Smart Grid & Residential Solar: A Match Made in Heaven?

Mark Twain famously said, "The reports of my death are greatly exaggerated."

The same might be said of the American solar industry. Solyndra Solar collapsed despite substantial government assistance, and Evergreen Solar and SpectraWatt both went bankrupt due to competition from low-cost Chinese imports. There is certainly cause for consternation. But the DOE remains committed to the American solar industry.  Loan guarantees are standing firm behind the SolarStrong project in which San Mateo-based SolarCity which proposes to install, own and operate up to 160,000 rooftop solar installations on 124 U.S. military bases in 33 states. It has been described as the largest residential solar project in history.

This could be viewed as a kind of solar arms race between the US and Chinese governments, but that’s not exactly true. US policy is primarily directed at the adoption of solar technology as part of America’s energy policy looking forward. China, on the other is far more interested in becoming the dominant manufacturing supplier of panels, particularly for the export market. It would appear that they could care less whether any of the panels are actually used at home.

Last year in the US, solar energy contributed a little over 1% of the renewable total of 414 billion kilowatt-hours. This reflects a nameplate generation capacity of 260MW, a figure that has grown at a compounded rate of 65% since 2006. Solar power is expected to grow to 1200 MW by 2016, by which time it will contribute 9 billion kilowatt-hours and its share will grow to 3% of the renewable total.

In dollar terms, Zpryme estimates that that the solar market will grow from $1.2 billion today to $4.7 billion in 2016.

A couple of factors will aid that growth. The first is the establishment of a new and essentially painless financing arrangement called a Solar Power Purchase Agreement or SPPA. With an SPPA, the customer essentially buys solar generated electricity as a service from a company that retains ownership of, and responsibility for, the equipment - much like people used to pay for telephone service. The type of leasing options being offered by SolarCity is an example of an SPPA. These typically require $0 down and allow the customer’s monthly outlay in many cases to be less than what they had been paying for utilities before adding solar. Similar agreements are now becoming available for other types of energy efficiency purchases as well.

The second factor is the growth of the smart grid. The Smart grid will improve the ability of the electric grid to dynamically send and receive power to each and every residential installation efficiently, thereby acting as a massive storage battery and improving the viability of solar electric installation as a component in an integrated and distributed generation strategy. Smart grid development will also bring a number of collateral benefits, such as updated transmission lines, two-way communications, improved monitoring and maintenance, all of which will serve to reduce down time and transmission losses.

Duke Energy has had its plan approved to install solar on homes, schools and commercial buildings in North Carolina, essentially renting the rooftop space from the owners as a kind of distributed generation network. The power, enough for 1200 homes so far, is then routed to a central facility where it is dispatched or stored. This is all made possible by their Smart Grid.

In California, combined initiatives of 1000 MW of solar of ground mounted and rooftop arrays will also provide distributed power, courtesy of the smart grid, without which it would not have been possible.

An experimental project in New Mexico, overseen by Los Alamos National Laboratory, in partnership with the Japanese New Energy Development Organization, will focus specifically on residential solar-smart grid integration, evaluating ten different solar panel configurations, including a 910kW central plant as well as a number of 10kW household installations. Japanese manufacturer Kyocera has been selected to provide the solar panels for the project.

What’s interesting is that while these government-sponsored programs are well-positioned to help disseminate the use of solar technology, none of them seem terribly concerned about using American manufacturers. I examined a number of documents regarding SPPA’s from SolarCity and elsewhere and did not see any stipulation that the solar panels be made in the USA, despite the fact that these programs are largely sponsored by government funds.

In spite of this, the dominant player in the thin film solar panel market is First Solar of Tempe, Arizona, whose sales grew from $48 million in 2005 to over $2 billion in 2009. Only 7% of their sales came from US customers. Most of it, 64%, came from Germany. Chinese manufacturer Suntech comes in a close second. Its sales reached $1.9 billion in 2008, but then dropped to $1.7 billion in 2009. Number three is the German producer Q-Cells.

The combination of smart grid development and falling panel prices point towards a bright future for solar power, with players from all over the world contributing to the mix, though it appears to be each manufacturer for himself.

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RP Siegel is the co-author of the eco-thriller Vapor Trails, the first in a series covering the human side of various sustainability issues including energy, food, and water.  Like airplanes, we all leave behind a vapor trail. And though we can easily see others’, we rarely see our own.

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