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The Suntech Bankruptcy: Bad or Good News?

Predictably, the Suntech collapse has undammed a flood of instant commentary, some of it somewhat self-contradictory.

There are those who argue that the Suntech bankruptcy and others soon to follow will relieve a glut in the global photovoltaics market, leading to supply being more in line with demand and prices stabilizing at a somewhat higher level, giving a badly needed incentive to innovators.  And then there are those—sometimes the same those—who say the shakeout will be brutal indeed, with no end in sight.

Whatever the situation, though it may now be a necessary one, it is hardly the best of all possible worlds.

Taking a relatively optimistic line, the Financial Times's prestigious "Lex" team asserts that "the end of the [solar] misery is almost in sight. Crippled balance sheets have brought growth in capacity to a halt. And demand is recovering. China’s Golden Sun solar subsidy scheme will double installed solar power capacity in the country to 10 gigawatts this year." Warren Buffett is investing in solar in the United States, and profitability could return to the industry "as early as" next year.

Yet just two days before a Beijing correspondent for the paper reported that "Chinese solar-panel makers are set to follow the lead of Suntech as the solar  industry enters a difficult period of consolidation and "adjustment.' " The clear implications were that a lot of PV makers will go down the tubes too, and that is won't be any easy adjustment.

Earth2Tech's Katie Fehrenbacher, like Lex, declared the Suntech bankruptcy "a good thing." But she went on to cite a Technology Review estimate that "hundreds of solar companies need to fail"; as many as 180 PV panel manufacturers may go under by 2015, she said.

One of the more drastic estimates of the global situation comes from Keith Bradsher of The New York Times: "The industry’s problem is that most of the cost of a solar panel lies in building the factory, not in operating the equipment. So when the industry has severe overcapacity, as it does now, each company continues running its factories to cover its tiny operating costs, and at least a small part of the interest on the loans it took out to buy the costly factory equipment. But when every company pursues that strategy, the whole industry loses money and virtually no business is able to cover its full interest costs."

Maybe the most balanced assessment was in the Wall Street Journal's "Heard on the Street": Chinese companies like LDK Solar, with balance sheets known to be weak, will go under too; stronger companies like Trina Solar and Yingli Green Energy will prosper.

photo: Peter Parks/AFP/Getty Images

China's Suntech in Bankruptcy Proceedings

It came as no surprise today when the photovoltaics manufacturer Suntech, the world market leader in recent years, filed for bankruptcy in China. The company was well known to be in serious financial trouble and has been under investigation for having spent the equivalent of almost US $700 million for bonds that probably are fraudulent, to provide financial collateral for solar projects in Germany. Last week Suntech forfeited on a US $541 million bond, and the company's chairman, Shi Zhengrong (photo), a scientist widely admired the world over as an innovative entrepreneur, had to step down, as speculation centered on whether the Suntech's municipal sponsor, the city of Wuxi, would step in to save it with some kind of bailout package.

The news, however expected, is nonetheless, stunning. In recent years, Suntech led the pack of low-cost Chinese PV makers who laid waste to commodity manufacturers in Europe and the United States, making life impossible for innovative startups like Solyndra in the U.S. and Germany's Q-Cell, the world market leader when Suntech first emerged as a force to be contended with. But then there was sharp push-back from the United States and Europe, which imposed trade sanctions after their manufacturers complained the Chinese were "dumping" PV modules at below production costs. It now appears those complaints were well-founded, as the Chinese have run up huge debts that they cannot pay back, reportedly from selling their product at a loss. As the old joke goes, for only so long can you do that and make it up in volume.

Looked at another way, the Suntech collapse appears to be a case of a technology revolution devouring its own children. According to Keith Bradsher of The New York Times, who made his reputation as a technology and business correspondent covering the troubled U.S. auto industry, "China’s approach to renewable energy has proved ruinous, financially and in terms of trade relations with the United States and the European Union. State-owned banks have provided $18 billion in loans on easy terms to Chinese solar panel manufacturers, financing an increase of more than tenfold in production capacity from 2008 to 2012. This set off a 75 percent drop in panel prices during that period, which resulted in losses to Chinese companies of as much as $1 for every $3 in sales last year."

