Value of DOE Early Stage Research to the Solar Energy Industry

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Norman Barnaby Warren
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1 Value of DOE Early Stage Research to the Solar Energy Industry Written by: Britta Dosch and Stacey Davis October 2017 The electric grid is fundamental to the US economy and our economic competitiveness. Even as the electric mix changes to accommodate shifting market dynamics and air quality improvements, customer expectations for reliable, low-cost, and safe electric power remain the same. The US Department of Energy, with its mandate to ensur[e] the nation s security and prosperity by addressing energy and environmental challenges through science and technology solutions, plays a critical role in fostering the technological advancements needed to support the evolving needs of the electric grid. Today, fundamental shifts in the way electricity is generated and used requires further innovation and points to the continued importance of the long-term, high-risk research and development of energy technology for which the Department is known. 1 Electric sector transformation Recent years have seen substantially slower growth in US electricity consumption alongside historic changes in the energy resources that supply our electric needs. The US Energy Information Administration (EIA) estimates that electricity consumption between January 2013 and January 2017 varied by only 0.28% 2 a substantial change from the previous 60 year period from 1950 to 2010 that saw increases in per capita residential electricity consumption averaging 4 percent per year. 3 Energy consumption continues to flat-line even as the economy improves. While this can be seen as an important milestone that economic growth no longer requires concomitant growth in electricity demand, this also means that power companies can no longer rely on the historical model in which profits are tied to new investments required to meet growing demand. Electricity supply is undergoing even more dramatic changes, including shifts away from centralized baseload resources and growth in cleaner intermittent resources and distributed energy resources. Traditionally, utilities have served the minimum energy demand with centralized baseload resources such as coal, nuclear power and natural gas, 4 with intermediate and peaking loads served mainly by natural gas plants available at sufficient capacities to meet projected peak demand levels with an ample reserve margin. Determined by the marginal cost of generating electricity, the order in which different supply resources were used to meet demand was driven by the low fuel costs of nuclear plants and coal. For decades, this well-honed system met power demand in a reliable fashion, supplying the needed ancillary grid services; however, it did so at a substantial cost to public health and the environment. 1 A Brief History of the Department of Energy. US Department of Energy (DOE). 2 Consumption & Efficiency. US Energy Information Administration (EIA), Annual Energy Review. US EIA, Integrated Resource Plan Final Report. Tennessee Valley Authority,

2 Over the last half-decade, a combination of factors have upended the business-as-usual electricity supply profile: innovations in natural gas extraction have lowered the cost and increased the domestic supply of this resource; innovations in the efficiency and cost of wind and solar energy have made these resources more attractive economically, achieving economic parity in some markets; and environmental regulations have added to the cost of coal, which has, in many cases, shifted its position in the loading order where it operates at a lower capacity factor. And with low-cost natural gas increasingly setting the price for electricity, and absent a serious price on carbon emissions, coal and nuclear generation resources are having a difficult time covering fixed costs of operation and have become more prone to early retirement. The result is a visible change in the US energy mix away from traditional generating sources towards cleaner utility-scale and distributed renewable energy resources. Once supplying over 50% of power in the US, coal generation has been steadily declining for years driven mainly by low natural gas prices. Between January 2001 and July 2017, US coal production for electricity decreased by more than 27%. In that same time period, natural gas generation increased by 236%, 5 surpassing coal generation on a monthly basis for the first time in April 2015 (Figure 1) and this trend continues. 6 A recent DOE Staff report found that [variable renewable energy] resources such as wind and solar are beginning to serve more of minimum load as a number of factors have Figure 1. Natural Gas Generation Overtakes Coal as a Share of the US Energy Mix Source: US Energy Information Administration have collectively lessened the immediate need for traditional baseload resources in certain regions. 7 California s ISO, for example, has inverted their resource plan to include traditionally categorized intermittent renewable resources as the base with other resources filling in behind to meet demand during periods when the wind isn t blowing and the sun isn t shining (Figure 2). 8 The 2015 Renewable Energy Databook, released by DOE s Office of Energy Efficiency and Renewable Energy (EERE), found that cumulative renewable energy capacity [grew] 91% from 101 GW [in 2005] to more than 194 GW in This trend is expected to continue with forecasts showing PV capacity tripling over the next five years Electricity Data Browser. US EIA, July Short Term Energy Outlook. US EIA, July Staff Report to the Secretary on Electricity Markets and Reliability. US DOE, August Renewables Watch. California ISO, October 5, Renewable Energy Data Book. Office of Energy Efficiency & Renewable Energy (EERE). US DOE, Solar Market Insight Report 2017 Q2. Solar Energy Industries Association,

