Solar continues to gain in the U.S.

Posted on January 13, 2014 by meisele

According to SolarBuzz, http://www.solarbuzz.com, The U.S. installed 4.2 gigawatts (GW) of solar power during 2013, a fifteen percent growth over 2012.

The U.S. has passed Europe to become the second largest geographic market for solar, after Asia. These market gains continue, in spite of uneven policies by state and federal governments.

Utility and industrial scale projects accounted for more than 80 percent of new solar capacity. Good project finance rates and demand for projects from utilities to meet state renewable requirements has driven growth, accounting for over three-fourths of these large scale projects. The remaining 20 percent was installed mainly on residential rooftops.

2013 State rankings

California was again the leading state in the U.S. for installed solar PV in 2013; North Carolina and Texas expanded the fastest. Maryland and Colorado dropped from the list of top states. These changes mainly result from changing state policies and incentives for solar, with some states improving incentives and some states eliminating past programs.

Will this be the Natural Gas decade?

Posted on October 30, 2013 by meisele

Nuclear plants are suddenly very unpopular around the world, since the Japan tsunami accident of 2011. Coal, while plentiful and cheap, is a climate change antagonist and contaminates the environment. Several economic trends favor natural gas. Lets look at four of the biggest.

1. Asia boosts imports of natural gas Japan already was the world’s biggest importer of liquefied natural gas before the earthquake upended its nuclear industry. Japan has closed all of its 54 nuclear reactors. As recently as 2010, nuclear reactors supplied 30% of Japan’s electricity. This electricity capacity is being replaced by natural gas fired plants, through imports of liquefied natural gas (LNG). China and Korea are also boosting their contracts and sources of natural gas.

2. Fleet truck conversion to natural gas accelerates Lowes already has 7% of its trucks on gas and could reach as much as 20% within two years. UPS plans to buy 1,000 natural gas trucks by the end of next year. FedEx will shift 30% of its trucks to natural gas over the next decade. New natural gas truck engines are coming to market this year from Cummins and Volvo that can handle vehicles up to eighty thousand pounds. Long-distance truckers Con-way Inc., Swift Transportation and Werner Enterprises are testing compressed natural gas and liquefied natural gas powered trucks. T Boone Pickens has led an investment effort toward a nationwide fueling and repair infrastructure for natural gas. His Clean Energy Fuels Corp as well as Pilot Flying J have been building the infrastructure for long haul trucks to fuel with natural gas for two years. For shorter hauls, this year about 60% of all new garbage trucks purchased use natural gas. At Waste Management, 90% of its future purchases will be natural gas fueled. And many city public bus systems are substantially converted to natural gas.

3. European demand for natural gas is rising and sustained. Europe collectively is the world’s biggest energy importer. The energy import dependency of Europe is forecast to continue for the next decade. And the European Union has strict environmental controls on electricity power plants that have shifted demand from coal to natural gas in 2013. Germany will close all of its nuclear power facilities by 2022. In addition to electricity, natural gas is preferred for home heating in Europe in winter. With high prices and strained business relations with Europe’s leading historical natural gas supplier, Russia’s Gazprom, their market share has dropped from over 50% in the past to about 30% this year. For example, In Britain, BG Group PLC has signed a contract to import U.S. natural gas, and companies are exploring for new supplies.

4. LNG terminals for U.S. exports of natural gas U.S. companies are looking at building export terminals in at least eight locations. The U.S. Department of Energy has approved four terminals and four more are in approval cycles. Cheniere Energy Inc. is furthest along with its project at Sabine Pass, La., The Sabine Pass LNG Terminal commenced service in April 2008. Sabine Pass became the world’s largest LNG receiving terminal in 2008, and will be the first LNG export terminal online in the U.S. In the next five years, the U.S. will become an overall exporter of natural gas.

All of these megatrends suggest that although current supply is plentiful and prices are historically low for natural gas, the new uses of natural gas and competition for sourcing in the world economy may make this the decade of natural gas.

Obama on climate change: big talk, not much action

Posted on June 26, 2013 by meisele

The President’s climate change program offers nothing new to impact carbon emissions.

