What is holding back the growth of solar

power?
Sixty years ago, the price of solar panels was astronomical. At a cost of
$1,910 (£1,350) per watt in today’s money, the only practical use for them
was in space on the US Vanguard 1 satellite, which launched in 1958.

But slowly and then precipitously the price of building a solar cell came
down. Today it is less than $0.80 (£0.55) per watt. The subsequent
proliferation of panels (especially in Europe, China, US and India) has
tracked along the dizzying curve that eventually lead to the market
domination of the car, the mobile phone and electricity itself.

So could solar follow these inventions and achieve their level of ubiquity?
“History tells us that sudden, disruptive and largely unpredictable
technology shifts do occur,” said a Deloitte report (pdf) on solar in 2015.

In a study released recently in the journal Research Policy, Oxford

University researchers found, in the short term, that solar’s upward swing
was unstoppable. The researchers said falling manufacturing costs, which
have dropped by 10% a year since the 1980s, would grow solar’s share of
global electricity from roughly 1.5% today, to as much as 20% by 2027.

Not everyone is as optimistic. The International Energy Agency’s (IEA)

most ambitious scenario for renewables puts the amount of electricity
produced from solar photovoltaic cells at 16% of global production by 2050.

However, the IEA has consistently under-estimated solar. In 2000, it

predicted the world’s solar capacity would quadruple over the course of the
next 15 years. In reality, it took just five. The IEA then upgraded their 2015
forecast from 5 GW to 14 GW. This time it took just three years to get there.

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The International Energy Agency’s predictions for solar PV growth versus historical data.
Photograph: Carbon Tracker

Beyond photovoltaic (PV) cells, concentrating solar power, in which the sun
is used to heat water or oil and drive a traditional turbine, is also on the
rise. It remains very much the little cousin, with around 1GW added around
the world per year (compared with 50GW for PV). Dolf Gielen, director of
the International Renewable Energy Agency’s (Irena) Innovation and
Technology Centre in Bonn, Germany said he expected strong growth in
desert areas, such as Morocco and South Africa, where this source of power
was particularly effective.

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In developing countries, solar is the technology of the moment. Indian

prime minister Narendra Modi has thrown his hefty political weight, and
some money, into the development of an international solar alliance. China,
already the world’s largest solar producer, has added almost as much solar
capacity in the first quarter of this year as the total solar capacity of France.
It’s penchant for vast large scale farms tipped the global balance (once
about 50/50) away from rooftop installations.

Even in the poorest countries, solar’s flexibility is making it desirable. In

Bangladesh, more than 3.5m solar home systems have been installed in
rural villages. Across the world, 1.3 billion people live without electricity.
Often because the power grid does not extend to their home. As their
economies develop, solar power will flood into these countries as the
cheapest, most independent way for people to power their lives. The future
of the sun looks bright.

What’s holding solar back?

Yan Qin, a senior modelling analyst at Thompson Reuters Point Carbon,
told the Guardian a few dips still lie ahead for the solar. The main is grid
infrastructure, which was built to carry fairly consistent levels of generation
and will struggle to cope with the variability of solar and wind energy.

National grids are adapting, but the infrastructure investments are huge
and the work slow. In Europe, a plan to build a massive solar farm in the
Sahara desert that would provide 15% of Europe’s power by
2050, collapsed because the costs involved in transmission of solar power
have not fallen as fast as the costs to build panels. Gielen said this
variability was a limit to growth.

Japan begins work on 'world's largest'

floating solar farm
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“You have a very strong seasonality in solar production. That is a problem
at higher latitudes. If you would connect all the countries around the world
then always somewhere the sun would shine and problem solved. But we
are still quite far from that situation,” he said.

Like other renewables that rely on weather, solar is held back by its
“capacity factor”, essentially how often it is producing electricity. A coal
power station runs at 70-80% capacity. In northern Europe, solar panel
capacity factor is just 15%. This reduces its competitiveness significantly.

So instead of the continued exponential growth that is modelled by the

Oxford team, Qin predicts “moderate growth in solar could continue as
seen in recent years, but the growth will flatten out, turning into an S
curve”. This is backed by price forecasts of the UK government Climate
Change Committee and the US Energy Information Agency. Qin said the
industry would require government subsidies for at least another 15 years
in order to compete against established fossil fuels technologies, such as
coal and gas. A further challenge to solar will be chronically low prices of
fossil fuels, which could push back its ability to compete.

