film.

News came up this last week on Innovalight installing "the industry's first high-throughput silicon-ink inkjet printing system."

If there's any thin film competition for wafers in the large-scale installation niche, I suspect that it must be silicon-based, simply because of the whole supply-constraint problem in the rarer materials like Tellurium, and to a lesser extent, Indium. Innovalight looks to be a good potential contender in Silicon-based Thin Film.

It doesn't look like Innovalight is giving out its cell's efficiency, and they also apparently haven't mentioned the capacity of their new production line, but they are talking about $.50/Watt in the long term (cost vs price, unknown). It'll be interesting to see how far they'll have to scale in order to approach $.50/Watt, and how much money it's going to take them to get there.

Wednesday, June 10, 2009

Global Oil Reserves Fell in 2008 on Russia, Norway, Says BP

Global Oil Reserves Fell in 2008 on Russia, Norway, Says BP.

Don't forget Peak Oil.

Take the Crash Course.

Crash Course Chapter 17a: Peak Oil

Crash Course Chapter 17b: Energy Budgeting

Crash Course Chapter 17c: Energy and the Economy

Wednesday, June 3, 2009

Thoughts on Solar Materials - Thin Film - 6/3/09

I hear the arguments on future domination of the Solar Industry by Thin Film Technologies, but I would suggest that this is far from certain.

What particularly gets me is when people talk about how they're going to come up with solar paint or some such thing, and all of our problems will be solved, just like that; like a snap of the fingers. The argument goes that there's little point in spending all the time and effort on the massive industrialization of Silicon, because some futuristic technology will simply come along to make it obsolete.

Ok, so maybe it's true that some revolution will come along that will completely change how we see Solar Energy. Maybe one day you'll be wearing Solar Clothing to charge your remote devices, and cars and homes will wear coats of Solar Paint to provide for their Energy needs.

Even if this Solar future is to be the case, though, we know that it will have to meet certain requirements, particularly in terms of Scalability / Material Availability, and Cost Efficiency.

Remember that only 1000 Watts of Power strike the surface of the earth per Square Meter on average in the middle of a clear day. That's it. No matter the wonderful technology that you develop, you can't generate more energy than what's available. To generate the incredible amounts of Energy that will be required of the future Solar niche will require a mind-dizzyingly vast array of "panels" distributed around the Planet. That's miles upon miles of glass and aluminum frames housing some kind of protected PV material, whether Wafer-based or Thin Film; or else unhoused, or lightly-housed thin films of various types, even potentially including "painted" Solar surfaces.

The main point that I want to mention at this point is on the value of Cell Longevity.

Note that when you invest in a Solar Panel, you are actually paying upfront for the entire future energy production of that panel. Normally, Solar Panels are rated in Cost per Watt Peak, or Peak Power, which is an indication of the amount of Energy that the Panel would produce at an instantaneous moment of time in ideal midday conditions. Peak Power, however, is no indication of how much Energy that the Panel will actually produce over its lifetime. Two different kinds of panels may cost the same number of Dollars per Watt, but if one lasts only half as long as the other, then ultimately it is twice as costly in terms of its total Energy Production over its lifetime.

This is where the Levelized Cost of Energy (LCOE) comes in. When you Calculate the Levelized Cost of Energy of a Solar System, you are basically determining the overall cost of the System per unit Energy over the Entire expected Life of the System. I did a rough version of this kind of calculation here. Sunpower Corp provides this nice description of the factors involved.

There are a several reasons why a Solar Cell might stop working. One reason that a cell could fail would be from molecular damage to the PV material simply by the bombardment of Solar Energy (including various cosmic rays). This could slowly degrade any kind of Solar Cell. Other types of Solar Cell may be chemically susceptible to degradation, such as today's Organic and Plastic Cells. These materials degrade quickly under common exposed conditions, and at this stage of the game, a lifespan of five years or so seems to be the cutting edge. Finally, of course, smashing a Solar Cell by way of storm debris or a baseball can destroy a panel, and dirt and grime can cover the surface and degrade its performance.