Suntech itself is believed to owe its Chinese creditors upwards of $2 billion. "If Suntech seeks bankruptcy protection in the U.S. [as well as China]," reports the Wall Street Journal, "or if its U.S. creditors successfully filed for an involuntary bankruptcy, the company would be the largest and highest-profile Chinese company listed in the West to enter U.S. Bankruptcy Court in recent years. Suntech ranks as the second-largest Chinese company by revenue listed solely in the U.S. through American depositary receipts…"

The implications of the Suntech story go of course far beyond the company's investors and creditors, and indeed well beyond just China, the United States, and Europe. The whole global PV industry has been radically disrupted by the cut-throat tactics of the Chinese manufacturers and their political sponsors. Until the brutal shake-out in manufacturing is complete and the world market has stabilized, we will have no way of knowing the real price of a solar cell.

Photo: Nelson Ching/Bloomberg/Getty Images

How Do You Clean 250 Thousand Solar Thermal Mirrors? Trucks With Robot Arms!

It only takes five of these bad boys to clean the entirety of the Shams 1 concentrating solar power plant in the desert near Abu Dhabi every three days. That's a lot of cleaning: there are 258 048 mirrors at the plant, measuring 1.5 m by 1.3 m each, covering a total of about 2.5 square kilometers. The mirrors concentrate the sun's heat onto a liquid inside a tube, which is then used to make steam that turns a turbine to make electricity. According to Alawi Al Jafri, who took me and a gaggle of press around the plant on Sunday, they like to keep the mirrors to 85 percent reflectivity, though it could drop much lower and still function well. It turns out, he says, that there isn't much of a difference in output between clean and somewhat dirty mirrors, but when they get extremely dusty (which happens quickly in the windy desert of the UAE) and the reflectivity drops very low the efficiency comes down dramatically.

Watch the trucks in action:

Photo and video: Dave Levitan

Emirati Eminences Turn Out for World's (Sort Of) Biggest Concentrated Solar Plant Inauguration

A solar plant "inauguration" is an inherently undramatic event. Steam does not begin to rise from a cooling tower, water does not flow through the bottom of a dam, a majestic turbine does not begin to spin. The sun, shining down on the desert, doesn't much care that some of its photons are now being used to generate electricity in one of the most oil-rich nations on earth.

That lack of built-in drama, though, certainly didn't stop the United Arab Emirates from trying. The inauguration of Shams 1—a 100-megawatt concentrated solar power plant about two hours outside of the city of Abu Dhabi in the desert of the Western Region—featured a poet, the national anthem played by a 30-piece (or so) band, and was attended by some impressively important Emiratis: the President of the UAE, Sheikh Khalifa bin Zayed Al Nahyan (who doubles as the ruler of the Emirate of Abu Dhabi), along with the vice president (who doubles as the prime minister) and the crown prince (who doubles as deputy supreme commander of the country's army).

Shams 1, which has actually been producing some power to the grid since January, was officially ramped up to its full capacity of 100 MW on Sunday. It is a joint project of Masdar, the renewable energy company of the UAE; the french oil and gas company Total; and Spain's Abengoa Solar. It uses parabolic trough mirrors to heat a liquid inside a pipe, which is then converted to steam and used to spin a conventional power plant turbine. According to Abengoa Solar CEO Santiago Seage, who attended the event, Shams 1 is technically the largest operating single CSP plant in the world. There are plants co-located with thermal power plants that have bigger capacity, and others that are close to commissioning but aren't yet online, like the massive Ivanpah plant soon to switch on in the Mojave Desert in California (which uses a different type of concentrated solar).

Shams 1 is undeniably an impressive facility. Located in the desert near the town of Madinat Zayed, it felt like a microcosm of the UAE's wealth and recent growth; the parking lot prior to the inauguration filled up with white Land Rovers and black Mercedes, one after another, and the site's helipad was actually FOUR helipads for those high-helicopter-traffic days. The CEO of Masdar, Dr. Sultan Ahmed Al Jaber, called the plant a "beacon lighting the way" toward huge renewable energy growth in the UAE and in the Middle East-North Africa region.

