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Posts tagged with: green energy

The Chinese National Energy Administration has announced via the state run newspaper China Daily that they will be seeking to produce around 15 per cent of all the country’s energy by renewable means within the next 10 years.

China, despite being criticised for its heavily industrialised, polluting economy and images of Beijing obscured by dense smog during the 2008 Olympic Games, the government is taking proactive steps towards reducing carbon emissions with measures that would shame certain other attendees of the Copenhagen climate summit.

With the growing realisation of the fallibility on basing the huge Chinese economy on fossil fuel imports which could become untenable within the next 25 years, the Beijing government is planning to spend billions of dollars in investing in solar and wind farm sites in addition to research projects which could keep China at the cutting edge of green energy generation.

Renewable energy generation grew by 1 per cent in China in the last 12 months with the government hopeful that figures will grow from the present 9.9 per cent to 15 per cent by 2020. The Chinese government is keen to diversify its economy as well as its means of energy generation with the dual purpose of slowing the effects of climate change and making the economy more robust in the face of any potential fuel crises which could arise in the near future.

In spite of passing legislation designed to have an immediate impact on renewable energy uptake such as the feed-in tariff, a mechanism to incentivise investment in green technologies, government spokesman Zhang Guobao is realistic about the timescales involved in such projects. Speaking to China Daily, Zhang commented that,

“Power projects take a long time to be up and running, and we are basically allowing five years to complete them although it is a 10-year program, otherwise, the facilities cannot be put into use by 2020.”

Zhang added, “It appears that some local governments approved energy-guzzling projects during economic crisis so only by fully implementing our energy saving regulations can we realize economic growth with less energy consumption.”

On Friday rumours emerged that the German government is likely to significantly reduce the price paid for electricity produced by solar panels. Furthermore, the reduction may be made as early as April rather than in July as previously anticipated.

We expect an official announcement this week and will update you then but the rumours alone have already sparked hefty losses in solar energy stocks around the world. This is not surprising considering how large a proportion of the world solar market Germany represents. In 2009, close to 4GW of solar energy capacity were installed. The next biggest markets, Italy, France and the US were a maximum of 1 GW each. If demand drops significantly in Germany, it could lead to more pain for solar equipment manufacturers.

Personally, I believe a significant reduction in Germany’s feed-in-tariff is a good thing for the industry. Things got out of hand in 2009 as installers and manufacturers (particularly inverter manufacturers) struggled to meet demand. Everyone wants the solar industry to grow, but it must be stable growth. Too much too soon and there isn’t enough time for problems to resolved.

For example, in the southern part of Germany, solar energy makes up close to 5% of all energy production now. This is already causing problems for the electricity grid because of the intermittency of solar power. If solar energy were to grow more slowly, these problems could be dealt with as they arise.

The other problem of the feed-in-tariff is that it was making people too rich. Solar farms in Germany are providing 10-15% annual returns virtually risk free. No hedge fund can offer that. Given the risk of a solar investment, the return needs only to compete with long-term savings accounts, so if they provide just a 4% return, that should still be attractive. It is hard to predict what the effect of the drop in feed in tariff will be. Certainly, if the return on investment is lowered, there will be a reduced incentive and less of the ‘urgency’ which gave rise to the boom of last year. However, if there is still a reasonable, positive return on investment, then large numbers of people will still take up the opportunity. If someone handing out 20 pound notes switches to giving out 10 pound notes, would people start walking away?

On the verge of releasing details of the UK feed-in-tariff, what does is the message for UK policy makers observing this 17% cut? Why should they listen to the voices calling for an increase in the tariff whilst all our neighbours are busy cutting theirs? I would ask the government not to waiver in their commitment to growing the UK solar industry. The market in Germany is one thousand times greater than that of the UK (4 gigawatts compared to roughly 4 megawatts last year). The Germans have created an efficient industry with that is able to provide solar installations at competitive prices. The UK industry has not got off the ground yet. We must provide a decent incentive so that people begin to accept the concept of solar energy in the UK.

The experience of Germany shows that subsidies do not have to be provided forever, however the industry must be there before you can scale back.

My message to policy makers is this; we have a lot of catching out up to do, so don’t lose your nerve before we have even started.

With the UK still struggling out of recession and with little good coming of the much heralded Copenhagen climate change summit, brighter news has presented itself in the recent report that the UK has over achieved on its carbon emission reduction targets.

Set by the Conservative government back in 1990, the original reduction target was to be 34% by 2020, however, recent findings suggest that this reduction will now be something nearer 36%, with a number of factors helping to reduce carbon emissions across the UK. The report, carried out by the Committee on Climate Change (CCC) and released in October is already sparking debate as to whether the government is doing enough to fight climate change through carbon reduction policies.

Government action

While the government has announced that it will not go ahead with the construction of any coal power stations employing carbon capture and storage, many believe that not enough is being done to bring about a wholesale change in the way Britain produces its energy.

However, despite surging ahead with non-renewable energy programs, it would be difficult to argue that ministers in Westminster have turned a blind eye to the potential of green energy. Indeed, the Department of Energy and Climate Change (DECC) has already overseen the devlopment of some of the largest off-shore wind farms in Europe.

