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Retail Solar Price Drop Accelerates, New Record Lows Reached

August solar prices fell at the quickest pace in the last eight years, according to the monthly survey by Solarbuzz.com. In Europe, prices reached another record low. And industrial electricity prices are finally poised to fall below ::continue:: 20 cents per kWh.

Price per Watt Dips Quickly

The price of a single solar module in Europe fell 2.2% (10 euro cents) to 4.34 euros per Watt. The August price was almost 8% below that of August 2008 and represents a new record low. And remember, this price survey is for single modules, so large orders would get lower prices.

In the US, prices fell 2.4% (11 cents) to $4.45 per Watt. The August price is now less than 3% above the record low set a few years ago. The price of solar electricity fell almost 2% to reach a new record low in all three categories:

Residential fell below 36 cents per kWh for the first time at 35.89 cents, commercial fell below 26 cents for the first time at 25.77 cents, and industrial slid to 20.07 cents per kWh.

The eight-year survey witnessed two new monthly records: number of lower prices for modules and the rate of decline (described above). A total of 176 modules had lower prices (12.7% of the survey) compared to the previous record of 126 (9.2%) in May of this year. The previous record change was an increase in prices at 142 modules in August 2005.

And Demand Poised to Grow

Solarbuzz also reported that more solar projects are moving again, a sign that demand should pick up quickly in the months ahead. Economic recovery, green governmental policy, and more attractive prices are the main drivers of this increase in demand.

Bottom line: While solar electricity prices remain higher than most conventional electricity markets, they are getting more and more competitive as the months roll by. September should be an exciting month as prices continue to decline and finally reach a record low in the US. Combining further solar price reductions with a return of tight oil market this winter should help the price of solar reach its most attractive point ever relative to other energy sources.

Onwards in the Sustainable Energy Transition

AWEA: Record US Wind Power Growth in First-Half 2009

US wind capacity continued its impressive growth in the second quarter while fossil fuel consumption continued to fall. The American Wind Energy Association (AWEA) just released their second quarter report, and it’s full of surprisingly upbeat news for a sector hard-hit by the recession. The resilience of wind power as a low-cost, carbon-free source of electricity is made clear by the ::continue:: 1.2 GW in new wind capacity added March 1-June 30.

4 GW in First Half of Year a Record

While the second quarter’s growth rate was less than half that of the record first quarter, the two quarters add up to another record — for installed wind capacity in the first half of the year (~4 GW vs. 2.7 GW in H1 2008). And even though we are near the bottom of a deep recession, the second quarter growth of 1.2 GW was equal to Q2 2008. It brings total US wind capacity to a world-leading 29.4 GW.

Major growth occurred in 10 different states across the country. In percentage growth, Missouri led the pack by almost doubling its wind capacity last quarter to over .3 GW (too bad MO Senator Claire McCaskill (D) is slowing the current climate bill that would help the state take further advantage of their wind resources). Pennsylvania and South Dakota also had double digit growth rates at 28% and 21%, respectively. Texas extended its leadership in wind by passing 8 GW, while #2 Iowa passed 3 GW.

My top 10 states list in rough percentage of electricity from wind shifted a little:

  1. Iowa (~19% of its electricity from wind)
  2. North Dakota (just below 18%)
  3. Wyoming (over 15%)
  4. Oregon (over 8%)
  5. South Dakota (almost 8%, up from a tie for #7)
  6. Minnesota (~7.5%, down from #5)
  7. Kansas (~7%, down from #6)
  8. Texas (almost 7%, up from #9)
  9. New Mexico (~6.5%, down from a tie for #7)
  10. Colorado (~6%)

Wind capacity can now generate ~1.9% of US electricity demand. Wind may pass 2% by year’s end, further crowding out dirtier coal, oil, and natural gas consumption.

Fewer Wind Farms Under Construction Though

The difference between 2009 and 2008 is the second half of the year. Last July, there were ~9 GW under construction. But this July, the queue is a lower ~5 GW (even though it’s a vast improvement from the smaller 3.4 GW under construction at the end of Q1). As I wrote last week, wind farm construction is expected to pick up tremendously in 2010 to a new record above 10 GW.

Could 2009 Rival 2008?

The second half of 2009 is expected to witness a significantly slower pace of installation than last year (almost 5 GW) on more difficult financing and reduced US electricity demand. But the lower turbine prices and the federal stimulus support emerging in the months ahead may help 2009 get close to last year’s phenomenal growth. AWEA projects annual growth of 6-7 GW (second highest ever), with growth continuing at the second quarter’s rate over the next two quarters. They are probably right, since wind farms are such huge projects and take months to complete. But I would love to be surprised by another record year. And I will keep you abreast of progress here as it is made in the weeks ahead.

