What will the solar landscape look like in the next 5 to 25 years? With growing demand for energy and the imperative of reducing our greenhouse gas emissions dramatically by mid-century, it is certain that solar power will have a major role to play. At the same time, a flood of inexpensive solar panels from China and political uncertainty surrounding tax incentives have led to significant instability in the domestic solar industry. I had a chance to attend two panel discussions held by MIT on March 16, 2012 as part of the 2012 MIT Energy Conference, in which experts from the MIT faculty, the federal government, the solar industry and venture capital attempted to shed some light on the direction that solar energy is heading.
The manufacturing cost of solar panels has been declining rapidly, from around $100 per watt in the 1970s to between $1 and $2 per watt at present. Minh Le from the US Department of Energy discussed the Obama Administration’s Sunshot Initiative, which aims to reduce the cost of solar energy by 2-3 times, making it cost-competitive with other energy generation technologies by the end of the decade. The current goal is $2 per watt for residential solar (including installation and other balance of systems costs). The panelists agreed that the costs of physical panels would continue to decrease over the next 5-10 years, thanks to new technologies and manufacturing techniques (for example, technology website Ars Technica recently reported on a new manufacturing technology that promises to reduce manufacturing costs on solar cells to $0.40 per watt, about half of the lowest-cost current panels). Adam Lorenz of 1366 Technologies stated that he expects crystalline silicon cells to be competitive with the wholesale rate for coal power within 5 to 8 years.
The Sunshot Initiative also aims to reduce overall costs by streamlining the rather Byzantine permitting process in the US, which currently involves dealing with over 18,000 permitting jurisdictions and over 5,000 utilities spread across 50 states. The US system was compared unfavorably to the systems in Germany and other countries, where permitting is much easier and government incentives such as the feed-in tariff exist. To ensure investment in solar generating capacity, the panelists emphasized the importance of policy stability. Because of the long return on investment on these projects, the fragmented US system of federal and state incentives tends to discourage investment.
MIT professor Dan Nocera pointed out that while most of the conversation was focused on the developed world, the real growth area for solar technologies is in the least developed areas where grid power does not exist. In these areas, a small, inexpensive photovoltaic unit that would allow people to charge cell phones and operate indoor lights so that children can study after sundown would have an enormous impact on quality of life. Dr. Nocera emphasized that while developed countries must work within their existing infrastructure, developing countries have the opportunity to leapfrog the developed world, in much the same way that many developing countries skipped landline telephones and moved directly to cell phones.
Panelists discussed several areas where government policy is needed to help create a market for solar. A price on carbon, whether a carbon tax, a cap-and-trade system, or a combination of the two, would help clean energy technologies compete with fossil fuels. Australia, which resembles the US in its heavy reliance on fossil fuels, recently enacted a comprehensive carbon pricing scheme. Policies that encourage the electrification of the vehicle fleet, whose batteries could serve as a form of distributed energy storage for the smart grid, would help to address the problem of intermittency. More resources devoted to public education about energy policy issues would help foster an informed public discussion and raise awareness of renewable energy. Dr. Nocera in particular stressed the importance of making the issues visible to the public, and stated that perhaps an oil war on US soil will be needed before the public starts paying attention.
Despite the challenges facing the solar market at the moment, I took away the message that solar power has a bright future (excuse the pun). The panelists agreed that solar photovoltaics will be increasingly competitive with conventional power generation over the next decade. In the longer term, exotic technologies such as transparent solar cells that can replace glass and “artificial leaves” that can generate hydrogen and oxygen to be used in fuel cells promise exciting new applications for solar. Small, inexpensive solar panels promise to dramatically improve the lives of people in developing countries by allowing them to light their houses and charge mobile devices without connecting to the electricity grid. The solar resource base represents thousands of times the amount of energy humans use each year. Converting this energy into a usable form on such a large scale presents significant challenges, but with technological advances steadily driving solar closer to parity with fossil fuels and a number of exciting new kinds of solar technology on the horizon, the task hardly seems impossible.