I’ve been quite skeptical for a while about China’s ambitious plans to rapidly build up its solar power capacity, arguing that many of the plants being built are more designed to please central planners in Beijing than of real practical use. Now it seems at least one researcher at a major government institute agrees with that view, prompting him to slash his forecasts for new construction this year. That certainly doesn’t look good for big domestic names like Yingli (NYSE: YGE) and Trina (NYSE: TSL), which are hoping to keep their recent positive momentum going with big new demand from plant developers in their home market. 

The latest report contains interesting details on some of the major problems dogging China’s new solar building campaign, which has the country aiming to install 35 gigawatts of capacity by the end of 2015. The biggest problem is one that I previously discussed, namely that many of these projects would be built in remote locations that would have difficulty delivering power to China’s central grid.

But a second problem also emerged this fall as some developers started using the build-up program to make some quick money through a quirk in recent modifications to the power pricing system. None of this is too unexpected, since it was probably unrealistic that China could successfully execute such an ambitious build-up so quickly, especially when it had very little experience at such construction just 2 years ago.

But the growing reality could crimp ambitious sales targets for solar panel sellers that were depending on strong domestic demand to keep fueling their recent rebound. It could also turn into headaches for names like Trina and Yingli, which have recently set up funds for solar plant construction. Those funds could take a hit if many of their new projects get built but then fail to find long-term buyers due to poor planning.

China is now expected to build 10 gigawatts of new solar power capacity this year, well short of an earlier target for 14 gigawatts and a sharp slowdown from last year’s 13 gigawatts, according to the new report from Wang Sicheng, a researcher at the Energy Research Institute of the National Development and Reform Commission (NDRC). Only 3.8 gigawatts of new capacity were built through September this year, though the report notes that the fourth quarter is typically the strongest for new construction.

It seems that one of the biggest issues has come from lower-than-expected usage of power by local customers from these newly built plants using rooftop-mounted solar panels. Earlier plans that envisioned that such local consumers would use 80 percent of power generated at such plants, with the remaining 20 percent set for sale to more distant locations. But plant operators have only been able to sell about 60 percent of their power locally, because many such plants are located in remote locations with sparse population.

Adding to the problems was a wave of speculative new project announcements that look purely related to a recent preferential tariff announcement designed to promote growth in inland areas. The NDRC quickly moved to plug a loophole that was fueling the speculation, but the result is that many of the new plants announced during that window may never get built since many were conceived simply to earn some quick profits.

These kinds of shenanigans and logistical problems certainly aren’t unique to China. But in this case they’re quite acute due to Beijing’s desire to ramp up solar power output so quickly despite its lack of experience. I do expect we’ll see the rapid build-up continue, but at the end of the day we could see a significant number of planned projects get scrapped, and an equally significant number that do get built ultimately hit financial difficulties due to poor planning.

Bottom line: China is likely to fall well short of its plan for 35 gigawatts of solar power capacity by the end of next year due to profit-seeking speculation and lack of experience among plant builders and operators.

This article was originally published on Young’s China Business Blog and was republished with permission.

Lead image: Clouds via Shutterstock

Foresight Renewable Solutions is responsible for the engineering, design and construction of the USN-MUSE smart microgrid. If all goes well, the demo project will serve as a model for smart microgrid deployments at U.S. military installations and civilian communities in California and beyond.

Scheduled to be tested from Summer 2015 to the end of the year, the smart microgrid demo system will consist of up to 150-kW of solar PV capacity and a 100-kW/400-kWh energy storage solution based on Imergy’s ESP30 vanadium-flow batteries, Foresight Renewable Solutions’ CEO Carlos Pineda said. The GELI (Growing Energy Labs, Inc.) Energy Operating System (EOS) will manage the smart microgrid’s operations. 

Foresight was awarded the $1.7-million CEC grant last year, coming out on top among 30 candidates vying for the project award. Matching funds from participants will bring the total budget to $3 million.

“The grant was for newer technologies on the verge of commercial deployment. Imergy’s flow battery disaggregates power conversion and energy storage, providing for incremental additions of storage capacity if needed. It also uniquely provides cost-effective bulk energy storage and fast-response ability to enhance power quality,” Pineda explained.

Disaggregating Energy Storage and Conversion

The CEC’s selection process was extensive, Pineda said, entailing “an extensive review…to determine a strong community partner (including military bases) and the potential for the technology to increase renewable energy penetration.”

