Whither MicroFIT?

Annual Procurement Cap graph
Time, gentlemen, please.

The Ontario MicroFIT program is a keg about to run dry. Nobody knows if there’s another keg in the cellar. The Ontario Power Authority isn’t saying. There are encouraging signs, but past experience has taught us to be pessimistic.

We’ve been here once before. In October of 2011, following a provincial election, the program was shut down for a review of policies, procedures, and pricing. There was no advance warning that the stoppage was pending. There were few signs of how long the program would be closed, and what few there were turned out to be grossly understated. The industry was taken completely off guard, and was shoved into an extremely damaging nine-month deep freeze.

Things are different this time around – to a point. At least now there is some advance warning that something lies ahead, thanks to a feature of MicroFIT 2.0 called the Annual Procurement Target. The OPA indicated that the target for 2012 would be 50 MW. However, they haven’t really defined what that means. The industry has been forced to infer the meaning from the OPA’s behaviour.

When an aspiring MicroFIT participant applies for a contract, the OPA checks the application against the target. If the capacity of the proposed project falls within the target (and assuming the rest of the application is in order), the OPA gives conditional approval. Then the applicant must apply to their local utility for a connection.

No application has yet been rejected because it exceeded the target. Every MicroFIT project is roughly the same size – 10 kW – so once a project exceeds the cap, so will every project that comes after. The target is a trigger to turn off the taps until…something.

Back in late December, there was some speculation about the meaning of the word “Annual”. Did it refer to a target for calendar 2012? Some (me included) supposed that if the 50MW tranche was completely contracted out before New Year’s Day, the program would be shut down until the start of 2013, at which time another annual target would be set. Over 15MW remained when the calendars flipped, so we’ll never know what would have happened.

The OPA issued an update on December 21st,, but it shed little light. It implied that applications submitted before the end of the year would “remain active”, whatever that means. It suggested that anything submitted after that date would be subject so some as-yet unspecified pricing. It promised that more details regarding 2013 pricing would be released in 2013.

When 2013 started, The OPA kept on working through the remaining 15 MW, putting to rest any speculation that a new annual target would be set. That, at least, was comforting – it was evident that the program was not going to be shut down, at least not for a little while. However, there was no explicit statement that the existing pricing would remain in effect. This left the industry flying blind, not knowing if the projects they were pursuing would be subject to the existing price, or one yet to be revealed. This did not make for comfortable customer relationships. “Here, buy this system. It will earn you money. We have no idea how much. Hello? Hello?”

The OPA waited until January 29th to clarify things. At that time they announced that until the 50MW was exhausted, the existing pricing would remain in effect. That, finally, brought some clarity. However, it was also clear that at the established rate of contract issuance, only a few weeks remained before the procurement target (they stopped using the term “annual” at this time) would be reached and… something would happen. A price decrease? Probably. A complete shutdown? Maybe. There was a bit more transparency than back on October of 2011, but still far too much fog.

One thing that was clear: The amount of capacity allocated each biweekly period was between two and three megawatts, which meant that as of the end of January there were between two and three months left before the procurement target would be reached. On April Fools’ Day or May Day or somewhere in between, the keg would be empty.

When the barkeep announces last call, what to patrons do? They stampede for the bar to grab their last pint. Or two. This is what happened. The period from February 18th to March 4th saw a big uptick – only once in October did the biweekly report show a steeper drop in remaining capacity. The target was drawing nearer even faster than expected.

Then something odd happened. Over the following biweekly, the unallocated capacity actually increased. This is puzzling at first, until you realize that any approved project has 180 days to get installed and connected. The rush of applications that came after the program reopened in July – many of which replaced ones that died on the vine when the October 2011 program review was announced – were bumping into that six month limit, and clearly plenty had missed their deadline. It is to the OPA’s credit that they re-released this capacity into the pool to be reallocated, instead of treating it as spent.

Now the influx of new approvals and the amount of offsetting expirations should be approaching equilibrium, so we can expect the remaining capacity to continue to drop by about two megawatts per biweekly period. That means that as of this writing, the best guess is that the procurement target will be hit around May Two-Four.

The OPA still hasn’t said what it plans to do when the keg is empty. However, last month it launched a consultation process to various stakeholders – industry associations, representatives of electricity consumers, and community groups. The review was focused on one thing – price.

This is actually encouraging. Remember that the last time the OPA did a review, they shut the entire program down for the better part of a year. This time it looks like they don’t plan to shoo everyone out of the bar and bolt to door; rather, they’re chatting with folks while the taps are still running.

