“Solar Start-ups Set New Efficiency Records”- Will Solar Power Really Compete with Coal and Natural gas by 2020?

A recent article notes that 2 U.S. solar energy startup firms, Semprius and Alta, have broken solar-panel efficiency records by using GaAs (Gallium Arsenide) cells as opposed to the conventional Silicon. Although this material is more expensive, the fact that it’s much more efficient at absorbing sunlight means overall it could be more cost effective than conventional solar cells per kwh produced [1]. The cells made by Semprius are basically a completely new design, using mirrors that concentrate light onto extremely tiny cells, and these 3 layers of cells (as opposed to 1 normally) can also absorb a wider spectrum of the sun’s energy.  For this reason they achieve 33.9 % efficiency compared to 15% currently for the average solar panel. Furthermore, these cells aren’t prototypes unlikely to actually be sold on the market, but rather “designed for commercial use” [2].

Semprius solar panel

Source: Semprius

 Of course, the issue in deciding whether an alternative energy is viable is almost always the cost per kw-h of the electricity produced by it. To this end, Semprius’ panels only use 1 micron thickness of GaAs and a novel production technique using chemical etching on an “inexpensive substrate.” [2] In MIT’s “technology review” article, Joe Carr, CEO of Semprius, believes the panels will eventually produce electricity at a cost of 10 cents per kw-h. According to the eia (U.S. Energy Information Administration), the national average retail cost of electricity (the price consumers pay to companies per kw-h) is 9.83 cents [3]. That means that if Semprius’ prediction becomes reality, there’s a decent likelihood that solar energy will make a significant part of the U.S. electricity portfolio. However, I doubt that it will match coal’s use or completely displace it until at least 30 years, depending on a number of political, technology, and climatic factors. Furthermore, the DOE (Department of Energy) predicts that if the price of solar energy reaches 6 cents per kw-h by 2020, “solar panels would account for 15-18% of US electricity generation by 2030” as opposed to less than 1% currently [1].

A huge issue with alternative energy sources is also government subsidies. In the engineering finance class I took last semester, we studied the economic feasibility of alternative energy in items such as hybrids cars, electric cars, and solar panels in depth. The study accounted for a huge variety of parameters, including: inflation, value of the panels, psychological effects of the users, uncertainty in solar flux, deterioration in panel efficiency over time, aesthetic and practical effects of the panels on home value, the real increase in electricity cost (without inflation), change in usage between months, and the social cost of CO2. This was done from society’s and an individual’s perspective. The study concluded that current panels are highly economically unfeasible, from both perspectives, for 2 different setups, even with large government subsidies. This was based on Sharp panels with a nominal efficiency of 13.7 %. Society lost an average of $18,000 over the 25 year panel life and the user lost over $7,000, even with subsidies, and that’s for 1 house! However, interestingly enough, our analysis concluded that the panels would have to be 29-31 % efficient for the user to break even, but 39-57 % efficient for society to break even since society pays for subsidies through taxes. According to the “technology review” article, CEO Carr believes he can reach the 10 cents per kw-h target “without the help of government subsidies” [2].

For the reasons outlined above, I’m a bit skeptical but still optimistic for the future. As noted in the end of the last paragraph, the new panels have reached an efficiency that could be feasible for the user. I believe that it’s only through new technological advances such as Semprius’ that solar energy has a chance to be successful in the marketplace, and this new technology seems very promising if, and only if, it can be implemented in the manner desired. Right now, coal and natural gas account for 45% and 24% of electricity generation in the U.S., respectively [3].  If this technology continues to advance at the rate computer technology has, for example, I believe the prediction is surprisingly reasonable.  My skepticism is about the cost estimates and feasibility of mass production, because no matter how promising a technology and how “green” any given person is, it doesn’t matter if the product is too expensive to actually use. I hope Semprius’ partnership with Siemens, who have “experience in manufacturing and in building complete solar farms,” will actually “make it easier to secure financing from banks,” and thus make the product cheap enough to make a real difference on a national scale.

[1] http://www.physorg.com/news/2012-02-solar-start-ups-efficiency.html

[2] http://www.technologyreview.com/energy/39624/page1/

[3] http://www.eia.gov/electricity/

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3 Comments

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3 responses to ““Solar Start-ups Set New Efficiency Records”- Will Solar Power Really Compete with Coal and Natural gas by 2020?

  1. bradystoll

    New technologies always have the added disadvantage of being new. Its like beating an incumbent in a gerrymandered district – they get to make all the rules that you have to fight against. When calculating energy economics, people do not go through and account for psychological effects of having friends or family members die in a coal mining accident, or the aesthetic value of the land destroyed by mining, not to mention the health impacts of breathing particulates and other byproducts of burning coal. These costs only factor into renewable energy as we attempt to make the switch to cleaner energy production via technologies such as solar power.

    Hence i would claim that your analysis that solar power requires efficiencies as high as 57% to break even for society is an unfair comparison, unless you also account for the additional costs to society of medical bills for those affected by the production and use of traditional power sources, the cost of climate change impacts, the aesthetic impact of land use in mining and power plant siting.

    A carbon tax brings at least one of these issues to the forefront, helping give an economic benefit to one of the less tangible benefits of solar power. Even with this, solar power is still more expensive than traditional sources, but the difference is not so great as you paint it, and is dropping.

  2. cbs26

    Hello Veggeto121: Could you please elaborate on the parameters of the solar study so we can better understand your point? It seems strange to conclude that the only route to allow “society to break even” on solar PV is through an increase in efficiency to 39-57%. Couldn’t this break-even price also be achieved if the cost of the panel simply fell significantly, say by 50%? Why do you take efficiency to be more important than the levelized cost per kwh? Is it because you’re taking account of a constraint on available roof space on the average US home? Secondly, why did you choose to use Sharp panels as opposed to a brand that produces a cheaper levelized cost per kwh?
    Thanks, Chris

  3. veggeto121

    bradystoll: The study did in fact include “additional costs to society of medical bills” by including a social cost for CO2 factor; this factor also includes any other effects of CO2 that individuals can be reasonably compensated for, monetarily speaking. If you’re interested, the break-even values of CO2 varied between $175 and $315 per MT of CO2. I believe the current cost is $8 per MT of CO2, but don’t quote me on that. Either way the difference is in orders of magnitude, so a significant carbon tax wouldn’t be too far- fetched if the government really wanted to promote alternative energy sources. The 57% figure is so high (as I noted) because these technologies currently use government subsidies paid for by tax dollars. The break-even value for individuals is much closer to to the efficiency level that these new panels achieve.

    cbs26: You are correct. The only reason I specifically cited the break-even efficiency number is because the article mentions a leap in efficiency. There are other ways to achieve the break-even point which could include lowering the prices of the panels as you mentioned, among other things. I think the main reason the Sharp panels were used is because that happened to be the specific brand used by our professor on his actual house. The Sharp panels might also have been chosen because they represented a typical efficiency level and upfront cost, although I’m not sure about this point.

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