SOLAR—GETTING BIG & FACING CHALLENGES

It would be impossible to play a significant part in meeting the world’s imposing energy demands without confronting the challenges that come with scale. The good news: Solar is ready to play such a role. The bad news: With scale comes greater challenges.

The wind industry discovered this phenomenon when it built its first commercial-scale installation in California’s Altamont Pass in the early 1980s. A lack of understanding about the interaction between avian habitat and the turbines led to a disaster for the region’s bird population and a painfully arrived-at new understanding of how and where to site turbines. Wind’s next commercial-scale installations, in California’s San Gorgonio and Tehachapi Passes, were (and remain) successful operations causing little harm to avian life or habitat. And the industry still strives to further perfect its siting standards.

As the solar energy industry prepares itself for its coming expansion, 2 new reports, Utility Procurement Study: Solar Electricity in the Utility Market from the Solar Electric Power Association (SEPA) and Toward a Just and Sustainable Solar Energy Industry from the Silicon Valley Toxics Coalition (SVTC ), highlight recent industry growth and the challenges growth brings with it.

Solar energy’s investment tax credit (ITC) was recently extended for 8 years and expanded to allow electric utilities, for the first time, the use of the tax offset through ownership or investment in commercial scale solar. In the current credit crunch, utilities are likely to be one of the crucial sources of funding for such capital-intensive projects.

The solar industry is also seeing expanded world manufacturing capacity. In conjuntion with local, state and national incentives, new large-scale production is driving the cost of solar energy-generated electricity down to near-parity with other forms of power generation. Policies created to fight global climate change are adding to demand. The industry anticipates utility scale involvement at unprecedented levels.

While the financial crisis and concomitant credit crunch may have temporarily compromised investment, stimulus packages in the U.S., China and Europe that include healthy cash infusions for the development of New Energy in general and solar in particular are expected to more than counteract the effects of the economic downturn.

SEPA’s report on procurement is the first in a series, preparing the industry and the utilities for the opportunities to come.

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Solar, though, must conquer a new obstacle: Environmental hazard. Large amounts of fossil fuels are consumed in solar panel production and transport. Panels contain toxic materials, elements of which cannot be readily recycled, causing some environmentalists to warn about a potential landslide of hazardous waste from used panels.

The bad news is the good news: SVTC’s report is a warning to industry and political leaders. Policies must be set now to protect against harm later. The bad news is there will be a problem and the good news is solar energy use is expected to be so large that there will be a problem.

Sheila Davis, executive director, SVTC: "You can't just call your product green and close your eyes to what's happening in the supply chain…The solar energy industry is running into some of the same problems . . . we've seen in the electronics industry…"

It would be GREAT news for the solar energy industry if it had disposal and recycling problems on the scale of the electronics industry.

Presently, solar energy is ~1% of U.S. and global power generation. Some of the rapidly multiplying manufacturing sites have already created waste disposal problems. A sensational story emerged last summer about a criminal operation in China that was doing toxic dumping on nearby farmland. Experts speculate it is not an entirely isolated case. (See WASH POST CHINA STORY OPENS BIG OPPORTUNITY IN SOLAR)

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The SVTC report presents the opportunity to begin developing solutions before the problems become widespread. Those solutions include:

(1) Substitutes: Perhaps the Silicon Valley wizards can find more benign materials than silicon and the other substances used to transform sunlight and conduct the electricity generated.

(2) Planning: The estimated lifespan of photovoltaic panels is 20 to 25 years. The industry can therefore know large scale recylcing operations and processes need to be in place by ~2020.

(3) Stop exporting: ~13% of e-waste is exported to developing countries where it is handled, not always well, by greedy quasi-criminal entrepreneurs taking advantage of low-wage workers who are exposed to dangerous substances.

Davis, SVTC: "We don't want solar to go down that path…"

There are proposals for government action to mandate responsible action from manufacturers or to create taxpayer supported public recycling programs.

But some companies are not waiting to be forced to do the right thing.

(4) Extended Producer Responsibility: (a) PV Cycle, a coalition of the 17 main manufacturers in Europe, is planning to collect and recycle panels before they become a hazard. (b) First Solar, the biggest thin-film manufacturer in the world, has developed a potential industry model, selling its panels with a guarantee it will take them back from commercial customers when output falls off. First Solar also set up an independent trust to make certain money is there to fulfill the promise even if the company is not.

