Wednesday April 5, 2006

Last week I wrote a bit about BP Solar’s advertising and branding – it’s part of the marketing story, but definitely only part. Strategy is key.

BP Solar (North America) employs strategic marketing (though, how BP’s Alternative Energy marketing group which looks to be out of Houston, and BP Solar’s marketing in Frederick, as well as BP Solar’s overseas marketing groups work together is a curiosity). Vivienne Cox, BP’s Executive VP of Gas, Power & Renewables, said in November, and Karen Sterling of BP Solar’s North American marketing and communication’s group repeated to me, BP Solar’s goal is to drive solar to grid-parity – in other words, to make PV equal in cost to grid power for homeowners and businesses and to make it more widely available. That, says Sterling, is when solar will be attractive to more people.

BP Solar began collaborating with The Home Depot® in October 2004 to target the residential sector and with SunEdison to target the commercial and business sectors (like big box retailers) within select geographic markets. (SunEdison is working with Goldman Sachs, the investment house, and other financing institutions.) Grid-tied residential, commercial and business segments are BP Solar’s focus (off-grid, remote applications, not so much.) Recently, BP Solar engaged with Treasure Homes in California, leveraging the builder channel. (Unlike other cleantech marketers, BP Solar chooses to bypass, or has the fortune of not needing, the electric utility channel, going directly to consumers. That’s a good move – and another topic for another day.) BP Solar (NA) targets markets that offer the biggest solar incentives: California, New Jersey and Long Island. As for where to best leverage product in other markets, Sterling notes, “The marketplace changes, and it hasn’t been defined completely.”

The value propositions for solar PV, however, have been. To residential customers, PV is: clean, reliable, silent, pollution-free power that protects customers from the volatility of utility power…and “beautiful” deep blue, dark-framed panels. (BP did not ignore the issue of aesthetics.) BP Solar offers business and commercial customers roof systems, ground systems for large open areas, canopy systems for parking areas and walkways and building integrated PV – BIPV – in the form of rooftop tiles. The value propositions are: energy savings and other financial benefits – cost savings, protection against rising energy prices, energy efficiencies, revenue for ‘green attributes of solar (that is, renewable energy credits), and government incentives – as well as leadership in environmental stewardship. Commercial solar is (still!) emissions-free, silent and unobtrusive.

BP Solar has trademarked its programs (BP Solar Home Solutions™, BP Energy Solutions™, EnergyMax™). It is selecting qualified professional installers. Online customer support offers quotes and FAQs (though more technical information, similar to those put together by Xantrex, the inverter manufacturer, would be helpful.) Sponsorships include the BP Solar Neighbors Program™ and the Solar Decathlon (which Jeff Lyng’s team from the University of Colorado-Boulder has twice won which makes those of us in Colorado – and particularly those of us who supported passage of Colorado’s RPS – very proud.)

Whatever one might think of BP (the huge oil company, greenwashing), it is launching solar PV into the mainstream, across the collective radar screen – recognizing that clean energy is a good strategic investment for the company and its investors. In the Ceres recent sustainability investor report (“2006 Corporate Governance and Climate Change: Making the Connection”), BP scored very high in the oil/gas sector. And that’s great.

It would also be great if smaller players in this market could avail themselves of deep pockets, international brand name recognition and market share, too. Short of that, I’m hoping that BP Solar’s “continued innovation and technology gains across the solar value chain” will include next-generation semiconductor technologies to which BP can apply its ample marketing muscle – and Jeff Lyng and his team can incorporate into future Solar Decathlons!

Most environmentalists have a knee-jerk wretching reaction to coal. In a word, coal is “dirty”. Uncontrolled, burning coal results in about twice the carbon emissions as burning natural gas — not to mention all of the other nasties (sulfur dioxide, NOx, particulates, mercury, etc.).

So imagine my surprise when I met the other day with Kurt Waltzer, a consultant who works for the Ohio Environmental Council, who showed me a report on how coal was basically the ONLY answer for reducing carbon dioxide emissions.

The OEC recently completed a study entitled the Ohio Climate Road Map, which paints a detailed picture of how Ohio could take actions in the coming decades to stabilize the climate. Buried in the report (page 18 to be exact) is an innocuous looking chart that shows alternative climate mitigation strategies for the electric sector. Closer examination reveals the punchline: if a significant reduction in CO2 emissions from powerplants is truly required, the other emission reduction strategies often touted by environmentalists — efficiency, cogen, renewables — ain’t gonna get us there on their own. To achieve the required reductions, we need coal: gasified coal with sequestration.

In other meetings last week with coal interests, I am seeing evidence that coal supporters are beginning to get it: that the combination of improved technology AND tightened environmental stringency (along with the fact of depleting oil/gas resources) are strong tailwind forces at their back, and it may well be very advantageous for them to join the ride.

So coal may be moving towards environmentalism, and environmentalists may be moving towards coal. I’m reminded of the line from “Ghost Busters”: “Dogs and cats living together — mass hysteria!”

