Recently, the International Energy Agency (IEA), issued a report claiming that solar PV could be the biggest single source of electricity in 2050. The IEA believes the price of solar PV could touch 4 dollarcents per kWh. Even the Paris-based OECD-institution says solar power – should be the “fuel of choice” for populations with no access to the grid.
“Our latest advance is a leap forward in solar technology”, said SunEdison CEO Ahmad Chatila, “and will enable solar power to become the lowest cost energy solution – not just an alternative to other renewables, but the cost-winner over fossil fuels as well.”
SunEdison said that by 2016, its factory in Korea would be able to produce modules at a cost of $0.40 per Watt peak. The costs of storage are also coming down rapidly.
No wonder that more and more people are moving towards solar PV-with-battery-backup systems for their energy needs.
“Sun above the horizon” is a 500-page eyewitness account of the rise of the solar industry written by Peter F. Varadi, a Hungarian exile to the United States. In 1973 Varadi co-founded, Solarex, which became the largest solar PV producer in the world in 70’s. In his book, he makes it clear why he was convinced, even 50 years ago, that solar power would conquer the world.
In the early 1970’s, Varadi and Lindmayer worked for COMSAT Laboratories, with the responsibility for the development of a global satellite communication system. (p. 7) At that time, solar power was used only for space applications. In 1953 researchers at Bell Laboratories had discovered how to produce solar cells that could be used to power objects in space.
Solar’s space age laid the groundwork for many technological applications. As Varadi puts it, “today few people realize that without the invention of solar power, many things like the global phone service, cell phones, TV, internet, global weather service, the GPS system, manned space stations and machinery exploring the surface of Mars would not be possible”. (p. 2) He devotes a special chapter in the book to the use of solar power in communication and GPS systems. No communication satellite would be in operation today without solar cells, he notes (p. 282). (Although he recounts that in 1964 NASA did launch a satellite with a nuclear reactor: during the launch it broke apart and the radioactive waste was scattered across the globe. p. 279)
Making solar cells for terrestrial purposes was totally a new idea. There were two companies in the US – Spectrolab and Centralab – which produced solar cells for satellites and spacecraft and sold rejects for terrestrial use. In Germany, AEG/Telefunken, did the same. Another US company, Solar Power Corporation was founded at about the same time as Solarex.
The skepticism of the venture capitalists was only part of a larger myopia in society about the possibilities of solar cells, says Varadi. Initially very few people believed solar could be a useful energy source on earth. When the first oil crisis hit, and alternative energy became a serious concern and solar power suddenly entered the spotlights. Varadi notes that the RD program was started up by the US government under president Carter for development of large-scale solar power systems. The expectation was that it would take from 7 to 14 years to achieve grid parity in this way and that by 1986, solar power could be produced for 6 cts/kWh.
But this project did not get anywhere, because, as Varadi puts it, the utilities were not really interested in the concept of a centralized PV electric power plants. (102) The political climate was also not favorable. President Carter in June 1979 installed a solar hot water system at the White House, which was removed by his successor Ronald Reagan. “This was the symbolic end of the pioneering role of the US PV industry”, notes Varadi, which at that time produced at least 80% of the world’s PV products. (p. 246)
Lindmayer and Varadi (as well as a other entrepreneurs, like Elliot Berman of Solar Power Corporation and Bill Yerkes of Solar Technology International) were not interested in centralized power systems. They were convinced that decentralized PV systems would produce de-centralised local power at a reasonable price in a very short time. (p. 36) They realized that it was precisely the possibility of decentralized production that gave solar PV its unique advantage. (p. 104)
In the end, the two new-born capitalists managed to collect the required startup capital (of $210,000) from friends and acquaintances within two weeks. (p. 20) After nine months, writes Varadi, their company was already turning a profit.
Lindmayer and Varadi decided to use silicon (Si), because of its strength and longer life (over 20 years). (p. 13) Silicon – “the second most abundant element in the earth’s crust” – is still used in most solar PV today of course.
Interestingly, Varadi explains that solar cells are quite simple to make: he demonstrates how any one can make one in his own kitchen (not a very good one, and you need to buy the Si wafer, but still). (p. 24)
The next leap was the development of a new production technology (chapter 8 of the book), for manufacture of rectangular “multi-crystalline” Si “wafers” – which are still used today in half of all solar cells.
Varadi and Lindmayer found their niche for de-centralized solar power generators: there were many places in the world where grid connections were non-existent or not practical, e.g. lighthouses, oil platforms etc. Japan had already shown the way in this respect, writes Varadi. In 1961 Japanese company NEC had installed the first PV solar system to power a lighthouse, to be followed by many more lighthouses in the years to come. Varadi followed this example and started selling solar cells for similar applications in the US, for instance for repeater stations in police communication systems.
