The global solar industry continues to require subsidies (like rebates and feed-in tariff s) to stimulate demand. Profit margins all along the value chain remain fragile, and solar continues to be a very small part of the global electricity supply.

All solar technologies continue to compete with conventional energy and all solar technologies have the goal of reaching ‘grid parity’ (hopefully, before subsidies disappear). The irony of the grid parity story is that the real goal is for solar to achieve parity, without subsidies, with conventional energy, which will continue to receive subsidies.

In addition, all solar technologies – solar photovoltaics (PV) (thin-film and crystalline), concentrating solar power (CSP) and concentrating PV (CPV) also compete with other renewable technologies – such as wind. Many consider nuclear a ‘renewable’ technology too, though nuclear without subsidies to reduce cost, is quite expensive – and this expense is often overlooked.

For large installations (>50 MWp) – where CSP has an advantage, land and water are concerns and even PV panels need to be washed. The land issue is often skipped over when discussing large PV installations – land is not free and rarely cheap. Use of public lands in the US for example (a prime region for CSP) is problematic – fast track or not. Wildlife – and a desire to preserve open space – can interfere with project plans, extending these deadlines past investor patience levels.

The fact is that many stakeholders can stall project process. Forget about permitting issues for a moment, the truth is that environmental groups often take exception to the largest solar projects. Recently, La Cuna de Aztlan Sacred Sites Protected Circle, a US Native American cultural protection organization made up of several tribes, sued the US Bureau of Land Management (BLM) to halt 6 CSP projects in the American Southwest, potentially stalling close to 2 GW of projects.

For solar project developers, particularly CSP, this could prove problematic.

In the future, land use issues will become even more of an issue as time passes. Bottom-line: in the region of 6000 acres of public land that the BLM has designated as an energy corridor, may entail quite a fight to develop.

In contrast, there are a lot of rooftops out there for PV, and PV technologies have the edge as a distributed generation source (power at the point of need), but large, fl at, remote areas of land are a necessity for CSP and disturbed or otherwise distressed land is often not an ideal solution either.

The two charts in this article offer a forecast for all three technologies.

The forecast – admittedly conservative for PV – begins to consider the potential demand drain of CSP and CPV on that of flat plate PV technologies.

The demand drain is expected to be felt for PV beginning in 2012, which is also about the time that reductions in incentives (particularly FiT rates) will be making themselves felt.

For those that may be shocked at the apparently lower expectations for CSP and CPV (given all the announcements), please remember that announcements are not data, that everything always takes longer than the optimistic announcements indicate and that projects and, yes, even contracts, are often cancelled.

Where Will It Go?

The problem with the question of where to put solar, is that it remains interlinked with the biggest issue of all for solar technologies – currently solar needs incentives, otherwise it remains prohibitively expensive in many markets.

Europe is the largest global market, but with most incentives changing and these changes coming faster, solar cannot rely on this market for a future easy sale. Adding to this discouraging outlook is the fact that the EU State plans for incorporating renewable energy into the EU’s 20/20/20 goals are still a work in progress:

• Spain continues as a solid market for CSP and CPV, but its best PV days are behind it;
• Italy has a strong solar resource, but its market is currently being oversold, leading to a likely FiT collapse in its near future;
• France has all but shut down as a solar market;
• Germany (not a market for CPV or CSP) is becoming sterner with its forced degressions; and
• Portugal has an excellent solar resource, but no incentives.

So it is plain that the solar industry needs to start looking around for other markets. Where are these likely to be then?

• Ontario should remain a solid market for PV, but its solar resource will not serve CSP or CPV. That aside, transmission problems (lack of sufficient) should ensure that this market develops slowly enough not to collapse;
• Japan has always been a reliable market for solar, but, again, PV is limited by the country’s solar resources.

The strong markets in the future for all three solar technologies – that have the land, the solar resource along with either the incentives (or the potential for incentives) – are China, India and the US.

For example, the US has significant potential to be a strong market for solar technologies. However, the problems facing all solar in the American southwest are generally issues like transmission and distribution; cost; financing; environmental concerns ranging from ‘not-in-my-back-yard’, to, ‘not-on-my-sacred-land’; to endangered species; to access; to water.

In the US, California remains the strongest market for solar electricity.

