Seeking Alpha Articles

Dr. Kiss is a frequent contributor to Seeking Alpha.

The Day The Central Bank Powers Ended

Summary

  • Central banks in the developed world have just about thrown everything and the kitchen sink at the forces of deflation, with fairly little to show for it.
  • After the US and the UK, the Swiss have now been the third to throw in the towel.
  • Is this a general retreat? Are we going to succumb under the forces of deflation? Is there nothing else we can do?

There are powerful forces of deflation swirling around much of the developed world, the origins of which can be traced, in no particular order, to:

Deleveraging after asset bubbles burst
The half baked design of EMU producing a strong deflationary bias
Chinese over investment and overcapacity
Rising inequality
Stagnant or even declining populations

In a highly leveraged environment, deflation is very dangerous. It can lead to outright Fisherian debt-deflation spirals, or even in milder forms, (as has been on show in Japan for the best part of two decades and more recently Italy, for instance) it can wreck havoc.

In much of the developed world, it has been up to central banks to combat these forces. Central banks have chosen to embark, first on zero interest rate policies and then on forms of unconventional monetary policies, that is, buying large quantities of assets.

The results of these have been rather moderate, and that can be little surprise. In the face of deleveraging, monetary policy becomes rather powerless as households prefer to pay off debt, rather than take on new debt, despite record low interest rates.

But the forces of deflation haven’t been beaten and the unconventional monetary policies have unfavorable side effects. They also have their limits, and it seems that we’ve just been hitting one. The Swiss central bank (SNB) has ended its 1.20 floor to the euro.

This was really unconventional monetary policy, comparable to buying sovereign bonds. What the SNB did was buy unlimited amounts of euro in order to defend the 1.20 floor for the Swiss franc.

Switzerland is a small, open economy, so this policy made sense in times when its safe haven status made it very vulnerable for very large capital inflows. These flows can be so large as to wipe out the competitiveness of much of the Swiss export sector overnight, clearly the SNB could not stand idle letting that happen.

In principle, central banks can sell unlimited amounts of its own currency (like the SNB was doing), that is, they can buy unlimited amounts of assets (sovereign bonds, foreign currencies, whatever).

But, apparently, the SNB deemed there were limits to this, and they did have something of a point:

  • The Swiss monetary base five-folded from 80B francs to 400B francs.
  • Credit rose from an average of 145% of GDP to 170% of GDP.
  • A real estate boom is ongoing, flat prices have risen 60% since 2007.

None of this seems to have reached some ultimate limit. The real estate boom precedes the currency peg by four years, the credit expansion is considerable, but not yet alarming and can be dealt with by other means. The rise in base money is not in and by itself very worrying.

But the prospect of the ECB embarking on full QE and the inflow of Russian (and Greek and Italian) money, together with the prospect of large losses on its foreign currency holdings made the SNB sufficiently uncomfortable that it ended the peg to the euro by surprise.

Switzerland may now well turn into the proverbial bird in the mine as this will unleash the full deflationary vortex into the Swiss economy, and we will have to see whether they can come out alive at the other side of this.

Switzerland is only a small country though, there is a wider picture here, which seems to be telling that the world’s central banks will ultimately be powerless to stem the deflationary vortex that is threatening their economies. The Swiss were just the first to realize this.

Before we draw such dramatic conclusions we must first point out a few ifs and buts. The Swiss were the only ones practicing a special form of QE, the SNB didn’t buy long-term bonds, it bought euros instead.

The advantage of this is that it has direct traction in the real economy via the tradable sector. But even so, it hasn’t prevented deflation to set in.

The disadvantages are that it constitutes a direct ‘beggar-thy-neighbor’ policy (or, if you like, a first salvo in a ‘currency war’), even if large enough purchases of sovereign bonds (or even the expectations of such) will more or less achieve similar currency effects.

But currency markets are large and liquid, and Switzerland is a small country. Bond purchases would have been easier, especially considering the fact that Swiss debt/GDP ratio is just 35%, one of the lowest ratios in the developed world.

It’s curious that we might have reached the deep end of diminishing returns to QE just when the ECB seems to be embarking on this policy, even more so because the Eurozone is where it could arguably have been of most benefit a few years ago.

QE effectiveness

There are three main transmission mechanisms of QE:

  • Stimulating credit demand
  • Producing a wealth effect
  • Lowering the exchange rate

The first two work through lowering long bond yields, but when these yields are already very low not much can be expected here, especially where private sector deleveraging is the major problem.

Alternatives?

There is another mechanism which works on expectations. This is basically producing some sort of ‘regime change,’ such a drastic policy change that it affects inflationary expectations. This is what Japan achieved in 1932 by getting off gold and embarking on a reflationary policy that got them out of the economic depression.

In the words of Krugman, who, based on the Japanese experience in the 1990s constructed a model assessing the requirements for monetary policy effectiveness in a liquidity trap, this only works if central banks “credibly commit to being irresponsible.”

The BoJ looked on course of doing this, until they were denied traction by an ill-timed tax hike. The Swiss managed to pull this off by drawing a line in the sand at 1.20 francs to the euro and in a more limited way, Draghi has pulled this off with his 2012 “whatever it takes,” quelling a peripheral bond debt-spiral without actually having to intervene.

But Draghi’s intervention didn’t signal a drastic (‘regime change’) in monetary policy, it just signal that the ECB would be like any other central bank functioning as a lender of last resort. And the Swiss have given up their fight.

There are a few things monetary authorities could try to fight deflation, stuff like NGDP targeting or inflation targeting. In order to achieve credibility, massive actions are likely to be needed so it would be more of the same with the difference of an explicit effort to anchor expectations.

Perhaps this makes a difference, perhaps not, it’s certainly difficult to say, and it would be interesting to see a country trying it. Japan does have a 2% inflation target but they greatly compromised their own credibility by the tax hike.

Helicopters to the rescue?

There is one card that monetary authorities could still draw, which would be some variant of Milton Friedman’s famous ‘helicopter money.’ That is, central banks print money, which would finance a tax break for households (‘helicopter droppings’) and/or public expenditures (infrastructure, research, education, etc.).

Compared to the QE policy experience, this seems to have considerable advantages:

  • It injects money directly into the veins of the economy.
  • QE depends on further financialization of the economy, all these financial machinations aren’t very effective, suffer from large diminishing returns and considerable side effects.
  • Instead of purchasing paper, we could have gotten real stuff, stuff that is useful, infrastructure like bridges, roads, power lines, a smart grid, research, education, pipelines, whatever.

Basically, we could have gotten more traction in the real economy at a fraction of the sums involved. Why? Because it is actually more like fiscal policy, and we know that fiscal policy becomes very effective in economies suffering from large output gaps and rates at the zero lower bound, certainly fiscal policy that is financed with new money.

But, unless despair sets in completely, we don’t expect this to happen anytime soon.

Liquidate?

There is of course another alternative and that is to stop all the ways to combat these output gaps and actually embracing the resulting deflation. This is basically the position of many people who take their clues from Austrian economics.

What they have in common is a great belief in the efficiency of markets, these will automatically balance demand and supply and find the appropriate levels of prices, wages and interest rates to achieve that.

While we do not deny the efficiency of markets, it’s simply an experience that these do not always achieve macro-economic equilibrium. The basic innovation of Keynesianism is simply to depart from the given that large output gaps and high unemployment can persist.

Let the excess capacity liquidate itself, say the Austrians. Well, that’s possible, but we strongly doubt whether it’s less harmful than efforts to reflate the economy, especially under conditions of high leverage.

We know from Japan how pernicious deflation can be once it has set, and we know from Fisher that markets can spiral down in self-reinforcing feedback loops called debt-deflationary spirals. Do we want to risk this?

As observers, we like economic experiments as they put ideas to the test, but this is one experiment we would be highly apprehensive about. We’ve seen in the early 1930s what those deflationary spirals can achieve.

Austrians tend to argue that rates are way too low as well due to central banks, below ‘market rates,’ spurring all kinds of bubbles. But QE has ended in the US and despite economic growth picking up a bit, rates have trended downwards, not upwards.

The few cases in which rates were increased (Sweden, the eurozone) post 2008 does nothing to inspire confidence that this is the way to go, these decisions were reversed pretty embarrassingly.

Conclusion

The unconventional monetary policies seem to suffer from greatly diminishing returns, unwanted side effects, and general exhaustion. The US, UK, and Swiss central banks have given up. The Eurozone QE effort, looks dead on arrival, and the Japanese shot themselves in the foot with a tax hike.

There are a couple of choices left. Do nothing and risk the destruction of deflationary forces, or try to inject more direct means into the veins of the economy, there where necessary (basically Japan and the Eurozone).

 

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Toxic Materials in Photovoltaic Modules

Overview

  • Exempt for PV-modules
  • no regulation on module waste
  • no obligation for user to return modules
  • no obligation for producer to take back modules

1. Module Power:

  • 22 GW total installations in Germany
  • 27 GW world wide production 2010

2. Integrated Module Waste:

  • 60 GW integrated production
  • 2 600 000 t integrated module waste

3. Toxic Materials:

  • c-Si modules >1000 t Pb
  • CdTe modules ≈ 560 t CdTe

4. Leaching Studies (from literature):
Cd and Pb leach out at rain water conditions.

1. Market Numbers

Installed PV-Power in Germany

World Production: PV-Modules

World Production: PV-Modules

2. Waste

Distributed Modules

Expected Waste of PV-Modules

3. Toxic Materials

Crystalline Silicon

CdS/CdTe

CdS/CIGS

WEEE and RoHS

WEEE = „Waste Electrical and Electronic Equipment“ Directive (2002/96/EG)

  • Exempt for PV-modules
  • no regulation on module waste
  • no obligation for user to return modules
  • no obligation for producer to take back modules
RoHS = „Restriction of Hazardous Substances“ Directive (2002/95/EG)
  • Exempt for PV-modules
  • RoHS-limits:
  • 0.1 % for Pb
    36 Pb in solder on Cu-ribbons of c-Si modules!!
  • 0.01 % for Cd
    50 % Cd in CdTe and CdS!!

Produced Pollutants

4. Leaching Studies

Leaching Data from Literature

Leaching in Water Solutions

Conclusions

1. PV-ModulesexemptfromWEEEandRoHS in Europe.

2. Toxicmaterialsdistributedoverlargeareas:
c-Si modules > 1000 t Pb
CdTe modules ≈ 560 t CdTe

3. CdandPbleachoutfrommodulepiecesat close to rain water conditions.

4. AvoidCdandPb,makePVreally green
J. H. Werner, R. Zapf-Gottwick, L. Hamann
Institute for Photovoltaics
M. Koch and K. Fischer
Institute for Sanitary Engineering, Water Quality, and Solid Waste Management
University of Stuttgart, November 30, 2011

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Toxic Substances In Photovoltaic Modules

ABSTRACT

Most photovoltaic modules contain - without fun- damental need - toxic substances. In case of crystalline Si, the copper strings within the module contain the heavy metal Pb in the solder. Most modules from Cu(In,Ga)Se2 use a CdS buffer layer. In case of CdTe, the semiconductor itself is toxic; only a-Si modules are free of heavy metals. Within the last 30 years, the PV world market distributed about 1000 t of Pb and almost 600 t of CdTe over large areas. Nevertheless, the Euro- pean “Restriction of Hazardous Substances” (RoHS) does not consider photovoltaic modules. Our leaching studies on CdTe modules show substantial leaching of Cd under close to rain water conditions.

1. INTRODUCTION

Despite the success of photovoltaics in science, technology and market, there exists a taboo, which is usually not outspoken: toxic materials. Only few companies produce really “green” modules.

