Fighting Big Solar: Environmentalists clash over paving the desert in order to save the planet

[OKIsItJustMe]

http://www.reason.com/news/show/128044.html

Fighting Big Solar

Environmentalists clash over paving the desert in order to save the planet

Ronald Bailey | August 12, 2008

Last month, former Vice President Al Gore proposed a http://www.reason.com/news/show/127793.html">crash program that would require all electricity in the United States to be produced using renewable fuels such as solar, wind, and geothermal by 2018. The presumptive Democratic Party presidential nominee, Sen. Barack Obama (D-Ill.) is aiming for a more modest goal—a national mandate that http://www.thedailygreen.com/environmental-news/latest/Barack-Obama-green-vote-47102504">25 percent of the country's electricity come from renewable fuels by 2025. And already http://www.cnbc.com/id/25642976">30 states are mandating that some portion of the electricity their residents buy be produced from renewable energy sources.

For example, renewable energy mandates in the sunny Southwest include Nevada at 20 percent renewables by 2015; New Mexico, Colorado, and Utah at 20 percent by 2020; and Arizona at 15 percent by 2025. California ambitiously decreed that 20 percent of its electricity will come from renewable sources by 2010.

Given their abundance of sun-drenched deserts, thermal solar power is the most promising form of renewable energy for these states. Most solar thermal plants generate electricity using mirrors to focus the sun's rays on liquid filled tubes, producing steam that drives turbines. The once killer objection that solar power cannot supply round-the-clock base load power because it only works when the sun shines is now being finessed. Engineers have devised ways to store heat—http://cleantechnica.com/2008/06/29/molten-salt-may-be-solution-to-solar-energy-storage/">molten salt or http://symp15.nist.gov/pdf/p711.pdf">ionic liquids—that can be used to produce steam to drive turbines through the night and on cloudy days.

So, base load solar power now seems technically feasible, but what about cost? Current solar thermal plants produce electricity at http://news.cnet.com/Shrinking-the-cost-for-solar-power/2100-11392_3-6182947.html">15 to 17 cents per kilowatt hour, but many believe it will eventually fall to below 10 cents per kilowatt hour. By contrast, electricity from coal-fired plants costs around http://www.geotimes.org/apr08/article.html?id=feature_kilowatt.html">3 to 4 cents per kilowatt hour. The push for switching from cheap coal to expensive solar is being justified on the grounds that humanity needs to reduce the emissions of carbon dioxide from burning fossil fuels that contribute to man-made global warming.

…

[phantom power]

1. There is no risk free energy.

[texastoast]

2. I might get flamed for this

But the Mojave is a pretty darned good place for this. Just like West Texas is a darned good place for wind generators.

What people have to realize is that as long as population is not going down and consumption is going up, we have to find a way to heat homes and cook. I doubt that we will all become migratory and follow the good weather.

No one is talking about the real issues: Gluttony and overpopulation. Too damned many people. Wanting too much. Right now.

[NNadir]

3. Wait until we get around to a discussion of where to dump the waste.

The "solar will save us" crowd has been getting a bye on the grounds that solar has just spent 50 years being a failure.

Now rich people are using solar mysticism to 1) rape poor people on energy costs (see the Gazprom Kingdom of Germany) 2) get themselves tax breaks off their brazillion dollar salaries.

This will mean that solar may get close to an exajoule in the lifetimes of people who aren't too old now. (In general one should be under 50 to qualify.)

Of course, the plan is to dump their solar waste on poor people. (See People's Electronic Waste Republic of China.)

[qwlauren35]

4. Solar Waste?

This is a joke and I'm being dense, right?

[phantom power]

5. Well, here's an example:

http://www.washingtonpost.com/wp-dyn/content/article/2008/03/08/AR2008030802595.html

GAOLONG, China -- The first time Li Gengxuan saw the dump trucks from the nearby factory pull into his village, he couldn't believe what happened. Stopping between the cornfields and the primary school playground, the workers dumped buckets of bubbling white liquid onto the ground. Then they turned around and drove right back through the gates of their compound without a word.

This ritual has been going on almost every day for nine months, Li and other villagers said.

In China, a country buckling with the breakneck pace of its industrial growth, such stories of environmental pollution are not uncommon. But the Luoyang Zhonggui High-Technology Co., here in the central plains of Henan Province near the Yellow River, stands out for one reason: It's a green energy company, producing polysilicon destined for solar energy panels sold around the world. But the byproduct of polysilicon production -- silicon tetrachloride -- is a highly toxic substance that poses environmental hazards.

"The land where you dump or bury it will be infertile. No grass or trees will grow in the place. . . . It is like dynamite -- it is poisonous, it is polluting. Human beings can never touch it," said Ren Bingyan, a professor at the School of Material Sciences at Hebei Industrial University.

[NNadir]

6. This is NOT a joke.

The external cost of solar power is the subject of fairly exhaustive examination in the scientific literature.

It is non-trivial.

The picture is very, very, very, very much like the profile of electronic waste, which is hardly surprising since the chemistry is very similar.

The reality is routinely overlooked because despite 50 years of hand waving, solar energy has persistantly failed to become anything but a trivial toy.

Here are the amounts of energy produced by all forms of energy in the United States:

http://www.eia.doe.gov/cneaf/alternate/page/renew_energy_consump/table1.html

Solar is so trivial, it probably shouldn't even be listed. If - I don't expect this to happen - solar ever becomes comparable with say, hydroelectric, the waste problem will become very noticable.

[texastoast]

7. True, there is waste

I did see something in the last couple of weeks where a whizbang improvement has been made to increase efficiency tremendously and that it will soon be coming to market. It will be interesting to see the energy produced/waste ratio on that technology.

[NNadir]

8. There has been whiz bang technology announced every 10 minutes connected with solar electricity.

At least this is true if one longs on here every 10 minutes.

I've been logging on here for more than half a decade - hearing lots of "wiz-bang."

None of it has made solar anything but trivial.

From an environmental standpoing solar has a mass energy density problem, big time.

[texastoast]

28. Maybe this time is different

Seems like it was from serious MIT guys. Hope springs eternal and someday someone will come up with something solar as revolutionary to energy as the Post-it was to notes.

