Putting in place the solar potential

Jacinto EstimaGIS Developer and Coordinator

Research Center for Renewable Energy Mapping and

Assessment

Masdar Institute of Science and Technology

Abu Dhabi, United Arab Emirates

2015 International School on Solar Energy

University of Brasilia, Brazil

23 February 2015

• Jacinto Estima

• Portuguese

• Research Center for Renewable Energy Mapping and

Assessment at the Masdar Institute of Science and

Technology – Abu Dhabi, UAE

• Partners with IRENA for the development and

management of the Global Atlas for Renewable

Energy programme

• jestima@masdar.ac.ae

POTENTIAL

Potential

Renewable energy technical potential as defined

in the report “U.S. Renewable Energy Technical

Potentials: A GIS-Based Analysis” represents the

achievable energy generation of a particular

technology given system performance, topographic

limitations, environmental, and land-use

constraints.

Source: http://www.nrel.gov/gis/re_potential.html

Potential

Source: http://www.nrel.gov/gis/re_potential.html

How competitive is it?

How much can it cost?

Where can it be

harvested? How much

power?

Where is the resource?

PhotoVoltaics (PV)

grid-tied and off grid

• PV produces electricity

• works anywhere

• no tracking required

• electrochemical storage possible

Courtesy of RENAC

Concentrated Solar Power (CSP)

• Only for Sunbelt areas with high DNI

• Tracking is mandatory

• Hybrid operation possible (with CCP)

• Molten salt storage possible

Courtesy of RENAC

Three component radiation model

• Global radiation is composed of

direct radiation (coming directly from sun, casting shadows)

diffuse radiation (scattered, without clear direction), and,

reflected radiation (albedo).

9

UAE Solar Atlas Maps: Final Results

UAE Solar Atlas Maps: Final Results

• Version 1.0 launched in January 2013

• Version 2.0 launched in January 2015

• www.irena.org/globalatlas

• http://irena.masdar.ac.ae

• Global Spatial Data Infrastructure

• Enables users to visualize information on renewable

energy resources and overlay additional information

(Population, topography, etc.)

• As of January, 2015, 67 countries and more than 50

institutes and partners were contributing to the initiative

1,000 datasets. 45+ national atlases.

Data

bankability

Investor’s

interest

PUBLICSECTOR EFFORT

Local measurements

PRIVATESECTOR EFFORT

Existing local measurements

Data quality

Zoning

3TIER GHI global dataset

HelioClim3v4-MC GHI dataset

Meteotest GHI global dataset

INPE 10km GHI Brazil dataset

NASA 1 Degree DNI global dataset

INPE 10km DNI Brazil dataset

Technical potential

Technical constrains

• Topography (technology dependent)

• System performance (technology dependent):

Configuration

System losses

• modules, transmission, Inverters, etc. (PV)

• Solar field, Heat transmission, power cycle, etc. (CSP)

How much of the radiation are actually being converted into

electricity (%)??????

• Protected areas

• Land Use and Land Cover

• Distance to infrastructures (grid network, transportation

network, water, etc.)

• Water availability

Protected areas

Land Use / Land Cover

Demonstration on ECOWAS within GEOSS AIP-6

Presented at the GEO-X Ministerial Summit

Geneva, Jan. 14-17th, 2014

http://irena.masdar.ac.ae/?map=507

Economic and Market potential

Costs – elements of a PV system

Hard Balance of

System Costs Racking, mounting

hardware

Inverters/Trackers

Wiring

Monitoring equipment

Shipping

Land

Modules, R&D for modules

Soft Balance of

System Costs Business process costs

• Financing

• Installation

• Customer acquisition

• Permitting

• Interconnection and

inspection

System developer profit

System design and

engineering

Costs – PV Highlights in 2014

• Solar PV module prices 75% lower than 2009

• Total installed costs of utility-scale PV systems

fallen by 29% to 65% (depending on region)

• Global average of LCOE of utility-scale solar PV

has fallen by half in four years

IRENA Costing Alliance:

Renewable Power Competing

The levelised cost of electricity from

utility-scale renewable technologies,

2010 and 2014

Source: IRENA Renewable Cost Database

PV module prices VS efficiency

Wind and Solar Projections

(IEA World Energy Outlook)

Global Growth in PV Capacity

Installed RE capacity by region

Module and BoS “Soft-Costs” Vary

• Global module & hardware prices have declined 60% to 70% in the

last two years… but “soft” balance of system prices have not:

BoS costs in Q2 2012 were around three times higher in the United

States than in Germany by some measures.

• Elements present in countries with balanced price declines:

Competitive markets, skilled labor force, good information.

Well-designed policies: incentives aligned with market needs.

