Solar power is, without doubt, the renewable kind of energy that is most heralded as the solution to provide energy. The argument sounds tempting and reasonable, but it is certainly not fully thought through. Let’s have a look at the characteristics of solar power to see how much truth there is in those claims and how far solar power can take us.
Sunlight seems to have a lot of energy. One square meter facing the sun receives 1000W of power or 1GW per square kilometer. But unfortunately we are only able to convert a fraction of that into electricity. Where money is no object, this fraction can reach the lofty heights of 30% in multijunction cells. When you can spend hundreds of thousands or a million dollar on a kilowatt of power, there is indeed a lot you can do. But that’s like suggesting people should replace their cars with something like a Learjet.
But money is an object. Nobody can afford to spend hundreds of billions or a trillion dollars on 1 GW of nominal peak power (delivering 100-200MW on average). What we need are mass-fabricated cheap panels and those are working at efficiencies on the order of 10 to 15%, namely thin-film and poly-crystalline cells. Higher efficiencies getting cheaper in mass production can perhaps be hoped for, but are not currently in sight.
I am aware of the regular slew of announcements of new technologies, but practically all of them have caveats attached and are basically to be understood as a plea for more funds. Not that there is anything wrong with that, but you should not assume that they are indeed ready for production any time soon. Very often drawbacks such as a short lifetime or low efficiency are beyond improvement. The problem there, however, is that very little money is put to work in fundamental research in solar power, while the general impression may be different.
A lot of the money spent on solar power goes to the banks financing the installations. Assuming a 2% interest rate for the credit means that almost 20% of the money goes to the bank and investor. (Assuming that he will also want to get a 2% rate of profit.) Of course you would be deluding yourself if you expect those investors to get such conditions or expect such a low rate of interest. Assuming a 5% interest means that almost 40% of the money will go to banks and investors.
Most of the rest goes towards investment into production facilities and cost of production. Even of the R&D budget that is left, only about one tenth or less is poured into the kind of fundamental research required to develop such technologies. Which should serve as an explanation why there has in fact been little in the way of progress.
This is a problem of the incentives provided by constantly and predictably decreasing feed-in tariffs. Waiting another three or five years to develop better technologies means losing out on the high early tariffs that were paid on a per kWh basis. The result was that as little as possible was spend on newly developed technology to produce as much capacity as possible as soon as possible for the least amount of money – no matter how primitive or inefficient the actual product was. Under time pressure, new technology is a luxury, an additional cost and an additional risk. Companies may have been aware of that fact, but there is no use being aware of things going wrong, when you would go bankrupt long before you can prove your concept. In the end it meant that the whole branch of the industry was led into a dead end – as we now see with the bankruptcies of solar power manufacturers. But lets have a look at the current state of the art.
We need to differentiate between two applications of solar power. The first is rooftop solar power. Rooftops are constrained. The owner of a house has limited space and will probably go to some length to optimize the profit he can gain. Usually, tariffs for rooftop solar are higher, but so are installation costs and budgets of house owners, compared to industrial investors. The constraints of space means that the owner will have an incentive to use more efficient panels up to a point, in order to maximize the amount of profit gained – so long as the budget is sufficient. This profit may not just be money, but also energy – depending on the reason for buying the panels. The rate of profit is often of secondary importance.
If you have 20 square meters of roof space, you may want to prefer 15% efficient panels over 10% efficient panels, if you can afford them, even if they are somewhat more expensive on a per watt basis – so long as the increase in marginal cost is below the increase in marginal profit.
The problem for the solar industry is, however, that it is running out of house owners both willing and able to buy solar panels at a time when it was expecting their numbers to be limited only by the producers ability to deliver more panels. To paraphrase Henry Ford: “Empty roofs don’t buy solar panels, people do.” This misunderstanding led the industry to overestimate demand and to invest in too much production capacity. This has now forced prices down to the point where producers go bankrupt.
It is worth pointing out that the decrease of prices is not mainly driven by a decrease of costs through innovation and improvement of processes (although especially the latter is perfectly unavoidable). The main driver of the prices is oversupply. Had demand held up to expectations (some 10-20GW in Germany, instead of maybe 7 GW), prices would have had no reason to fall in the first place. The decrease in cost is driven by Chinese manufacturers – by externalizing cost of environmental protection and wages, not by an improvement of process or technology.
