Is a solar future without fossil fuel possible? Asian Property Review finds out.
Text by Benjamin K. Yong
WHAT’S UP WITH THE SUN?
“It is almost a foregone conclusion that the future of energy will be in electricity, especially generated by renewable energy.” – Catherine Ridu, CEO of SEDA.
Renewable energy (RE) is the future – countries which are aware of the disastrous consequences of climate change are rushing to reduce coal and other fossil production and increase the production of renewable energy. Of all the different types of RE, solar and wind present the greatest promise as they are easy to install and are getting cheaper by the day. As of 2016, countries like China and India have increased their solar power production (in Megawatts) by about 80% from the previous year. (See Figure 1). Other countries in Asia like Taiwan and Thailand have also upped their capacity by about 50% while Japan, Malaysia, South Korea and Pakistan have a quarter more photovoltaic production from the previous year. A latecomer to the renewable energy scene, the Philippines nevertheless played catch-up by increasing its solar power production by a whopping 525% compared to 2015.
Ideally, the world will reach the end of the carbon era sooner than later. This is when all energy production comes from renewable sources. At the rate RE is being produced, this looks like a very real possibility although it might take years, or even decades.
At this stage, it might seem hard to believe but the country once derided as full of pollution is now at the centre of the RE revolution. Just look at the figures below: “China installed more solar capacity than any other country has in total in 2017. It increased it by 69%. With a total 54GW to be installed in 2017, by 2040, renewables and coal will each account for 40% of China’s generating capacity. China has already smashed its own record by installing 34.5GW in 2016. Creating 43GW solar output in the first 9 months of 2017 – that’s more than the combined capacities of Germany, the US and Japan.” – Bloomberg
And more: “China created a giant panda solar farm in Northern China and built the world’s largest floating solar installation in Southern China.It has exceeded its government’s own target for solar capacity for 2020. It sets itself a new target of 213GW of solar power by 2020 which is five times larger than the current capacity of the US. China now produces two-thirds of the world’s solar panels and is installing one wind turbine every hour.” – Solar Energies Industry Association.
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In other words, China is now the leading solar producer in the world and is determined to further this lead. It also plans to phase out fossil-fuel vehicles which has led the chief executive of China’s top electric vehicle maker, BYD, to predict that China’s vehicles will be “fully electrified, including all passenger cars” by 2030.
This means more electricity is needed to power those cars, increasing the demand. What better way than to harness the power from the sun and wind which is clean and cost-effective, given the sheer magnitude of China’s production capacity. These are all part of China’s way to address climate change – a phenomenon which most countries are taking seriously and which by the looks of it will be led by China in the near future.
As production of renewables increases especially solar power, prices for new solar power projects are falling so fast that the cheapest prices from 2016 have become the ceiling price for solar today, reports Bloomberg.
This year, in the Middle East, the lowest bid price for Saudi Arabia’s 300MW Sakaka solar project was 1.79 cents/kWh, six times cheaper than the average residential price for electricity in the United States at 12 cents/kWh. This has led some solar experts to believe that 0.03/kWh can be considered as a point of no return for the Middle East area given its big volume and low financing rate. Following that, an analyst was quoted to have said: “Solar power delivers the cheapest unsubsidised electricity ever, anywhere, by any technology.”
“What we are witnessing is the birth of a new era in solar PV,” IEA Executive Director Fatih Birol said in October 2017 following findings by the International Energy Agency (IEA) that new solar photovoltaic capacity increased by 50% in 2016.
STORAGE IS KEY
Solar energy storage is the key to making the application of this RE a success. Without storage, you would only be able to get the solar energy at the time it’s converted that is in the day time when there is sunshine. Sunshine in tropical countries are at its optimum between 10am – 4pm. In other words, the power generated by solar panels is intermittent (and variable) and not in a continuously regular flow.
In order to address its intermittency and manage its variability, energy storage solutions are required. With storage, you could use it 24 hours a day.
Currently, energy storage systems are still in various stages of experimentation and use but the technology is improving by leaps and bounds with many storage and battery models R & D being undertaken. This has resulted in the price of storage falling much faster than anyone expected. The growing demand from consumer electronics and electric vehicles were the top reasons, according to McKinsey research.
