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Photovoltaics
Victor AlfonsoMSRE‐517Feb. 25, 2014
University of San Diego MSRE Program
Image Source: techhamlet.com
PhotovoltaicsPhotovoltaics (“PV”) utilizes solar cells that act as semiconductor devices to convert sunlight into DC electricity
Images Source: solarlove.org
Sun light is absorbed by the n‐type layer, causing electrons to disconnect from the atoms
Disconnected electrons flow to the absorber or p‐type layer
N‐type layer becomes positively charged, p‐type layer negatively charged
Electrons are forced to flow back from p‐type layer to n‐type due to p‐n junction, creating a direct electric current
Image Source: http://buckscountycleanenergy.com/
DC electricity passes through an inverter where it is converted to AC
AC electricity from the inverter is sent to the main circuit breaker panel for the home
Excess electricity can be stored or sent back to grid
Photovoltaics
Central (“String”) InvertersTypical Cost: $0.18‐$0.25/W10‐15 year warrantyModules are connected in a series The entire array is jeopardized by one module 9% shading can result in 54% array performance loss
Micro Inverters Located on each moduleTypical Cost: $0.35‐$0.45/W 20‐25 year warrantyEasily pinpoint issues (independently controlled modules)
Images Source: www.renewablegreenenergypower.com
Photovoltaics – Inverters
Q3 ’13: 35% growth vs prior year / 420% growth vs Q3’10 Dramatic utility growth in 2 years (SDG&E: Top 4 in US in Q3’13) CA, AZ, NC, MA, NV top 5 states in US for PV installations
Graph Source: http://seia.org/
Photovoltaics – TheU.S.Market
Benefits of Photovoltaics
Fuel (sunlight) is free No noise or pollution
Minimal maintenance Long service lifetime (25+ years)
Modular / Expandable Transportable (in some cases)
No moving parts Excess electricity generated can be sold back to utility grid or stored
Photovoltaics – Benefits
Challenges of Photovoltaics
Upfront costs remain high Inconsistent fuel source (dependent upon sun light exposure)
Requires cleaning and maintenance Large surface area required (inefficient)
Lack of storage capability without battery
Utility grid constraints (Hawai’i, Germany)
Photovoltaics – Challenges
Economics are driven by four main factors:
System cost: Component, installation and maintenance costs
Financing: Ownership, term, real interest rates
Incentives: Federal tax credit, state rebates, state and utility production incentives
System performance: Efficiency, maintenance & service, sunlight
Graph Source: http://seia.org/
Photovoltaics – Economics
Financing Structures:
Self‐Financing Cash Home Equity Loan (HEL), or Home Equity Line of Credit (HELOC) Cash‐out mortgage refinancing (COMR)
Third Party Ownership (Private Sector) Power Purchase Agreements Solar Leases
Utility and Public Financing: Utility Financing Public loans (credit‐enhanced and revolving loan) Property Assessed Clean Energy (PACE)
Photovoltaics – Financing
Power Purchase Agreements: Solar Finance Company (SFC) designs/purchases/installs/maintains the system Homeowner purchases energy at a specified rate (fixed or escalations)Moving can get complicated: buy‐out (15‐20 yr. contract) or transfer to new buyer Low availability due to local incentives and rebates needed to make pricing competitive
Solar Leases:Similar to PPAs except homeowner makes monthly lease payments (fixed or escalation); no electricity is sold
Graph Source: http://seia.org/
Photovoltaics – ThirdPartyOwned
Utility Loans: On‐bill Financing: Customer repays principal + int. on utility bill (tied to borrower)Metered‐Secured: Typically separate bill; loan is tied to the meter/property
Public Loans: Credit‐enhanced: 3rd party capital (bank) funds a portion of the loan, local gov.either funds the remainder or provides a credit enhancement for lender’s portion Loan loss reserves, subordinated debt, interest rate buy‐down
Revolving Loan Funds: Initially funded by appropriations or public benefit funds, provides direct loans to the homeowner that is replenished by the loan payments
PACE (Property Assessed Clean Energy): Local gov. creates special tax assessment district Homeowners can opt‐in, thus agreeing to a senior tax lien on property in exchange for funds for approved projects
Homeowner repays via property tax payments
Image Source: http://nrel.gov/
Photovoltaics – Utility/PublicFinancing
Federal Incentive: 30% of installed cost as tax credit, no maxState/Utility Incentives:
Photovoltaics – Incentives
Image Source: solarcellcentral.com; Graph Source: solarbuzz.com
Crystalline Silicon PV: Solar cells that are cut from either a single silicon crystal (mono) or a block of silicon that has multiple crystals (poly)
Photovoltaics – Technology
Photovoltaics – TechnologyPolysilicon Module Pricing 2010 to 2013
Image Source: www.greentechmedia.com
Photovoltaics – TechnologyPolysilicon Module Pricing 2013 to 2017 Estimates