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Combining solar with other available renewable technologies – hydro, wind, tidal and
geothermal – could help tackle problems including consistency of supply. Photograph: Jean-
Paul Pelissier/Reuters

This is despite claims from the solar industry (pdf) in the UK (where
subsidies were recently slashed by 65%) that it will be able to go subsidy
free by the early 2020s – a forecast Qin describes as “bullish”. Gielen
believes solar will eventually be one of the cheapest forms of energy.
Although just how cheap depends partly on government policies and the
institution of global or regional carbon pricing – which will deflate the
competition from fossil fuels.

The best solutions

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Gielen says solar could supply 10% of the world’s electricity by 2050 as
technological solutions are developed to cope with its shortcomings.
Batteries that store excess power for night time or cloudy days remain
expensive, although costs are coming down. Tesla, among others, claim
they will soon be able to provide affordable storage to private rooftop solar
and large utilities alike.

But a better solution, said Gielen, and one which was already proliferating
across the world, was to combine solar with other available renewable
technologies – hydro, wind, tidal and geothermal. These all provide either
consistent power or vary on different rhythms to the sun. Costa Rica for
example, uses a powerful mix of all these technologies so that it rarely turns
on its diesel generation plants these days. Some countries – the UK in
particular – are choosing to add nuclear to this mix, although the heavy
price tag and public unease makes it a tough sell.

Despite the sun flooding the earth with enough light every hour to fulfil our
energy needs for a year, solar power will not solve our clean energy
conundrum on its own.

A Unique Mix of Opportunities and

Challenges for Solar Energy
August 9th, 2016
Company
 3

13

The global solar sector is in the midst of an unprecedented period of transformation.

Within the past five years, the cost of a solar panel has come down 82 percent. Last
year alone, China installed more than half as much solar as America has
cumulatively. Bloomberg New Energy Finance estimates that solar power will account
1

for 30 percent of U.S. installed energy generation by 2040.2

As someone who has witnessed the ups and downs of the industry firsthand, I’m mindful
that our work is just getting started.
The latest estimates provided by the U.S. Energy Information Administration (EIA)
reinforce this: Out of total U.S. electricity generation in 2015, renewables account for 7
percent. Within this number, solar comprises approximately .6 percent of the total.3
At the same time, energy demand is off the charts and will continue to be for the
foreseeable future. The rate of consumption has skyrocketed over the past 50 years and
will only continue on an upward trajectory. While efforts around efficiency are having an
impact, EIA projects a 48 percent increase in world energy use between 2012 and 2040. 4

A decade ago, I’d have a tough time making the argument that the trend lines might one
day intersect. Costs had begun to come down, but we didn’t yet have a clear sense of
grid parity, which is critical to solar becoming a mainstream energy resource. (Grid parity
is the point at which an alternative energy source can generate power at a levelized cost
of electricity that is less than or equal to the price of purchasing power from the
electricity grid.)
The 2009 economic downturn — fresh in the minds of policymakers and industry leaders
alike — led to risky investments that raised questions and distracted from the
remarkable advancements happening at the time.
The difference between 2009 and today is three-fold: private sector leadership, a
strong public policyfoundation and technological innovations that are fundamentally
changing how businesses and consumers source and consume energy.

 Corporate leaders from Apple to Bed Bath & Beyond to Macy’s and Walmart are
among the many U.S.-based companies that are embracing solar as a
cornerstone of their operations.
 COP21, the Solar Power Plan, California’s Net Energy Metering 2.0, the
extension of the Solar Investment Tax Credit (ITC) and other public-private
initiatives reinforce the commitment of policymakers to provide a lasting
foundation.
 Technological advancements, from unprecedented solar cell efficiency to system
integration to energy management, keep us looking forward. In fact, combining
solar with storage and energy management, once thought decades away, is now
within our reach.

Solar Industry Has its Cycles

However, despite this undeniable progress, solar will still go through cycles of prosperity
and challenge.

 Although a highly unique and isolated situation, the SunEdison bankruptcy

contributed to a sense of market uncertainty.
 While the ITC had the opposite effect (providing greater certainty), it also
removed the urgency for power plant project construction in the second half of
this year.
 When it comes to financing, we’re seeing less competition.
 We’re in another transitional period. Companies that make the right investments
today and innovate with the long-term in mind will emerge as the solar energy
companies of tomorrow.