Here, we estimate the total amount of toxic sub- stances in PV modules. We report also results from leaching experiments at CdTe-modules. Substantial leaching of Cd occurs under acidic conditions.

2. MODULE MARKET

2.1 Historic Development

Figure 1 presents the annual production of photo- voltaic modules [1] which grew by a factor of 103, from 20MWin1983to27GWin2010.If one sums up the numbers, one obtains a total number of 53 GW for crystalline Si (c-Si), 3.3 GW for amorphous Si (a-Si), 0.77 GW for CIGS, and 3.4 GW for CdTe-modules produced between 1983 and 2010.

2.2 Toxic substances

Modules from a-Si: They do not contain any toxic substances, such as the heavy metals Pb or Cd.

Modules from c-Si: The solder of the cell strings contains 36 % of Pb [2]. In addition, there are traces of Pb (and sometimes even Cd) in the paste, which is used for screen printing the front and back contacts.

Fig.1: Within the last 30 years, the annual photovoltaic market grew by a factor of 103, with crystalline Si (c-Si) still being the dominating technology.

Compared to the Pb in the strings (19.8 mg/W in a cell with two bus bars), the amount of Pb in the screen print- ing paste (0.2 mg/W) is small.

Modules from Cu(In,Ga)Se2: Apart from one producer (Solar Frontier), most so-called “CIGS” modules contain the toxic CdS as an about 50 nm thick “buffer” layer under the ZnO front contact [3]. The semiconducting Cu(In,Ga)Se2 itself does not contain heavy metals.

Modules from CdTe: Here, the semiconductor itself of about 4 μm thickness is toxic.

TableI:Toxic substances in PV modules. Our own measurements (numbers in italic) on CdTe deviate from the numbers in Ref. [4].

Table I collects the toxic materials in PV-modules. From these numbers, and Fig. 1, we calculate the masses in Fig. 2. In order to estimate the module areas,

The 21st International Photovoltaic Science and Engineering Conference November 28th - December 2nd, 2011, Fukuoka, Japan

We use the following numbers for module efficiency: 15 % for c-Si, and 10 % for CdTe.

4. LEACHING EXPERIMENTS

At present, there is no specific regulation for the disposal of PV modules within the EU: Manufacturers of PV modules are not obliged to take them back; end- users are not obliged to discard them properly. Thus, PV modules might end up in trash cans, recycling containers for glass, and in building waste, which, for example, is used for the substructure of streets. Modules might also be shredded and simply dumped in normal landfills. Therefore, it is important to know how much toxic material is leached out by water of different pH-value.

In case of c-Si, leaching experiments have not been carried out. In case of CdTe-modules, previous leaching studies [6-8] yielded contradictory results. The company First Solar [6] claims that (unpublished) leaching experiments in Germany did not classify CdTe-modules as hazardous waste. This result contradicts leaching experiments of Sierra Labs, showing that under Califor- nian law, CdTe-modules should be classified as hazardous waste [7]. A third, Norwegian study [8] yielded substantial leaching of Cd under acidic conditions. From standard batch and column tests performed at basic conditions (pH>8), the study concluded CdTe-modules would not be characterized as hazardous waste.

We have carried out worst case leaching experiments on CdTe modules, milled to pieces of 0.2 mm size [9]. Substantial leaching is observed: We find more than 50 % Cd to be leached out within 50 days for pH- values between pH=3.1 and 5. These results raise serious questions about the leaching in normal, “neutral” rain water, which (via the solution of CO2 from the atmosphere) has pH=5.5. More studies are in progress.

REFERENCES

  1. [1]  Collected from annual April issues of Photon International.
  2. [2]  see, for example, www.q-cells.com (solder consists of 62 % Sn, 36 % Pb, 2 % Ag)
  3. [3]  U. Rau, M. Schmidt, Thin Solid Films 287, 141 (2001)
  4. [4]  V. Fthenakis, Renewable and Sustainable Energy Reviews 13, 2746 (2009)
  5. [5]  EU Directive 2002/95/EC, Official Journal L 037, 13/02/2003 P.19 -23
  6. [6]  www.firstsolar.com
  7. [7]  M. Saurat, M. Ritthoff, Appraisal of Laboratory Analyses Conducted on CdTe Photovoltaic Modules, Wuppertal Institute for Climate, Environment and Energy (2010)
  8. [8]  G. Okkenhaug, Environmental Risks Regarding the Use and Final Disposal of CdTe Modules, Norwegian Geotechnical Institute, NGI report No. 20092155-00-1-R (2010)
  9. [9]  R. Zapf-Gottwick, M. Koch, K. Fischer, and J. H. Werner (unpublished)

Fig. 2: Heavy metals in photovoltaic modules. Summing up, yields 1060 t of Pb in a (crystalline Si-) module area of 350 km2, and 570 t of CdTe, distributed over 34 km2 in CdTe-modules. Thus, the 3.4 GW module power of CdTe contain already more than 50 % of the toxic materials of the 53 GW of c-Si.

3. LEGISLATION

3.1 RoHS

Cadmium and lead in electric and electronic equipment fall under the EU-directive “Restriction of Hazardous Substances” (ROHS) [5], which states in article 4: “Member States shall ensure that, from 1 July 2006, new electrical and electronic equipment put on the market does not contain lead, mercury, cadmium, …” On May 27th, 2011, the Council of the European Union revised and clarified RoHS, maintaining an exception for photovoltaic modules.

Without that exception, which is under debate, Cd and Pb would not be allowed in PV-modules: The limiting concentration for Cd are 0.01 % and for Pb 0.1 % “by mass per homogeneous material”. The limits hold for any single substance that could theoretically be mechanically separated - and not for the whole product! In case of crystalline Si modules, the soldering layer for the strings consists of about 36 % Pb; whereas the Pb- content in the screen printing paste is close to the RoHS-limit. Clearly, the compound CdTe with 50 % of Cd atoms cannot meet the RoHS. Also, CIGS-modules with CdS buffers, cannot meet the RoHS. However, CdS in CIGS-modules can be replaced by ZnS (as shown by the products of Solar Frontier), and Pb is not necessary in solder (as not only shown by the world wide electronic and car industry, but also by some Si modules manufacturers). Only the CdTe-technology, i.e. about 5 % of the annual module market, would severely suffer from the strict application of the RoHS. In return, PV modules would really be “green.”

The 21st International Photovoltaic Science and Engineering Conference November 28th - December 2nd, 2011, Fukuoka, Japan

TOXIC SUBSTANCES IN PHOTOVOLTAIC MODULES
Jürgen H. Werner 1,2, Renate Zapf-Gottwick 2, Michael Koch 3, and Klaus Fischer 3

1 Institute of Photovoltaics, University of Stuttgart, Germany
2 Steinbeis Center Applied Photovoltaics, Stuttgart, Germany
3 Institute for Sanitary Engineering, Water Quality, and Solid Waste Management, University of Stuttgart, Germany

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Holistic Approach to Energy—Part 2

SUMMARY

Holistic approach takes an overview of the upcoming changes in the energy industry, considering all the elements that contribute to the common good.

For maximum environmental benefit we analyze an ultimate renewable energy scenario, where all sources of energy are led back to SPV, Solar PV, assuming 10 billion people on earth.

To go with the SPV power source as the primary source of power, we look at in a holistic way how best to store end deliver energy.

Batteries, hydrogen and renewable fuels are compared in transportation, residential and industrial applications.

The role of a renewable hydrocarbon RHC is advanced as the best replacement route for fossil fuels.

The social issues, job creation and capital formation functions are delineated to complete the holistic approach to energy.

HOLISTIC APPROACH

This article is part of a series outlining an energy transformation in the 21 st century, where the world economy is moving from a fossil fuel based energy supply to a clean renewable SPV based energy. In the first article—Trends in the Cost of Energy—the cost evolution of the different energy sources are compared, with the conclusion that by 2020, SPV will be the lowest cost energy generation everywhere in the globe.

In the second article—The Battle for the Sun—the growth forecast of this industry is quantified and the implications of central versus distributed electricity generation is recognised. In this essay, the holistic nature of energy is used to examine the many different consequences for our lives.

Holistic approach to the grand energy transformation from the age of fossil fuels to the age of renewables considers and optimizes all the interdependent elements for the common good. In the process, the environment will be protected, the efficiency of SPV generation and photosynthesis will be maximised and the sharing of the societal benefits in job creation, in wealth creation and the use of the suns energy will be equally secured for all.

A case can be made that in our lifetime this energy transformation from fossil fuels primarily to SPV generation will be the largest job creator. At the end of 2013, the SPV industry has employed 1 million workers in direct jobs world wide, while it installed 30GW of SPV generation. In the same period the combined job creation in the IT industry (Google + yahoo + facebook + twitter + apple + microsoft +Linkedin) a group of IT companies, added 287,000 jobs. To complete the transformation during this century, the industry will grow several hundred folds, creating several 100 million jobs in the process. The change is large enough, so that a structural reorganization of our economy could take place parallel with this change, optimizing job creation and the distribution of the resulting wealth.

I wish to emphasize in the beginning, that this article is from one compassionate observer to all of you compassionate investors, a call for action in times of turmoil, times of danger and times of opportunity. Several parts of this essay are and will be the subject of more scholarly examinations. But the issues at the intersection of technology and compassionate investment are worthy of your attention.

THE LIMITS OF POPULATION INCREASE

As the first step, let us examine, whether available SPV energy generation can support the 10 billion population expected by the end of the 21st century? We also assume that the 10 billion people will all have access to the same amount of energy, what the average person uses in in the US today. This energy is approximately 100,000 kWh/ year/person. This energy includes all personal, commercial, industrial energy use, whether it is in the form of electricity, or fossil fuel. http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm? tid=44&pid=45&aid=2&cid=regions&syid=2007&eyid=2011&unit=QBTU.

As we assume that the primary energy source is going to be terrestrial SPV, we also have to look at how this is going to effect, if any, the food supply. The food energy a person burns is estimated to be 100W. This energy also comes from the sun via photosynthesis, as vegetables, grain, animal meat. Interestingly humans burn about the same amount of energy to maintain life, as used for all other energy, or 100,000kWh/year/person. So the energy plus food will require 200,000 kWh/year/person. However the food creation via photosynthesis is much less efficient than SPV and requires much greater land use. The existing biodiversity of animals, vegetation, foodstuff for animals, and all water use, will not be disturbed as long as the land required for human habitation and use, will be a small part of the global land surface, Let us calculate the required land surface for energy generation.

As shown, energy consumption is expected to be (10 billion, 10(10) persons x 1×10(5) kWh/year/person) = 1 x 10(15) kWh /year. The result of the assumption that everyone will have the same energy consumption as people in the US have today (100,000kWh/year/person direct energy consumption (electricity + fossil fuels). This energy consumption will require an area of 1 x 10(13) square meters, since each square meter on the average will generate 200kWh/year, (assuming 25% PV efficiency, 50% area coverage and 1600 hours of average insolation). The usable surface of the earth is 1.5 x 10(8) square km, = 1.5 x 10(14)square meter. This land area can generate 3 x 10(16) watts SPV electricity (making the same assumptions for the SPV performance as above) Within the accuracy of this estimate, it is safe to conclude that less than 1% of the earth land area is needed to provide all the energy from the sun for the earth with 10 billion population and with all the existing biodiversity.

THE CASE FOR DISTRIBUTED GENERATION

The conclusion of the previous section is that SPV energy as a source of life on earth is three orders of magnitude away from being the limiting factor to the further increase of human population. This is the same three orders of magnitude, as the present day concentration of CO2 in the O2 of the atmosphere.

