Burn Some Daylight

The Senate's recent filibuster of the tax extender for the 2009 30% Solar Investment Tax Credit is the latest manic-depressive moment in our industry.

What does this mean if you want to power your World with onsite clean power?  There is little time to waste--we typically need six months from GO to power up--and we only have a little over ten months left before the 30% Solar ITC reverts to a 10% credit.

Why should you care?  Here is the value stack under the present tax law, present California incentives, and present avoided power costs.

Here is what it will look like if you flip the switch after 31DEC08, under present law.

The 25% system value-add drops to 5%.  Still positive, but much harder to justify the investment.  The after tax IRR drops from high teens to below 10%.  Not enough to pull demand for renewables forward five years--to accelerate the job creation and adoption--that the 30% stimulus does. 

And the cost of doing the right thing is about what we burn in two months in Iraq using the President's $186B 2008 Iraq war cost estimate.

The McKinsey report did not acknowledge that a long term distributed generation + renewables federal tax policy is critical to kicking our brown power habit. Think of it as The Patch.  It helps us get where we need to be.

There are a number of institutional investors sitting on the sideline ready to get in the game if there is a multi-year tax policy to pull demand for renewables forward five years--which is exactly what the solar ITC does.  It creates green collar jobs in California and elsewhere, and provides a stable platform for R&D and getting the costs out of distributed PV power.

There are three things you don't wanna do when harvesting your available solar resource.  Number three is procrastinate.

Spent the last week in the United Arab Emirates on a potential solar development project.  The heart of the issue is that development growth has outstripped the capability of the grid to power this growth.  Is solar power part of the solution?

Part of the solution may be what I saw in Abu Dhabi, at the site of a new Sir Norman Foster designed zero carbon city.  Located in the emirate with the fourth largest oil reserves in the world, Al Masdar (Arabic for "the source") plans to meet a significant amount of its power needs with a 200MW array. 

The question is how well PV will work in the summer heat of the UAE.  PV does not like heat--it produces less power when the cells increase in temperature.

Summer ambient temps can reach 45C [113F] and temperature at the cell [Tcell] can be 25C +/-5C over that.  To determine how PV actually performs, Dr. Abu-Zaid at Masdar is running the largest PV competition in the world--testing over 30 1kW systems from manufacturers in UAE field conditions.  Data from the competition, including

• power output,
• temperature,
• power loss from dust and
• peak power output

using identical inverter and measurement equipment will be used to determine what type of pv power is best suited for desert conditions.

At roughly 9A that morning, with 25kW installed, these systems were collectively performing at over 50% of max--in February!  The UAE has great potential as a market for PV.

Dr. Abu-Zaid is doing the right thing.  There is a dearth of actual performance data available for use when designing systems.  This competition will be a great add to the Photon data.  And it motivates me to incorporate ways to get more performance from my systems deployed in high-heat environments.

In doing my homework for my trip to the UAE last week, I came across an investment bank's report that concluded that, outside of California, the UAE is the highest potential market for solar in the world.

Part of the rationale comes from the math--PV power runs $0.22/kWh and grid power derived from $100/bbl oil costs north of $0.40/kWh.  Why use your oil to provide heavily subsidized grid power at $0.054/kWh when you can sell it to we Californians as transportation fuel?

Part of the rationale comes from insolation--I measured much higher than I expected.  And part comes from the fact that rapid development growth has outstripped the grid's ability to power these new buildings.

My take away from the trip?

• Solar power is a very feasible option for the UAE.
• They need to start building for a world where energy is expensive--build to LEED Silver, California Title 24 and EPA Greenstar standards, before they look at solar.  Think Negawatts, not Megawatts.
• AC is the critical load--look at geothermal exchange heat pumps [groundwater is ~2m from the surface, temp 20m down should be ~14C] that provide a cooling sink function or absorptive chillers using solar thermal.

Solar makes sense, but only on energy efficient buildings.  This will require a big change for a country used to free energy.  How do you go from the biggest per capita carbon footprint in the world to a zero net energy future?  Stay tuned.