Green

Like most of the US solar industry, I have been watching for the tipping point in silicon photovoltaic panel installation and energy costs since the early 2000s.

What the EPA’s Clean Power Plan Means For More Than Just Solar

It's long been-promised by proponents of renewable energy, so I was a bit skeptical in December when it was again predicted to cause a disruption taking market share away from coal and other traditional energy providers in the US market and cause mass adoption of solar as a home heating/cooling and electricity technology.

I also don't immediately buy into the ability of the EPA Clean Power Plan to convert those millions of consumers to home-based solar generation purely based on changes in law that mainly effect producers and not consumers of energy.

Classic 'Solar Tipping Points'

Some great moments in the solar tipping point so far:

  • In 2012 ThinkProgress gave us three handy charts which showed why solar "has hit a tipping point."
  • In 2011 the tipping point supposedly happened for 3rd party residential panel ownership in California, the largest adopter market state... and that did nothing for material costs or even made a speed bump in demand for the dirtier technologies.
  • Even back in 2005, silicon crystalline solar photovoltaic panel technology "hit a tipping point" to supposedly make solar a much more viable energy generation technology. 10 years ago. Yet the demand for materials has still not risen much ever since we began tracking prices in 2012.

The monthly renewables MMI® registered a value of 60 in May, a decrease of 1.6% from 61 in April. The decrease is on par with the generally flat "terse investor frown" trend the index has tracked since its inception so, while it's not disconcerting, it doesn't give great hope for prices of raw materials for silicon panels or wind turbines to rise in the short term, either.

No Increased Demand for Raw Materials

A lot of the metal inputs of these technologies are suffering their own price problems due to market gluts that have nothing to do with solar or wind adoption, particularly steel plate.

The most promising development for solar generation is that it's now cheaper than gas in 47 states, but there's no evidence that that will spur on solar adoption in a place like, say, Minnesota where it's dark much of the day and snowmelt will ruin your roof-mounted panels every winter.

Silicon, itself, is rising in both demand and price as semiconductor and energy use is definitely on the upswing in mature markets. The adoption problem continues to be the scale of the industry. Powering California, Texas, the rest of the West and Florida will not deliver the amount of panels on roofs needed for consistent power generation for utilities and grid owners to divest in backup generation technology. It also won't deliver the amount of homes and commercial businesses generating electricity necessary to push raw material prices up significantly.

Paypal, SpaceX, Cars, Why Not the Solar Tipping Point?

Enter Elon Musk, sensing a business opportunity, and this month's announcement from Tesla Motors that it's expanding its li-ion battery business to homes and commercial properties interested in using a modified version of the automaker's batteries to store solar power generated during the day for their homes' use at night. Hey guys, another tipping point!

It's true that Tesla's advance is economical, necessary and fills a major need in the market: the ability to store energy collected from the panels at night in places where daylight doesn't extend beyond 8 PM. It could also resolve the orientation battle now being waged in California between utilities and homeowners by taking a decision on where stored power goes out of utilities' hands.

Actual Renewable Materials Prices

Still, as we are cautious about the markets we cover, I will wait to see if Tesla's battery business takes off and provides a boost for silicon solar demand. We've been promised a tipping point before. Now, how about that SpaceX IPO, Elon?

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In January 2015, Saudi Arabian company ACWA Power surprised industry analysts when it won a bid to build a 200-megawatt solar power plant in Dubai that will be able to produce electricity for 6 cents per kilowatt-hour.

Why Manufacturers Need to Ditch Purchase Price Variance

That price was less than the cost of electricity from natural gas or coal-fired power plants, a first for a solar installation. Electricity from new natural gas and coal plants would cost an estimated 6.4 cents and 9.6 cents per kWh, respectively, according to the US Energy Information Agency.

Technological advances, including crystalline silicon-solar photovoltaic panels can now convert higher percentages of sunlight into energy and have made solar panels more efficient. As a result, we may be seeing a long-awaited rise in the price of silicon used for the panels, microchips and semiconductors. The week's biggest mover on the weekly Renewables MMI® was the price of silicon, which saw a 7.4% increase.

Last week, manufacturer SolarCity began construction on a $900 million, 1 million-square foot PV panel factory in Buffalo, as well.

The price of silicon rose 7.4% on the renewables MMI last week.

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Deepwater Wind began construction off the coast of Rhode Island on a five-turbine wind farm that will, eventually, have the ability to power 17,000 homes.

