The economic logic of the solar energy supply chain

Fossil fuel and solar energy generation are intrinsically very different processes, and the opportunities they present for maximizing availability and efficiency — with respect to both resource consumption and financing strategies — are correspondingly diverse. Besides the differing environmental impact, the disparities between the supply chains demonstrate just how absurd it is to evaluate the economic potential of energy sources solely on the basis of the capital cost of the power generation plant required. it is because of such absurd reasoning that there has been such reluctance to exploit the potential of renewable resources.

Figure 2.1 compares the supply chains for fossil fuels and renewable energies, from which the following conclusions can be drawn:

• The shorter the supply chain — ie, the smaller the number of distinct processing steps involved — the greater the scope for reducing the costs of energy generation. If improved solar technologies can be introduced on a large scale, they represent not just the least environmentally damaging strategy for meeting energy needs, they are also potentially the most productive and thus the most economic solution. For this to happen, it is insufficient merely to recognize the benefits of solar energy. Technologies and strategies must be developed to exploit its advantages to the full. Insufficient progress on this front is the reason why the greatest potential economic benefit of renewable resources has not yet been systematically exploited.

As long as they remain embedded within the conventional framework for energy generation, providers and consumers of energy from renewable resources will continue to pay the costs of fossil fuel supply and distribution networks. The potentially decisive advantage that renewable resources have over conventional fossil fuels will continue to go unexploited. If the switch to renewable resources simply replaces elements of the established fossil fuel structure, this will introduce a systemic bias that will hamper the growth of the renewables sector, confining it to a peripheral role within the energy industry for some time to come. Effective use of renewable resources requires a radical rethink of the supply and distribution network — simply copying the established structure will not work. The construction and operation of the distribution grid, for example, typically constitutes more than half the costs of an electricity supply. It is in the elimination of precisely these factors that the greatest opportunity for productivity gains from renewable energy resources lies.

It follows from this that productivity gains from renewable resources cannot be realized through the construction of multi-megawatt power plants with sprawling distribu tion networks. That is not to say that there is no place for solar thermal power plants. What is does imply is that such plants should not be used as the core of an inter-regional — or even international — distribution grid. The ideal use for a solar thermal power station would be to serve large towns and cities in its immediate vicinity — for example, Cairo's power needs could be supplied by a plant located in the nearby desert.

• On this basis, one criterion for evaluating the various technologies available for exploiting solar energy will be their potential for shortening or even completely eliminating the energy supply chain. On-site generation using PV cells, for example, may potentially be far more economic than large-scale generation plant.

• One decisive advantage for renewable energy in the future lies in the ability to generate electricity at minimal technological and infrastructural cost. Because electricity is such a flexible tool, the demand for electricity will grow at an increasing rate, at the expense of other sources of energy. Within the current system, it is simpler to supply fuel for combustion when and where the energy is required. Converting the same fuel into electricity requires additional process steps, and thus is more laborious and technologically complex. With renewable resources, the opposite applies: electricity generation using PV and wind turbines is technologically the simpler route, whereas producing combustible fuel is more complex and long-winded. This reversal provides the template for the energy revolution to come.

The complexity of fossil fuel and solar power generation

Renewable energy is regarded as uneconomic primarily because of the allegedly greater material cost of local power generation over centralized power stations. This reasoning is specious, as it neglects to consider the long supply chains involved in fossil fuel energy and the concomitant material cost of fossil fuel

Wind power




(on-site generation)


(on-site generation)


->■ National grid—»-Distribution (medium (low voltage)


- Pressing-

Gasification Conversion to pellets

Recycling of residues

^ station


"National grid—»-Distribution (medium (low voltage)


Crude oil Extraction—»Shipping—»-Refining-


I power

Garages Oil traders

-»-National grid—»-National grid—»distribution (high voltage) (medium (low voltage)


-»-Coal-fired-»-National grid—»National grid—»Distribution power station (high voltage) (medium (low voltage)