Just maybe not in time to save all this overpopulation.

[n2doc]

11. You ever seen a tar sands mine?

Talk about pollution. The longer we mine/drill fossil fuels the longer we will be creating gigantic pollution problems.
Not to mention what will happen when the coastal cities flood. We need to push hard for non-co2 emitting energy sources. Large areas of the planet are going to be /have been/ destroyed by us anyway.

[tinrobot]

20. How about Yucca Mountain?

[SnoopDog]

9. Why does this solar energy cost 15 to 17 cents?

I don't get it... If the power source (the sun) is free where is this cost coming from? Can anyone help me on this?

[jberryhill]

12. Because solar cells are not free

I can sell you a barrel of oil which will produce X amount of energy for Y dollars, or I can sell you a solar cell which, over the course of its useful life, will produce W amount of energy for Z dollars.

Before you buy either one from me, aren't you the least curious to know what the actual numbers W X Y and Z are?

Solar power is "free" in the same sense that oil is "free" too.

If you go to Los Angeles, head over to the La Brea Tar Pits, and take a look at the free oil and methane bubbling up - all for free.

[SnoopDog]

13. What?

Take solar and coal power plants as an example.

Both 'plants' need to be built - buildings, generators, wire, etc. From an accounting standpoint, these are capital costs and are required for both implementations. Also, for example, Solar One in Nevada, is like a solar furnace and does not use solar cells.

After the power plants are built, they are ready to produce electricity. The coal plant needs a steady supply of coal. The solar plant needs daylight.


Even if one plant or another cost more or less to build, you have to factor in the fuel source.

Your post does not really address the 'higher cost' for a KW of solar electricity vs coal.

I never have been able to find a legitimate reason why there is a higher cost. Intuition says that it is less expensive.

[jberryhill]

14. First, let's decide which technologies you want to compare, and then we can compare them...

Oy...

"Intuition" is not much of an engineering cost comparison technique.

Rather than to "feel" your way, you can readily estimate the cost of a solar installation and some other technology, and figure out how long the payback time is for that installation.

Just a casual search for some consumer products and I find:

1. gasoline generator:

http://www.toolsnow.com/browse.cfm/4,1981.html

$599.99

Rated wattage: 5000 W
6.6 Gallon fuel tank capacity
Run Time on 50% Load: 15 Hours

2. solar panel (the OP is about PV)

http://www.solarhome.org/index.asp?PageAction=VIEWPROD&ProdID=12975

$1,199.95
224W maximum power

...or go find two "things" of your own to compare. Be generous and give yourself four hours a day of that 224W max.

Assume $10 per gallon gasoline.

This set of numbers should be sufficient for you to compare the payback time required before fuel cost of the gasoline generator exceeds the installation cost of a comparable solar power system.

It's not black magic, and it is certainly not intuition. It's just math. Why do you need intuition if you can add, multiply, and divide?

Solar One, btw, is not in Nevada, it's in Yermo CA. When you stop by there, get lunch at Peggy Sue's diner. Say hello to the kinda oddly friendly old guy hanging around the back porch. He's Peggy Sue's dad, and he'll tell you all about the pictures on the wall, which are quite a history.

[SnoopDog]

16. Ok thanks anyway...?

No offense, but, I finally see you have no knowledge on this.

And intuition tells me otherwise so that is why I am asking why 'they' say the cost is $.12-$18 per kw.

And you really should be sure of your facts - here is the link to the Solar One project in Boulder City NV

http://www.nevadasolarone.net/the-plant

I really wish someone could explain the cost structure for the $.18/kw for solar...

[jberryhill]

17. "COST PER KW"

Is the cost per installed generating capacity.

That 224W panel costs $1199. They aren't giving it away for free. That's a retail panel at $5.00/W (or 5000/kw).

I'm glad to learn that after earning a Ph.d. in electrical engineering and working primarily in solar for years (my senior design project was a solar generating system), that I have "no knowledge".

"Solar One" was the name of the plant in Yermo:

http://www.yermocsd.org/news/oldnewsroom/LocalImageLib-archive-1-1-2007.html


This is a view of the Original Solar One Electrical Generating Station just East of Daggett. Southern California Edison built this test platform in the 1980's to test the feasability of solar energy production.

That was back in the days when I was working on solar.

And, yes....



Is there as well. Their burgers are excellent, and she did a great job with one of the commercial buildings that had begun to decay after Route 66 was replaced by the interstate.

Now the plant in Nevada cost 266 million dollars. It presumably produces some number of peak watts. Take those two numbers and divide them, and you have the installed cost/watt.

On edit - found it... The Nevada "Solar One" (which was also the name of the University of Delaware's solar house some 35 years ago) has a nominal production cost of 64 MW. So the installed cost per watt of the Nevada Solar One plant is $4.16 per watt.

Now as a point of comparison, you might note that the Sharp PV panel is retail $5.00/W. If you want to cover a few football fields in the Mojave with them, I'm sure you'd get a substantial discount.

You are correct on one point, though. I had forgotten to take into account that everytime someone builds a solar project, they call it "Solar One".

This was the first "Solar One" I saw:

http://www.udel.edu/iec/history.html


Solar One. A demonstration house at the University of Delaware


The Yermo plant was the second "Solar One" I visited.

I didn't realize that anyone would be dumb enough to name a plant "Solar One" within a comfortable drive from a defunct "Solar One" that's been sitting there for years.

Finally - you need to learn the difference between power, measured in watts, and energy, measured in watt-hours. Your question was why does solar have a higher cost per watt. That is a different question from the cost of producing X watt-hours over the life of a solar installation, and the fuel cost of a conventional installation. Just comparing the home gasoline generator at an installed cost of $.12/watt and the Nevada Solar One at an installed cost of $4.16/watt, your intuition might tell you that the next question is how much fuel you can burn before the next incremental watt-hour takes you to the payback point of the solar installation.

[kristopher]

21. Nanosolar thin film panels are down to $0.95/watt with 14% CF. nt

[jberryhill]

18. Okay, here's the cost structure

Solar One in Boulder City cost $266 million and is rated at 64 MW. That's an installed cost of $4.16/W.


