If those numbers sound impressive, consider that the US consumes ~90,000 railroad trains of coal each year for electricity. How much solar or renewable capacity is needed to replace ALL of that coal. Let’s start with round numbers.

• US consumption of coal ~1B tons ~600GW of solar PV
• The average home PV system is 4.7KW. 600GW would require 127M residential PV systems – more than the current base of US homes!
• At 15W/sq-ft, 600GW would require 40B sq-ft or ~10X the total commercial rooftop area in the US.
• Solar currently costs ~$4/W installed. The DOE’s SunShot program is targeting $0.75/Watt by 2020. The cost of 600GW in 2020 would be $450B.
• There are cells technologies with efficiencies above 30%. There are concentrator systems that increase power density more than 10X.
• At 150W/sq-ft and $0.50/W, we could replace 100,000 trains of coal with 4B sq-ft of solar panels at a cost of $300B. Or about what we spend on foreign oil each year.

References:
SunShot
SEIA Year-End Executive Summary

• Labor costs in China have risen 250%
• Shipping costs from China have risen 300%
• the cost of robotics for manufacturing has dropped by 500%

.

The issues of control, just in time delivery, and IP protection never went away, but now they are no masked by the lure of cheap labor. Sell Global and Make Local. Bring it home and reduce COGS, decrease TAT and increase EBIDTA. Changes in the “T” in EBIDTA are still needed to fix this economy.

]]> http://sambeal.com/2011/02/28/sell-global-make-local/feed/ 0 http://sambeal.com/2011/02/15/is-global-warming-worth-the-hot-air/ http://sambeal.com/2011/02/15/is-global-warming-worth-the-hot-air/#comments Tue, 15 Feb 2011 21:10:50 +0000 sam http://sambeal.com/?p=702 In a recent op-ed in the Wall Street Journal, Ann Jolis uses a disingenuous feint to throw more doubt on global warming. Her question was “Is rising CO2 behind the “apparent” increase in catastrophic weather?” For example, heat waves in America and Europe last summer followed by bitter winters; firestorms in Australia last summer, followed by Biblical floods, etc. Good question, and she turned to climatologist, Gilbert Compo at the University of Colorado in Boulder, for an answer.

Turns out his “super-computer” model of the world’s weather does not correlate rising CO2 levels with the current spate of storms. Just too many variables, he says. OK.

But Jolis uses this reasonable fact to draw the absurd conclusion that the best way to cope with catastrophic weather is to build a strong economy without wasting trillions (her word) of dollars on green energy.

You can’t argue with idiots, so don’t try.

• Renewable Energy reduces our dependence on foreign oil. ~$350B per year. Not only is the a significant fraction of our trade deficit, there is a real flow of US money to terrorist bent on our destruction.
• Clean air and clean water is essential for human life. It is our obligation to the future. How hard is that to understand?
• Solar and wind energy is free, but obviously converting it into useful energy costs money. Most of the cost is in fixed installation. Afterwards the output is essentially free minus minor maintenance (monitoring strongly recommended). Fixed costs are benefiting from gains in technology and manufacturing, i.e. the learning curve. Today’s 15 year pay-back will be tomorrow’s 3 year pay-back.
• The expansion of renewable energy markets is an economic force that is only accelerating. World-wide solar and wind power account for ~200GW of generating capacity today and will exceed 1TW by the end of the decade. That level of growth will produce jobs for the countries that innovate, make and market solutions. Jobs that span all sectors of energy generation, energy efficiency, air and water purification, and more. Coal mining is not a job skill that anyone wants. Job growth in offshore oil exploration is negligible.


As a footnote, Ms. Jolis, strong economies don’t protect us from the resulting higher taxes, insurance and borrowing rates that disasters bring about. And while it was fortunate that “fans got to the SuperBowl”, the people who lost livelihoods or family members in these storms don’t feel so fortunate.

