Loser: A Foggy Notion

For solar photovoltaic power, the growing consensus among experts is that small really is beautiful. From Southern California to Sydney, Australia, engineers have for years favored modest, distributed installations of perhaps 1 to 1000 kilowatts, affixed to the roofs of the homes or office buildings that receive the sun-generated electricity.

The alternative, "central-station" approach concentrates more generation into fewer, more remote, and much larger installations. It never caught on in most of the developed world for several reasons, chief among them the 10-percent loss of power incurred when distributing solar power on the grid. Furthermore, no one really wants to look at vast agglomerations of solar panels sprawled over dozens of hectares of picturesque countryside.

These facts have not deterred the owners of one of the world's newest and largest photovoltaic (PV) power plants, the Bavarian Solarpark. With 57 600 solar panels covering a total of 25 hectares of farmland, the facility is nearing completion and already starting to soak up the wan southern German sunlight.

Operating as a single financial entity, the 10-megawatt-peak station actually consists of three collector installations located within a 50-kilometer radius: 6.3 MW at Mühlhausen, 1.9 MW at Günching, and another 1.9 MW at Minihof. The solar farms feed into southern Germany's electric grid just as a gas-fired, coal, or nuclear plant would, except that the PV plant's dc power must be converted by inverters into ac power, at a loss of about 5 percent of the power the plant generates. Another 5 percent is lost as the current travels through power lines and into homes and businesses. During peak day hours, solar power displaces power from conventional plants with enough juice for 5000 homes consuming 2 kW each.

PowerLight Corp. of Berkeley, Calif., in partnership with Deutsche Structured Finance in Frankfurt and K&S Consulting Group of Regensburg, Germany, installed the PV system for about ¤45 million (about US $58 million). Mounted on a single-axis tracking system, the panels follow the sun, increasing their exposure to solar radiation by 30 percent in the course of a day compared with static horizontal panels. That's crucial in a region where the sun shines only about 1500 hours on average per year, providing only 60 percent of the sunlight that is available in places like Southern California.

If building a central station PV plant in Bavaria—a region that records on average 180 days with rain and 179 days with fog per year—strikes you as a costly indulgence, you're not alone.

"Bavaria is about the maddest place you could put a photovoltaic power plant," says Vaclav Smil, distinguished professor at the University of Manitoba, in Canada, and author of Energy at the Crossroads: Global Perspectives and Uncertainties (MIT Press, 2003). "You've got cloudy conditions through the year," observes Smil, who grew up in the same gloomy climate across the border in what is now the Czech Republic. "In the fall and in the spring, there are several days in a row where you have no direct solar radiation at all, which means your solar-cell power output goes down to almost nothing."

The German government, a coalition of Social Democrats and Greens, has decreed that the country will wean itself completely from nuclear power by 2020. To do so, it must replace all that nuclear capacity—about 30 percent of Germany's total of more than 500 terawatthours per year—and the coalition has pledged that a substantial amount of it will come from renewables. Germany now gets about 10 percent of its electricity from renewables, and the plan is to increase that share to 20 percent by 2010.

The German Renewable Energy Law, adopted in 2000, compels utilities to buy power from grid-connected renewable sources, such as hydro, wind, and PV, at guaranteed prices for 20 years. The so-called feed-in tariff, which is the rate that the utilities must pay, is ¤0.457 per kilowatt-hour for central station PV in 2004—more than any other renewable source, including wind, which reaps just ¤0.09/kWh. Utilities in turn sell Solarpark's power to the consumer at about ¤0.16/kWh, from which the utilities also must recover their costs for generation, transmission, distribution, and administration. The shortfall of about ¤0.30/kWh gets totaled up across all utilities and is then shared by all German power customers in the form of higher energy bills.

Bavarian Solarpark

Goal: Partially replace Germany's nuclear and fossil fuel power plants with homegrown solar PV plants

Why it's a loser: The losses due to transmission of central station solar power negate the benefits enjoyed by users of on-site solar generation; plus, it rains every other day in Bavaria

Organizations: PowerLight Corp., Berkeley, Calif.; Deutsche Structured Finance, Frankfurt; and K&S Consulting Group, Regensburg, Germany

Center of activity: Bavaria, Germany

Number of people on the project: 255

Budget: ¤45 million (about US $58 million)

The high PV tariff, which ensures that Solarpark's equity investors will clear about ¤5 million per year, is under fire from unexpected quarters—environmentalists, who bemoan the loss of precious green space, and Germany's leading renewable energy advocate, who fears that the money is enriching foreign competition.

