Saving up the sun

Power & Energy talks to Mike Taylor of the Solar Electric Power Association and the Solar Energy Industries Association’s Rhone Resch about the challenges facing solar as it begins to play an ever more prominent role in the renewable energy mix.

“We cannot wait 10 years before we start to address climate change”

SEPA’s Mike Taylor brings Power & Energy up to date on the issues of storage that affect solar’s viability as a renewable energy source.

Solar energy, in common with other renewable energy sources, has been enjoying a surge in popular support, both here in the US and internationally. But questions remain, primarily around reliability and ease of transmission. Mike Taylor, Director of Research and Education for the Solar Electric Power Association, points out that solar energy is more complicated than most people think.

“Solar energy presents a little more complex picture than traditional renewable or centralised generating sources,” he says. “There’s a market for distributed solar as well as centralised solar. With centralised solar projects, there are a large number of announcements out there, a few thousand megawatts; at that scale, these projects will be able to fit into the existing transmission system.

“But as the industry scales up even further, we will start to see transmission issues, similar to the wind industry, as being a limiting factor within the centralised project growth. They may diversify away from corridors where wind energy is; solar and wind areas of development aren’t necessarily going to overlap, so they’ll potentially be separated from one another. Solar is not going to necessarily align with the existing wind projects.”

Taylor does concede that the general issue of transmission is similar to that of the wind industry, with both sectors experiencing rapid growth. “These solar projects need to find ways and transmission paths to get into the grid and find their way to load, and there are a number of groups and studies out there that are working diligently on this. The problem for wind industry is here and now, whereas with the solar industry, the centralised projects are largely still in the announcement phase, so we haven’t run up against any practical, tangible limitations based on installed projects at this point.

“You can certainly forecast that that would happen, but I think we’re still a few years away from seeing that as being the driving force in the industry. A lot of these announced projects have financing and permits to get; they have a number of issues to work their way through.”

Taylor points out that by contrast, the other half of the solar industry, distributed solar, is a unique niche in which residential, commercial and utility projects are being done on a localised level. He explains that this is being accomplished, in some cases, through random disbursement, when a homeowner or commercial businesses decides to utilise solar. “A lot of the utility announcements have been for large aggregated projects that are individually one to two megawatts,” he adds. “They sit well within the distribution system, but they’re announcing them in chunks, anywhere from five megawatts up to 500 megawatts.

“So you’re seeing these distributed projects being proposed and moving forward at a scale that matters. I call them ‘distributed power plants.’ The utility puts in one to two megawatt projects at 100 different locations around their territory, so they can fit within the urban grid on the distribution system. They can be strategically located so they’re not overburdening one distribution time. We’re starting to see this model being explored, especially by the California utilities, and Duke Energy in North Carolina and PSE&G in New Jersey are also stepping up with this model.”

According to Taylor, the growth of distributed solar changes the nature of the issues: instead of it being a transmission problem or a problem on the distribution line, those installing distributed solar must work with local city and building and permitting offices, signing leases with large big-box warehouses or big-box office stores. He believes it is an innovative diversification that is unique to the solar industry.

Storage issues

One of the major issues related to solar energy, and renewables in general, is the question of storage. Taylor says that at the distribution level, storage is not as critical, because it is integrated into the system. It’s associated with load in a lot of cases, and the relative amount of solar to the load is not so much that it causes huge problem. However, as penetration levels increase on any particular localised area, isolated issues do start to occur.

From an operational standpoint, Taylor says that having these individual solar systems with a small amount of storage – on the order of 15 minutes to an hour – could assist in the coordination of the variability that a utility might experience. “As we get higher and higher penetrations on the distribution level, a small amount of storage can go a long way to helping 75 percent of the problem.

“You have two factors that are reducing the risk of that variability. One is geography: you’ve got all of these solar systems spread out over a 50 to 100 mile area. Not all of them are going to be increasing in power at the same time, so you’ve got geographic risk mitigation. You could also see, as utilities move forward with smart grid initiatives, smart meter initiatives and a small amount of storage integrated into these systems, that it becomes a much more powerful way to deploy this distributed resource.

