FedEx Modec Electric Van
Hybrid and Electric Trucks and Vans
The United States is the world’s most dependent nation on oil. Soaring prices hurt our ability to recover from the recession. Mideast conflicts demonstrate our lack of energy security. The recent BP gulf spill is estimated to have caused over $40 billion in damage. Strip mining Canada for tar sands causes environmental damage, as does the energy-intensive conversion of tar sands into oil.
President Obama announced a goal of cutting U.S. oil import by one-third by 2025. Controversial to the plan is more offshore oil drilling. Welcome are the initiatives of the National Clean Fleets Partnership. This public-private partnership will help large companies reduce diesel and gasoline use in their fleets by incorporating electric vehicles, alternative fuels, and fuel-saving measures into their daily operations. The partnership is part of the DOE Vehicle Technology Program’s “Clean Cities” initiative.
AT&T, FedEx, PepsiCo, UPS and Verizon – Partnership Charter Members – announced plans to save 7 million gallons of diesel and gasoline fuel by deploying 20,000 advanced technology vehicles including hybrid and electric trucks. These charter members represent five of the nation’s 10 largest national fleets and collectively own and operate more than 275,000 vehicles.
Large commercial fleets are heavily dependent on petroleum-based fuels (gasoline and diesel) to deliver their goods and services every day. In 2009, there were more than 3 million large commercial fleet vehicles on the road, consuming nearly 4 billion gallons of fuel. Fleets, which are typically centrally managed and comprised of a large number of vehicles, offer significant opportunities to reduce fuel use and carbon pollution.
FedEx Electric and Hybrid Fleet
FedEx has 19 all-electric vans and trucks and 330-hybrid diesel and hybrid gasoline vans and trucks. Those 348 have driven over 7.7 million miles to reducing fuel use by almost 300,000 gallons and carbon dioxide emissions by approximately 3,000 metric tons. The Environmental Protection Agency (EPA), the DOE, and CALSTART have recognized the FedEx hybrid vehicle project for its role in spurring hybrid truck advancements.
FedEx fleet includes Navistar and Modec electric delivery vans. E700 Eaton hybrids are heavily used in New York. Fiat’s Iveco diesel hybrid delivery vans are used in Milan and other cities. Azure gasoline parallel hybrids (Ford E450 chassis and Utilimaster body) make deliveries in California cities such as LA and Sacramento. Azure is now building thousands of Ford Transit Connect Electric Vans.
Also being hybridized are the traditional FedEx 16,000 pound vans with a cargo capacity of approximately 670 cubic feet. Eaton’s hybrid electric system has been placed in the standard white FedEx Express W700 delivery truck, which utilizes a Freightliner chassis and an Utilimaster body, and designated E700. FedEx Ground is working with Parker Hannifin Corporation to test a hybrid hydraulic technology with on a heavier class vehicle (Class 6). FedEx Fleet Details
FedEx is thinking outside the truck. Couriers in New York City and in London’s West End deliver many of their packages on foot, reducing vehicle emissions and traffic congestion. In Paris, electric tricycle delivery drivers zip packages to awaiting customers.
UPS Hybrid Fleet
UPS has over 50 hybrid diesel delivery trucks. Delivery trucks make lots of stops and capture lots of braking energy. The trucks have 60 percent to 70 percent higher fuel efficiency and emit 40 percent less carbon dioxide than normal UPS delivery trucks. UPS invests an added $7,000 per truck for these fuel-efficient hybrids, and saves over $7,000 in fuel in less than three years.
UPS also demonstrated its hydraulic hybrid delivery vehicle at the South Coast Air Quality Management District in Diamond Bar, California. The unique UPS delivery vehicle uses hydraulic pumps and hydraulic storage tanks to store energy, similar to what is done with electric motors and batteries in hybrid electric vehicles. Fuel economy is increased in three ways: vehicle-braking energy is recovered that normally is wasted; the engine is operated more efficiently; and the engine can be shut off when stopped or decelerating. The vehicle was designed with the support of the UPS, Eaton Corporation – Fluid Power, International Truck and Engine Corporation, U.S. Army – National Automotive Center, and Morgan-Olson. UPS has experimented with two hydrogen fuel cell vehicles, a Sprinter fuel cell van in Ontario, California and one in Ann Arbor, Michigan. UPS Fleet Details
UPS is going green to make more green – money. Fuel costs UPS over 2 billion dollars every year. Their approach to saving fuel is not based on one big technology breakthrough. Rather, it is based upon hundreds of smart decisions. For example, USP designed delivery routes to minimize left turns because turning across traffic is not only more dangerous, it requires longer idling time, wastes fuel and creates more congestion. The right-turn only approach saved UPS 3,000,000 gallons of fuel.
National Clean Fleets Partnership and the U.S. DOE
Through the National Clean Fleets Partnership, the Department of Energy will help companies:
- Reduce fuel use through the use of more efficient vehicles and technologies, including hybrids
- Replace gasoline and diesel vehicles with alternative fuels, such as electricity, natural gas, biodiesel, ethanol, hydrogen, or propane
Partners will benefit from:
- Opportunities for technical assistance and collaboration, including: opportunities for peer-to-peer information exchange; collaboration with DOE and national laboratories surrounding research and development initiatives; and assistance in pursuing group purchasing—so that smaller companies work with their larger peers to get the benefits of purchasing advanced vehicles in bulk.
