Alternative Energy Watch: Big Move in Solar; Clean Energy Subsidies Lag Those For Fossil Fuels (GE, FSLR)

It is time for our daily review of the alternative energy sector. General Electric Co. (NYSE: GE) plans to build a new plant to manufacture 400 megawatts annually of thin-film solar PV panels. No location has been specified for the plant, but a good guess might be near the thin-film plant GE just acquired near Denver.

GE will use cadmium telluride thin-film technology, similar to the process that has made First Solar Inc. (NASDAQ: FSLR) the leader in the market for thin-film solar panels. First Solar may not be standing still though. The company is reported to be in discussions with thin-film maker HelioVolt, which uses a copper iridium gallium diselenide process known as CIGS to make solar cells. The CIGS process is reportedly 19.9% efficient in converting sunlight to electricity, considerably better than the 12.8% conversion rate of cadmium telluride cells and near the 20% or so efficiency of crystalline solar cells. Thin-film modules enjoy a considerable cost advantage over silicon-based solar PV modules.

The new GE plant is expected to be on-line in 2013, but its capacity will be well short of First Solar’s 2,300-megawatt capacity. First Solar expects to reach that capacity by the end of this year.

The International Energy Agency has issued its first “Clean Energy Progress Report” analyzing world-wide installation of clean energy technologies. [http://iea.org/papers/2011/CEM_Progress_Report.pdf] The report presents a number of interesting facts and conclusions about the development of clean energy.

The first key finding is that fossil fuel subsidies must be removed and more incentives added for clean energy. The report says that government subsidies for fossil fuels in 2009 totaled $312 billion, compared with just $57 billion for renewables. The main cause of the disparity is the lack of a price attached to the externalities of burning fossil fuels. As long as there is no cost for carbon emissions, fossil fuel burning will always be cheaper than using alternative fuels.

The report also found that 47% of new electricity demand in the past decade has been filled by burning coal. Coal is the fastest growing energy source of the last 10 years. The report does note that cleaner, more efficient coal-fired plants have met this new demand, but encourages more spending on technologies like carbon capture and storage.

Renewable electricity generation has grown by 2.7% annually since 1990, but demand for electricity has grown at an annual rate of 3%, and from a far larger base. In 1990, 19.5% of global electricity was generated from renewable sources (including hydropower); by 2008, that percentage had fallen to 18.5%. In order to meet published targets for 2050, solar-powered generation needs to grow at an annual rate of 22% and wind generation will need to grow by 17% annually.

Biofuels currently provide about 3% of the world’s transportation fuel. To reach the 2050 target of 27% of global transportation fuel consumption, biofuel production will need to increase 10 times over the next 40 years. Advanced biofuels, not food-crop-based ethanol, needs to grow 30 times in the next 20 years.

And, as if to underscore the need to develop new biofuels, the United Nations Food and Agriculture Organization has reported that its index of food prices is the highest it’s ever been in the more than 20 years that the organization has existed. A 70%+ rise in corn prices is partly attributed to the use of corn to make ethanol in the US.

Because much of the production of biofuels is government-mandated, the ever-growing amount of biofuel being produced drives up the cost of the food crops like corn and oilseeds. China, for example, banned the use of grains to make biofuels in 2007 because of the practice caused drastic shortages and sharply higher prices.

Paul Ausick