On June 25, President Obama announced a goal of curbing greenhouse-gas emissions 17% from 2005 levels by 2020. The key program to accomplish this is “…establish carbon pollution standards for both existing and new power plants.”

This would be the first-ever federal effort to regulate greenhouse-gas emissions from electricity generating power plants, the source of about one-third of such carbon emissions in the U.S. The main strategy is to reduce the use of coal, in favor of cleaner, less carbon emitting fuels, mainly natural gas.

Obama is only a decade behind! In the past decade (see charts), the electric utility industry has already reduced its coal usage by over 1/3, from 51% of total electricity generation in the U.S. to 37% in 2012, as reported by the Nuclear Energy Institute .

Natural gas has taken up all of the slack, because natural gas fired plants are physically smaller, can be situated near customers in large cities, have much shorter regulatory approval cycles, and because horizontal deep fracking drilling has made natural gas plentiful and cost effective, now and in the future for North America. Over 90% of the new capacity for electricity currently in the approval process in the U.S. is for natural gas fired plants. Natural gas’s portion of total electricity will continue to rise, with or without regulation by the federal government.

President Obama’s plan includes other measures meant to reduce emissions, including $250 million in federal loan guarantees for cleaner fossil-fuel energy projects; new fuel-economy standards for heavy trucks; and greater cooperation between the U.S. and major economies including China, India and Brazil. These proposals are either too small to have a meaningful impact, or they lack any specific proposals that could achieve meaningful results. Big talk, but little results will come.

Mr. Obama’s proposals don’t require congressional approval. One can expect legal and congressional challenges to regulating carbon emissions from power plants. But the electric utility industry will continue its progress away from coal, with or without those regulations.

Darkness before the (solar) dawn

Posted on April 16, 2013 by meisele

How could it happen? On March 4, the board of Suntech Power (STP) fired its founder and chairman, Zhengrong Shi, replacing Shi with Susan Wang, a Suntech director. This was the second demotion for Shi, who lost his job as chief executive officer last August.

Suntech reported losses of more than $1Billion in 2012 after making a profit in 2011. And, Suntech is being forced by eight banks into bankruptcy after defaulting on $541 million of convertible bonds due March 15. The company’s finances are being investigated in China.

A global supply glut and cuts to government subsidies for alternative energy in Europe has spurred losses for Chinese solar manufacturers since 2011. Suntech, with the largest industry manufacturing capacity, but also the largest debt of any Chinese module maker, was particularly vulnerable to the price and demand pressures in the solar market.

Suntech’s downfall is as unimaginable as the New York Yankees going to the minor leagues…. Dr. Shi is the superstar scientist, educated in prominent Western universities, who founded Suntech in 2001. Suntech was the highly visible, successful international growth company created in the modern Chinese way, with world-wide market presence, leading technology, and the world’s largest factory capacity financed from state backed lenders. The results have been stunning for a decade: listing on the New York Stock Exchange in 2005, number three word-wide photovoltaic supplier by 2006 as well as supplier to the Olympics, and the world’s solar module market share leader by 2009, with modules that are world class in efficiency. With Suntech in the lead, China was clobbering the U.S. and Germany and all comers in solar.

The right stuff

What will happen to Suntech and its 2 gigawatts of solar capacity? For the long run, Suntech has all the right stuff; leading technology, modern manufacturing capacity that will serve the market for a decade or longer, and world wide application and sales acumen.

Excess dynamic random access semiconductor memory (DRAM) in the 1980s and excess optical fiber data transmission capacity in the 1990s resulted in a surge in development to utilize the unused capacity, as well as a surge in acquisitions and industry consolidation to buy and deploy the assets for a fraction of their cost. I predict the same will happen with Suntech.

On the asset acquisition side, already reports are surfacing of interest from the government of Wuxi, where Suntech is headquartered, to find a buyer or financier. Rumors of Warren Buffet’s interest have been reported. I expect more, quality players will circle the field where Suntech plays, looking to garner a leap forward in capability and capacity, at a fraction of the normal cost.

