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Hotter than the Sun

Joern Pelzer and Marko Maschek investigate the potential of solar power generation technology, its applications and future markets.

Harvesting the power of the sun is one of the most exciting technologies of our time. In the last five years it has seen an unparalleled renaissance due to global warming, government subsidies and private equity investments into the space.

Solar technologies fall into three categories – photovoltaics (PV), the conversion of sunlight into electricity; concentrated solar power (CSP), where steam or hot air generated from sunlight drives a turbine generating electricity; and solar thermal, which is used for heating and warm water.

Photovoltaics
PV uses a physical phenomenon, called the photo-effect, in which a light particle or photon penetrates a semiconductor material and shakes loose an electron in the outer or valence band of the material.

A certain energy level, expressed in electron volts, is necessary to generate a free electron depending on the characteristics of the semiconducting material. The free electrons are collected across the semiconductor and represent a current. Einstein received the Nobel Prize in Physics for this discovery in 1921.

Less than 5 giga-watts (GW or one billion watts) of PV are installed globally – the equivalent output of five nuclear power plants. Solar cells have been used since the ‘50s, most commonly in space applications because of their extremely high prices and light-weight characteristics. However, it is only in the last 10-15 years that solar cells have been used commercially. They have come to prominence on residential rooftops and in some consumer electronics applications such as pocket calculators or watches.

Concentrated Solar Power
CSP was developed in the early 1980s and has recently garnered fresh attention. The basic principle is to use parabolic troughs consisting of mirrors which track the sun and concentrate the rays onto a receiver. The receiver contains a liquid which is heated up to approximately 400°C and passes through a heat exchanger. There it generates steam which drives a turbine, much like a conventional power plant.

CSP is a reliable form of energy generation and can be deployed at utility scale. Due to its storage characteristics – the liquid can retain heat – it can be used for base loads and even to generate hydrogen.

The largest CSP power plants are based in California and Spain – the California plant has been reliably producing energy since the 1980s. Spain is the hottest place on the planet for CSP due to feed-in tariffs. The Spanish utility Iberdrola, one of the largest developers of renewable energy, recently announced a combined 500 MW across Spain.

The US also has an interest in CSP and several projects have been reported in Tucson and Boulder. The US also seems to lead a new generation of dish Sterling technology, where a Stirling Engine is employed to generate electricity. The Stirling Engine is an external combustion engine that uses a temperature differential to generate power. It is mechanically less complicated than an internal combustion engine but its dynamics are difficult to master and therefore no large-scale deployments have occurred. Currently prototypes are being built and have the potential to produce hundreds of megawatts of power.

Solar Thermal
Solar thermal is perhaps the least known but most built out solar technology – the International Energy Agency reported 115 GW of this technology installed globally. Solar thermal is used for space heating and is often integrated into buildings. Water circulates in collectors and tube systems, and the stored heat generated from the sun is fed into a heating system.

The leading country is surprisingly China, representing 44% of the world market, followed by Japan, Turkey, Israel, Greece, Brazil, Austria and the US. China has four solar water heater standards and almost 1,000 factories and dealers produce and sell solar water heaters. The Europeans seem to have one of the most ambitious visions for solar thermal, however, which is to supply up to 50% of low temperature energy by 2030.

The benefits of the large-scale installed base of solar thermal are evident when looking at the savings in oil and reductions in CO2 emissions. The International Energy Agency estimated oil saving in 2004 in the order of 2 billion gallons, or about 2% of the total annual US gasoline consumption. For CO2 emissions, the savings would amount to approximately 21 million tons or roughly 5% of Germany’s National Allocation Plan for allowed annual CO2 emissions.

Three generations of PV
There are three generations of technology in the photovoltaic (PV) market. The first generation (Gen 1.0) has been in use for more than 50 years and uses silicon as its basic material. Silicon demand by the PV industry has seen a recent shortage of solar silicon, however this is expected to ease by 2008. While PV based on silicon is a mature market, exhibiting the best conversion efficiencies and lifetimes, it is also the most expensive. It is costly and challenging to bring a solar wafer plant on-line and the model very much resembles that of the semiconductor industry where large scale fabs rule.

