Solar Shines Brighter

Photovoltaic-cell sales hit $1.2 billion in 1997, as users discover significant energy savings.

Because of its prohibitive cost and the number of modules needed to generate needed power, manufacturers have been slow to adopt solar technology on a wide scale. Especially as a means of electricity generation, photovoltaic (PV) cells have not been a practical alternative. Although some companies have incorporated such heating aids as solar wall panels into their buildings, large-scale applications in manufacturing facilities have been about as rare as a solar eclipse. Despite the solar industry's cloudy past, recent advances in technology, government incentives, people-driven initiatives, and the deregulation of the U.S. electricity industry are beginning to make solar power a practical alternative. Industry already is using PV cells -- semiconductors that convert light into electricity -- in applications ranging from backup power systems to lighting. They also are used to power telecommunications and security systems. Other types of solar systems are being used to heat air and water in manufacturing facilities. According to Harvey Forest, president and CEO of Amoco/Enron Solar, a joint venture between Chicago-based Amoco Inc. and diversified energy group Enron Corp., Houston, industry in the U.S. alone loses $26 billion each year because of a lack of premium power during shutdowns. Solar panels, Forest says, can be used instead of diesel engines or grid-supplied sources to charge batteries for backup systems. Forest, who also is president of the Washington-based Solar Energy Industries Assn. (SEIA), adds that his company's solar products are used to power systems that monitor the flow of oil and gas in remote locations. An example of how the sun is being used to heat a factory can be found at the Ford Motor Co.'s Buffalo Stamping Plant in Buffalo. At that facility, exterior solar ventilation walls are used to preheat air for use inside the plant. Intake fans draw the air behind the black walls of the plant. The air is then heated by the sun and drawn inside. The black walls also provide an extra layer of insulation. The Solarwall system, manufactured by Buffalo-based Conserval Systems Inc., completely covers the two walls that have a southern exposure and totals more than 50,000 sq ft. Dick Grainger, a national sales manager with Conserval, says more than a mile of flexible ducting distributes the heated air throughout the facility. Ford says the system has resulted in energy savings of almost $200,000 a year. Similar systems are in place at seven other Ford facilities and two General Motors Corp. plants. Conserval President John Hollick says interest in the solar-wall concept is growing. "We spend a lot of time just educating people," notes Hollick. Conserval recently completed a 100,000-sq-ft installation in Montreal and also has installations underway in India and Japan. Buyers of such a system in the U.S. can get a 10% federal tax credit, says Hollick. Eastlake, Ohio-based Gould Electronics Inc.'s Foil Div. in Chandler, Ariz., uses a solar-thermal-energy system to produce hot water for industrial use. In operation for more than 15 years, the parabolic-trough system provides hot water for Gould's copper-foil manufacturing operations. The solar-thermal system saves the company $80,000 to $90,000 in annual energy costs. Oil flowing through individual solar collectors in the system is heated to up to 460 F by the sun. It then flows to two 30,000-gallon oil storage tanks where the heat is transferred to water that will be used in the plant. Dave Simmons, engineering manager, says that although the system's technology is dated, it provides an average of 40% of the plant's thermal water-heating requirements. The most recent technology for heating water on a large scale involves the use of a large field of nearly flat mirrors. The mirrors concentrate sunlight onto a thermal receiver on top of a centrally mounted tower. One such system, operated by the U.S. Dept. of Energy (DOE), uses molten salt to store the sun's heat. Located near Barstow, Calif., it can produce 10 megawatts of electricity, enough to power about 10,000 homes. Because of a growth spurt in the solar industry, industrial applications for solar systems are beginning to make more sense. With an annual growth rate estimated at about 20%, the industry is mushrooming, especially outside of the U.S. where 75% of the market for solar products exists. Last year, says Scott Sklar, executive director of SEIA, the global industry generated $1.4 billion in sales, of which $1.2 billion was from PV cells. In terms of megawatts produced, production has increased from 24 in 1985 to 120 last year. The industry's growth has been driven, in part, by the massive demand for electricity in developing nations. In countries where there is little access to grid-connected systems, solar power provides a logical alternative. "Demand is increasing supply primarily to the Third World markets," Sklar says. "Global democratization and privatization are also boosting the industry." With two billion people in the world still without electricity, the potential for solar's growth is immense. The decreasing cost of producing solar power also is making it a favorable choice for off-grid applications. Thanks to automation and other advancements in technology, the cost of solar power has plummeted from $22 a peak watt in 1980 to as low as $4 a peak watt today. "Cost has always been one of the biggest barriers to switching to solar," says Kenneth Blower, New York-based director of health, safety, and environment for BP America Inc. U.S. manufacturers, which now claim 50% of the global market for PV cells, experienced a record growth spurt in 1997. According to SEIA, four new automated solar manufacturing plants opened last year, and six more are scheduled to open this year. Several major oil companies are investing millions of dollars in new facilities. Fairfield, Calif.-based BP Solar, a wholly owned subsidiary of British Petroleum Co. PLC, London, opened its first U.S. solar panel production facility in Fairfield, at the end of January. The Hague, Netherlands-based Shell Solar Energy B.V., part of the Royal Dutch/Shell Group, opened a solar production line at its plant in Helmond, Netherlands, last October. The Royal Dutch/Shell Group plans to invest $500 million in solar cells and sustainable forestry plantations in developing countries to fuel local powerplants. Solarex, a unit of Amoco/Enron Solar, will complete a $7.7 million expansion of its Frederick, Md., plant by the end of this year. Although the U.S. is the biggest producer of PV systems, it is not the biggest user. "If we were to take a snapshot of the entire U.S. industry, [we would find] there is about 10 times more square footage of solar panels in Austria," says Greg Peebles, vice president of operations with Jacksonville, Fla.