A bright solar morning ahead

At post bankruptcy prices, the marginal cost to produce a photovoltaic panel with Suntech’s factories could be as low as 10 to 20 cents per kilowatt, essentially just the price of the raw silicon, currently dropping quickly, plus a small operating cost. This is a whopping advantage in the market, and a huge accelerator for large scale solar installations. At 15 cents per kilowatt, solar is cost competitive with utility scale gas fired electricity plants. As companies, governments and utilities look at ways to insulate themselves from future fuel cost shocks, solar from Suntech’s factories is going to look super attractive.

As Shi Dinghuan, president of the Chinese Renewable Energy Society and an adviser to the State Council, told Bloomberg News, “the government won’t let this well-known company enter catastrophe easily.”

The days currently look dark for Suntech and the solar industry in total. But today’s excess capacity and pricing pressures are setting the stage for an amazing growth spurt in the next several years, putting a new light on the solar market.

Energy letter to Santa

Posted on December 11, 2012 by meisele

Dear Santa, It’s that time of year when kids young and old dream big dreams. Here is our big dream list for energy.

image courtesy Any Tots

1. “The Lady in Red, is dancing with me…” Take all the red tape in Washington for liquefied natural gas and use it to wrap more presents instead. You’ll need thousands of yards of the stuff to wrap a several state-of-the-art LNG facilities, for U.S. exports. Save a few yards to wrap Chris de Burgh’s beautiful song in.

2. “The answer my friend is blowin’ in the wind….” Please send a copy of Dylan’s song and a multiyear, stable production tax credit program to our wind energy friends.

3. “Baby you can drive my car.” Our electric car industry needs a 300 mile, one hour rechargeable battery system. Can that be so hard to fit under the tree, along with the Beatles tune?

4. “Let the Sunshine In…”, how about 25% efficiency and a copy of the 5th Dimension song for every silicon photovoltaic module maker?

5. “Jive Talking”, the Clean Coal marketing hype has far outweighed the actual results. Since we need coal for decades, how about some real sequestering breakthroughs scaled up to meaningful projects, while we dance to the Bee Gees?

6. Oh, can you throw in an iPad mini for Tiny Tim, with a few tunes? Thanks Santa. When you finish this list, we’ll have a new one waiting.

Happy Holidays and best wishes everyone.

For a Triple Play, add a carbon tax on imports

Posted on November 13, 2012 by meisele

If you could spur the U.S. economy, reduce the budget deficit, and help climate change, all with one action, wouldn’t you jump on it?

U.S. carbon emissions are at a twenty year low, thanks to natural gas fired electricity plants, efficiency gains and conservation. Meanwhile, by the end of this year, China will be emitting twice as much as the U.S., according to Richard Muller, a faculty senior scientist at the Lawrence Berkeley National Laboratory. This is largely due to China’s dependence on coal for electricity generation.

Thanks to the shale oil boom, the International Energy Agency predicts the U.S. will overtake Russia and Saudia Arabia as the leading oil producer by 2020.

In effect, our public policy, technology, and the recession have combined to give the U.S. an effective energy strategy that also may improve the environment.

How to cement these gains on a global level? The U.S. should add a carbon tax to imported oil and imported goods. These tax revenues will accelerate deficit reduction, strengthening the economy. And, they will provide incentives for foreign countries to move more aggressively away from coal, and utilize natural gas, oil, and renewable energies, all areas of current and emerging strength for the U.S. and making energy a potential export product for the first time in decades.

A carbon tax on imports delivers a triple benefit of economic development, deficit reduction, and incentives for lower carbon usage. It’s a public policy triple play!

Superstorm Sandy’s urgent message: “Backup electricity”

Posted on November 4, 2012 by meisele

The images and stories from Superstorm Sandy are too reminiscent of Katrina. Flooded communities. A fractured infrastructure that cannot help thousands of citizens for days. The storm passes but local, state, and FEMA responses, while well intentioned, don’t stop shortages of electricity, gasoline, food, and transportation.

The key lesson is that all of the needed emergency infrastructure runs on electricity. And we can’t depend on the grid in an emergency. My three point plan for off-grid electricity won’t eliminate hardships, but it will speed the recovery process by days.

