Sun’s power proves elu­sive

Har­ness­ing sun­light has so much prom­ise, but has yet to de­liver, writes Keith Orchi­son

The Weekend Australian - Review - - Investments -

CAN so­lar do it this time? Dur­ing the last ma­jor oil cri­sis in the 1970s gov­ern­ments and in­vestors saw ma­jor po­ten­tial in pro­duc­ing elec­tric­ity from the sun and from wind. Three decades later wind power has soared to reach 100,000MW of global ca­pac­ity, while the so­lar in­dus­try still lags in the wannabe’’ cat­e­gory.

How­ever, clean­tech’’ in­vestors see the cur­rent record oil prices and the col­lat­eral rise in global gas prices open­ing strong new op­por­tu­ni­ties for the so­lar in­dus­try. As Por­tuguese eco­nomics min­is­ter Manuel Pinho, a strong sup­porter of so­lar de­vel­op­ment, says: The per­cep­tion that re­new­able en­ergy is ex­pen­sive is chang­ing ev­ery day as the oil price goes up.’’

The cost is­sue is crit­i­cal for so­lar power as it is far more ex­pen­sive than fos­sil- fu­elled elec­tric­ity. Swiss re­search cen­tre CSEM es­ti­mates that, at best, cur­rent so­lar costs are five times higher than they need to be to achieve com­mer­cial vi­a­bil­ity in their own right with­out car­bon penal­ties for con­ven­tional plant.

None­the­less, many in­vestor ad­vis­ers are con­fi­dent that so­lar has a big fu­ture. Se­bas­tian Wald­burg, man­ag­ing part­ner of Barcelon­abased SI Cap­i­tal, a private eq­uity in­vest­ment com­pany spe­cial­is­ing in re­new­able en­ergy, has told a Lon­don sem­i­nar that he ex­pects 16,000MW of con­cen­trated so­lar power to be in­stalled world­wide in the next six years. Ex­ist­ing CSP ca­pac­ity is only 400MW.

Con­cen­trated so­lar power uses mir­rors to fo­cus the sun’s heat on to wa­ter- filled tubes, turn­ing the liq­uid to steam to drive power tur­bines.

Aus­tralia claims a lead­ing role in the global de­vel­op­ment of CSP through the So­lar Sys­tems project in rural Vic­to­ria — a $ 420 mil­lion plant sup­ported by $ 129.5 mil­lion in sub­si­dies from the Vic­to­rian Gov­ern­ment and the Howard Gov­ern­ment plus a $ 285 mil­lion in­vest­ment by TRUen­ergy, the Aus­tralian sub­sidiary of Hong Kong- based China Light & Power.

So­lar Sys­tems man­ag­ing di­rec­tor Dave Hol­land, who says the north­ern Vic­to­rian project is sched­uled to be fully com­pleted in 2013, pre­dicts that its suc­cess will lead to more than $ 10 bil­lion be­ing spent on 5,000MW of com­mer­cial CSP across Aus­tralia by 2030.

So­lar Sys­tems has been work­ing on its con­cen­trated sun power approach for 18 years, de­vel­op­ing a con­cept ini­tially de­signed by its tech­ni­cal di­rec­tor John La­sich while work­ing on so­lar pho­to­voltaic sys­tems dur­ing the oil price crises of the 1970s.

TRUen­ergy man­ag­ing di­rec­tor Richard McIn­doe — whose par­ent com­pany CLP has op­er­a­tions in Hong Kong, China, In­dia, Tai­wan and Thai­land — says the So­lar Sys­tems project of­fers op­por­tu­ni­ties for sun power de­vel­op­ment across Asia at a time when many coun­tries are look­ing to adopt re­new­able en­ergy tech­nolo­gies to meet the need for large green­house gas emis­sion re­duc­tions.

While con­cen­trated so­lar power is seen as im­por­tant be­cause of its po­ten­tial abil­ity to con­trib­ute to main­stream elec­tric­ity pro­duc­tion, most of the cur­rent fo­cus around the world is on dis­trib­uted gen­er­a­tion from pho­to­voltaic sys­tems on build­ings. PVs dif­fer from CSPs in that they di­rectly con­vert sun­light in to elec­tric­ity but at a much weaker con­ver­sion rate.