Onwards in the Sustainable Energy Transition-

New report predicts record wind power growth ahead

A new wind power report just came out of the US Department Of Energy that bodes very well for future wind power growth. After a difficult year in 2009, record growth is expected to continue 2010-12. In fact, wind power is expected to be the biggest source of new electricity supply during the period, providing 60% of new demand. Wind power is expected to dethrone natural gas as the top source of new electricity for our country.

Turbine Prices to Fall, White Hot Growth Rates to Return

Turbine prices have increased since 2001 as demand growth has been through the roof. Turbine prices have actually doubled since 2001 from a low ~75 cents per watt to ~$1.50 per watt in mid-2008. But the deep recession is inducing lower demand in 2009 (down 20-50% from the record high of 8.5 GW hit in 2008). This lower demand has allowed wind turbine supply to catch up, sending prices back toward lows of a few years ago as I mentioned a few weeks back. The grid parity I wrote may be reached by 2012 for solar was reached by wind power years ago (when the federal Production Tax Credit is included). As wind prices get more competitive and financial markets recover, the Energy Information Administration (EIA) predicts that record growth will return to the US market in 2010-12, sending demand to consecutive record highs of ::continue:: 10.4 GW, 11.9 GW, and 13.7 GW!

Another recent DOE report outlines a growth path to 20% of US electricity coming from wind by 2030 that has been far surpassed these past three years and by the EIA projections above. Thus, we may be able to reach 20% wind by 2025 or earlier.

Wind Farm Performance Improving

The capacity factor (percentage of time wind is producing its potential) for wind farms has improved over the years. Back before 1998, the capacity factor was in the low 20% range. Since 2005, the capacity factor has been 35-37%.

What About Solar and Other Renewables?

If wind provides 60% of new electricity demand in 2012, can solar, geothermal, and biomass provide a bulk of the remainder? My current projection is for solar to provide ~10% of EIA’s projected new demand in 2012 (over 2.5 GW). If geothermal and biomass can add a similar chunk together, we’ll only need a couple of new natural gas or coal plants that year (less than 20% of new capacity).

Bottom Line: Wind power has gone through tremendous growth in the US and worldwide. The EIA predict lower turbine prices and healthier financial markets will bring new record growth for the renewable electricity provider – making wind the leading source of new power for America. If we have similar rates of growth for other renewables, our need for new fossil fuel power plants will be miniscule by 2012. Let’s make it happen!

Onwards in the Sustainable Energy Transition-

Solar quickly approaching grid parity

Solar module prices are falling so fast that solar may be able to cost-effectively compete with fossil fuels within a matter of months. The latest bit of news confirming astounding price drops was from China’s LDK Solar. LDK is a producer of the main component of solar modules (wafers). While their second quarter guidance showed a boost in shipments, it also lowered their revenue expectations, translating into a cost per watt of ~$1.

Competing with Thin Film’s First Solar

The cost leader for solar has recently been First Solar, who lowered their production cost per watt to 93 cents during the first quarter. But the lower efficiency of First Solar’s modules (at ~10.9% vs. 14-22% for silicon-based cells) means that selling its modules at $1 per watt is equivalent to Yingli Green Energy, JA Solar or Sunpower selling its modules for $1.30-$2 per watt. I thought sub-$1.75 per watt was unrealistic for crystalline silicon producers in 2009. But LDK’s revised second quarter guidance means that such prices are expected per silicon-based watt, at least on the wholesale level, throughout the rest of the year.

Prices Less than Half 2nd Quarter 2008

Such a price translates into less than half the price of just a year ago. If installation costs can fall in a similar trajectory, relative prices versus fossil fuels will be similar to last year at this time. And once economic recovery begins to lift the price of natural gas in coming months, solar will become competitive and demand will soar.

The Strong Will Thrive

Solar companies who are strong enough to weather the next few months by lowering their cost of production will emerge highly profitable as the recession subsides. In the meantime, the second half of 2009 may witness serious consolidation throughout the solar industry as impaired financial markets fail to provide enough capital for smaller players. But the stronger producers (such as First Solar, Sunpower, and Suntech) appear poised to thrive as solar becomes mainstream and grid parity expands into several markets by 2010.

Onwards in the Sustainable Energy Transition