Solidly encasing the PV material in an aluminum and glass (or possibly plastic) module will, in most cases, help to protect the cells from physical damage, but that housing will certainly add to the cost of manufacturing the module. For a thin film product aiming to compete on very low manufacturing cost, this added expense is going to be a killer. In fact, during First Solar's Q1 '09 Conference Call, Jesse Pichel of PJC suggested that Glass was actually FSLR's largest cost. First Solar didn't disagree, and nobody mentioned Tellurium.

Now, if glass is actually even a significant portion of the cost per watt for a thin film, then it sets a kind of a lower limit on the potential cost to manufacture Thin Film Cells housed in glass (adjustable by efficiency). So, to some extent, the decision is whether to go for extreme affordability (or flexibility) and avoid a robust enclosure, but lower the operating lifetime of the cells; or else go for a longer lifespan, but adding significantly to the total cost of the module. First Solar, for example, is targeting a production cost of $.65 per Watt.

Though I'm certain that nanotech of various sorts will be able to make headway in durable exposed thin film cells, I can't help but think that it's going to have its limits. For comparison's sake, a tarp is made of very tough stuff, yet I've seen my share of tarps shredded by fall winds, and a tarp doesn't depend on the same kind of exacting chemical structure that a PV cell does. You can beat the crap out of a tarp, and it will still keep the rain off of your stuff. I'll be very impressed if I see a thin film material that you can roll into a ball, peat with a stick, and still use to generate electricity. I can't wait to see the infomercial.

There are numerous conclusions that I could follow with, but for now, I'm going to leave this with a simple idea for the consumer. Don't just buy solely based on Cost per Watt, or one day you're going to be led astray. Know what you're buying, and make sure that it has a solid warrantee over a time period to assure your expected payback. If you're offered a deal too good to be true on a cost per watt basis, it could simply be that the product you're buying is going to crap out long before it pays itself off.

Wednesday, May 27, 2009

Spire Solar - Nanophotovoltaic Device Patent.

Spire Receives U.S. Patent for Nanophotovoltaic Devices

This patent is for nanophotovoltaic devices formed from silicon or gallium arsenide having sizes in a range of about 50 nanometers to about 5 microns, and method of their fabrication.

Although there are a number of applications, the patent describes one application which is to inject nanophotovoltaic devices into diseased tissue, e.g., cancerous tissue, and activate these cells by the use of suitable radiation. These cells will generate electric fields in the tissue, causing a disruption of the cancerous cells.

Another day, another neat Solar Tech Announcement.

Spire is an interesting company. They don't seem to get much notice, but they've been around for a very long time. The present CEO, Roger G. Little, founded the company in 1969. He's a Physicist / Ironman Triathlete, and is surely tough as nails by the fact that he's stuck with a business like Solar Energy for so long; through so many years of very unfriendly market conditions. In addition to Solar, Spire has several Medical and Semiconductor Technologies that they produce, and so this new patent seems like a nice little fit between the several divisions of the Company.

Sunday, May 17, 2009

Calculation Central.

One of the fun things that I have been enjoying doing for this blog is to run various calculations that in some way apply to Solar Energy, or Energy in general. Since these things tend to get lost down the blog history, so I've decided to keep a reference to them here.

Note: I would consider all of these to be rough. Since I am typically looking at very general cases, I make assumptions. As much as possible, I try to point out the assumptions in the detail of the article.

Also, I'm typically choosing some specific variable or variables to focus on, so I am probably not calculating exactly what you are looking to know. However, hopefully that doesn't mean that my work isn't some value in giving direction in possible ways to look at a problem and to work out a reasonable solution.

Selected Calculations:

So, you want to buy a solar plant, part 2.

Description: Extends Part 1 by correcting for panel degradation and inverter losses.

So, you want to buy a solar plant.

Description: A rough start at a look of Calculating a Levelized Cost of Energy (LCOE) for Solar.

Part II : Percentage Land Area required for 100% Replacement of 2006 Energy Demand.

Description: State-by-State comparison of Total Land Area required in order to replace 100% of that State's Electricity Consumption.

Percentage Land Area required for 100% Replacement of 2006 Energy Demand.

Description: State-by-State comparison of Total Land Area required in order to replace 100% of that State's Energy Consumption.

For the Survivalists: How much gasoline is one Solar Panel worth?