]]> http://sambeal.com/2011/02/15/is-global-warming-worth-the-hot-air/feed/ 0 http://sambeal.com/2011/02/15/sturm-und-dross/ http://sambeal.com/2011/02/15/sturm-und-dross/#comments Tue, 15 Feb 2011 00:02:21 +0000 sam http://sambeal.com/?p=697
• People use “Search” to research a topic or find a solution. Google dominates search but Bing is gaining and new entrants are constantly emerging, like Blekko.
• People use Facebook to socialize and play games – both of which are essentially leisure activities. People don’t go to Facebook to solve problems. And Facebook keeps people inside their walled garden with intra-friend messaging, virtual goods and all those games. Every page on Facebook has a 250px sidebar of Image Ads.

That’s the way it’s been for the last few years, but things are changing.

• Search is bogging down with SPAM (Ads pretending to be information) and DROSS (words pretending to be information). The latter has gathered a lot of attention with the IPO of Demand Media, who basically pays pennies per word for keyword-stuffed articles. Jason Calacanis does a good job of calling the kettle black .
• Facebook is evolving. With 1B members forecast by year-end they are changing the web.

Google’s mission is to catalog the world’s information. Facebook’s mission is to catalog the world’s people and entities. The page changes unveiled last week make no distinction between a personal page, a corporate page or a movement, belief or hobby. If they are successful, people will use Facebook to play, to communicate, to learn, to shop and to live.

A few years ago I wrote a faux press release blog claiming “Facebook hits 2B users and changes name to WWW”. That was semantically incorrect since www is a sub-domain. I should have said “Facebook changes name to Hotel California”.

Market Opportunity

Detect and diagnose underperformance and deliver actionable messages to site owners.

With so many new companies entering into and competing in the renewable energy marketplace, how do the parties ensure that key components of a solar generation facility perform as intended? Rigorous commissioning and performance testing might address immediate issues. But what happens in later years when photovoltaic modules do not meet performance expectations or the inverter fails? What happens when a developer or contractor obtains modules from an inexpensive overseas supplier and the modules degrade more quickly than projected? What good is a warranty from a company that will not be around in a decade to respond to a claim? What remedies exist when key components fail to perform as intended? Is there insurance available to respond to these risks?

Target Market Segments – Grid-connected Commerical

In the US, grid-connected commercial installations comprised over 50% of total installed power in 2010 surpassing 400MW, a growth rate of 100% over 2009. [1] At an average price of $5.87/W, this represents a $2.4B market while the global market exceeds $10B. The European Photovoltaic Indusry Association (EPIA) estimates a global demand of 14GW to 30GW depending on policy initiatives.[2] Additionial forecasts from US consultants support the 30GW level and strong growth in North America [3,4,5,6]. Assuming 30% commercial and a price reduction to $4/watt installed, produces a total global market size of $18B to $40B.
Grid-connected commercial solar installations are created with a variety of financial arrangements:

• A Power Purchase Agreement (PPA), where the developer agrees to install and maintain the generation facility and the site, building or land owner agrees to buy the electrical output.
• Site Lease Agreement under which the site host (which may or may not be the off-taker) gives the developer rights to install, own and operate the facility at the project site.
• An Engineering, Procurement & Construction Agreement (EPC) under which the developer hires a contractor (the “EPC Contractor”) for the design, materials and construction services necessary to provide a turnkey facility accompanied with an Operations and Maintenance Agreement (O&M) under which the developer hires a contractor (which may or may not also be the EPC Contractor) to provide long-term maintenance services.