Yes, it does look like another price drop is likely. That’s okay. The industry can take it. Solar module prices have continued to drop since the July re-launch. That said, some of that price drop is structural – efficiencies gained by economies of scale as the industry has grown – but some is also cyclical, as overproduction has produced a glut of panels on the market. Once that excess inventory is drawn down, panel prices will stabilize and maybe even increase. If the OPA lowers the rate too much, they risk making the program unattractive. That will not be in anyone’s best interests.

But it’s much better than shutting things down.

So here’s to the OPA rolling out the next keg – and may it be tasty, frothy, sensibly priced, and bring us all courage to keep pressing on toward a greener, cleaner tomorrow.

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Sand in the Vaseline – Part IV

Worship the 7 percentFor the past three weeks I’ve been talking about the shortcomings of the MicroFIT program. First, the OPA’s online application process. Second, the Local Distribution Companies (LDCs) and the problematic and inconsistent ways of each. Third and most recently, the heart of the Feed-In Tariff program – the FIT rate itself. Today I’ll look at perhaps the most frustrating and potentially devastating issue – one that threatens not only the future of the Feed-In Tariff program in its various forms, but also whatever might come after it.

The issue is the 7% rule.

First, a bit of background. The electricity grid that history has bequeathed unto us is a rough beast – antiquated, creaky, and obsolete. It was designed for a very different era. In that era, the world in general was different, electricity customers were different, the thinking behind electricity transmission was different, and the approach to electricity generation was different.

The surrounding world was a big place. There were no limits – no limit on how much the economy could grow, no limit on the number of rivers that could be dammed, no limit on the amount of coal or oil or uranium that could be extracted from the ground, no limit on how much waste – smog-causing nitrogen oxides, climate-changing greenhouse gases, and near-perpetually poisonous radioactive spent nuclear fuel – that could be tossed into the environment. The world, of course, had an infinite capacity to absorb all that garbage. Humanity could dump all it wanted into the earth, air, and water, and there would be no ill effects.

Back in the day, the electricity consumer was not particularly demanding. The main uses for electricity were brute force devices – incandescent light bulbs, motors, resistance heaters, and so forth. These devices were inherently forgiving. They could withstand minor fluctuations and dips in power, and alternating current with a waveform that was something less than perfectly sinusoidal. Even an occasional outage wasn’t going to cause a catastrophe.

To get the electricity across the vast distances from where it was produced to where it was needed, the utility built high voltage transmission lines. Substations changed the attributes of the electricity from that which travelled well over distances (low current, high voltage) to that which was required for general consumption (higher current, lower voltage). Then distribution lines transmitted the power from the substations to the consumer.

Finally, generation. When the grid was built, power was generated in a very small number of facilities, each of which produced a very large amount of power. These facilities included hydroelectric dams, coal-fired generators, and nuclear reactors. As a general rule, these facilities were located a great distance from the areas of highest electricity consumption – the cities.

The times, they are a-changin’.

The surrounding world is not what it was. Most or all rivers suitable for large hydroelectric dams have been exploited. Fossil fuels are becoming harder and harder to extract. Energy-rich black coal is running desperately short, and being replaced by dirtier and less energy-dense brown coal. Most of the oil in easy-to-reach places has been extracted, forcing us to push into hostile environments – ever further offshore, into ever deeper water, or into ever colder and more dangerous arctic regions. These places have become attractive because scarcity has driven the price up inexorably. Uranium reserves still appear to be holding, but this is mostly because public enthusiasm for nuclear power has faded in the wake of horrifying disasters. Finally, the cost of waste – potentially devastating climate change being the most pressing example – is becoming more and more evident.

Electricity consumers have changed. Increasingly, we depend on complex microprocessor-driven technologies that surround us to the point that we don’t notice them any more. High-definition TVs. Satellite receivers. PVRs. Computers. Smart phones. SCADA-controlled industrial processes. Life support equipment in hospitals. Systems for dispatching emergency services – firefighters, ambulances, and police – to where they are needed. All of this technology does not respond well to a dirty and fluctuating power supply coming from an obsolete grid.

The scarcity of fuel and the side effects of waste have driven up the cost of energy. What used to be an acceptable loss – the energy dissipated as heat (and the noise of that 60Hz hum) with every kilometre of transmission lines – looks increasingly profligate. These transmission lines also look increasingly vulnerable and indefensible in an era of random global terrorism.

The change in the global environment, and the fading apparent wisdom of making massive urban areas completely dependent on distant sources of power, have driven a change in the approach to energy generation. Economics and other forces are pushing us away from centralized generation and toward distributed generation (DG), where power is provided right at the point of use through solar, wind, combined heat & power, district energy, biomass, and large-scale energy storage.