A 100 MW coal fired plant has an installed cost of about $1/W, and will use 300,000 tons of coal per year. Scaling that to match Solar One, then you will spend $64 million for a 64 MW plant, and it will use 192,000 tons of coal per year.

Coal is $30 per ton.

What that means is that I can build and run the coal plant for 35 years before I've spent as much money as I spent building the Solar One plant.

And that calculation assumes that Boulder City has sunshine 24 hours a day.

[kristopher]

22. coal jumped to nearly $100/s.t. this year and carbon caps are yet to come. nt

[HamdenRice]

25. Your cost accounting is too simplistic

See post 23.

[jberryhill]

26. No shit, really?

I thought the guy had a genuine question about what it means when one refers to one or another solar technology in terms of $/Watt.

I apologize humbly to you sir, for not writing an economic thesis, but instead throwing together some back-of-the-envelope numbers.

Perhaps you might answer his original question about why any solar technology can be compared in $/Watt.

[HamdenRice]

30. "can be compared in $/Watt."

that's the whole point -- in a fair, forward looking analysis, they can't be compared. They should be compared in terms of variable costs, if it is projected that fixed costs of solar will decline dramatically as a result of economies of scale.

Ironically, that was always the analysis used to promote nuclear -- once the plants are built, the energy generated is almost free. (Of course it wasn't because the cost, inter alia, of disposing of nuclear waste turned out to be a variable not fixed cost.)

You analysis lumps together fixed and variable costs, and therefore is fundamentally flawed when imposed on an emerging technology.

You didn't have to write an economic thesis -- just a back of the envelope analysis that gets basic accounting right.

[jberryhill]

37. "Fundamentally flawed"

Okay, Hamden why don't you have a crack at answering the guy's question, which arises from the fact that he doesn't know the difference between a watt and a watt-hour.

Or how about you post some numbers. I don't care what payback time you get for the solar plant relative to the coal plant, as long as the result is that you successfully demonstrate that you have educated this person to understand the difference between two physical units.

Okay?

But you aren't going to do that. Instead, you are going to harp on the "fundamental flaw" in a back of the envelope calculation to which I said "no shit", meaning it was not intended as some sort of grand economic theory.

But the guy STILL is "looking at my electric bill" and can't tell the difference between a watt and a watt-hour, and you won't help him out.

[oldhippie]

46. Unfortunately, half the people in this forum don't know the difference ...

.... between power and energy. And using big uppy words like "capital cost" and "amortization" gives them the vapors. And then to even broach the subject of math (really arithmetic), why, they'll just swoon.

As a working EE with 30 years PV experience that went over to the dark side and picked up a couple of MBAs, one thing I have learned is 75% of the population has no clue as to how electricity or economics works. Just sayin' ..........

[SnoopDog]

48. Ok, you are an experienced EE person, so I ask you...

Here is the article quote:

"Current solar thermal plants produce electricity at 15 to 17 cents per kilowatt hour, but many believe it will eventually fall to below 10 cents per kilowatt hour. By contrast, electricity from coal-fired plants costs around 3 to 4 cents per kilowatt hour. "

Can you tell me what the component costs are for 'solar thermal produced electricity at $.17/kwh and what the component costs for the coal-fired plants at $.04/kwh?

For instance, lets take coal...

On my bill I will see 30 kwh @ $.08 kwh so I know my 'usage cost'. So what makes up that 'usage cost'? I guess the costs to be....

1. Fuel cost (a direct cost) say, $.03/kwh
2. capital expenditures say, $.03/kwh
3. labor and executive pay say, $.02/kwh

So, breakdown solar thermal $.17/kwh costs - that is my question. Or tell me what I am missing....


I see everyone is an expert here but no real answers.

[oldhippie]

49. I'll give it a shot ...........

I don't have real numbers handy and don't have time tonight to do the quick research, but I think the gist of your problem is this:

I think you've seen that the initial capital cost of the solar plant is currently much more (many times) than that of an equivalent scale coal plant. They've been building coal plants for years and have the plans, procedures and costs nailed down pretty well to be able to build them relatively cheap. They are a known quantity. Big utility scale solar plants are still relatively new. Each one is a bit unique as the technology and procedures mature, but they are still many times more expensive than a fossil plant. True, once it is built the cost of the fuel is almost free, but .......

When the big company or utility goes to build that expensive solar plant, they don't just withdraw the couple billion dollar from their savings account and start building. They have to borrow the money for construction, just like we do to build a house. They go to lenders who invest in such things. Now these lenders, knowing that this is a new plant design, each being more or less unique, has more risk than would be involved in building that old cookie-cutter design coal plant, so they charge a higher risk premium in the interest rate. But, the utility gets the money and starts building the plant. Interest starts accruing immediately. In a couple of years the expensive solar plant is done and can start generating revenue. The fuel is free, but the owners have to start paying down the construction loan and that massive interest bill that has been accruing since day one. That loan has to be paid off over some X years, and that amortization and interest payment has to come from the revenue of the sale of KWHrs.

I don't have any real, typical numbers handy to run, but that loan payment and interest probably is that missing element in the costs that are driving the solar plant generated electricty to $.17/KWHr. I'll just SWAG off the top of my head it may be around $0.10 -$0.12 per KWHr. The coal plant has to pay off their construction loan, too, but it's for a much lower amount. If you are a homeowner with a mortgage, you know that a big chunck of each payment goes to pay the interest. And bigger numbers drive bigger interest payments.

So long story short, I think you'll find that the amortization of the construction and other capital costs are much higher on the solar plant than the coal plant, and that's what is driving the difference. Now, as you and many others have said, that difference is probably going to decrease over the years as fuel costs for the coal plants get higher, environmental rules cost more, carbon taxes kick in, etc. As the industry get more experienced with the designs, processes, and procedures of building large scale solar plants they will find efficiencies and bring the capital costs down. Lower costs, and standard designs will also lower the risk premium that lenders demand, reducing the interest costs. Eventually the curves will cross.

I've been watching this process and this industry unfold for over 30 years. Progress has been excruiatingly slow. But it's getting better and gaining momentum. I think the numbers you quoted, the $0.17/KWHr to be pretty realistic based on my observations. Someday when I have more time I'd like to run the amortization numbers for such a large scale thermal solar plant. I've done it for numerous PV systems, and the numbers are comparable in magnitude.

