zawy

Solar Power Will Be Transformational in the Next Decade

Jack, you changed the input data to "prove" your point. We were talking about 13 cents/kWh and you're using a gracious "effective-efficiency-... of 30 years instead of the standard 25 years. A 3rd source of fudging is that you didn't do APR correctly. Even with your gracious 30-year effective-efficiency-l... monthly payments would be $60, so the rate is 16.4 cents/kwh instead of 15.

If you'll look at my comments, you'll see that i similarly found that $5.4/W is break even for 7% loan and if electricity costs rise 3% a year and if we can get a interest deduction, so we're not really in disagreement. I just want the math and assumptions to be correct and precise. Being off just 1 cent/kWh over 30 years is $3,900 on a 6 kW system (about $2000 in today's dollars when adjusted for inflation).

Solar Power Will Be Transformational in the Next Decade

Your article doesn't take into account the upfront costs when calculating payback. You assume banks will give out 0% loans on the initial $30K investment, or that rich people who can afford the upfront costs are satisfied with 0% return on the investment. If electrical grid energy costs increase 3% per year and you or your bank are satisfied with 7% return on the $30K investment, you have to use a 7%-3%=4% depreciation factor. In this scenario, the $4.5/Wp installed costs you propose in a typical 6 kWh/day/m^2 location (this includes clouds!) at today's 13 cents/kWh, it will barely break even over the 25 year "efficiency-effective" lifespan of the solar cells. If it's in a new house where you can depreciate the home interest expense and are in a tax bracket of 25%, then the depreciation factor is 7*0.75-3=2.6% then payback can occur at $5.4/W installed which i believe is very doable.

There is no simple energy storage solution. The raw materials in EEStor supercapacitors cost $10/kWh, about 50 times less than current generation lithium-ion. See BCON for 10-hour energy storage with 25-year lifespan that could cost less than $1/kWh. Even at $1/kWh, storing half the energy of Jacks $30K, 7kW system in 6kWh locations will cost 7x6/2= $21K. Flywheels with carbon nanotube technology ($4/pound in 5 years) could solve the energy storage problem. They use vacuum and magnetic floating to keep 80% of the energy for 12 hours. Currently used in energy storage for cranes, trains (start/stop regeneration), and telephone systems.

Contradictions in the Solar Market

I agree that the seeking alpha article that discussed oversupply is probably wrong. The reported demand appears to be a gross underestimate of actual demand. The solar companies themselves know better than financial institutions what their customers are scrambling for. There's no incentive for buyers to tell outsiders what their needs are. They just need to tell the solar manufacturers, who are reporting a very bullish outlook.

For the 1st contradiction, who's forecasting the 54% utilization? Certainly not any individual solar manufacturer. So i would question your industry-wide numbers It's also important to compare last quarter's capacity with next quarter's production. Not this year's year-end capacity with this year's production.

In the 2nd contradiction, the thin film expansion in light of poly oversupply, you're going backwards towards the same data used in contradiction number 1. It's not a different contradiction if the problem is simply an underestimate current demand. The 30% lower cost/watt of installed thin film explains the increasing market share.

The 3rd contradiction is still not a different contradiction. Over supply of poly is inherent to the argument of contradiction number 2 and still explain by an underestimate of coming production and demand.

For the 4th item, thin film (FSLR) has 2 times the profit margin and their costs will be cut in half in the next 5 years. Lower mono and poly prices will still not enable poly and mono manufacturers to keep up. That is not to say I'd buy FSLR at this PE. In fact, I sold FSLR and bought CSIQ right after FSLR jumped, but also right before CSIQ fell. Thankfully it's coming back today.