Lower energy costs and sustainable energy security, reliability and resiliency — not only for the MUSE facility but for electric grid operators — rank at the top of the list of the smart microgrid project’s anticipated benefits. As Imergy explained in a press release, “The Smart Microgrid project will focus on developing applications and use-case scenarios to optimize power consumption at military bases, college campuses, industrial parks and other institutions.”

Integrated with a solar PV system with generating capacity of as much as 150-kW and the GELI EOS, three Imergy ESP30 series vanadium-flow batteries will comprise the core of the MUSE smart microgrid. Each ESP30 has a 50-kW power/200-kWh energy storage capacity. 

Four key attributes will provide the basis for assessing the CEC-USN smart microgrid’s performance:

• Demand charge management: The project will demonstrate how well the system can release short bursts of energy when demand peaks occur, enabling users to reduce their electricity bills by lowering their utility demand charges;
• Load shifting: The project will prove how well the system can shift load from higher cost times of day to lower cost times of day, enabling users to reduce their electricity bills by shifting load to times when electricity prices are lower;
• Solar firming and ramp rate control: The project will show how well batteries can smooth out the jagged nature of solar power production, helping solar power systems provide more consistent power throughout the day;
• Island mode: The project will demonstrate how well a photovoltaic (PV) solar system and battery storage, disconnected from the grid, can provide energy for a user’s critical loads during a given time period, enabling similar systems to be securely deployed at remote, mission critical facilities.

The Battery Technology

According to Dr. Herve Mazzocco, Imergy’s director of business development, the company’s vanadium-flow batteries are more efficient, flexible and will in short order prove to be more cost-effective than conventional, fossil-fuel grid assets for balancing out fluctuations in grid power demand and supply, particularly as penetration of renewable energy generation assets continues to grow.

Imergy’s vanadium-flow battery systems, Mazzocco highlighted, can ramp up or down and pass through full charge-discharge cycles in a matter of milliseconds as compared to minutes for natural gas “peaker” plants, delivering electricity at utility-scale over periods of four, six and even eight hours.

Besides enabling grid operators to integrate more intermittent renewable energy from solar and wind generation assets, these attributes are also of critical importance when it comes to recovering to grid outages and failures — in other words, they can significantly enhance grid resiliency and reliability.

Imergy’s vanadium-flow battery technology is also scaleable, Mazzocco said, making it better suited to meet grid-scale needs. Further, the batteries last longer than advanced energy storage solutions based on Li-ion batteries, he said.

The fact that Imergy uses recycled vanadium from environmental waste in manufacturing its advanced battery storage systems adds to the MUSE smart microgrid’s advantages and benefits vis-a-vis conventional alternatives. A transition metal, ample supplies of vanadium exist. The majority of vanadium is used in structural steel alloys. It also alloyed with titanium in the manufacture of jet engines and air frames, as well as in alloys used in nuclear reactors.

Integrating Renewables and Enhancing Energy Security, Grid Reliability and Resiliency

Distributing advanced energy storage systems both on the utility and customer sides of the grid could well be the missing piece of the puzzle that accelerates the transition from fossil-fuel to renewable energy-based energy system and “green” economy. Navigant Research predicts that annual global revenues for energy storage systems for the grid and ancillary services will grow from $675 million in 2014 to $15.6 billion in 2024.

California and the U.S. military are at the forefront of a wave of early adopters. Passage of AB2514 in October 2013 requires California’s three investor-owned utilities to acquire 1.3 gigawatts (GW) of power storage capacity by 2020.

Renewable energy resources supply 12 percent of the Navy’s total annual energy needs at present. That’s due to increase to at least 20 percent over the course of the decade. “Microgrids at military bases could help the military lower energy costs, expand their use of renewable energy, and reduce their dependence on diesel and grid connectivity for mission critical assignments,” Imergy highlights in its press release.

The CEC-USN microgrid will be the first field-test of Imergy’s ESP30 vanadium-flow battery system in the U.S. Similar installations that entail integrating solar PV and Imergy’s vanadium-flow battery system are under way in India and will be up and running before the CEC-Navy microgrid system is operational, Mazzocco said.

Vanadium-flow battery storage technologies such as Imergy’s ESP30 address multiple issues grid operators are facing as environmental, industry regulations and market conditions change and greater amounts of renewable energy generation capacity come online, he elaborated.