The road ahead won’t be without its challenges, but we’re laser focused on making
strategic decisions with the long-term in mind. It’s been embedded in our DNA since day
one.
So, as I write this, I believe our strategy is one that will assure our place in this vast
transformation. My 13-plus year career in the sector has taught me that the peaks and
valleys are part of the journey to a truly significant opportunity. Our team is advancing
SunPower’s mission every day.
Change isn’t always easy, but with our 30-year history and track record of success,
we’ve shown we have the perseverance and flexibility needed for long-term success.
Together with our customers, we'll continue to seize new opportunities and change the
way our world is powered.

3 Challenges Facing the

US Solar Market in 2017

GTM Research’s Cory Honeyman illuminates the issues that

are keeping solar executives up at night.

by Cory Honeyman
December 20, 2016
5

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 

The following is an excerpt from GTM Research's latest U.S. Solar Market Insightreport.

While 2016 is expected to eclipse the 10-gigawatt annual mark for the first time ever, and by
a wide margin, three trends are expected to shape the near-term U.S. solar market outlook.
Looking ahead to 2017, each of these trends raises challenging questions that will shape to
the extent to which utility, non-residential, and residential solar will grow (or fall) over the
next few years.

Despite dirt-cheap PPA pricing, the utility

PV segment is struggling to reboot
procurement
Despite PPA pricing consistently ranging between $35 and $60 per megawatt-hour, the
uptick in new utility offtakers has only partly countered the demand rollback from utilities
that over-procured in the past couple of years. Most notably, California’s investor-owned
utilities have already procured enough renewables to meet their RPS obligations through the
end of this decade.

In turn, new development has increasingly focused on distinct sub-segments, for example,
utilities with viable contracts offered via the Public Utility Regulatory Policies Act (PURPA).
Another segment to watch is retail customers seeking offsite wholesale PPAs. Corporate
customers have already procured more than 1.5 gigawatts (DC) of offsite wholesale solar for
post-2016 installation dates. And in California, community-choice aggregation is gaining
momentum, with an addressable market of more than 3 gigawatts (DC) through 2020 based
on current and announced CCA programs.

Commercial solar's still struggling to

scale onsite development, so demand is
pivoting to offsite solutions

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FIGURE: Share of Annual Commercial Solar Installations -- Onsite vs. Offsite*

*Offsite includes community solar, virtual NEM, and offsite wholesale projects. Since offsite
wholesale projects sell power directly into a wholesale electricity market, or to a utility and
which then resells it via a green tariff, the percentages calculated in this figure include
installations classified as utility PV.

As mentioned, large corporate customers have ramped up procurement of offsite wholesale

solar projects, which are currently accounted for in the utility PV segment. This demand has
largely come from Fortune 500 customers with large industrial loads or aggressive, near-term
renewable energy procurement targets. By year’s end, GTM Research expects more than 800
megawatts (DC) of offsite wholesale solar to come on-line, growing fourfold over 2015.

On top of that, investment-grade commercial and municipal customers continue to serve as

anchor subscribers to most community solar installations. Altogether, community solar is
expected to add more than 200 megawatts (DC) on an annual basis in 2016, growing fourfold
over last year. In turn, for the first time ever, more than half of annual solar PV capacity
involving non-residential customers will come from offsite projects (i.e., virtual NEM,
community solar and wholesale solar).

However, onsite development is expected to resume its position as the primary driver of
development, given demand pull-in for offsite wholesale PPAs prior to the federal ITC
extension. In the long term, large corporate customers’ demand for solar-plus-storage versus
offsite wholesale PPAs will play a critical role in shaping the breakdown between onsite and
offsite development.

As customer adoption ramps up in major

state markets, it’s becoming harder and
costlier to scale residential solar
FIGURE: Year-Over-Year Residential PV Installation Growth Rates: CA, NY, MA and
AZ

Source: U.S. Solar Market Insight Report

In a number of major state markets, residential solar growth rates are slowing down. The
reasons behind this slowdown all center on one question: How does residential solar scale
when early-adopter customers begin to deplete?

Most notably, this question is being tested in residential solar’s largest state market,
California. Conversations with installers confirm that it’s becoming harder and costlier to
land new leads and to convert those leads into sales. As the funnel of early-adopter leads
reduces, three trends within the competitive landscape compound this market fundamentals
challenge.