“It’s no longer about passively reacting to the sun and injecting the power into the grid, it could become a very usable and tangible resource that utilities can deploy. But that’s still in the near future, when these do need a small amount of storage. You do need smart grid capabilities and better communication capabilities. So that’s a near to medium-term ideal.

“On a centralised system side, you have to again bifurcate it by technology, whether it’s concentrating solar power and you’re using thermal storage, or whether it’s photovoltaics. At this point, there are no large-scale solar storage announcements for photovoltaics. There are no ready solutions for having a large amount of storage for centralised photovoltaic projects. There are for projects having 100-megawatts of storage that can deploy for an hour or two hours, but for larger projects it’s not technically or economically feasible.”

The storage picture is looking better for thermal storage on the concentrating solar power side. Taylor cites as an example of this projects in Spain that have integrated solar thermal storage, and research being done in the US, including the announcement for a project with fixed hours of storage in Arizona called Solana, for which Arizona Public Service will be purchasing the power from Abengoa Solar.

Thermal projects generally have slower ramp rates than PV and wind, as Taylor explains: “They can adjust the flow rates of the fluids inside and, even without storage, manage them in a way that’s a little more friendly to the grid. There’s a better buffer in the way they operate, because thermal fluids have an inertia that you can manage. For example, if you know that you see clouds coming across the horizon, you can manage that.

“But pairing it with three to six hours of storage does allow you to deploy this resource in a way that can benefit the utility grid and the project, in the sense that the better your project can perform and correlate with peak, providing a firm capacity backup, the better the economics of the project should be. You should be compensated for that benefit you’re providing to the grid.”

Coming events

At the time of our interview, SEPA was busy with preparations for the annual Solar Power International conference in Anaheim. The conference, organised jointly with the Solar Energy Industries Association, attracts more than 22,000 attendees from both electric utilities and the solar industry.

“It’s in the top two in the world, in terms of the size of the conference,” Taylor says. “It’s an expo and a conference, with more than 45 sessions that attendees can go to. We also have a large exhibit hall that has more than 800 exhibitors and in a few hundred thousand square feet.

“Anyone who is anyone in solar in North America and the western hemisphere, and increasingly, internationally, comes to this event to understand and meet with electric utilities. That’s where SEPA’s niche is, in coordinating events and sessions and workshops for electric utilities – networking events so people can meet each other and get to know the solar industry. The solar industry is there. The finance people are there. The installers are there. Pretty much anyone who is into the solar market goes to this conference.

“There are a lot of solar and renewable events occurring: they’ve increased precipitously in the last two years. Because our event is organised by the two solar non-profits in the United States, we like to think we’re neutral to the profit motive. Revenues from this drive the work that SEIA and SEPA do to try to help feedback programmes for, in our case, utilities, and in SEIA’s case, for the solar industry. We’re taking the proceeds from this event and driving them back into the respective membership and industries to help facilitate the marketing even further.

“What always surprises me is that the conference holds 4000 or 5000 people. The other 15,000 to 20,000 people are coming to go to the expo and to network and to learn about technology and to have meetings with each other. They’re not there to sit in conference rooms and watch presentations. They’re there to do business.”

Mike Taylor is Director of Research and Education for the Solar Electric Power Association.

---

History of SEPA

The Solar Electric Power Association is a non-profit, business-to-business organisation that works primarily with electric utilities across the United States. Its aim is to bridge the gap between the solar industry and the electric utilities, helping to facilitate the use and integration of solar power.

The Association aims to help the electric utilities with their understanding of markets and technology and to help create dialogue between other electric utilities, so they can learn from each other, as well as with the solar industry. SEPA has more than 700 members, 110 of whom are electric utilities. Most of the major utilities across the United States are members of SEPA, and there are also a large number of solar industry members interested in learning about the utility market and utility issues so they can understand how we can facilitate the market through and with utilities, rather than against and opposed to facilities.

---

Solar Power International

Solar Power International (SPI), previously called Solar Power Conference and Expo, was created in 2004 when the Solar Electric Power Association (SEPA) and the Solar Energy Industries Association (SEIA) joined together in partnership to create a business-to-business solar conference and expo.