Image Source: www.greentechmedia.com
Thin‐film PV: Thin layers of amorphous silicon (a‐Si), cadmium telluride (CdTe), copper indium gallium (CIGS) or Dye‐sensitized solar cells (DSC)
Photovoltaics – Technology
Image Source: solarcellcentral.com; Graph Source: solarbuzz.com
Photovoltaics – TechnologySingle junction silicon efficiency has matured, while Thin Film has considerable room for improvement:
Image Source: www.greentechmedia.com
*CdTe Thin Film
Mono‐crystalline
Poly‐crystalline
Amorphous (Thin Film)
CdTe (Thin Film)
CIS/CIGS(Thin Film)
Typical ModuleEfficiency
17‐22% 14‐18% 7‐9% 10‐14% 11‐13%
Best research efficiency
25.0% 20.4% 13.4% 19.6% 20.8%
Area required for1 KWp
6‐9m2 8‐9m2 13‐20m2 11‐13m2 9‐11m2
Lowestprice/watt (module only)
$0.75/watt $0.55/watt $0.69/watt $0.59/watt
Temp Resistance
10‐15% perf. drop in high temps
More tolerantthan mono
Toleratesextreme heat
Tolerates extreme heat
Toleratesextreme heat
Photovoltaics – Technology
Photovoltaics – Technology
Image Source: www.nrel.gov
PerovskiteCalcium Titanium Oxide mineral as absorption material3% efficient in 2009, 16%+ today Can be semi‐transparent (façade applications, solar paint?)Sustainable and abundant; potential for <$0.15/wattChallenges: durability, degradation and device toxicity
Quantum DotsNanocrystals made of semiconducting materials Generates more electrons than absorbed photonsPotential for 66% efficiencySame challenges as perovskite
Image Sources: http://geotech.com, http://ee.t.u‐tokyo.ac.jp
Photovoltaics – TheFuture
Payback Considerations: Local incentives (very difficult to achieve <7 year payback without them) Current utility prices and how much to forecast utility price increases in the future Solar panel degradation – typically 0.5%/year
Accelerated Depreciation: Accelerated Depreciation via the Modified Accelerated Cost Recovery System Photovoltaic systems are eligible for a cost recovery period of 5 years Significant tax implications (and thus demand driver) for businesses
Tax Strategy for REITs: Taxable REIT Subsidiary (TRS) REITs aren’t allowed to be in the business of selling electricity; a TRS can be setup TRS can take advantage of federal and local tax grants and incentives TRS makes money by selling the property electricity at the equivalent utility rate TRS pays the property rent to use roof space (rent payment has net zero effect)
Image Source: http://nrel.gov/
Photovoltaics – PaybackConsiderations
Photovoltaics – PaybackModel
Questions?
References• “Solar Market Insight 2013 Q3” http://www.seia.org/research‐resources/solar‐market‐
insight‐2013‐q3
• “Photovoltaic (Solar Energy)” http://www.seia.org/policy/solar‐technology/photovoltaic‐solar‐electric
• “Solar Explained” http://www.eia.gov/energyexplained/index.cfm?page=solar_home
• Palmer, Roxanne (2013). “Solar Power Growing Pains: How Will Hawai’i and Germany Cope with the Boom in Alternative Energy?” http://www.ibtimes.com/solar‐power‐growing‐pains‐how‐will‐hawaii‐germany‐cope‐boom‐alternative‐energy‐1518702
• Federal Tax Credits for Consumer Energy Efficiency http://www.energystar.gov/index.cfm?c=tax_credits.tx_index
• State Tax Incentives (Slide 15) http://www.dsireusa.org/summarymaps/index.cfm?ee=1&RE=1
• Speer, Bethany (2012). “Residential Solar Photovoltaics: Comparison of Financing Benefits, Innovations and Options.” http://www.nrel.gov/docs/fy13osti/51644.pdf
• Rinaldi, Nicholas (2013). “Solar PV Module Costs to Fall to 36 Cents per Watt by 2017” http://www.greentechmedia.com/articles/read/solar‐pv‐module‐costs‐to‐fall‐to‐36‐cents‐per‐watt
References• Osborne, Mark (2013). “First Solar Hits Cost Reduction Milestone” http://www.pv‐
tech.org/news/has_first_solar_retaken_the_lowest_cost_pv_manufacturer_mantle
• Maehlum, Mathias (2013). “Solar Comparison Chart” http://energyinformative.org/solar‐cell‐comparison‐chart‐mono‐polycrystalline‐thin‐film/
• Arzvizu, Dan (20120). “Solar Photovoltaic Technology Status, Challenges and Promise”. http://www.nrel.gov/director/pdfs/12062012_solar_pv_technology_status.pdf
• Fehrenbacher, Katie (2013). “Introducing New Solar Gear That Could Change The Game” http://gigaom.com/2013/03/26/introducing‐new‐solar‐gear‐that‐could‐change‐the‐game/
• “Inverter, Storage and PV System Technology” http://www.pv‐system‐tech.com/fileadmin/user_upload/2013/pdf/InSyst13_GW‐ES.pdf
• Zyga, Lisa (2014). “Perovskite Solar Cells Become Even More Promising with Cheaper Materials.” http://phys.org/news/2014‐01‐perovskite‐solar‐cells‐cheaper‐materials.html
• “NRL Achieves Highest Open‐Circuit Voltage for Quantum Dot Solar Cells.” http://phys.org/news/2013‐09‐nrl‐highest‐open‐circuit‐voltage‐quantum.html
• Wesoff, Eric (2013). “First Solar’s CTO on Improving PV Module Performance.” http://www.greentechmedia.com/articles/read/Slide‐Show‐First‐Solars‐CTO‐on‐Improving‐PV‐Module‐Performance