Those words might have been a bit loftier than the ocassion called for—there is certainly big interest in solar power in the region, but there aren't any particular signs that explosive growth is right over the horizon. Still, progress: the CIA Factbook entry for the United Arab Emirates, based on 2009 data, will certainly need to be revised—it says 100 percent of UAE power comes from fossil fuels. But some things are unlikely to change much thanks to these particular 100 megawatts: It also says the country produces more than 3 million barrels of oil per day, good for eighth place in the world, 2 million of which it exports (putting it in seventh place in that category). It drops to 27th in carbon dioxide emissions from energy consumption, but that's in the 115th largest country by population in the world. Dramatic numbers, for such a drama-free event.

Photos: Dave Levitan. Top and bottom: views of Shams 1 plant. Middle: Representatives of Total, Masdar, and Abengoa Solar at the inauguration.

Disclosure: Masdar paid Mr. Levitan's airfare and other expenses related to the inauguration.

German Renewables Reach 25 Percent

The latest issue of the IEEE Power & Energy magazine (March-April) is devoted to photovoltaics, with substantial articles on the U.S. SunShot vision, integration of solar energy in one important U.S. grid, the solar picture in Germany, development of performance metrics on the basis of a 1 MW Tennessee plant, and the PV outlook in post-Fukushima Japan.

Even to somebody who has been keeping a pretty close eye on Germany, the German numbers astound. According to the article by Jan von Appen et al., total photovoltaic capacity in German is 31 GW, equivalent to 6-10 standard nuclear power plant installations, allowing for solar's intermittency. With much of that capacity concentrated in the relatively sunny South (which by the way is not all that sunny, by some standards), and with many recent installations at the distribution level, the challenges to grid management are formidable, as the authors explain.

Small and medium-size installations of less than 30 kV have dominated Germany's solar expansion in recent years, so that 70 percent to total PV capacity is now connected to the low-voltage grid. "In some low-voltage grids," they say, " the installed PV capacity can even exceed the peak load by a factor of ten."

Renewable energy now meets about a quarter of Germany's average electricity consumption, and at times photovoltaics alone satisfy as much as 40 percent of peak demand.

To be sure, Germans pay a fairly high price for what some might dismiss as a quixotic quest for political correctness in energy generation. German home rates, at 28 euro-cents per kilowatthour in 2012, were almost twice the residential rates in nuclear-rich France, for example.

Arguably, however, Germans are positioning themselves to do just what President Obama says he'd like to accomplish in the United States--to be a major global player in the technologies of the near future. And this is a game, let it be said, that Germans are extremely good at playing.

It's not just a matter of basic engineering excellence, which everybody knows about. Germans also excel at execution in high tech, as a recent article in the Wall Street Journal pointed out. And it's not just that either. Germans also excel at maintenance and follow-through.

Ride a German high-speed train and you won't be impressed only by the high speed. You'll notice that everything works, from the toilet paper rolls to the door handles. And you'll be struck that everything is clean as a whistle. You won't likely have, sad to say, the same experience on an Amtrak Acela.

Vanadium Redox Gaining Ground in Energy Storage

The vanadium redox flow battery is not a phrase that comes tripping off the tongue. It certainly is not a household phrase. But it's a technology we are going to be hearing more about in grid-scale energy storage, as it is coming around the outside track at an accelerating speed.

Two weeks ago, at IEEE's fourth annual Innovative Smart Grid Technologies Conference (ISGT, a relatively small but well-focused event), one of the most interesting presentations concerned a novel vanadium reflow battery that is being put through its paces in a northwest European town. Meanwhile, a German vanadium flow battery innovator has teamed up with an American vanadium electrolyte producer in a strategic alliance.

The developments are noteworthy because while grid-scale energy storage is crucial to the long-term future of intermittent renewables like wind and solar, the really promising candidate technologies can probably be counted on one hand.

In a panel on "international viewpoints" at ISGT, Hongfeng Li of Prudent Energy described the try-out of the company's trademarked VRB-ESS vanadium redox flow battery in a part of Europe (probably Germany) where the grid is required to buy wind energy at 9 eurocents per kilowatt-hour and photovoltaic energy at 20 cents/kWh (presumably in a feed-in tariff system). The objective was to determine whether the flow battery could help reduce the town's dependence on the grid and provide some support for it. The finding was that the VRB-ESS could yield revenue and improve grid performance.