Why Manufacturers Need to Ditch Purchase Price Variance

The 30-megawatt, $290 million wind power project began construction this week 18 miles off the coast of Rhode Island, but, itself, is a much smaller project than the stalled Cape Wind farm project originally planned for the area around Cape Cod in Massachusetts.

US Wind Power Lags

Offshore wind projects are common in Europe and a real driver of renewable energy success there. The fact that the US is only starting to get into the offshore game is a testament to how the regulatory framework and maturity of the renewable energy industry are both lagging here in the states.

The death knell for the proposed 130-turbine Cape Wind project may have come early this year when the two largest electric utilities in Massachusetts backed out of a plan to buy most of the power that was slated to be generated by the proposed turbine project, the latest casualty of what can only be described as an environmentalist civil war over whether to place turbines off Nantucket Sound.

Green vs. Green

The Humane Society, the International Fund for Animal Welfare, the International Wildlife Coalition and and others are against the project. On the other side are groups that might normally be considered allies, including the Natural Resources Defense Council, the Union of Concerned Scientists and Greenpeace.

Opponents, such as environmental lawyer Robert F. Kennedy, Jr., say the natural environment of the Sound should be preserved and that the industrial nature of the turbines would spoil views from the shore. They also say that native birds would be decimated by the 40-foot-tall turbines.

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The price estimate of discarded metals; including gold, silver, iron and copper, according to the UN’s Global E-Waste Monitor 2014 report is $52 billion in 2014, alone.

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The gold itself was valued at about $11.2 billion. Some researchers, according to the report felt that in many cases, it made sense to recover the metals.

More Scrap Recycling Needed

Not much was diverted for recycling. Only about one-sixth of last year’s e-waste was moved from landfills for reuse, according to the report.

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The United Nations (UN) recently put out a listing of countries and regions dubiously leading in the generation of electronic or e-waste.

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E-waste, for this discussion, includes electronic and electrical equipment. Everything from printers and computers to discarded cell phones, calculators and other personal electronics was counted by the UN. Even vacuum cleaners, toasters, electric shavers, video cameras were included in the total as all were dependent on being plugged into a wall.

US, China, Dubiously Top E-Waste List

India found itself in the 5th spot, having discarded 1.7 million metric tons of electronic and electrical equipment in 2014. The US (7.1 million mt) followed by China (6 million mt) topped the “Global E-Waste Monitor 2014,” report compiled by the United Nations University (UNU). Together, these two were responsible for about 32% of the total e-waste.

Regionally, most e-waste in the world last year was generated in Asia at 16 million mt. The top three Asian nations with the highest e-waste generation in absolute quantities were China with 6 million mt, Japan with 2.2 million mt and India with 1.7 million mt.

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I always think it harsh, particularly for those of us sitting in northern Europe often under leaden skies, that the Middle East is not only blessed with vast reserves of cheap and easy to extract oil and natural gas, but even more limitless supplies of sunshine.

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When the oil runs out they will become the powerhouse of the world again, but this time generating electricity. True sandstorms in desert areas are a source of considerable maintenance and repair cost, but clearly aren’t a major hindrance as solar and wind farm investments have boomed in 2014 driven increasingly by economics, not subsidies.

Japan and China Investing in Renewables

After all the hand wringing we have done over the years about subsidies paid to wind farms, it comes as a welcome development to report that some 95 gigawatts of increasingly economic renewable generating capacity was created in 2014 at a cost of $270 billion, led by China and Japan who combined, invested $75 billion in solar power.

This is the largest level of new renewable capacity (not including hydro-electric) in one year, at least in terms of GW of capacity. The previous higher spending year, 2011, resulted in lower levels of installed capacity because costs were so much higher then.

Lower Costs

According to the Financial Times, equipment costs have fallen 75% since 2009 while large solar construction and connection costs have fallen by up to 65% in the last four years and solar panel efficiencies are rising making such projects increasingly attractive.

Thierry Lepercq, chairman of Solairedirect, a French company that has 57 solar parks built or under construction around the world said, “We’re generating power at lower prices than other energy sources in Chile, India and South Africa.”

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Steel mill utilization rates dropped to below 70% in March and have stayed there. U.S. Steel, ArcelorMittal and Evraz have all idled mills, while many others have cut utilization amid weak steel demand (particularly anything exposed to oil and gas tubular markets) and high inventories of flat steel products.

