Stephen Lacey from ClimateProgress talks about worldwide renewable energy

Beyond Zero's Matthew Wright speaks to Stephen Lacey from ClimateProgress.org, about the most recent developments of global renewable energy.

Stephen Lacey interview

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Matthew Wright: Today on our show we are interviewing Stephen Lacey from climateprogress.org, in fact he is from a number of really exciting internet bases news services, and he has some great insights into the global renewable energy revolution. We will see if we’ve got Stephen there.

Hello Stephen?

Stephen Lacey: Hi I’m here, thanks for having me.

Matthew Wright: Fabulous. We had some technical difficulty there but got over that one quickly. Now we always like to start the show by introducing our guests and how you got involved and interested in renewable energy?

Stephen Lacey: Sure. I have been interested in this topic for some time, I have a journalism background and have been reporting on the clean energy industry for the last 6 years or so, but I have really been interested in environmental issues for quite some time.

I grew up in the north eastern part of the U.S where conservation, land conservation, energy efficiency and environmental stewardship are important pieces of who people are there in that region, so that was generally how I grew up, so energy reporting, and particularly clean energy reporting is sort of what I wanted to do in journalism.

So for many years before I moved over to climate progress here, which is based in the Centre for American Progress in Washington D.C, I was working for a network of publications called Renewable Energy World which was a published a variety of magazines, podcasts, and videos, web based products on the financial health of the industry, on project development and on new technologies development s, things happening in labs, and companies around the world, so I have done a lot of broad-based reporting on where this sector is globally, and particularly here in the United States. A lot of my focus has been on the U.S.

So it’s a really exciting time to be reporting on the industry, because there is so much going on, and as your listeners might know, it has been a tough time politically here in the U.S so, it can get very frustrating, but also in its own way very exciting.

Matthew Wright: So I guess there are 4 main commercial renewables now, there’s: Bio-Fuels, Rooftop solar photovoltaic, large scale solar thermal plants, and wind power. Maybe we could work through each of those and see where they’re at.

I am interested to start on what your insight, and accumulated knowledge on what you think is happening with photovoltaic? I was reading a piece by you, I think that went out today, talking about the massive up-scaling of photovoltaic panels, that’s rooftop solar panels, in manufacturing companies in China.

Stephen Lacey: China has been playing a very large role in photovoltaic manufacturing in recent years. It’s really been an overnight phenomenon. Back in 2005/2006 you would go to various solar conferences, and there were 1 or 2 Chinese firms. Now when you go to a solar conference, there are dozens of these firms. They have their own blocks set aside. Companies from China, Malaysia, Taiwan.

The Chinese have particularly have set aside a lot of cheap debt, from the Chinese Development Bank, which is a half government run bank, that provided very low cost loans to industries that are of strategic importance to the Chinese Government, and to China as a whole.

So they have looked at solar photovoltaic manufacturing as a very important strategic importance to them, and have helped scale-up companies in that country, very dramatically.

In the year 2000 we had about 100Mw of solar manufacturing capacity. Today at the end of this year, we are going to have 50,000Mw of production capacity, much of that in China, Taiwan, and Malaysia, so it is very stunning.

Some of that is happening in the United States where we’re having our own troubles here competing with some of the cheap debt provided by the Chinese Government, so we have had our struggles here competing, but you are seeing a scale up here seeing a little bit of scaling in Europe, some closures, some being opened. But it is really Asia where you’ve seen this explosion.

And so what that has done, is drive down the price of solar to levels unforseen even a few years ago, so there is a structural oversupply of panels on the market right now, which is very bad for manufacturers, because they might be selling panels for less than it costs to make them, or very close to what it costs to make them, but it is very good for project developers.

So, around the world, and here in the U.S where we have seen a lot of large scale project development. We’ve seen the cost of developing project costs drop by double digits, and just in the last year alone the cost of developing projects has dropped by about 25% here in the U.S.

So this is really a good thing, it’s a good story for the industry. It definitely causes a lot of hiccups and problems upstream where the manufacturers are. It’s a very nuanced issue, it’s not black and white, but it’s been amazing to see the growth in this industry, and how prices, costs and the size of projects have changed.