My attention was caught by a recent news story about the Space Island Group, which intends to build commercial space stations for a multitude of purposes, including the manufacture of solar power satellites (SPS). The article credited SIG with the intent to supply half the world’s energy needs by capturing the sun’s power in space and beaming it to the Earths’ surface using microwaves. The article inferred that the Group believes it can capture a $1 trillion share (in today’s terms) for an initial development and launch investment of $10 billion. Given that energy demand is forecast to increase by perhaps 60% by 2030, this is not only an extremely ambitious technical target and an incredible commercial ambition. Just how realistic is the ambition and how likely are they to succeed?

First a little background on SPS, which is really necessary if we are to put the goals in context:

• An SPS installation would consist of a huge PV array in geostationary orbit linked to a microwave transmitter assembly aimed at a large area receiving antenna on Earth.

• The attractions of such an arrangement include the fact that the array would be in sunlight over 99% of the time. The SPS would be in Earth’s shadow on only a few days at the spring and fall equinoxes and, even then, for a maximum of an hour and a half late at night when power demands are at their lowest.

• The idea of beaming energy to Earth via satellite was first proposed by Peter Glaser in 1968 who was later awarded a patent. The idea itself makes sense!

• There have been investigations of the concept almost continually since then by almost every respectable authority, including the US DOE, NASA, NRC as well as the European and Japanese and these are ongoing.

So, if it has technical merit, what are the problems?

• The PV array would be much larger than any assembled yet on Earth. A 5GW array is often discussed. I we could buy this for $3/watt – which is well below current factory gate module prices – this would imply a current cost of $15 billion for the modules alone in this array. Granted mass production on this scale will make costs much lower and some thin film companies are predicting eventual system costs of $1/watt.

• Several factors may mitigate against this though:

o There are two extreme manufacturing options: manufacture the panels one Earth and ransport them into space: manufacture the systems in space from materials either obtained in space or transported from Earth.

o Current space launch rates (Shuttle) run between $3,000 and $5,000 per pound ($6,600/kg and $11,000/kg).

o To give an idea of the scale of the problem, assuming a typical solar panel mass of 20 kg per kilowatt, and without considering the mass of the support structure, antenna or significant mass reduction of focusing mirrors, a 5 GW power station would weigh about 100,000 metric tons.

o This is excessive though, as a space solar-panel would not need to support its own weight, and would not be subject to earth’s corrosive atmosphere. Very lightweight designs might achieve 1 kg/kW, or 5000 metric tons for a 5 GW station.

o This would be the equivalent of between 50 and 1000 launches to send the material to low earth orbit, where it would be turned into subassembly solar arrays, which then use ion-engine style rockets to move to geostationary orbit. With an estimated serial shuttle-based launch cost of $500 million to $800 million, total launch costs would range between $22 billion and $400 billion On top of this, would be the cost of large assembly areas in low Earth orbit and in geostationary orbit.

o Not all PV modules are suitable for space use and those most extensively tested – based on triple junction gallium arsenide cells – are much more expensive than silicon or CIGS thin film.

o The cost of the transmitter and receiving antennae will be additional to the array cost. For 5GW system using 2.45GHz radiation, a transmitter might have a diameter of 1km – in this case the receiving antennae would need to have a diameter of over 10km. Although these might be simple structures they will not be cheap!

o But let’s be optimistic – unreasonably so! Let’s assume that the panels and electronics can be manufactured for $1/watt, that transportation costs are at the low end of the estimates ($22 billion), and the antennas add only $1/watt

o This would give a total cost for a single 5GW array of $32 billion – roughly $6.40/watt, which I less than the current cost of terrestrial systems

• This 5 GW system would generate almost 40TWh/year, worth almost $2 billion at 5 cents per watt. A long payback!

• The current World electricity demand is about 1500 TWh/year and may grow to 20,000TWh/yr in 2010 and 30,000 TWh/yr in 2030. This single 5GW installation would contribute less than less than 2% of the world’s needs in 2010

I have not even tried to address seriously the problems of satisfying governments and the populace that they are not about to be “microwaved” should such a project go ahead. In truth, my perception is that there is little or no evidence that the systems as envisaged would posed any hazard to man or animal and launch costs will depend dramatically on the designed structures and the manufacturing methods. However, I see these are refinements that are not needed to decide it the postulate makes sense: to quote from the article which originally intrigues me:

“SIG is currently pursuing a $200 billion, 20-year energy purchase contract from India and/or China this year, 5% of which will cover all of SIG’s development and early launch costs. SIG’s target is to supply half the world’s electricity generation and distribution, currently a $2 trillion annual market.”

Now I have no idea what SIG envisage their “development and early launch costs “ to include, but I am forced to conclude that, realistically, $10 billion will not even cover the cost of deploying one 5GW system and see little chance that they will capture 50% of the demand in any realistic timeframe.

This all sounds as if I am completely turned off by the idea, but the opposite is true! It would need only 50 of these “power stations” to satisfy global demand in 2010 and the concept of producing vast amounts of energy in space and “beaming” the power, safely and economically, to where it is needed, is a dream worth aspiring to. I just don’t think we are going to get there in my lifetime!