The Clean Energy Cash Back Scheme (essentially a feed-in tariff) similarly represents a commitment to reduce carbon emissions through legislation. The DECC is already publishing papers on the future landscape of the UK power infrastructure with a grid capable of connecting various micro-generation sites across the country.

The recession factor

With the world financial crisis manifesting itself in the UK in the form of a protracted recession, this has of course had an effect on energy use with the population using less energy and therefore generating less carbon. Critics of the reports findings have highlighted that some of the carbon reduction percentiles can be accounted for by the economy and any imminent up-turn could similarly skew the figures.

In response to such assertions, Ed Milliband, minister for the DECC stated that,

“The recession will not deflect the Government’s efforts to cut emissions and move to a low carbon economy. We must redouble our efforts at home and internationally.”

Solar panels fall into two main technological categories. The incubant, established tyoe are called crystalline silicon solar panels and the exciting but unproven type are known as ‘thin-film’ solar panels. To understand the advantages and disadvantage of each technology I’ll briefly explain how each type of solar panel is made. Crystalline silicon solar panels are made from 50 or so ‘solar cells’ connected together and encased in glass. Each solar cell is in fact a thin slice of large crystal of pure silicon (called an ingot). These large crystals are grown from a seed crystal surrounded by molten silicon at very high temperatures. The silicon used must first be extracted from silicon dioxide (also known as sand) and then purified to a very high level. Once the crystal is formed it can be sliced into wafers. The wafers are then specially treated to make a junction between a positive and negative type semiconductor, and then other layers such as the conductive contacts are added to make a working solar cell. This process has many steps and consumes a lot of energy. However, many companies have spent a lot of time refining the process to make it as efficient as possible so almost all parts of the process are now automated.

Thin film solar panels are made using a radically different process. The underlying physics is similar in that they still use a junction between a positive and negative doped semiconductor, however thin film solar panels have the potential to be made in much fewer steps than crystalline silicon. The idea is to take glass (or sometimes foil or plastic) and coat it directly with a series of layers, including the active semiconductor layers to produce a working solar cell. The glass is then encapsulated with a protective plastic and a second sheet of glass as protection. This process saves having to make lots of small cells and connect them together. The other advantage is that the layers are very thin, hence thin film solar cells. The active layers of the cell are only a few nanometers (billionths of a meter) compared to 0.2mm for each silicon wafer.

The important point of all this is that the manufacturing cost of thin film solar cells has the potential to be significantly lower than crystalline silicon. Unfortunately, there are some catches. Firstly, they are not as efficient as crystalline silicon. Crystalline silicon reaches 16 – 18% efficiency in modern solar panels, whereas the most efficient thin film solar panels on the market today  are under 11%. The next drawback is reliability. Thin film solar panels have had less time to prove themselves and have been known to suffer from degradation meaning that their performance gets significantly worse over time.

Despite these drawbacks, several companies have managed to become very successful in manufacturing thin film solar cells. The most notable is called First Solar who are now one of the top two largest solar panels manufacturers in the world and have a significant advantage over rivals due to their low manufacturing costs. First solar make thin film solar cells made from cadmium telluride, one of a number of semiconductor materials that can be used for thin films. First Solar’s panels are less efficient but are very popular for large scale solar installations because of their low cost.

Before the financial crisis, when silicon was in short supply and very expensive, all thin film solar panels were a good idea. First Solar could not produce enough and billions were invested in a large number of thin film solar companies aiming to follow in their footsteps. Now that the silicon shortage is over and the price of crystalline silicon solar panels has fallen, the environment for thin film solar cells is more challenging. First Solar will remain a strong player as they have managed to get to high volume and have a reliable production process. Many of the 200+ start-ups hoping to replicate their success will struggle however. For thin film solar cells there are a wide range of different manufacturing processes and materials that can be used, and there is still a lot of research being done to improve our understanding of the underlying physics. This means that there is a lot of opportunity to invent a ‘unique’ technology and start a company but only the best thin film solar companies will make it however. They have to show not only that their technology is efficient and reliable, but also demonstrate that large scale production is feasible and low-cost. Many ideas that look good on paper or in the lab turn out to be impractical when it comes to volume manufacturing.

At present, it seems like crystalline silicon will retain a strong market share for the foreseeable future (it current represents 80-90% of the market) but I believe that eventually certain thin film technologies will begin to displace crystalline silicon. There is a lot of potential for efficiency improvement in thin film, as well as lower manufacturing cost. Some technologies, particularly that usce solution processing are really very exciting.

What does this mean for the UK solar industry? Very little actually. I would expect over 90% of the UK market will be crystalline silicon for a long time. The reason is that the UK market will be dominated by smaller rooftop applications (partly due to the structure of the feed.in tariff as discussed last week). In such space-constrained applications you want to use the most efficient technology to maximize the energy generated from the available area. For now, this means always choosing crystalline silicon as it’s efficiency is significantly above any thin film solar panel out there.

Keep an eye out for breakthroughs in solar technology as some are surely bound to occur, but beating high quality crystalline silicon solar panels made in China for cost, efficiency and reliability is not easy.