Solar Power Industry Growth Opportunities

Posted on May 9th, 2011 by
   

Dr. Charles Gay Ph.D., President of Applied Solar, discusses the impact of the new 33% Renewable Portfolio Standard that was just passed into California law. This is the first part of a two part series.

Full Transcription:

Ben Lack: What impact will California Governor Jerry Brown’s decision to sign into law a 33% Renewable Portfolio Standard by 2020 have on the solar industry?
Charlie Gay: Well, first, we’re incredibly appreciative of the vision of Governor Brown. I actually met him when he visited the ARCO Solar Factory when he was Governor the first time in 1982. He’s been a long-time supporter of solar, and that’s really an important part of the role of government as long term continuity and consistency. When the government policy is clear and consistent over time then the industry can plan, can build infrastructure, can make the investments knowing that that market will be there and can grow. We have a lot of work to do ourselves but having that context of policy is really an important part of being able to grow the business. And growing the business reduces the cost. The more that we manufacture, the lower the cost.For a company like Applied Materials, what that means is that we develop our supply chain; we’re an equipment builder. We build the tools that customers use to build solar panels. We would expect that a lot more industry will actually set up shop here in the U.S. and in the Southwest, certainly, to be able to support the solar business in California. California has been the leading state in the adoption of solar for over one and a half decades now. Here in the U.S., it’s great that the success of the solar business has led to even greater opportunities for the solar business.
Ben Lack: What will the solar industry have to do to grab the additional market opportunity that the RPS bill now provides?
Charlie Gay: Well, there’s always going to be a mix but first a photovoltaic solar panel generates electricity when they have most electricity is needed which is during a hot summer time afternoon. In general, winds blow in the evening and when it’s dark. If you combine wind and photovoltaics, of course, you get a nice balance of renewables that help match the 24-hour cycle of our days. Other technologies here in California that are also pretty attractive include geothermal. We’re blessed, along with probably New Zealand, as having some of the best geothermal resources. Many of them though have already been tapped or are close to being maximized for their use. So, there’s a limit on how much geothermal there is. By and large, solar thermal concentrating power systems have opportunities where there’s water along with a lot of sunshine. And of course, photovoltaics can operate independently of whether there’s enough water. So, I see a great future for photovoltaics across the state in this mix of renewable technologies. It’s also consistent with that predictability of the learning curve that goes with a manufactured product. For every cumulative doubling of the number of solar panels that are made, the costs come down by 20%. And this is a very predictable 35-year historical trend that I see continuing on as time goes by. And when all is said and done, the solar resource is the one that will outlast and outlive everything else. Today there is more than 11,000x the amount of energy delivered every day in sunlight than what we use across the planet.
Ben Lack: What makes the California solar indsutry different from other parts of the country/world?
Charlie Gay: What’s unique about California is in a sense is that it has its own solar ecosystem. One of the things that we actively participate in here in the Bay Area is an organization called Solar Tech. This is a group of folks that have come from the downstream, from the installers, from the dealers, from the permitting agencies, from the financing institutions. It’s not just about the technology. It’s actually today no longer about the technology. It’s about financing and access to capital. What makes the Renewable Portfolio Standard so important is the bankers will look at a business base for lending capital, see that there’s a predictable market available, can match up the manufacturers and the projects for power plants with the financing, and can enable that in collaboration with utilities and with the various municipal county and state agencies that are important to facilitate the adoption of solar with a minimum amount of paperwork and overhead hassle.
Ben Lack: What, from a manufacturing process, gives the U.S. the best chance to become the market leader in solar innovation and production?
Charlie Gay: I think the key here is you could think of this as a small ecosystem. One example maybe that differentiates America from almost everywhere else in the world is the role of small business. As the steel industry in the U.S. came to an end in the ’70s, business incubators where created as a way of helping form small industries that could grow into large ones. And most of the job creation in the U.S. is related to how small businesses grow into large business. One way to think about this, maybe from where I’ve been born and growing up in Los Angeles, the Los Angeles Department of Water and Power and the L.A. Economic Development Agency, in a sense formed a perfect pairing here. They know where the electricity is going to be needed and how much would be needed every year. We know that we want to finance the job creation that goes with being able to support that industry of scale up. So, putting a small business and growing it like manufacturing together with the delivery chain, with the permitting process, creates jobs in a local economy, creates this cluster that can then be a role model for the replication of this industry around the world. And in the sense it also side-steps logistics problems of making something on the other side of the planet and shipping it all the way to California, in that example.
Ben Lack: What is Applied Solar doing to  lower costs for solar panels and increase output?
Charlie Gay: What we put a lot of emphasis on is creating a roadmap of vision for the industry that has become a reference for almost everybody in the industry to look at in defining how to scale and get the cost out. What we do is to use this roadmap as a springboard for conversation but also as a planning foundation for growing the capabilities of our customers. They can get trained with us on the equipment that we make by making the equipment that’s necessary for the next generation of cost reduction where more and more technology is coming to bear. Over the last thirty years, there have probably been four innovations in solar beginning with screen-printed paste evolving into PVA for the encapsuling of a module, the introduction of wire-saws, which really came about as a result of the existence of steel belted radial-tires growing, and then the use of silicone nitrite layer that could provide an anti-reflection coating with hydrogen embedded in it. Today there’s about double the number of innovations on our customer’s plate for implementation in the next two to three years.
Charlie Gay: The scaling of this industry has led to an explosion of ideas and innovations for further cost reduction has led to the ability to bring the strength of a company like Applied Materials that has really only been in solar for the last five years but has already become the number one producer of the equipment in the industry. Together with raw materials suppliers like Dupont, Dow Corning and Dow Chemical, major U.S. corporations that are participating in the growth of the industry enabling innovations in their areas, as well, along with the customers who manufacturer solar panels and install them in the field. It takes a system. It takes from the large scale, the banking and the policy system to the on-the-ground scale with manufacturing and having this road map being the foundation for being able to be predictable, to be able to align the opportunities in the shortest time possible to be able to bring the scale.


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