The world has changed. But the grid hasn’t changed – or at least it hasn’t changed enough.

In Ontario, the rule is that DG may not exceed one-third of the minimum load on a feeder (a feeder being a line that delivers power from a substation to consumers). This is based on a standard developed by the Institute of Electrical and Electronics Engineers (IEEE). Since the feeders in question have a minimum load that is either 20% or 30% of peak, that translates into a limit of either 7% or 10% of peak load that may come from DG.

Mind you, nobody is actually treating the IEEE1547 standard as being carved in tablets of stone and brought down from Mount Horeb by the disembodied spirit of Nicola Tesla. Or not exactly. Everyone agrees that it may be possible to push beyond these limits, given sufficient study. The Ontario Energy Board has said it. Hydro One has said it. Hydro One’s consultants, Kinectrics, have said it.

But nobody is commissioning the study. So nothing changes. In other words: “If more research was done, we might be able to make it happen. We could do the research, but we’re not going to. We’re also not going to push for anyone else to do it. Because really, the less things change, the happier we are.”

So if Hydro One, and the Ontario Energy Board, and every other decision-making body in the constellation that appeared after the breakup of Ontario Hydro all agree collectively to sit on their hands, it’s not the end of the world, right?

Actually, it just might be the end of the world. If we don’t get this right, to quote author and environmentalist Paul Hawken, …”we are stealing the future, selling it in the present, and calling it gross domestic product.”

Meanwhile, others are moving the ball further down the field. According to the L.A. Times, Hawaii recently reached a level of DG of 75% of minimum load, or 23% of peak. That is more than double the level that Ontario has decided is feasible. California recently adopted a benchmark of 100% of minimum load, or three times the Ontario threshold.

Although Ontario’s elected representatives have charted a course to a clean energy future through the Green Energy Act, they are being stonewalled. Ontario’s electricity czars have made a concerted effort to treat standards as dogma, to treat innovation like leprosy, and to treat the world like it has infinite capacity to sop up all the carbon and radioactivity they can spew out.

It is utterly reprehensible.

Sand in the Vaseline: Part III

This is the third installment of a series looking at the Ontario MicroFIT program. Part I looked at the Ontario Power Authority and the shortcomings of its online application system. Part II looked at the way each Local Distribution Company (LDC – your local electricity utility) handles MicroFIT applications, and suggested how it could all work much more smoothly. This post will zoom up to cruising altitude and look at the FIT rate itself, and how it makes the MicroFIT program what it is: less than what it could be.

Policies flow from objectives, and objectives flow from some overarching goal. According to the OPA website, “The primary goal of the Green Energy Act is to further enable and promote energy conservation and renewable energy development.” The site also states four expected benefits, which you could also view as objectives – more renewable energy, more conservation, more jobs, and less climate change. The Feed-In Tariff program speaks to items one, three, and four.

In fact, you can sum these up in one simple objective – a healthy and growing renewable energy industry. Such a creature will automatically create jobs, and lots of them. Such a creature will also automatically mitigate climate change, or at least this one province’s contribution to it, since renewable energy more-or-less by definition is energy that does not produce climate-changing greenhouse gases.

In a perfect world, how would you create a thriving renewable energy industry?

There are a number of policy options, but one of the best is the Feed-In Tariff (FIT). This measure offers a premium price for renewable energy, partially in recognition of the massive subsidies – explicit and implicit – that traditional energy sources like coal, oil, nuclear, and natural gas receive. It is also partially in recognition that, in the case of rooftop solar at least, the energy is more valuable; solar provides the most energy exactly when it is most needed, exactly where it is most needed – high noon in summer, when urban air conditioners are cranked, the grid groans under the weight of peak demand, and power may have to be purchased at extortionate rates from neighbouring states and provinces.

But the main reason for the premium is the same reason parents accept the expense of raising children – it is a commitment that won’t last forever. As each unit of renewable energy comes online, the cost of the next unit is slightly lower. Over time, these cost reductions really add up. A good FIT correlates the buy rate for new power contracts with the capital cost to produce that power (since operating costs are close to zero), with a little extra to allow for profit. As the capital cost drops, so can the FIT. Eventually, or so the theory goes, the FIT will reach the prevailing price of electricity from other sources, and can be abandoned altogether.

The primary focus of the program, therefore, should be to monitor the cost of renewable energy installations continuously, and to realign the FIT rate to that cost as frequently as possible. This downward path of the FIT rate is called regression. Ideally, regression would be in realtime – this would provide the least-cost path to bring the price of renewables in line with that of traditional energy sources.

