Wednesday, June 23, 2010

Concentrated Solar Power Summit: Less talk, more rock

In my last post, I wrote about the immense potential for solar thermal power called CSP for Concentrated Solar Power. CSP is the utility grade way to harness the Sun’s energy.

While there are not many CSP energy plants in operation yet, the most optimistic projections estimate that up to 25% of the world’s energy needs could be met by CSP by 2050. This is obviously a source of some relief to those who continue to be anxious about the environmental damage and risks involved in existing energy development, such deepwater oil wells. But the future is always uncertain especially when it is about predicting what is going to happen in 2030 or 2050. The enthusiastic predictions must not hide the huge difficulties to get there.

As a matter of fact, the potential for CSP is going to be on full display this week in San Francisco at the CSP Today 2010 Summit. Hundreds of experts are going to gather to talk about the quest for a better LCOE; the plusses and minuses of using Dishes vs. Towers vs. Parabolic troughs vs. Fresnel to collect and concentrate solar power; the role of government funding and support and how to access loan guarantees and get projects financed; and so on.

What is remarkable in this event is that one and only one of the key CSP players is not going to speak that much but is going to take the attendees for a long drive to Bakersfield where their first Californian 5 Mega Watts Kimberlina plant is in operation.

In the current status of this industry one project is certainly worth a thousand words.  There are so many hurdles to go through that showing the real plant and explaining how they got there in resolving the permitting, the financing, the commissioning and many other critical hurdles, will speak volumes. It will, for me, be the most important “talk” of the entire conference.

The company is Areva Solar. I like their attitude because it is the mark of a mature company. I should say the mark of a leader, as the mother company Areva Group is leader in nuclear power.  They certainly know how to realize big projects and have proven it.  They know what matters: less talk, more rock.

I hope that the message will be received by other CSP firms. I have a bold suggestion: the next summit should be a tour of the solar fields now in operation, so attendees could actually see what it takes to build a utility-grade solar plant. That is where we will learn the most and therefore will make most progress as a group in our quest to take innovations to scale and make the forecasts of industry analysts a reality.

Monday, June 7, 2010

Energy: To lighten a Billion smiles

Chennai, India – 22 May 2010 – I am touring India to meet the leaders of the emerging renewable energy industry. I’m on my way to The Siva Group, just after a visit to Orient Green Power, when I see a billboard promising the people of India: “Energy: To lighten a billion smiles.”

This billboard cannot come to my attention at a better time. It reminds me how important renewable energy is for developing countries and the rest of the world as well. The day before, when I arrived in Bangalore to visit GVK, the local newspapers were reporting long outages and explaining that a city that aspires to be the Silicon Valley of India still depends on generators for its electric power.

The Times of India reported on 19 May: “This is one of the worst situations in the past two decades. Five to six hours of intermittent power cuts every day have crippled industry. All process industries have come to a halt as production costs have increased by 60% and the output has come down by 10%."

The reason for the long outages is the low quality of the coal and therefore poor efficiency of the turbines. In short, the energy sources of today cannot light a billion smiles here, at least for now. But there is great hope in Modern India of developing new technologies to harness the sun, the wind and biomass to generate the energy this country needs.

The Future of Energy in Modern India
Solar energy is starting to develop in India thanks to the Jawaharlal Nehru National Solar Mission, and to private enterprise initiatives as well. One of the most promising technologies being developed is Thermal Solar, also known as Concentrated Solar Power (CSP).

