June 24, 2010

VX2010 Panel: Integration of Wind, Solar More Possible than Ever

TPR/MIR is pleased to present the following excerpts from a panel titled, "Accelerating the Integration and Deployment of Renewable Energy Technologies: Wind and Solar," from VX2010: The VERDEXCHANGE Green Marketmakers Conference. The panel features Paul Gipe of windworks.org, who argues for the implementation of feed-in tariffs like those in Germany to speed up the delivery of renewable energy production to the grid, and Randy Wu, director of development for First Solar. First Solar has been called "The Google of Renewable Energy" and is a large-scale contractor for Sempra Utilities, with several on-the-ground solar energy facilities complete around the world and several more on the way in the American Southwest.

Paul Gipe

Paul Gipe: I'm here to talk to you about a movement for advanced renewable tariffs here in North America. Renewable energy has come of age as a commercial generating technology, and it's particularly true when you look at both wind and solar. Wind, in particular, is growing at an exponential rate around the world, but mostly in Northern Europe. There's currently about 30,000 megawatts here in North America, mostly in the United States. But there's about 70,000 megawatts in Europe, most of that in countries in Western Europe that use feed-in tariffs, and I'll talk about those.

Don't let anybody tell you that we can't have a penetration of renewable here in North America. California currently gets almost 2 percent of its electricity from wind, Germany currently gets 7 percent, and Denmark gets almost a quarter of its electricity from wind energy today. Not only do we see exponential growth in wind energy but also exponential growth in solar photovoltaics. Those of you who have been to Freiberg, the solar city of Germany, know that while some architects here in the United States brag about the fact that they build zero energy houses. People like that are laughed at in Germany, where they build plus energy houses. Again, most of the growth is taking place in Northern Europe, not here in North America, and certainly not in the United States. Currently in the PV market, we're selling about 6,000 megawatts per year. The major markets include Germany, which is between 1,500 and 3,000 megawatts per year. We actually don't know how much they installed in 2009. Spain, which did 2,600 megawatts-yes, 2,600 megawatts-in 2008. We don't know exactly how much they got last year, but possibly 500 megawatts...California installs about 200 megawatts per year. We are currently the market in the Unites States. About half of all the world's solar photovoltaics are installed in Germany-yes Germany-cloudy, wet Germany.

Why have Europeans been so successful at renewable energy? Two reasons. One is they've engaged the community's participation; they've engaged the public in the desire to earn profits from renewable energy-to do well by doing good. They've done this through advanced renewable tariffs, commonly called feed-in tariffs. If you're going to have aggressive targets, like they have in Germany and like California has, with its 33 percent target, you have to have aggressive mechanisms to meet those targets. That kind of aggressive mechanism is feed-in tariffs.

What are they? Simply, it's a payment for generation. You pay for the electricity that's produced and you pay a price that makes it profitable to do so-not a very difficult concept. It has been hard for us in the United States to understand this, but we're getting the message now. If you follow that principle you pay one price for wind, one price for solar, one price for biogas, and so on. Where is this being used? It's being used in every country that's developing renewable energy rapidly: 18 E.U. countries and, of course, China, India, Mongolia, and Slovenia.

It's time for California as well. If you look at how the growth of photovoltaics has taken place in Germany, and you look at the German market, they tried everything we Americans typically do: all the subsidy programs, all the things we're still talking about over here, and they gave up on them, as Hans Josef-Fell said this morning, and went to feed-in tariffs. The rest is history. Currently there are 150,000 new systems being installed every year on people's rooftops in Germany. That is 2 percent of the electricity supply in Bavaria. Bavaria is like the Texas of Germany or the Kern County of California-conservative Bavarian farmers that are installing solar panels, not to save the earth (that's nice), but to make money to stay on the farm. Currently solar photovoltaics provide one percent of the electricity in Germany. Wind in the United States, in California, only provides two percent. Germany is producing one percent of its electricity today with solar photovoltaics. Homeowners are earning $3 billion per year in revenue. Homeowners are putting revenue in their pocket, about $3 billion in Germany's case. Anyone who owns a rooftop in Germany can do solar today. You don't have to be wealthy like you do in California...

They've done all this renewable energy in Germany; how much energy are they really producing? Almost 100 terawatt hours per year. If we had that here in California it would be one third of our electricity. We'd almost be to Fran Pavley's target already. Germany is doing it today. So the status of Germany: 15 percent of their electricity comes from renewables. There are 90,000 people employed in the wind industry, with 50,000 employed in the PV industry alone. Some of those are First Solar in eastern Germany. All in all it's about 300,000 people working in renewable energy in Germany today. What does it cost the Germans? It costs about $50 per year; about five percent of their electricity bill pays for renewable energy. Opinion survey after opinion survey shows that the German public supports this and wants more of it.