The most critical piece of information for making decisions in any industry is the price. With good price information comes good decision making about matters like when to add production capacity and how much to add. Therefore, another focus of the program should be to make the FIT regression as transparent as possible.

Since the Ontario FIT program began, the highest rate has been for rooftop solar photovoltaic (PV) systems with a nameplate capacity of 10kW or less. When the program launched in May 2009, the rate was 80.2 cents per kilowatt-hour. In October 2011 the OPA froze the program, reopening it after a ridiculously drawn-out review in July 2012 at the rate of 54.9 cents. The adjustments came without warning and, although extensive consultations were held, the process for setting the rates was utterly opaque.

RegressionThe chart at left shows in red what an orderly, linear regression on a biannual schedule could have looked like. The blue line represents what the OPA has actually done. The area above the red line and below the blue is wasted money – cash given away in the form of MicroFIT contracts with parties who would have accepted less. The area below the red line and above the blue is…well, the best name for it is Death Valley. No contracts, no revenues, no profit, no industry.

For 18% of its existence, the MicroFIT program didn’t exist at all.

How could the OPA have done better?

Simple – every time a contract is issued, require the program participant to name the price they paid for their system. This is competitively sensitive information, but it would be simple enough to anonymize it so that nobody can get an unfair edge over rivals. If every MicroFIT contract issued since July 2012 was for the maximum system size of 10kW, this would yield 5,000 data points – more than enough to track trends in system pricing while weeding out any statistical anomalies.

It would be child’s play to take this data and present it for the industry to scrutinize, and set out the rules for how and when the data would drive FIT rate adjustments. This would render the process completely transparent. Everyone would know where the price was headed. There would be no attempts to play the timing game, waiting until the gap between expenditure and expected revenue was the widest – there would be no point.

If a review of the program were required, there is no reason it would necessitate shutting down the program altogether. It’s not like every car had to be taken off the roads for the better part of a year while the Province formulated the law prohibiting use of handheld cellphones while driving. The OPA’s decision to freeze MicroFIT for nine months did immense damage – like breaking a child’s legs while she is just learning to walk. It was no way to meet the objective of a healthy and growing renewable energy industry.

Oh, there are other things that could be done differently to minimize the cost of the program and maximize the speed at which we convert to a post-carbon economy. Eliminate silly rules like the one that prevents a person that owns more than one property from putting up solar panels or a wind turbine on as many of those properties as they wish (with due consideration for the feelings of the neighbours, of course, which municipal zoning rules already handle quite nicely, or should). Allow projects to be built on a property regardless of whether it is owned by a person or a corporation. And most of all, eliminate the 7% feeder rule.

But that’s a topic for another day.

 

Sand in the Vaseline – Part II

Image courtesy Wikipedia
Image courtesy Wikipedia

Last week I spoke briefly about the simplicity of the German Feed-In Tariff (FIT) program. I contrasted it with the unnecessary complexity of the Ontario MicroFIT program – a program modeled, if you can believe it, on the German one. I elaborated on just how simple the process of applying for a MicroFIT contract could be, and how far from that ideal the actual application process is. But the maze doesn’t end when you finish your application, submit it to the OPA, and receive initial approval – far from it. There are many other players on this particular field.

MicroFIT is a program that crosses jurisdictional lines and corporate boundaries. However, once again escaping to the perfect world I described last week, it wouldn’t be that difficult to make the process simple without robbing anyone of their sovereignty or trampling on anyone’s rights.

The data you enter would flow auto-magically to all the various players involved – the Ontario Power Authority, the local electricity utility, the local municipality, and the Electrical Safety Authority – without you needing to know who they are or what role they play, and certainly without you having to provide the same information over and over again to each party (and even multiple times to the same party). It wouldn’t matter in what part of the province you happen to reside – your experience, including the time the process takes and the costs you incur, would be the same if you were in Kenora, Cornwall, or Camlachie.

Sadly, that’s not how it works.

After you submit your application, wait several weeks, and finally receive approval from the OPA, you move on to the next player in this process – your local electric utility, or more formally your Local Distribution Company (LDC).

All of the LDCs require a bunch of information that you already entered earlier in the process. For example, exactly 50% of the fields on the Hydro One form are also on the OPA application. Entering this data a second time is a waste, and provides an excellent opportunity to make mistakes.

Of course, someone will defend this by saying that it protects the privacy of applicants. That’s a crock. Most applicants see no difference between the LDC and the OPA, and couldn’t care less anyway. They certainly aren’t going to raise a stink if the OPA shares the information already provided. If the OPA is worried about that, all they need do is add the simple step of requesting permission to share the information for that one specific purpose.