Expectations for the growth of CSP are high, as evidenced by these recent reports:
  • In its Global Outlook 09, Greenpeace predicts that CSP could meet up to 7% of the world’s power needs by 2030 and fully one-quarter (25%) by 2050 in its most optimistic yet possible scenario;
  • The International Energy Agency predicts in its 2010 Technology Roadmap that CSP could provide 11.3% of global electricity needs by 2050;
  • iSuppli predicts that CSP will be the fastest-growing solar sector and will expand by a 37X factor from 2009 to 2014, compared to just a 6X increase for PV during the same period.
Some key reasons for the soaring development of CSP, include:
  • It is clean, generating a low level of carbon emission compared to photovoltaic (PV) solar cells, which produce toxic waste in manufacturing;
  • It has the capacity to store heat energy for later conversion to electricity, unlike PV;
  • It is simpler and easier to manufacture, and more land-efficient, than PV;
  • Because it costs less than PV, it offers the possibility of reaching grid parity faster than PV alone;
  • It can be used to improve the output of existing power plants (such as Bangalore’s Peenya unit) by producing steam to optimize the use of installed turbines;
  • It can be used to supply the specialized demands for electric power by industrial applications ranging from food processing to desalination;
  • It suits large-scale utilities, compared to PV, which is typically installed locally, such as on rooftops.
CSP is in fact a small but fast-growing part of global energy production already. Annual global CSP installations are projected to reach 10.8 GW in 2014, up from just 0.29 GW in 2009 and an estimated 1 GW in 2010. In comparison, PV installations will amount to 45.2 GW in 2014, up from 7.0 GW in 2009 and an estimated 15 GW in 2010.

Even with all this momentum, “lighting a billion smiles” won’t be easy. The Jawaharlal Nehru National Solar Mission launched in 2009 with the ambitious targets of generating 1 GW of solar power by 2013 and reaching grid parity by 2022 through the generation of 20 GW of solar power. Such targets should ignite major industrial development in the coming years, and face challenges such as land acquisition and financing. CSP, which accounts for approximately 60% of the solar energy target, will require $8 Billion in equity financing and $17 Billion of debt financing.

Do you think India will achieve this ambitious solar mission?

Wednesday, May 19, 2010

Is There Hope Over The Horizon Disaster?

Like so many of my colleagues, friends, and family, I have been struck by the devastation from the massive oil spill in the Gulf of Mexico, where 11 men died working on the Horizon rig.  The loss of human life, entire ecosystems, and the economic impact in the Gulf oil spill is unprecedented, as Time Magazine’s Bryan Walsh writes in The Far-Ranging Costs of the Mess in the Gulf.

Coming after the financial crisis, which is still seriously shaking the world, and before the looming climate change, this disaster is one more example of the terrible difficulty we face having to master complex systems. The reasons for this difficulty are twofold:
#1 - Progress is fueled by Risk. It is in exploring the unexplored that we are improving. It therefore is an endless process of risky discovery.
#2 - Complexity is a moving concept. What was complex a century ago is simple today and what is complex today will be mastered in the future.

In taking risk and pushing the envelope, we increase our understanding of how to deal with increasingly complex systems. Whether we do a good job managing complexity and whether our actions make the world better or worse depends on many factors, including the extent to which we are driven by self-interest versus the common good.

Taking risks means possible loss of control, both of the situation itself and how others perceive it. The very innovative BP Company is experiencing this once again. Should they be blamed for having taken risk? Let’s be honest and say no. Given their engineering excellence we cannot blame them for having tried to explore unexplored areas, because we need this oil and somebody has to try. But we could blame them, if when confronted with this disaster they only search for solutions that preserve their economic interests, instead of “shutting down the damn thing and stopping the pollution.”

For horrible disasters, it is quite important to notice that often, but not always, they ignite a positive reaction in our societies and are followed by creative recoveries, including economic boom. Let’s try then to explore which kind of positive reactions we might expect out of this disaster.
#1 - Based on the fact that oil is going to be more and more difficult to extract, more advanced technologies are needed. We could then expect that innovations like GreatPoint Energy and Bloom Energy will get wide acceptance in the coming years.
#2 – Renewable energies need to reach maturity. They are the necessary complement to fossil fuels but the utility grade market is extremely difficult and costly to reach.  We could expect that more attention will be paid to taking innovations to scale, by strategic and corporate investors as well as policy makers.
"Taking innovations to scale” for new energy and clean water is a domain that Bob Marassa and I are developing. In future blog posts, we will describe and illustrate with real cases what it takes to “take innovations to scale,” in the hope that exchanges with our readers will improve the evolution of this important domain.

Update (June 1, 2010):
I was glad to read a great Op-Ed by David Brooks on the NY Times, titled "Drilling for Certainty" where he had a very similar perspective to this blog post.