Matthew Wright: It is a phenomenal upswing in production, and actual capacity deployed. Do you think it is already at the point, or when will be the point where it’s actually disruptive to electricity markets?

And when I say disruptive, electricity markets are structured around the forecast that there will be certain demand profiles, throughout the day, throughout the evening, and if you start wedging PV into markets, and almost gutting the mid-day power demand, what do you think is going to happen? When is this going to happen?

Stephen Lacey: Well I think that solar photovoltaic in most markets are already competitive with the very expensive generation that you need during the peak times in middle of the day.

So in many countries around the world, and especially here in the U.S, I can really speak to what is happening here in the U.S, we use a lot of natural gas for peak generation. So we will fire up these spinning reserve plants that are sitting there idling for 20 hours a day, and we ramp them up for 4 hours a day, and because these plants are just sitting there, and it’s very inefficient to ramp them up for a short period of time, that generation costs a lot.

So what we saw with record temperatures across the country throughout the summer, the wholesale prices for electricity reaching unprecedented levels, and photovoltaic’s were actually 1/3rd of the cost of the electricity that people were paying for during the middle of the day.

So, already in many markets, solar PV is generating electricity for much cheaper, the problem of course is the up-front cost in how well these other barriers. Consumers are worried about putting these on their roof, we have institutional barriers in relation to financing because costs are weighted up front in developing solar systems. Its not taking off as quickly as we would like even though it can be competitive from a generation stand point.

So in terms of competing with coal and nuclear plants, we are seeing that in very sunny markets around the United States, contracts for electricity from solar photovoltaics, are coming in lower than it would cost to generate electricity than from a new nuclear or coal facility, that is trying to build one today, and that is a remarkable thing.

They are not necessarily cheaper than a coal plant that is in operation today and has been in place for 10 years and already have moralised their costs and investment, but a new coal plans that has to go through all these new environmental regulations relines on a finite dirty and regulated resource for its fuel.

Solar photovoltaic looks very good compared to these resources. So I think the future is really bright, and I don’t want to paint a rosy picture and say that this market is going to explode overnight, but I think the fundamentals are there, and I think market by market we are going to see pretty rapid penetration where solar resources are good.

Matthew Wright: And do you think that it’s affecting the investments yet? Is it coming to a point where the conventional companies are saying, we are not going to install a gas or coal plant because we are not going to be able to sell our power for prices in the middle of the day which we used to rely on, which is what we used to rely on for our revenue streams?

Stephen Lacey: Yeah, you are seeing a lot of utilities and power provides actually partnering with solar companies, to pair generation with natural gas.

So, they’re taking these extraordinary efficient new natural gas turbines and combining them with concentrating solar power, which is a utility scale of solar thermal, we can describe that technology if you would like, or with solar photovoltaic, and you create a much more efficient process for generating electricity during the middle of the day.

So you are starting to incrementally see that these decisions are changing where utilities are putting their money, you are really seeing little build out of coal in various countries, in the US here, you are seeing some development of coal activities here, but the numbers of development are substantially lower, and it is a question of how many are actually going to get developed in the next 5 years, and it could be 0, it could be 1 or 2. They are instead opting for cheap natural gas, and increasing inexpensive solar. You are going to see a lot of hybrid technologies like that rather than a big build out of coal plants.

It will not be that way across the board, I want to stress that. The energy markets are so fragmented that it’s very difficult to say, oh well this technology is competitive everywhere, and Utilities are going to jump on the band wagon.

This is really going to be company by company, and individual market by market, and I want to stress that, because I think that we have these very high expectations that all of a sudden renewable energy is going to sweep the globe, and renewable energy is going to happen in a very short period of time, but you’re dealing with institutional industries, that have been around for a long period of time, and it sort of takes a while for people to get comfortable with these decisions.

But what we are seeing is that people are getting comfortable with these decisions, the technologies work today, and that shift is happening.

Matthew Wright: We are talking to Stephen Lacey from climateprogress.org, and formally of renewable energy world. Stephen, you did mention solar thermal, could you just tell us a little about the solar thermal industry?

I’ve got a question in particular. Previously there wasn’t a view a few years ago, that PV, or rooftop solar was going to come down in price that quickly and therefore the belief was that if you built a solar thermal plant on sun, and had storage that could run into the night, is it possible that solar thermal plants would have to be like peakers, and actually be built to provide the evening power load and so on?

