Installed price of solar photovoltaic systems in the U.S. continues to decline at a rapid pace


(Nanowerk News) The installed price of solar  photovoltaic (PV) power systems in the United States fell substantially in 2011  and through the first half of 2012, according to the latest edition of Tracking the Sun (“Tracking the Sun V: An Historical Summary of the Installed Price  of Photovoltaics in the United States from 1998 to 201”; pdf), an annual PV  cost-tracking report produced by the Department of Energy’s Lawrence Berkeley  National Laboratory (Berkeley Lab).
The  median installed price of residential and commercial PV systems completed in  2011 fell by roughly 11 to 14 percent from the year before, depending on system  size, and, in California, prices fell by an additional 3 to 7 percent within the  first six months of 2012. These recent installed price reductions are  attributable, in large part, to dramatic reductions in PV module prices, which  have been falling precipitously since 2008.

The  report indicates that non-module costs—such as installation labor, marketing,  overhead, inverters, and the balance of systems—have also fallen significantly  over time.  “The drop in non-module costs is especially important,” notes report  co-author Ryan Wiser of Berkeley Lab’s Environmental Energy Technologies  Division, “as these costs can be most readily influenced by local, state, and  national policies aimed at accelerating deployment and removing market  barriers.” According to the report, average non-module costs for residential and  commercial systems declined by roughly 30 percent from 1998 to 2011, but have  not declined as rapidly as module prices in recent years. As a result,  non-module costs now represent a sizable fraction of the installed price of PV  systems, and continued deep reduction in the price of PV will require concerted  emphasis on lowering the portion of non-module costs associated with so-called “business process” or “soft” costs.

The report indicates that the median installed price of PV  systems installed in 2011 was $6.10 per watt (W) for residential and small  commercial systems smaller than 10 kilowatts (kW) in size and was $4.90/W for  larger commercial systems of 100 kW or more in size.  Utility-sector PV systems  larger than 2,000 kW in size averaged $3.40/W in 2011.  Report co-author Galen  Barbose, also of Berkeley Lab, stresses the importance of keeping these numbers  in context, noting that “these data provide a reliable benchmark for systems  installed in the recent past, but prices have continued to decline over time,  and PV systems being sold today are being offered at lower prices.”

Based on these data and on installed price data from other major  international PV markets, the authors suggest that PV prices in the United  States may be driven lower through large-scale deployment programs, but that  other factors are also important in achieving installed price reductions.

The market for solar PV systems in the United States has grown  rapidly over the past decade, as national, state and local governments offered  various incentives to expand the solar market and accelerate cost reductions.   This fifth edition in Berkeley Lab’s Tracking the Sun report series  describes historical trends in the installed price of PV in the United States,  and examines more than 150,000 residential, commercial, and utility-sector PV  systems installed between 1998 and 2011 across 27 states, representing roughly  76 percent of all grid-connected PV capacity installed in the United States.  Naïm Darghouth, also with Berkeley Lab, explains that “the study is intended to  provide policy makers and industry observers with a reliable and detailed set of  historical benchmarks for tracking and understanding past trends in the  installed price of PV.”

Prices Differ by Region and by Size and Type of  SystemThe study also highlights the significant variability in PV  system pricing, some of which is associated with differences in installed prices  by region and by system size and installation type. Comparing across U.S.  states, for example, the median installed price of PV systems less than 10 kW in  size that were completed in 2011 and ranged from $4.90/W to $7.60/W, depending  on the state.

It also shows that PV installed prices exhibit significant  economies of scale. Among systems installed in 2011, the median price for  systems smaller than 2 kW was $7.70/W, while the median price for large  commercial systems greater than 1,000 kW in size was $4.50/W.  Utility-scale  systems installed in 2011 registered even lower prices, with most systems larger  than 10,000 kW ranging from $2.80/W to $3.50/W.s

The report also finds that the installed price of residential PV  systems on new homes has generally been significantly lower than the price of  similarly sized systems installed as retrofits to existing homes, that building  integrated PV systems have generally been higher priced than rack-mounted  systems, and that systems installed on tax-exempt customer sites have generally  been priced higher than those installed at residential and for-profit commercial  customer sites.

Price Declines for PV System Owners in 2011 Were Offset  by Falling IncentivesState agencies and utilities in many regions offer rebates or  other forms of cash incentives for residential and commercial PV systems.   According to the report, the median pre-tax value of such cash incentives ranged  from $0.90/W to $1.20/W for systems installed in 2011, depending on system size.   These incentives have declined significantly over time, falling by roughly 80  percent over the past decade, and by 21 percent to 43 percent from just 2010 to  2011.  Rather than a direct cash incentive, some states with renewables  portfolio standards provide financial incentives for solar PV by creating a  market for solar renewable energy certificates (SRECs), and SREC prices have  also fallen dramatically in recent years.  These declines in cash incentives and  SREC prices have, to a significant degree, offset recent installed price  reductions, dampening any overall improvement in the customer economics of solar  PV.