About 20 years ago a second generation PV technology was introduced, commonly referred to as thin-film because the cells are made by covering a carrier with a thin layer of a combination of materials, such as copper, indium, selenium or cadmium telluride. In general, Gen 2.0 technology is cheaper to make than Gen 1.0, because it is lightweight and flexible. Its conversion efficiencies are lower than for plain silicon, which has traditionally limited its usage. So-called amorphous (or a-silicon) also falls into the Gen 2.0 category. It uses only a small amount of silicon compared to Gen 1.0.

There is a great deal of potential in Gen 2.0 technologies as the conversion efficiencies are approaching 10% and are getting close to Gen 1.0, with better potential for lower costs. It should be noted that most thin-film materials are toxic, which may reduce its use in the residential market as there is a precedent for avoiding toxic substances in buildings, such as the ban of lead paint or asbestos.

Third generation PV (Gen 3.0) is very much in its infancy and leaves the traditional semiconductor space altogether. Prototypes that produce electricity at relatively low conversion efficiencies are available today, and solar cells printed on plastic or glass using organic materials have been cultivated by some start-ups, including Konarka, a 3i  portfolio company. Some California-based venture-backed companies have come up with nanostructures for the use in PV. These approaches are likely to push costs down and open entirely new markets in the next 5-10 years.

To summarise, the three generations have advantages and drawbacks including (in order of importance): cost per watt; conversion efficiency; lifetime; solar harvesting or spectrum efficiencies; weight per surface unit; flexibility; colour and pattern schemes; and toxicity. While Gen 1.0 has been deployed en masse over the last 10 years and represents roughly 90% of the market, there is room for the next two generations to enter the scene, especially since costs play such an important role to compete with standard electricity generation. The “sound-barrier” is $2 per watt on a module basis, something that Gen 2.0 materials can reach in the foreseeable future. Less than $1 per watt will be achievable with Gen 3.0 at a cost of lower conversion efficiencies and lifetimes mid-term. In 2005, for example, the average price per watt was at $3.50 for modules.

Market growth
There is a difference between on- and offgrid applications for PV and, historically, grid connected PV systems, such as those on residential and commercial rooftops, have represented the bulk of the market. The three smallest markets, each with a 6% market share in 2005, were consumer, off-grid and communications applications.

The total market is poised to grow on average by 30-40% per annum. The leading country is Germany where 600 MW were installed in 2005, followed by Japan. China is catching up fast and is home to one of the most successful PV manufacturers, Suntech, which had a reported output of 82 MW in 2005. Globally, Sharp of Japan has been the largest producer of PV, followed by German’s Q-Cells, the third and fourth position went to also Japanese Kyocera and Sanyo.

With decreasing costs per watt due to innovation and price drops for silicon, a 2010 average module price could be in the range of $2 per watt or less. We see growth across all markets and the emergence of niche markets like consumer electronics, clothing and military applications. Konarka, for example, is working with OEMs to integrate its PV material into clothing and it is conceivable that we will see electricityproducing jackets, backpacks and handbags within the next five years.

Besides PV on rooftops, new materials could be integrated into the external and internal architectural elements of buildings, from wallpaper to windows. Consumer applications will not need the 25 year life-time and the stability specifications for rooftops, instead they have to be lightweight, flexible and cheap.

Another requirement is the ability to produce electricity from internal light sources. Incandescent and neon light occupies a different part of the spectrum to sunlight and one of the advantages of Gen 2.0 and Gen 3.0 materials is better energy conversion indoors, which makes up for the lesser conversion efficiency compared to Gen 1.0 technology.

Overall outlook
Given the enthusiasm for PV and the ever increasing amounts of government subsidies, PV will continue to be sold out for the years to come. The California Solar Initiative alone will require 800 MW every year to be installed in the US until 2016. In 2005 only 108 MW were actually installed.

We will witness subsidies running out by the latter half of the next decade when electricity generation from PV will be cost competitive with standard sources of electricity generation, at least in sun-rich parts of the globe. Winning companies will have a cost base of $1 per watt and global distribution. Many wireless devices will have PV embedded to stretch battery life – we might by then be walking on solar carpets and see the outside world through solar windows.

PV is also a chance for the poorer nations to catch up because they get more of the sun than developed countries in general and often have no electricity grid. A great example is the one laptop per child programme targeted at children in developing countries, which could be the first large scale consumer application using PV.

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