Hope that helps.

[SnoopDog]

52. Thanks...

So the majority of the cost of $.17/kwh is to pay back the capital costs and interest payments...ok I can see that...

I guess I go back to the idea that once these plants are operational, the ongoing day to day costs is minimal. An investment from the US Government could use tax dollars to build these plants and eventually, our power could approach zero (of course add in maintenance and labor costs and therefore a Usage cost would have to be factored in but that is no where near $.17 or even $.04/kwh.

And as I have posted prior - think of the co2, global warming, toxic chemicals this son;t be spewing and that our health would be better and therefore our health care costs would go down.

thanks again...

[kristopher]

54. You've actually taken the wrong message away from the explanation

First, on capital costs: there is a difference between most renewable projects and coal (or nuclear) plants in that the loan to build the facilities are financed at different rates. The renewables are forced to raise money as high risk venture capital for independent generators costing around 18% and up. The large fossil thermal plants have traditionally been given preferred "utility" rates that are much, much lower.

Second, even if govt buy the plants, we still need to pay for them; discounting costs because the government handled investment is not the way it works.

No, the way the price will drop is for more manufacturing capacity to be built. If only two small companies, each having the ability to build 10,000 TVs were the sole source of flat panel HD TVs, what do you think they would cost?
If other companies enter the market to manufacture comparable TVs, what happens to the price?

The key to dropping price is a set of laws that say: "we are going to stop using fossil fuels and start using solar." This will tell people with money that a lot of people will be buying solar units (PV or thermal) and that building a plant to supply those units is a good investment.

Another law that allows faster depreciation on such manufacturing facilities would help.

Another set of laws that guarantee the same rates for renewable facilities as coal plants get would also help.

Now one final point. The $0.04/kwh you have been using for coal is NOT for new facilities with modern antipollution equipment (not talking about carbon at this point). The cost/kwh from new plants is closer to $0.08 - $0.09 /kwh. The .04 average includes old, paid for plants that are extremely dirty and that should, in many cases, be shut down. Two factors are set to make that new plant and average cost much higher; first is the demand for coal and the dwindling supply. Fewer and fewer easy to remove veins of coal remain (if you call chopping off the top of a mountain "easy to remove"). The seams are getting smaller and narrower and are not able to be extracted efficiently with existing technology. The second of course, is the cost of carbon. Adding carbon costs will push up the price of coal even more.

How much these increases will amount to is yet to be seen.

[Indenturedebtor]

66. So 30 years ago solar wasn't feasible? I'm shocked!

And it was a pilot project you say? Pilot projects are expensive?

Come on.... Can we also consider what mass production would do for the pricing?

[Finishline42]

43. So if we use more realistic numbers

At $4 a gallon for gas. After 340 hours of operation you would have spent $600 on gas so now both systems are at $1200.

But you have generated a lot more power with the generator but the point being is that for the next 40-50 years you can generate electricity for that $1200 you spent, whereas you have to keep buying gas at some unknown price for those years and we know the generator is not going to last that long.

What happens if the price of PV drops by 30-50%?

[HamdenRice]

23. You are asking an excellent question. Don't let the "smarter than thou" types throw you off.

jberryhill is, on the simplest level, correct -- solar plants cost money. But his analysis is too simplistic, and is not the way either a power company or more precisely a governmental development plan would look at the cost of solar versus carbon power.

The concepts you are looking for are variable costs, fixed costs, and depreciation. Using these concepts, you could price the cost of solar power differently from the way jberryhill has.

To explain these costs, let's use a very simple hypothetical factory that produces spoons. It buys sheet metal, stamps the metal into spoons with a machine, and sells the spoons. Assume the machine is very sturdy and needs almost no maintenance.

There are several sets of costs associated with this production process. There is the cost of the machine. And there is the cost of the metal (as well as the cost of factory workers).

To figure out whether the company is making money on the spoons, the company will ask itself: is the sale price of each spoon higher than the cost of the sheet metal and labor that went into it, plus the cost of the machine? If the sale price of a spoon is higher than the cost sheet metal (along with some piece of the cost of the machine), than making spoons is profitable. The cost of sheet metal and labor are variable costs. These costs are defined as costs that increase the more stuff you produce; in other words, you can't make more spoons without buying more sheet metal.

But the cost of the machine is a one time expense. The cost of the sheet metal is recurring. The company will not, by accounting rules, be able to deduct the cost of the machine all at once. They figure out how long the machine will last (say 20 years) and divide the cost of the machine by 20 and subtract 1/20th the cost of the machine from their income each year to understand the part of the cost of the purchase of the machine that goes into each spoon.

That cost is called "depreciation."

Depreciation is a fixed cost. It does not change depending on how many spoons you make. If business (demand for spoons) is good, the company will speed up the machine. If business is bad, the company will slow down the machine. But the cost of the machine stays the same (ie it's fixed).

Now, here is the very strange thing about business decision making: in many contexts, in making decisions about manufacturing goods (including electricity), variable costs are more important than fixed costs. To put it another way, we are often more concerned about whether the cost of the sheet metal that goes into the spoon is higher than the price of the finished spoon, than we are about whether the cost of sheet metal plus the cost of depreciation is higher than the price of the finished spoon.

One of the more difficult decisions any business is faced with is when the price of the good is profitable when measured by variable costs, but not profitable when you add fixed costs; in other words, what happens when the sale price of the spoon is higher than the cost of sheet metal (and labor) that went into it, but not higher than the cost of sheet metal and labor plus depreciation.

In many settings, orthodox business decision making says something quite strange: keep producing spoons; it's profitable now even if it's not profitable on paper, because depreciation isn't a current out of pocket cost, but instead a mere accounting item. Keep this idea in mind, because it relates directly to solar.

Now here is why this is such an important problem for solar power. A much higher percentage of the cost of producing solar power is fixed cost compared to the cost of carbon power. To produce more power from coal, you have to buy more coal. Sunshine, the "input" of solar power, by contrast, is free.

This is very important for countries that have "industrial policy" -- policies that governments use to make plans to favor certain industries for development. Most East Asian and European countries have industrial policies. The U.S. is one of the few economically advanced countries that adamantly does not have "industrial policy" (because it smells of socialism) -- or I should say we pretend we don't, but we do when industries favored by the right wing, like nuclear and military, are involved. That's why East Asia is whopping our asses economically; they have well thought out industrial policy.