3 Figure 2. CAISO Hourly Average Breakdown of Total Production by Resource Type (MWh) (October 5, 2017) Source: California ISO In addition to transitioning away from traditional baseload resources, the US has seen a growing demand for distributed energy resources (DER). DER encompasses many technologies and resource types, such as battery storage and rooftop PV installations. These systems can, among other benefits, provide end users with the ability to generate most of the power they consume onsite, lower electricity bills, and give consumers access to power during grid outages. 11 In February 2017, recognizing the growing importance of DER, NERC released a study which examined the transformation of the US s resource mix to include a higher proliferation of DER. 12 This sentiment is echoed by the more than $1.3 billion investment that utilities, including Exelon, NRG, Duke Energy and Southern Company, have made in distributed energy companies since Navigant expects the annual installed capacity across the global DER market to grow from GW in 2015 to GW in 2024, representing $1.9 trillion in total investment. 14 Much of this growth in new energy technologies was made possible by DOE s earlystage research. DOE early stage research powered US solar industry leadership Through partnerships with industry, support for academic research and first rate energy laboratories, the Department of Energy advances early stage research essential to the development of transformative science and technology solutions to meet each generation s energy and environmental challenges. As a key example, over the last four decades and with bipartisan support, the DOE s solar PV subprograms have made significant contributions to early stage research that has brought down costs, improved efficiency, and enabled a vibrant domestic industry: 11 Tracking the Rise of Distributed Energy Resources. Navigant Research May Distributed Energy Resources; Connection Modeling and Reliability Considerations. North American Electric Reliability Corporation, February Utility Investments in Distributed Energy. GTM Research, March Distributed Energy Resources Global Forecast. Navigant Research, January

4 : Flat Plate Solar Array Project The Flat Plate Solar Array Project was funded by the US Government and managed by the Jet Propulsion Laboratory to develop the module/array technology needed to attain widespread use of photovoltaics by The project reduced PV module prices from $75/Wp i to $5/Wp (1985 dollars) and increased module efficiencies from 5% in 1975 to more than 15% in : PV Manufacturing Technology Project (renamed Photovoltaic Manufacturing R&D Project in 2001) The PV Manufacturing R&D Project was a government-industry R&D project made up of partnerships between the DOE and PV industry members focused on improving manufacturing processes and equipment. As a result of the project, average manufacturing costs declined by 54%, from $6 per Wp in 1992 to $2.75 per Wp in Additionally, manufacturing capacity increased from 14 MW in 1992 to 250 MW in : Thin-Film PV Partnership Project The Thin-Film PV Partnership Project was comprised of government- and industry-led R&D partnerships on emerging thin-film solar technologies. Three national R&D teams focused on three different thin-film semiconductor materials. The project resulted in significantly reduced manufacturing and product costs and as a result, domestic production of thin films grew from roughly 10 WM in 2003 to more than 250 MW in : Solar America Initiative The Solar America Initiative was created in 2006 as part of President George W. Bush s Advanced Energy Initiative with the goal of making solar energy cost competitive. The initiative again aimed to further increase the efficiency of solar technologies Present: SunShot Initiative The SunShot Initiative supports efforts by private companies, universities, non-profit organizations, state and local governments, and the National Laboratories to drive down the cost of solar electricity. This project set cost targets at $0.10 per kwh for residential PV, $0.08 per kwh for commercial PV, and $0.06 per kwh for utility-scale PV. SunShot has already accomplished the utility-scale goal, three years earlier than expected, and has set a new goal of $0.03 kwh for utility-scale solar by DOE s solar R&D work has established the foundational knowledge that drives today s private sector innovation. An estimated 274 patent families and 30% of other patents in the solar energy field are linked to EERE-attributed patents, more than any other organization. 19 Over 160 different companies have participated in DOE PV partnerships, including many of today's leading solar companies, such as 15 Ross & Smokler. Flat-Plate Solar Array Project Final Report. Volume VI: Engineering Sciences and Reliability. Jet Propulsion Laboratory, October Accomplishments in Photovoltaic Manufacturing R&D. National Renewable Energy Laboratory (NREL). 17 Thin Film Photovoltaic Partnership Project. National Renewable Energy Laboratory (NREL), About the SunShot Initiative. SunShot Initiative. EERE. US DOE. 19 Accomplishments. SunShot Initiative. EERE. US DOE. 4

