SOLAR 3.0: The Future of our Industry.
We are in the midst of a global energy transition. With Intersolar just around the corner, collaboration and meaningful industry conversations are taking place in Europe. To elaborate onwhat the future of the industry will look like, Array Technologies and our industry partner First Solar got together to discuss the next generation of solar energy.
First Solar’s managing director, Stefan Degener, and founder of Array Technologies, Ron Corio, took time out of their busy schedules to discuss the future of the European and global solar markets.
What is Solar 3.0 and why is it important?
Stefan: We as First Solar are thinking about the evolution of solar energy in three phases. Currently we see ourselves in the first stage what we call solar 1.0, which is defined by energy only contracts on the offtake side. We are just exporting energy into the grid, which has some challenges in matching between load and generation capacity and creates a debate about solar. This energy only pumping into the grid is limiting the penetration of solar pv to about 15 to 20 per cent of the total generation capacity. So if we want to meet the European target and the global target and want to go to 100 percent renewables we should think of the next phase, solar 2.0, which is the pv power plant combined with advanced plant control. Here in Europe, especially in Germany, several of the power plants are already controlled on a regular basis, but this is just curtailment – shutting the power plant down to maintain stability. So we are thinking about solar 2.0 and how the power plant can be strategically managed for the output and provide frequency control or other grid services to support the grid and provide higher value energy to the grid. These grid reliability services would provide significant value to grid operators and if this is fully understood and implemented with this advanced control we could go up to approximately 40 percent. That is the stage we are preparing and we are coming along with pretty soon. Solar energy 3.0 is a fully dispatchable solar pv power plant – we are talking about utility scale plants – using battery storage or another storage unit to allow time shifting, providing more or less energy to the grid as it is demanded. With this the industry should be able to support a pv penetration of up to 80 per cent. This is pretty similar to what the conventional generators are providing today. This is the basis for us to support our long term climate ambitions, the decarbonization of energy, mobility etc. We see ourselves as a kind of thought leader. Who is today, combining the segments of pv, storage and the political stake holders.
Storage is an important aspect of solar 3.0. How mature is the utility scale storage market?
Stefan: Energy storage in utility scale is not very prominent these days in Europe. The main application today is on the residential and commercial side. However, we have our first applications for utility scale level, storage for frequency control in Europe. In particular, there are a couple of power plants already equipped in Germany. It is picking up. But it is definitely the future.
Much of solar 3.0 is reliant on huge drops in pricing. We already see module and storage pricing on the decline, but how can the system be optimized further?
Ron: The costs have reduced dramatically, but further reduction is possible along with improvements in efficiency and performance in panels and trackers. With solar 3.0, we will see a more autonomous operation with module cleaning, ground maintenance, performance optimization, and integrating systems with storage schemes. We will see large scale adaption of storage into the economics and the progression of reaching economic viability in all these different applications. Reliability will be the key factor for the success of utility scale PV, which has been the driver for Array. In general, I think part of the focus moving forward in the industry is to look at the total value of the system and its long term performance; not just reducing the upfront costs, but also increasing the value that the power plant provides over its 30 year life.
Could you give us an example where you have already reached cost reduction in O&M?
Ron Corio: Our tracker technology has the lowest levelized cost of electricity and scheduled O&M in the industry. This comes as a result of continuously optimizing our system design for the nearly 30 years that we have been in business. We have a patented technology that sets us apart from others. How? Other tracking technologies include a high number of motors, controls, and fragile electronics. These additional components need multiple replacements over the lifetime of the plant which impacts the long-term economics of the project, and creates high risk for investors. By contrast, our centralized technology comes with zero scheduled maintenance. A recent study conducted by TÜV Rheinland on solar tracking architectures found that, Array’s tracking technology for a 100 MW site, when compared to decentralized technology, can save investors and plant owners as much as $12.41-million in O&M costs over the 30-year lifetime of the PV power plant.
How important are utility scale projects for solar 3.0?
Stefan: Utility scale projects are important if you really look into it from the most economic standpoint and from the ability to provide these grid services. We are about to build a battery pv combined system in the US pretty soon – in Arizona, where we have agreed with Arizona public services – the local utility, who are entering into a 15-year-ppa. The energy from the power plant, which is producing over day, loading the battery, then most of the energy will be pumped into the grid between 3 and 8 pm. This is where we are gaining the experience on these systems and then carry this experience over into other markets like Europe, where we are working closely together with developers. The utility scale segment in Europe, somewhere between 100 and 150 megawatts, is a very important kind of pillar if we want to drive solar penetration up to levels of 60 to 80 per cent.
Ron Corio: Utility scale solar is obviously a much cheaper form of energy generation than residential or commercial projects. We will see the utility-scale market move forward, just based on the economics.
Both of you mentioned the importance of quality and reliability for Solar 3.0. How far is the industry really with this? What has to be done?
Ron: We pioneered much of the utility-scale tracking market in the US. In the early days, there was resistance to tracking technology and introducing moving parts to fixed, static systems. Reliability was a key focus of the financing and engineering community. Essentially, that’s what is engrained in our DNA, and that is how we have built our product. We have been building solar trackers since 1989, and have seen a lot of extreme weather and environmental conditions over that time which has definitely informed our tracker designs of today.
The industry has raced toward lowering costs, partially fueled by auction markets all over the world, so there is a huge focus solely on CAPEX. We believe that will change as the industry matures, the focus on CAPEX will move to lifecycle value, and LCOE is really the metric that needs to be used if we are focusing on highest value and best return on investment. This is true of the PV power planet, but also for value-added services as we move forward with frequency stabilization and energy storage. We have to get the basics right today, and I think the industry is still working on that to some extent.
Stefan: We are actually testing 80,000 modules per year, our test labs have 4,000 modules in testing at any one time. This is how we apply these high standards, how our customers are able to rely on First Solar and lenders are able to rely on the technology they are financing, which is designed to have a super high lifetime.
Are there any challenges?
Ron: There are challenges in the market dynamics and economics around the world. With the focus on auction processes, pricing is on a downturn, and that is really great, but ultimately, we as an industry still all need to be focusing on delivering a quality product. The industry is very innovative and resilient, and I see the 80 percent penetration for renewables is doable within the next 20-30 years.
Stefan: Between economics, market and demand we need to be clear that we are all working in regulated market. Energy is basically regulated all over the world, we need to work closely with the grid operator etc. to archive the 80 per cent of solar penetration and 100 per cent of renewables in the next decades, the industry is definitively well positioned to do that cleverly and produce reliable and cost effective products.