The fees charged by each LDC to install a new electricity meter and hook up a new MicroFIT installation vary dramatically. Hydro One charges $1,500. Guelph Hydro charges $1,000. On the one project I’ve done with them so far, Waterloo North Hydro only charged $464.66 +HST. Is Hydro One really providing an extra $1,000 worth of value?

So much for data redundancy and value for money. Now let’s move on to inconsistency.

There are 76 LDCs operating in Ontario. That means – let me do the math here – 76 different possible experiences you might have as a MicroFIT applicant. I’ve only dealt with five LDCs, but each one is different and each one is an adventure. Interestingly, when I pointed out the inconsistencies in the process to an administrator at one LDC, she told me with some surprise that her company had collaborated with several others to come up with one consistent approach. I have no reason to disbelieve her, but after devising this standard, each one of the other participants must have gone home and gave their newly standardized business model a complete overhaul.

The best of the lot is Hydro One. This is a bit surprising, considering how much flak they typically get from the renewable energy community. The Hydro One process is completely web-based. That is wonderful –the other four LDCs all rely completely on paper forms. One other labour-saving feature of Hydro One’s process is that I don’t need to collect another signature from a prospective customer – that only happens if and when we get a contract offer. Hydro One is unique in that they request the transformer pole ID, but once I learned that, I got in the habit of grabbing this on my first visit to any customer in Hydro One territory. Mind you, although they ask for it, they only use it in a minority of cases. It would be helpful if the system only requested this information if it was actually necessary. Oh, and one more thing – if I’ve submitted the application and Hydro One informs me that I made a mistake, I can’t go back and correct the specific issue. I have to start all over again. You take the good with the bad.

Each LDC has its own quirks. Guelph Hydro asks for a Single Line Drawing, which in our case is identical for every job except for the number and wattage of the panels – information you’ve already supplied on the application form. Why bother gathering it on the SLD as well? Hydro One simplifies this – they ask you to pick from a list of three possible kinds of connection you’re planning, and that dictates which of the three possible drawings is the right one for your case. It would save us some unnecessary extra work if Guelph Hydro would do the same.

Waterloo North Hydro requires that you provide some proof of identification from the applicant. They suggest we use their driver’s license number. Apparently Waterloo is rife with people stealing someone else’s identity and promptly rushing out to apply for a MicroFIT contract under false pretenses. I, for one, would rather not have this information in my possession. I value my customers’ privacy and I wish WNH would accord their prospective suppliers the same respect. Every other LDC we work with does.

Centre Wellington Hydro asks for details regarding our insurance coverage. When I quizzed their contact person, she informed me that it wasn’t really necessary, which begs the question: Why ask for it if you don’t need it?

Here’s an idea: Start with the Hydro One online form. Pass the collection plate among all the remaining 75 LDCs to pay for a data interface that pre-populates the Hydro One form with the information already entered on the OPA website. Then get every LDC using the same process.

How sweet would that be?

Next week: Rules and regulations, and making them work for the benefit rather than the detriment of green energy in Ontario.

Sand in the Vaseline – Part I

Vaseline_Opened
Image courtesy Med Chaos, Wikimedia Commons

I haven’t experienced Germany’s Feed-In Tariff program directly, but I’ve heard all about it. It’s easy. If you decide you want to participate, you go through a perfunctory application process and you’re in. You get whatever rate is in effect when you apply. Painless.

In a perfect world, the Ontario FIT program would be just as simple. The most obvious case crying out for simplicity would be the small-scale residential part of the program, called MicroFIT.

If you wanted to take part, you would register online – that always makes life easier, right? If, like my company, you work on behalf of a customer, you would only have to register once for yourself, and once for each customer, and you would have one place to go to see the status of every one of your projects. Your customer would have their own account that would let them see just their own project.

Of course, there is a 20-year contract involved, and it relates to a piece of real estate. There would have to be a way to ensure that everyone registered as an owner of the property in question was a party to the MicroFIT contract. But since the Ministry of Natural Resources already has a database which contains exactly the required information, it would be a piece of cake to use the free interface available to other provincial ministries to look up the property and return the names of the owners – and even to make an automatic correction if you hadn’t entered the legal name that is on file. Then the system would simply require that each owner give consent, and that’s that.

However, in the real world, things are very different. The process is fiendishly complicated, and there are reams of seemingly arbitrary rules. You’d almost – almost – think that someone was doing their level best to limit participation to the lowest level possible.

