Eye on solar: Part one

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By Jeff Postelwait
Online/Associate Editor

In this first of a two part series, I sit down for a question and answer session with Frank De Rosa, senior vice president of North American project development with First Solar. Be sure to keep checking out our semiweekly e-newsletters because next time I’ll be talking with an official from SunEdison who can shed more light on the subject of solar power technologies.

Q: What role has local government assistance (production tax credits, feed in tariffs, investment tax credits, etc.) played in the way you do business, and where you do business?

A: Public policy initiatives for renewables to offset the lack of a charge for carbon emissions from fossil-fired electricity generation have played an important role in fostering the solar power industry. Until now, for instance, the majority of First Solar’s business has been in Germany, due to the feed in tariffs that country had the foresight to establish to meet its carbon reduction goals.

Click here to read coverage about First Solar on elp.com

As a result, it has been the world’s largest solar market for most of the past several years. But that is changing, as the FIT in Germany declines and U.S. markets open up. California, of course is the largest solar market in the U.S., due to the state’s 20 percent Renewable Portfolio Standard.

Q: What do you think about photovoltaic solar getting to a point where the industry is less reliant on such government backing? What will have to happen first, before the industry can stand on its own?

A: Yes, PV is approaching a point where it can be sustainable even without carbon adders, thanks to dramatic reductions in PV cost. First Solar, for example, is currently developing utility scale power projects that will be able to price electricity in the 14 to 16 cent/kwh range. This compares very favorably with gas peakers–the most expensive source of generation. The peak production for solar power coincides, of course, with peak demand on sunny summer afternoons.

Our goal is to reach 10 to 12 cents/kwh in a two or three years, competitive with combined-cycle gas generation. First Solar has driven its manufacturing cost for PV panels down from nearly $3/watt in 2004 to 76 cents/watt in the last quarter. There is similar cost reduction trajectory for the balance of system in our power plants.

In the meantime, extending initiatives such as the Recovery Act-funded Treasury Grant program (in lieu of ITC) and the Department of Energy loan guarantee program are badly needed to ensure that the first wave of utility scale solar projects that are starting construction this year and next can be readily financed in the post-recession economy.

Q: How has First Solar felt the pinch of the global economic turndown? What have the company’s pain points and success stories been as the recovery unfolds?

A: First Solar has continued to grow and prosper during the recession, with a 140 percent CAGR in revenue for the past three years – growing from $500K in 2007 to $1.2 billion in 2008 to $2 billion in 2009. But our investment in planned new manufacturing capacity slowed at the end of 2008 with the economic turndown of that period.

As a result, we are capacity constrained and cannot produce enough panels to meet current demand. Since then, however, we have restarted manufacturing investment, and will increase production capacity from 1,400 MW this year by 58 percent to 2,200 MW in 2012.

Q: How do you keep costs down on your products? How important is it for you to keep costs lower? (in terms of manufacturing costs per watt of power, for example)

A: Continued cost reduction in panel manufacturing cost (as well as balance of system for solar power plants) is critical to achieving our mission of enabling a world powered by clean, affordable solar electricity. This can only occur if our cost is competitive with other forms of generation.

We have achieved the dramatic reduction in manufacturing cost per watt for our panels in three ways: (1) improving the performance of the technology (greater electricity yield from the panel), (2) increasing factory production (greater throughput), and (3) and lowering the cost of our raw materials.

Q: Could you explain to our audience, please, how the efficiency of PV has been increased in the past few years, and how it could be further increased? What is the potential of the technology?

A: Conversion efficiency is the rate at which a PV panel converts the sun’s energy to electricity, photons to electrons. But it turns out that conversion efficiency is only one factor in achieving the lowest Levelized Cost of Energy (LCOE). Efficiency is a good measure of how one panel compares to another on a laboratory test bench at a single point in time.

The actual yield from a solar power project (which, together with its cost, determines the LCOE) depends, however, on a number of other factors, such as the PV technology’s response to lower light conditions at the beginning and end of each day or under cloud cover, as well as the drop-off in generation that occurs in very hot conditions.

First Solar’s thin film PV technology has a performance advantage of 3 to 13 percent over traditional crystalline silicon solar panels under these real world conditions, despite the fact that those panels have higher laboratory efficiency ratings.

Q: Tell me about some specific projects First Solar has been involved with. Who have some of your utility partners been?

A: The first utility-scale solar project that we developed and built in the U.S. is the 21 MW facility in Blythe, CA, completed in 2009. The project was acquired by NRG Energy and the off-taker is SCE. Also last year, we completed a 20 MW project at Sarnia, Ont., which was acquired by Enbridge.

The off-taker is the Ontario Power Authority. Enbridge also purchased the next 60 MW phase of the project (also under contract with OPA), which has just been completed and, at 80 MW, is the world’s largest PV project. We are currently building a 30 MW project in Cimarron, NM for Southern Company. The off-taker is the Tri-State Generation and Transmission Association.

In addition, we are expecting to start construction this year of the 290 MW Agua Caliente project in southwestern Arizona, which has a power purchase agreement with PG&E. Our North American project development pipeline for projects under contract with utilities totals 2,200 MW. We plan on building 500-700 megawatts of projects in 2011, up from about 200 megawatts in 2010.

Q: Who are some of your customers, large and small? Do you deal in rooftop solar at all, or are your customers usually on the utility scale? (say 500 kW and up?)

A: Our utility customers include PG&E, Southern California Edison, the Ontario Power Authority, and NV Energy. Projects have been sold, as noted above, to Enbridge, Southern Company, and NRG Energy.

We also work with others who develop projects in North America, such as Sempra Generation, for whom we built the 10 NW El Dorado project in Boulder City, NV, and which we are currently expanding to a total of 58 MW. Also, juwi, one of our European partners, has built some U.S. projects using our panels.

Most of our panels in the U.S. are used in utility-scale projects, but there are some commercial and residential rooftop installations–though these are in the minority.

Q: Are there any acquisitions or purchases you’d like to discuss? Like the purchase of NextLight Renewable Power? What impact has this had on First Solar?

A: First Solar has been building its utility systems business since 2007, when it acquired Turner Renewable Energy, followed by the acquisitions of solar project pipelines from OptiSolar in 2009 and Edison Mission Group in 2010. The acquisition of NextLight in July 2010 provided a good opportunity to focus our efforts into a dedicated enterprise.

We created the Utility System Business group this past summer to bring the benefit of a focused enterprise for our utility and systems customers, whose needs differ from those of our module customers. The systems business supports utility customers’ achievement of renewable generation requirements at the lowest cost and shortest lead time to generation, while continuing to drive solar PV economics to levels comparable with fossil-fuel generation, enabling broader adoption of solar PV technology.

Q: How do the leaders at First Solar feel about the state of the solar power industry at large? What would they like to see more of? What trends would they like to see reversed?

A: We expect significant growth in global demand for PV in the next several years, with the U.S. market playing a growing role, as the industry approaches sustainable economics in geographies and markets with high solar irradiance. Consensus estimates are that the 2009 7.2 GW global market for PV will experience a 32 percent CAGR, reaching 16.7 GW in 2012.

As we continue to reduce costs and increase economies of scale, approaching price parity with some forms of fossil fuel generation, it remains critical to continue the state and federal public policy framework that has helped jump-start the renewable energy industry.

In California, the 20 percent RPS has helped make that state the largest solar market in the U.S., and extending that to 33 percent is important to continuing this growth. At the federal level, extension of the Treasury Grant program and the Department of Energy loan guarantee program is badly needed to ensure that the first wave of utility scale solar projects that are starting construction this year and next can be readily financed in the post-recession economy.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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