With an industry growth rate of more than 40 percent per year, the two associations felt there was a need for a single event in which industry could come together with potential customers, policymakers, investors, and other parties necessary for continued rapid growth.

The event, held annually at the end of October, has grown from 1100 attendees to more than 22,500 in five years.

---

Rhone Resch of the Solar Energy Industries Association explains how solar fits into the energy puzzle.

Long before the arrival of the American Recovery and Reinvestment Act, Rhone Resch and the Solar Energy Industries Association was working behind the scenes to highlight solar as a viable solution to America’s energy worries. With some of the world’s best solar, the US is well placed to create energy from the sun and has the opportunity to leverage solar to play a pivotal role within the country’s energy mix.

However, Resch does admit that solar currently has some shortcomings. “Although solar isn’t more cost effective at the moment, it certainly has the potential to be much more cost effective than traditional sources of fossil fuels,” he says. “In large part it’s because you manufacture solar. You don’t mine it or drill for it, and because of that you’re able to scale up the manufacturing and drive down costs per unit; and as we do, so you will see the price of solar continue to go lower and lower while the traditional forms of energy continue to go higher.”

New jobs
Solar’s emergence as a viable alternative energy source is already beginning to show across the US. Attempting to kill two birds with one stone, President Obama’s tactic of deploying further jobs into the solar industry will hopefully meet the need of America’s rising unemployment rate. Obama has pledged to invest US$150 billion into creating five million new ‘green collar’ jobs – solar manufacturing and installation forming an important part of that number.

Resch notes that those states that have been hardest hit by the recession – Ohio, Michigan, Indiana and Illinois – are those that are now creating and filling solar employment positions. Workers made unemployed in the automotive or other manufacturing sectors are now turning to solar; tradesmen are being employed to install solar.

“When you install solar you’re using the tradesmen, the backbone of our economy,” says Resch. “We’re re-employing those who have been let go by industries that can no longer survive in the United States; and we’re giving new opportunities in an industry that is sustainable, that provides good quality jobs, and well-paying jobs for the future.”

Despite this, integrating solar as a vital part of the country’s energy mix is no easy task. In the second quarter of 2009, the SEIA spent US$54 thousand lobbying the government on solar power, whereas Chevron spent US$6 million to further its own interests. The capital funds of fossil fuel corporations are much greater and have traditionally held the lobbying power in Congress. Key to overcoming this is presence, explains Resch. He notes that every quarter the association is increasing its presence and educating Congress on the value of solar energy. “It’s important, not necessarily to just look at the numbers of dollars spent, but to look at some of the accomplishments that we’ve achieved over the last year and to see the return on the investment of those dollars.

“For example, in the bailout bill in October of last year we got a long-term extension and expansion of the tax credits for solar energy in the United States, and that’s a 30 percent tax credit for businesses. It was expanded to be a 30 percent tax credit for homeowners as well, which is an eight-year extension, so that’s a huge victory providing stability for our industry to grow in the United States.”

He also points to the 19 provisions in the stimulus bill for solar energy companies, significantly more than the oil and gas industry. The SEIA has been very strategic in working with Congress to ensure its policies and incentives are heard, and the market is likely to expand quickly. “What’s critical is that we’re getting the industry engaged and to appreciate the role that Washington can play in the energy sector,” says Resch.

“That means inviting their congressmen out to ribbon cuttings or openings of new factories. To invite senators to briefings on energy. To visit them when they come to Washington and tell them about the new employees that they’re hiring and the new technologies that they’re developing. Combined, what this creates is a grassroots capability that has the potential to be second to none, and the grassroots is absolutely critical if we are going to be successful in Washington.”

Since the American Recovery and Reinvestment Act was announced, the DOE has systematically been providing awards and funding for solar, for R&D projects or university partnerships to addresses the technology barriers that create the high cost of solar usage. The number of solar awardees for the funds is high, but Resch explains that the technologies aren’t commercial yet. “We certainly can expect the R&D investment to result in new products in the next several years,” he says.

