10.18.15

Dark Days Ahead for Roof-top Solar

Posted in Uncategorized at 10:53 pm by Administrator

If you have read any of my blog posts you will know that I am not a big fan of roof-top solar.

Roof-top solar panels are expensive and inefficient to install. These systems also cause major issues for utility grids because of the need to handle the bi-directional flow of electricity to and from the customer. This additional complexity unfairly imposes additional costs on all electricity users who do not have roof-top solar panels. I have also argued that the value of all solar energy, including roof-top solar will decline significantly between 10:00 am and 2:00 pm as supply begins to exceed demand.

Over the past 2 years some of these concerns have become reality in many parts of the world.

The problems associated with integrating large amounts of roof-top solar into the electricity grid on Oahu have led to a steady decline in installations.

On October 13, 2015 it was announced that the Hawaiian Public Utilities Commission was ending the Net metering program whereby customers with solar panels received a credit for any electricity they returned to the grid. The inequity of that approach was that it equated mid-day electricity generation that was increasingly problematic and would exceed demand on some circuits to expensive peak demand evening electricity that was required by all customers including those that had roof-top solar panels. The new system will pay customers something close to market value for their solar power generation – a value that will be much lower than what was received under the net metering system. Customers with solar panels will now also have to pay a minimum monthly bill to help cover the costs of servicing their more complex inter-connections. Most observers have concluded that the impact will be a further reduction in roof-top solar additions.

Hawaii is not the only place where roof-top solar installations are declining significantly.

The world leader in roof-top solar for most of this century has been Germany. I personally have never understood why a country at a latitude of 48 degrees would spend hundreds of billions of dollars subsidizing roof-top solar when there is very little solar power available in the winter – the peak demand season for electricity use in Germany.

I don’t know if this reality has finally become apparent to the Germans but subsidies have been decreased significantly in the last few years and solar panel additions have dropped pretty dramatically.

As in Hawaii, other jurisdictions with high penetration of roof-top solar utilities are requesting and being granted the right to charge customers with solar planels a fixed monthly fee. They are also being allowed to pay customers market based prices for excess solar power rather than a fixed feed-in tariff.

In Spain the government has dramatically cut subsidies and support for solar power development over the past few years most recently targeting residential battery storage systems. In September the Spanish government won a court case that was an attempt to force restoration of these subsidies.

Most recently the Tennessee Valley Authority published the most comprehensive study I have seen yet on the costs and benefits of residential roof-top solar. The study concludes that the amount paid by TVA for rooftop solar is still higher than the true value to the system despite the fact that the TVA has reduced the payments from $.22/kwh to $.12/kwh since 2012.

When you consider these developments it is difficult to see the installation of roof-top solar panels maintaining the pace of the last few years in the developed world (China is a different story where government mandates will ensure that solar installations continue at an accelerated pace). In my opinion that is a good thing. Development of solar power needs a reboot to take a more rational and less subsidized approach.

Believe it or not I am actually a big believer in solar power. At latitudes below 35 degrees N/S I think it is absolutely the best renewable source available. By pairing concentrated solar power installations which include molten salt storage with photo-voltaic solar panels to reduce costs it would be possible to build plants which can supply electricity 24 hours a day, 365 days of the year (the Gemasolar plant in Spain can already do that). Utility scale solar plants have the added advantages of being easily equipped with sun tracking which significantly increases plant output.

By centralizing solar panel installations it is also much easier to integrate this generation into the regional grid and to supply battery or other short-term voltage stabilization storage technologies. A recent example of how effective this approach can be is the Kauai Island Utility Co-op’s drive to install 30 MW of utility-scale PV solar by the end of 2015 some of which will have battery backup. These facilities will consistently generate more than 50% of the electricity required at mid-day on the island.

For many parts of the world including the Southern United States, Mexico, Southern China, all of India, north Africa, the Middle East and many other areas solar power is the obvious choice when it comes to renewable energy. Innovative projects such as the Khafji Saltwater Desalination plant point to a future where not only energy but abundant fresh water will be available in these areas. Energy storage systems based upon molten salt, batteries, or other technologies need further development and significant R&D funding needs to be directed towards this effort. But there is no doubt that in the long run solar power in equatorial regions has enormous potential.

North and south of 35 degrees latitude I believe that other technologies including wind, geothermal, and hydro-kinetics offer a better value proposition for both subsidies and R&D funding.

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