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Solar Power Generation
Creating electricity from the sun’s rays will work only with the backing of industry and government
- November 1, 2010
- Article
- Management
For many years solar power generation has been utilized on a small scale. Farmers and cottagers have used this technology either to augment power from the traditional grid or to generate power in areas far from power lines where electricity transmission can be cost-prohibitive.
However, as the technology evolves, these may no longer be the only instances in which the use of the sun as a power source is plausible. And this, ideally, will lead to long-term manufacturing production of the necessary parts and modules in Canada.
Solar photovoltaic (PV) devices convert sunlight into direct-current (DC) electricity, the same type of power that can be stored in batteries. Today these PV systems also can be tied directly to the grid via an inverter to produce alternating-current (AC) electricity that can be used directly or sent back to the grid.
“Solar photovoltaic power generation is finally starting to live up to its enormous potential to be a major contributor to the world’s electricity needs,” explained Queen’s University Mechanical Engineering Professor Joshua Pearce.
Last year, according to Pearce, global PV production eclipsed 10 gigawatts (GW), which is equivalent to roughly 10 coal-fired power plants. This year 16 GW of production is possible.
“As more factories and larger factories come online, the costs of PV will continue to decline and open up new markets,” said Pearce. “PV can no longer be brushed off as a niche player. In a century when environmental externalities can no longer be ignored, PV will play a larger and larger role in world electricity supply.”
Until very recently most PV systems were off-grid and attached to batteries to provide power in remote locations. Today in these types of applications, PV can provide the least costly supply of electricity. Because of a combination of technological evolution and economies of scale, PV is becoming competitive in a number of markets, and for much larger grid applications.
Types of Solar Systems
Historically, most of the small-scale solar PV systems used in off-grid applications tended to produce expensive per unit power because of the high costs of the necessary batteries. Larger solar farms were then developed in sunny regions and were traditionally owned by utility companies. These facilities served the grid directly in a traditional centralized power plant arrangement.
Now there is a third choice: grid-tied systems that both generate power for local use and distribute unused power back to the grid.
In this type of setup the PV system provides a percentage of electricity needs, but also is attached to the grid.
“In this way the PV owner gets the benefit of the grid and a much lower-cost system, while the grid benefits from lower transmission losses and other technical benefits of having generation located right near, or on the roof of, the electricity user,” Pearce said.
Barriers still exist, however, to solar power generation despite the benefits.
In the case of solar farm installations producing large amounts of electricity, the primary barrier is grid capacity. Electricity transmission systems are created on a model that takes electricity from centralized plants out to users.
To make the best use of solar generating systems, the grid must be able to handle more electricity and also handle more generation points.
“A secondary barrier that we will face this century is the penetration limit, or the percentage of solar that can make up our energy supply,” said Pearce. “Solar cells do not work at night and only intermittently on cloudy days. Thus, without a dispatchable source of electricity to back it up, or a method to store solar energy, the amount of solar we can put on the grid is very limited.”
Historically, less than 10 percent of the total generated power that enters the grid each year comes from solar power.
Pearce’s research has shown that this penetration limit can exceed 25 percent by coupling PV systems with commercially available combined heat and power (CHP) units and modest battery storage. 1
“To go further we must couple solar with other sources of power, for example, hydroelectricity, or improve energy storage from batteries, supercapacitors, and hydrogen generation plus fuel cells,” said Pearce. “Ideally you also want the generators as close to the users as you can get to cut down on transmission costs and losses. The distance away from the existing grid that you can put a solar farm is highly dependent on economics and thus variable.”
Why Solar?
According to Pearce, the true cost of electricity should include the negative environmental variables that arise during the generation process, including pollution, health costs, and the cost of climate change.
“Solar electricity generation is a truly sustainable source of electricity that erases the negative externalities from traditional sources,” said Pearce. “By shifting more of our electricity generation to solar now, we are cushioning ourselves from future costs as environmental externalities are brought into the cost of electricity, radically increasing them.”
When grid-connected, solar electric generation also can replace some of the highest-cost electricity used during times of peak demand, such as a hot summer day. This can reduce the load on the grid and eliminate the need for other local backup during blackouts. Power from grid-connected PVs can be used locally, which will also reduce transmission losses.
The Bottom Line
“If we are careful about it, we can also use this fundamental transition to a new source of electricity as an economic engine, generating thousands of good jobs,” said Pearce.
Solar PV actually creates the most jobs per electricity output unit of any technology. In the U.S., an average of 0.87 total job-years per GWh (26 jobs per MW) are created by solar PV, compared to 0.11 total job-years per GWh for coal (8.7 jobs per MW). Another study estimated 22.4 jobs per MW of solar PV is possible, which includes component manufacturing done in the U.S. 2
There are two fundamental reasons to support local manufacturing of photovoltaic technology in Canada, the first of which is the easily understood environmental impact. The second reason is economics. Pearce and his group recently completed a financial analysis for an investment in a turnkey PV manufacturing plant producing 1 GW per year that showed the benefits of investing in this technology. 3
“The financial benefits for both the provincial and federal governments were quantified for a number of scenarios ranging from a modest loan guarantee for construction, to a full construction subsidy,” explained Pearce.