The online tool that the OPA has provided is so much less than it could be. As a contractor, I do not get my own account. Instead, I have to create a new one each time I have a new prospective customer (including collecting and then inputting sensitive personal information that I’d rather not have to handle, and that they are perfectly able to enter themselves), enter my own contact information every such time, and share the login and password information with the customer. If the customer neglects to click the confirmation link in an automated email, or decides to change their password, it can stop up the whole application for days.

This is to say nothing of the fact that sharing passwords is the Single Deadly Sin of information security. It simply isn’t done. The designers have put those annoying “captcha” tests in at every opportunity, but left the most glaringly obvious security hole right in the middle of everything. It is astounding that any self-respecting web developer would have put their name to this beast.

If I want to see how each of my potentially dozens of applications are doing, I have to log in to each one individually – no bird’s eye view for me. It is incredibly simple to lose track of where a particular application is in the process, and to miss the window of opportunity to complete the next step. Then it’s back to square one.

If there is more than one person on title, you have to enter their first name, last name, and date of birth on the web page, and then you have to enter that all over again – along with their address, phone number, and email address – on a PDF that you then attach to your application. An OPA employee must open that form to confirm everything is correct, since the web site can’t do that automatically.

To make sure you haven’t missed anyone that’s on title for the property, you have to visit your local Land Registry Office and pay for a Parcel Registry form (or pay an additional $20 plus HST to get it online). Then you have to upload this document to the OPA website. After you submit your application, an OPA employee has to open the document and manually check that there is contact information in the application for each person on title. They also check that the name on the parcel form is an exact match to the name on the online application. If you goofed by omitting a middle name, or using a married name instead of the registered maiden name, or using a commonly used name instead of the legal name, the OPA will gleefully toss your application back at you or just terminate it outright.

And after all that effort, how does the system ensure every party that is on title for the property has agreed to take part? You check a box on a web page. That’s it.

Again, if you’re a contractor, you have to get each person on title to sign a form giving you permission to act on his or her behalf.  If the name on that form is not an exact match with the name on the Parcel Registry form, the OPA will once again kick it back at you or terminate the application. Oh, and to make life interesting, they sometimes issue a new version of the form, forcing you to re-do every form for every application that is still in progress. Nice.

The OPA’s only real concern in this process is to ensure that this contract will not be the one that pushes them over their self-imposed Annual Procurement Cap. That and to ensure their contract will be legally binding. With a decently designed web application including an interface to the Land Information Ontario database, they could make the application process simple, automatic, fast, and foolproof.

Instead, they’ve made it byzantine, labour-intensive, glacially slow, and massively error-prone.

That’s to say nothing of the total lack of decent flow-through of information to the other parties further along in the process. I’ll take a dive into that quagmire next week.

Moore’s not here

Chart - Price of Chinese C-Si modules
Price in C$/watt. Data courtesy Solarserver.

Late last summer, I was walking the neighbourhood near where a rooftop residential solar PV system was about to be installed. People tend to be more interested and less sceptical about solar when their neighbours are getting into it, so it’s good policy to pound the pavement in the hopes of drumming up some business. I had already had several great conversations, and had some promising leads jotted down on my smartphone.
I saw a gentleman sitting on his porch, engrossed in the notebook computer on his lap. His roof was a good candidate, so I introduced myself. He obviously wanted to escape the conversation as soon as possible and get back to his surfing, so I did my best to keep it brief. I explained that his home had a good roof for solar, that some folks down the street were about to get a system, and there was good money to be made in generating electricity from sunshine.

The man clearly believed he knew all he needed to know about solar, and even more clearly demonstrated that he knew next to nothing about it. He explained that he worked in the information technology field, and IT equipment is typically amortized over three years. He had no intention of making a 20-year technology commitment when whatever he installed would doubtless be obsolete before, say, a politician could complete one term in office.

I won awards on my high school debating team, so I can make a persuasive argument. I’ve trained people in the corporate world on things like email encryption tools and document management systems, so I can explain things. I’ve also had to make sales pitches to C-suite executives, so I can convince people that what they’ve just learned from me is, in fact, simply something they knew all along.

However, I’m also a reasonably good judge of character. I could tell that with this guy, I’d be wasting my time. That he knew IT cold, I have no doubt. But he greatly overestimated the similarities between his field and others. Microchips and solar cells both depend on silicon, but concrete does too, and the three have about as much common ground. I wasn’t going to convince him that he was missing out on a great opportunity. Better to mosey on over to the next likely house and hope for someone with an open mind.