The existing energy sources, both for electricity and for transportation have been centrally owned and controlled by large corporations. The distributed nature of sunshine, lends itself for a decentralized generation and organization such as represented by microgrids.

The advantages of the micro-grid distributed power are:

> The lowest cost SPV electricity generation is by user owned microgrids, by eliminating two unnecessary middle man, the utilities and the third party lease owners. The savings can be 50%. > The energy supply is not as vulnerable to terrorism, cyber attacks and the elements as the electricity from the central grid is.

> The efficiency of the SPV generation within the micro-grid is about 25% higher than through the grid interactive system and shutting the central grid down, does not shut the SPV down

> Finally tying the SPV generation to large central utilities and third party lease financing companies, we further aggravate the wealth distribution by flowing rent payments from the taxpayers, ratepayers and Main street to the suppliers of capital.

The wealth distribution effect stems from the nature of our political/economic system. This is also the characteristics of large centrally controlled services such as the utilities and the fossil fuel industry. In the US we have installed so far 10 GW of SPV, almost all utility interactive. The owners are either the utilities or third party financiers. The last example is the lease financed residential installations. The average cost of the installed system over the past 10 years was about $6 per watt. Of the $6 per watt, $2 per watt was subsidized by taxpayers (or ratepayers), amounting $20 billion. This $20 billion migrate to the suppliers of capital. As the industry grows in the next decades by 1000 fold, this wealth transfer could run into $trillions.

All the details of financial analysis for a cost effective SPV micro-grid and other estimates can be seen on www.postfreemarket.net.

DIFFERENT STORAGE OPTIONS FOR RENEWABLE GENERATION

With more than 100 GW SPV installed worldwide, the rate of growth of further renewable energy development is definitely limited by a lack of suitable energy storage. To be able to penetrate all the applications now filled by fossil fuels, storage has to be found for at least four different applications; i) satisfy the daily load curve of electricity supply,

ii) solve the issue of seasonal variations of the need for electricity,
ii) find a renewable energy produced fuel for transportation; and
iv) find an efficient solution for delivering heat and satisfy the seasonal variation of the load curve.

Three different technologies for renewable energy storage are examined using the chemical energy storage mechanisms within atomic and molecular interactions. We have the further constraints that the storage has to be compatible with clean renewable energy generation. The storage mechanisms are listed in Table 1). This is not a complete list of viable energy storage schemes. Hydrogen stored in solids, Boron hydride compounds and various metallic solids such as Al and Si are all useable sources for renewable energy storage. In my view,the three most viable schemes presently are listed here.

On the Table (1) below we are listing three different renewable, reversible processes that are under consideration:

A ) The energy stored in batteries,
B ) Hydrogen gas stored in high pressure tanks; and
C ) The energy stored in hydrocarbons or any other oxidizable atoms or compounds and released by oxidizing (burning) the storing materials.

Whatever will end up as the choice of the the storage medium for transportation, can be used also to solve the storage requirements for the seasonal load variation in the stationary application. The holistic approach to energy assumes that whatever storage medium will be selected, it will be created with renewable clean energy, such as SPV.

 

Equations 1A and 1B represent the working of the batteries.. In 1A oxygen is moved from the Nickel (Ni) to the Iron (Fe), with the help of a charging field E in an electrolitic solution. This NiFe battery with proven 30,000 cycles+, is a good candidate for stationary application, to solve the daily load curve variation of microgrid battery storage.

In equation (1B), Li ion is moved from one FePO4 electrode to the other.

Because of its high energy density, Li batteries are employed both in transportation and in some stationary applications.. The Li based batteries are limited by the number of cycles (1000 cycles) they can perform without degradation. There are also serous stability issues. Among the batteries today, really only the Li based batteries can be considered as energy storage for EV.

The second storage scheme, as shown on Equation (2), employs Hydrogen in the Gas form. It is the electrolysis process to generate H(2) by electrolysis of water, using SPV electricity. In this essay we do not consider hydrogen generated from fossil fuels, since the cost of electrolytic H(2) generation is already cost competitive.

PICKING A WINNING TECHNOLOGY FOR EV

 Most of the car companies have started to offer some form of non polluting electric vehicles, EV’s. There is the pure EV, running on batteries as used by Tesla. There is the “Plug in Hybrid” PHV, such as the Prius and several companies offer Fuel Cell based vehicles, FCV, running on hydrogen fuel, as compressed hydrogen.

There is a lot of technology and investor interest in EVs today. Just in Seeking Alpha there are several articles on Tesla each day, with hundreds of comments following each article. The two primary proponents of battery powered EVs are Elon Musk of Tesla and Hans-Jakob Nausser of VW. They are both certain that batteries are the right technology and they just dismiss FCV competitors, such as Toyota.

Our analysis finds FCV fueled by compressed hydrogen and a fuel cell, a compelling intermediate solution until a liquid RHC based fuel becomes available.

Here are the simple calculations for the Tesla battery EV and the Toyota Mirai FCV; In the case of Tesla the battery pack is amortized over its life of 570 cycles or 120,000 miles. For the Toyota Mirai, the cost of the hydrogen pressure tank plus the fuel cell are amortized over the same 120,000 miles.

According to Tesla Specs, 60 kWh battery will go 208 miles = 3.5 miles/kWh. Cost of traveling 1 mile = cost of 1kWh/3.5.
The batteries are warranteed for 120,000 miles/208 miles = 570 cycles.
If the cost of the battery is $500/kWh, the cost per cycle= $0.87per kWh amortization.

We have to add the cost of electricity assumed at $0.15/kWh. Total cost per mile = ${0.87+0.15}/3.5 = $0.29/mile.

Mirai has 300 miles range for the 5kg of H(2). To compare to Tesla, we use 120,000 miles warranty. The 5kg H fuel costs estimated by Toyota, $50 or $10/kg. The cost per mile $50/300 = $0.17/mile. We have to amortize the cost of high pressure cylinder + the cost of FC stack over 120,000 miles. We do not have numbers from Toyota, but from NREL the estimate is $2400, or $2400/120,000 miles, = $0.02/mile.

The combined cost with amortization is = $(0.17 + 0.02) = $0.19/mile.

Using Fossil fuels in an ICE (Cadillac SRX) gives 30 miles/gallon and cost $4.0/30 = $0.13/mile. The energy density in 1 kg of petrol is 44MJ per kg, equivalent of 10 kWh of electricity, or if you use it as heat, it is equivalent to 30kWh. Hydrogen and hydrocarbon based energy storage gives more than an order of magnitude improvement in energy stored in a kg of material, compared to anything batteries can provide. This is why fossil fuels ruled for the last century. Ideally if we can find non polluting fossil fuel equivalents, that can be produced using SPV generated electricity, we have the best solution to renewable storage. That is what the next discussion is about.

RENEWABLE HYDROCARBONS, RHC, OR ELECTROCHEMICALLY PRODUCED FOSSIL FUEL EQUIVALENTS

The fourth column of Table 2, under O(2) RHC, The Renewable HydroCarbons listed is Formic acid, HCOOH. This is the acid the ants produce and it has a vinigary taste. A colleague of mine from RCA Labs, Dr R Williams, about 40 years ago, has patented the electrochemical production of Formic Acid from CO(2) ( http://www.google.com/patents/US4160816.) They also have demonstrated the conversion and measured the efficiency of production.

Figure 3 is the last five steps of the combustion of hydrocarbons, ending in the CO(2) gas. The Williams patent basically teaches us how to make the first step back up on the hydrocarbon chain from CO(2) ==> HCOOH, using SPV electricity.

It certanly is an existence proof, that hydrocarbons can be produced electrochemically. There have been several publications and patents since that time, related to the subject. I know at least of one commercial effort dedicated to the use of formic acid in the renewable energy cycle (MVTG). If RHC is economical, that should be the fuel of choice for transportation. It could be fuel in an FCV or a non polluting combustion engine. Calculations based upon the Williams demonstration as described in the patent, indicate that using Formic acid as a fuel, produced by SPV generated ectricity, will result in a competitive fuel cost in the vehicle with batteries or foosil fuel, with the added benefits of non polluting, no range limitations and the fuel is dispensable in the existing petrol stations.

Reforming on large industrial scale has been done for some time. The most notable process is the Fischer-Tropsch process, that was the primary source of fuel during the second world war both for the Germans and the Japanese. recent calculations indicate that the F-T produced diesel oil can be competitive with oil at a price of $30pb.

Of course there are an infinite number of variations among the hydrocarbons to be designed for RHC. One example is shown on table 1 equ (3), starts with hexane, a liruid hydrocarbon, is degraded (oxidized spontaneously) to an other liquid hydrocarbon in the chain, formic acid, gives up hydrogen and generates -496 kcal/mole free energy. In the reverse process with the use of catalyst and appropriate solvents and added energy in the form of SPV electricity, the formic acid is reformed back to hexane. In the process we are back to the original hydrocarbons again, without any pollution in the cycle.

The primary thought I want to share with the reader, that with the advent of low cost SPV electricity, the equivalent of electrochemically produced fossil fuels have to be looked at. This RHC is also the ultimate fuel for clean EV industry.

CONCLUSION: THE INTERSECTION OF CLEAN ENERGY AND COMPASSIONATE INVESTMENT

A case is made that the age of extracted fossil fuels can be replaced with clean energy consisting of SPV electricity generation combined with RHC Renewable Hydrocrbon storage. RHC is also the optimum fuel for the EV.
To bring back the SPV leadership to the US we have to launch a national focus to:

> Develop the next generation of SPV technology, to go beyond c-Si technology and reach efficiency above 30%. Multi-junnction thin film devices have this capability. This will bring back the full scale job creation of the vertically integrated SPV industry.

> Develop a chain of user owned microgrid franchises with its own independent storage, hooked into the smart central grid through the battery. This will help to resolve the wealth inequality that weighs on the economy. It will also increase the efficiency of SPV and make the energy supply safer from unwanted interruptions

> Develop suitable energy storage to go with the renewable energy supply. As an interim solution optimize high energy density and long lived batteries, but most importantly develop the electrochemical RHC as the most generic solution to EV transportation and the solution to follow both the daily and seasonal load curves.

A compassionate investor will have many opportunities to invest with this holistic approach to energy and collect a fair benefit.

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Nanergy Solar Germany Storage Systems

NSGSS is proposing to establish a battery storage manufacturing and commercialization activity in Senftenberg Germany, to serve the intermittent power generation of the renewable energy industry.

The Charter of NSGSS is to carry out R&D, manufacturing and commercialization activities in battery storage technologies, initially focusing on NiFe and Li rechargeable batteries. This activity will concentrate on finding a solution to insure load following of the renewable electricity generation for the daily and seasonal variation of the residential and commercial users. This could provide for the user a stand alone independent power generation micro-grid, designated by NSGSS the “Sun-owner UPS”

NSGSS proposes to carry out the program in multiple phases:

PHASE 1. Market and install Sun-owner UPS systems with components purchased from third parties. Sales volume 5 million Euros per year. 2014 - 2015.

PHASE 2. Establish a NiFe manufacturing facility for the existing and bank approved technology for 20,000 kWh capacity batteries. These batteries will be sold as part of complete Sun-owner UPS systems, including PV generation, storage and load control and monitoring. We estimate the average selling price for residential use at 12 Euros per watt, leading to the installation of 2MW of PV with 20,000 kWh of batteries, for a total sales volume of 24 million Euros per year. 2016—2017.