This was followed by other products: calculators, digital watches navigational aids, and other gadgets, including toys, some of which sold in the tens of thousands. Solarex sold many of these products through mail order catalogs. This had the effect of “educating” people about the possibilities of solar power, writes Varadi. “People have to see it to believe it. They don’t attend conferences”. He notes that “the consumer product PV business was never taken seriously, scientists and solar experts probably did not know about it or if they knew they disregarded its existence. It never came up in any government studies.” (131) Yet Varadi believes that through these market activities a basis was laid for the later success of solar power.
In addition, Solarex looked abroad. There were and are many places in the world where people do not have grid connections. One successful venture was with the French company Leroy-Somer, which supplied solar-powered water pumps to places like the Sahel and the Sahara.
One important chapter in the history of solar PV was the development of quality and testing programs – crucial for a product that needed to be reliable for over 20 years. The first quality control program was started by the Jet Propulsion Laboratory in Pasadena. This, writes Varadi, made the failure rate of existing solar cells go down from 45% to 0.1%. Varadi notes that “this was one of the most important and useful government-sponsored PV programs”, for without it “the expected failures would have destroyed the image and usefulness of PV”. (p. 97)
Varadi credits both business and government programs with the success of PV. And business includes not only independent entrepreneurs, but even the oil companies! Over time the oil industry has invested quite a bit in solar power, Varadi recounts. Solarex itself was bought in 1983 by Amoco (Varadi and Lindmayer sold it to allow the company to grow faster), which was later taken over by BP, which has now withdrawn from solar power altogether. Solarex’s rival Solar Power Corporation was bought by Exxon, which got out again in 1984. The other rival, STI, was bought by Arco in 1977 and renamed Arco Solar, and then sold to Siemens in 1989. Shell “went in and out of the PV business” many times over the years. Currently, the oil majors are all out of the PV business, with one exception: French company Total has been involved in PV since 1983 and has in recent years enlarged its presence with the acquisition in 2011 of 60% of SunPower Corporation for $1.3 billion. Total is now building a solar power RD centre in France together with EDF.
Unlike the oil companies, utilities, Varadi notes, were never interested in solar PV. They resisted what they regarded as a form of competition. They are probably still regretting that today.
But the one factor that may have been most responsible for the current stormy growth of solar PV, according to Varadi, was the introduction of the Feed-in Tariff (FIT) in Germany in 2000 (after an initial scheme that had started in 1991). Varadi met – and was highly impressed – by one of the architects of the German program, Hermann Scheer (1944-2010): “He opened a new world for me with the perspectives, connections and possibilities [he sketched]”. (p. (335)
The reason the FIT was so important was that the main barrier for solar power, after cost had been tackled through mass production and technological progress, was the financing. This was the barrier that the FIT scheme helped to overcome. The FIT provided financing for the relatively high-priced solar PV while forcing a gradual price reduction and stimulating investment.
The German program did one have unintended consequence, though: as a result of the spectacular growth in demand, the price of silicon and of solar modules skyrocketed, especially in the period 2003-2007. This is one of the reasons why many market watchers and energy experts are (or were) under the impression that solar PV was so expensive. It was extremely expensive for a while – but that was temporary. When silicon prices went down again, the PV industry, as Varadi puts it, “became unstoppable” (p. 368).
Indeed, for then the Chinese got on board, and the rest, as they say, is history. Or: history in the making, if it is up to the likes of Cheng Kin Ming, the Chinese entrepreneur who has over the past few years invested $20 billion in solar power companies – and recently announced that he is only just starting. Interestingly, Varadi was personally involved in bringing the solar revolution to China. Back in the dark Communist days of 1983, he went to China to explain the Chinese the possibilities of solar power. A bit of technology transfer with far-reaching consequences! Incidentally, the World Bank also helped China actively: its involvement led to the first China Renewable Energy Development Project (REDP) adopted by the Chinese government.
Of course the part of history where solar will change our world forever has mostly still to be written – although the speedy advance of renewable energy is already having a strong impact on the existing energy system. As Varadi discusses in the last part of his book (and wrote about in this article for Energy Post in November 2013), throughout the years utilities have consistently chosen to disregard the solar power industry. Instead of working with the fledgling sector and trying to find win-win solutions, they did all they could to prevent solar power from getting connected to the grid (p. 447). They have now belatedly woken up, and are trying to adjust to the circumstances.
Nevertheless, Varadi believes utilities still have a “window” in which to act. They have certain advantages: an existing customer base, strong brand names which can convince customers that they will be around for a long time, and financial resources to invest in new business models. In particular he mentions one attractive offer from an existing utility, namely RWE’s HomePower solar system. This is a PV array with a battery attached to it – as well as a grid connection (p. 476). Isn’t this what SolarCity also wants to start selling in the United States?
Peter F. Varadi’s book, Sun Above the Horizon, can be ordered via the publisher, CRC Press, It can also be ordered through Amazon.
Source: Energy Post.
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