One effect of industrial policy is that typically the government will pick up part of the cost of, or subsidize, initial investment costs -- the costs that will become depreciation, or fixed costs -- ie the cost of buying the spoon making machine or the solar generator.

To give you another hypothetical, but concrete example, imagine if a government decided to simply pay completely for the cost of two power plants, and turn them over to private power companies as a gift. Imagine that one plant was solar and the other coal. The solar company would now have no depreciation cost and extremely lower variable costs. By contrast, the coal power company would have no depreciation costs as well, but would continue to have variable costs that depended on the price of coal.

So if the sunk costs of the power plants were covered by "gifts" (or more realistically development subsidies) it's possible that the cost of solar power would be lower than the cost of coal.

The point of this example is that many economists believe that solar will only become viable if the government subsidizes the development of the early plants, until technology development costs come down. (This is what the government did with nuclear, and many of the technologies, such as microprocessors, that derived from the space program and military.) It means that solar power, because of its low variable costs, is uniquely well suited to government intervention. It means that subsidizing initial investments in solar construction lead to very, very low costs down the road, because you've taken away the fixed cost and there are little variable costs.

It means, as your intuition suggested, that solar power has the potential to be extremely cheap, especially if we calculate its costs based on variable costs, if government industrial policy picks up the investment costs that would otherwise later be treated as depreciation.

[jberryhill]

27. "if government industrial policy picks up the investment costs"

Ding, ding, ding... we have a winner.

And that is precisely why so many solar projects from the 70's are idle or abandoned. Incentives were offered, investments were made, accounting magic did its stuff, and the investors moved on.

But, seriously Hamden, the original question was pretty basic - why does solar have a $/Watt figure associated with it, and it's a good bet that the guy doesn't know the difference between capacity in Watts, and energy in Watt-hours.

solar power has the potential to be extremely cheap

Absolutely. As can anything else, provided the appropriate artificial environment.

I don't think you are going to easily peg me as "anti solar", since it is the reason I pursued an advanced degree in electrical engineering in the first place.

[HamdenRice]

29. How much did your first pc cost?

If it hadn't been for NASA and DOD, how much do you think it would have cost?

You are reading this post on the offspring of DARPA's net. Do you think Skinner and EarlG would be able to maintain this site if it had to bear the costs of the development of the internet?

It's happened before and it can happen with solar, without solar power proprietors "moving on."

I'll never understand why some people can understand and enjoy the benfits of industrial policy incentives when it comes to computers, the internet, and nuclear, but go all free market fundamentalist when it comes to the one technology we may need to develop to save the planet from climate catastrophe.

[jberryhill]

36. Hamden, you are missing the point

Yes, ding dong, NASA funded part of the solar work I was doing two decades ago.

Now go read post #35, and what THIS PERSON'S question is.

His question is why does solar cost $X/watt, because he is looking at his electric bill and trying to figure out why what he's being charged for a kwh is different from the article's mention of a coal installation costing a different $/Watt figure.

The numbers in the back of the envelope calculation I posted were to help him understand that his confusion is between two different things.

[Finishline42]

33. As pointed out elsewhere in the thread

solar power has the potential to be extremely cheap

Absolutely. As can anything else, provided the appropriate artificial environment.

There is a difference with solar vs coal in that solar cost is 95% upfront and coal is a lot less but then you have the cost of coal that is not a fixed cost. Plus, what are the subsidies on the mining and transportation of coal? True cost of coal is a difficult number to pin down.

With solar - at some point - you reach a break even point - where the income from the power generated pays off the investment - how much longer will the plant be productive?

With a coal plant - that break even point is reached quicker for the equipment, but the cost of coal and operational costs are a major part of the cost of power and have increased consistently over time.

[HamdenRice]

56. Excellent points, all nt

[wtmusic]

32. I'm trying not to let the "smarter than thou" types throw me off

but the SMTs keep providing numbers and you don't. It's throwing me off. :shrug:

[HamdenRice]

39. Providing numbers is false certainty if the numbers are garbage

You know the old phrase, garbage in, garbage out. The numbers are meaningless because they mix fixed costs and variable costs with respect to an emerging technology.

It's as though I tried to convince you that it was better to live in Montgomery, Alabama than New York by adding together the average temperature, the average yearly family income, and the average height of 16 year old boys, and then dividing the outcome by the number of Starbucks per capita.

Sure, I'd have a number, but what would it tell you about the quality of life in Montgomery and New York?

[jberryhill]

40. okay, then you don't want to explain the difference betwen $/W and $/Wh /nt

[wtmusic]

42. OK, point taken.

However...

if I was provided the average temperature, the average yearly family income, the inches of rainfall, and the violent crime rate I would have a basis on which to make a rational judgement. Maybe not a definitive one, but it's going to advance my understanding of Montgomery and what it means to live there.

In #14, jberryhill provided a concrete example of how much more expensive solar-generated power is than that generated by gasoline.

What is your contention that "solar power has the potential to be extremely cheap" based on? You claim that its "if we calculate its costs based on variable costs, if government industrial policy picks up the investment costs that would otherwise later be treated as depreciation". It's certainly conceivable that there might be variable and investment costs which would still make solar energy impractical. Without any numbers, even rough numbers, it's impossible to tell.

[SnoopDog]

34. Thanks for your response. Still doesn't add up - at least to me...

The article states that the cost of Solar Energy is $.17/wk and $.04/kw for coal. To me that says - look at your electric bill and you may use 30 kwh per month at a cost of $.083478/kwh (this is from coal, etc). So I would say that the article is off from the get go because this is my actual bill.

So exactly what comprises the $.04 or $.17/kwh cost?

I would say that the $.17/kwh is unsubstantiated.

Once again, my intuition and investigations says that once solar furnace generated electricity comes online, the costs are extremely minimal. You have maintenance costs and employees to run the operation. The fuel is free. Eventually the electric bill payments will pay off the capital costs and result in a 'paid for' power plant and free fuel source thus making for what I would believe to be near free electricity (yes add in maintenance and employee costs).