First, a phenomenon termed “customer fatigue” has come up as a challenge in neighborhoods

where homeowners are flooded with door-to-door sales pitches. Second, demand for cash
sales and loans over leases and PPAs has picked up more quickly than expected, and portions
of the installer landscape are still playing catchup in serving this change in demand. Third,
publicly traded residential solar companies have struggled to continue growing while
simultaneously seeking to become profitable.

To be clear, GTM Research does not expect all of the above trends to be permanent
problems; rather, they are signs of a segment figuring out how to grow in a maturing
customer environment. Over the remainder of this decade, continued cost reductions will
position nearly all states in the U.S. to move past grid parity for residential solar under
current policy conditions. But scaling that demand in major and emerging state markets will
not only hinge on the policy outlook (i.e., NEM and rate reform outcomes). Equally
important, a reboot in growth rates will rely on evolving sales strategies that lower the cost of
customer acquisition, and continued proliferation of consumer loans to serve the change in
customer demand.

Andrew Mills, a researcher at Lawrence Berkeley National Laboratory,

led a study published in August looking at the various planning processes
across the country for integrating distributed solar power into the grids.
He told Epoch Times that it is important to plan for the actual amount of
energy solar panels or wind turbines can produce at specific times (like
peak demand times). Some regions are doing this better than others, he
said.

Planners will also have to take into account ramp-up and shutdown costs,
or in other words, the flexibility needed to manage the peaks and valleys
of renewable energy production. Having this flexibility is estimated to
cost anywhere from 5 cents to $10 per MWh.

In terms of transmission infrastructure, he said that existing

infrastructure may be able to handle added renewable energy up to a
certain point, after which the costs for upgrades will increase. For
example, one study he reviewed predicted a cost of 30 to 50 cents per
watt of solar after a threshold level of solar adoption. To put that in
perspective, the capital cost of buying solar is about $3 per Watt.

Another important aspect of utility planning, Mills said, is taking into

account the amount of solar power rooftop panels will pump into the
grid. NYISO is doing a good job of this, he said.

Planning ahead for this can be difficult, because it depends on how many
people decide they want to install solar panels on their homes or
businesses. But utilities can look at factors such as income demographics
for a region, energy use, and the economics of rooftop solar to make
predictions.

“There’s always been a number of factors that are very uncertain in

planning,” Mills said. He gave the examples of fluctuating natural gas
prices, or economic recession. “Utilities have always faced uncertainties
in the past and they’ve developed a number of planning processes that
have allowed them to make decisions under uncertainty.”

Solar power brings additional uncertainties, but he is confident utilities

can face them with good planning.
 The three challenges facing the
electricity sector
Jean-Paul Bouttes, François Dassa & Renaud Crassous / EDF, Strategy and Prospective Division /
September 12th, 2011

energy transition

The global electricity sector is facing three major challenges: the security of supply
to keep up with ever-mounting demand, the fight against climate change, and the
global trend toward massive urbanization. Electricity will play a key role through
low-emitting energy-generation technologies that reduce greenhouse gas
emissions. These technologies already exist. Success will depend on how public
policies are used to encourage innovation.
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Needs and limitations and more willingness on the part of policymakers to encourage
innovation programs. The first challenge will be to invest enough to keep up with the
growing demand for global energy while keeping final energy costs under control.
The International Energy Agency estimates that 1.4% of global GDP will have to be
invested in the energy system between 2010 and 2035, or $33 trillion over 25 years.
Two-thirds of these investments will need to be in emerging and developing
economies to satisfy the projected 2% annual growth in primary energy needs while
the remaining third will be required to replace outdated infrastructure in OECD
countries.

In terms of fossil fuel production and the electricity sector, most of the energy
infrastructure required to satisfy needs 25 years out has yet to be constructed. The
magnitude of the challenge cannot be understated given serious and ongoing
uncertainty of the outlook for the global economy, fossil fuel prices, and future
environmental regulations. These uncertainties have been underscored by the recent
crises – economic (financial crisis of 2008, euro zone crisis), industrial (Deepwater
Horizon, Fukushima) and geopolitical (Arab Spring) – that the world has seen.
The second challenge relates specifically to the regulation of greenhouse gas (GHG)
emissions. To have a 50% chance of limiting the global temperature increase to 2°C
in relation to turn-of-the-century levels, global emissions will have to be reduced
50% between now and 2050, whereas under a business-as-usual scenario, emissions
would almost double by that year. The energy sector is on the front line, as two-thirds
of global GHG emissions are carbon emissions linked to that sector.