This month, the State Grid Corporation of China will commission a 2 MW/8MWh VRB-ESS battery system, as part of the Zhangbei National Wind/PV/Energy Storage and Transmission Joint Demonstration Project, says Li.

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How Big is the U.S. "Electricity Gap"?

Income inequality in the United States has been a big conversation point recently, especially with the viral success of a video showing in striking graphical form just how badly distributed the nation's wealth really is. Now, Opower, a social engagement company that helps people reduce electricity use, decided to see if that gap extends to our homes' energy use. The answer is yes, though it doesn't approach the scope of financial inequality.

According to Opower, the top 1 percent of residential electricity users consume 4 percent of the total. Those biggest users average 33 654 kilowatt-hours per year, compared to 7 198 kWh per year for the bottom 90 percent of users. There are some fun ways of quantifying this, of course: "One day of combined residential electricity usage across the top 1 percent of US households (comprising approximately 3.1 million people) is roughly equal to one year of total electricity consumption in the African country of Sierra Leone (a nation of 5.5 million people)." The choice of comparator there could certainly be questioned, but it is striking nonetheless.

In some ways, the news here is that the gap between the biggest and smallest users is so modest. That is, we might have expected it to be much bigger. The top 1 percent of people in the U.S. rake in 17 percent of income, and possess an astonishing 35 percent of all the country's wealth. A good measure to use here is the Gini coefficient: a value of zero indicates complete equality (for $100, say, 10 people each have $10), and a value of one indicates the opposite (where one person has all $100 and the others have none). According to Opower, the Gini coefficient for income in the U.S. is 0.47, while for residential electricity use it is 0.34, a far more egalitarian distribution.

And if you drill down a bit into the electricity gap it actually seems to get smaller: the largest one percent of homes, averaging around 6400 square feet, use 2.5 times as much electricity as the average American home, at 1600 square feet (24 500 kWh/year vs. 9500 kWh/year). That means about 5.9 kWh/year per square foot for an average home, and 3.8 kWh/year per square foot for the mega homes, a more efficient rate. As the report points out, there are a few reasons for this, including the fact that some big items like a refrigerator don't scale linearly. A house five times the size of the average won't necessarily have five more fridges. People who can afford the big houses are also more likely to be able to afford energy-saving adjustments like triple-paned windows and better insulation.

The point here is that improving overall electricity use patterns in the country probably shouldn't focus on the big users (in contrast to, say, lowering the deficit by taxing higher incomes more). Of course, it's worth nothing that Opower has a vested interest in that conclusion, since they would like their particular methods for energy savings to spread as far as possible; but it does make sense.

The report does highlight some outstanding questions, including the possibility that the inequality gap is underestimated because some houses are a second home and the owners actually use more than just their primary residence's share. Still, it seems clear at least that electricity is not so unevenly used as some other resources in the U.S.

Image via Dean Terry

A Clever But Questionable Approach to Geoengineering

Technology Review editor David Rotman has an unusually reader-friendly article in the issue just out  on what goes by the name, loosely, of "geoengineering"—deliberate efforts to modify earth's atmosphere to counteract the effects of greenhouse gases. In the March issue, Rotman profiles MIT scientist David Keith, a former atomic physicist, and his idea of injecting sulfuric acid into the upper atmosphere, where the sulfur aerosols would reflect incoming solar radiation back into space.

"One of the startling things about Keith's proposal," writes Rotman, "is just how little sulfur would be required. A few grams of it in the atmosphere will offset the warming caused by a ton of carbon dioxide, according to his estimate."

The idea of pumping sulfate aerosols into the atmosphere is not new as such. What does seem novel in Keith's scheme, however, is the disarmingly simply method he proposes for putting them there: Customize standard Gulfstream business jets and have them fly 20 kilometers up to disperse sulfuric acid, which will combine with water to form the reflective sulfate aerosols.