Then add in the other costs savings and benefits - very little CO2 output. This directly addresses our clear and present danger of global warming. No mercury and other toxins being spewed into our air and soil. Our cleaner air and soil will directly result in Healthier people and thus reducing health care cost.

And lets be clear - the other power sources, especially nuclear, are heavily subsidized. And what to do with the nuclear wastes?

Using the Solar One power plant as an example, it costs $260 million and services about 14,000 homes. $1.04 billion dollars would service 56,000 homes. Talking about subsidizing - if we just took the cost of the illegal Iraq invasion, we could build 35+ Solar One power plants servicing 490,000 homes.

[jberryhill]

35. Hamden, do you see what I mean?

He doesn't understand the difference between a KW and a KWh.

Last try, Snoop:

The article states that the cost of Solar Energy is $.17/wk and $.04/kw for coal. To me that says - look at your electric bill and you may use 30 kwh per month at a cost of $.083478/kwh (this is from coal, etc). So I would say that the article is off from the get go because this is my actual bill.

You are comparing two entirely different things.

A kilowatt is a unit of POWER.

A kilowatt-hour is a unit of ENERGY. If I deliver you a kilowatt for one hour, then I have provided you with 1 killowatt-hour of ENERGY.

Your electric bill is for the ENERGY that was delivered to your house last month, and they are charging you 8 cents per killowatt-hour delivered to your house.

The electric company has a plant they built somewhere which is a 1000 MegaWatt plant - i.e. it is capable of producing POWER at the rate of 1000 MegaWatt.

That plant cost $X million to build, and thus the installed POWER CAPACITY is $X per Watt of installed capacity.

IF I say that solar is $1/watt and I say that coal is 10 cents/watt, THESE NUMBERS HAVE ABSOLUTELY NOTHING TO DO WITH WHAT IT COSTS TO PRODUCE A WATT-HOUR FROM EITHER OF THEM, AND HAVE NOTHING TO DO WITH WHAT YOU ARE CHARGED ON YOUR ELECTRIC BILL.

[SnoopDog]

38. Well now Doctor....

You are now simply being insulting. Your lack of any tangible information on my questions proves this.

I do indeed know the difference between kw and kwh. Mistyping is my only mistake in the sentence.

So go back to your 'diner' and have a cup of coffee while we hopefully get some intelligent responses to my very simply stated yet hard to answer question.

[jberryhill]

41. Well if you know the difference

...then why would you compare the cost of energy in $/Kwh from your electric bill, to the cost of coal generation in $/W in the first place?

Can you restate your question?

[kristopher]

44. That isn't correct, JB.

Even though snoop isn't labeling the term properly, the relative costs he is referring to ($0.04 & 0.17) generally accord with the average price/kwh of the two technologies. The installed costs per kw are so different that the meaning of the question is self evident - if you are informed.
As to the relationship of those numbers to his electric bill, it is common to miss the fact that the price on the bill is thhe averaged price of electricity that varies both by means of production and by method of purchase on the market. Some of the electricity in that $0.08/kwh probably cost the utility over a $1.00/kwh to provide via the spot market, while some purchased from an old, fully depreciated coal plant might be as little as $0.02/kwh.
Since snoop is looking for information and since you didn't accurately address the question yourself, I fail to see a basis for your condescending attitude.


HamdenRice, thank you for taking the time to provide a comprehensive and easy to understand explanation of the basic economics of production.

[jberryhill]

47. I'm aware of what goes into the charge on the bill....

I give up. Solar-produced electricity is free. I quit the conspiracy this morning.

[kristopher]

55. Don't take offense...

No one said it was free, it just looked like you were a bit too focused on finding a fight rather than creating a meeting of minds. It's a trap most of us tend to fall into.

Inhale and Ommmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm

[HamdenRice]

57. You made a good point, so no need to take offense, but ...

Jberry, you’ve made some excellent points, but I think you were talking past the original question.

I think it is very important to point out, as you did, that solar isn’t free, even though the source of the power is free. The basic point we all agree on is that the cost of energy produced by a solar power generator, whether commercial scale plant or a home solar panel, must include the amortized or depreciated cost of the solar equipment in order to calculate the cost of the energy produced. So your basic point, solar power isn’t free even though sunshine is, is important and well taken.

On the other hand, SnoopDog was asking a more complicated question, and some of the figures and arguments you made didn’t really address it. You used a couple of garbled analogies that further confused the issue – for example saying that oil or coal is free because it can bubble up isn’t right. Oil costs money to pump, coal costs money to dig. But there is a more fundamental issue: the more energy you produce the more coal or oil you need purchase, so oil and coal are variable costs. By contrast, there are few variable costs associated with solar’s energy source, sunshine. A solar plant will produce more energy if it’s sunny than when its cloudy; but there is no extra cost associated with the extra sunshine.

Moreover, your use of a dollar per kilowat figure is confusing and doesn’t address SnoopDog’s question. I should preface this by saying that, as you know, I’m not an engineer, but when I was in finance, I did work on some power “project finance” assignments, including drafting power supply agreements, between plants and grids, and these plants were to be located in developing countries where the logic of development subsidies is different from here.

You are correct in pointing out that when we look at an electrical plant we look at “POWER” and “ENERGY” two terms that are confusing to non-specialists. For those reading along, here is an analogy: suppose instead of electricity, we were talking about a water company. The water company has a huge reservoir (say 20 million gallons) and delivers water to customers by pipe. The total amount of water the water company can keep in its reservoir is analogous to the POWER that can be generated by an electricity plant; the water that flows through the pipes to each home, at a rate of say 20 gallons per minute is like the kilowatts per hour (ENERGY) that is delivered to a customer. So we speak of a 64 Megawatt power station that has 64 Megawatts of potential power; but it delivers kilowatts per hour of energy to each a particular customer.

So the basic point of why I think you were confusing to SnoopDog is that you kept dividing the dollar cost of a solar unit by its power, and comparing that to the dollar cost of a coal station by its power. Yes a company might evaluate its investment on that basis as part of the analysis. But it would also look at the cost of delivering kilowatt hours. That’s a different thing entirely, and was the question Snoop was asking. You can’t mix the two – they’re completely different costs. If I remember those power supply agreements, most of the decisions built into the agreements about whether the plant would supply energy to the grid are made on the basis of the cost of energy delivery, not the cost of power.