PHASE 3. Carry out R&D in parallel with Phases 1 and 2 on next generation of battery technologies. The goal is to complete the development of sealed NiFe batteries, with higher energy density both per weight and volume, and the capability to integrate the NiFe batteries with elements of hydrogen use for the elimination of seasonal variation of the renewable electricity supply (patent pending). During Phase 3, construct the manufacturing capacity for sealed, Hydrogen integrated NiFe batteries with 1 million kWh capacity. The sales volume associated with this manufacturing activity would service 500 million Euros market per year 2016 - 2020.

The space requirement for Phases 1 and 2 is 10,000 square meter and for Phase 3, 100,000 square meter.
The CAPEX for phase 2 is 10 million Euros. The development cost is 2 million Euros. The CAPEX for Phase 3 is 100 million Euros. The jobs created when fully functioning in 2020, are 1000 jobs.

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Water Solubility of Cadmium Telluride in a Glass-to-Glass Sealed PV Module

Abstract

Cadmium Telluride (CdTe) is gaining a substantially increased role in the world’s energy mix. The environmental safety concern of cadmium leaching out of CdTe solar panels has become a very important issue. Our recent study shows that naturally occurring groundwater and rainwater dissolve CdTe at a very fast rate, allowing cadmium to enter the groundwater at concentrations at least four orders of magnitude greater than the EPA allowed limits for drinking water. The study also demonstrates that water travels by capillary action between the various layers in a typical PV module structure, thus leading to delamination and hence contamination by cadmium at an even faster rate than otherwise anticipated. The behavior of the cadmium leaching out of CdTe solar panels makes it imperative not to discard rejected CdTe modules/panels in dumps or landfills.

Introduction

CdTe-based photovoltaic modules have gained a market penetration of approximately ten percent of the existing PV market. In 2010, this proliferation represents an annual manufacturing capacity of about two gigawatts and an installed capacity by the end of 2010 of approximately five gigawatts. Unless further manufacture of CdTe is curtailed, a cumulative installed capacity of about 50 gigawatts is possible by 2020. This increase means that 100,000 hectares or 1,000 square kilometers would be covered with this cadmium containing photovoltaic material. About 5,000 tons of water-soluble carcinogenic CdTe would thereby be spread over the 1,000 square kilometers of land area. Cadmium has been established by several international agencies as one of the most carcinogenic materials. The “Restrictions of Hazardous Substances” Directive (RoHS) was signed by many nations including the European Community, China, Japan, and India [ref. 1]. In the European Community, however, the promoters of CdTe have managed to get an exemption from the Directive for CdTe PV. Some other countries, such as Japan, China, and India, continue to ban cadmium telluride. In Europe and the US, cadmium telluride based PV modules are heavily marketed.

In 2010, for example, the industry sold approximately 2 gigawatts of CdTe based modules. The initial exemption in Europe depended heavily on white papers published in the US by NREL personnel [ref. 2] and some other related institutions, such as Brookhaven National Laboratory [ref. 3]. Those papers claimed that CdTe is not water-soluble. Also, the manufacturers of the modules declared that the installed modules would be dismantled at the end of their useful live (20-30 years) and all cadmium would be subsequently reclaimed. To pay for this cost, the manufacturer sets aside approximately $0.015 per watt [ref. 4]. Keeping in mind the magnitude of the problem and the danger to humans and other living things, we have reexamined these two fundamental assumptions: the water solubility of cadmium from modules, and the cost and responsibility for recycling.

The makers of CdTe photovoltaic modules acknowledge the toxic and carcinogenic properties of cadmium and have therefore promised that when the modules reach the end of their useful life they will de-mount them, pack them, ship them “home” and salvage the cadmium [ref. 4]. Some companies have set up funds which are supposed to cover the cost of doing so even though that cost would nearly equal that of delivering and installing the modules in the first place. History has shown us, though, that such promises, however vociferously advertised, are not always fulfilled, especially when they involve projections of 25 to 30 years into the future. We have therefore examined the possibility that modules will end up in a landfill, broken and exposed to groundwater. We have attempted to answer the question: Under such circumstances, will dangerous amounts of Cd ions leach out of the panels, especially broken ones, to pollute the water table or groundwater?

Some past studies have indicated that such leaching would be minimal, but they used only pure water as the leaching solution [ref. 3]. In the real world, one is likely to encounter acidic leaching agents such as groundwater or acid rain. The leaching protocol adopted during experimentation addressed the basic problem of how to take into account the conditions of the broken panels that would be anticipated in a landfill. The idea was to “break” the panels as realistically as possible to prepare the samples. Breaking them by impact would closely simulate the “real world” but the breakage patterns would be inherently random and therefore not precisely reproducible from piece to piece nor in successive experiments. On the other hand, slots cut through the front glass with a diamond saw are reproducible, but not entirely realistic.

Our investigation therefore included two independent studies, both using approximately 2- inch (50 mm) squares taken from a “First Solar” CdTe module. One set of samples was broken by impact while the other set was slotted with a saw. All samples were kept at normal room temperatures (20 to 25°C) throughout the leaching process. The first study examined five pieces broken by impact. We struck each square a single blow on the front surface with a 5-ounce cross-peen hammer to induce the kind of breakage that would likely occur when modules are thrown into a landfill. Each sample was then submerged in about 150 ml of leaching solution in a covered 8-ounce Mason jar. One jar contained pure (DI) water. The other four samples were submerged in citric acid-based buffer solutions with pH values of 3, 4, 5, and 6, respectively. These were intended to span the range of acidity one might encounter in actual groundwater as rain seeps into the pile of discarded modules. Initial ICP spectrometry analyses (blanks) of the leaching solutions showed no cadmium with a MDL of about 3 ppb. After 32, 120, and 206 days of submersion we analyzed each solution for cadmium by ICP emission spectrometry. We also tested the pH of each buffer solution at the end of 206 days and found it still within 0.1 pH unit of its nominal value. The pure water, lacking any buffer, had acquired a final pH value of 6.4. The sample in pure water appeared to suffer no additional destruction beyond that caused by the hammer blow, but those in the more acidic solutions underwent increasing degrees of delamination with decreasing pH values. In fact, the samples in pH 3, and 4 solutions were completely delaminated with all of the front glass fragments having settled to the bottom of the jar, and all the active layers were removed. Only the laminating polymer remained attached to the back glass. The samples in pH 5 and 6 solutions had at least 75% of their front glass area delaminated and the underlying active material gone. The analysis results are shown in the accompanying graph (Figure 1), which plots cadmium concentration of the solutions versus time for each pH value. Concentrations are in parts per million (mg/l). For reference, the maximum level of Cd permitted by the EPA in drinking water is 5 parts per billion (5 micrograms/liter). It is not clear why for pH 4 the final (206 days) reading is less than the previous one. One possibility is that the cadmium may not have distributed itself uniformly throughout the solution. Another possibility is that there may also have been some adsorption on the EVA plastic after the sample delaminated.

The leaching solutions, especially the more acidic ones, show cadmium levels 4 orders of magnitude greater than the EPA limit. Thus, even if this experiment does not mimic the conditions in a landfill perfectly, it is hard to argue that the cadmium in CdTe modules is safe against polluting the environment. The other set of tests also used squares from a “First Solar” module approximately 50 mm on a side, but these were carefully cut through the front glass with a diamond saw to make six slots each approximately 25 mm long. All the samples had the same pattern as shown in Figure 2. Two such samples were immersed in buffer solutions with pH values of 4 and 10, respectively. The pH 4 simulated acid rain, as in the broken-sample tests, while the alkaline solution simulated the properties of some groundwater that passes through calcium salts. The third sample was put into rainwater collected during a storm on 3 June 2010 in Washington, DC, which had a measured pH of 6.9 (essentially neutral). All three samples were kept in plastic containers with airtight lids and maintained at room temperature. After 7, 10, 14, 21, 30, 45, and 64 days, we withdrew approximately 10 ml specimens of the leaching solution for analysis by DCP-AES to determine the Cd concentrations. To maintain constant solution volume, each sample withdrawn was replaced with 10 ml of fresh solution.

The results of the analyses are summarized in Table 2, and graphed in Figures 3 through 5. Comparing results, at 64 days the broken sample in pH=4 solution had about 85 mg/l Cd, while the scribed one had 54 mg/l. The difference might be explained by noting that the broken sample had a much closer pattern of cracks so as to expose more of the active layer to the leaching solution. Both, however, had Cd concentrations four orders of magnitude above the EPA limit for drinking water. What is even more striking is that the sample in the alkaline solution with a pH of 10 reached a concentration of 110 mg/l Cd after 64 days. According to NREL’s Cadmium Telluride Fact Sheet [ref 5], CdTe PV modules contain between 3 and 10 grams of Cd/m2. The nominal value is 7. So a 5×5 cm (25 cm2) sample would contain about 17.5 mg of Cd. If all of this dissolved in 0.15 liter of solution the concentration would be 117 mg/l. The final concentrations of cadmium given in Table 1 show that at least the majority of this element did leach into solution for the jars with pH values of 3, 4, and 5, and that a significant fraction leached out at pH 6. We were not able to measure the original amounts of cadmium in the samples, but based on the nominal value it should be clear that substantial amounts of the element leach out effectively in all but the pure water. One observation that supports the conclusion that most of the cadmium is being leached is that the concentration-versus-time curves tend to level off after 60 to 100 days. Therefore, it is very probable that in the real world virtually all the cadmium will be leached out within the first year after the modules are dumped.

Conclusions

If damaged, CdTe photovoltaic modules are exposed to essentially pure water, the leaching of cadmium is small but as the pH diverges from 7, leaching effects increase by a factor on the order of 100. Thus, when such modules are discarded and thrown into real world dumps or landfills, they will constitute a serious pollution hazard from leached cadmium. If CdTe were the only practical photovoltaic technology, we might have to accept the environmental risks, but such is hardly the case. Several other quite acceptable technologies exist without the presence of carcinogenic components.

References

1. Restrictions of Hazardous Substances (RoHS), Directive 2002/95/EC of the European Parliament and of the Council of 27 January 2003 on the restriction of the use of certain hazardous substances in electrical and electronic equipment, http://www.rohs.gov.uk.
2. Zweibel, K., Moskowitz, P., Fthenakis, V. “Thin-Film Cadmium Telluride Photovoltaics: ES&H Issues, Solutions, and Perspectives,” National Renewable Energy Laboratory, NREL/TP-520-24057, February 1998.
3. Fthenakis, V.M., “Life cycle impact analysis of cadmium in CdTe PV production,” Renewable and Sustainable Energy Reviews 8 (2004) 303–334, Elsevier.
4. http://www.firstsolar.com/en/recycle_program.php.
5. Zweibel, K. and Fthenakis, V., “Cadmium Facts and Handy Comparisons,” National Renewable Energy Laboratory, http://www.nrel.gov/pv/cdte/pdfs/cdte_factsheet.pdf.

Table 1
Cadmium concentration in ppm (mg/l) of broken leaching samples.

 

Figure 6. Broken samples after 206 days of soaking. Buffer pH values as written.

Jonathan Allen and Zoltan Kiss,
Amelio Solar, Lawrenceville, NJ 08648
and
Sezhian Annamalai, Ian L. Pegg, and Biprodas Dutta,
Vitreous State Laboratory, The Catholic University of America, Washington, DC 20064

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What is PFM?

Post Free Market—PFM—is part of a larger networking effort I am initiating at my young age. In this present effort, I am asking you to read a very learned economic essay published in Seeking Alpha, that I also publish in. The essay was written by a group of professors from Holland, Shareholders Unite, who are worth following.

I think of them as a European bit more conservative “Keynesian”  Paul Krugman: http://seekingalpha.com/article/2831296-the-day-the-central-bank-powers-came-to-an-end?v=1421969328. At the end of this essay, there are a number of comments (at the time of writing this email there were 72 comments). The very last comment was by me, under Zoltan Kiss. Several comments before that, there was an other comment by me, answered by the Author. My last comment, he did not answer.

I hope this is the beginning of a discussion, which in a humble way will also be the beginning of finding solutions, and help establish first of a franchise, SSEC. This is also the purpose of the  “postfreemarket” web site. Any comments you want to send to the web site, please do so.Thank you and Welcome to our compessionate enterprise SSEC, to create jobs for us all who are in need to work!

Respectfully, Zoltan Kiss

  • an 21, 2015. 03:45 PM
  • The Day The Central Bank Powers Came To An End [View article]

    Shareholders unite

    Help.
    I have always enjoyed your articles on any topics, even if I did not fully understand.

    I saw the consistency of your arguments and in any specific discussions with the commenter I found your side of the arguments more compelling.I am not an economist. Also understand that all professions language is a conspiracy against layman. At best I am a layman. Help me with some of my questions, just because there are no bad questions. The first two of my many questions/answers.

    The reason there is high unemployment, because there are no jobs. We have enough of our human necessities covered, food, shelter, clothing and all the new non-necessities, iPhone 5,6,7 etc are made by robots and due to the wealth distribution, fewer and fewer people can buy them. In the jobs that are created, mostly service jobs, some of my engineer friends are flipping hamburgers at McDonald’s, or are driving taxis.

    Second question:
    Why should the 1% invest their money to create jobs, when you can only make real money with money? As Forbes pointed out in one of their articles, the upper 100 billionaire in the US, increased their wealth by about 20% each year, creating more wealth in the last two years than the total GDP growth during the Obama years in the US. Than someone pointed out that wealth created by these 100 billionaires is not even counted in the GDP.SU, I know you can say this has nothing to do with the topics you discussed.

    But please you tell me. Your article and my perceived reality must intersect. How? Where?

 

  • 20 Jan, 05:20 PMReply! Report AbuseLike0

  • Shareholders Unite

    , Contributor
    Comments (3172)| Following| Send Message

    Author’s reply » Robots, AI and cheap overseas labor do create problems for the labor market but the past 200 years show that productivity increases normally translate into higher earnings, profits, or both, which increases markets for goods and services that are not so easily automated or shifted abroad.

    This time the negative effects might well balance, or even outweigh the positive effects though.

    Wealth is not counted in GDP, only income is. I think one of the basic problems is inequality, which shifts money from low to high savers and removes incentives to invest in additional productive capacity. High saving countries export their problems to the rest of the world by exporting surplus savings and importing demand (these are flip sides of an accounting identity, as it happens).

    Have to run now, but feel free to ask additional questions

 

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  • The Day The Central Bank Powers Came To An End [View article]

    SU
    Thank you for rewarding my unprofessional questions with serious answers. You also have emboldened me to ask the same two questions in different forms.

    If we define unemployment “People who want to work, but either can not find a job, or could only find an inadequate part time job, or are working full time in positions that neither satisfies their financial needs, nor does it utilize their education and work capacities”….. I estimate that number in the US is about one third of the work force, or about 60 million people (justification of this number some other time).

    From experience in Germany, (from the time when East Germany was absorbed in the West), the cost of creation of one sustainable job was about 1 million Euros.

    The cost of creating 60 million jobs in the US, $60 trillion, is just not within the capabilities of the present capitalist system. To talk about the various economists, their theories etc. I feel is not addressing the real issues.On the second question. I also ran companies for a time. I understand the difference between income and shareholders value, “assets”. But we could only increase shareholders value from operations, by bringing profits after taxes down to assets.

    The 100 US billionaire assets were much greater (5 times the 20% change in assets).

    We are only talking about the change in assets in the last two years, which presumably were their after tax profits, so it should have shown up in the GDP, OK not as assets, but as income. The example in question; the 100 US billionaire have earned 20% per year over 1.48 trillion assets, or about $600 billion over two years, which is comparable to the growth of the GDP throughout the 6 years of the Obama presidency. What gives?

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Holistic Approach to Energy—Part 1

 A)  Battery storage. Use as the example Tesla model S
 Parameters
  • Powertrain
  • Model S is a rear wheel drive electric vehicle. The liquid-cooled powertrain includes the battery, motor, drive inverter, and gear box.
  • 60 kWh microprocessor controlled, lithium-ion battery
  • Three phase, four pole AC induction motor with copper rotor
  • Drive inverter with variable frequency drive and regenerative braking system
  • Single speed fixed gear with 9.73:1 reduction ratio
Electric motor 310 kW (416 bhp), 600 N·m (443 ft·lb), Three-phase AC induction motor
Transmission 1-speed fixed gear (9.73:1)
Battery 60 or 85 kWh lithium ion[4]
Electric range
  • 85 kWh
    265 mi (426 km) (EPA)
    310 mi (500 km) (NEDC)
  • 60 kWh
    208 mi (335 km) (EPA)
    233 mi (375 km) (NEDC)
Plug-in charging
  • 11 kW 85-265 V onboard charger for 1ϕ 40 A or 3ϕ 16 A [5] on IEC Type 2 inlet[6]
  • Optional “Twin Charger” for 22 kW for 1ϕ 80 A or 3ϕ 32 A[5]
  • Optional Supercharger for 120 kW DC offboard charging, adapters for domestic AC sockets (110-240V)
60 kWh will go 208 miles = 3.5 miles/kWh
cost of travelling 1 mile = cost of 1kWh/3.5
from the warrantee, the batteries are warranteed  for 120,000 miles/208 miles = 570 cycles
If the cost of the battery is $500/kWh, the cost per cycle= $0.87per kWh amortisation.
We have to add the cost of electricity assume $0.15/kWh, total cost per mile = ${0.87+0.15}/3.5 = $0.29/mile
 
B)   Toyota  mirai FCV, high pressure hydrogen fuel
Powertrain
Electric motor fuel cell-powered 113 kW (152 hp) 335 N·m (247 lbf·ft)[1]
Battery 1.6 kWh Nickel-metal hydride[2][3]
Range 480 km (300 mi) (Toyota)[4]

Fuel cell system with an output power density of 3.0 kW/L

The FCV range is expected to be approximately 700 km (430 mi) under Japan’s JC08 test cycle.[15]
The exhaust  H2O or water volume is 240 mL per 4 km running.[35]
the stack’s world-leading power output density of 3.1 kW/L
The tanks store hydrogen 70 MPa (10,000 psi). The tanks have a combined weight 87.5 kg (193 lb).[1][34]
The electric traction motor delivers 113 kilowatts (152 hp) and 335 N·m (247 lbf·ft) of torque. The Mirai has a 245V (1.6 kWh) sealed nickel-metal hydride (NiMH) traction rechargeable battery pack

The front tank holds 60.0 liters, the rear tank, 62.4 liters. Total hydrogen storage mass is about 5 kg.

http://www.thegreencarwebsite.co.uk/blog/index.php/2014/08/14/toyota-admits-fuel-cell-cars-will-cost-more-to-fill-up-than-petrol-models/

They estimate $50 for a full tank of H2 and 300 miles range. Compare this with a Prius, which is cheaper, can refuel at any gas station, has a range of 595 miles, and the gasoline would cost $18 to go 300 miles. With competition like that, the FCV could be a difficult sell, even in Japan.

Using the data above.
Mirai has 300 miles range for the 5kg of H. to compare to Tesla, we use 120,000 miles warrantee
The 5kg H fuel costs estimated by toyota, $50 or $10/kg. to go one mile has a fuel cost of $50/300 = $0.17/mile
We have to amortize the cost of high pressure cylinder + the cost of FC stack over 120,000 miles.
We do not have numbers from Toyota, but from NREL the estimate is $2400, or $2400/120,000 miles, = $0.02/mile
total cost of travel $0.17 +$0.02 = $0.19/mile
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The Battle For The Sun

Who Will Collect The Rental Income For Solar Energy In The 21st Century?

Summary

  • In the “Age of Solar 1,” Solar PV SPV has passed 100GW installed generating capacity worldwide and is becoming a real contender as the primary replacement for fossil fuels.
  • In the “Age of Solar 2,” the industry is forecast to grow more than 1000 fold in this century, and in the process, generate over 200 million jobs.
  • SPV generation is twice as expensive in the US as in other developing countries. If this does not change, it will make our manufactured goods and our country less competitive.
  • In the battle for the sun, the collection of the solar rent is moving from the utilities to third party lease companies as the representatives of financial institutions.
  • For distributed SPV future, the “Sunowner” with batteries is the model. The user/owner does not pay rent for sunshine, nor does he need subsidies for SPV electricity generation.
 “Let there be light,” said the Lord. And there was light and there was energy, and there was solar energy for all of us. You and I are born equal under the sun, with equal rights to the use of our sun’s energy. Unless the path in the delivery of solar energy changes, some of us will be making rent payments to some of our neighbors for the use of solar electricity for the rest of our lives, making the wealth divide even more isolating. This article attempts to throw some light on this reality.

The fossil fuels that accumulated over 4 billion years of photosynthesis are being exhausted. At the present rate of use the question is not if the end comes, but when. If there is a lower cost alternative to electricity generation and other forms of energy usage to fossil fuels such as Solar PV (SPV), it is our responsibility not to burn fossil fuels any longer than necessary, since fossil fuels are the source material for many other vital uses in life. Whatever will be the replacement for fossil fuels, its renewable energy comes from the sun. There are several manifestations of the sun’s energy that can be converted into electricity and other useful energy, but the most direct conversion is photons into electrons via Solar Photo Voltaic or SPV.

I have spent a half of a century in the R&D and commercialization of SPV. Hopefully, the reader can forgive me some bias toward this field. In my advanced age, I do not forgive myself any known distortions in presenting to the reader what I see as the possibilities of SPV future. This article was planned within my technological competence to examine the technological issues determining the future. It became clear very quickly, while technology is the basic determinant of future energy, the real battle for the sun is more an economic political battle for the very nature of our existence. Changing from fossil fuels to SPV has an effect comparable to moving from agriculture of the Middle Ages to the Industrial Age. About 25% of the GWP (Gross World Product) is direct energy generation but everything else is affected indirectly through the cost of energy. This changeover in energy could be a rare opportunity to introduce seamlessly, without violence, structural changes to our free market economy and help reduce the economic schism of our society.

This article is based on the basic prediction developed in a previous publication in SA that the lowest cost electricity generation will be SPV by the end of this decade. It is important that we get this right, since the magnitude of the changes involved can affect the structure of the whole economy and change the quality of our lives. In this spirit I invite the readers of Seeking Alpha to comment on any aspect of this paper, especially in designing a structure for an energy future where SPV is likely to play a central role.

The Age of Solar 1

In 2013, the developments of the past 50 years culminated in a worldwide cumulative SPV electricity generation capacity of 100 GW. Someone aptly called this first 50 years the age of Solar 1.

Some of the highlights of the age of Solar 1 include:

  • Development and commercialization of crystalline Silicon c-Si technology close to its maximum theoretical efficiency of 22%.
  • Development and commercialization of thin film based PV technologies, including amorphous Silicon, a-Si, Cadmium Telluride, CdTe, and Cupper Indium diSelenide, CIGS.
  • Multi junction materials for space application reached over 40% efficiency. These devices are also the basis of high efficiency concentrating PV, CPV products.
  • Cumulative installed capacity of 100 GW of SPV electricity generation was reached.
  • The non-subsidized cost of SPV electricity has fallen to under $0.10 per kWh in areas of greater than 2000 hours of insolation and in selective countries.
  • Past research indicates the direction of further improvements in PV materials and their efficiency as to how to reach generation cost of SPV electricity under $0.03 per kWh. This involves the use of multi junction thin films.
  • The most important technological/economic challenge became obvious from the German experience. The installed SPV capacity has reached the limits, where any increase of further renewable capacity without storage will actually decrease the value of the already installed generation. Focus on large scale battery storage has become essential to the future growth of the SPV industry.

The most painful conclusion from past experience is the overriding role of available capital, confirming once more that vision without money is hallucination. The same capital also insures the continued movement of wealth to those who hold the capital.

The age of Solar 1 has shown the importance of a number of other building blocks of great importance to the industry; these are “job creation,” “the right way to use SPV,” “the dark side of SPV,” and the “battle for the sun.” While the present article focuses on “The battle for the Sun,” the author is also preparing publications on the other three topics.

Job Creation

SPV technology was born from the necessity of survival in securing an alternate energy source to the dwindling fossil fuel supply. It is an additional welcome benefit that SPV does not produce CO2. In our jobless economic recovery, an equally important role is abundant job creation by SPV. 1 million workers were employed worldwide in 2012 in the SPV industry. The US employment in SPV at the same time was 120,000 workers. Most of the US PV jobs are associated with installation and project financing. Many other aspects of job creation in the PV industry associated with manufacturing are smaller in the US, since those industries moved elsewhere. All efforts should be made to bring back PV module component manufacturing and manufacturing equipment assembly to the US, to maximize the job creation capacity.

How To Best Deploy SPV

The evolving SPV industry did not develop, as one would have expected, providing energy security and utilizing the inherent modular nature of the technology. When the industry started, we the researchers proudly declared here is high technology for the “have nots.” It did not turn out that way. Instead in the developed world, large centralized utility interactive PV fields dominate over 90% of the PV market with several undesirable consequences:

  1. When the grid is out, your PV generated electricity is wasted, thrown away. (We have at home a 10kW SPV field, but during Hurricane Sandy, we had no electricity of any kind for a week.)
  2. Instead of generating the SPV electricity locally, we wheel it sometimes 1000 miles to the user, incurring substantial grid losses.
  3. The utilities and the industry advanced the notion that instead of local storage, we must stay with central utility controlled power and let the grid be our storage.

The awakening opposition of the utilities to SPV can also characterize the change to the age of Solar 2. The utilities, while they had the chance, did not invest aggressively in PV projects, letting “third parties,” including financial institutions, take over this role. Now with the emphasis on distributed “rooftop solar,” they suddenly realize that they may have lost the greatest opportunity in the coming shift to renewable electricity generation.

Distributed residential and commercial rooftop installations are becoming more fashionable, but here again for the time being the utilities control the delivery of SPV electricity, through grid interactive inverters without any local storage. Nonetheless, the mix of central utility SPV to distributed SPV is changing. In the coming age of Solar 2, the percentage of distributed solar will increase.

The Dark Side Of SPV

In the age of fossil fuels, we have burned a lot of carbon containing compounds, generated a lot of CO2 and contaminated our atmosphere. This contamination is spreading beyond geographic borders carried by winds around the globe. The darkest side of the SPV industry is the potential contamination of our local fresh water tables and our land by the large-scale installations of toxic and carcinogenic SPV materials in our back yards. We are still at the beginning of the truly large-scale installations and commercialization of SPV; we must put regulations in place now that prevent pollution. We cannot allow the replacement of atmosphere contaminating fossil fuels by land contaminating renewable energy. An appropriate and adequate control of the PV industry enforcing environmental safety should be the first order of business.

The Battle For The Sun In The Age Of Solar 1

In the battle for the sun during the Age of Solar 1, the utilities definitely controlled the industry and controlled the solar rent, whether it came in government subsidies or in other forms of taxpayers’ or ratepayers’ obligation. In the same period, 100GW SPV installations were completed at the cost of $0.5 trillion. Of this amount, less than half has gone for hard costs to manufacturers and installers and the other half, containing most of the subsidies, has gone to large scale project owners and project financiers. Most of the manufacturers and installers are bankrupt or out of business, while the capital providers’ wealth has increased substantially.

(click to enlarge)

Figure 1

A further distressing consequence of the past deployment of SPV has established a substantially higher cost industry in the US than the rest of the world. A recent study (Figure 1, Table 1) funded by the DOE attempted to analyze the reasons for the substantial cost difference. While this specific detailed study was carried out in the US for 2011, the ratio of cost difference remained the same for 2012 and 2013 (see Table 1). The large difference between the cost of SPV in Europe and the cost in the US is designated by the DOE study as “soft costs.” The hardware costs are essentially the same everywhere; there is some difference in the cost of labor compared to China, but not compared to Europe. Most of the soft costs really can be explained as the added overhead of the third party financial leasing company that has been interjected into the marketing chain, added to it the cost of money through a number of cumulative financing steps. In any case, the profits associated with the soft costs do not stay with companies manufacturing and installing hardware, but go to shareholders, banks and lenders.

In the first 50 years of the history of SPV, the utilities have collected most of the rent payments for SPV electricity. Through the third party rooftop leasing model, the rent collection for SPV electricity is shifting to the big banks and Wall Street.

Comparison of different SPV installed system costs:

(click to enlarge)

Utility US Utility Germany Without battery Sunowner
($/W) US *rooftop lease US rooftop purchase German rooftop purchase Rooftop owner with storage
2013 price 2.40 1.35 5.50 4.50 2.30 5.00
2012 price 2.80 1.85 7.90 5.87 2.62
2011 price 3.50 2.20 8.50 6.19 3.00
2010 price 5.00 3.20 9.65 6.91 4.25

Table 1

The Age of Solar 2

The Magnitude Of The SPV Industry - The Solar Prize

In estimating the magnitude of the SPV industry in the 21st century, this article uses several forecasts. My previous SA article, “Trends In The Cost Of Energy”, linked above, outlines a cost evolution of solar PV, according to which by 2020, SPV generated electricity will be the lowest cost electricity generation at below $0.05/kWh. In the same article, the route to this cost is also outlined, by promoting multi junction thin film PV devices.

From the other side of forecasting, we look at the forecasts of the IEA, Shell Oil and Greenpeace for the magnitude of the SPV industry in the 21st century.The industry growth actually surpassed all three of these forecasts between 2000 and 2013. IEA numbers were farthest from the actual growth, missing by a factor of 10.

For the second half of the 21st century, IEE predicts 8,000 GW, the “Ocean” branch of the Shell Oil study (Figure 2) predicts 60,000 GW, and the Greenpeace forecast comes in at 100,000 GW of SPV in the energy mix by 2060.

On Figure 2, the Shell (NYSE:RDS.A) (NYSE:RDS.B) forecast shows a 37.7% penetration of solar of the total energy mix at the end of the century. The Shell forecast for 2060 for SPV penetration is 25%, or 209.6 EJ per year. This energy forecast per year converts into 100,000 GW SPV cumulative electricity generation, which is within the range of the Shell forecast. This is the number this article will use as the magnitude of the industry to be established in the next 50 years. This is a 1000 fold increase compared to the installed capacity in 2012.

(click to enlarge)Figure 2

The economic value of this cumulative industry, if we assume $1 per watt installed system cost on the average, is $100 trillion. This $1 per watt cost is a reasonable estimate, considering that in 2014 utility scale SPV is being installed in Europe at 1 euro per watt ($1.35/W).

The growth of the industry is shown on Figure 3. This graph was prepared by the author, starting with historical numbers prior to 2014, and ending up in 2060 with the forecast of the Shell study. Between 2014 and 2060, 20% growth was assumed. The graphs combine three curves. On the logarithmic scale, the cumulative installed capacity is shown for the world (green graph) and the US (blue graph). The S curve (red graph) on the linear scale (right) is representing the annual US installed capacity of the SPV industry in the 21st century.

(click to enlarge)

Figure 3

The growth of the industry in the past decade in different geographic regions ranged from 20% to 100% per annum. The 2014 growth worldwide is expected to be 48 GW per year or 36%. The cumulative installed capacity growth spans six orders of magnitudes on the logarithmic scale, going from a $1 billion value in 2002 to over $100 trillion value for the cumulative installed capacity during the first 60 years of the century. Beyond 2060 we assume a linear growth of 3% per annum, (as forecast in the Shell oil report). In addition to this 3% increase in the energy consumed, an additional 4% replacement business will have to be serviced, going with a 25 years amortization of both the SPV power projects and the component manufacturing facilities. For the US, this converts to annual 1200 GW of both component manufacturing and power project installation. This is the basis of a century of sustained employment and required investment. Extrapolating from the experience of the age of Solar 1, a worldwide SPV industry in 2012 employed 1 million workers to manufacture and install 35GW of SPV with an employment creation of 29,000 jobs per GW. The graphs of Figure 3 forecast about 30 million jobs for the US and over 200 million SPV jobs worldwide. Before this development can happen, several serious obstacles have to be overcome.

The Technical Challenges Of Solar 2

A) Further cost reduction of SPV modules

The most important goal is to reduce further the cost of SPV generated electricity from the present $0.10 per kWh by an additional factor of 3 to below $0.04 per kWh (in areas of insolation of 2000 hours). This cost reduction is feasible based on past research. There are several potential avenues pursued by different groups. The author believes that multi junction thin film device is the route to lowest cost with least resistance to achieve the goal of greater than 30% SPV conversion efficiency. This will result in a module manufacturing cost of under $0.3 per watt. The scientific talent and political will together with financial commitment has to be mustered to pioneer this development. Certainly the scientific talent is here in the US to do the job, (some of it unemployed), but due to lack of financial commitment, the first generation SPV technology c-Si manufacturing today is in China. We hope this will not happen for the next generation SPV technologies.

B) Energy storage

A common view advanced in the energy industry that there is no suitable storage technology to go with solar or wind power. Certainly present battery technology can go a long way to solve this problem. The table below shows a comparison among the various types of rechargeable batteries (see Table 2, prepared by the author). The two battery technologies most used today are Lithium and Lead acid.

Table 2

Type of battery Lead acid NiMh Lithium NiFe
Wh/kg 35 60 200 50
Wh/liter 65 230 300 150
Power W/kg 180 500 1,500 100
Cycles 800 1,500 1,000 10,000+
Initial Cost $/kWh 200 600 500 250
Levelized life $/kWh 0.50 0.50 0.50 0.025

There are several versions of Li batteries, some used in electric vehicles. From the table above, one can see the parameters. The Li batteries have the highest energy densities, but their drawbacks are life cycle cost and they can explode. Lead acid batteries are of more moderate cost, but are toxic. The oldest battery technology developed by Edison around 1900 is NiFe, needs a new look. Advantages of NiFe batteries are: i) there are no toxic or carcinogenic materials in the product, ii) the battery is deep discharge capable, iii) it is not damaged by overcharge or over discharge, iv) the battery has a very long life, virtually indestructible. The life cycle cost of NiFe batteries, the cost of storing 1kWh of electricity, is about 2.5 cents per kWh. With further optimization, NiFe battery can provide acceptable storage costs.

C) Present US deployment of SPV is too expensive

Some of the flaws of SPV deployment have been discussed. We have also noted that looking ahead, the rooftop SPV installations increase compared to utility scale projects. The large majority of this installation is done by third party leasing companies. A recent SA article and associated comments succinctly analyze the case of the largest leasing company, SolarCity (NASDAQ:SCTY). Unfortunately, all these rooftop installations continue to use utility interactive inverters, keeping the fatal flaw of wasting SPV electricity when it is needed most. As can be expected the cost of the leased systems is substantially higher than the purchased systems. If we look at for example 2012 prices, (Table 1) US rooftop leasing cost is three times what the same rooftop costs in Germany. As the percentage of SPV in the energy mix increases, the cost of US made goods will have to carry this unnecessary higher energy cost, making US goods not competitive.

D) The guidelines for an optimum residential SPV system

In an ideal, socially just world, what would be the best deployment of SPV generation?

  1. The user owns the generating equipment. The “Sunowner” (SO) becomes the user/owner’s SPV stand-alone power station, UPS.
  2. SO generates SPV electricity when the sun shines with least losses.
  3. SO has local storage (battery or other) so that electricity is also available when the sun does not shine.
  4. SO becomes part of an existing smart national grid, connected and separated through the batteries from the grid, either contributing to the grid when the user has excessive stored energy, or taking from the grid when his stored energy is inadequate. There is no feeding the UPS AC power back to the grid.
  5. The user owns his generating equipment, does not pay rent or tariffs to anyone for the SPV electricity generated. There is no need for any subsidies in the form of feed in tariffs or net metering. The home generated electricity does not even has to show up on the utility meters.

To bring about the world of “Sunowners,” there has to be adequate affordable private or public capital so that the user can take out a loan if needed to purchase his SPV generator.

Can The Economy Generate Enough Capital To Change Over From Fossil Fuels To SPV?

To answer the above question, we will estimate the cost of conversion to SPV and compare it to the cost of staying with fossil fuels.

The US annual electricity usage is 4,000 billion kWh {4×10(12)} kWh. If this energy is generated entirely by SPV, assuming an average insolation of 1500 hours and 80% overall efficiency, we would have to build 3,400 GW cumulative SPV generation capacity to replace the presently existing fossil fuel and nuclear-based US capacity. Furthermore if we go to an entirely SPV generation, we would have to install at least 2,000 billion kWh of storage capacity.

According to Figure 3, we start with the existing 10 GW US installed SPV capacity in 2013 and with 20% annual growth rate, we reach 1000 GW capacity by 2040. Assuming an installed cost of $1 per watt between now and 2040, the 1000 GW of SPV will cost $1 trillion, or an annual investment of $40 billion. To replace fossil fuels on this scale, we have to add battery storage. If we take California as an example with its energy use profile, for every kW of SPV, we need to add 4kWh of storage. NiFe batteries, at a cost of $250 per kWh, would double the installed system cost to $2 per watt, requiring an annual investment of $80 billion per year. While this is a sizable amount, it certainly is not an obstacle for a country with $15 trillion economy.

As we further expand beyond 2060 and reach the 1200 GW leveling off on the S curve, we reach the annual production valued at $1 trillion per year; if batteries are also included, $2 trillion per year. This is 13% of the US GDP today. Our actual energy costs using fossil fuels for 2014 are estimated over 20% of GDP or $3 trillion. If fossil fuels remain dominant to the second half of the century, this cost will definitely increase substantially.

Are There Any Materials Limitations That Would Prevent Conversion To SPV?

To answer the above question, we have to look at the rare materials like Cd and Te in CdTe, In and Ga in CIGS. There are several material combinations that can replace the ternary compound materials, e.g., Sn and Zn. The other rare materials used in batteries are Ni in NiFe batteries and Li in Lithium batteries. The natural abundance of these materials in the earth’s crust is very large compared to what we are likely to need for SPV generation. The problem is the rate of mining and extraction existing today is only adequate to reach a growth rate of about 200 GW per year. This growth is expected to be reached before 2025. For certain materials like Te in CdTe, the available material is only adequate for 5GW production per annum. An other example is Li for batteries. Recently, Tesla (NASDAQ:TSLA) announced plans for a 30GWh Li battery factory. For only that to happen, the amount of Li extracted would have to be more than doubled compared to today. It is important to emphasize again that this is not materials limitation, but the rate of extraction, which has to be addressed.

Concluding Remarks

In the Age of Solar 2, the SPV industry has reached cost parity with existing competing technologies of electricity generation. The majority of fossil fuels for energy generation can be replaced with Solar PV in the next 50 years. This involves constructing over 100,000 GW of new SPV generation. The capital required is reasonable for the world economy, but the extraction of key materials has to be increased substantially to meet the needed growth targets.

The SPV industry with the unprecedented growth will surely be one of the most exciting investment opportunities of the next decades. The required increase in the extraction of several limiting materials mentioned above should be looked at. Most importantly, shortages for SPV are likely to occur for In, and Ga and for battery materials Li and Ni.

The c-Si manufacturers have used up much of the excess inventory and many of them are looking forward to renewed growth and profitability. SunPower (NASDAQ:SPWR) has a solid technology and game plan. Many of the Chinese c-Si players will show strong growth.

Thin film SPV technology will reemerge as the important alternative for further cost reductions. CIGS and other multi junction thin films such as Hanergy (OTC:HNGSF) in China and Stion in the US warrant attention.

The whole industry of residential and commercial stand alone UPS installations, the “Sunowner” model, are waiting to be funded. At this time, there are no established public companies on the market, but there are a number of small private companies are starting to offer the stand-alone systems with batteries for the residential market.

On the negative side, as the education of the public increases about SPV, the inherent disadvantages of the third party leasing model will limit their expansion. There are a number of companies in this category, the largest public companies are SolarCity, followed by SunEdison (NYSE:SUNE). Also a number of private companies backed by large financial institutions like Vivint Solar, Verengo, etc., belong to this group. These companies not only bring with them a high priced US SPV industry, but they lock their Main Street clients into solar rent payments at a time when SPV prices will continue to decline substantially.

Companies that are using toxic and carcinogenic materials will have to come to terms with their associated contingent liabilities. First Solar (NASDAQ:FSLR) is the most notable company in this group. First Solar is the only company left that uses CdTe in large quantities. It has been shipping product for several years so that issues associated with the end of life responsibilities of the installed fields are not far away. It has changed its policy about recycling recently, but that does not remove contingent liabilities of site contamination.

Finally, we must recognize our social responsibilities as we construct the clean renewable SPV infrastructure to replace fossil fuels as our primary energy source. We all should help to insure that all of us can enjoy free sunshine not only to darken our skin, but also to generate our SPV electricity. “Let there be light,” said the Lord.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

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The Solar PV Market

 Challenge For Investors

Following a large increase in the price of the stock of Sunpower (NASDAQ:SPWR) and First Solar (NASDAQ:FSLR), solar investment is under the magnifying glass again. In the present essay I would like to elaborate on my forecast in a previous article on Solar PV: that the cost of PV-generated electricity will decrease toward $0.01/kWh by the middle of the century. I would further like to connect the macro view expressed in that article to the realities of PV trading today.

In this article the sun as the source of our energy is discussed, followed by a look at some of the negative effects of the energy industry, including PV, on our environment. Next, we examine the investment climate surrounding solar PV and try to explain why there is no Exxon presently in this field, commenting on some existing companies. Finally, we outline forward opportunities for investment, where solar PV can be a vehicle to make a lot of money and do some good at the same time. The approach in this article is to outline some of the underlying forces determining the progress of PV rather than cataloging the details of the history or the detailed present state of individual companies.

Here Comes The Sun

The PV industry is already a half of a century old. During most of this time, the industry was engaged in R&D to develop the right technology. This process still is not completed. In spite of the fact that R&D is still continuing, the commercial phase of the PV industry is well under way. In the last decade the industry grew from sales under $1 billion to over $100 billion in 2012 and is forecast to grow another 100 fold before the middle of the century. Cumulative installed PV power generation capacity worldwide reached 100 GW in 2012.

Man’s economic progress is primarily characterized by how much energy he uses to live his life. Worldwide, the average power a human being consumes today is 100 watts, equivalent to 1000 kWh energy in a year. Let us call this “100 watt servant equivalent” 1 Holon (from Arthur Koestler’s notion of the autonomous subunits of a society). Our average energy consumption per person in the U.S. is 10,000 kWh per year, or 10 Holons serving us day and night throughout the year. In some parts of the developing world, people only have 0.2 Holon helpers, their per capita use of energy just one fiftieth of ours in the U.S. Our use of energy also determines our interference with nature. This is the intersection where we poison our water, pollute our air and overheat our globe.

With the exception of nuclear and geothermal energy, all our energy comes from the sun. In an article, “Solar energy, a global view”, the effectiveness of the sun’s efficiency (defined as the energy that can be extracted from different products of photosynthesis divided by the sun’s energy falling on the product) is listed in growing the different crops by photosynthesis. The most efficient biomass (like algae) has an efficiency of the order of 1%. On the same scale, the efficiency of forests is 0.1%, of crops (like corn) 0.01% and meat 0.001%. Note the PV efficiency, direct conversion of the sun’s energy into the most usable form of energy, electricity, is 10% to 50%. The conclusion is that to harvest biomass energy will require at least an order of magnitude larger land area than to harvest the electrical energy by PV. Another interesting comparison is that when we convert crops to biofuels thereby introducing an additional factor of efficiency loss, we use the sun 10,000 times less efficiently than when we use Solar PV.

The Cost of Electricity From Different Sources

(click to enlarge)The Cost of Electricity from Different Sources

This basic fact of solar PV’s relatively high efficiency can be seen in figure 1, which compares the cost of electricity generation from different sources. The cost of PV depends on the insolation of the location and can vary more than a factor of three (800 hours for Alaska vs. 2400 hours for parts of Arizona). The PV curve on figure 1 is for insolation 2000 hours of equivalent peak sunshine per year.

The Energy Industry and the Environment

All energy sources have to be subject to the same rules and limitations. They have to provide the lowest cost energy with the least adverse effect to the globe. Comparative costs were discussed in the article mentioned above and shown in figure 1. The use of any of the sources of energy have environmental consequences. Nuclear fuels are still waiting for their graveyards. Fossil fuels are spewing their pollution directly into the air, mostly as CO2, while they heat the planet. Solar PV may also cause disaster unless we recognize and guard against contamination at this relatively early stage of the industry. The first world conference on environmental problems in Solar PV took place in Fukuoka, Japan. The findings are published in a paper from University of Stuttgart. Two toxic ingredients are identified in the use of PV, lead (PB) in cSi and cadmium (Cd) in CdTe.

To fully understand potential contamination by the use PV, we have to address the end of life issues of PV projects. If PV will end up as a dominant component in the energy mix, the industry will have to be accountable for its complete cycle. Ultimately, PV installations may cover 1% of the world’s land area, which translates in the U.S. into approximately 100,000 square km (half the area of Arizona). At the end of the life of the PV installation, the field will either have to be dismantled, or it will go into the landfill. The dismantling cost of a PV field is comparable to the installation costs, presently about $0.4 per watt. Today the owner of the PV field is responsible for this cost. So far, no manufacturer has accepted this obligation. (FSLR has a recycling program, but it does not include dismantling the installation). Recycling will only take place if it is economical . For cSi modules, the value of wafers is about $0.25. The dismantling cost is substantially higher. For CdTe, the value is less than $0.1 per watt, even less economical than cSi. The overall conclusion is that the dismantling of PV modules will consist of removing them for landfills. Hence, it is absolutely essential that the PV modules destined for the landfills do not contain water soluble pollutants, not to contaminate our water tables.

Where is the Exxon of the Photovoltaic industry?

In this section, we examine the complex nature of PV technology, influenced by the politics of the energy industry and the large reward associated with the potential of finding the primary replacement for fossil fuels.

To harvest the sun’s energy, man has devised many different tools, all part of the renewable energy industry. Wind energy, hydro energy, ocean tidal waves, solar thermal process, concentrating solar thermal (power towers), concentrating PV (CPV), and solar PV are all renewable technologies in use today. Photovoltaics are made with a number of different materials, grouped into two categories: crystalline Silicon (cSI) and thin film PV. Among the thin films, there are amorphous Silicon (aSI), cadmium telluride CdTe and copper indium gallium diselenide (CIGS). There are different type of thin film devices, single junction and multi junction. There are other set of PV materials and devices as well, specially developed for the space industry. This is the matrix from which we have to pick a winner.