That said, I am in favour of installing as much rooftop solar as possible in terms of the technology. There is little reason not to do it, if it wasn’t for the way feed-in tariffs are financed. Solar panels are a rich man’s game and so is house ownership in most countries. There is nothing wrong with that, but the money they earn is paid by all private consumers of electricity, most of whom are not rich at all and cannot profit from solar power for lack of money and real estate. (At least in Germany, industry is exempt from paying for financing the feed-in tariffs.)
To put it (only slightly hyperbolic) in contemporary terms, it’s the 99% paying for the subsidies of the 1%. If such tariffs were financed through taxes, mainly paid by those who could afford to buy solar panels, it would be a very different situation. If you are rich and you don’t want to give your “hard earned” money away to all the other rich guys, you better invest in solar power. This way things turn into a prisoners dilemma among the rich. While the most profitable outcome for all concerned would be to have no solar panels at all (nobody would pay the solar tax), every single participant can profit from this arrangement or avoid damage by installing solar panels. And experience tells us that this is going to be what people will do.
I will deliver an estimation of the potential energy gained this way further on.
Solar Power Plants
Industrial solar power plants are a very different matter. There is little incentive to use higher efficiency solar panels (or other technology) if this has an impact on the potential rate of profit to be gained. Buying a larger area of agricultural land is much cheaper than using more expensive technology. And since solar power is perceived as environmentally friendly per-se, there is usually no investigation on environmental impact to speak of, if you compare it to much lower impact investments such as power lines or rail roads.
A typical installation will use thin film solar panels. For reference, I will use the installation in Lieberose, Germany. It is a new, tightly packed installation and about as efficient as it gets in terms of static layouts. The cells have an efficiency of 10%. The park has a size of 1.62 mio square meters and delivers 52 mio kWh of electricity per year, which corresponds to an average power of 5.9MW.
As we can see, such a park will deliver about 4W per square meter in Germany. Allowing for losses due to long and medium-term energy storage (in order to make this power rating comparable to conventional power plants in terms of quality – as I discussed at length, again assuming that about one third of the eventual consumption is fed from stored energy), this must be reduced to about 2W per square meter.
Now you might be suspicious of this number. Doesn’t roof top solar provide 10W per square meter of collector area? It does. But collector area is less than half the story. In our example, 700,000 panels adding up to a total collector area of 500,000 square meters were installed on an area of 1,650,000 square meters. That’s because some distance between two panels is unavoidable. the rows of solar panels to avoid casting shadows on them. This is less of a problem closer to the equator, where the sun won’t be in the south at noon, but basically overhead. (This factor is already accounted for in the average annual insolation maps.) On the equator panels also don’t need to be installed at an angle, but can be put down flat. In any case, you need additional space between the rows for accessibility with vehicles during construction and maintenance.
The size of such installations is staggering. In order to build the equivalent of a 1 GW power station, an area of 500 square kilometers or 50,000 hectare must be occupied with solar panels as tightly packed as the ones in the picture. For comparison, the city of Berlin has a size of 891 square kilometers. A power plant of similar size would provide merely 2.5% of the total electricity demand of Germany.
It is easy to see that this is a problem. Even major advances in technology (such as panels with 20 or 30% efficiency at a fraction of the current cost of 10% efficient thin film) would still require the area of dozens of the largest cities in Germany to be completely paved with solar panels in order to provide the majority of electricity through solar power.
So, isn’t rooftop solar enough then? Well no. Rooftops are in fact only make up a fraction of the area of a city, on the order of 10-20% (especially when you have to consider whether or not the roof has a favourable southern inclination). Most is occupied by roads, walkways, parks, lakes and so on, areas in which solar panel cannot be installed. Of course, solar panels can be installed above streets, parking lots, railways etc., but even that has its limits. People do actually want to be able to have a clear view of the sky, even (and especially) in a city.
There is no doubt that rooftop solar can make a major contribution to the electricity needs of any country, but this is on the order of maybe 10%. (The total contribution of solar power to German electricity was just under 2% in 2010, despite the preponderance of solar farms. There is still a lot of potential left.)
Given the necessary size of solar farms, however, I despair of the current enthusiasm for this technology. Putting the grandiose plans of some environmentalists into practice would lead to environmental destruction on an unprecedented scale. And I won’t even discuss their monetary cost. (At the end of 2010 the amount of money that will be paid over a span of 20 years as feed-in tariffs for solar power has reached 100bn Euros in Germany, despite delivering a vanishing quantity of the total amount of electricity needed.)