Stephen Lacey: I think that you are going to see an increased shift towards storage, using either oil, or some sort of heat transfer fluid, oil or molten salt or even using hot rocks to trap heat and generate electricity overnight when the sun is not shining. And that is because the cost of photovoltaic has come down so much that project developers are choosing photovoltaics over solar thermal.

It’s exactly what you said in your comments in this question. People did not see that dramatic drop in price in PV, so in the U.S we have seen a number of projects that were planned concentrating solar power projects, shifting into photovoltaics.

That doesn’t mean these companies aren’t serious about developing concentrating solar power, but they are re-evaluating where the technology is going to be in a few years like a bright source, which has a power tower technology, that is essential tower, placed in a bunch of mirrors that direct the sunlight onto a central boiler, it boils water, goes to a heat exchanger and generates electricity.

You’re seeing that company developing molten storage technology, so that it has the ability to sell lower cost electricity to utilities and have an additional value that photovoltaic’s can’t provide.

PV is great in the middle of the day, it does generate electricity during the day, but it simply doesn’t have the capabilities, the base load power capabilities that concentrating solar power does. So companies are really going to have to re-evaluate where they are, I think there is a lot of technology development still needing to take place in concentrating solar power, even what we have seen in PV, but you will see a healthy balance.

For now I think PV is winning the day though.

Matthew Wright: So if you have a vision of the grid moving towards 100% renewable energy, do you think it will be variable wind, variable PV, rooftop solar that is, and your firming power would come from solar thermal storage, and pumped hydro storage?

What sort of vision of 100% renewable grid can you imagine?

Stephen Lacey: Well I see the generation portion being important, I see the storage portion being important, but I also think that the demand response capabilities, that is, better grid management tools to allow you to see what is happening on the grid, and see storage capabilities, efficiency capabilities, and generation capabilities all together into a single unit.

So I think it’s going to be solar photovoltaic, concentrating solar power for base load power, definitely pumped storage. We are going to see combined heat and power facilities, maybe coal plants that are repowered with bio-mass, and the heat can be used for district heating systems along with cleaner electricity through bio-mass.

You might see a lot more on-site gas turbines, which are cleaner burning, not to go on too much of a side note, but there is also a question about how clean natural gas is when you look at the life cycle emissions, but clearly its much cleaner burning on site, than other fossil resources.

But I think what we need are increased efficiency capabilities, to match those generational capabilities. We just can’t meet our current energy demands by throwing up a bunch of technologies together, and not being able to manage those. Because as great as renewable are, they don’t really have their intermittences’. And no one in the industry will deny that that can be an issue, but it has to be managed, and it is already being managed.

Here in the U.S there is a company called Internoch which works with clients who have agreed to reduce demand during the middle of the day, and ramp up demand at night when there is an excess generation. They then pool that together and match it with intermittent wind facilities, so when people reduce their demand, and actually get paid for those demand reductions when there is a lack of wind electricity, and when there is excess electricity on the grid they soak that up, and can get paid for that as well.

So it’s a dancing partner, your using intelligent communications to pool a lot of commercial buildings and residential buildings together to match the generation output from a wind farm. And you’re going to see more of that. And I am a fundamental believer in that is what we need to get to 100% renewables, it’s not just generation.

Matthew Wright: Do you think there will be a shift in the energy supply model, from selling energy kw/h, to say comfort or some sort of energy services.

Stephen Lacey: You know, I’m not sure. I think that you are seeing more energy services companies, but ultimately it comes down to dollars and cents and energy delivered. I can’t say that the model will change.

People want reliable electricity and heat. They want it for as little work as possible, for as little money as possible, and I think we have been so accustomed to cheap energy, that it’s probably not going to change. So, I think that these models will evolve over time given how different these technologies are, but ultimately it is going to come down to businesses and individual consumers, wanting reliable heat, power and fuels, and it will come down to the price unit of energy that your delivering.

Matthew Wright: And electric vehicles, you have electric vehicles in the U.S on the market, we are not so lucky here in Australia. Do you think we are likely to see an upswing like solar panels? It’s a slow start right now, but 100Mw capacity in the year 2000 was a slow start, and now we are at 5 times more global manufacturing capacities. What about the EV’s.

