Why PV solar is still considered expensive?

Photovoltaic  solar industry has started expanding in recent years in US and Europe and the rest of the world also started following. Still solar energy is considered expensive in many parts of the world for various reasons. In most of these countries, energy is predominantly managed by Governments with age-old technologies and transmission systems. Coal is still the major fuel used for power generation and distribution and their infrastructures are old and inefficient. Transmission losses, power pilfering, subsidized power tariffs and even free power for farmers, are some of the issues that compounds the problems. Energy and water are considered more of social issues rather than business issues. For example in India, frequent power failures are common  and sometimes people do not have power even up to 8 to 12 hours  a day, especially  in country sides. Standby diesel generators are integral part of an industry or business. The heavily subsidized power supply by Government from coal-fired power plants is  underrated. The average power tariff in India is still less than $0.07/kwhr.But the reality is they will be using diesel generated power for equal several hours in a day  and the cost of diesel power varies from  $0.24 up to $0.36/kwhrs, almost in par with solar power. The average power cost will amount to $0.18 to $0.20 /kwhrs.

Any slight increase  in oil price will have a dramatic effect in energy cost in India and their balance of payment situation.Governments are in a precarious situation and they have to make a balancing act between subsidizing the energy cost and winning the elections. They often subsidize the power resulting in heavy revenue losses for Government run electricity boards. Most of the electricity boards in India are in red. People are used to low power tariffs for several decades and any increase in the tariff will make the Government unpopular. Greenhouse effect and global warming are secondary issues. With an average economic growth rate at 7% year after year, their energy requirements have gone up substantially. They may need several hundred thousands of MW power in the next 5 to 10 years. They have opened up energy sector to private only in recent years.

Renewable energy industry is relatively new and there are very few large commercial-scale solar and wind power plants in India. Majority of residents and businesses cannot afford high cost of PV solar installation. Even if they install, there is no ‘power- in tariff’ mechanism by Government where consumers can export surplus energy at a higher tariff to the grid. With current power failures lasting 8-12 hours/day, such mechanisms will have no value. The situation is the same in many Asian countries.

The solar panel costs are high due to lack of local production of silicon wafers, batteries and inverters and most of them are still imported. State electricity boards do not have funds to buy power at higher tariffs. Import duties and taxes on imported components are still high making renewable industries uncompetitive against cheap coal-fired,  subsidized power cost of $0.07/kwhrs .India requires massive investment on renewable energy industries. But most of the power projects which are under planning stage or under implementation are based on either coal or oil or LNG.There is no sign that India will soon become a major player in renewable energy.

In PV solar projects, the cost of storage batteries are higher than the solar panel during the life cycle of 25 years. If the life of a battery is 8 years then you will need 3 batteries during the life cycle. For example, if you use 100 watts solar panel with a life span of 20 years, the initial cost of solar panel may be $300 which will generate an average power of 140 watt.hrs /day. If you plan to store 5 days energy using a battery, you will enquire 5x 140= 700 watt.hrs battery, costing about $175.If you have to replace batteries 3 times during the life span of 20 years then the cost of battery is 3×175= $525.You have to add operation and maintenance cost, in addition to it. Therefore, your investment on batteries is 1.75 times more than solar panels. This cost will substantially add up to your energy cost.

In most of the Asian countries where they cannot export surplus power to the grid, they have to rely only on batteries. This high cost of stored energy is not remunerative because they cannot export this surplus to the grid at a higher tariff. This situation is not likely to change at least in the short-term.

Solar energy storage with Battery or Hydrogen?

Renewable energy industry has slowly but steadily started expanding in many parts of the world in spite of  high cost of investment and high  cost of energy. Countries like US, Germany and China are now investing on large-scale solar and wind technologies, opening new avenues for investments and employment opportunities. Many of these technologies will undergo several changes over a time before it can completely substitute fossil fuels. How long this process will take will depend upon number of factors; but the single biggest driving force will be ‘the issue global warming and its consequences” and also on uncertainties over oil reserves in the world. Nothing dramatic will happen in the near future except that the concept of alternative source of energy will expand rapidly. It is also an opportunity to discover new forms of fuels, power generation and distribution methods.

The concept of solar energy is now well-recognized as an alternative source of energy because, it is abundantly available, it is clean, generates no pollution and it is silent. The major raw materials such as Silica  and Gallium Arsenide  are  also available but some of the rare earth materials used in PV industries and batteries  are available only in certain parts of the world.  China is endowed with many such rare earth resources. For example, Lithium has limited resources and now bulk of it is produced from natural brines similar to the one at Atacama deserts in South America. It is also available in the form of minerals and ores which many countries are now trying to exploit commercially.

The storage of energy from  solar and wind is  done using deep cycle batteries, most of which are Lead-acid batteries. Bulk of the used Lead acid batteries are recycled but the demand for such batteries keeps increasing. As I mentioned in my previous articles, the sheer weight of these batteries, space required to install them, capacity use, capacity constraints, regular need for  maintenance and life cycle are some of the issues that are critical for renewable industries. In deep cycle batteries, discharging stored energy below certain levels dramatically reduces the life span. Hot climate conditions have certain impacts on maintaining such batteries.Life of a battery is critical because when you calculate the cost of energy over the life cycle of 25 years,the several replacements of battaries and their cost will have a dramatic effect on the cost of energy.

Batteries are indispensable tools in energy industries but their usage can be minimized  to a great extent by using Hydrogen as a storage medium. Let us analyze a simple example of a PV solar system for power generation. We made a computer simulation on three  different  scenario for a PV solar system for a small residence with power consumption at 15,500kwhrs/day. First simulation was based on PV solar, direct grid connect, without  storage batteries but connected directly to the grid, assuming the grid power tariff  is at $0.10/kwhrs and sale to grid tariff at $ 0.30/kwhrs.The second simulation was based on grid independent system  using battery  storage for 8 hrs autonomy. The third simulation is also grid independent, but solar power is connected to an Electrolyzer to generate Hydrogen and store it in a tank. We used a small capacity battery, less than twenty percent  of the capacity used in the earlier case and a Hydrogen storage with Fuel cell along with an inverter. The stored Hydrogen was used to generate power to meet the requirement of the residence, instead of supplying power directly from the battery. The cost of energy using direct grid connect was the lowest $$0.33/kwhrs, while Grid independent with battery storage ,the cost of power was $1,20/kwhrs.In third  scenario with Hydrogen and Fuel cell the cost of power was $ 1.90/kwhrs, but there was surplus Hydrogen in the storage tank. With Hydrogen as a storage medium, the cost of power is high due to initial investment but it is maintenance free and ideal for remote locations.

The Hydrogen and Fuel cell solution though expensive, has a several advantages. The power generated by PV solar is stored in the form of Hydrogen instead of storing in batteries. A single battery is used to keep up a steady current to Electrolyzer but bulk of the energy is stored in the form of Hydrogen. Another advantage with this system is that stored Hydrogen can also be used as a fuel for residential heating as well as to fuel your car.