Coun­tries as di­verse as Ger­many and Ja­pan, which has led the world’s in pro­mot­ing so­lar PVs through sub­stan­tial sub­si­dies de­spite a less- than- sunny cli­mate, to China and the US, in­clud­ing Mid­dle East na­tions and Aus­tralia, are sup­port­ing pho­to­voltaic de­vel­op­ment.

US- based mar­ket re­search firm Clean Edge says the global con­sump­tion of so­lar power was worth $ US20.7 bil­lion last year and it pre­dicts this will rise to $ US74 bil­lion in 2017. This is a sub­stan­tially higher cur­rent es­ti­mate than that of­fered by Deutsche Bank, which be­lieves the cur­rent global PV mar­ket is worth $ US15 bil­lion — but the bank sees sup­ply ris­ing at 40 per cent a year. Amer­ica — the world’s fourth- largest so­lar power mar­ket af­ter Ger­many, Ja­pan and Spain — brought 150MW of so­lar ca­pac­ity on line last year, 45 per cent more than in 2006, to reach a to­tal of 750MW, still a tiny frac­tion of its over­all gen­er­a­tion plant.

An­a­lysts are pre­dict­ing that, un­der the present sub­sidy ar­range­ment, which the so­lar in­dus­try hopes to see boosted un­der ei­ther Barack Obama or John McCain as pres­i­dent, ca­pac­ity will reach 2550 MW by 2012.

The latest global high point for pho­to­voltaics is the an­nounce­ment by Mas­dar PV, an arm of the Abu Dhabi gov­ern­ment- backed clean en­ergy ini­tia­tive that will see the world’s first zero emis­sions city built in the Mid­dle East in the next decade, that it will in­vest $ US2 bil­lion in man­u­fac­tur­ing ca­pac­ity for PVs. Mas­dar PV plans to spend $ US600 mil­lion on fac­to­ries in Ger­many and Abu Dhabi to pro­duce 210MW a year of ini­tial sup­ply and then to scale up pro­duc­tion to 1,000MW a year by 2014.

Sul­tan al Jaber, Mas­dar CEO, claims the project as the big­gest sin­gle in­vest­ment in so­lar tech­nol­ogy to date and a mile­stone in the small Arab state’s plans to be­come a global clean­tech’’ hub.

Win­fried Hoff­mann, pres­i­dent of the Euro- pean Pho­to­voltaic In­dus­try As­so­ci­a­tion, says the Mas­dar ini­tia­tive is a po­ten­tial gamechanger for the global so­lar mar­ket.’’

The world­wide PVs out­look is not en­tirely sunny: both Ger­many and Spain are on the brink of scal­ing back sub­si­dies to the PVs in­dus­try and tight global sup­plies of sil­i­con, the main el­e­ment for so­lar pan­els, con­tin­ues to con­strain de­vel­op­ment. The price of polysil­i­con, also a key in­gre­di­ent for the IT in­dus­try, has risen 900 per cent in five years to reach $ US400/ kg.

The so­lar in­dus­try hopes that new polysil­i­con fac­to­ries will ease the sup­ply sit­u­a­tion af­ter 2010 and an in­creas­ing num­ber of en­ergy com­pa­nies are seek­ing to get round the prob­lem by re­sort­ing to thin film’’ tech­nol­ogy, which em­ploys glass or steel and very lit­tle sil­i­con. The thin film’’ tech­nol­ogy is de­signed for easy work with other rooftop ma­te­ri­als.

Over­all, the broad view in the in­dus­try and among many an­a­lysts is that, af­ter a very long ges­ta­tion pe­riod, so­lar power is about to cross en­ergy sup­ply’s great di­vide be­tween con­ven­tional and re­new­able re­sources to be­come a gen­uine player in the mar­ket­place thanks to both crude oil prices and the move by gov­ern­ments around the de­vel­oped world to place a price on car­bon emis­sions.

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