What's not to like in this scenario? The main objections are just those that my fellow energy blogger David Levitan has identified in this space: The impossibility of accurately predicting what the regional impacts of the sulfur pumping would be, and the complete absence of any understanding of its impact on ocean acidification, one of the most serious consequences of carbon dioxide buildup. "It's not possible to use existing models to know how geoengineering might affect, say, India's monsoons or precipitation in such drought-prone areas as northern Africa," Rotman concedes in the end.

For balance, Technology Review also has in its current issue an excellent short commentary piece that makes the case for energy conservation and efficiency (an editorial strategy Scientific American also has adopted when addressing the delicate subject of geoengineering). It won't be enough to just keep trying to marginally reduce our immense greenhouse gas emissions, writes Jane Long, who chairs a California future energy committee and co-chairs the Bipartisan Policy Center's geoengineering task force. "Our first step should be to to commit to never building another energy-inefficient city, building, vehicle, or industry."

Image: Don Bayley/iStockphoto

From the Gut: "Intestinal" Design for Vehicle Natural Gas Tank

We often refer to the nuts and bolts of our machines as "guts," but this is taking it to another level. A company called Otherlab is working toward a new kind of natural gas tank for vehicles, based on an "intestinal" design. No, it's not "digesting" the fuel any differently from today's natural gas-powered vehicles, but it does wrap around the car's other "organs" much in the way that the body's digestive organs nestle into whatever space is available in the human trunk.

Essentially, the idea is to have the fuel tank be a series of small, high-pressure cylinders in the place of a single big cylinder. The small tubes would allow for conformability: car makers could shape the tanks to fit in any number of spaces and designs, as opposed to the bulky needs of a standard natural gas tank. Otherlab was at the ARPA-E Innovation Summit last week, where they made their case during the mildly crazy Future Energy pitch session; the company is an ARPA-E awardee, and has received a relatively small $250 000 grant to develop the technology.

Otherlab says the conformable tanks could be made from either stainless steel or carbon fiber, a difference that would change the weight and cost parameters. In general, making natural gas a viable transportation fuel is limited by its energy density: it has about 30 percent less energy by volume than conventional gasoline does, which so far has kept it to a niche part of the vehicle market. According to ARPA-E, "if successful, Otherlab's intestinal natural gas storage system would allow an increase in the storage density, safety, and space utilization and give automotive designers more freedom in vehicle design." They also point out that in theory at least, natural gas vehicles produce 10 percent less greenhouse gas emissions than traditional gas-powered vehicles.

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New Appointments at U.S. Energy Department and EPA

President Obama announced on Monday his new appointees to lead the U.S. Department of Energy and the Environmental Protection Agency: Ernest J. Moniz at DOE, and Gina McCarthy at EPA. In his remarks, reported the Wall Street Journal today, Obama said the said the two would lead efforts to "do everything we can" to combat climate change. At EPA, McCarthy previously headed up the air quality division, where she formulated rules to regulate greenhouse gases as air pollutants, curtail pollution from coal-fired power plants, and set standards for new coal plants that in effect will make it impossible to build them without incorporating radically new technology.

Moniz, a professor at the Massachusetts Institute of Technology who has a PhD in nuclear physics,  is very well known in energy circles as a leader of MIT policy studies and as the former top scientist in Bill Clinton's energy department. Among other things, Moniz was a major player in the 2010 MIT study that vigorously embraced natural gas. That attitude will not make any waves in the Obama administration, which equally has embraced gas. His advocacy of innovation in nuclear power may be of greater import. At the time he was serving in Clinton's DOE, he told IEEE Spectrum that we needed to "raise the headlight beams" in nuclear--which we took to mean that we need to look further ahead, more sharply.

That could be good news for developers of smaller, modular, more inherently safe reactors, like those described in the August 2010 issue of Spectrum—a subject outgoing Energy Secretary Chu had little or nothing to say about in his voluminous parting remarks to colleagues.

Photo: MIT Energy Initiative


Postscript: Shortly after this was posted, the Nuclear Energy Institute's president and CEO issued a statement welcoming the appointment of Moniz, noting his service on the administration's blue-ribbon Commission on America's Nuclear Future, and citing specifically the commission's recommendation that a group of consolidated spent fuel storage facilities be built while a permanent solution to the nuclear waste storage problem is developed.

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