The Age of Cheap Solar: How can innovative technologies compete in the new solar market?

Speaker: Nicolas Morgan, Vice-President, Business Development & Marketing, Morgan Solar Inc.

Date: March 26, 2013

About the Speaker

Mr. Morgan is the co-founder and current vice president of Business Development and Marketing at Morgan Solar Inc. in Toronto.  Nicolas was previously an International Business Development Manager for FON Technologies, a Spanish Wi-Fi start-up company. Before this, he served as a risk management and business process advisor while at Ernst & Young, focusing on the Ontario electricity sector.  Nicolas currently sits on the Board of the Queen Street Solar Co-op, a developer of community-financed green energy projects. Mr. Morgan has a Bachelor’s of Social Science in Anthropology and post-graduate studies in Applied Information Technology.

Morgan Solar Inc. is a 2007 solar energy start-up developing highly efficient, low cost concentrated photovoltaic (CPV) technologies and balance of system components.

About the Sustainable Energy Lecture Series

This presentation is part of an ongoing series of lectures, organized by the Carleton Research Unit in Innovation, Science and Environment (CRUISE) and the Carleton Sustainable Energy Research Centre (CSERC). The lecture series was established in 2010 as part of the Master’s program in Sustainable Energy.  Since then, lectures have covered diverse topics ranging from examinations of the sustainability of nuclear power, aboriginal energy projects in Canada, the ability to catalyze action on climate change, and wind energy controversies in Ontario.

The Solar PV Market

For the past decade, the solar PV market has witnessed a significant drop in the price of cells for electricity generation.  In 2006, the price per watt was over $4 per watt.  Today the price per watt is on the order of 55 cents per watt, a level unimaginable just a decade ago.  This development was primarily driven by large investments in solar PV in China, Spain and Germany.  Massive subsidies for solar PV manufacturers in China have contributed to a flooding of the market for conventional solar PV panels at progressively lower prices, resulting in the crippling of competing manufacturers across the globe.  In Spain and Germany, the implementation of the feed-in-tariff program contributed to a significant, artificial demand for solar PV.  The investments there have contributed to technological improvements in the manufacturing and efficiency of conventional multi-crystalline solar panels which have contributed to greatly reducing the cost of solar electricity.

A significant decline in the price of electricity for solar PV has not necessarily been beneficial for the industry as a whole.  Panel manufacturers have been having trouble coping with the decline in prices, driven downward relentlessly as a result of manufacturing subsidies in China.  For example this was the situation faced by Solyndra, a US-based panel manufacturer.  Solyndra had raised around $1.5 billion in equity and government funding but the company became unprofitable and was unable to cover costs and debt repayment.  That company’s financial failure made it much more difficult for many other solar PV companies to capture investment funds thereafter.

Since the 2008 financial crisis and reductions in incentive programs for solar electricity, for example, Spain’s reduction in incentives under its feed-in-tariff program in 2009, the solar PV market has not yet made a full recovery.  Chinese manufacturers are continuing to produce low-cost panels, at a loss of $1 for every $3 in sales.  However, there are signs that market conditions are stabilizing.  Cell prices have begun to level off, albeit at very low levels.  Another positive sign is that a huge solar PV market opening up in places like India, China and Bangladesh, where solar insolation is high and generating electricity using solar PV technologies makes economic sense, particularly for off-grid applications.

Morgan Solar’s Sun SimbaTM Technology

Sun SimbaTM is a new technology developed by Morgan Solar Inc. which has the potential to be a game changer in the solar PV industry.  The Sun SimbaTM configuration consists of a plastic disk which captures the sunlight and focuses it on a multi-junction PV cell.   This arrangement doubles the efficiency compared to the currently popular solar energy technologies, at half the cost of manufacturing compared to conventional solar panels.

In addition to the panel itself, Sun SimbaTM also utilizes a unique potentially game-changing tracking device to orient each cell for maximum capture of sunlight, called the Savanna TrackerTM.  It is self-ballasted, simple, low-cost, and able to be deployed rapidly.  The technology is scalable for deployment at varying capacities and can easily be assembled by trained local technicians in developing countries.  And because the trackers can be linked together, they can withstand severe weather conditions.

Mr. Morgan emphasized that innovation in solar PV are not limited to the PV panel itself.  There are numerous other areas to develop including innovative practices and technologies involved in the assembly of cells, the tracking devices, inverters, monitoring and controls.

What Canada is Doing Right?

Mr. Morgan stated that the federal government offers a number of programs that provide financial assistance to new start-ups in the sector, such as funding for salaries, support for innovative research, and potentially limited funding for start-up and operating costs as well.  At the provincial level, such as in Ontario, there are also programs with similar objectives which provide financial support.

Problems Holding Solar PV Back

Mr. Morgan described several significant factors which are holding solar PV back.

There is currently very little available funding for start-up and operating capital.    Many solar PV companies are finding it difficult to access bank loans and investments since they often cannot meet the steep, long-term financial requirements that banks require before lending money.

In addition, there are not many provincial governments that have followed Ontario’s example for supporting innovative companies like Morgan Solar Inc.  The Ontario feed-in-tariff program, while helpful, supports investments in established technologies and does not do enough to encourage innovation in the industry.  At the federal level, there is no national renewable energy policy or mandate in place.

From the public policy perspective, Canadians still think too locally, overlooking the opportunity that exists to make sales in developing countries like India and China. In the developing world, there is little available money or resources for building a continent-side power grid, therefore, localized energy sources are the only way to provide electricity to people.  This opens up an area of opportunity for exports of technology and expertise.  Finally, Canadians need to learn how to scale-up their companies or they will lose out to foreign competition.

Discussion Period

A number of questions were asked concerning the viability of the business case made by Mr. Morgan as well as questions regarding the details of Sun SimbaTM technology.

With respect to the technology, Mr. Morgan described how their PV cells are manufactured in layers.  Each of the three layers selectively uses a portion of the solar spectrum which greatly enhances the efficiency of the cell.

Mr. Morgan also reassured the audience that the plastic used in the focusing lens does not shatter, does not turn yellow, and does not get dirty easily in contrast to other types of plastic material.  He thinks it would be economically practical to recycle most of the waste produced when the cells are decommissioned.  When it comes to the carbon footprint of the technology, the plastic used is a natural gas derivative and the light and stackable panels can pack densely for shipping.

With respect to policy aspects, Mr. Morgan described certain partnership issues when working in developing countries, and problems due to the practices of local governments which favour local technology companies and energy providers over foreign firms.  He did not think such partnership issues existed to such an extent in India where there is room in the market for many players.

The issue was raised of how the cost of electricity using the Sun SimbaTM technology compares with grid electricity prices.  Grid parity compares the eventual levelized cost of solar energy from a project with the local price of electricity off the grid.  Mr. Morgan said that the electricity costs using the Sun SimbaTM technology are below grid parity in many current markets.  This in itself is useful in the selling of his innovation.

The culminating question was “will this technology change the future?”  Mr. Morgan’s response was “we think we have a game-changing technology; ours is cheaper than diesel by 40%.”  He went on to explain that solar electricity is only a small piece of the total electricity market and is significant, but not a dominating, player in global energy production.  More market development and technology uptake abroad must occur over the next five years for solar to take its proper place in the electricity supply mix.  He stated that the pricing of electricity is currently done irrationally.  However, since there is a need to increase generation and build power grids to meet peak demand in the future, we could expect solar to contribute15-20% of baseload, with higher amounts possible provided that grid-scale power storage is available.

Written by Sean Nauth and Brian Lam, Masters of Arts students in Sustainable Energy Policy.

Click here to view Mr. Morgan’s presentation.