• Tax policies, local requirements for permitting and inspection,

installation costs, and customer acquisition costs have substantial

effects on PV system costs in residential and commercial buildings

and hence on the growth of PV markets.

• Future cost reduction in the balance of system costs – soft

costs and reduced finance costs

Soft Costs for Residential PV in Germany

Are ~$2.7/W Lower than in the U.S.

Total soft costs for residential PV in Germany, including margin, are just 19% of the implied soft costs for U.S. residential PV ($0.62/W vs. $3.34/W)

Source: Joachim Seel, Galen Barbose, and Ryan Wiser, “Why Are Residential PV Prices in Germany So Much Lower Than in the United States?: A Scoping

Analysis,” Lawrence Berkeley National Laboratory, 9/2012

* Notes: US module and inverter prices are based on average factory gate

prices for Q4 2010-Q3 2011 as reported by GTM/SEIA with an adder of

10% to account for supply chain costs. Inverter efficiency is assumed to be

85%.

Costs for Customer Acquisition, permitting,

Installation Labor and Overhead are Key

Source: Seel, Barbose and Wiser at LBNL (Feb. 2013), “Why are Residential

PV Prices in Germany So Much Lower Than in the United States?”

CSP cost breakdown

Note: Total installed cost breakdown for 100 MW parabolic through and solar tower CSP plant in South Africa

Barriers: MAJOR COMPONENTS OF SOFT

COSTS ARE DUE TO regulatory or market

factors that are hard to address

• Profit and Overhead (rent, utilities, inventory costs, insurance,

administrative fees and general administrative costs)

• Installation Labor (lack of standard system design, scarcity of skills

or competition in labor markets, requirements to utilize more highly

skilled labor than needed, lack of easy-to-install systems)

• Customer Acquisition (development of clear and accurate product

information, marketing, advertising, system design, arrangement of

financing for which building owners qualify, sales calls, bid

preparation, site visits, and collection of payments)

• Permitting and Inspection (inconsistent national, provincial and local

regulations; labor costs of completing permits; costs of idle labor

while waiting for inspections to be conducted; costs to connect

building PV systems with utility distribution lines)

Potential Solutions:

Target the Most Important Soft Costs for

Policy Action and Innovative Financing

The biggest targets for reducing soft costs of PV systems

are:

Customer Acquisition Costs (residential buildings)

• Related to availability of information on PV options

• Related to quality/availability of energy audits including PV

Installation Labor Costs (residential and small commercial)

• Related to labor productivity (training, capacity building)

• Related to ease of installing devices

Fees and Labor for Permits and Inspection

• Related to number of forms, complexity of regulations

Overhead and Profit Margins

• Related to market competition (multiple available contractors)

• Related to price supports (keeping pace with cost reductions)

Potential Solutions: Policies That Target

Opportunities for Soft Cost Reductions

• Promote competitive markets and reduce price

supports in line with equipment costs to reduce

supply chain margins (profit and overhead).

• Streamline installation and improve vocational

education and training to reduce labor costs.

• Develop standards, market information exchange

databases, and embed PV cost calculators in audit

processes to reduce customer acquisition costs.

• Address policy and regulatory barriers to reduce

costs of permitting and inspecting, connecting PV

systems.

• Innovate financing to manage high up-front costs

of installing PV systems in ways that reduce

margins, labor costs, customer acquisition costs

and permitting and inspection costs in tandem.

National

Provincial

Potential Solutions:

Financial Mechanisms to Reduce Up-Front

Residential PV Costs and Acquire Customers

Third-party ownership models

•Reduces the up-front costs through discounts on bulk purchases

•Eliminates operations and maintenance responsibilities

Property tax assessment models

•Allows long-term financing at lower interest rates with taxes as

collateral

•Allows transfer of system ownership when the property is sold

Monetizing the PV environmental value

•Links sale of renewable energy certificates (SREC) to national or

international carbon markets

Shared-ownership models

•Allows for communities to jointly finance large PV systems

Utility-based models

•Allows for the finance of new, large-scale, local PV projects

•Provides benefits of economies of scale

Potential Solutions: Innovate Ownership

Structure through Leases and

Purchased Power Agreements

• Experienced private firms install PV systems on many roofs,

reducing overall costs for customer acquisition, permitting, and

installation labor.

Lease Option: Customer pays for use of PV equipment.

PPA Option: Customer pays for solar energy produced.

• Customers see immediate savings on their electric bills without the

effort of choosing and installing a PV system themselves.

• Suppliers earn good rates of return on PV system investment.

• Finance companies link investors with private firms:

Firms sell service agreements to customers and install equipment.