Description: Comparison between the energy output of typical modern Solar Panels to the energy contained in a Gallon of Gas.

How much is 1% in efficiency worth in Solar?

Description: Discussion of Diminishing Returns in Increasing Conversion Efficiency.

Does Solar Tracking make sense?

Description: Comparison between a Stationary and a Tracking Installation, discussion of potential advantage of tracking in Energy Output.

Real World Estimation of Land Use per Watt - Sunpower

Description: Land Use Scenario using Tracked Sunpower Modules. Expands upon Solar vs Coal, Land Area Comparison, below.

Solar vs Coal, Land Area Comparison, below.

Description: Comparison between Kentucky Coal Output to potential Kentyucky Solar Resource. Ideal Situation. Expanded on in Real World Estimation of Land Use per Watt - Sunpower , above.

A Note on Units of Energy and Insolation.

Description: Description of the concept of Insolation, and description of a rough way to use Insolation as a basis for Annual Solar Energy Output.

Looking forward to 2020.

Description: Scenario for 2020 making assumptions based on 15% replacement of Fossils by Renewables by 2020. Assumptions are very optimistic.

Coal / Solar Cost Comparison - Final Draft.

Description: Comparison between Coal and Solar Costs over the long term, assuming various rates of Inflation. Written prior to Economic Crash, so certain Assumptions should be reworked.

Wednesday, May 13, 2009

Idle Speculation... Counterparties, Derivatives, and Hedging.

I work with a fellow, incredibly sharp, and very well versed on finance with a focus on hedging.

Today we were talking.

He talks about how basically everybody is hedged in all of these ways, so that they'll be assured of returns within some particular range. For instance, a bank doesn't care about whether you pick a fixed or a variable interest rate, because as soon as they make the deal, they're going to hedge it with derivative deals designed to make sure that returns over the period of the loan are within an acceptable percentage range, irrespective of what happens to actual interest rates over that time. Well, it seems that everything works out great as long as none of the hedging Counterparties go under. At that point, you have to have another layer of hedge to insure you against counterparty bankruptcy. Soon enough, it becomes a pretty ugly web of dependent hedging relationships.

Another example would be in the case where you might write, say, 1000 Naked Call Option Contracts on some company. You don't have the shares, but you've just offered to sell 100,000 shares to the Call Buyers IF the price of the stock is above a particular "strike price." At the Option's Expiration Date, if the Calls ended "in the money," then you'd have to buy and deliver a huge number of shares, and you'd take a very large loss on the deal. Well, to protect from losses, you can simply buy a swap from a counterparty, which basically insures you against loss in the case that you had to deliver shares. Having just paid a premium to a counterparty, however, and by putting THEM on the hook for your potential losses, you are giving that counterparty incentive to support your interest in whatever way they can; to keep your calls "out of the money." Of course, your counterparty isn't going to just go on the hook for your losses without a hedge, so they might very well bring another counterparty in on the deal, and so on. In such a way, there could potentially be incredible amounts of money riding on the success or failure of even a small public company, and nobody outside of the loop would have any way of knowing about it. These side deals would all be private arrangements, and they wouldn't leave a tick on a chart.

Well, my first impulse was to suggest that in such a situation, a share price could not move freely because of all the pressure put on it by its associated Derivatives, but my friend corrected me, and suggested that, no, the shares could move to reflect fundamentals IF the Derivatives were in balance in both directions. Of course, normally there would be Financial interests sitting on the other (long) side of the deal. Some of these interests would be the same ones that were placing the original short bets, and long interest could be used as a hedge in and of itself. However, it's not the normal case that I'm worried about. The case that I'd be worried about would be one in which a significant chunk of Wall Street were on one side of a trade, and they eventually had to take their losses and test the fitness of their counterparties. Really, it wouldn't have to be Call Options in particular, it could be the Derivative Hedging of Short Sales, or Naked Short Sales of a target company, that could create a systematic counterparty risk in the case of a big, unexpected price movement.

Last, imagine that you are at a company involved in Investment in the Stock Market, and you are involved with various and sundry counterparties in hedging deals. Imagine that you look at a stock or industry that seems like a promising prospect for future growth. What would you do if you found that your counterparties would take big losses if you went and did something to drive up the price and profit from the long side? Well, at the very least you'd think very carefully about whether it would be worth it to blow up your own counterparties by buying those shares.

