Could solar power be replacing fossil fuels?

Over the next two decades. The residential Solar Power industry is set to create up towards a quarter of a million jobs. It will replace over 40 coal power plants and provide tens of millions of Americans with billions of dollars in savings on their electricity bill. How do we make this happen? We simply need to look at the numbers and tell regulators and investors to get with it, face the facts, remove red-tape and stop clinging to an aging fossil energy infrastructure. The technology is finally mature and ready. Solar energy is a significant if not dominating part of the U.S. energy future.

Solar is becoming cheaper than regular household cost of electricity.

Solar system prices have dropped consistently over the last two decades, and many researchers believe we are not done yet:

•  Increasing supply of solar modules will continue to drive down prices.
• Module efficiency is increasing, producing more energy per dollar of cost.
• Mounting racks, tracking devices, inverters etc. are also demonstrably becoming cheaper.
• Cost of red tape such as interconnection regulations and permitting is twice as high in the U.S. as in Germany and will and should come down.

So prices are falling. What about cost of regular electricity?

• Regular electricity prices are projected to continue to rise with demand.
• U.S. is moving away from cheap but dirty coal towards already more expensive natural gas and nuclear.
• Oil, coal and uranium prices are increasing.
• Emissions regulations are likely to increase for fossil fuel generation in the longer term.

Americans are quickly getting the idea, money saved is money earned!

“Why is all this important?” you may ask. It is important because the cost of a solar system and the cost of electricity are the two major (if not only) elements that drive the level of solar installations in the U.S. in the long run. Subsidies, grants and tax credits cannot always be around.

In 2012, a SEIA poll showed that 92% of Americans believe the US should develop and use more solar energy. Look now at the projected trend for unsubsidized solar system electricity prices, predicting them dipping below regular electricity prices nation-wide, within the next five to ten years.

Remember then that business models exist in the U.S. already that allow households to have solar systems installed on their roofs without paying a penny out of their pocket, and that these business models can already save people 20% on their electricity bill every year. Companies such as SunRun, Solarcity and Sungevity pick up the tab in exchange for a yearly leasing fee, which is lower than what people paid for their electricity before.

With this in mind, it’s hard not to imagine that the growth in solar systems installations is going to continue at a rapid pace!

So here’s the pitch!

If just a third of these 92% of Americans decide over the next two decades, before 2030, to save money on their electricity bill, without having to move a muscle, there will essentially be about 35 million households with solar systems in 2030. 35 million!

Assuming that system sizes stay about the same on average, that’s a total of $543 billion in investment into an energy source that is clean, non-volatile, predictable and that creates jobs.

Assuming a total of 30 hours per installation and 2 hours in yearly maintenance, this scenario would create about 180,000 full-time jobs before 2030. And that not counting the numerous jobs in administration, financing, transmission, production and support that come with it which would likely bring it over a quarter million.

The total energy produced would be enough to replace over 40 coal power plants!

"So what are you saying?"

Many will point to often-cited arguments against solar such as grid reliability or back-up generation. But for every argument you find against, there are people who can explain you how those problems are handled. Long-distance power transmission, energy demand response and 24-hour solar generation are among them.

So what am I saying? I’m saying that the solar industry is grossly underestimated by the media and lacks more informed investors. It has the potential to be a trillion dollar industry over the next decades. It brings power generation into communities and away from dirty fossil fuel plants. It provides energy security and energy independence. And it does all this cheaply while creating hundreds of thousands of domestic and non-outsourceable jobs. If you think I’m being too optimistic, try reading the book “Solar Trillions” by Stanford Professor, Tony Seba, who is on the same page.

Let’s get behind this, support energy regulations supporting this revolution, remove red-tape, tell our friends and colleagues. Corporations such as Deutsche Bank, Google and Walmart are among some of the private institutions who are getting it and getting in early, and more are coming. Let’s go!

/Andreas Nicolet

Assumptions and calculations:

Sources:

[1]  http://www.seia.org/research-resources/solar-market-insight-report-2012-q2

[2]  http://www.seia.org/research-resources/solar-industry-data

[3]  http://www.seia.org/research-resources/us-solar-market-insight-report-2011-year-review

[4]  2012 Census

[5]  http://www.seia.org/research-resources/national-solar-survey

Wind craze

I recently fell upon a discussion on a wind energy forum. Someone was trying to figure out how much power he would be able to generate if somehow he could tap into the jetstreams of the uper-atmosphere. Now, initially, most people react with astonishment and scepticicm when they hear such ideas - and I'm writing today to tell you that those people would be right! A back of the envelope analysis reveals the cold (or shall I say hot) truth.

A small sized wind generator raised into the upper atmosphere would not only be facing a problem just having it float in the air, but the power would most likely never get to the ground.

Using the thickest cable on the American Wire Gauge (A measure of cable thickness) reveals that we would lose over 16% of the power to so-called "resistive heating" in the cable. Now, this would be acceptable if the copper-cable wouldn't weigh almost 10 metric tonnes, or the same as two large Boeing 747 jet engines!

 The smaller the cable, the lower the weight obviously but also the higher the power loss. The cut-off point comes at around AWG5 (The weight only HALF a jet engine) where the power loss would surpass 100%. 