Revenues for the governments were derived from taxation; sales of panels in Ontario; and saved health, environmental, and economic costs associated with offsetting coal-fired electricity. In the study, both the federal and provincial governments enjoyed positive cash flows from these investments in less than 12 years, even in the most radical scenario, and in many of the scenarios both governments received a return on investments of more than 8 percent.
“The results showed that it is in the financial best interest of both the Ontario and Canadian federal governments to implement aggressive fiscal policy to support large-scale PV manufacturing,” said Pearce.
Impact on Manufacturing
In the previous scenario, the single-GW solar PV fabrication facility will create hundreds of jobs in the construction of the facility, and once it is operational, it could permanently employ several hundred people. Many of these jobs require similar skill sets as current manufacturing jobs in other sectors.
“This is just one plant, and we really need many such plants if Canada is going to provide enough PVs to meet the capacity and future demand just for our own country,” said Pearce. “We have a well-trained, highly skilled work force in Canada. It is a deplorable waste not to have our people employed when we desperately need exactly this type of person to help continue to grow the PV industry. If we do not support the PV industry now, we will have missed a prime opportunity. Our economy will suffer and, in 10 years, the solar cells on the roof of your house will have a ‘made in China’ sticker on them.”
For more information, visit me.queensu.ca.
Notes
- J. M. Pearce, “Expanding Photovoltaic Penetration with Residential Distributed Generation from Hybrid Solar Photovoltaic + Combined Heat and Power Systems,” Energy Policy 34, (2009), pp. 1947-1954.
- For a recent review of the job numbers for solar for Canada, see: K. Branker and J. M. Pearce, “Financial Return for Government Support of Large-Scale Thin-Film Solar Photovoltaic Manufacturing in Canada,” Energy Policy 38 (2010), pp. 4291–4303.
- Ibid.
Is Solar a FIT?
Canadian Industrial Machinery asked Professor Joshua Pearce, Queen’s University, about the recent Ontario feed-in tariff (FIT) bill. Here is what he had to say.
Do you think the Ontario FIT program is a positive step?
Yes, absolutely the Ontario FIT is a great first step. It has literally put Canada on the global photovoltaic world map. FIT programs in general have been shown to radically improve PV deployment, and, when used appropriately, they can become powerful economic engines.
The Ontario FIT provides solar PV owners with a fixed rate for electricity they generate for 20 years. These rates are essentially subsidized by future costs of electricity spread out over 20 years. This allows the cost of the program to be relatively modest. The really clever part of the Ontario FIT, however, is the Ontario content standards that increase with time. This essentially forces PV companies to relocate at least part of the manufacturing to Ontario. Thus, the small amount of money we pay out in electricity rate premiums is more than made up for in jobs and economic activity created by manufacturing in the province.
Currently the Ontario FIT is having problems, mostly because of too much success.
The Ontario Power Authority (OPA) planned out the FIT rates carefully to provide investors in PV systems with approximately a 10 percent return on their investment. The problem was that between the time that the FIT rules were made and the time they went into effect, solar prices dropped by 40 percent or more. This shot the returns up into the teens and brought speculators into the market by the busload.
Quite frankly, if you own any property in Ontario, you should be looking to cover your roof with solar. This situation is not sustainable, and the FIT rates will soon be brought down.
If these types of programs become victims of budget cuts, will the sector leave too?
This is a significant risk. Because Ontario has not shown long-term planning and support for the FIT program, the PV industry, for the most part, has been afraid to jump into Canada.
Most “manufacturers” are really only building assembly plants, essentially gluing the components of a module or an inverter together here, while the more high-tech processes are completed in Asia, Europe, or the U.S.
The day after the FIT were to end, these manufacturing plants will move to some other country that can supply low-cost, low-skill workers.
How do you think we can avoid this?
Any government that establishes a FIT program needs to do a couple of things carefully.
First, they must firmly commit to long-term support of the PV industry until the industry can stand on its own. This will give industry the confidence that they are not going to get the rug pulled out from underneath them as soon as they get started.
The government must also have a clear exit strategy, meaning they have a plan to reduce the FIT rates over time to zero. They must publish this strategy so businesses can plan for it. This is what was done in Japan, which is why they are leading players in the PV industry, have some of the best technology, and are building multi-GW PV facilities.
Finally, in the case of the Ontario FIT, we should continue to increase the Ontario content percentages to force companies to set up full manufacturing plants here if they want to take advantage of our government-mandated support.
Solar PV Manufacturing News
Canadian Solar Inc. has announced that Guelph, Ont., will be the location of the company’s new solar module manufacturing facility. Production will start early next year, and the company has stated that it will be one of the largest solar panel module manufacturing plants in North America.
This will be Canadian Solar’s first feed-in tariff domestic content-compliant solar manufacturing facility in Ontario. It will be capable of manufacturing 200 MW of solar modules per year while employing approximately 500 people.
“We salute the province of Ontario and its leaders for their exemplary commitment to renewable energy,” said Canadian Solar Chairman and CEO Dr. Shawn Qu. “The issue of climate change is arguably one of the most important challenges we are facing today, therefore it’s inspiring to see such a wide range of groups, government, business, investors, and citizens come together to build a mutually beneficial solution. Through innovation, creativity, and hard work, we are able to mitigate climate change and create needed employment.”
For more information, visit www.canadian-solar.ca.
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