Nonetheless, the fellow was wrong. Dead wrong. Moore’s Law does not apply in the world of solar photovoltaics. If you look at cell efficiencies, nothing terribly exciting is going on. Certainly nothing like a doubling every 18 months, which is something that has become an article of faith in IT circles.

Oh yes, every time you turn around there’s another breathless announcement by some university research team that has made an astounding breakthrough in efficiency. However, these innovations seem to disappear on the road from the lab to the marketplace.

There are plenty of reasons. The devil is in the details, so maybe the process to manufacture the new-fangled device is too complicated, and cannot scale to mass production. Solar panels have to be able to take a lot of abuse, so maybe the end product isn’t robust enough to withstand shipping, installation, and two decades of weathering in every earthly climatic zone. Efficiency is useless if it comes at too high a price, so maybe, as in the case of solar cells known by the acronym CIGS (Copper Indium Gallium Selenide), three of the four key components are so rare that manufacturing large volumes with that stuff would use up the entire global supply and send the price into the stratosphere.

If you look at mainstream solar PV installations, most are the breed known as C-Si (crystalline silicon). The processes for transforming silicon into ingots, ingots into cells, and cells into modules are well established, simple, and efficient. The finished product is solid and easily able to put up with 20 years of whatever Mother Nature can throw at it (while still remaining fully functional, and retaining 80-90% of its capacity at the end of that time). The materials aren’t terribly exotic. The principal element happens to be the second most common in the earth’s crust after oxygen. On every Caribbean beach, you see tons of it – sand. We won’t be running out of that any time soon.

This time last year, most of the panels being sold were 245 watts. This year, most are 250 watts, with some 255-watt units thrown in. A 4% increase in efficiency over an entire year is not going to impress anyone, especially my IT-schooled front porch friend. You can rest easy knowing that if you install a solar array on your roof this year, the ones being installed the following year won’t be dramatically different.

That doesn’t mean that the industry is static – far from it. However, the big news is not gains in efficiency; it is reductions in price. These come from scale economies, meaning that the more units you produce, the cheaper each unit becomes. It’s not as sexy as press releases touting scientific breakthroughs, but it’s here and now rather than pie in the sky.

Let’s take Chinese C-Si modules as an example. If you look at Solarserver data from September 2011 to January 2013, the price per watt in any given month is between 50% and 65% of what it was a year earlier. At no time during that time period did prices rise. Cell efficiency did not play a significant role in that downward pricing trend. It’s all about economies of scale.

In personal computers, it’s easy to make the argument that you should wait until next year’s model, because it will be cheaper and more powerful. You could make the same argument in solar PV. Why buy this year, when next year the cost of panels (and, as it turns out, the entire system) will be lower? The problem with that rationale is that you never end up buying a computer, or a solar PV system.

The real question you need to ask is whether it makes economic sense to buy today, based on prices today, and based on benefits today. The fact that a newer, shinier, more powerful product comes out next year has no impact on the validity of that decision.

Even for Mr. Porch Surfer, tomorrow never comes.

The story of sunshine

SunFromClouds
Image by Bartosz Kosiorek, courtesy of Wikimedia.

It all started about 4.5 billion years ago. A small, unremarkable star began to shine, warming a small, unremarkable planet. After a mere billion years, life began to emerge. Another three billion years later, plants began to appear, and all that sunshine started being put to use.

Half an aeon on, and humans came on the scene. They took the solar energy that had built up over the previous few hundred million years – transformed from plants into oil, natural gas, and coal – and began burning it. They burned it so they could run things like steam engines and internal combustion engines. They also burned it to generate electricity. This allowed neat things to happen like the industrial revolution, the Space Age, and the Internet.

However, all that burning had the unfortunate side effect of destroying the planet. Oh, not all at once, of course. It started off slow, but like a snowball rolling down a mountainside, the rate of destruction got faster and faster until it looked like nothing could stop it.

This wasn’t an accident. Certain businesses had become very big and very rich by getting the oil, natural gas, and coal out of the ground. The people running those businesses tried to use their vast wealth to convince everyone that there was no problem with what they were doing. They did their best to prevent people from realizing that the carbon that came from their products was, in fact, nasty. They also did a very good job of blocking efforts to stop the planet from being destroyed. It seems a bit odd that they would do this, since their businesses rather depended on having a planet to reside on, but the things people do sometimes don’t make much sense.

Somewhere in the middle of all that burning, a clever person noticed something remarkable. If you took the right kind of material and shine sunlight on it, you get electricity. You can skip that whole multi-million-year step of waiting for dead plants to become oil, you could skip the step of burning that oil to boil water into steam, you could skip the step of using the steam to turn a turbine to generate electricity, and you could skip the whole planet-destroying thing as well.

