Monday view: Cheap solar power poised to undercut oil and gas by half

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Monday view: Cheap solar power poised to undercut oil and gas by half

By Ambrose Evans-Pritchard

Last Updated: 11:31pm GMT 18/02/2007

 

 

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Within five years, solar power will be cheap enough to compete with

carbon-generated electricity, even in Britain, Scandinavia or upper Siberia. In

a

decade, the cost may have fallen so dramatically that solar cells could

undercut

oil, gas, coal and nuclear power by up to half. Technology is leaping ahead

of a stale political debate about fossil fuels.

Anil Sethi, the chief executive of the Swiss start-up company Flisom, says

he looks forward to the day - not so far off - when entire cities in America

and Europe generate their heating, lighting and air-conditioning needs from

solar films on buildings with enough left over to feed a surplus back into the

grid.

The secret? Mr Sethi lovingly cradles a piece of dark polymer foil, as thin

a sheet of paper. It is 200 times lighter than the normal glass-based solar

materials, which require expensive substrates and roof support. Indeed, it is

so light it can be stuck to the sides of buildings.

Rather than being manufactured laboriously piece by piece, it can be

mass-produced in cheap rolls like packaging - in any colour.

The " tipping point " will arrive when the capital cost of solar power falls

below $1 (51p) per watt, roughly the cost of carbon power. We are not there

yet. The best options today vary from $3 to $4 per watt - down from $100 in the

late 1970s.

Mr Sethi believes his product will cut the cost to 80 cents per watt within

five years, and 50 cents in a decade.

It is based on a CIGS (CuInGaSe2) semiconductor compound that absorbs light

by freeing electrons. This is then embedded on the polymer base. It will be

ready commercially in late 2009.

" It'll even work on a cold, grey, cloudy day in England, which still

produces 25pc to 30pc of the optimal light level. That is enough, if you cover

half

the roof, " he said.

" We don't need subsidies, we just need governments to get out of the way and

do no harm. They've spent $170bn subsidising nuclear power over the last

thirty years, " he said.

His ultra-light technology, based on a copper indium compound, can power

mobile phones and laptop computers with a sliver of foil.

" You won't have to get down on your knees ever again to hunt for plug

socket, " he said

Michael Rogol, a solar expert at Credit Lyonnais, expects the solar industry

to grow from $7bn in 2004 to nearer $40bn by 2010, with operating earnings

of $3bn.

The sector is poised to outstrip wind power. It is a remarkable boom for a

technology long dismissed by experts as hopelessly unviable.

Mr Rogol said he was struck by the way solar use had increased dramatically

in Japan and above all Germany, where Berlin's green energy law passed in

2004 forces the grid to buy surplus electricity from households at a fat

premium. (In Britain, utilities may refuse to buy the surplus. They typically

pay

half the customer price of electricity.)

The change in Germany's law catapulted the share price of the German

flagship company SolarWorld from €1.38 (67p) in February 2004 to over €60

by early

2006.

The tipping point in Germany and Japan came once households twigged that

they could undercut their unloved utilities. Credit Lyonnais believes the rest

of the world will soon join the stampede.

Mike Splinter, chief executive of the US semiconductor group Applied

Materials, told me his company is two years away from a solar product that

reaches

the magic level of $1 a watt.

Cell conversion efficiency and economies of scale are galloping ahead so

fast that the cost will be down to 70 US cents by 2010, with a target of 30 or

40 cents in a decade.

" We think solar power can provide 20pc of all the incremental energy needed

worldwide by 2040, " he said.

" This is a very powerful technology and we're seeing dramatic improvements

all the time. It can be used across the entire range from small houses to big

buildings and power plants, " he said.

" The beauty of this is that you can use it in rural areas of India without

having to lay down power lines or truck in fuel. "

Villages across Asia and Africa that have never seen electricity may soon

leapfrog directly into the solar age, replicating the jump to mobile phones

seen in countries that never had a network of fixed lines. As a by-product,

India's rural poor will stop blanketing the subcontinent with soot from tens of

millions of open stoves.

Applied Materials is betting on both of the two rival solar technologies:

thin film panels best used where there is plenty of room and the traditional

crystalline (c-Si) wafer-based cells, which are not as cheap but produce a

higher yield - better for tight spaces.

Needless to say, electricity utilities are watching the solar revolution

with horror. Companies in Japan and Germany have already seen an erosion of

profits because of an effect known " peak shaving " . In essence, the peak wattage

of solar cells overlaps with hours of peak demand and peak prices for

electricity in the middle of the day, crunching margins.

As for the oil companies, they are still treating solar power as a fringe

curiosity. " There is no silver bullet, " said Jeroen Van der Veer, Shell's chief

executive.

" We have invested a bit in all forms of renewable energy ourselves and maybe

we'll find a winner one day. But the reality is that in twenty years time

we'll still be using more oil than now, " he said.

Might he be wrong?

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