The third major challenge is massive urbanization, particularly in emerging and

developing countries, where the trend is particularly visible since cities, even when
they develop in a relatively disorganized fashion, offer a better chance of escaping
poverty than rural areas. Urban growth rates have reached unprecedented levels: it
took 130 years for the population of London to rise from 1 million to 8 million, but
Bangkok saw the same increase in 45 years, Dhaka in 37 years and Seoul in 25 years.
By 2030, the urban population will likely have doubled from 2 billion to 4 billion
worldwide. Cities account for two-thirds of global energy consumption today and this
will probably rise to three-quarters in 20 years. They are also responsible for 70% of
global energy-related CO2 emissions and a large majority of local air pollution. This
has made energy optimization a key to managing both social and environmental
externalities of modern cities. To be efficient, this optimization will need to go hand
in hand with systemic and long-term planning of “sustainable cities”.

To meet these three challenges simultaneously, electricity should play a decisive role
within the energy system.

Tackling climate change: Electricity on the front lines

Electricity currently accounts for 40% of carbon emissions produced by the energy
sector, or 25% of global greenhouse gas emissions. A direct link can be traced
between this current state of affairs and the generation mix used to keep up with ever
increasing demand for electricity: two-thirds fossil fuels (41% coal, 26% gas and oil)
and one-third carbon-free sources (14% nuclear, 16% hydroelectric, and 3% other
renewables). Coal generation emits roughly one tonne of CO2 per MWh compared
with 450 kg for combined-cycle gas turbine technology.

The IEA has made the point that the power sector is expected to account for 70% of
the emissions reductions required of the energy system by 2030 to limit the
temperature increase to 2°C. This will only be possible with simultaneous efforts in
terms of demand-side management, which the IEA scenario assumes will enable a
40% reduction in sector emissions; massive reductions in emissions from electricity
generation, with average carbon content declining by 60% by 2030 and 90% by
2050; and, further downstream, the replacement of fossil fuels with low-carbon
electricity for an ever larger number of end-uses (transportation, industry and
housing).

The challenge may appear daunting but is by no means insurmountable. For the next
two decades, we already have low- and no-carbon generation technologies that are
competitive.

On the demand side, technologies exist for a wide range of end-uses: thermal
insulation in buildings, efficient lighting, more efficient electric motors, heat pumps,
solar-powered water heaters, etc. Energy efficiency will make a key contribution in
helping the electricity sector reduce emissions. On paper, the cost associated with
related measures could be relatively low, but there is a need to monitor transaction
costs, which are generally hidden and can reflect asymmetric information, behavioral
patterns, household budget constraints, or the interests of the concerned parties (e.g.
well-known problems that arise between tenants and owners).

On the supply side as well, there are technologies that can deliver lower-carbon
electricity at an affordable price ($60-90 per MWh in OECD countries). Examples
include supercritical coal-fired plants (efficiencies of up to 45%) and combined-cycle
gas turbines. Most importantly, carbon-free technologies like hydroelectric, nuclear
and wind power are available.

Hydropower capacity could be increased three- to fourfold from the current level,
mainly in developing countries, at a competitive cost. Since hydropower is capital-
intensive, financing must be facilitated in the least developed economies. It will also
be crucial to monitor the impact of dams on biodiversity, population resettlement,
and integrated water resource management.

Nuclear power is also competitive. Without prejudging the full results of analyses of
the recent Fukushima accident, it seems clear that projects will be subjected to more
restrictive and selective standards, with more emphasis placed on observance of the
highest safety standards: this will mean plants which further reduce risk in the face
of extreme events, and national safety authorities and international governance
bodies (IAEA, WANO, WENRA) that have more power in terms of controls,
permitting and the sharing and implementation of best practices. These are key
elements for the technology to be accepted. Acceptance also hinges on clear and
consistent permitting and public debate procedures for the entire cycle (from fuel to
waste management, with plant operation in between). For nuclear power to be
competitive, industrial operators must be able to control costs as well as construction
times, taking advantage of economies of scale and standardization. This was one of
the main reasons why many projects fared so well in Continental Europe in the 1980s
while economic failures were seen in the UK and US.

As regards wind power, land-based turbines are rapidly nearing maturity (10-30%
more expensive than already-competitive generation technologies). In regions with
abundant wind (more than 3,000 hours, e.g. Texas), onshore wind can be
competitive already, if indirect costs resulting from the intermittent nature of the
resource are well managed. These indirect costs can be broken down into three
categories: costs associated with network expansion to allow transmission and
development in a larger number of areas, cost of investments in additional facilities
to guarantee that demand can always be met, and costs associated with dynamic
network management to maintain the supply-demand balance in the short term. The
IEA estimates the additional costs for a system drawing 15%-30% of its energy from
wind generation at €15/MWh, or more, depending on the overall energy mix.

These technologies can make a difference. The power systems of Sweden and France,
where over 90% of electricity comes from nuclear and hydro plants, emit less than
seven tonnes of CO2 per capita, compared with over 11 tonnes in Denmark and
Germany, where coal makes up close to 50% of the mix (Eurostat figures, 2008).

The next two decades represent a real window of opportunity: even assuming
significant efficiency gains, the IEA still projects that 5,000 GW of new capacity will
come online between now and 2030, which is more than current global capacity
(installed capacity in 2008: 4,720 GW). These low- and no-carbon technologies must
therefore be deployed massively to avoid locking the global electric system into the
same high-carbon path for a few more decades.

The importance of innovation

In the longer term, the technologies being developed today will round out our
portfolio. The challenge will be to invest enough in R&D to ensure that they emerge,
cost less, and can be deployed after 2020 or 2030.

Photovoltaic solar is a case in point. Its economic maturity is measured very

differently in different parts of the world. In California, sunshine is sufficiently
abundant that full costs can be below €250/MWh in the residential market, while
system benefits (sum of net avoided costs, from generation to distribution) can
exceed €100/MWh since generation is closely correlated to peak demand (possibly
avoiding network costs as well). The technology could therefore be considered
mature in regions such as California within ten years if costs are halved. In Europe,
where sunshine is half as abundant, generation costs are still around €300-
500/MWh in the residential sector and system benefits are closer to €50/MWh. This
means costs will need to be reduced by a factor of between six and ten, pushing back
economic maturity into a more distant future.

Carbon capture and storage encompasses a range of complex technologies, some

aspects of which have already been mastered: we know how to capture and transport
carbon, and have a relatively good grasp of some storage techniques. The goal now is
to integrate these various steps and move from prototypes (pilot projects of no more
than a few tens of MW) to the industrial scale (for plants with capacities of 600-
1,000 MW). Costs must also be reduced: the cost per tonne of CO2 is currently
estimated at between €60 and €100 and can be as high as €150, meaning the
technology would cause coal-fired electricity prices to double or triple. Further
studies must also be conducted to test the long-term reliability of storage in
underground aquifers, and carbon transport infrastructure must be developed.

Carbon-free electricity could thus play an increasingly important role in creating

sustainable cities since it can meet all urban energy requirements while also reducing
both carbon emissions and local pollution if substituted for fossil fuels, especially in
heating and transportation. Across the entire chain, from decentralized generation to
conversion into final energy services, the development of “smart” solutions will
facilitate communication and the optimization of energy consumption in buildings
and public spaces, transportation, decentralized generation and possibly, in the more
distant future, electricity storage.

The role of public policies

There is thus no need to count on an as-yet-unidentified miracle technology to set
lofty targets for decarbonizing the electricity sector. On the other hand, the
transformation will come at a cost, one that must absolutely be kept in line by
collectively forging public policies that create efficient incentives for consumers and
producers. These policies should meet three criteria.

Firstly, they must be geared more to the long term. Time constants are long in the
power industry: investment processes require three to 15 years, while plants are
designed to remain in service for between 30 and 60 years, and the corresponding
transmission and distribution infrastructure at least that long. A building’s lifespan
can exceed 100 years.

It is generally difficult at an institutional level to set regulations that provide visibility

over several decades. At the same time, the stability and predictability of market
regulations over long periods depends in large part on how costs to society are kept
in check. If there are doubts about these costs being efficiently managed, the risk of
reversals in public policy increases considerably. A good illustration is the way in
which solar incentives have been available in fits and starts in Germany and Spain:
since feed-in tariff instruments did not control the quantities deployed, an
unexpected surge in total subsidy amounts led the governments of these countries to
abruptly change their policies.

Cost control, however, is not merely a matter of sound policy-instrument design. It is

also a question of adapting the type of public intervention to the maturity of the
technologies.

For mature technologies, the goal should be to encourage massive deployment in the
market over the next 20 years. These options (carbon-free wind, nuclear and hydro
power on the supply side; heat pumps and enhanced insulation for demand-side
efficiency) are competitive with a carbon price of €0 to 50 per tonne, which could be
directly financed by the market on the condition that the carbon value is fully
integrated into energy markets with a long-term view, and that some market
imperfections that are hindering deployment are removed.

For not-yet-mature technologies, the cost of CO2 avoided is typically a few hundred
euros per tonne higher. The first step to change this state of affairs will be to launch
and support R&D and experimentation programs, for instance through public-
private partnerships, international research organizations and demonstration funds.
This will enable massive deployment further down the road, within a decade or two,
if the gap in competitiveness is bridged.

Secondly, public policy must be founded on a coherent combination of price signals

and related regulatory measures – and this at all levels of the production and
consumption chains.

At every level, prices must reflect total costs to ensure investment financing over the
long term and an economically efficient selection of mature low- and no-carbon
technologies. In the electricity sector, additional measures are usually required to
assure that investments are made in generation and transmission infrastructure in a
timely manner. For instance, public debates must be opened well in advance to
address acceptance concerns, permitting systems must be clear and stable to avoid
delays in investments, and technical standards must be established to facilitate the
integration of intermittent generation.
Further downstream, efficiency standards for electric appliances and homes can be a
way to address the problems of high transaction costs (e.g. the cost of obtaining
information or finding a qualified contractor) and information asymmetry
(unawareness of the most efficient solutions). As mentioned above, this assumes that
real costs will be reflected in final prices to avoid a rebound effect. This is an essential
dimension of smart meters and smart homes, bearing in mind that the situation of
the most vulnerable customers must be taken into account as well.

Lastly, we must acknowledge that the devil is in the details. Ill-adapted policies can
result in serious systemic failures, as was illustrated by California’s electricity crisis
in 2000 and 2001, when poor market design and inconsistent regulations resulted in
rolling blackouts. In Europe, the initial design of the CO2 quota system had the
perverse effect of encouraging investment in coal generation since new build
benefited from free allowances, a distortion that will be eliminated from the EU
emissions trading scheme in 2013.

Concerns about climate change, energy security and rapid urbanization call for
electricity to play an enhanced role in the energy system and economy, and the
coming decades will be a real test. To attract sufficient long-term investment,
effectively deploy technologies by order of maturity, and encourage technological
progress, we will have to work together toward institutional innovation. Serious and
chronic uncertainty about energy prices and future growth are such that the creation
of a long-term collective strategy and the design of adapted regulations will be
decisive. Particular attention must be paid to ensuring that interaction between the
deregulated market and the regulations under which it operates gives efficient
incentives over the long term, while guaranteeing that quality of service is
maintained and that the full costs of energy services are kept in check.

Solar-powered irrigation: A solution to

water management in agriculture?
03 August 2016
Stéphanie Roblin

Stéphanie Roblin explores the use of solar power in

farming and explains why it could be an ideal solution to
irrigation in developing countries.
Farmers have always played a significant role in our society as they provide the world’s population with food. However,
one may forget that, not only do they provide food but they also provide energy, which nowadays, is of paramount
importance, especially as in light of renewable energies. Indeed, farmers can produce energy from the wind, the sun or
the biomass and they can use it for their own farm, or, if they have a surplus, resell it to companies.

Solar energy might be one of the easiest ways for farmers to produce energy. Indeed, farmers usually have several
large buildings whose roofs are directly under the sun, without being hindered by the shadows of the trees, turning them
into an ideal place to settle a photovoltaic system. Therefore, the use of solar energy in agriculture is becoming
increasingly popular and the energy produced from this renewable source can be used either on the farm or in the local
power grid, providing the farmer with an additional income.

One of the areas in agriculture that benefits the most from solar energy is irrigation, especially in arid regions. The main
reason is that using the sun for irrigation represents a virtuous circle: when the sun shines, it feeds the irrigation system,
well, we know that crops needs more water when the sun shines a lot. Therefore, a large quantity of energy is available
when it is actually needed.

How does a solar irrigation system work?

The pumps used for the transport of the water are equipped with solar cells. The solar energy absorbed by the cells is
then converted into electrical energy via a generator which then feeds an electric motor driving the pump. Most of the
traditional pump systems mainly work with a diesel engine or with the local power grid. However, these two modes of
operations present disadvantages compared to solar pumps.

In many rural areas, especially in developing and emerging countries, the access to the electricity grid is not always
guaranteed. In this case, farmers cannot rely on the traditional irrigation system. Thus, using an independent and
alternative energy system can be a solution for the farmer to secure a safe power source and for the public grid to avoid
saturation.

Diesel pumps are slightly more efficient than AC powered pumps as they allow greater flexibility. However, one of the
main constraints is that this system relies on the fuel availability, added to a greater impact on the environment. Diesel-
driven pumps are cheaper than solar-powered pumps but the operating costs are quite high and depend heavily on the
diesel price. In solar-powered systems, it works the other way round, that is, although this system is relatively
expensive, the source of energy is free, therefore, after the amortization period, there are no longer operating costs
(only the maintenance costs must be considered). Therefore, solar pumps turn out to be a viable long term investment.

As several studies, such as Water for wealth and food security by AgWater Solutions Project, have shown, the access
to water for agricultural purposes remains critical in some areas such as in arid regions of Africa and Southern Asia.
Many Indian and African farmers fetch the water directly from the well or the rivers and irrigate their fields using buckets.
If farmers of those regions could have access to a motorized pump, they would increase their yield by 300%.

Therefore, nowadays, R&D tends to focus on creating solar pumps that are affordable in arid regions. The company IBC
SOLARhas developed with Siemens, a solution to replace diesel engine by solar-powered engine. In this case, the
whole irrigation system including the pump can remain as it is; only the diesel engine is replaced by a photovoltaic
system and the so-called “IBC pump drive controller”. A prototype of this system was tested in 2015 in a farm in
Namibia and according to the manufacturer, turned out to be quite efficient. The main advantage lies in the fact that
there are low acquisition costs as the existing infrastructure is used.

Where is solar irrigation happening?

The installation of solar pumps in arid regions such as in Africa, India and South America is also part of many
development projects, aiming at increasing local farmers productivity and as a consequence, improving their living
conditions. One of the successful example of this is the initiative of a Physics teacher in a school in Blankenese
(Germany) where students have developed two solar-powered pumping systems in cooperation with the company SET
GmbH from Wedel. They installed these systems in two farms in Nicaragua to pump underground water. This project
could also be achieved with the collaboration of the UNAN University in León, which deals a lot with the exploitation of
solar energy. Indeed, the project has been running for over 10 years and 30 pumps are in operation now in Nicaragua. It
is supervised by the Nicaraguan company Enicalsa that helps farmers benefit from solar irrigation. The use of solar
pumps allows the latter to produce all year round, even in dry season and thus to increase their income and strengthen
their position in the local market.

Aside from the regions previously mentioned, there is also an increasing interest in solar irrigation systems in Europe.
Just a few months ago, a mobile solar drip irrigation system from Austria has reached the production stage. The
Austrian company Wien Energie carried out this project which pursues a dual objective: on the one hand, reduction of
CO2 emissions owing to the use of solar energy, on the other hand, achievement of 30% water savings thanks to the
drip irrigation method versus the traditional sprinkler irrigation.

The principle of the drip irrigation method is quite simple. With the use of various valves, hoses and pipes, water drips
slowly and at regular intervals to the roots of the plants. Therefore, there is no water waste as water goes directly where
it should go, contrary to a sprinkler system in which water evaporates into the air or seeps into soils where no plants
grow. Therefore, drip irrigation method enables to grow more crops with less water, turning it into a highly efficient
irrigation method.

In the Wien Energie solar irrigation system, a mobile solar energy system with photovoltaic modules (up to 3kW) is
connected to a wheeled pump which can pump from wells or rivers. Thanks to an app on your smartphone, you can
determine the amount of energy produced by the system. The solar-powered pump then distributes the water through
the hoses, directly to the crops. After a successful test on a 3.5-hectare organic cornfield in Guntramsdorf, Austria, this
system is now ready for production.

Therefore, in countries which suffer from high temperatures and scarce water resources, the drip irrigation system could
contribute to an efficient water management. This is all the more important as farmers have to face three challenges:
save water, money and energy. Mobile solar drip irrigation systems shall turn out to be the perfect answer to face these
challenges. Although these systems are still quite expensive and complicated to settle, many R&D projects are working
on the democratization of the use of solar power in agriculture, which, in the future (and even now), could play a vital
part in the management of the food and energy crisis.