I don't know... it's just Idle Speculation.

Thursday, April 30, 2009

FSLR; The Betamax of Solar?

FSLR announced their earnings today. The results were great, particularly considering the overall economy.

I've given FSLR considerable thought in the last couple years, and I remain convinced that they have unspeakable future problems. On their investor relations page, they link to the pdf associated with their Q1 conference call. In it, they mention what they consider to be risks to their business, but nowhere do they mention the risk associated with availability of their critical Tellurium supply. Ok, so maybe they have it all figured out; but nobody's asking, and nobody's telling.

Ok, I don't know, but I want to get an idea of what kind of supply issue they're up against, so I've gathered some info.

Per Greentech Media, FSLR uses 6 grams of Tellurium per square meter. (See.)

Per First Solar, the FS-277 Module is .72m2 and has a peak power of 77.5W. (See.)

77.5W / .72m2 = 107.64W/m2

So, at 6 grams / m2, the amount of Tellurium required per Watt works out to be 6g / 107.64W = .056 g/W.

Well, we know that FSLR is aiming for a bit over a GW in annual production for '09 and '10, so rounding to 1GW gives roughly 55.7 Metric Tons of Tellurium required to produce that GW of modules.

The question, then, is how much Tellurium is out there, and what does it cost?

According to the USGS, the price has ranged from $41,800/MT in 2004 to
$82,000/MT in 2007. The World Supply of Tellurium according to US Geological Survey was 132MT in 2006.

Ah, no problem. If they're using 55MT to produce 1W worth of modules, and they're paying even the high price of $82,000/MT for their supply, then they're only paying a total of $4.5 Million for their entire yearly supply of Tellurium. That's less than a penny per Watt. In fact, during the CC, Jesse Peechel stated, quite possibly accurately, that First Solar's largest cost was glass.

Wait, a problem. Solar is big. A sensible look at the required future scale of Solar Energy puts the annual Global installation rate to be around 30GWp per year by just 2012. What if FSLR wants to maintain a significant share in this market?

Well, as it is today, it appears that over a third of the World's Tellurium supply is required for the production of a single Gigawatt of First Solar modules.
If FSLR were to take 10% of that market, they'd have to produce 3GW of modules, which by today's efficiencies would require 165MT of Tellurium, or more Tellurium than the World produced in 2006! Well, maybe the price of Tellurium is a pittance when the company is demanding only a third of the World supply of material, but I can guarantee that it won't remain so when that company is demanding 33MT MORE than the World's annual supply.

A big part of this problem is that there's no such thing as a Tellurium mine. Tellurium is only produced as a byproduct of mining other commodities, such as Copper. This means that it's very difficult to increase the World Supply independently of the supply of those other materials. If you were to mine Tellurium alone, the cost would be astronomical, and yet if you were to drive up the mining activity in Tellurium's sister elements, then you'd have the affect of driving down the prices of those materials, thus making them into less desirable targets for mining.

What about efficiency gains? Sure, if FSLR is able to pull off a tripling, or even just a doubling of their efficiency, then they could make do with dramatically less material. I can imagine several possible ways that they could do this, but I suspect that it will be a tough path. As it stands, per the CC pdf, FSLR has increased the conversion efficiency of their product by .3% since Q1 of '08. That's simply not going to cut it, particularly if you look out past 2012 when the market gets even larger.

I don't know. They have some very smart people there, and they're working hard in an exciting industry. The particular technology just doesn't seem to stack up to me, though, and like I said, nobody is asking questions and nobody is volunteering answers.

Ah well, in the short term, I'm quite certain that they are going to do great. Wall Street loves them, and they have excellent margins for the time being. They very well might be able to leverage some of that temporary financial advantage in order to open up new technologies to their benefit, so we'll see.

All that said, I'm not short FSLR, and I suspect that to go short FSLR would be a very bad plan.

Also, a final note, it's pretty obvious that I think that the strongest players at this time are out of China, but it's not that I don't like some US Companies. I really like Applied Materials, and Sunpower to name a couple of domestic players.