Friday, September 7, 2012

Declining Cost of Solar Keeping Power Source Afloat

The Tennessee Solar Institute, in a recently released evaluation of the current climate for solar power, says the lack of government incentives to defray the cost of installation has lead to a drop in arrays, but not the decline that would have occurred had the technology's costs not decreased.

The amount of solar power added to the electric grid in Tennessee is projected to drop 8.3 percent in 2012 from 2011, from 13.2 megawatts to 12.1 megawatts. That the drop was not larger, according to the institute, was primarily because of the decreased cost of solar installations. Absent that influence, demand would have likely dropped by more than 41 percent to 7.7 megawatts this year, the report concludes.

"The model looked at grant incentives … some of those are disappearing, so (the report) kind of wanted to look at, if these factors disappear, how is that going to affect demand?" says John Sanseverino, director of programs for the Tennessee Solar Institute, which produced the report in partnership with the University of Tennessee's Center for Industrial Services.

The report found that, even without federal and state grants "demand will still be there, but prices have to drop — and prices are dropping," Sanseverino says.

A void is still left by the lack of incentives, say solar companies, because Tennessee does not require utilities to purchase a certain percentage of renewable power, which more than half of states have done although goals, standards and criteria vary widely.

Evelyn Winther, who represents the East Tennessee division of Asheville-based FLS Energy, says state grants have helped the company establish itself in Tennessee. Local projects include a solar thermal installation at the Knox County Detention Center and a photovoltaic array atop the Knoxville Convention Center.

The company is currently partnering on three applications for the Tennessee Department of Environment and Conservation's new Clean Energy Grant program, set to issue more than $5 million for a variety of green projects.

While prices for solar technology may be diminishing, potential customers still need some kind of incentive in order to offset the upfront investment, she says.

"It just adds a level of security," she says. "In general we're getting close to that grid parity, and I think having the incentives has helped overcome the mental hurdles."

Mike Carroll, CEO of MK Technologies, agrees. His company is building solar-equipped electric car charging stations in Nashville, Chattanooga and Memphis. While he hopes to leverage the work into winning similar projects, the process has given Carroll pause when it comes to expanding into more traditional solar installations.

"I can look at the cost to drive a mile in my Yukon and to drive a mile in an electric vehicle. The (solar) market is very controlled, it's very contrived," Carroll says. "If you want to erect a solar farm, there's not a lot of confidence that you're going to be able to lock in what you'll be able to sell your energy for."

The solar institute report used a cost estimate of $4.13 per watt to determine this year's market for the solar compared to a cost of $5.90 per watt last year.

That amount is probably correct for certain types of mid-size installations, but the cost is about $6.50 per watt for the typical residential system and about $4.50 a watt for small commercial entities, which represent many of the installations in Tennessee, says Gil Melear-Hough president of the Tennessee Solar Energy Industries Association.

"Solar has dropped in price in dramatic fashion the last few years," he says. "But we are not at what is known as grid parity yet, when the cost of solar is the same as traditional sources. We are expected to get there in Tennessee around 2018."

In addition to looking at incentives, the report analyzed the potential impact of repealing a property tax break on solar installations, which was proposed in the Tennessee Legislature last year.

Should the measure pass in the future, the value of installations would likely decline by more than two-thirds and tax revenues of $1.4 million would be lost, according to the institute's report.

The report represents a finale of sorts for the Tennessee Solar Institute, which oversaw some of the dispersal of $23.5 million in federal dollars pumped into the state's solar industry in 2010 and 2011. The current function of the organization is being dissolved and its focus will shift to research.

Several employees are expected to work with the Rooftop Solar Challenge, funded by the Department of Energy and led by the University of Tennessee's Baker Center. In addition, the University of Tennessee has partnered with several institutions in submitting a proposal for a DOE-funded development of a "plug and play" photovoltaic system sold to do-it-yourselfers in big-box retailers such as Home Depot and Lowe's.

"The TSI name will go on, it will just not be as it is now," says UT spokeswoman Susan Stewart. "The university's relationship with solar is not going away."


No comments: