The Future of Solar Power Center on Global Energy Policy, Columbia University School of International and Public Affairs October 20, 2015 Varun Sivaram, Ph.D. Douglas Dillon Fellow
Cleantech VC: The Wrong Model for Energy Innovation Council on Foreign Relations
Cleantech VC: The Wrong Model for Energy Innovation Council on Foreign Relations
Technology Preparing for high PV penetration Policy Council on Foreign Relations
The cleantech VC boom, from 2006-2012, is now a bust Cleantech entrepreneurship from 2004 to the present. (a) Number of cleantech start-up companies that received A-round funding in a given year. (Source: CrunchBase) (b) Total venture capital investment in private cleantech companies by year. ( Source: Bloomberg New Energy Finance ) Source: Gaddy and Sivaram, forthcoming Council on Foreign Relations
Venture capital flight from cleantech is due to high risk and low return compared with other sectors Comparison of VC Preferred Risk/Return Profile with Actual Investment Profiles by Sector. Actual A-Round VC investment risk/return profiles by sector and year from 2006 – 2011, compared with nominal value preservation and lowest public market benchmarks Source: Gaddy and Sivaram, forthcoming Council on Foreign Relations
Perovskite solar: the biggest solar breakthrough in 60 years Council on Foreign Relations
Perovskite solar: Trojan Horse approach to market entry Source: Sivaram, Stranks, and Snaith, Scientific American , 2015 Council on Foreign Relations
Council on Foreign Relations
Technology Preparing for high PV penetration Policy Council on Foreign Relations
Solar is in danger of reaching technological “lock - in,” where a first-generation solution crowds out next-generation tech Learning Curves for a Technology Market First mover creates a barrier to market entry… The first technology to achieve scale in the market • Cost per Unit benefits from learning-by-doing , reducing its costs and increasing its market share Barrier to entry Theoretically superior technologies face a Catch- • Incumbent 22: they need scale in order to fulfill low-cost, Challenger high-performance potential, but they cannot scale up against an entrenched incumbent Time …endangering long -term emissions reduction Solar PV’s “Moving Target” for Grid Parity 0.6 The cost and performance targets to materially • Electricity (¢/kWh) Wholesale Price of displace fossil fuels are much lower than those 0.4 which can be achieved with current technologies MIT “Future of Solar” study demonstrates that • All Generators 0.2 solar faces a moving target for cost- Solar PV Installations competitiveness that will become harder as more 0 solar is deployed 0 10 20 30 40 “Think ‘potato chip,’ not ‘silicon chip’” ~Nate • Lewis, Caltech Professor Solar PV Penetration (%) Sources: Texas: MIT, 2015 Council on Foreign Relations
Nuclear, solar, and batteries are examples of “lock - in” from the past, present, and future, respectively Examples of today’s dominant designs and tomorrow’s emerging technologies Dominant Design Path to Dominance Emerging Technologies Light water Nuclear • Adm. Rickover Gen. IV reactors • • reactor (LWR) chose LWR for (gas/salt/liquid metal All U.S. reactors • U.S. submarines cooled) offer safety, and most reactors Civilian power cost advantages around the world sector followed Small, modular • are LWRs this design reactors more versatile Solar Crystalline silicon • 1950s Bell Labs Printable materials • • solar panel invention (e.g., perovskites) Silicon controls • Chinese scaled up promise lower cost, • >90% of the global due to familiarity higher efficiency market with microchip Applications include • processing window coatings Batteries Lithium-ion • Companies like New chemistries • • battery Panasonic have (Li-S, Mg-ion) increase Tesla, BYD to scale • scaled up Li-ion energy density up production by from electronics Applications include • >10X for EV, grid applications to long-range EVs, better applications electric vehicles grid storage Council on Foreign Relations
To outrun “value deflation,” the solar industry should set a $0.25/W target by 2050 Utility-Scale Solar Drivers Utility-Scale Solar Drivers California Germany Texas 12 0% Value Reduction from Zero penetration (%) Economic Value of Solar (¢/kWh) Texas 10 Germany -20% California 8 6 -40% -45% 4 -52% -60% -55% 2 -69% -80% 0 0 10 20 30 Solar PV Penetration (% of total 15% penetration 30% penetration system energy) Sources: Texas: MIT, 2015; Germany: Hirth, 2014; California: Mills and Wiser, 2012 Council on Foreign Relations
Learning curve likely will not reduce the cost of silicon solar panels to “pennies per Watt” by 2050— new tech needed! 100.0 1975 1980 Module Price ($/W) 10.0 1985 2008 2002 1.0 2015 0.1 0.001 0.01 0.1 1 10 100 1000 10000 Cumulative Shipments (GW) Sources: GTM Research; Sivaram and Kann, forthcoming Council on Foreign Relations
Technology Preparing for high PV penetration Policy Council on Foreign Relations
Distributed solar could bring many benefits, but a sophisticated market is required to realize those benefits Source: Rocky Mountain Institute, 2013 Council on Foreign Relations
Under Prime Minister Modi, India has made an ambitious commitment to deploy 100 GW of solar by 2022 Cumulative Solar PV Capacity (GW) 100 Off-Grid Solar Distributed Solar Utility-Scale Solar 80 60 40 20 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Council on Foreign Relations
In India, multiple deployment types of solar are needed to realize PM Modi’s vision of an “ultimate energy solution” India’s energy challenges Deployment type Reliability Low access Import reliance Air pollution GHG emissions Utility-scale 1 solar Distributed 2 solar 3 Off-grid solar Source: Sivaram, Shrimali, and Reicher, Stanford Steyer-Taylor Center, forthcoming Council on Foreign Relations
blogs.cfr.org/levi Council on Foreign Relations
Supplementary slides on India Council on Foreign Relations
Utility-Scale Solar Deployment Is on Track for Official Targets, Driven by Federal and State Policies Utility-Scale Solar Drivers Utility-Scale Solar Forecasts (GW) Last Modified 2/21/2015 1:14 AM Pacific Standard Time 70 Federal Schemes o Solar Parks: 25 “Ultra - Mega” solar Other Deployment projects of at least 500 MW each will 60 collectively produce 20 GW o National Thermal Power Corporation Federal Schemes 50 Viability Gap Funding scheme will procure 15 GW by 2019 State Schemes State Schemes 40 o Each state has a solar target, and most progress is likely to come from utility- Official Targets scale solar: e.g., Maharashtra (7.5GW), 30 Andhra Pradesh, Telangana (5GW), Sources: o Almost all state schemes involve private 20 Bridge to India Printed developers bidding in a reverse auction Forecasts for a guaranteed tariff to sell power to the state 10 MNRE Official Other Deployment Targets o Utilities and power companies bound 0 by renewable purchase and generation obligations (RPOs and RGOs) are expected to procure 7 GW by 2019 | 21
Distributed Solar Deployment is Projected to Dramatically Lag Official Targets Types of Distributed Solar Distributed Solar Forecasts (GW) Last Modified 2/21/2015 1:14 AM Pacific Standard Time Residential 20 Residential o Rooftop solar for residential customers Commercial is not currently economic anywhere in 40 GW official Industrial India target by 2022 o Subsidized residential electricity tariffs Official Targets 15 prevent significant savings from solar under net metering Commercial o Distributed (<1MW) solar systems for commercial buildings are economic in 10 12 states o Favorable federal tax treatment Sources: supports solar competitiveness Printed Industrial Bridge to India 5 o Industrial sector is slightly less Forecasts economic for distributed solar than MNRE Official commercial sector because of lower Targets tariffs o Still, with favorable tax treatment, 0 distributed solar systems for industrial facilities are economic in 12 states | 22
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