Now remember, I'm not saying that we should not experiment with new ideas or concepts. The point I'm trying to make here, is that sometimes we get so focused on being innovative that we get our heads stuck in the clouds (pun intended) and forget the basic facts and physics that surround us. There are plenty of down-to-earth ways we can be innovative today: Google has been experimenting with investments in flying wind turbines, and they have succeeded fairly nicely with low-altitude flying wind turbines such as this.
 
So, sure there a probably ways we can think about concepts like these in a plausible way, low-weight superconductors, microwave transmission and so on, but let's focus on the low-hanging fruits of sustainable and renewable development for now. Space-beams, and jetstream wind can wait a little longer.

Makani's prototype flying wind turbine.

Thoughts on Impact Investing

Someone asked me to write a blog-post about Impact Investing. I thought I would give my 2 cents on it on my own blog:

As a graduated Master of Finance and Strategic Management, following a workshop on Impact Investing led by Ross Baird from Village Capital, has been quite eye opening to me. Impact investing attempts to put the traditional shareholder model on the line by challenging it with a completely new paradigm - one in which private investors value not only financial returns, but also the knowledge that their investments are making social and environmental returns to the communities in which they are made.

[It's welfare and community-building, wrapped tightly in a cloth of capitalism and soaked in a potent mix of ambition, drive, pride, hope and sense of humility and responsibility]

The challenge for Impact Investing as I see it, is to credibly convince investors that it is more than disguised philanthropy. The argument which must be put forward is that unlike philanthropy, Impact Investing still has a strong focus on making entrepreneurs create financial returns and make the ventures profitable and sustainable. This way, the Impact-ventures not only benefit from the constant drive towards scalability and creation of competitive advantages that financial incentives traditionally instill, but also create sustainable business models that build and grow the communities around them. It's welfare and community-building, wrapped tightly in a cloth of capitalism and soaked in a potent mix of ambition, drive, pride, hope and sense of humility and responsibility that I think is hard to find any other place than in the poverty-trapped societies of the third-world.

The future of impact investing is promising. In the wake of a number of investing "bubbles" and scandals on the Wall Streets of the World, I believe that an increasing amount of investors are starting to understand that ventures, which are more focused on working together with under-developed communities rather than off of these communities - while still quite profitable - will be able to create great gains and wealth from their still untapped potential. With an increasing volume of Impact Investments, the creation of more systemic analysis, measurable performance indicators and tested business models, I foresee that this field will become less and less risky and more and more profitable and impactful, witnessing impressive growth figures over the next decades.

USA can create 400,000 permanent jobs in the wind industry!

The wind energy industry has the very real potential to create more than 400,000 permanent domestic jobs or full-time equivalents (FTEs) by 2030.

The scenario which I calculated (See calculations in tables below), is based on the American Wind Energy Association’s goal of reaching 20% wind power penetration by 2030, with 85% of installations being onshore, 15% offshore.

In the wake of political discussion over creating permanent American jobs, I decided to do my own calculation of how wind could create a stable job for hundreds of thousands of Americans. Also, politicians are currently debating the extension of the so-called Production Tax-Credit (PTC) which has helped the wind industry grow its roots in America since 1992, but was allowed by congress to expire Dec. 31st 2011.

The 400,000-figure constitutes a great blend of skilled manufacturing labor, white collar and STEM jobs for wind turbine manufacturing, component manufacturing, wind farm development, jobs at independent power providers and utilities, in consulting, in R&D/Universities and in the financial industry.

The figure does not include jobs related to the disposal, and recycling of decommissioned turbines, nor does it include what I argue to be the thousands of jobs tied to the overdue build-out, modernization and digitalization of the aging US transmission grid, which would help support the increasing power balancing and trade stemming from higher wind penetration.

The best part is, that the jobs are hard to outsource. The continuing development of new, proprietary technologies in the industry as well as a high concentration of jobs being directly attributed to installation and maintenance means that there is a limited possibility and relatively high reluctance to outsource the value chain to countries with poor protection of intellectual property rights, such as China.

It seems like a no-brainer that the high amount of manufacturing, engineering and assembling jobs that this industry creates, is a great way to help the loss of jobs that the US has witnessed in the auto industry. And how can one not help smile at the fact that to a large extent, some of the US’ best wind resources are found in the Midwest (See map below), also known as home of the… wait for it… auto industry.

I calculated the 400,000-figure by pairing readily available information from the European Wind Energy Association (EWEA)on yearly installed, and cumulative installed, wind power in Europe in 2008 and 2010, total amount of European wind industry jobs and the electricity demand forecasts from the Energy Information Agency (EIA). I used the European figures, because the European wind industry is still significantly more mature than the American, and I argue that it better reflects the future dynamics of jobs in on- and offshore parts of the industry in the US. My assumptions on capacity factors and the ratio between jobs in on- and offshore installation and O&M are based on my previous experience, working alongside engineers and technicians in Asset Management for the largest offshore wind farm developer in the World, DONG Energy.

Figure 1 - Wind resource map

Source: http://www.windpoweringamerica.gov/wind_maps.asp

Table 1 – Jobs per megawatts of yearly installed capacity and cumulative installed megawatts

Table 2 – Jobs in on- and offshore industry segments in the USA

Read about the PTC-bill, currently pending in the Committee on Ways and Means here: http://action.awea.org/page/content/TakeAction/