“To solve these multiple problems you need fast response, large capacities and long lived assets, and that’s what we provide. In the end, the bottom line is that we deliver a solution that is safe, that lasts long, that is affordable and compares favorable to traditional fossil fuel-based grid assets.”

Lead image: Lighthouse at Port Hueneme, California via Shutterstock

New Hampshire —

Concentrating photovoltaic system manufacturer and solar developer Soitec, in conjunction with CEA-Leti both of France along with the Fraunhofer Institute for Solar Energy Systems ISE in Germany, announced that they have achieved a new world record for the direct conversion of sunlight into electricity.

The record multi-junction solar cell converts 46 percent of the solar light into electrical energy. Multi-junction cells are used in concentrator photovoltaic (CPV) systems to produce solar electricity in PV power plants, in regions with a large amount of direct solar radiation. Soitec is currently constructing a 44-MW CPV plant in Towsrivier, South Africa. The achievement of a new world record comes just one year after the one previously announced in September 2013 by these French and German partners.

Multi-junction solar cells are based on a selection of III-V compound semiconductor materials. The world record cell is a four-junction cell, and each of its sub-cells converts precisely one quarter of the incoming photons in the wavelength range between 300 and 1750 nm into electricity. When applied in concentrator PV, a very small cell is used with a Fresnel lens, which concentrates the sunlight onto the cell. The new record 46 percent efficiency was measured at a concentration of 508 suns and has been confirmed by the Japanese AIST (National Institute of Advanced Industrial Science and Technology).

One of the most difficult challenges that had to be met by this cell is the exact distribution of the photons among the four sub-cells, which was achieved through the precise tuning of the composition and thicknesses of each layer inside the cell structure.

Soitec plans to produce a 50 percent efficient cell in the near future and according to the company’s VP of Solar Cell Product Development Jocelyne Wasselin, this new achievement paves the way to do that. “I have no doubt that this successful cooperation with our French and German partners will drive further increase of CPV technology efficiency and competitiveness,” she said in a statement. Wasselin added that Soitec currently employs 25 engineers and technicians at its production line in France that uses bonding and layer-transfer technologies.

Lead image: New record solar cell on a 100 mm wafer yielding approximately 500 concentrator solar cell devices. ©Fraunhofer ISE/Photo Alexander Wekkeli

Norvento, an independent, medium-scale wind turbine manufacturer and developer, has secured planning consent for two new twin turbine sites in Scotland. The four nED100 turbines will be located in Castle Douglas and Midlothian and will be completed in June and July 2014, respectively.

SANTA CLARA, CA.—(eSolarEnergyNews)—Hanwha SolarOne, a top-10 global photovoltaic manufacturer of high-quality, cost-competitive solar modules, will build a new solar photovoltaic (PV) module factory in Eumseong, Chungbuk, South Korea. Hanwha SolarOne will invest $12 million to build the facility, which is scheduled to begin production in the second quarter of 2015 with an annual manufacturing capacity of 230 megawatts (MW).

Hanwha SolarOne is building the factory to service local Korean demand as well as further diversify the company’s manufacturing capacity, offering new options to supply tariff-free modules to the U.S.

“Hanwha SolarOne is proud to help South Korea become greener with clean solar electricity,” said Seong-woo Nam, chief executive officer of Hanwha SolarOne. “This new facility will also further diversify our manufacturing footprint, allowing us to offer tariff-free modules to the U.S. The Hanwha Group has successfully managed trade disputes in dozens of industries over the last 60 years, something no other tier-one solar manufacturer can claim.”

Hanwha SolarOne will hire about 200 new employees to work at the facility, including research and development personnel to focus on developing innovative module technology.

The new plant will add to current expansions already underway to bring the company’s cell production capacity to 1.5 gigawatts (GW) and module production to 2 GW by the end of this year. Once the new module factory is complete in South Korea, Hanwha SolarOne’s total module production capacity will reach 2.23 GW.

Investors appear to be worrying that falling oil prices will dampen enthusiasm for building new solar plants, since lower oil prices mean solar power will be less competitive with more traditional power sources derived from fossil fuels. The only problem with that logic is that solar power was never competitive with fossil fuels to begin with, meaning solar stocks could be getting punished for no good reason.