In fact, the research house found that storage is already economical for many commercial customers to reduce their peak consumption levels. “Further, given regulatory changes to pare back incentives for solar in many markets, the idea of combining solar with storage to enable households to make and consume their own power on demand, instead of exporting power to the grid, is beginning to be an attractive opportunity for customers (sometimes referred to as partial grid defection).”
Case in point is Japan which is now going through a shift from utility-level solar installations to small and mid-sized rooftop installations, which are already a standard feature in many of the nation’s new homes and commercial buildings, and are estimated to provide up to 70% of the national solar capacity in the longer term, says Ziv Nakajima-Magen, Partner & Executive Manager, Nippon Tradings International (NTI).
“What this means, is that many households with solar panels installed will remain with large amounts of excess power on their hands – which would naturally mean a need for better and cheaper energy storage solutions – a trend which electronic giants such as Panasonic and Tesla have been quick to capitalise on.
“Panasonic strongly believe that 2019 will be the turning-point year in which the number of houses built with rooftop solar panels, combined with the unattractive level of feed-in tariffs, will create a shift from grid supply to storage and utilisation of excess energy. Declining costs of residential solar installations further promise to maintain the high level of interest in this type of construction.”
BENEFITS FOR PROPERTY
For residents everywhere, cheap and regular energy are a must-have. Right now, much of the urban world relies on the electricity grid provided by national utility companies. But imagine if each household can produce its own electricity and sell the excess back to the national grid (referred to by McKinsey as partial grid defection).
The rules allowing the selling of excess electricity back to the grid by consumers is termed as a Net Energy Metering (NEM) policy. In an ideal world, we would have a NEM policy in place to pay customers for extra energy production. Feed-in tariffs are incentives for those who use renewable power. Both have proven to be powerful incentives to install solar PV panels.
On the other hand, according to McKinsey, this presents a risk for widespread partial grid defection, in which customers choose to stay connected to the grid in order to have access to 24/7 reliability, but generate 80 to 90% of their own energy and use storage to optimize their solar for their own consumption.
“We are already seeing this begin to play out in places where electricity costs are high and solar is widely available, such as Australia and Hawaii.”
If NEM is implemented, the returns would make for a sound investment and significant energy cost reductions. The return on investment period is estimated at between five and seven years (depending on the saleback price), while the PV panels carry a 25- to 30-year warranty.
Apart from stand-alone buildings, solar systems can also be integrated into multi-unit buildings such as apartments, office buildings and industrial complexes. The main benefit is significant cost reduction especially where there is a lot of demand for electricity.
” Solar energy and other renewables especially wind will replace oil and coal one day – it is inevitable and the energy transition is unstoppable. “” – Catherine Ridu, SEDA
“The photovoltaic (PV) installation will also help hedge against future price increases in electricity when subsidies are eventually fully rationalized,” says Catherine Ridu, CEO of SEDA Malaysia. She adds that housing developers should be compelled to integrate solar panels into new homes in future or even those currently being developed because the solar PV component is perhaps the only component that can help generate income for the household (or reduce electricity bills).
In India, it was recently reported that Tata Power will build a 30MW solar facility in Maharashtra state that will meet the yearly energy needs of more than 14,000 homes. It will use domesticallyproduced crystalline silicon photovoltaic (PV) modules. The facility covers more than 140 acres and will generate more than 62 million kilowatt hours per year.
Also in India, in one of the remotest regions in the Himalayas, solar panels have been installed to bring electricity to villages that have never experienced electricity for hundreds of years. In such areas, installing solar panels and a battery can be an easy way to bring a basic amount of electricity to a village. This is often initially used for lighting and the charging of mobile phones – this can be found in many areas in Africa.
With the rise of solar PV installations, microgrids will naturally emerge. These are a small network of electricity users with a local source of supply that is usually attached to a centralized national grid but is able to function independently. Keeping track of how much electricity is consumed from either the microgrid or national grid is not that difficult – they could use accounting software such as distributed ledgers to keep track of which grid residents are consuming electricity from. That way, the operators of the national grid and the microgrid can be paid accordingly.
In London, for example, blockchain technology has brought peer-to-peer electricity to a block of flats owned by one owner but rented out to separate tenants. The block has solar panels installed on the rooftop. This is one way for people who can’t install their own panels to take part in a decentralised energy economy, according to the technology supplier