Solar energy technologies and markets. Eero Vartiainen, Solar Technology Manager, Fortum Solar Business Development

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1 Solar energy technologies and markets Eero Vartiainen, Solar Technology Manager, Fortum Solar Business Development

2 5 statements on solar energy true or false? Solar energy is utopy true false Solar energy is extremely expensive today true false Solar energy is feasible only for distributed production true false Solar energy has no relevance is Finnish conditions true false Fortum is not interested in solar business opportunities true false 2

3 High Resource & system efficiency The world is moving towards Solar Economy Traditional energy production Exhaustible fuels that burden the environment CHP Advanced energy production Energy efficient and/or low-emission production Solar Economy Solar based production with high overall system efficiency Nuclear tomorrow Hydro Geothermal Bio Ocean Sun Wind Low Oil Coal Gas CCS Nuclear today Finite fuel resources Large CO2 emissions Infinite fuel resources Emissions free production Copyright Fortum Corporation 3 All rights reserved by Fortum Corporation and shall be deemed the sole property of Fortum Corporation and nothing in this slide or otherwise shall be construed as granting or conferring any rights, in particular any intellectual property rights

4 Solar energy availability Global horizontal irradiation (kwh/m 2 per year) Total amount of solar energy incident on the surface of the Earth is 800 million TWh per year. That is about 5700 times the global primary energy demand in Source: Research Institute for Solar Energy 4

5 Solar energy availability in Europe Yearly solar horizontal irradiation availability in Europe kwh/m Diffuse Beam Sicily Rome Nice Paris Holland London Copenhagen Helsinki Jyväskylä Sodankylä Source: Beam direct sun and diffuse sky irradiation calculated from European Test Reference Years 5

6 Monthly solar electricity for Helsinki and Sicily Monthly PV production (kwh/kw p ) Helsinki Sicily

7 How much electricity could be produced in theory? With a PV system of 15% efficiency, a module area of 25 km x 25 km would be needed to produce the yearly electricity consumption in Finland. To produce all world s electrity consumption, an area equal to 1/3 of Finland would be needed. 7

8 How much solar PV would fit in the Finnish market? About 20% of the Finnish electricity consumption could be produced with PV without significant surplus With a small storage, the penetration of PV could be increased to 40% Increasing PV penetration much higher than 50 % requires seasonal storage The economically optimal storage size increases with the lowering storage cost Useful PV production / electrcity consumption (%) kwh/kwp 2 kwh/kwp 1 kwh/kwp no storage Annual PV production / electricity consumption (%) Calculation is made with Helsinki weather data and 2011 hourly Finnish electricity consumption (annual sum 82 TWh). 8

9 Three main solar energy technologies with unique characteristics Photovoltaics, PV/CPV Concentrating Solar Power, CSP Solar Thermal, ST Power Residential to utility scale Power & heat Commercial to utility scale Heat & cooling Residential to comm. scale 9

10 Solar energy conversion technologies Photovoltaics (PV) global installed capacity 90 GW Can utilise both direct beam sunlight and diffuse skylight Crystalline silicon cells (90% of the current PV market) Thin film cells (10% of the current PV market) Organic and dye-sensitised cells (laboratory to pilots) Concentrating solar thermal power (CSP) installed capacity 2 GW Conventional technology with steam turbines, requires high direct sunlight Concentrating Photovoltaics (CPV) mainly pilot projects, installed capacity 0.1 GW High efficiency systems with lenses, requires high direct sunlight Solar thermal heating systems installed capacity 200 GW Collector systems that heat air or water China the biggest market by far 10

11 Solar PV cell technologies Monocrystalline silicon Multicrystalline silicon Thin film Polymer Dye-sensitised Concentrating PV 11

12 12 Solar PV technology efficiency development

13 Concentrating PV (CPV) To increase the efficiency of PV, it is possible to join together several thin layers of semiconductors that each capture a different wavelength of the solar spectrum. Commercial 3-junction cells (Ge/GaInAs/GaInP) exceed 30% efficiency. New 4-junction cells are expected to reach over 40%. These cells are expensive and to reduce material cost, they are used with concentrator systems (lenses and mirrors). Concentration ratios can be up to 1000X which means that only 10 cm 2 of cell is needed for 1 m 2 module. Concentrating PV requires high direct sunlight and a sun-tracking device. 13