The state may be struggling, but it either installs the most solar or buys the most solar from out-of-state systems.

But going forward getting the electricity from a remote – and out-of-state location – to California is a problem. The question is this: Who pays for building the transmission? Should California pick up part of the bill?

Away from the US and Europe, Australia and Israel have potential, and face the same issues with incentive burnout, as do all regions. Though many enthusiastic statements are made about countries on the continent of Africa and the Middle East, these markets are highly unlikely to develop GW-level demand in the near term. Why? The reasons include the expense of solar technologies, a lack of true motivation to bear it, and the availability of substitutes. In the case of countries in Africa, there is also affordability.

How Much Will Be Installed?

The solar industry (and all its technologies) will be truly successful when the forecasts take all solar technologies into account – that is, demand for solar, and not simply demand for PV, CSP and/or CPV. The majority of the MW installed continues to be PV, but investors and other stakeholders are beginning to consider the criteria of best fit when making technology selection.

In brief, best fit can be defined as:

• A mixture of application (commercial, residential or remote applications including consumer power);
• Customer need;
• Distributed generation or not;
• Cost of installing solar wherever it goes;
• Topographies that mitigate intermittency and the need for expensive storage;
• Customer taste;
• Performance given the solar resource; and
• Crucial for all solar technologies are incentives and ‘finance-ability’.

In addition to all of the above, CSP requires a large area of fl at land, a good solar resource, and a way to get the energy to load.

Hybrid systems (using natural gas or wind for example) help to mitigate intermittency concerns and reduce or eliminate the need for costly storage. As for CSP storage, technologies remain quite expensive, and some utilities have decided against including storage when choosing CSP. Water concerns are also significant. It takes around 18 months to two years to install a system. And finally, with systems >100 MW (the likely best fit for the technology) it will be some time before the economics can truly be analyzed – and until enough data exists to perform this analysis, theories will abound. So it is important to bear in mind that theories are just that, theories, and not facts.

The CPV industry appears to be moving from the demonstration stage of its lifecycle to true commercialization, but these are early days yet and more field demonstration is needed before it begins to take more of a share from the solar pie. The primary continuing concern is cost. CPV requires less land area than CSP, but, it does require direct normal irradiance (DNI) of >6, and ideally higher than 6, for optimal system performance.

CPV also requires precise tracking. In terms of cost, automation may be way off for some manufacturers, and complexity in module design (the all-important optics) can sometimes be a negative.

And finally, what is there to say about PV? Most MW (now GW) of solar demand continue to go to PV. So, if the amount of MWs or GWs is the point, PV currently wins, and within the PV technology universe, crystalline wins.

PV remains the best distributed generation (DG) technology (power at the point of use), and there are some who still believe that it belongs on the roof first and foremost. Well, there are a lot of roofs in the world and in this regard, PV is the most appropriate technology. PV is also suited to off grid villages and homes, tents, backpacks, large fields and that ever promising but still non-booming sub-application, building integrated PV (BIPV).

Finally, right now PV modules are cheap, cheap, cheap – particularly the industry work horse, crystalline.

Significant wafer capacity is currently coming on line, which should eventually alleviate a current blip up in polysilicon prices. And with the trend to lower incentives, PV is best able (currently) to survive margin squeeze, something which CdTe thin-film poster child First Solar continues to do with some apparent ease.

Does That Mean PV Wins And CSP Is Doomed?

Candidly, it is too early to identify winners and losers in the overall solar industry.

First, the industry remains in startup stage and is now beginning to experience challenges with rapidly decreasing incentives, subpar availability of transmission and distribution, and for PV, almost overnight growth from MW to multi-GW level of demand.

Moving forward, reductions in the cost of and advances in balance of systems (not the technology) will be key for PV and CPV, while advances in installation techniques are crucial for all technologies. And if CSP can overcome the cost of building thermal storage into the technology, it will have a compelling case that tips the scale for utilities.

What is important to remember is that the primary competitors for solar remain conventional energy (particularly natural gas), wind and nuclear.

About:

Paula Mints is the Principal Analyst for Navigant’s PV Service Market Research Program, and Executive Editor of the Solar Outlook Newsletter. She is widely recognized as an industry expert on photovoltaic (PV) technologies and markets.

Renewable Energy Focus U.S., January/February 2011