In conjunction with this report, LBNL and the National Renewable  Energy Laboratory (NREL) have also issued a jointly authored summary report that  provides a high-level overview of historical, recent, and projected near-term PV  pricing trends in the United States.  That report summarizes findings on  historical price trends from LBNL’s Tracking the Sun V, along with several  ongoing NREL research activities to benchmark recent and current PV prices and  to track industry projections for near-term PV pricing trends.  The summary  report documents further installed price reductions for systems installed and  quoted in 2012.

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University of British Columbia Files Patent on Unique Battery Type Solar/Light Conversion Cell


SOURCE: University of British Columbia

University of British Columbia

November 02, 2012 11:30 ET

VANCOUVER, BC–(Marketwire – Nov 2, 2012) – The University of British Columbia (UBC)announces the international patent filing for a Battery type Solar/Light conversion cell. This unique generator and storage approach allows both solar power generation and storage within a single cell. Based on photosynthesis, it can be implemented using abundant and readily replenished and renewable biomaterials.

This invention aims to allow industry to install solar photovoltaic (PV) systems with a built in energy storage component. This type of system addresses the natural intermittency of Solar (PV) systems due to the movement of clouds over modules and the need for night time power, and it provides a built-in solution for reducing the total demand on the electrical grid. This unit is anticipated to provide a simple effective method for energy arbitrage by storing direct and indirect Solar/Light energy for later use should the peak energy demands fall several hours after the peak solar generation is available, such as at night. The commercialization of this technical achievement would allow for a much larger penetration of solar PV into the total energy supply and management system and therefore the invention has the potential to increase the value and market for both grid-connected and off-grid solar PV systems worldwide.

The invention is the result of an interdisciplinary venture led by Professor J. Thomas Beatty, who studies photosynthesis in micro-organisms, and Professor John D. Madden in Electrical & Computer Engineering. “We began by asking whether we can learn from nature and make use of natural materials to create useful solar energy harvesting approaches. What we found is an approach that integrates two key components of energy supply: generation and storage”.

The new approach involves the use of a light absorbing battery-like cell complete with two electrodes and an electrolyte. Light is absorbed by light harvesting molecules in the electrolyte. Charges are then transferred between the excited light harvesting molecules and mediator molecules, also in the electrolyte, with nearly perfect quantum efficiency. The mediators store the harvested energy, which can then be extracted at the electrodes on demand. Essential to the effectiveness of this technology is the development of highly selective electrodes, each of which primarily reacts with only one type of mediator.

“Unlike photovoltaic technologies, which rely on very thin absorbing layers, and transparent electrodes, this new technology operates with light arriving parallel to the surface of the electrodes, allowing for thicker devices with volume for energy storage,” says Madden. “With the new architecture one can envision the creation of solar ponds for harvesting and storage. This is a very general new approach.”

The UBC team is supported by Natural Sciences and Engineering Research Council of Canada. Researchers from the University of South Florida and the Australian Centre of Excellence in Electro materials Science are also involved.

The University of British Columbia, located in Vancouver, BC, is a global centre for research and teaching, consistently ranked among the top 40 universities of the world. UBC attracts $550 million per year in research funding from government, non-profit organizations and industry through more than 8,000 projects. It ranks in the top ten universities in North America for commercializing research and has spun off 149 companies. It is a place where innovative scientific ideas are transferred effectively to industry through a globally connected research community.

IRS to Rule on Status of Solar PV Owned by REITs


 

Note To Readers: We have been following this development in “match-making” which, we believe, will open an entire new avenue of financing ‘green power’ (including wind and geothermal) Power Agreements. How soon will the IRS ruling have an impact in the marketplace? Good question. However, with the ‘flow through’ tax structure of a REIT providing broader access to investors and markets … “the Sun’s the limit”!   Cheers!  – BWH –

 

 

A solar power facility in Chicago, Illinois. (Image credit: Getty Images North America via @daylife)

Tom Konrad, Contributor

The biggest open question in my article Solar REITs: A Better Way to Invest in Solar was, when will we have a ruling from the Internal Revenue Service (IRS)?

In particular,

  • Will solar photovoltaics (PV) be considered real property for purposes of Real Estate Investment Trust (REIT) ownership?
  • Will revenue from power purchase agreements (PPAs) with utilities be considered rents?

These are both important, because in order to qualify for their special tax status, REITs must receive 75% of its gross income from IRS-defined “rents” on “real property.”  The IRS has substantial leeway to determine what qualifies as both “rent” ans as “real property,” hence the need for a ruling to clarify matters.

As I discussed, the IRS issues rulings in response to either a taxpayer request (this is a “private letter ruling”) or in response to a request from a government official (a “revenue ruling.”)  My sources told me that a revenue ruling is generally considered preferable because the chances of an outcome that would allow REITs more freedom to own and derive revenue from PV are higher if there is a government official behind the request.  A revenue ruling also has the advantage that it is immediately applicable to all taxpayers, while a private letter ruling is only binding on the requesting taxpayer and the IRS.  In practice, however, private letter rulings set precedents which other taxpayers and tax attorneys can reasonably expect to have broader application.