"I think that the mechanism of feed-in tariffs, that showed its merits in the German success story in wind technology, should not have been identically copied for PV," says Gerd Eisenbeiss, architect of Germany's feed-in tariff strategy in the late 1980s. Eisenbeiss, who now oversees about 40 percent of all German public energy research from his post as a managing director at Forschungszentrum Jülich, would prefer direct government grants to German manufacturers for innovative projects instead of a system that rewards native and foreign entities alike.

Other observers contend that such generous financial support encourages companies to foist immature technology on unsuspecting consumers. "With the right subsidies, you could give away 2-carat diamonds in cereal boxes," says Howard C. Hayden, emeritus professor of physics at the University of Connecticut, in Storrs, and author of The Solar Fraud: Why Solar Energy Won't Run the World (Vales Lake Publishing, 2001). "The upshot is that the productive Germans, the ones who are using electricity for something useful, are subsidizing these solar toys."

Expensive toys they are. PVs are by far the priciest power source per kilowatt to install, according to estimates compiled by the U.S. Energy Information Administration. EIA numbers for 2002, the last year for which they are available, show that the cost to build a solar PV plant (minus 10 percent to account for a U.S. investment tax credit for solar power) is a whopping $3915/kW—nearly 10 times that of a conventional, gas-fired combustion turbine. The capital outlay for PV is more expensive, and so, too, of course, is the output: PV power costs three to five times as much per watthour as nuclear, gas, oil, or coal generation. And a PV plant's capacity factor—the ratio of the total electricity that a plant produces per year to the total potential electricity that would be produced if the plant operated at 100 percent during every hour of the year—is anywhere from 12 to 30 percent. That pales in comparison to the 84 percent-plus capacity factor of the 19 nuclear plants Germany wants to replace.

Despite the higher costs and lower output of PV power, Germans support their government's policies: in a recent poll, 58 percent said they would not go back to relying on nuclear energy and would instead pay more for renewable sources. To ensure the ready availability of such resources, the German government ostensibly aims to create a thriving indigenous renewable energy industry. The Association of the German Solar Industry (known as the UVS), in Berlin, estimates that last year the country's PV industry generated ¤1 billion in revenue and created 5000 jobs.

But the real point of German government support for PVs is actually far more ambitious. The ultimate goal, say Solarpark stakeholders, is to foster the growth of a global PV industry and to count on economies of scale to bring the price of PV down to levels that even developing countries can afford. And if that means goosing demand by taking advantage of Germany's feed-in tariffs to pay a U.S. company to build a solar power station in soggy, overcast central Europe, then so be it.

"Every doubling of shipments in our industry has resulted in a 20 percent decrease in cost," says PowerLight's executive vice president Howard Wenger.

Such cost decreases will benefit K&S Consulting's Third World clients, like the parliament of the Casamance region in the Republic of Senegal, in West Africa, which has commissioned a 10-MW-peak PV plant.

"We produce in Senegal 80 percent more energy than in Bavaria," says Jochen Kleimaier, managing director of K&S Consulting Group. The 10-MW-peak Casamance project will provide the region with 35 percent of its power needs. Similar projects under development could over time supply the entire country, which basks in more than 3000 hours of sunlight per year, with one-third of its 1 gigawatthour-per-year requirement.

Kleimaier believes all developed countries have a responsibility to nurture new energy systems at home and to help developing countries move up the economic ladder. This should be done without consuming massive amounts of greenhouse gas-emitting fossil fuels or building nuclear power plants in unstable regions of the world.

"We have to find a way to produce energy in Africa, in China, in India," says Kleimaier. "We figure Senegal is a very good country to develop those kind of projects."

And while the subsidies last, Bavaria is also a very good place to install PV plants. Just don't expect them to make a dent in German energy demand. A plant like Solarpark that is projected to put 10 GWh/year onto the grid will supply less than 0.002 percent of the country's needs. It is merely, in Smil's words, "a spit in the ocean."