(5) Recycling: Manufacturers must come to understand recycling as an integral facet of the process, not an afterthought. The landfill is not the answer, it is the question.

To this day, the wind industry is hounded by misconceptions about its threat to avian life. Going forward, it has formed the American Wind Wildlife Institute (AWWI) and produced a siting handbook to assure best practices. As a result, for every bad word spoken about wind, there are thousands of good ones.

Toxic dumping stories, embraced by a sensationalist media, threaten to hang an equally unfortunate rap on the solar industry. Responding to SVTC’s report as anything other than a valuable opportunity would be a big mistake.

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SEPA Releases Utility Procurement Study: “Solar Electricity in the Utility Market”; Report Aims to Improve Acquisition of Solar Power by Electric Utilities
January 6, 2009 (Solar Electric Power Association)
and
Solar energy's darker side stirs concern; Cells contain toxic materials that could end up in landfills. Some firms are taking steps to help keep the industry's reputation green.
Marla Dickerson, January 14, 2009 (LA Times)

WHO
The Solar Electric Power Association (SEPA); Silicon Valley Toxics Coalition (SVTC ); Sheila Davis, executive director, SVTC; Lisa Krueger, vice president of sustainable development, First Solar, Inc.; PV Cycle

WHAT
Utility Procurement Study: Solar Electricity in the Utility Market and Toward a Just and Sustainable Solar Energy Industry are 2 new reports that highlight solar industry growth and challenges.

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WHEN
- The Utility Procurement Study is the first in a series of 2009 SEPA reports.
- In 2008, 5,000+ megawatts of new photovoltaic and concentrating solar power projects were announced.
- In 2005: 2.6 million+ tons of e-waste was disposed of in the U.S., 87% in landfills or incinerators.

WHERE
- The Utility Procurement Study is based on two preceding studies, one on “traditional” methods for the procurement of large-scale solar electricity by utilities and the other on “innovative” methods.
- SVTC is based in San Jose, CA, in the heart of Silicon Valley.
- Silicon Valley’s concern with toxicity in silicon-based solar panel production comes from the necessity of dealing with it in silicon-based computer chip manufacturing.
- First Solar Inc. is based in Tempe, Ariz.
- PV Cycle is a European panel manufacturers’ group.

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WHY
- The Utility Procurement Study is to improve large-scale solar acquisition by electric utilities by providing innovative ideas for procurement.
- The first part of the report examines the “traditional” procurement process: (1) the release of a standard request for proposal (RFP) by a utility, (2) a response from solar project developers, (3) scoring and selection by the utility staff, (4) negotiation, and (5) a contract between a specific company and the utility.
- The second part of the report proposes innovative procurement ideas such as (1) aggregation of purchasing power by utilities and (2) interactive auctions where pricing response could be more dynamic than a single bid process.
- SEPA is comprised of over 500 utilities and solar industry members.
- E-waste from silicon-based electronics manufacturing is known to be polluting U.S. landfills and contaminating groundwater with harmful substances such as mercury and chromium.
- China is major producer of polycrystalline silicon, a key component of solar cells.
- Silicon processing isn't the only solar manufacturing that generates hazardous chemicals w/risks to workers and the environment.
- First Solar has made recycling panels an integral part of its manufacturing process and set up a trust to fund to guarantee the recycling even if the company goes out of business.

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QUOTES
- Julia Hamm, executive director, SEPA: “The past year was marked by an unprecedented number of announcements for new large-scale solar power projects…A significant investment of time and resources by both utilities and solar companies goes into a solar project’s initial development. Current practices and procedures such as requests for proposals, negotiations and contracting occur behind the scenes, but are critical to the overall success of new solar generation. This report targets improvements during these early stages of project planning by identifying areas of common expectations and understanding between the two industries.”
- Mike Taylor, Director of Research and Education, SEPA: “Some of these innovative ideas have been tried, and the report details their successes and drawbacks. Other practices that are examined may have been used in solar acquisition, but perhaps not at the utility scale, or not in power plant development directly. The report provides new ideas to utilities that might be willing to look outside the box as they engage with these exciting and rapidly developing companies and technologies.”
- Lisa Krueger, vice president of sustainable development, First Solar, Inc.:"We are in business to create environmental solutions…What good does it do if we create waste problems?"