When I wrote the article, I knew there were rumors that a revenue ruling might be requested soon, but not if any taxpayers had yet requested private letter rulings.  Private letter rulings are, after all, private between the taxpayer and the IRS.  The only way to learn about a taxpayer’s request is if the taxpayer makes it public.

The Renewable Energy Trust Capital, Inc. (RET), a San Francisco, CA based mission-driven company founded in 2011 to “facilitate the transition to a clean and sustainable economy,” is requesting a private letter ruling, andannounced the fact in late September.  I spoke to RET’s CFO, Christian Fong, CFA about RET’s request.  I was interested in both the timing of the request, and and RET’s motivations and plans.

Timing

Fong stated that RET filed its request over the summer, but emphasized that the request is a process, in which there is considerable back-and-forth between the IRS and RET.

Why not wait for a revenue ruling?

Fong stated that the “industry lacks clarity” on REIT ownership of PV.  He says it’s necessary that someone ask the question so that the industry can “move forward one way or another.”

What RET plans to do with their ruling

Although Fong said nothing to imply it, it’s also possible that RET is interested in gaining a first mover advantage.  RET has gathered venture capital, which they intend to use to form a REIT or REITs.  Those REITs will buy PV assets which will be maintained by RET’s strategic partner, True South Renewables.  The REIT will then be listed on a stock exchange and sold to individual investors.  Since Solar REITs will be a new asset class which I expect to be attractive to income investors, the first listed solar REITs will probably sell for a premium, allowing the first movers to make larger profits for creating the first solar REITs than the organizers of subsequent REITs.  That potential profit is not a bad thing, however, but rather compensation for the effort of going ahead and working through the process with the IRS.

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Has the IRS received any other requests?

Because the only way the public is likely to find out about a private letter ruling request is if the taxpayer behind the request announces it, it is quite possible that there are other requests in process.  However, as Joshua L. Sturtevant, and associate with Distributed Sun of Washington, DC told me in my interview with him for my previous article, the IRS will likely want to deal with this issue only once.  Hence, we can expect that the service has consolidated the ruling requests it has received to date, and will most likely issue the rulings together.

What it will mean for the industry

Fong says RET’s intent is to show investors that solar is “not vaporware.”  Solar PV is a solid asset that generates real cash flows for investors.  RET is clearly ready to create and list one of the first (if not the first) solar REITs as soon as the IRS issues a ruling that allows solar REITs in any form.  Such REITs will be a boon for green income investors, and probably bring even grater benefits to solar developers, who currently have relatively limited and expensive sources of capital to use developing PV projects.

 

South Korea to Invest $35 Billion in Renewable Energy by 2015


Published on Date October 14th, 2010 by ecopolitology

The South Korean government has announced that it intends to invest $35.4 billion in the renewable energy sector over the next five years as it aims at reducing its dependence on fossil fuels and build a green economy for the future.

The announcement was made by a presidential task force which is responsible for the drafting the country’s green energy policy. According to the announced plans, the green energy thrust to the economy would be provided through a combination of public and private initiatives.

The South Korean government announced the ‘Green Korea‘ plan in September 2008 which identified nine key areas for green investment: solar and wind power, light-emitting diodes (LED), hydrogen fuel cells, gas-to-liquid energy, integrated gasification combined cycle (IGCC) and energy storage.

Solar Energy

The South Korean government plans to increase the solar power generation capacity to 400 MW by 2012. In addition to large-scale power plants the government is also looking to investment in home-basedsolar power systems. According to the ministry of Knowledge Economy, a total of 100,000 homes will have solar power systems installed by 2012 these will include all government-planned buildings and 60 percent of privately-owned homes will have solar power systems.

South Korea already has one of the largest solar PV power plants in the world — the SinAn power plant, capable of generating 33,000 units of electricity annually.

And seeing a local market opportunity, South Korean manufacturing giants like Hyundai, Samsung and LG have also invested heavily in solar.

Wind Energy

The country aims at increasing the installed wind energy capacity to 1000 MW by 2012. There are plans for creating local manufacturing hubs which would supply wind turbine components to the local as well as foreign markets. The aim is to grab 10 percent share of the world’s wind energy technology supply chain by 2020.

The local companies like Hanjin Corporation are installing there own medium-sized wind turbines in the existing wind farms and are also looking to develop wind turbines of more than 5 MW generation capacity.

Green Transport

The new automobile policy has been designed keeping in mind Korea’s strong automobile sector. The government has outlined a policy which targets development of next-generation engines which are fuel flexible, that is, can be operated with several combinations of fuels. Several automakers in Korea are preparing to launch fuel cell-based cars in the near future and many, including Hyundai Motors, have launched hybrid cars which runs on cleaner fuels like natural gas.

The government will invest $5.6 billion in the automobile sector by 2013 as it aims at becoming one of the four largest green cars manufacturing nations.

Green Jobs

The government believes that the green industry can generate more jobs than conventional industries. If these projects are executed as per plans the government expects to generate more than 100,000 jobs by 2012 which can increase to 950,000 by 2030.