Solar Set To Grow To Multi-Terawatt Scale In US

Solar energy holds the best potential for meeting US long-term energy needs but requires lower cost technologies and more effective deployment.
Published: Tue 19 May 2015

With the potential of solar electricity generation to grow to very large scale, massive expansion of global solar generating capacity to multi-terawatt scale is very likely an essential component of a workable strategy to mitigate climate change risk in the United States, according to a new study from MIT’s Energy Initiative.

Solar generation challenges

But there are three preeminent challenges for solar generation: reducing the cost of installed solar capacity, ensuring the availability of technologies that can support expansion to very large scale at low cost, and easing the integration of solar generation into existing electric systems. Progress on these fronts will contribute to greenhouse-gas reduction efforts, not only in the US but also in other nations with developed electric systems.

“What the study shows is that our focus needs to shift toward new technologies and policies that have the potential to make solar a compelling economic option,” said the study’s chair, Richard Schmalensee, Howard W. Johnson Professor of Economics and Management Emeritus at the MIT Sloan School of Management.

Solar development needs new technologies

After decades of development, supported by substantial research and development (R&D) investments, today’s leading solar PV technology, wafer-based crystalline silicon (c-Si), is technologically mature and large-scale c-Si module manufacturing capacity is in place. For these reasons, c-Si systems are likely to dominate the solar energy market for the next few decades and perhaps beyond.

However, current c-Si technologies also have inherent technical limitations, in particular their high processing complexity and low intrinsic light absorption. As a result commercial thin-film PV technologies, primarily cadmium telluride (CdTe) and copper indium gallium diselenide (CIGS) solar cells, have been developed and constitute roughly 10% of the US PV market today. Although these emerging technologies are not nearly competitive with c-Si today, they have the potential to significantly reduce the cost of PV-generated electricity in the future.

Thus, R&D programmes should focus on new technologies, rather than on near-term reductions in the cost of c-Si, and on efficient, environmentally benign thin-film technologies that use Earth-abundant materials in order to ensure their long-term availability. Further, given the potential for concentrated solar power (CSP) systems to be deployed on a large scale, CSP R&D efforts should focus on new materials and system designs.

Cost competitiveness for solar energy

As of the end of 2014, PV systems accounted for over 90% of installed US solar capacity, with about half of this capacity in utility-scale plants and the balance spread between residential and commercial installations. However, the estimated installed cost per peak watt for a residential PV system is approximately 80% greater than that for a utility-scale plant, with costs for a typical commercial-scale installation falling somewhere in between. As the module costs do not differ significantly across sectors, the major driver of cost differences in different market segments is in the balance-of-system (BOS) component. This accounts for 65% of estimated costs for utility-scale PV systems but up to 85% of the installed cost for residential units.

Reduced solar BOS cost

Experience in Germany suggests that several components of BOS cost, such as the cost of customer acquisition and installation labour, should come down as the market matures. However, the costs associated with permitting, interconnection, and inspection (PII) may be more difficult to control. A national or regional effort to establish common rules and procedures for PII could help lower the cost, particularly in the residential sector and perhaps in commercial installations as well. Residential solar would also expand more rapidly if third-party ownership, such as offered by SolarCity, were allowed in more states.

As such drastic cuts in federal support for solar technology deployment would be unwise. Further, policies to support solar deployment should reward generation, not investment; should not provide greater subsidies to residential generators than to utility-scale generators; and should avoid the use of tax credits.

Inter-state trading of solar energy

Finally the report calls for state renewable portfolio standard (RPS) programmes to be replaced by a uniform national programme. If this is not possible, states should remove restrictions on out-of-state siting of eligible solar generation. This would reduce the cost of meeting set mandates by allowing unrestricted interstate trading of credits.

Further reading

MIT: The Future of Solar Energy