• Disposal of voltage) ash

Uranium —»-Shipping—»-Ore-»-Shipping-»-Enrichment -»-Shipping-»-Nuclear-»-National grid—»National grid—»Distribution mining extraction • Disposal of power (high voltage) (medium (low voltage)

enriched station voltage)

uranium • Intermediate storage

• Final storage

• Reprocessing

Figure 2.1 Comparison of electricity generation from fossil fuels and renewables vO

extraction and transport. It also takes no account of the relative complexity of the different generation technologies. Electricity generation from fossil fuels involves a considerably greater number of processing steps, resulting in proportionately greater technical costs (see Figure 2.2). In a fossil fuel power station, the first step is to convert chemical into heat energy through combustion (in a nuclear power plant the heat is derived from nuclear fission). Three further conversion processes follow: thermodynamic energy transfer to turn water into steam; conversion into mechanical energy as the steam drives the turbine; and finally conversion of mechanical energy into electrical in the generator. At the same time, the mechanical plant must also be cooled.

pv electricity generation, by contrast, involves only two steps: conversion of incident sunlight into direct current in the cell itself, followed by inversion to produce alternating current. in the case of wind power, the wind is converted into mechanical energy by the rotors, which in turn drive the generator to generate current. No cooling system is needed. Quite clearly wind turbine plant is not only easy to install; it is also more amenable to standardized production, and does not require operational personnel, aside from occasional maintenance work.

The fact that supply chains for solar power are short and the generation plant relatively simple really does beg the question of why generations of scientists and technicians have refused to accept it as an alternative, instead setting store by more laborious techniques, even preferring such extremely complex and technically fraught propositions as controlled nuclear fusion. Whereas complex technological solutions are placed on a pedestal, comparatively simple technologies are regarded with studied distrust, too backward for the modern, progressive age. imaginative reservations are constructed in respect of 'simplistic' techniques, while justifications for hightech approaches are grossly oversimplified.

Sunlight —»-Solar cell-»-Inverter-»-Electricity


Fossil-»-Combustion-»-Heat-»-Steam—»-Turbine -»-Generator-»-Electndty fuel chamber |—»-Cooling

—»-Emissions filter '—»-Waste storage and disposal

Nuclear-»-Reactor-»-Heat-»-Steam—»-Turbine ->Generator->Electridty

Figure 2.2 Internal processing steps involved in solar and fossil fuel/nuclear electricity generation

Short chains: the greater productivity potential of renewable energy

There are greater opportunities for productive energy use where power can be generated at a reduced technical cost. For renewable energy, however, these opportunities have hitherto been realized only in isolated niches — for instance, in low-end applications like pocket calculators, in the so-called 'passive use' of solar energy for heating and cooling buildings, in the solar collectors already installed on countless roofs in places like Greece and Israel, or in the 'solar home systems' in use in rural regions of developing countries, where generation from PV even at this early stage in their development, is already more cost-effective than conventional power generation and distribution methods. Using PV saves on the cost of purchasing generators and the diesel to run them, not to mention erecting expensive overland distribution cables.

In the industrialized countries, such examples are regarded as side-issues or interim solutions for less developed countries. This dismissiveness means that the enormous opportunities that shorter supply chains present for increased productivity in the industrialized countries are all too quickly overlooked. Of course, for these opportunities to be realized, there must first be a conceptual break with the idea that what worked for fossil fuels will work for renewable energy. The structures required for fossil fuel energy are not compatible with the economic requirements of an electricity supply based on solar energy.

Solar Panel Basics

Solar Panel Basics

Global warming is a huge problem which will significantly affect every country in the world. Many people all over the world are trying to do whatever they can to help combat the effects of global warming. One of the ways that people can fight global warming is to reduce their dependence on non-renewable energy sources like oil and petroleum based products.

Get My Free Ebook

Post a comment