Elon Musk: Most Of World's Power from Solar By 2040  

EcoGeek has a post on PayPal and Tesla Motors founder Elon Musk and his (well founded) belief that solar will provide most of our power needs in a few decades time.

Elon Musk, the founder of PayPal and chairman of electric car company Tesla, recently said that he believed most of the world's power would come from solar by 2040. That seems remarkably optimistic to me.

At the Future in Review Conference, Musk said that in 30 years, solar thermal and solar photovoltaic power will, combined, produce more electricity than any other source. That title is currently held (and held firmly) by coal. Displacing the coal industry with renewables would require massive capital investments and innovations, particularly in power storage.

I have to say, my mind doesn't have to stretch too far to see how it would be possible. But a few things need to happen first. Solar needs to get cheaper, and photovoltaics have to stop relying on raw materials (indium / monosilicon) that are difficult to acquire. And then we need to figure out how to store the power so we can use it at night. This could be through a combination of utility-scale power storage and distributed power storage through home fuel-cell and hydrogen creation systems.

Musk, as the chairman of Solar City, a company that installs panels on houses, sometimes with no down payment at all, obviously believe in the distributed power model. The goal of Solar City is to have people pay, not for the $30,000 panels on their roof, but for the 30 years of electricity those panels will generate. Already Solar City is projecting $80 M in revenue for this year.

The final piece of the puzzle in getting to solar supremacy came out in Musk's speech as well. Very simply, "There should be a carbon tax."

According to photovoltaic industry analyst SolarBuzz, total PV installations in 2007 were 2826 MW_peak, representing a growth rate of 62 % (!!!) over 2006 . By way of comparison, Worldwatch claims that PV installations were 2935 MW_peak in 2007.

Germany continues to be the main driver for the PV industry, although Spain is now coming on very strong with their subsidy program as well. Ontario now has a similarly (over) generous subsidy program in operation so we are starting to see many announcements for PV power plants there as well. Japan is falling behind as their subsidy program was for a fixed capacity (i.e. 100,000 homes).

Thin film is growing much faster than poly- and mono-crystalline Silicon. SolarBuzz claims growth of 123 %, from 180 MW to 400 MW of installed capacity. Since a lot of the newer thin-film capacity is either CdTe or microcrystalline Silicon rather than the simpler amorphous Silicon (which happens to degrade quicker), the 400 MW number is probably actually 'firmer' than the 180 MW deployed in 2006.

The current leader of the direct bandgap thin film solar industry is First Solar of Ohio. The manufacturer of CdTe thin film solar cells has gone from $67 million in sales in the first quarter of 2007 to $197 million in the first quarter of 2008. Net profits increased 830 %, from $5 million to $46.6 million. With profits being about 25 % of sales, they have a much higher profit margin than most industries, including any oil major. That tends to imply they will be able to grow their production capacity very, very fast. They are currently advertising for 105 positions. According to the above report, First Solar is selling their modules for $2.45/W_peak, and since the cost of sales is 47 % of total sales, that implies a cost of $1.15/W_peak.

It will be interesting to see how the CIGS manufacturers stack up. As long as the price of solar is supported by overly generous government subsidies we aren't going to see technology sorting out winners and losers in the market, however.

Update: in case you wonder what $1.15/W_peak means, I calculate that for an environment with a capacity factor of 0.2 (i.e. San Franciso), when amortized over 25 years it works out to under $0.04/kWh. Each peak Watt will average 1.6 kWh/annum (max of 1.75 kWh in first year, dropping by 20 % over 25 years). Assumptions: energy inflation of 2.5 %/annum, general inflation of 2.5 %/annum, interest on financing of 6.0 %/annum. You have to add in all ancillary costs onto that four cent figure (such as frames, inverter, etc.) but the point remains obvious.