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PV in the USA: Technology Evolution,Expanding Markets, Advancing Technology

Scott Stephens

U.S. Department of Energy

Solar Energy Technologies Program

Energy Efficiency and Renewable Energy

http://www.eere.energy.gov/solar

Email: [email protected]

Tel: 202-586-0565



Agenda

U.S. Department of Energy (DOE) Background andDOE Solar Program Evolution

Expanding Industry – APEC Opportunity

Solar America Initiative Preparing forUnsubsidized Grid Parity

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Organizational Structure:

U.S. Department of Energy

Formed: August 4, 1977

Annual Budget: $23.4 Billion

(2006)

Energy Efficiency,

Renewable Energy (EERE)Annual Budget: $1.255 Billion

(FY09 Request)

10 Programs (5 EE, 5 RE)

3

Solar Energy Technologies

Program (SETP)

Annual Budget: $168 Million(FY08)

~20 Staff (incld contractors)



The mission of DOE’s Solar Program:

Market Transformation

Grid Integration

Photovoltaics (PV)

Distributed Generation, on-site or near point of use

4

Concentrating Solar Power (CSP)

Centralized Generation,large users or utilities

To accelerate the wide-spread adoption of solar electric technologies across theUnited States through a program of applied research and development,

demonstration, and market transformation activities.



Historical record efficiencies - 30 years of R&D success

5

Historical Role of DOE:

• Focus on narrow and quantifiable metrics: $/W, cell efficiency, g/W, etc.

• Fund risky technologies (private Sector wouldn’t invest in PV)

• Provide long term support for struggling yet promising companies



History of Photovoltaics

Cumulative installed grid-connected and off-grid PV power in the reporting countries ? Years 1992-2006

4000

5000

6000

P o w e r ( M W )

Grid-connected

Off-grid

6

0

1000

2000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

I n s t a l l e d P

V

Predictions of centralized power production (GW solar

farms) or rural electrification were mistimed or misguided



PV funding focuses on Levelized Cost of Electricity

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Technology Pathway

Partnerships



Three very different technologies all have viable

strategies to reach grid parity by 2015

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Binning technologies allows an “apples to apples” comparison.

Approach ensures best-in-breed funding across all promising technologies.



Agenda


Expanding Industry and the APEC OppertunitySolar America Initiative Preparing forUnsubsidized Grid Parity

9



Trend #1 – Manufacturing shifts: US EU Asia

10

Preliminary Data –

PV News, March 2008

Preliminary Data –

PV News, March 2008- European manufacturing growth was stimulated by Feed-in-Tariffs

- Initial Asian growth was based upon labor, manufacturing support, tax incentives

- Projected continued Asian growth due to aggressive business strategies



Trend #2 – Modules flow from Asia to Europe

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- Germany remains the only significant, heavily subsidized, uncapped market

- Asian advantages may diminish as EU manufactures automate, ramp production

- This export trend is unsustainable particularly as world PV production takes off



In a rapidly growing market with demand reliant on

government incentive programs, oversupply is a risk…

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Policy and market risks in an oversupply situation

Policy risksGermany may revisit accelerated EEG cuts in 2009 - currently uncapped – could assign carbon conditions

Spain may stick to lower caps - recently a 500MW/yr cap has been enacted

EU Nations grow increasingly concerned about uncapped programs

Korea could slash post 2009 subsidy program

Market risksExcessive profits at >35% margins could erode public support

Global recession / inflation could halt expensive programs

German utilities may have difficulty integrating >15GW of PV on grid



APEC Opportunity – Domestic Demand Growth

APEC advantages

High Electricity Rates

Solar ResourceLow Labor Costs

Lower Indirect

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Manufacturing incentives (SEZ)Progressive Policy Action

Interconnection, Smart Grid

Commitment to infrastructure

PHEV, Centralized Storage

Climate change sensitivity



Agenda


Expanding Industry and the APEC OppertunitySolar America Initiative Preparing forUnsubsidized Grid Parity

14R. Margolis NREL



DOE can have a unique leadership in the growth of the

solar industry

Universitiesand National

Labs

StateLegislators

andRegulators

FederalPolicy

Makers andOther

Agencies

Technology Innovation

and Policy

New Markets

and Applications

The PVindustry hasthe potential

to enter a

“virtuous cycle” oflower cost,

newtechnology

andexpanded

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Utilitiesand End

Customers

BuildingIndustry andWorkforce

Dev Groups

FinancialIndustry

Solar andOther

IndustryGroups

DOEEERESETP

Cost Reduction

Private

Investment

Manufactur- ing Scale-Up

markets.

