by Todd Woody
I spotted a rare critter on the streets of San Francisco
this week—a smiling, optimistic businessperson.
Then again, Ron Kenedi is in the solar panel business.
“The big news as I see it is the demand—demand keeps
growing everywhere,” says Kenedi, vice president of Sharp Solar, the renewable
energy arm of the Japanese conglomerate. “What really amazes me every day is
how much demand has grown throughout the world.”
Kenedi is not one for Pollyannaish optimism—he started in
the business around the time Ronald Reagan took down Jimmy Carter’s solar
panels from the White House roof.
“I used to have to go out there with a sandwich board on to
get people interested in solar,” he says. “Now I can’t even walk down the
street without people talking to me about solar and wanting it on their home
and businesses.”
That’s because there’s a boom in so-called distributed
generation under way—placing solar panels and pint-sized photovoltaic farms at
or near where electricity is consumed.
Until very recently, distributed generation just couldn’t
compete on cost with Big Solar—massive megawatt solar thermal power plants
usually located in the desert.
Big Solar has had the edge by the dint of the gigawatt-size
deals utilities have struck with developers like BrightSource Energy, eSolar,
and Solar Millennium. Large solar thermal power plants—which use mirrors to
heat liquids to create steam that drives a generator—could make electricity
cheaper than photovoltaic panels, which produce electrons when the sun strikes
semiconducting materials.
Now that’s all changing. Over the past year, a number of Big
Solar thermal projects have become mired in disputes over their impact on
fragile desert ecosystems and the lack of transmission lines to connect them to
cities. In December, California’s powerful Democratic senator, Dianne
Feinstein, introduced
legislation to ban renewable energy development on more than a million
acres of the Mojave Desert she wants to protect as national monument.
Photovoltaic module prices, meanwhile, have plummeted by about
30 percent over the past year thanks to an oversupply of modules and the rise
of low-cost Chinese manufacturers. Thin-film solar companies, which make solar
cells that use little or no expensive polysilicon and which layer or print them
on glass or metal, began to produce solar modules for less than a one dollar a
watt—long considered a key milestone for making solar competitive with fossil
fuels. Though less efficient than conventional crystalline solar modules,
thin-film solar cells can be manufactured more cheaply, making it particularly
suited for use by photovoltaic power plants.
Distributed solar’s new competitiveness can be seen in a
spate of deals and initiatives over the past few weeks as utilities turn to
small-scale solar to help meet mandates to obtain a growing percentage of their
electricity from renewable sources. As of today, 1,300 megawatts’ worth of distributed solar
will be installed over the next five years—at peak output those arrays will
generate as much electricity as a big nuclear power plant.
California regulators two weeks ago approved Southern
California Edison’s five-year program to install 500 megawatts of solar arrays
on commercial rooftops. They also recommended that PG&E, the big Northern
California utility, be given the go-ahead for its own 500-megawatt distributed
solar program to place small solar farms near substations and cities that can
plug directly into the grid.
And both utilities revealed additional distributed solar
deals this week. Southern California Edison agreed to buy 50 megawatts from
three small-scale solar farms to be built by San Francisco’s Recurrent Energy
in Kern and San Bernardino Counties in the eastern part of the state.
On Monday, PG&E filed a request that regulators approve
a contract with Eurus Energy America, a
joint venture between Tokyo Electric Power and Toyota Tsusho, for 50 megawatts
of solar electricity from three power plants to be constructed near Fresno.
“We’re seeing the rest of the industry cotton on to what
we’ve been saying, distributed solar done at the right size can scale,” says
Arno Harris, Recurrent’s chief executive. “Distributed solar is faster on
permitting, on environmental issues, and interconnection to the grid.”
For Sharp Solar, the biggest demand for its thin-film panels
comes from utilities. “That’s what’s opening up the utility sector for Sharp—it’s a very robust market,” says Kenedi.
(And lest you think this is just a California phenomenon,
the New York Power Authority last week announced a program to
install 100 megawatts of photovoltaic panels on rooftops and at ground stations
over the next four years.)
The Sacramento Municipal Utility District showed, just last
month, how fast the distributed generation market is growing when it put up 100
megawatts of photovoltaic projects up for bid and sold out the allotment in one
week.
But the shocker of the SMUD deal is that the utility is not
paying a premium for solar electricity, according to Adam Browning, executive director
of Vote Solar, a San Francisco
nonprofit that promotes renewable energy (and an occasional Grist contributor).
I’ll spare you the utility industry calculus of “time
differential avoided costs,” but Browning has run the numbers and believes that
SMUD will pay essentially the same price for solar electricity as it would for
fossil fuel-generated power when demand peaks. (Solar farms typically supply
peak power as their output coincides with the time of day when demand spikes.)
“The point here is that this is an entirely revenue neutral
investment for SMUD,” Browning says. “They got solar electricity for what they
would have paid for fossil, which is a significant milestone.”
SMUD officials did not return requests for comment so I
could not verify those numbers with the utility, but given that solar
developers must put down a deposit of $20 a kilowatt for winning bids—that’s
$100,000 for a five-megawatt project—it seems unlikely there were many
speculators in the bunch willing to walk away from a six-figure commitment.
Truth be told, we’re going to need every kilowatt of green
electricity we can wring from Big Solar, distributed solar, wind, waves and
geothermal. But the rise of distributed solar generation will help ease the
load as well as the environmental pressures from developing other forms of
green energy.
Related Links:
Large-scale distributed energy is here: Recurrent Energy signs 50MW power purchase agreement
How innovative financing is changing energy in America
Let the era of solar wholesale distributed generation begin