To continue the water company analogy, Snoop was asking “why does the water coming into my pipe cost x” and your answer was “add up the total cost of the reservoir, the water in it, and divide by the number of gallons in the reservior.” The better answer would be to look at the variable costs of delivering water into his water main pipe; in a way, you were making a mistake that was very analogous to the mistake you were accusing him of – using the wrong costs.

Now another problem with using measures of dollars per megawatt which you used was very well summarized by oldhippie: a company calculates amortization/depreciation based on the cost of building and financing a power plant and those costs are highly artificial – they are based on interest rates, subsidies, even highly artificial accounting rules built into the tax code such as accelerated depreciation. While it makes sense on an accounting basis for a company to be concerned with this number, it is not a useful measure of the actual economic comparison cost of delivering energy from coal or solar.

Let me give just one simple example: if a coal plant is 40 years old, it may be almost completely depreciated (because of tax benefits like accelerated depreciation that occurred early in its life) and the depreciation charge will be based on 1968 equipment prices. That number that is charged against energy delivery will be low, making its energy seem cheap, but that would be on the basis of an accounting number that will not really reflect the underlying economic cost of the energy delivered. As oldhippie also pointed out there are so many other arbitrary numbers that go into making solar expensive – from higher interest premiums, to venture capital financing costs, to the cost of standardizing plans and specs. It is almost impossible to do a head to head comparison if we include fixed costs, depreciation and amortization because those numbers are almost completely artificial and not based on actual tallying of resources. We really need to look at these alternative energy sources in terms of variable costs to determine whether to build them. We also need to find ways to reduce fixed costs, which, if this was Germany, Japan, China, Korea, South Africa, Greenland, or most other advanced developed or developing countries would involve subsidies to take away the artificial financial advantages of old power sources.

Snoop’s intuition, which you dismissed was fair and valid. It goes to the underlying question of whether in the long run, installing a solar plant now consumes less resources and produces power at a lower cost measured in variable costs only.

[ChazII]

73. Thank you for your common sense.

You have cleared up some things for me and I appreciate your posts on this thread.

[Fledermaus]

53. Solar thermal plants...not PV panels

Operating costs plus a profit.



http://www.nevadasolarone.net/newsroom/videos




http://www.nevadasolarone.net/newsroom/videos

[caraher]

10. That waste is from producing photovoltaic panels

The usual solar electricity technology involves using a semiconductor to convert light directly into electricity ("photovoltaic"). Their manufacture involves producing essentially the same kinds of waste that any electronics production does, and is rather energy-intensive - a typical estimate is that it takes roughly 20 years of operation to recoup the energy invested in producting conventional PV solar panels. And guess what - their expected useful life is not much more than 20 years.

But (and I didn't read the article, just the excerpt in the OP) solar thermal plants operate on entirely different physical principals and should have very different costs, advantages and disadvantages. The higher cost per kWh is ultimately the result of it being a comparatively young technology; efficiency improvements and economies of scale the might accompany widespread adoption of the technology would be the reason to expect cost to drop as described.

Comparing to coal at 4 cents per kWh is grossly unfair, because much - probably most - of the cost of coal is hidden. It reflects what it costs to dig the coal out of the ground and burn it. It does not reflect the cost of using so-called "clean coal" technologies, carbon sequestration schemes, or the economic price associated with the environmental effects of coal burning (climate change, acid rain).

[jberryhill]

15. Steam engines are not a "young technology" /nt

[kristopher]

19. The energy payback on solar PV is between 1-4 years

Depending on the specific technology.

Reference NREL Report No. NREL/FS-520-24619

And the reason solar is so expensive - the only reason - is that there has been no way to establish a market for the product in the face of an entrenched fossil fuel centered grid system.

IF we establish policies to CHANGE the system, then investment will be made in constructing plants to build solar PV and the price will drop. Exactly the same way it dropped with flat panel TVs and HD TV.

How many times have you seen the price of electronic devices plummet when the gadget becomes massively popular?

[Nederland]

24. Exactly

All that needs to happen is for solar to be attractive enough to a large number of people that a mass market is created, and I believe companies like Nanosolar are a start. However, as the OP points out, solar has always had a problem when it comes to generating power around the clock. While thermal solar has efficient ways around this, PV solar does not. The cost and efficiency losses due to some type of electrical storage drive the costs up significantly, and with it your mass market appeal goes out the window.

I believe PV solar will always only be a supplemental supplier of energy, not a primary one.

[kristopher]

45. Which is where V2G enters the picture.

It is basis of cheap, distributed storage that serves a dual function of providing personal transportation and grid backup. Envision 45-50kwh of battery storage for about $50/year and tell me what you come up with.

[Nederland]

58. That would be very nice...

...but we are a long way from that. What is your expected battery lifetime? The Tesla battery pack is warrantied for 5 years and currently costs $20,000. You are expecting that cost to drop to $250? Like I said, we are a very long way from that.

[kristopher]

59. How do you make that determination?

What is it you think stands in the way of such products being available? Can you be more precise about what "a very long way" is supposed to mean?

Pick any successful consumer electronics product or technology and dig out a cost/market penetration graph. In every case you see huge price reductions due to increased investment in manufacturing and wide-scale (near universal) deployment within 10 years. Batteries and solar panels are not one bit different than any other such product - the only thing missing is high market demand, which is a matter of policy related to fossil fuels, not public preference related to batteries or solar.

Two more relevant facts: our personal transportation fleet rotates almost completely within a 10 year cycle; Tesla's batteries are already obsolete.

Compare the price of a "walkman" with state of the art 1995 techonolgy with the same tape-machine (same features) today. You won't find the same manufacturer, but what cost $3-400 in 1995 costs $5 today.

Over and over and over we see the same process.

[Nederland]

60. The big difference is technology type

Battery technology is not like silicon. The reason electronics are very cheap is because the marginal cost is very, very low. Chips take a lot of money to design, but hardly any to build. Batteries are different--marginal costs are fairly high and as a result they don't benefit from volume production the same way electronics do. Lithium batteries are not new--they have been used in computers and watches in huge volumes for over a decade and the price has not dropped the same way it has for electronics.

