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Krughütte, PV park

I just came across a recent report on the state of photovoltaics in Germany, written by Harry Wirth from Fraunhofer ISE. What are the main takeaway points? The points in italics are my own.

By the way: There is this Stanford University report proposing that the world can go 100% renewable by 2050. This stands in contrast to the results in this Fraunhofer ISE report, suggesting that 100% renewables in Germany by 2050 is simply too expensive. The reason for this discrepancy has been taken up by the energiewende blog. Basically, the Stanford Report suggests that the 100% renewable scenario is achievable and requires 1080 GW of installed PV capacity. We will see below whether this is realistic or not.

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At the dinner table a couple of days ago I talked to an electrician who claimed that all these investments in solar energy are a seriously flawed policy. He had several points:

  1. Solar power is a technology that uses more electricity in the production of solar panels than it produces itself once in use
  2. The policies fail because they only subsidise those that are anyway rich enough to have enough money to place solar panels on their rooftop
  3. The government should not provide the subsidies to individuals or companies who profit from this but – if it wants to push renewables – should invest itself in this industry and thus reap the profits itself

Let’s see whether these points make sense or not.

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So folks, this is it. Anyone who ever thought it was impossible, there isn’t enough space, it is too expensive, or whatever other unreasonable argument was ever forwarded: The #energiewende is there, it is not only happening in Germany but worldwide. Take a look at Figure 1 below. Nuclear energy production is stagnating, and that for more or less the past 30 years, while alternative sources of energy, wind and solar, are now nearly producing the same amount of electricity as nuclear is. energiewende

This should be a slap in the face for all doubters, for all naysayers and pessimists alike. We do not need nuclear energy, we have safe alternative sources of energy, they are able to produce the same amount of electricity as nuclear is, and if they keep growing just for a little while longer as they have been growing during the past couple of years, then we won’t need nuclear energy in our future energy mix at all. And we might even be able to significantly reduce non-renewable sources of electricity production.

Has anyone seen a significant drag on economic growth from this #energiewende? Has anyone noticed a significant increase in unemployment? Where are the promised recessions, where are the masses of job losses, productivity reductions and losses in international competitiveness that we were promised if we were ever moving to greener sources of electricity production? Anyone? Honestly, the only recessions, the only losses in employment, the only high costs that we know about come from the financial world, from rich people juggling around billions of dollars a day to take advantage of minimal spreads in the name of economic growth; from the banks that try to push up their return on assets and sell us mortgage-backed securities based on worthless mortgages and that do more shadow banking than actual banking; from companies that try to make us believe that we need to buy more and more in order to become happier, better people. Is that really how it should be? Are we really barking up the right tree if we are anti-green? Do we not lose sight of where the real costs are? After all, we should remember that our economic system is part of the natural environment, and not the other way around.

#energiewende here we come!

 

 

A new report, by order of the European Commission, studying the Subsidies and costs of EU energy just came out (published by Ecofys. KPMG and the Centre for Social and Economic Research). This study is particular noteworthy since it is one of the first that attempts to provide useful data on energy costs and subsidies for all EU Member States and for all technologies. Here is a quick summary of the most interesting findings as well as some thoughts and discussions.

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In a previous post I had shown that nearly all big international solar giants are doing very badly and are close to bankcruptcy with their share prices hovering close to zero. I was wondering why the governments do not help them out and provide further incentives for consumers to buy solar panels that should be available much more cheaply now. And I was also suggesting that the solar industry is at a cross-road and was wondering what will happen next. In case you also wondered about this, here are some news:

China is buying tons of solar panels from its nearly bankcrupt solar giants.

Hard to understand why the EU does not do something similar in order to meet/exceed emission targets AND move away from austerity at the same time AND save its failing solar giants which it subsidised for so long only to allow them go bankcrupt eventually… Someone tell me what is going on and why subsidising these companies now does not make sense?

Germany’s biggest solar energy producer, Conergy, is bankcrupt, and currently undertaking procedures for insolvency. Though the newspapers present this as a surprise, l present you a graph with its share price evolution from 2006 onwards:

Präsentation1

Are you surprised now? Well, with that kind of evolution in the share price, this was to be expected. Now, Conergy had problems with its managers, claims of accounting `problems’, unfortunate management decisions which led to a fixed price of some supplies that drastically fell in price quickly after the fixing, etc. But is that the main reason?

So here is the evolution of the share price of Germany’s second largest solar energy producer, Solarworld.

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Wait one more year, or two, and with that kind of evolution you will see another bankcruptcy… Though a big investor from Katar last month stepped in to give funding to Solarworld, it apparently didn’t help the share price. So we may say that the German solar energy production in general is in a bad state.

But then again these companies don’t even make it in the Top 10 of world’s solar energy producer (if one accepts Wikipedia as a sufficiently credible source…).  So let’s go to the Top 10. Number one is a Chinese company, called Suntech, number two is a US-based one, called First Solar. Let’s look at First Solar:

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Though we see that there was a crisis effect in 2008, and the share price fell considerably until the beginning of 2012, it has since picked up. This is a main difference to Germany. Is this due to better management? Difficult to say. Is it due to subsidies? Well, subsidies in Germany for solar energy have been really large. If subsidies play a role here, then Germany’s companies should look much more solid instead of bankcrupt…

So there is another claim out there, namely that cheap Chinese solar panels flood the markets, produced more cheaply because of cheaper labor and lower environmental standards. Let’s see whether that picks up in the share price of China’s largest solar energy producer, Suntech Power:

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Hohohoho – unexpected, no?

Looking at this, I doubt really that the international competition argument pulls here. It looks to me that in general solar energy is in a crisis – at least if you trust the predictive power of the share prices. I also looked at other solar energy producers, and those that I took a look at all had a similar evolution. My guess is: the increase in share price was around 2008 was mostly speculation that went hand in hand with the oil price boom and extensive governmental subsidies. When the subsidies worldwide started to be reduced due to the austerity programmes we also saw a reduction in solar demand growth, investors got scared, moved their money to gold/silver or under the mattress.

The question is: if these solar energy producers really are in such a bad state as their share price suggests, what is going to happen to solar energy in the future? What would be a good governmental policy? Solar energy is already approximately competitive to traditional non-renewable energy sources. They are simply bought less because they are only profitable for consumers after several years. Discounting matters.

Governments should take that into account – one way to provide a good policy is to shift benefits for consumers forward or costs backwards. Thus, there could be special loans e.g. for solar energy so that consumers do not need to put all money up front, which thus shift the costs backwards in time.

In any case the quick study above suggests that world solar energy producers are at a cross-road. The question is what will happen next?

UPDATE (16. July 2013): China is buying tons of solar panels from its nearly bankcrupt solar giants. Hard to understand why the EU does not do something similar in order to meet/exceed emission targets AND move away from austerity at the same time AND save its failing solar giants which it subsidised for so long only to allow them go bankcrupt eventually…

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