Solar energy, despite all of the effort to increase its usage, stillonly accounts for less than one percent of the energy we consume. Theamount of solar energy that reaches the Earth’s surface every hour isgreater than mankind’s total demand for energy in a whole year. Thetotal energy stored in the world’s supply of fossil fuels is equal tojust twenty days of solar energy. By any measure, the sun is apowerful and virtually limitless source of energy and it is imperativethat we capitalize on this clean energy source by increasing our use ofsolar energy and reducing our reliance on fossil fuels.
How do we begin to capitalize on such a rich source of energy? Bothdistributed and utility-scale solar energy projects are vital toaccommodate the world’s growing energy needs as they are both suited toharness the extraordinary power of the sun. The underlying technologyused by utility and distributed solar is different and understandably,each has its own proponents and detractors. For the most part, utility-scale solar projectsuse solar collectors to generate enough heat to power a steam turbinethat in turn generates electrons. Distributed solar energy derivesprimarily from the use of photovoltaic panels that capture photons andconvert them into electrons. Distributed PV efficiency is improving allthe time. Currently, there is a conversion efficiency ofapproximately 17% for crystalline silicon panels and 10% for thin filmpanels — a dramatic improvement from only a few years ago.
In California alone, there are plans for 35 utility-scale projectsthat would generate approximately 12,000 Megawatts (MW) of energyannually — an amount of energy comparable to the combined power of tennuclear power plants. The Mojave Solar Projectand the Genesis Solar Energy Project, both located in southernCalifornia, are two of the largest projects under consideration and areeach aiming to generate 250M watts of energy. These projects areexpensive, however, in terms of both dollars and natural resourcesrequired. The federal government has promisedto help reduce the financial cost by allocating a portion of thestimulus plan for this purpose. Companies that have their plants readyto be opened by the end of this year will receive a portion of the $67billion of federal money that has been set aside for renewable energyprojects (including loan guarantees and grant programs).
Despite these incentives, it is risky to undertake a large-scaleenterprise like utility-scale solar power in an uncertain economicclimate, as financial institutions are reluctant to be involved inbillion-dollar projects. Another issue is the fact that such solar’farms’ require huge tracts of land. The Bureau of Land Management (BLM)has been tasked with finding 24 tracts of public land of three squaremiles each with good solar exposure, favorable slopes, road andtransmission line availability. Additionally, the land set aside forutility-scale solar farms must not disturb native wildlife or endangered species such as the desert tortoise,the desert bighorn sheep, and others. The wildlife issue has proved tobe a contentious one. Projects in California have been halted due tothe threat caused to endangered species resulting in a backlog of 158commercial projects with which the BLM is currently contending.
Another challenging issue for utility-scale solar projects is theuse of water. Combined, the Genesis and Mojave projects would use 1.24 billion gallons of waterper year due to the wet cooling systems involved. One alternative towet cooling systems, dry cooling, uses 90% less water, but can onlyhandle the full cooling load up to temperatures of 85?-90?F. As aresult, dry cooling in deserts is not cost efficient. Just aschallenging is the fact that to date, there are no affordable storagesolutions for utility-scale solar projects. Without the means tocapture and store excess electricity produced by solar farms, anenormous inefficiency is created.
An alternative to utility-scale projects is the use of distributed solar energy. There are various types of renewable power technologies in use, butsub-utility scale power photovoltaics (PV’s) account for 98% of thedistributed solar energy market. Unlike utility-scale projects,distributed energy is solar power on a small scale and entails theinstallation of solar panels on the roofs of buildings. Toward the endof 2009, the California Public Utilities Commission unanimously votedfor the Southern California Edison’s Plan. This plan recommended scattering solar panels on rooftops all over theregion in an effort to create 500MW of energy. Like utility-scale, theplan benefited from the 30% federal tax credit for renewable energyprojects.
Distributed solar power does not involve the legal red tape, thelarge tracts of land, or the vast quantities of water thatutility-scale projects require, and has the ability to generate enoughenergy for homes, schools and hospitals. Installation is easilyaddressed and solar panels can last for up to 30 years if wellmaintained. The price of solar panels has dropped dramatically toapproximately $2.40 per watt (price depending on scale of order) forsilicon panels and is likely to drop even further in 2011. Furthermore, unlike utility-scale projects, distributed solar projectssuch as the Southern California Edison’s Plan spread capacity evenly,distributing benefits and drawbacks. If a utility-scale project"crashes," it affects a huge area. With distributed energy, onlyindividual units are affected in the case of a power outage.
In many locations and in certain circumstances, distributed solarprojects are less expensive than utility-scale solar projects becauseof the avoidance of both new transmission lines and line losses — thelatter of which typically accounts for approximately 7% of the powershipped over transmission systems. The costs associated withutility-scale solar projects are often not included in the side-by-sideeconomic comparison made between the two forms of solar powerdevelopment. An additional benefit of distributed solar is itsability, when developed in clusters (i.e., local micro-grids), toalleviate the need to upgrade distribution substations and add localpeaking plant capacity.
As mentioned, distributed solar plans have their detractors. Solarcertainly is not the cheapest source of electricity and is onlyeffective in areas with a high percentage of sunshine. More than 50 million Americans livein Community Associations where we might expect to see efficientadoption of distributed solar plans. But these locations commonly havepolicies limiting the use solar equipment due to height restrictions orother specifications regarding roofing materials.
Utility-scale projects may have the capacity to generate enormousamounts of energy but they represent a huge financial risk,irretrievable waste of resources, and threats to endangered species,all of which are problems that may take years to solve. On the otherhand, distributed solar power entails a fraction of the risk posed byutility-scale projects and is poised to capitalize on the vastopportunity offered by 140 million residential rooftops in the U.S.alone, not including all of the commercial rooftops available for PVinstallation. Distributed energy is certainly the way forward in thefield of solar energy use.
David Anthony is an experienced entrepreneur, venture capitalist,and educator. Since founding 21Ventures in 2003, the firm has providedseed, growth, and bridge capital of more than $400 million to over 40technology ventures across the globe focusing mainly in the cleantecharena. David Anthony sits on the board of a number of 21V portfoliocompanies including (partial list) Advanced Telemetry; BioPetroClean,ETV Motors, and Variable Wind Solutions. David also serves on the boardof directors of several publicly traded companies including Axion PowerInternational, Inc. (OTC: AXPW); Clean Power Technologies Inc. (OTC:CPWE) Entech Solar Inc (OTC: ENSL) and ThermoEnergy Corporation (OTC:TMEN).
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