First, require cell towers to have power backup. It can be solar, hydrogen cells, or fuel based. Since cell phones provide the most critical communication system, lets require providers to ensure availability and tax the cellular users to pay for it.

Second, require gasoline retailers to have generator backup. Even with fuel onsite, if they dont have electricity, they can’t serve the public. Too much gasoline is sitting in tanks and not helping the public.

Third, use FEMA dollars to equip local public facilities, especially schools and shelters, with backup generators. The fuel source may be tailored to local requirements. In an emergency, people need a safe, warm place to stay immediately, when their home is damaged.

Lets not wait for another catastrophe to upgrade our infrastructure. We don’t know where and when it will happen, but there is no reason to be unprepared. Off grid electricity is the key strategy for minimizing personal hardships and saving lives.

Time to Rethink Solar Subsidies

Posted on October 30, 2012 by meisele

Solar prices have dropped by more than half in the last five years. Solar purchase or feed-in subisidies over the past decade were created by the governments of Japan, Germany, Spain, and other countries. America’s combination of state subsidies, especially California, combined with the U.S. tax credit for solar, have also contributed to accelerating the solar learning curve. In the latest Solarbuzz survey, 34% of solar module purchases are below $2.00 per watt, with the lowest retail prices about $1.06-1.10 per watt for silicon modules and $0.84 per watt for thin film modules. The long sought $1 per watt price point has been reached.

Unfortunately for the solar industry, record low natural gas prices have moved the ‘grid parity’ target lower again. And, the global recession has pinched all of the economies that were funding fast solar growth, resulting in greatly reduced or eliminated solar subsidies and reduced demand growth.

Where to go from here? Dieter Helm’s new book The Carbon Crunch: How We’re Getting Climate Change Wrong- and How to Fix It offers some interesting alternatives. He argues for a carbon tax on all energy sources (not a cap and trade system). A carbon tax would favor solar but also encourage natural gas as a medium term solution over coal and oil. It would be a new source of revenues for struggling government budgets. And it would generate a source of money to fund a broad range of new technology to help solar, such as better energy storage, and reduced solar installation costs.

Green activists won’t like his proposals. Neither will proponents of a expanding a regulatory approach to limiting fossil fuels. So it just might be the right approach for the next policy phase in evolving the world’s electricity fuel sources. And help restimulate the solar market in a time of economic slowdown.

U.S. DOC hands out solar tariffs to China

Posted on May 22, 2012 by meisele

On May 17, 2012, the U.S. Department of Commerce announced its affirmative preliminary determination, announcing duties (tariffs) for Chinese imports of crystalline silicon photovoltaic cells. Duties range from 31 to 249 percent. These duties apply retroactively, back to mid-February. Excluded are thin film photovoltaics and modules produced in the PRC from cells produced in another country other than China. Commerce is currently scheduled to make its final determination in early October 2012.

Expect third tier Chinese suppliers to move their product to other geographies. And the tariffs will temporarily push out the time to grid parity and stall solar adoption in the U.S., hurting consumers, installers, and large field operators.

Leaky wells are not good business

Posted on March 20, 2012 by meisele

Oil and Gas executives are claiming that well water contamination by the new horizontal, deep frac wells are due to faulty well construction, not the technology itself. Mark Boling, executive vice president and general counsel of Southwestern Energy Co., a major natural-gas producer, said he has examined several incidents in Colorado and Pennsylvania where gas drilling appears to have caused gas to get into drinking water. “Every one we identified was caused by a failure of the integrity of the well, and almost always it was the cement job,” he said.

The Wall Street Journal has an excellent article on the situation. Since cement failures occur at a regular rate, and because the new horizontal wells have more complicated installation and setting processes, it is no relief to the industry to place the blame on well construction. This head-in-the-sand approach will only make repercussions larger down the road. For its own sake, the industry needs to get ahead of this problem, with documented best practices and standards for construction, comprehensive ground water testing, and transparency of information to all concerned. Only then will they gain the confidence of the public, political leaders, and interested parties. Landholder royalty payments are not enough.