The U.S. solar power purchase agreement (PPA) market will grow to reach an estimated $8 billion in new photovoltaic (PV) solar power generation installations by 2013, up from an estimated $0.7 billion in 2009, according to Gartner, Inc. [6]

Revenue Critical Production

Revenue is a critical factor behind all of these arrangements. At the point of agreement, estimates of performance are made using guidelines or modeling programs or sstatistical simulation tools.
Uncertainties in revenue over time relate mostly to the evaluation of the solar resource and to the performance of the system itself. In the best of cases, uncertainties are typically 4% for year-to-year climate variability, 5% for solar resource estimation (in a horizontal plane), 3% for estimation of
irradiation in the plane of the array, 3% for power rating of modules, 2% for losses due to dirt and soiling, 1.5% for losses due to snow, and 5% for other sources of error. [7]
Identifying and reacting to losses that can be managed is critical for revenue and O&M efficiency.
However, with all of the agreements that are typically executed in connection with a solar project, it can be confusing to figure out who is responsible for losses. Moreover, the parties and agreements described above may not themselves provide adequate performance assurance for such components. The practical answer for determining who ultimately bears responsibility depends on the contract warranty and insurance if available. This can be further complicated when PPA agreements are traded in secondary markets – much like the maligned mortgage practice that contributed to the financial crisis in 2008.

Guarantees Under PPA and EPC Agreements

Increasingly, developers that offer performance assurances to the off-taker under a PPA turn around and pass along their exposure to the EPC Contractor under the EPC Agreement. However, such assurances often have their limits. For example, a performance guaranty from the EPC Contractor may provide assurances that the system, as designed, will perform as intended. But such guaranties may not ensure performance of the modules or inverters themselves. Also, there may be disagreement about whether another warranty exclusion applies, such as a failure to properly maintain the equipment. If the contractor under the EPC Agreement and the O&M Agreement are the same, this particular concern is less of an issue as the same party would be responsible for design, procurement, installation, and maintenance.

Performance Monitoring is like Insurance

As the solar market expands, another solution is becoming more widely available for those who want to limit their exposure to product failures. In particular, third party warranty insurance may be available to reduce or eliminate risk, albeit with added cost. The typical installation, property and liability policies obtained by a developer or contractor do not provide warranty coverage. However, a few insurers in the marketplace now offer specific warranty insurance policies. For example, one insurer is willing to give a 25-year guaranty that modules will perform to 90% capacity in the first ten years, and 80% for the remaining 15 years. However, this guaranty is also only available with respect to modules made by a limited set of manufacturers approved by the insurer, reinforcing the importance of vendor selection for key components.

The solar power integrators have four performance issues: Under-performance (losses), lack of effective monitoring, fire and maintenance safety, and module theft. A wave of no less than a dozen announced products, services and combination offerings addressing performance optimization have appeared during the past year. These products and services all require major paradigm changes, or need to be designed in as new construction, more difficult to justify. The problem, as described by Brian Banke, an Asset Manager for Solar Power Partners, a leading PPA.

“Maintaining a solar site is a “daunting exercise in O&M made manageable with accurate upfront performance modeling, a reliable and effective monitoring system, active monitoring by knowledgeable personnel, realistic preventative maintenance policies and budgets, solid warranty backing, efficient reactive repair policies and targeted analytics.” [8]

A true fault detection and diagnosis solution that can support the gamut of solar revenue reducing factors is needed. Such factors include:

• Module degradation
• Array soiling {episodic, chronic, seasonal}
• Array shading {periodic, episodic, gradual increase, weather related, environmental related)
• Array overheating
• Module Failures (open/short cells, open short panels, blocking diode}
• Array DC disconnect failure
• Inverter failure
• Combiner failure
• Grid power failure {Single / Double phase faults)
• Protection failures (panel fuse, array fuse, inverter output fuse, combiner fuse}

REFERENCES

1. SEIA Q3-2010 US Solar Market Insight
2. EPIA 2010 Global Market Outlook for Photovoltaics to 2014. Also see Renewables 2010 Global Status Report (REN21) – July 2010
3. International Business Alliance Dec.1, 2010 by Paula Mints, Navigant Consulting
4. IREC Solar Market Trends Report, July 2010 (IREC21)
5. GTM Global PV Demand 2009
6. Garner SVPVS December 2009
7. Report 2010-122 (RP-TEC) 411-IEARES, March 2010
8. Brain Banke, Article series by a PPA Operations supervisor Heres comes the hard part.

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