14 Concentrating solar (thermal) power (CSP) Another way of utilising direct sunlight with tracking systems is concentrating solar thermal power (CSP). Reflectors are used to concentrate sunlight to a receiver and heat a medium (syntethic oil, water or molten salt) which in turn will heat up steam that is driven to turbine to generate electricity. Typical solar-to-electric efficiencies range from 15% (throughs) to 30% (dishes). A benefit of CSP is that heat can be stored or backup fuels used to generate electricity when the sun is not shining. A CSP tower with a molten salt storage 14

15 CSP reflector systems Parabolic throughs and linear Fresnel reflectors (LFR) have a line focus. Throughs have a mobile receiver whereas LFR receiver is fixed. Parabolic through Linear Fresnel reflector Solar towers and parabolic dishes have a point focus. Tower receiver is fixed whereas dishes are mobile and have an independent engine/generator (such as Stirling engine or microturbine) Solar tower with heliostats Parabolic dishes 15

16 Solar thermal heating Solar collectors can be used to produce domestic hot water. When the sun is shining, cold water is heated in the collectors and the heat is transferred to the storage tank. Space heating by solar heat is limited because the heat load is small during the summer. However, it is possible to utilise passive solar heating and daylighting during winter. 16

17 Global cumulative PV capacity reaches 100 GW in History / moderate scenario Policy-driven scenario Global cumulative PV capacity (GW) Source: European Photovoltaic Industry Association (EPIA) 2012 estimate is an average of moderate and policy-driven scenarios

18 Solar PV new capacity demand will shift from Europe to China, US, Japan and India Annual PV market (new capacity per year) GW E2012 E2013 E2014 E2015 E2016 Germany Italy Rest of EU Japan USA China India Other 18 Source: European Photovoltaic Industry Association (EPIA) Note: 4 GW of Italy s new capacity in 2011 was installed late 2010 but grid-connected in 2011

19 IEA PV power generation estimate (TWh per year) 5000 PV electricity generation (TWh) Off-grid Utility Commercial Residential Source: IEA Technology Roadmap Solar photovoltaic energy 19

20 Solar PV (multicrystalline silicon) manufacturing process PV system cost breakdown Silicon Ingot/wafer Cell Module Balance of system Balance of system includes all other system components except the module: inverters, cables, mounting, installation work etc. 20

21 PV module price development (German spot market) 3,0 German spot market price for PV modules PV module price (euro/wp) 2,5 2,0 1,5 1,0 0,5 0,0 1/09 3/09 5/09 7/09 9/09 11/09 1/10 3/10 5/10 7/10 9/10 11/10 1/11 3/11 5/11 7/11 9/11 11/11 1/12 3/12 5/12 7/12 9/12 Factory gate c-si Mono c-si Multi c-si a-si CdTe Sources: Photon International, PV magazine 21

22 Polysilicon spot market price has dropped dramatically Virgin polysilicon price ($/kg) Sources: Photon International, PV magazine 22

23 German PV rooftop system price development 5 Historical price Price forecast PV system price (euro/wp) Historical data: German Solar Industry Association (BSW) Price forecast based on historical cost reduction of 20% every time the global cumulative capacity (source: EPIA) doubles 23

24 PV electricity cost is already lower than retail price in some areas PV vs. retail electricity price (c/kwh) PV 2012 PV 1,5 /W Nordic Germany Italy China India California PV 1 /W Retail PV 2012 PV 1.5 /W PV 1 /W Retail PV 2012 PV 1.5 /W PV 1 /W Retail PV 2012 PV 1.5 /W PV 1 e/w Retail PV 2012 PV 1.5 /W PV 1 /W Retail PV 2012 PV 1.5 /W PV 1 /W Retail low Retail high PV Investment cost 2012 rooftop averages: Germany 1.8, Nordic and Italy 2.4, China and India 2.6, California 3.6 euro/w p + VAT (except Germany) VAT: Nordic 25%, Italy 20%; China 17%, India 13.5%, California 9.25%; O&M cost: 1 c/kwh; Exchange rate $1.25/ Interest rates: Nordic 3% Germany 3%, Italy 5%, China 3.5%, India 7.5%, California 3.5%; System lifetime 25 years Yearly electricity production: Nordic 810, Germany 900, Italy 1350, China 1350, India 1620, California 1620 Wh/W p 24