Modern PV R&D goes back to work carried out after the Second World War. Most of the R&D was funded by the U.S. government in the industrial laboratories on the East coast of the U.S., including Bell Labs, IBM (NYSE:IBM), GE (NYSE:GE) and RCA, and in universities across the country. Crystalline PV, an outgrowth of the semiconductor industry, was first commercialized and used in the space program. The first large scale commercial players in the industry were oil companies like Amoco who picked up Solarex. Arco, Shell (NYSE:RDS.A) and Chevron (NYSE:CVX) followed the pattern. The oil companies did not have the patience to stay until the industry matured and the PV effort was passed on to technology companies like Siemens (SI), glass companies and utilities.

The first thin film technology was developed at RCA and commercialized by two companies, Chronar (in a glass to glass sealed package) and ECD (on a stainless steel substrate). ASi has the flaw that, due to light induced degradation, the stabilized efficiency leveled off at around 7%, not competitive in the power market of today. Both companies are out of business, though a number of companies make aSi today, including Schott Solar, Masdar PV, and others.

First Solar, a CdTe based thin film company, was founded in 1996. It became the largest thin film company (and for a while the world’s largest PV company), trading on the Nasdaq. FSLR has manufactured and installed over 6GW of PV, spreading 1 million Kg of cadmium across the globe in the process. The main funding for FSLR came from the Walton family, founders of Wal-Mart (NYSE:WMT). CIGS companies have been funded primarily by venture capital from Silicon Valley. It is shocking to realize how unsuccessful their efforts have been. After investing more than $2 billion into companies like Nanosys, Nanosolar, Miasole, Solyndra and others, not one winner was found.

Governments have also played an important role in the development of this new energy industry. Until 1990 the U.S., where most of the technology was invented, was the unquestionable leader of the industry. Next Japan started a major commercialization called the Sunshine Project. Following that, Germany introduced a very successful Feed In Tariff (FIT) and over five years, 30 GW PV was installed, currently representing about 5% of German electricity generation. Finally, with the help of government funding, a dozen companies in China have built about 40 GW of PV module manufacturing, gaining about 60% of the world’s production capacity. This rapid expansion of capacity caused an imbalance between supply and demand, the prices of PV modules collapsed, and today all cSi manufacturers are operating at a loss. In spite of the current chaos, we should not forget that PV electricity generation today is often competitive with other sources and heading towards becoming the lowest cost source of electricity. The industry worldwide employs over 1 million workers and its total sales volume is over $100 billion. In comparison, the combined employment of Google (NASDAQ:GOOG), Facebook (NASDAQ:FB) and Yahoo (NASDAQ:YHOO) is less than 100,000 and their combined annual revenues are $85 billion.

The first 40 years of the PV industry is a story of waves of investment by large industrial capital concentrations, oil companies, technology companies and Silicon Valley venture capital, only to lead finally to the domination of the industry by today’s most effective concentration of capital and political power, China.

The story of Solyndra might be instructive as a case study in picking a winner. It started in Silicon Valley as a stealth startup. It was heralded as the “destructive game changing” technology in PV. It was not the government that picked Solyndra as a winner, but Silicon Valley venture capital that invested over $1 billion in the company before it had a mass producible product. One fatal flaw in Solyndra was a primitive technology error, that neither the investors nor the Nobel Prize winning science advisor to the President picked up. That technology error was evident in the first filing to the SEC: its device was made of an array of cylindrical tubes, that only covered half the illuminated area, claiming to collect more light than a continuous flat plate that covered all the area. As it turned out, it only collected about 70% of the available light. It is no wonder that with this 30% handicap, it ended up in bankruptcy.

Solar PV seems simple. Light falls on one side of a glass sandwich and two wires carry out around 200 watts of electricity for every square meter. But in the current market, it is not so simple to pick a winner. First a selection has to be made from a 10×10 matrix of technologies (e.g., solar thermal vs. CPV vs. PV?). Let us assume that one was smart enough to pick solar PV. Next comes another 10×10 matrix within solar PV to pick the right material, the right devices, the right structures and the best manufacturing processes. Next pick the right business strategy and finally pick the right country and political system, which will best help you to replace fossil fuel in the energy mix. May the best matrix win.

This is a very different scenario from the knowledge economy, where a bright teenager writes a suitable computer program, venture capital blesses it by putting up more funding than the young man needs, at the same time arranges with Wall Street a suitable exit scenario making an untold number of new millionaires in the process. Take Facebook as an example. It has raised $16 billion in a public offering, valuing the company more than 20 times sales. It employs 4000 people. Solar PV is not this type of investment. Investors at different stages of the solar PV company do not have control up to the point that they can exit. These factors may explain why at this stage there is no Exxon of solar PV.

The Present Investment Vehicles (“The Dark Side of Solar”)

A major article came out in the New York Times, entitled the “Dark Side of Solar”. In the article, on one hand, the looming trade wars between China and the U.S. and between China and Europe are described. On the other hand, none too transparent allegations of poor quality Chinese PV modules are advertised. These trade wars are the cruelest indictments of our dysfunctional economic system. The Chinese were willing to make the investment in the PV industry that we in the West were not willing to, and we are the ones who are benefiting primarily from low cost clean PV electricity using Chinese made modules. We should examine our motives and reexamine our economic interests before we condemn the Chinese for unfair trade practices.

It is indeed time to examine both sides of the solar PV industry. On the sunny side, we have installed 100 GW of PV, the cost of PV electricity generation has come down to $0.10/kWh and PV from the present 1% penetration of the energy market is heading to be the largest component in the world’s energy mix

On the dark side, the industry is in total chaos and a major trade war is looming. But another great danger comes from the largely overlooked end of life issues for PV systems. Many PV modules contain significant amounts of toxic materials, principally Lead and Cadmium. 1000 tons of toxic Cd is already spread over 100 square km (EPA allowed levels are 5 micrograms/liter. 1000 tons of Cd is adequate to contaminate the total U.S. fresh water supply above this limit). Some cSi products also contain Pb (lead). Lead is less toxic than Cd, and smaller amounts/watt are used than in the CdTe modules, but a far larger amount of cSi modules have been installed so far than CdTe. To expose the environment to these hazards is inexcusable. With minimal responsible regulations, these hazards can be eliminated. At the same time, there other PV devices can be substituted that do not carry these dangers. Many cSi manufacturers have eliminated lead from their modules. We have to introduce regulations on module wastes to set acceptable limits on pollutants and set uniform end of life conditions (decommissioning) for all manufacturers and users. Europe has recently passed such “waste electrical and electronic equipment” directive (WEEE) to take effect for PV products at the end of 2013.

If we examine the companies that are trading on the market, unfortunately, all the major players in crystalline silicon show losses. From their financial statements, one can conclude that the true manufacturing cost of crystalline silicon modules is close to $1/watt. Today cSi modules sell as low as $0.50 per watt. In spite of this as the industry gets rid of excess inventory, the prices will firm up and the remaining Chinese companies will survive and prosper: Canadian Solar (NASDAQ:CSIQ), JA Solar Holdings (NASDAQ:JASO), JinkoSolar Holdings (NYSE:JKS), ReneSola (NYSE:SOL), SunTech Power Holdings (NYSE:STP), Yingli Green Energy Holdings (NYSE:YGE), etc. It is clear that the Chinese government has decided to stand by the “dozen” remaining cSi companies. One quality American cSi company is SunPower (SPWR). It has the highest efficiency modules and game plan to match it. The surviving cSi companies should be a good long-term investment in spite of the difficulty of the industry today

Among thin film PV manufacturers, the largest public company, FSLR, remains a short-term opportunity. A fine upcoming Thin Film company is a subsidiary of Showa Shell of Japan, which operates under Frontier Solar in the U.S. It manufactures Cd free CIGS modules and has the most efficient thin film product.

FSLR has been the flagship for solar PV investors. Unfortunately, the company is carrying a fatal flaw that CdTe is carcinogenic and soluble in rainwater. This brings with it a contingent liability associated with contaminating the soil where it is erected and a liability associated with the announced recycling of Cd. This issue has been debated in several previous comments on the pages of Seeking Alpha. For further detail, the reader can review that debate. First Solar shareholders and the PV community until now seem to have decided to ignore the liabilities associated with carcinogenic CdTe.

Two potential competitors of FSLR, GE’s Prime Solar in Colorado and Abound Solar, also of Colorado, have abandoned the market. The two have invested well over $1 billion. At this point, GE has no plans to start production and Abound Solar has declared bankruptcy. More worrisome news is that Colorado health and environment officials have designated the Abound site as a hazardous waste site due to Cd, and suggested encasing the modules in inventory in concrete, similar to nuclear disposal procedures.

On the First Solar financials, the liabilities associated with the use of hazardous CdTe show up as an approximate $0.02 per watt of set aside (at the end of 2012, this represented $212 million). This amount, which directly affects the true cost of the First Solar modules, does not include the dismantling (decommissioning) cost, which far exceeds the set aside. In the long term, investors should be aware that the liability associated with the choice of a toxic material is a most serious and tragic flaw, a major disaster for the environment and unforgiving to the balance sheet of the company and its shareholders.

Even if not in the public markets, the PV industry has been an excellent opportunity as an investment vehicle for project financing. In the last decade, 100 GW of cumulative PV power has been installed worldwide. This represents about $500 billion total project financing, of which about $200 billion came from subsidies. The primary beneficiaries of this industry were the institutions providing the funding. In addition to profits associated with the construction of these projects, the 20 year guaranteed payments under the feed in tariffs (FIT) resulted in some cases in long-term RRI in excess of 20%. This investment opportunity remains in the future. Goldman Sachs (NYSE:GS) recently announced that they will participate in this business in Japan.

Solar PV in the Future (the ability to do good while making money)

If the forecasts for the PV industry are correct, we are at the very beginning 1% of the industry (installed 100GW of the eventual 10,000GW to be installed). How can we participate in this largest of all industries?

Let us call the Crystalline Silicon technology the first generation PV, the existing single junction thin film PV, the second generation PV, and the coming multi junction thin films as the third generation PV. The first generations have brought us to about $0.10/kWh cost, the second generation with 20% efficiency will bring us to $0.05/kWh by 2020, and in the second half of the century with above 40% efficiency thin films we should reach $0.01/kWh PV electricity cost. This vision will only happen if there is political and financial support of the development of this third generation technology. Third generation multi junction thin film PV companies are not yet public. There are some known private companies as examples, like Stion Solar working on multi junction thin film PV products based on CIGS, Alta devices working on GaAs, and others. Finding and funding these early third generation PV companies will be one of the great opportunities in PV Solar. I hope to introduce some of these companies to SA readers.

The main conclusion of this essay is that we only now are embarking on the largest opportunity of this century, replacing the majority of fossil fuels with clean, sustainable renewable solar PV. Clearly such a major shift will affect our social fabric in many ways. One of the great challenges of our time is job creation, and solar PV is one of the greatest sources of new jobs of this century. Slowing climate change depends on our use and sources of energy. How and where is the energy produced and delivered, whether we continue to use the centralized model of the utilities or we focus on distributed power generation, all needs to be reexamined. How rapidly can we move to the large scale use of solar PV will depend on available capital and political will. Members of the financial community and readers of SA will play an important role in determining this future. Whatever our political affiliation or social status, we all are part of the human community and we should accept the responsibility not to poison our air and water as we develop the needed energy resources for future generations.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

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