In fact, the DOE estimates that its efforts have accelerated solar industry progress by 12 years and that without DOE s involvement, the average solar PV module production cost per watt would have

5 First Solar, the largest solar producer in the world since 2009, General Electric and Boeing. 20 DOE s programs were central to the success these and other solar companies have had in developing cost and energy efficient solar technology. In fact, the DOE estimates that its efforts have accelerated solar industry progress by 12 years and that without DOE s involvement, the average solar PV module production cost per watt would have been $5.27 in 2008, $3.30 per watt more expensive than the actual cost in 2009 of $1.92 per watt. 21 Today, solar PV technology is the fastest-growing energy source for renewable generation. 22 The amount of solar power installed in the US has increased from 1.1 GW in 2007 to an estimated 47.1 GW in 2017 enough to power the equivalent of 9.1 million average American homes. 23 Solar accounted for 39% of new electric generating capacity additions in 2016, more than any other source in the US. 24 As capacity increases, prices continue to decrease, with the price of solar panels falling over 75% in the past 10 years. 25 Figure 3. US Utility-Scale & Distributed Solar PV Cost and Capacity Source: US Department of Energy It is important to note that this expansion isn t just occurring for utility scale solar as illustrated in Figure 3. In July 2017, the EIA included forecasts for small-scale solar PV capacity and electricity generation for the first time in its Short-Term Energy Outlook. The September 2017 EIA data projects that total US small-scale solar PV capacity will grow from 16.5 GW at the end of August 2017 to 20.2 GW at the end of With continued growth in capacity, small-scale solar will play an increasingly important role in the domestic energy transformation. 20 Thin Film Photovoltaic Partnership Project. NREL, History. SunShot Initiative. EERE. US DOE. 22 EERE Success Story-The Future's So Bright, You've Got to Wear Shades: The Roles of the Department of Energy, National Laboratories, and Industry in Evolving the Solar Market. US DOE, December The Clean Energy Economy in Three Charts. EERE. US DOE. 24 Munsell, Mike. US Solar Market Grows 95% in 2016, Smashes Records. GTM, Greentech Media, February Energy Department Announces Achievement of SunShot Goal, New Focus for Solar Energy Office. EERE. US DOE, September Short Term Energy Outlook. US EIA, July

6 DOE must continue to support US energy leadership DOE s role in early stage R&D is not done. As the US continues to lead in the solar space, benefitting from the fruits of DOE s past research, there is a need and an opportunity to undertake early stage research on grid management technologies and practices that will support continued electric reliability and resilience amidst all the changes taking place that impact the electric power grid. A 2016 report by the DOE s Solar Energy Technologies Office identified challenges and opportunities that require continued research, including increasing the use of grid-flexibility options which could enable America to get 25% of its electricity from solar and meeting cost reduction targets. 27 Greg Wilson, Co-Director of the National Center for Photovoltaics at NREL sees grid integration and energy storage as the next major research frontiers. 28 As our energy grid moves towards a future that is less dependent on fossil fuels and is more reliant on clean energy, DOE has the opportunity to again lay the foundation through research and development for continued energy security and economic prosperity and powering US leadership on advanced energy solutions. About CCAP For over three decades, CCAP has provided policy and strategic solutions in the areas of clean energy, climate and air quality in the United States and internationally. The organization has a proven record of engaging stakeholders government entities, the private sector, the finance community, and others to develop win-win policy solutions and strategies. CCAP was started to develop and support a bipartisan coalition of governors, business leaders and NGO s to pass the U.S. Acid Rain Program and its work continues today with efforts to support states with implementation of clean energy and carbon reduction strategies, managing a stakeholder group looking at implications of nuclear plant retirements and in general engaging States, the private sector, impact investors and other stakeholders on clean energy and climate issues. Internationally, we work in countries and with the UNFCCC, the Green Climate Fund and other climate organizations to develop advanced mitigation solutions in the energy, transport, and waste sectors, including managing in-country mitigation projects in Latin America and Asia. CCAP s Board of Directors includes Jim Rogers, former Duke Energy and Cinergy CEO, and Jolyne Caruso, Founder and CEO of the impact investment firm Alberleen Group and Chair of the Barnard College Board of Trustees. i Wp is a measure of a watt of power under peak solar conditions. 27 On the Path to SunShot: Executive Summary. Solar Energy Technologies Office. US DOE, May EERE Success Story-The Future's So Bright, You've Got to Wear Shades: The Roles of the Department of Energy, National Laboratories, and Industry in Evolving the Solar Market. US DOE, December

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