25 PV system prices will continue to fall 25 Source: EPIA: Connecting the Sun, 2012 Note: PV system prices in nominal terms

26 PV module efficiency increase will drive costs down including Balance of System cost Average crystalline silicon (c-si) PV module efficiency has increased by %-points/yr With current increase rate, 17-18% average efficiency will be reached by 2020 and 20-21% by 2030 Best commercial monoc-si modules already reach over 20% Theoretical limit for single-junction mono-c- Si cells is 30% Best multi-junction cells have reached 44% in laboratory and may reach over 50% Average efficiencies of commercial modules (%) 14,4 14,9 13,8 12,9 13,3 13,3 13,7 13,7 14,1 13,7 12,4 13,5 11,7 11,8 12,9 13,1 13,1 11,2 12,7 13,1 12,0 11,9 12,2 11,4 11,0 10,8 7, Monocrystalline Multicrystalline a-si CdTe CIGS HIT 26 Source: Photon International

27 Energy payback time of PV has decreased significantly Energy payback time development according to different studies during Energy payback time (years) Source: Update of energy payback time data for crystalline silicon PV modules (Thomas Wetzel, 26th European PVSEC, 2011) 27

28 Energy payback time depends on the solar conditions Energy payback time for crystalline silicon modules at various locations Energy payback time (years) 2 1,5 1 0,5 0 Monocrystalline Multicrystalline Sun belt South Europe Germany 28 Source: Update of energy payback time data for crystalline silicon PV modules (Thomas Wetzel, 26th European PVSEC, 2011) Solar PV electricity production: Sunbelt 1800, South Europe 1275, Germany 1000 kwh/kw peak

29 Average PV lifetime CO 2 emissions compared with average European and Fortum generation mix 350 CO2 emissions g/kwh Average European mix 2010 Fortum average mix 2010 Fortum European average mix 2010 PV South Italy, manuf. with European average mix PV in South Italy, manuf. with Fortum average mix PV in South Italy, manuf. with Fortum EU average mix PV in Nordic, manuf. with European average mix PV in Nordic, manuf. with Fortum average mix PV in Nordic, manuf. with Fortum EU average mix 29

30 Largest solar PV plants are already bigger than 100 MW Agua Caliente PV plant (250 MW) Arizona, US 30

31 Solat heating in Denmark 31 Source: Ramboll

32 32 Fortum solar projects: Glava Energy Center in Sweden a 130 kw PV system connected to Fortum s grid

33 33 Fortum solar projects: Espoo City car depot in Finland - a 55 kw PV system to charge electric vehicles

34 Fortum and solar energy business Fortum has established a solar business development unit this year and has analysed different solar energy markets Large-scale PV production becomes first feasible in countries with good solar conditions and high electricity price We are analysing concrete project possibilities e.g. in India and France (in synergy with Fortum s growth initiatives in CHP and hydro) 34

35 Fortum has launched PV solution offerings to residential customers in Sweden and Finland Solar kits to B2C customers May 2012 Easy to buy solar PV kit offering to residential customers around Stockholm Fortum as single-point of contact, system and installation through partners System analysis and calculation tool available on-line August 2012 Solar kit launched for public on 14 th of August Available for all customers in Uudenmaa who are connected to grid PV system sizes from 1.3 to 3.8 kw Installed system turnkey price for the largest system 2.4 euro/w p + VAT 35 Buy back excess production Fortum buys produced excess solar energy from customer NordPool spot price - Fortum fee (0.29 c/kwh) Available for Fortum electricity contract customers 35

36 First PV system (1.8 kw) sold by Fortum in Finland installed Thank you for your attention! 36