Finance companies charge a fee for processing the service agreements

and for monitoring and maintaining the equipment.

Buyout options are available to building owners when the term of the

service agreement ends or when owners sell their house or office.

Potential Solutions: Roof Leasing Model

Applied by Narni Municipality in Italy

Public Administration and Roof Leasing:

• Italian Legislative decree No. 28/2011 states «[…] public authorities can grant third persons leasehold estate in order to enable them to install RES plants for electricity generation, pursuant to legislative decree 2006, April 12 No. 163. This provision also applies to military areas and army sites […]»

• As a result of this decree, many Italian municipalities started initiatives providing private entrepreneurs with the access to roofs (e.g., Narni Municipality).

Main Features

• Public notice seeks private sector expressions of interest;

• Annual payment for leasehold estate right is based on the amount of installed capacity;

• Private party pays for roof maintenance and for design, construction and management of the PV plant; and

• Municipality owns the PV plant, manages RES subsidies, and sells electricity at expiration of the 20-year contract.

Potential Solutions: Long-Term Investments

to Reduce Installation Labor Costs

•Installation labor is large portion of soft costs for all PV projects• Larger systems benefit from construction labor scale economies

Training & Certification Protect Safety, Improve Performance AND Reduce Total Costs

Training, Professional (international) certifications

Standardization of equipment and designs, development of local firms big opportunities

Source: Ardani, K et al. (2012) “WREF 2012: Benchmarking non-hardware balance of

system costs for PV systems in the United States using a bottom-up approach”

Potential Solutions: Streamlining Design and

Installation Processes

Use of international standards

to design and install PV

systems:

• Reduces transaction costs

• Provides access to best

practices worldwide

• Assures quality

• Increases workforce efficiency

• Develops local capacity for

designers and installers

• Provides a detailed technical

basis for laws and regulations

• Supports public and private

tendering processes

• Gives confidence to financing

sources (bankable projects)

Potential Solutions: Modular Assembly,

“Plug-and-Play” Design Efforts Reduce

Installation Labor & Overhead Cost

Micro-inverter, mounting and grounding assembly are incorporated into each panel.

Panels snap together with no extra wiring.

Potential Solutions: Italy’s Catalogue of Building-

Integrated PV Options Reduces Information Costs and

Customer Acquisition Costs, Boosts Competition

• The Catalogue makes it easy to find the right technology with samples of innovative building-integrated PV solutions that have been granted a higher feed-in tariff:

• Innovative modules:• Flexible PV modules • Rigid PV modules • Thin film layer on rigid support• Photovoltaic tiles • Transparent modules

• Innovative components• Facades

Potential Solutions: Solarize Initiative

Reduces Soft Costs in U.S. Communities

through Group Sales)

“Solarize” model at community

level targets residential PV

challenges:

• Costs: high up-front costs

• Complexity: PV system

purchase process with hard

choices on technical issues

• Customer inertia: No clear

deadline for customer action

Basic program elements:

• Competitive contractor

selection process led by

community volunteers

• Community-led outreach and

education by a trusted local

organization

• Limited-time offer of just six

months vs. typical two-year

period from initial customer

inquiry to system installation

Source: US Department of Energy (2012) “THE SOLARIZE

GUIDEBOOK: A community guide to collective purchasing of

residential PV systems”

Environment – CO2 emissions

Energy security (world diversity)

Energy security (south America

diversity)

Jobs in selected countries in 2013

Global RE employment by

technology

Opportunities for Progress

• Promote innovative financing mechanisms to:

Encourage firms that specialize in installation of building PV

Make it easier for building owners to decide to install PV

Grow the PV building market and achieve scale economies

• Develop cooperative initiatives to reduce installation labor costs:

International standards for easily-installed PV modules

Self-guided distance learning tools for building contractors

Better information to help building owners select contractors

• Cooperate to promote low-net-energy city building standards:

Build on existing networks of low-carbon communities to provide the

demand-pull that will build scale and lower costs

Analytic Issues to Consider

• How much new solar capacity might appear in

regional generating plans by 2030?

• What enhancements to the power grid might

make sense as solar capacity grow?

• Would distributed solar projects create a need

for enhancements to local distribution grids?

• How can we optimize the grid for cost savings,

electric supply security and sustainable growth?

Facilitating Variable RE

• Zoning: renewable power development zones to cluster

development and plan cost-effective transmission links to

load centers

• Planning: integrated resource planning at country and

regional level to incorporate a greater share of cost-

effective renewables

• Enabling: open markets, reduce financial risks to boost

renewable power investment

• Capacity Building: to plan and operate power grids with

higher share of renewables

Thank you for listening

Jacinto Estima

jestima@masdar.ac.ae