-based Energy Laboratories Inc., a company that specializes in solar-energy research and development and system design. Forest says the grid-connected sector is the fastest-growing part of the PV industry. Japan is becoming the largest market in that sector, followed by Germany and the U.S. "What's driving that are the incentives that Germany, Japan, and the U.S. are providing to drive down the cost of our systems," Forest says. "We are competitive with off-grid, diesel-power electricity generation." In Germany, residents in some utility territories pay a surcharge of up to 1% to bring in electricity from solar systems. Such programs often have been people-driven rather than government-driven. Other than getting a 10% federal tax credit, commercial users of electricity in the U.S. have had little incentive to switch to solar power. That is beginning to change. President Clinton announced a plan last June that could result in the installation of solar systems on the roofs of one million homes and businesses by 2010. (Sklar says that only 100,000 buildings in the U.S. currently use PV technology.) Called the Million Solar Roofs Initiative, the program will be run by the DOE, which will work with partners in the building industries, local governments, state agencies, the solar industry, electric-service providers, and other organizations. Business owners will be able to apply for loans to install solar energy systems from the Dept. of Housing & Urban Development, the Rural Utility Service, the Dept. of Veterans Affairs, the Small Business Administration, and the Federal National Mortgage Assn. Speaking at the opening of BP Solar's Fairfield, Calif., facility, Vice President Al Gore said states and utilities across the country already have announced plans to install nearly half a million solar-energy systems as part of the Million Solar Roofs Initiative. "The faster the government promotes solar, the faster it will grow," says Tom Vonderhaar, vice president of sales and marketing for BP Solar. "The higher the profile, the faster the market will develop." In California, where about 30% of the world's PV cells are produced, the state has set aside $540 million to help promote existing, new, and emerging renewable technologies. About $54 million of that amount will be used for rebates to electricity customers who install small wind, solar, and fuel-cell equipment. The Worldwatch Institute, Washington, says that outside of the U.S., countries in Europe and Asia have been most aggressive in offering incentives to companies that switch to renewable energy sources. Such programs are expected to become more common as a result of last December's global climate conference in Kyoto, Japan. At that conference, 159 nations agreed to reduce output of carbon dioxide and other greenhouse gases to 5.2% below 1990 levels by 2012. Last year Germany's Ministry of Research & Technology announced it would provide financial support for two large solar manufacturing plants. In Berlin, the city's construction industry committed last November to install solar collectors in 75% of all new buildings. Subsidies from the Berlin government and the city utility cover up to 60% of the funding for the solar systems. In Japan, where the Ministry of Trade & Industry's goal is to install solar cells on more than 70,000 homes by 2000, the government also offers subsidies and tax incentives. Although the use of PV cells has been increasing, the cost of solar power compared with other energy sources still is preventing its widespread growth. With the introduction of thin-film technology, however, the cost of PV cells is dropping. Thin film cells, while only about 9% efficient (they convert 9% of the sunlight that hits them into electricity) can be produced in a highly automated and inexpensive manner. Single-crystal silicon cells, the most expensive type to produce, still dominate the PV market and are the most efficient electricity generators. Solar modules made using these cells are about 14% efficient. Polycrystalline cells are made up of many small crystals and are less expensive than single-crystal cells to produce, but are only about 12% efficient. Sklar says that in addition to cost, one of the main reasons it has taken so long for solar power to spread across the U.S. is the lack of a deregulated electricity market. Just last month, however, the electricity industry was deregulated in California and Massachusetts. Several other states have implementation dates later this year. Rick Gaskins, an attorney with Charlotte, N.C.-based Kilpatrick Stockton, a law firm that represents independent power producers, believes distribution of power will remain a monopoly under deregulation. However, he says one could contract with a power-generation company other than a local utility. "With big industrial customers, it will have the biggest impact," says Gaskins. "You could put your contract out for bid. You could end up buying power from the Midwest even if you are on the East Coast." Although deregulation is expected to benefit those independent companies that offer renewable technologies such as solar power, critics say it could backfire and actually increase the amount of pollution generated. Coal-fired power production still will be the least expensive way to generate electricity. "In the Northeast, there is a worry that companies will burn more coal and that power production will shift to the Midwest," says Gaskins. "There are tough problems involving how you make the transition." Numerous utilities across the U.S. are making the purchase of energy from renewable sources an option. Larry Alexander, director of the energy division at Boston-based Environmental Futures, a management and marketing communications consulting firm, says between 40 and 50 utility companies in the U.S. offer green pricing programs. In one program offered by the Public Service of Colorado, companies such as IBM Corp. and Adolph Coors Co. are voluntarily paying higher rates in order to support renewable-energy programs. "In many of these programs, industrial customers are recognized for their participation," says Alexander. "It's a sign to the community and their customers that they are doing something good for the environment." Karl Rabago, vice president for new energy markets for Austin-based Planergy, an independent energy-services company, says public involvement will be key to industry's decision to move toward solar power.

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