It took a while for solar cells, as they were called, to take off. Perhaps that’s a poor choice of words, because one of the first things they did was literally to take off – or, actually, to lift off. At first, the only places where it made sense to make electricity from sunlight were ones in which nothing could burn because there was no air – outer space. As more and more solar cells were produced for things like satellites and deep space probes, some solar cells came down to earth, finding their way into other things like pocket calculators and marine navigation aids. The more solar cells that were produced, the cheaper they became.

Some people in government became concerned that the planet was getting warmer and the weather was getting weirder. There were more droughts, more floods, and more freak storms that killed people and did lots of damage. Those government people also noticed that oil, natural gas, and coal just kept getting more and more expensive, and tended to come from countries that were nasty and warlike. They thought that being dependent on those energy sources was a bad idea.

They began doing things to help solar energy to grow. Terms like feed-in tariffs, tax incentives, loan guarantees, and renewable portfolio standards started being bandied about. As governments set up programs to help solar, people and businesses responded. Soon solar panels – made up of dozens of solar cells –started appearing on rooftops and in fields.

The first people to get in the act were the ones that were most concerned about the planet. They decided to follow the put-your-money-where-your-mouth-is philosophy. Other people were in it for the cash. They couldn’t believe their luck – their roof used to be a liability, needing to be re-shingled every couple of decades at huge expense. Now, their roof had become an asset, like having a tenant in a basement apartment – except this tenant never had parties late at night, never took up any living space, and never skipped a rent cheque.

Early on, it was important to find a good roof. The best ones faced south, and had a rectangular shape. You could still make money if your roof faced southeast or southwest – you only lost about a tenth or so. Even if you had, say, a triangular roof (called a “hipped roof”, although it didn’t look anything like the part of your body that holds your pants up), you arranged the panels in a brickwork pattern and used up what space you could.

As time went on, the panels came to look less and less like an add-on, and more and more like they were always intended to be part of the building. They also got more efficient, so even roof areas that got only a bit of sun were worth wiring up. Most of all, solar panels just kept getting cheaper and cheaper.

The cheaper that solar panels got, the more that people wanted them. Soon, they were so cheap that governments didn’t need any programs to convince people to buy them. It was cheaper to buy solar panels and to get the power from them, than it was to buy the power from the local electric company.

In fact, the panels got so cheap that some governments found themselves in the awkward position of trying to explain why they had spent a ton of money building another way to make electricity – nuclear power. This type of energy was hugely expensive, hugely risky, hugely inflexible, took a very long time to build, had to be built a long way from the cities where the power was used, and had a nasty habit of producing poisonous waste that lasted thousands of years after the people who had used the electricity were quite dead. In other words, it was the exact opposite of solar in every way except that it produced watts. Half-built, abandoned nuclear power plants – and embarrassed politicians – became an all-to-common sight.

While all this was happening, something else was changing – the way people and stuff moved around. As oil, natural gas, and coal became more expensive, people started buying vehicles that ran on something else – electricity. Interestingly, people who owned this kind of vehicle were more likely than everyone else to buy solar panels. Something about being guilt-free while at home and on the road.

Solar carports started appearing in parking lots. Retail stores built them to attract electric car drivers. Businesses built them to show their employees that they cared about the environment. Municipalities built them to provide much-needed money, by charging people for charging their cars (in addition to charging them for taking up space in the parking lot).

The best thing about all these solar panels was that they lasted an incredibly long time. They would still produce power after a hundred years, long after the people who installed them were pushing up daisies. Instead of leaving behind a ruined planet and a bunch of poisonous garbage, people could choose to leave behind free electricity. In other words, solar gave people the chance to leave their children with a better planet rather than a worse one.

Eventually, the oil, natural gas, and coal companies went the same way as the stuff they once were paid so much to get out of the ground – they became fossils. The nasty carbon that their products spewed into the air began to subside, helped along by factories that pulled the carbon out of the air and used it to make other kinds of useful stuff. People realized that it was a good idea to plant trees instead of just cutting them down – since trees pull plenty of carbon out of the air, they helped repair some of the damage that had been done.

The electricity continued to flow steadily off the rooftops. The electric cars continued to hum down city streets free of smog and noise. The weird weather gradually calmed down.

And the sun kept right on shining.

Please note: The tone and language used in this post was inspired by The Story of Stuff. Although I am a huge fan of TSoS and recommend that you watch it, neither I nor this blog are affiliated in any way with TSoS. No infringement of their copyright is intended.