To reach it’sfull potential,

the PVindustryrequires

close

coordinationbetween anumber ofpublic and

privateentities.



October 3rd 2008 – U.S. Congress passes 8-year 30%

investment tax credit (ITC) for photovoltaics.

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ITC provides a tax credit for 30% of fully installed system price until January 1st 2017.

Also, the ITC removes the tax credit cap for residential installations and opens up the

credit to electrical utilities for centralized and distributed solar installations.



Local and regional photovoltaic support programs

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The 8-year ITC is a major addition to a collection of other small scale sustainable support programs

including renewable portfolio standards, renewable energy credits, low interest bonds, efficiency

standards on new building construction, and installations on government buildings/land.



Innovative business models take advantage of solar’s

unique modular advantage

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Power Purchase Agreements (PPAs), installation aggregation, “solar options” on

new home constructions, are all business strategies which streamline

installations and accelerate adoption curves.



Market penetration begins - 2007 residential PV and

electricity price differences with existing incentives

Currently PV isfinanciallycompetitive where

there is somecombination ofhigh electricityprices, excellentirradiance and/or

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state/localincentives.

Employing DOE resources including detailed solar maps, utility rate information, and

financial modeling software (SAM), along with state solar subsidy reporting, SETP plans

to provide “parity maps” which are updated frequently.



Conservative forecast: 2015 residential without

incentives and (1.5% PA) increase in electricity prices

PV is less expensivein 250 of 1,000largest utilities, which

provide ~37% of U.S.residential electricitysales

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nearly 870 utilities)are projected to havea price difference ofless than 5 ¢/kWhbetween PV and gridelectricity



Realistic forecast: 2015 residential installations without

incentives and (2.5% PA) increases in electricity prices

PV is less expensivein 450 of the 1,000largest utilities, which

provide ~50% of U.S.residential electricitysales

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nearly 950 utilities)have a pricedifference of less than5 ¢/kWh between PVand grid electricity

DOE also publishes reports highlighting secondary benefits such as carbon reduction,

price stability, domestic security, technology development

www.nrel.gov/analysis/pvclearinghouse/



Longer lead efforts Grid Integration / Energy Storage

Interface Module

Inverter/controller marketsare segmented inautomotive, telecom,mobile, & retail end-usesSolar energy marketquickly becoming thebiggest contributor toinverter markets; 2007~$2Bn sales, 2010 ~$10BnsalesHigh Penetration PV

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SETP is working to develop smart grid standards and eliminate barriersCoordination with 1000+ utilities, 10+ smart grid and demand response companies, othergovernment regulatory offices.

Conducting Studies to establish photovoltaic installation thresholds:www.eere.energy.gov/solar/solar_america/rsi.html

Example: SolarCity (Residential PPAs) + Fat Spaniel (Monitoring) + GridPoint (DR)

Major drivers that will propel accelerated growth

Increasing time-of-use pricing offerings – pressure to expand net metering caps

Growing demand response program practices

Increasing use of intermittent renewable generation and continued power quality / grid reliabilityrequirements

Integration with smart grid, microgrid, and PHEV



Preparation for a solar future:

Expect lower costs

Acknowledge the need for domestic PV demand growth

Push for long-term and sustainable subsidy programs

Leverage domestic strengths: low labor costs, strong

policy support, aggressive business investments, IC

workforce, SEZ

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Quantify secondary benefits including energy securityand carbon reduction

Anticipate, foster, and coordinate local support

programs

Bypass “dumb grid” investments by promoting

synergistic technology solutions (PHEV, TOU, DR,

Storage)



For More Information:DOE Solar Program/Analysis: http://www.eere.energy.gov/solar/solar_america/

PV Value Clearinghouse: www.nrel.gov/analysis/pvclearinghouse/ SNL PV Systems R&D: www.sandia.gov/pvNREL Solar Research: www.nrel.gov/solar

Si n u for our Newsletter and Market Anal sis: Send email to solar ee.doe. ov

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Questions on this Presentation:

Scott Stephens

[email protected]: 202.586.0565M: 612-720-5446

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