Steel imports are still arriving, but will slow sharply in the second quarter and through the remainder of the year as US steel prices are no longer priced significantly above markets in the rest of the world. Weaker-than-expected US manufacturing data will also mean that it will take some time to work those inventories off. As such, we don’t expect US steel mills to reboot until September or so.

Weak Demand

Weak demand and plentiful supply means a continuation of low prices.

However, the fundamental position is driven by the competition with pig iron – scrap’s core substitute. Here iron ore continues to slide as China acts to protect its own producers while international suppliers’ output piles up. The bankruptcies/closures seen so far (Atlas in Australia, Cliffs in Canada) are nowhere near enough to balance the market.

Until a bigger supply response is seen (and there will have to be one at some point), the price will move inexorably downwards. Despite the downward adjustment of scrap prices seen so far this year, it is still more cost-effective on a global basis to make steel using iron ore than scrap. That will mean further weakness for scrap-based electric arc furnaces around the world as they switch to either pig iron or billet as their primary raw material. If global scrap prices fall again, US exporters will sell more to the domestic market and hence our concern that $250 per ton is not the floor for US scrap prices.

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Ontario, Canada just decided to undertake a cap-and-trade approach in reducing their greenhouse gas emissions, joining its Frenchier neighbor Quebec and the US state of California under the so-called Western Climate Initiative and its cap-and-trade program, to invest further in a green future.

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It remains to be seen how Canada’s oil sector – and a host of other industrial sectors, especially those with operations in Ontario – will fare under the cap-and-trade scheme.

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Last month we lamented the slow growth of both the US and international solar and wind power supply industries. While we can't report a great one-month turnaround, renewables were flat as a board again this month, incremental progress seems to picking up steam in local markets both here and abroad.

Flat? Steady? You Make the Call

The monthly Renewables MMI® registered a value of 61 in April, proving that one man's steady with March's value is another man's flat with March's value.

Free Download: Cut Your Silicon Shipment Costs

While it might not be realistic to expect neodymium and solar silicon to trade into the higher ranges of our MMI reports, one would certainly think that increased adoption would lead to somewhat higher prices for mature technologies such as solar. While prices are not increasing for the base materials there were several positive stories about market-based solar technology adoption this month.

Texas Solar/Wind Power

In Texas, the city of Georgetown became the first city in the state to commit to receive its energy from 100% renewable sources by 2017.

In Georgetown, the city utility company has a monopoly and can choose the city’s provider like individuals elsewhere in Texas. When its staff examined their options last year, they discovered something that seemed remarkable, especially in Texas: renewable energy was cheaper than non-renewable. In February, city officials finalized a deal with SunEdison, a multinational solar energy company. It means that by January 2017, all electricity within the city’s service area will come from wind and solar power.

Last year Georgetown signed a 20-year agreement with EDF for wind power from a planned project near Amarillo, the deal with SunEdison takes the renewable elements of the city’s power supply up to 100%. SunEdison will build plants in west Texas that will provide Georgetown with 150 megawatts of solar power in a deal running from 2016 or 2017 to 2041.

India Solar

If a small city in Texas embracing renewables doesn't convince you the needle is moving, then perhaps bigger government-supported projects in India are what's needed to convince the skeptics.

In the build-up to India's government-sponsored RE-Invest 2015 conference, participating companies provided non-binding investment indications of 166-gigawatts of solar power generation capacity and five-GW-per-year solar manufacturing capacity.

SunEdison and First Solar committed to build more than 20,000-megawatts of clean energy capacity in India by 2022. SunEdison said it would build 15,200 MW of solar and wind power capacity by 2022, while First Solar made a commitment to develop 5,000 MW of solar by 2019.

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Georgetown, Texas, a community of 50,000 people 25 miles north of Austin is poised to become the first city in the Lone Star state to receive 100% of its power from renewable sources.

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Thanks to investments in its grid by the state government, most Texas cities enjoy an electricity market that is deregulated, meaning customers have the right to choose from a variety of providers and plans. In Houston there are more than 70 plans that offer energy from entirely renewable sources.

In Georgetown, the city utility company has a monopoly but can still choose the city’s provider like individuals elsewhere in Texas. When its staff examined their options last year, they discovered something that seemed remarkable, especially in Texas: renewable energy was cheaper than non-renewable. In February, city officials finalized a deal with SunEdison, a multinational solar energy company. It means that by January 2017, all electricity within the city’s service area will come from wind and solar power.

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