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Solar electricity is expensive and cutting that cost without government help will likely take a very long time. Energy Secretary Steve Chu on Friday said his agency is offering $27.3 million to nine companies through a new initiative that he said will help cut down solar electricity pricing dramatically by the end of the decade.
The new initiative, called SunShot, is the latest effort by the U.S. Department of Energy to make solar electricity cheaper to produce (using solar panels). The goal is to cut the installation cost of a large-scale solar power project, from equipment to labor and a built-in profit margin for developers, to $1 per watt without government subsidies by 2020.
Reducing the cost of solar isn’t necessarily a new goal for the DOE. Already the White House has suggested that the stimulus money has helped to drive down the price of solar electricity by half over the next five years. The administration has invested billions of dollars into the solar industry over the past two years alone, from the $935 million in loan guarantees to Solyndra and Abound Solar for building factories to the roughly $472 million in grants to developers for installing solar power generation projects.
The goal is not just to boost the country’s renewable energy generation but also to create jobs. The investments are also meant to help counter complaints that the U.S. is falling behind countries such as China in providing government support for green technologies.
“We want (solar) to be competitive without subsidies. If it’s achievable, then, boy, the companies and the installers will have a huge world market,” Chu said during a press conference. SunPower’s (s SPWRA) co-founder and president emeritus Dick Swanson joined Chu during the conference call to present the company as an example of a successful beneficiary of DOE funding.
At installation cost of $1 per watt, the cost to produce solar power will fall to roughly $0.06 per watt, making it comparable to the wholesale rates of power produced by coal or natural gas, Chu said. Currently, solar power plants built for utilities have cost from $3.50 per watt to more than $7 per watt, depending on the size and whether the solar panels are installed on the ground or the roofs of commercial buildings, according to GTM Research.
That term “large scale” doesn’t have a defined size. Back in 2009, the largest solar power plant was a 25MW project by Florida Power & Light. The DeSoto power plant includes 180 acres of SunPower solar panels. In 2010, Sempra Generation completed a 48MW project on 380 acres in Nevada.
Projects under development now by other companies are in the hundreds of megawatts range each, and they are set to rise from remote tracks of land. At the same time, some states and utilities are promoting installations of smaller projects, from 1-2MW to about 20MW, that can be built closer to communities they serve.
Chu is launching SunShot as part of a larger plan by the administration to boost the production of cleaner sources of energy. In his State of the Union address last week, President Obama said he would like the country to get 80 percent of its electricity from clean sources by 2035. He said “clean sources” would include not just renewable sources such as solar and wind but also nuclear, natural gas and “clean coal.” Clean coal is a euphemism for a type of technology that scrubs carbon dioxide emissions in coal-fired power plants in order to reduce the amount of emissions that they emit into the atmosphere.
As part of SunShot, the DOE plans to invest up to $20.3 million in five manufacturers of different components of a solar electric system. The recipients include 3M (a polymer sheet to replace glass as the protective to layer of a panel); 1366 Technologies (a new process to produce silicon wafers for making solar cells); and Veeco (a factory equipment to make copper-indium-gallium-selenide cells). SunShot also will fund efforts to reduce installation and permitting costs in the future, the DOE said.
1366, incidentally, also has received funding from DOE’s Advanced Research Projects Agency—Energy (ARPA-E) program, which aims to fund innovative technology that might be considered too risky to attract private investments.
The remaining $7 million will go to companies that are in the earlier stage of their product development. The recipients are Caelux, Solexant, Stion and Crystal Solar. The $7 million funding is coming from the Photovoltaic Solar Incubator Program, which isn’t new and whose mission is also to fund early-stage companies and help them reach pilot or even commercial production.
We have written about Stion and Solexant before, both of which have lined up funding and space for commercial production. The new DOE funding is meant to develop their next-generation products, it appears. Stion’s CEO, Chet Farris, told us about the company’s effort to add an additional layer of semiconductor material to boost the efficiency of its copper-indium-gallium-selenide (CIGS) thin films.
While it’s difficult to say whether these investments will deliver the promised results, the administration can count on increasing scrutiny from skeptics questioning the funding decisions and the benefits for taxpayers. To show success, the DOE will have to point to more than SunPower as a role model.
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Photo of DeSoto plant, courtesy of SunPower