[kristopher]

63. We will see, won't we. nt

[Finishline42]

67. That is not the problem

"Chips take a lot of money to design, but hardly any to build."

You have got that wrong. The equipment to build chips that get smaller with each new design and the equipment faster at the mfg and assembly is VERY expensive. The reason chips are so cheap is because they are selling millions upon millions.

Lithium batteries may have been around a long time but the difference is the amount of power they are being designed to store, the size of the battery, and the duty life. Cars present a much different challenge than a watch or computer.

[Nederland]

68. Apparently you don't know what the term "Marginal Cost" means

What I said is that the marginal cost of making a chip is very small. In economics and finance, marginal cost is the change in total cost that arises when the quantity produced changes by one unit. Mathematically, the marginal cost (MC) function is expressed as the derivative of the total cost (TC) function with respect to quantity (Q). Note that the marginal cost may change with volume, and so at each level of production, the marginal cost is the cost of the next unit produced.

What this means is that yes, the cost of making that first chip is very high due to high design and equipment costs, but the cost of building the next chip, or the next million chips, is very low on a per unit basis. This is not true of batteries, where marginal costs are fairly high due to much higher material costs.

[Finishline42]

69. Yes the marginal cost of the materials for batteries are higher

but the same dynamics apply to both - volume goes up - cost per item goes down.

Toyota's plans for hybrids was to get volume up to 200,000 cars per years and that would key the opening of plants in the US to assemble the Prius but also to build a plant to produce the batteries here.

Pricing changes on the materials as well. If the current production numbers are insufficient to maintain efficient production for individual items - costs will be higher.

Just like the cost of regular batteries have gone down drastically - volume justified the investment in high speed production equipment.

[Nederland]

70. Yes

I will concede that batteries will go down in price significantly. My objection the the post I replied to was the idea that a 45kwh battery could possibly be availible in the near future for $250. I expect a 10 or 15 fold reduction in price due to volume ramp up, but I think a 100-200 fold decrease is unrealistic. Like he said, time will tell.

[kristopher]

72. You might want to adjust your expectations for the batteries

I was incorporating improved technologies that would have an effect on the valuation of storage. Two different approaches:

Ex 1: http://www.lightningcarcompany.co.uk/nanosafe.php
Until now, battery technology has hindered electric vehicle innovation. In 2000, US company Altairnano Inc. established a research programme to create an ultra safe, high power battery using cutting-edge Nanotechnology. The result of their hard work is the NanoSafe™ battery.

SAFER - NanoSafe™ batteries use nano titanate materials instead of graphite which makes them far more thermally stable - there are no toxics or heavy metals used in NanoSafe™ batteries.

LONGER-LASTING - NanoSafe™ batteries have a life expectancy of 12+ years, versus the 3-5 year usable life of other batteries. NanoSafe™ can retain up to 85% charge capacity after 15,000 charges.

FASTER CHARGE - NanoSafe™ batteries can be recharged in approximately 10 minutes, rather than the hours required by many other rechargeable batteries.




Or Ex 2, the best of both worlds, increased capacity and longevity: http://www.nature.com/nnano/journal/v3/n1/full/nnano.2007.411.html

Nature Nanotechnology 3, 31 - 35 (2008)
Published online: 16 December 2007 | doi:10.1038/nnano.2007.411

High-performance lithium battery anodes using silicon nanowires

Candace K. Chan1, Hailin Peng2, Gao Liu3, Kevin McIlwrath4, Xiao Feng Zhang4, Robert A. Huggins2 & Yi Cui2
Abstract

There is great interest in developing rechargeable lithium batteries with higher energy capacity and longer cycle life for applications in portable electronic devices, electric vehicles and implantable medical devices1. Silicon is an attractive anode material for lithium batteries because it has a low discharge potential and the highest known theoretical charge capacity (4,200 mAh g-1; ref. 2). Although this is more than ten times higher than existing graphite anodes and much larger than various nitride and oxide materials3, 4, silicon anodes have limited applications5 because silicon's volume changes by 400% upon insertion and extraction of lithium which results in pulverization and capacity fading2. Here, we show that silicon nanowire battery electrodes circumvent these issues as they can accommodate large strain without pulverization, provide good electronic contact and conduction, and display short lithium insertion distances. We achieved the theoretical charge capacity for silicon anodes and maintained a discharge capacity close to 75% of this maximum, with little fading during cycling.

[Nederland]

62. Look at the history of television sets

http://www.tvhistory.tv/tv-prices.htm

[caraher]

61. Hmmm... OK, I think I know what the issue was with the sources I'm remembering

I think my remembered figure is high because it was actually looking at solar installations in the UK as well as older technologies. Thanks for the good news!

[kristopher]

64. My guess was that you had crossed energy and monetary paybacks. nt

[caraher]

71. I know it wasn't money

It may have also been a carbon emissions thing rather than energy... I though Monbiot had something about a 20-year break-even in Heat, which really focused narrowly on greenhouse gas emissions. In any case - the longer period never did sound quite right to me, but I remembered it as coming from a source that should be pro-solar

[wtmusic]

31. The solar power cartel gets a taste of NIMBY

"The San Diego-based Desert Protective Council also opposes the construction of a high voltage power line that San Diego Gas & Electric says it needs to transmit renewable power from a solar generation project planned for California's Imperial Valley. The power line would run through an existing right-of-way in a state park, but each of its 141 new towers would average 130 feet in height. "Our take has been from day one, 'Here we go again,'" said Terry Weiner, Imperial County conservation coordinator for the Desert Protective Council to the San Diego Union-Tribune. "Here is where we can do everything out in the desert that we don't want to do in our own backyards in the city,'"

Solar occupies a geographical footprint 150 times as big as nuclear for equivalent power -- and nuclear creates power 24 hrs/day.

[XemaSab]

50. I think I worked on that project

:P

[bananas]

65. Maybe you should work for UCAN.

http://www.ucan.org/energy/electricity/why_the_sunrise_transmission_project_must_be_terminated
http://www.ucan.org/energy/electricity/sunrise_powerlink_issue_center
http://www.ucan.org/

[excess_3]

51. Big Carbon is coming .n/t