Stephen Lacey: You know, that’s a tricky situation, and a lot of manufacturers have ramped up because of government incentives. The U.S before in 2009, had about 2% of advanced battery manufacturing, and in the next couple of years we could see up to about 40% of battery manufacturing.

So we are seeing a lot of movement here, and companies like Nissan, GM, and Ford have rolled out electric vehicles that people are buying. But people are not buying them as dramatically as people expected.

So I think it is going to take a while. Unfortunately some of the charging stations that have been rolled out have not been used as much as people thought they were going to be used. So you actually see some companies trying to shift chargers around, trying to work out who is using them, some are ripping them out entirely. I think the net impact is that there are more chargers being installed, but this doesn’t happen in a linear fashion. Consumers are not behaving the way that people thought. Some are using these vehicles heavily and some are not.

Obama’s goal is to have one millions of these vehicles on the road by 2015, and there are a lot of questions about if we’re going to get there because of consumer demand. I can’t say whether or not we will be there, clearly that is a lot of electric vehicles on the road, and we certainly need more, so things are happening. They are not happening at an extraordinarily fast pace. But I think we are happening faster than a lot of other countries.

Matthew Wright: personally I would love to have a pure electric, or a plug in hybrid electric car, which leads me to bio-fuels, because the other vision for the world is that your running everything on bio-fuels, and there has been land use competition, food competition issues. What’s the latest in the bio-fuels industry? We hear about 2nd and 3rd generation bio-fuels. Are we there yet?

Stephen Lacey: Boy, we’re not there yet, but we are taking incremental steps. In 2004/2005 there was a lot of excitement, all the way until 2007 or so, there was a lot of excitement about next generation bio-fuels not competing with food recourses for using used bio-fuels.

Using things like Jetropha (Sp) and cellulosic waste products. Using acid hydrolysis or microbes to break down waste products, and turn them into sugars which can be converted into fuels. That is all happening, but its not being commercialized as was predicted. And here in the United States, we are seeing some pretty good movement.

There are millions of gallons planned around the world. The department of energy are working with the navy, and the department of agriculture here to set aside $500 million to develop 10’s of millions of gallons of bio-fuels facilities to power the navy’s war ships, and power the military’s airplanes.

So in the U.S because we have had some difficulties in commercializing some of these facilities, the military has taken a strong role in this, and people are very excited about what this will do, because there are companies at the pre-commercial scale that were not able to ramp up after the financial crisis, and the military is giving them a market to sell into, and the funds are there to scale up to commercial facilities. And I think that is really going to help this market.

So don’t expect cars to be running off bio-fuels in the next 5 years though. This is incremental progress; it’s not like the photovoltaic’s industry which more closely matches what you see in consumer electronics.

This is land use issues, these are very large complicated facilities that take a lot of money to develop, and then on the demand side, you have oil companies fighting against fuel standards because they are worried that too many bio-fuels are going to corrode engines and corrode pipelines and so forth, so a lot of institutional barriers for bio-fuels. But I think that some people are optimistic but not bullish.

Matthew Wright: We just have a minute or two left, so do you think it is going to be a EV, or bio-fuel driven future for cars in the future? In a sentence or two?

Stephen Lacey: I wish I could tell you, I think its going to be a com0bination of both. I think you’re going to see it split half and half, and I don’t think that he gasoline fuelled engine is going to be phased out any time soon either. I think we are going to see a healthy mix of al;l the technologies.

Matthew Wright: Now, that’s climate progress .org (www.climateprogress.org) for more of your work. Where can they go for that?

Stephen Lacey: They can go to climate progress .org, or renewable energy world .com, or go to the centre for American progress. We are working on a lot of the clean energy issues her in the U.S, and around the world so, I am happy to have people to email me, or they can find me on the website.

Matthew Wright: Great. Well thanks Stephen.

Stephen Lacey: Your Welcome, I really appreciate.

Matthew Wright: We hope to get you back for another wrap up in a few months.

Stephen Lacey: You bet, sounds good. strong> Matthew Wright:We have been speaking to Stephen Lacey from climate progress.org

transcript by Matthew T.