Solar Power 1

Solar Power is coming of age?

Fastest growth in technology and business is perhaps in Solar Energy sector these days. Human beings have been late in discovering and accepting the SUN as a useful source for meeting their daily energy requirements. It is said that SUN shines more energy in one hour than the total annual requirement of the world, rich and poor included. It is abundant, it is free and available everywhere. To utilize it profitably has not been easy, although largely due to the chicken egg problem of demand vs technology. However, the oil is now at its end .It will be extinct in less than fifty years and prohibitively expensive much earlier. Although Coal in the world is enough for two centuries, it is creating problems of pollution and green house gases. There was enthusiasm for wind power in the last decade; the availability of wind is still limited. The enthusiasm for wind is still there, however the race is now for solar energy. Solar industry is growing at a rate of more than 40 % per year. Germans are after Solar, more than any body else to be followed by China, Japan and the US.

Solar dream

Solar power has been a dream since Solar Photovoltaic Cells(PV) were first introduced in the space satellites in 1960s.High capital costs and low conversion efficiency have been the major factors making solar power unaffordable. Incremental technological advances have brought these costs down and have improved efficiency many times. Solar cells used to have an efficiency of fewer than 5 %. Today, efficiency of commercially available Solar cells is 17.5 %. There are some with lower efficiency but are also cheaper than the high efficiency (17.5%) solar PV cells.

Chicken-egg syndrome of demand and price ?

Demand and prices used to be a chicken egg problem and it still may be; higher costs are due to low demand, while low demand leads to higher costs; no more. Very high supportive feed-in tariffs have spurred the demand. Germany today offers a Feed-in Tariff of 25-30 US cents per kWh, which may be 4-5 times the conventional rate. This makes Germany today to be the highest electricity cost country. The upside, however, is that 70% of all solar pv installations in the world were in Germany. Germany will recoup the higher costs in the long run eventually in the form of a major solar exporter. German high tariff has created high demand conditions in the world. Pressure has been developed in other countries to offer such supportive rates. High demand initially created short term supply problems and thus led to increases in the prices of solar raw materials, like Silicon.

Grid parity issues

It appears that the earlier US target of achieving grid-parity in 2015, meaning that solar power becomes competitive with fossil power on the electric grid, would be achieved. The indicators are several; last month, the quoted capital cost rates in the U.S. markets came down to 3.5 USD per KW, it used to be more than twice this figure only some years back. Solar cells of high thermal efficiency (mono-crystalline Si- 17.5% efficiency) are costing less than 2.5 USD per KW, and thin- film lesser efficiency ones are being sold at 1.0 USD per kW or less. In China, several government contracts have been made at the rate of 1.5 USD per kW for domestic power, although Chinese rates, especially in the domestic market do not quite reflect true costs and prices. Still, it gives some trend.

However, even if grid parity in solar power is achieved as early as 2015, it would not mean overnight conversion in the US, Europe and Japan. It would take a long time to develop production and supplies infrastructure. Solar and other renewable market share in the developed world may not exceed 10-15 % by 2030, although new fossil plants construction rate may come down very significantly by that time (2030).

The Lessons from Wind?

What does all of this hold for us? Good news, but still not very close-by. Look at the Wind Power. Despite a forward looking policy, we have only a few MW of wind power installation, although a few projects are at an advance stage of processing, which may mean 100-150 MW of wind power in a few years time. Due to heavy demand of Wind Turbines in the Western markets, no wind power equipment vendor was ready to supply wind turbines to our projects. Long lead times were quoted and not honored. In this atmosphere, obviously prices quoted are high also. Of late things seem to be changing; enthusiasm has shifted to solar energy, and considerable resistance developed against wind power due to noise, birds’ safety and aesthetic issues. Consequently vendors are talking to project sponsors in Pakistan, and hopefully would be offering reduced prices that may not necessarily translate int0 lower NEPRA tariff for reasons I have been discussing elsewhere. Prices in Pakistan do not come down so easy and automatically!!

Cheap Wind Power in India?

In the mean time, India has installed more than 11000 MW of Wind Power, at a modest capital cost of 1100-1200 USD per kW, which is almost half the rate at which similar projects have been approved in Pakistan. Indian case, however, is different. They have a local manufacturing industry which manufactures 100 % of wind turbines and are self –sufficient, thriving upon low costs. Imported western equipment and services are comparatively much more expensive.

Perhaps this is the time for us to pursue Wind Power, even if the interest elsewhere may be waning. Firstly, it has only become available now, in practical terms as has been mentioned earlier. We have long stretches of unpopulated areas, with rich wind resources that remain totally untapped. Various ways and means should be investigated to bring down the capital costs.