He notes the success of the provisions of the stimulus bill for the solar industry, which are now starting to pay dividends, such as making the investment tax credit refundable. By turning it into a grant, applicants can now receive a check from the federal government for 30 percent of the cost of the system, rather than a 30 percent tax credit. As well as this, the stimulus bill also created an expanded loan guarantee programme and a new tax credit for manufacturing.

“All of these are critical to address some of the challenges we face in a recession economy. Specifically, that those companies who used to invest in solar projects last year may not this year, because either they’re not loaning money on the debt financing or they don’t have the tax equity on the tax side, and subsequently we found at this time last year that investment dollars were drying up for the solar industry. We were able to address both of those issues in the stimulus bill and we’re starting to see in the third quarter the demand for solar increase significantly due to these new programmes,” he says.

Solar transmission
One of the worries surrounding a big change in America’s fuel mix is how the various types of renewable sources will fit into the grid, given that the transmission structure was built for the traditionally dominant fossil fuel resources. Resch explains that solar fits in many ways; one being distributed generation capacity. “Solar generates electricity at the point of consumption. By putting solar on your roof, you’re putting a small power plant on your home or your business that will provide a substantial amount of its energy, so it relieves some of the stress on the grid because those electrons come from the solar panels on your roof rather than a power plant that may be 100 miles away.

“So greater use of distributed generation certainly helps to alleviate stress on the grid and cuts down on the need for major expansions. The second is that solar can be used by utilities to alleviate some of the hot spots: certain areas of the grid have more congestion than others. By putting solar on buildings strategically in those areas, again, you can alleviate that stress on the grid.

“The third is that you can build solar farms in the dessert or on landfills or on brown field spaces or other areas and can directly connect to interstate transmission lines. These solar farms could range from five megawatts to 500 megawatts, and depending on the transmission infrastructure you can connect some smaller projects to existing transmission lines that have the capacity to absorb more electrons. Now, you may not be able to build a 500 megawatt power plant on that line, but you certainly can build a 50 megawatt power plant on that line. You will see solar start to improve the efficiency of transmission by making sure that the transmission lines are being as fully utilised as possible.

“Finally, in the long run, we need to build new transmission in the United States. We have partnered with the American Wind Energy Association and developed a study and recommendations called Green Power Super Highways. It outlines all of the recommendations that are necessary in order to build new transmission in this country. It takes more than 10 years to build a new transmission line, and we cannot wait 10 years before we start to generate electricity from solar farms in the southwest. We cannot wait 10 years before we start to address climate change, so the siting and the financing and the permitting of these new transmission lines is critical,” he says.

Resch believes that it won’t be long before solar reaches a par with traditional fossil fuels. Solar is already cost competitive in certain areas of the country and is a viable cost alternative for natural gas. Natural gas is used to generate peak electricity, as well as base loads, and aligned with the time that solar can be maximised. He notes that solar is displacing the most expensive electrons to consumers: “Peak prices in California vary depending where you are, but in PG&E they’re US$0.37 per kilowatt hour and in San Diego Gas and Electric in the south, they’re US$0.42 per kilowatt hour.

“Those are double the current price of electricity, and solar is the lowest cost option in those areas already. It is critical is that state governments create an accurate price signal for electricity that not all electrons are the same. That you can’t have the same rate 24 hours a day, seven days a week. Rather, when the utility is paying more for its electricity, consumers should pay more for their electricity. That becomes a very clear price signal in the marketplace that will allow solar to compete more with traditional fossil fuels.”

Public attitudes have long supported solar; promoting its benefits to the legislatures is the hard part. A recent poll conducted by Kelton Research on behalf of the SEIA showed that 92 percent of the American public want the US to use more solar energy. Support from solar transcends party lines and economic strata.

“People strongly support greater use of solar energy – there are not many things in the world that achieve a 92 percent public support rate. It’s putting us up in a category with puppy dogs and ice cream in terms of popularity and that is fantastic, but what we also need to do is to be smart about it and to make sure that it’s not just a technology that people like, but a technology that people start to utilise and that we get Congress and the state governments to support greater use of solar energy.”