You can add renewables very quickly; that's my message here today. For example, in Germany they added 15 terawatt hours, that's a billion kilowatt hours of electricity within five years. 15 billion kilowatt hours of electricity a year-we're only producing 4 billion, 4 terawatts hours of wind generated electricity in California after 25 years. Germany is at almost 40 billion kilowatt hours per year. Spain is at 30 billion kilowatt hours per year. Spain has 40 million people; California has 38 million people. Both Germany and Spain are now producing about 5,000 megawatts of solar per year.

So what are these renewable tariffs? They're very simple. They have to be comprehensible and transparent. You have to have priority access to the grid. You put your solar panel on your rooftop; you have to be able to sell the electricity. Prices have to be high enough so it's profitable to do it or we won't do it. The contracts have to be long enough so that there's an opportunity for you to not only pay back your investment but make money too. We want fair profits but not undue profits. We don't want to gouge ratepayers, but we want renewable energy development. We want fair tariffs, but we need them now. You get this through price differentiation. You have different prices for different technology, and you have different prices for different applications. You have a higher price for solar on a rooftop, for example, because it's more expensive to do so, and a lower price on ground mounted systems, such as First Solar does. And in a case of wind energy, both in France and in Germany they have different prices for different wind resource intensities, and that's one of the things we need here in North America.

Is this unthinkable? Five years ago it was absolutely unthinkable. At a meeting much like this, a very private meeting, a person from the Bush Administration stood up and waved his finger at me and said, "You are absolutely nuts!" (At the time I was quite upset by this, but later I realized it was the high point of my career. And now I take that as a badge of honor.) Those of us who are nuts are making the changes we need to see here in North America. It is possible. We see a growing trend, both in the United States and in Canada. We are developing momentum-China, India, Mongolia, South Africa, and Slovenia, the list is continuing to grow-we need some places here in the United States.


Nothing is as powerful as an idea whose time has come. The feed-in tariff is an idea that we as North Americans are ready to accept. As said by Terry Tamminen, once a close advisor to Governor Schwarzenegger, he likes feed-in tariffs because they turn farms, homes, and businesses into entrepreneurs. That's what we need. We need to unleash the entrepreneurial spirit here in North America by having feed-in tariffs that enable us to develop renewable energy for profit and save the earth by doing well at the same time. I would conclude by saying there's no time left for half measures; there's no time to lose. We have to take action because we need a lot more wind, and we need a lot more solar. These renewable tariffs are a new policy option for us here in North America.

Randy Wu: I thought the best thing for me to do would be to tell you what First Solar, as an established manufacturer, is doing. Manufacturing started in 2004 at 20 megawatts. In 2010, we're at 1.2 gigawatts, a 50-fold increase in manufacturing capacity. That's a fast rise up.

I'm going to talk some more about the low-cost stuff. Our plants are around the world; we are a global company. We started in Ohio; our second plant was in East Germany; our third plant is in Malaysia. We have a deal with Electricity De France to build a fourth factory in France. When I started in the solar industry two years ago, I was actually with OptiSolar, a California startup with a dream of building manufacturing facilities in California. When they recruited me I had never met anyone like that before, and I may never meet anyone like that again. We did get two production lines in operation in Hayward, California, and had big plans to expand just outside of Sacramento. And then Lehman Brothers went under. Essentially all capital dried up, and it was impossible for us to keep the factory going. First Solar liked the business plan that OptiSolar had put together: developing large-scale utility projects to scale-up manufacturing. They acquired a development arm, so we now have proven factories and 25-year modules standing behind us. We're off and running.

It wasn't enough to meet or beat the dollar per watt standard. When I stared two years ago, everyone was saying that solar needs to reduce its costs, bring it down to less than a dollar a watt. First Solar has done that. We're headed down to 52 to 63 cents a watt. To all these other companies that are looking to take some of our business away: have at it. The more the merrier; competition is good for all of us-keeps us moving and someone will come out with a better product.

Those of you that are experienced in the solar industry know that just reducing the cost of the module is not enough. One of the main reasons we're on the ground with utility-scale projects in open space is you have a balanced system that needs to be handled. In particular, with the rooftop, how are you going to mount those modules, whether it's commercial or residential, that weren't designed to accommodate solar panels? Most of our panels are tilted at about 15 degrees toward the south. That is the best profile to capture most of the solar eradiation that will fall upon on the panels. Most of the existing home and office structure is not oriented in that way. So there are huge challenges, and we wish everyone well. We have applications for residential and commercial offices, but our big focus is on bringing the costs down. So you can't just look at the modules, you've got to look at the balance of system as well.

We're not always going to have wide open spaces. There are areas that make sense, whether it's in public land or private land. We do want to increase the efficiency of our modules, which is how much of that sunlight is captured. You can see we're at about an 11 percent efficiency now, which is actually a dramatic gain over where First Solar was when it's product first came out in 2004. We're moving ahead; the roadmap is to reach 15 or 16 percent efficiency, which is very, very important if you're in a space-constrained location.

Last, we are active in other areas. You can see we have a broad range of projects, from 21 megawatts to 550 megawatts. They're all utility-scale projects, and they're all highly dependent on transmission being upgraded. If you saw the panel preceding this one you'll have some idea of how daunting a task it is to permit and build a transmission line.



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