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Energy Movement

Michael Welch

©2006 Michael Welch

In the last several months, the energy world has seen lots of interesting and mostly positive movement. The recently passed energy bill has provided a lot of impetus for the nonrenewable technologies, and some help in areas that Home Power readers are more interested in promoting.

But several other areas of movement are not as closely connected with the energy bill, and clearly reflect the public's desire for a renewable, cost-effective, and nonpolluting energy future. Greater public awareness of environmental problems that were mostly being ignored by politicians and the large energy companies is again becoming a factor in policy making.

Economically, it hasn't hurt the cause to have energy prices skyrocket from previous years as much as gasoline prices have (about 60% higher, supposedly from supply interruptions since Hurricane Katrina), and as much as home heating costs are expected to rise this winter (40% for natural gas and 27% for heating oil). Supplies are not expected to return to normal until the summer of 2006 at the earliest.

PV Demand

All facets of the industry have been impacted by a worldwide, hot market for solar-electric modules. And this is happening on many levels, from the home rooftop market to larger commercial installations to utility projects. As reported in HP102, the module shortage has resulted in substantial lead times for module shipments, and has been pushing up prices after literally decades of steady price decreases. I and many others felt that things would have changed by the end of 2005.

But module prices are continuing to go up, even though the industry has done a lot to try to keep up with demand. For example, solar cell manufacturers quickly ramped up production. But they were stymied when PV-grade silicon manufacturing could not keep up with the cell-producers' demand. Fortunately, these are all short-term problems that are naturally solvable within the economic framework of a demand-driven industry. Prices and demand are rising, so the industry wants to add production, and they will.

What has been surprising to me after watching this trend of increasing prices is that the higher costs have not seemed to slow demand much at all. The public's interest in the technology in the United States, where prices have gone up the most and incentives are far less than in high-sales nations, has continued despite higher per-watt installation costs.

One thing that helps is that installed system prices are not going up at the same rate that PV module costs are increasing. This is because the PV modules normally make up 50 to 80 percent of the total system cost, leaving the rest to balance of system (BOS) parts and installation fees. The major BOS component is the inverter, and inverter prices have been holding steady for years, not even keeping up with increases in common price indexes. Installation costs have stayed pretty flat, with easier-to-install equipment and sharing of techniques among installers.

Solar Hot Water Resurgence

As the point person in a local nonprofit that deals with renewable energy, I have noticed an increasing interest in solar heating. In fact, 2004 statistics recently released by the U.S. Department of Energy bear this out. Solar thermal collector shipments increased by 23 percent over 2003 levels. The same report shows that solar thermal collector prices are decreasing at a pretty good rate, due to advanced technologies and manufacturing economies of scale. Prices are down 27 percent since 2000.

Besides the cheaper prices helping to increase the amount of installed solar thermal capacity, folks that I talk to are

Solar Panel

Shipments

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