Can the Solar Industry Spin Sunlight into Gold?

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An old joke begins, "How many engineers does it take to change a light bulb?" Sitting in the audience at the June 2008 IntertechPira Photovoltaics Summit in San Diego, one would expect that light bulb to be powered by the sun. However, in this crowd of nearly 180 business leaders, engineers and scientists, an informal question posed by presenter Mark Culpepper, VP of Enterprise Solutions for SunEdison, revealed that only four people in the entire audience currently have solar power deployed on their own home or business.

Why is it that the foremost solar enthusiasts and industry luminaries aren't drinking their own champagne or feeding Fido their own dog food? The answer, according to Culpepper, "Right now, it's just too damn expensive."

Offering cost effective systems on a commercial scale requires the realization that while renewable energy has enormous social and ecological benefits, the carbon footprint must be considered next to the cost footprint. As eloquently observed by industry expert and icon Paul "Boomer" Maycock, President of PV Energy Systems Inc., "Implementing a solar system does not help you lose weight, smell better or become sexier." When you turn on the light bulb, power is power. In other words, selling electrons is a commodity business.

Making Solar Sexy

If one electron looks the same as the next, then one way to set yourself apart from the crowd is to focus on the way those electrons are captured. This philosophy, embraced by visionary CEO David Saltman, is exemplified in his company's elegant and innovative building-integrated photovoltaics (BIPV) product line. His company, Open Energy Corporation, offers solar panels that blend seamlessly into homes & buildings.

While other engineers argue over the relative merits of polycrystalline silicon (poly-Si) versus copper indium gallium selenide (CIGS), Saltman seems to intrinsically understand that building contractors want fire rated, UL certified roofing materials and homeowners want solar panels that look like standard cement tiles, not like Star Trek convention souvenirs.

No matter how customer tastes shift, one thing is certain: the industry won't really take off until solar power reaches the same cost as traditional grid-supplied energy, something called "grid parity" amongst summit attendees. The consensus in the crowd here was that solar will hit this milestone sometime between 2012 and 2015.

Reaching grid parity represents a significant first step in developing a critical mass of widespread solar deployment. Once presented with the choice of equivalent-cost energy from the sun versus legacy pollution-belching power plants, the theory is that consumers will fall like dominoes into the renewable energy era. However, the challenges facing the industry are far from trivial.

Sunshine Around the World

A closer examination of global solar demand reveals that double digit growth continues to be the norm. According to Paula Mints, Principal Analyst at Navigant Consulting, global demand for PV was 3,073 megawatts in 2007, compared to 1,985 mW in 2006. This impressive 55 percent annual growth rate in 2007 follows on strong growth in 2006 and 2005 (41 and 34 percent, respecitvely).

However, the dirty little secret behind all of the numbers is that the market for PV products is primarily driven by government incentive programs, which may be sending faulty investment signals to the financial community. Unlike traditional market driven supply and demand curves, the growth experienced in the last few years can be directly attributed to global government incentives. Therefore, forecasting industry growth becomes more of an exercise in guessing at future government policy decisions, an activity perhaps best left to Ouija boards and Magic 8-Balls.

People Respond to Incentives, or 'Is There a Market for Solar?'

Of the 3,073 mW of panels shipped worldwide in 2007, nearly 50 percent went to Germany, a country plagued with poor natural sunlight conditions roughly equivalent to those found in Alaska. The fact that half of global demand comes from a single country is a direct reflection of the strong incentive programs in place there. In Germany, the government has created a "feed-in tariff" program that guarantees utility companies will purchase solar generated electricity from customers at a highly attractive and above market rate.

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