All that said, let’s look first at what’s been happening to oil prices, which were in the spotlight last week after Saudi Arabia vetoed a plan by other OPEC members to cut oil output in a bid to boost sagging global prices. That move fueled fears that oil prices will continue to fall from current lows not seen since 2010 when the world was still suffering from the effects of the global economic downturn.

Following the drop last week, oil prices are now down by about a third since June. The plunge has understandably hit major oil companies, which will get far less revenue even though their costs will remain fixed. But suppliers of equipment used to make alternate energy are also getting hammered and took an especially big beating last Friday.

Leading the post-Thanksgiving sell-off was high-flyer Canadian Solar (Nasdaq: CSIQ), whose shares plunged 11.6 percent on Friday and are now down 40 percent from a September peak. The picture looked similar for most other solar panel makers, withYingli (NYSE: YGE), Trina (NYSE: TSL) and JA Solar (Nasdaq: JASO) all dropping 7-8 percent on Friday. Wind power also got caught in the selling frenzy, with wind turbine maker Ming Yang (NYSE: MY) down 7 percent on Friday and off 24 percent since September.

One of the worst hit was ReneSola (NYSE: SOL), which tumbled nearly 9 percent on Friday and whose shares have lost nearly half of their value since September. The company may have looked especially vulnerable since it is one of the few that relies completely on exports, unlike its peers which have positioned themselves to take advantage of a major solar power building program in China.

So the big question now becomes: Is all of this selling justified, and is the industry headed into a new downturn just as it starts to emerge from its previous slump? I’m not a major expert on solar energy policy, but my answer to both of these questions would be a fairly confident “no”. The reason is simple, namely that solar and wind were never economically competitive power sources using current technology, even when oil prices were still high. The only reason solar and wind energy plants are being built at all is due to government policies that subsidize their development.

Those policies typically see governments set prices for solar and wind power at artificially high levels, and then force utilities to buy that power at those inflated prices. Thus even if a power company can make its own power at much cheaper costs, it still has to buy all the output from solar energy plants at the government-set prices. That reality means that solar plant construction shouldn’t see any major shifts despite the big drop in oil prices, and that solar stocks are likely to rebound strongly once the current round of panic selling subsides.

Bottom line: The recent plunge in solar stocks is the result of panic selling due to falling oil prices, meaning the shares could rebound sharply once the sell-off subsides.

This blog was originally published on Young’s China Business Blog and was republished with permission.

Lead image: Oil chart via Shutterstock

The delays mean China could fall short of its goal to install 14 gigawatts of solar capacity, Li said. Japan is expected to add 10.3 gigawatts to 11.9 gigawatts of solar power in 2014, Bloomberg New Energy Finance forecasts.

The shortfall poses the biggest risk to small panel producers that rely most heavily on the domestic market, said Wang Xiaoting, a Hong Kong-based analyst for BNEF. Bigger producers such as Yingli Green Energy Holding Co. and Trina Solar Ltd. will be more resilient because they’ve diversified and moved to markets with higher prices, she said.

Policy makers have purposely delayed approvals on large utility-scale projects to make way for more installations on rooftops following a push to boost the use of distributed solar power. China plans to add as much as 8 gigawatts of solar on rooftops, factories and other buildings in 2014, a more than 10- fold increase compared with the previous year.

China is expected to install less than 12 gigawatts of both distributed and large-sized solar capacity this year, Li said. When grid connection issues are considered, capacity additions may fall below 10 gigawatts, he said.

Tariff Cut

China saw a record addition of 8.9 gigawatts of solar in the last quarter of 2013 as developers rushed installations ahead of a tariff cut, according to data from Bloomberg. The last three months of last year accounted for almost 70 percent of annual installations for the whole of 2013, according to data compiled by Bloomberg.

The nation added 3.79 gigawatts of new grid-connected solar capacity from the beginning of the year to the end of September, according to the National Energy Administration. China hasn’t announced any reduction plan in preferential power prices this year.

The country had almost 20 gigawatts of solar capacity at the end of 2013 and is targeting a total of 35 gigawatts of installations by 2015.

Solar accounts for about 2 percent of China’s electricity generation capacity, up from 0.08 percent four years ago and double what nuclear power contributed last year, according to BNEF.

Copyright 2014 Bloomberg

Lead image: Solar panels via Shutterstock