- DOE technical tools and resources: DOE has developed a wide range of technical tools to help partner companies navigate the world of alternative fuels and advanced vehicles. A diverse collection of cost calculators, interactive maps, customizable database searches, and mobile applications puts vital information and analysis at fleets’ fingertips.
This Department of Energy initiative will compliment the Environmental Protection Agency’s Smart way Transport partnership program with the freight industry by furthering efforts to improve efficiency in goods movement and reducing our dependency on foreign oil.
On September 24, Congress approved a $25 billion bailout for GM, Ford, and Chrysler. “It seemed like a lot when we first started pushing this,” says Democratic Sen. Debbie Stabenow of Michigan, one of the bill’s sponsors. “Suddenly, it seems so small.” The three troubled automakers are already back in Washington D.C. asking for another $25 billion.
A couple of weeks ago, GM said that the future of our nation depended on it getting added billions so that it could buy Chrysler. GM has changed its mind. It just wants taxpayers to give the Detroit three another $25 billion. The problem is that the total of $50 billion is paid by taxpayers like you and me.
Congress would do well to have some national goals for the $50 billion, not goals set by auto lobbyists. Goals include America’s need to become competitive with the world if we hope to create more jobs and end this recession. Workers need help by either keeping their jobs or by getting new jobs. Americans need cars that cost less at the pump and better alternatives to always using a car. America needs to be energy secure, not desperately dependent on oil. To meet these goals, several alternatives are being considered:
- Another $25 billion with no strings attached.
- Let GM reorganize under Chapter 11 bankruptcy.
- Boost consumer auto purchases with tax credits for buying vehicles with excellent fuel economy.
- Invest the $25 billion in rail and transit.
When Chrysler got its 1980 loan guarantee, Lee Iacocca cut his annual salary to a dollar and slashed the wages of other top workers by 10 percent. The tax payers never paid a cent. It was a $1.5 billion loan guarantee.
This time around, Chrysler will be fine. Chrysler President Jim Press, when talking in September at a Western Automotive Journalist meeting, stated, “We need a new business model based on one word – Reality.” The new management team at Chrysler inherited a 4 million car per year overhead with sales falling to one million per year. Chrysler is privately owned by Cerberus Capital Management. Chrysler has been actively downsizing to be smaller, agile and profitable.
Ford is also moving to a business model that matches the name of its best selling car – Focus. In recently discussing its third quarter results, Ford stated that it remains on track to achieve $5 billion in cost reductions in North America by the end of 2008 compared with 2005. After a quarterly pre-tax loss of $2.7 billion, Ford had overall liquidity of $29.6 billion. The company promised shareholders further cost cuts and cash improvements.
In his November 17 Wall Street Journal article, Michael Levine discusses why Chapter 11 bankruptcy is the best option for GM. Chapter 11 would allow GM to be more competitive with Toyota, which now has now the world leader in market share. Over the years, GM has lost about two-thirds of its market share. Only with bankruptcy can GM be free of restrictions that prevent it from being competitive. It has 7,000 dealers compared to Toyota’s 1,500 successful dealers. GM has enormous pension and health care costs that add thousands to the cost of cars. The burden is so great, that GM needs SUVs to make money and sees no margin in fuel efficient cars. Yet, it is fuel efficient cars that customers are now buying. If GM reorganizes under bankruptcy, creditors will be forced to give it breathing room and paralyzing restrictions will be removed.
Robert Reich, former Labor Secretary, wrote on November 11, “When a big company that gets into trouble is more valuable living than dead, there used to be a well-established legal process for reorganizing it – called chapter 11 of the bankruptcy code. Under it, creditors took some losses, shareholders even bigger ones, some managers’ heads rolled. Companies cleaned up their books and got a fresh start. And taxpayers didn’t pay a penny. In exchange for government aid, the Big Three’s creditors, shareholders, and executives should be required to accept losses as large as they’d endure under chapter 11, and the UAW should agree to some across-the-board wage and benefit cuts.”
Al Gore, in his November 9 NY Times Op-Ed identifies a major opportunity, “We should help America’s automobile industry (not only the Big Three but the innovative new startup companies as well) to convert quickly to plug-in hybrids that can run on the renewable electricity that will be available as the rest of this plan matures. In combination with the unified grid, a nationwide fleet of plug-in hybrids would also help to solve the problem of electricity storage.”
Now law, the Emergency Economic Stabilization Act of 2008 gives tax credits exceeding $7,000 for the purchase of plug-in hybrids. President-elect Obama, when campaigning, favored expanded use of tax credits to speed the transition to a competitive auto industry that makes clean cars. Consumer vehicle spending could be boosted now by expanding the offering to include a $2,000 tax credit for vehicles getting over 35 miles per gallon and up to $10,000 for zero-emission vehicles. Auto industry sales would immediately jump without a $25 billion give away.
In the seventies, I left my job with a major Detroit corporation, Burroughs, then the second largest computer firm. At the time, all makers of mainframe computers were in trouble, including IBM. If the government had done a massive bailout and protected their businesses, the United States would not have transitioned into the global giant of information technology. Lacking a bailout, IBM reinvented themselves into a global leader in IT services with a deep new patent portfolio. Burroughs became Unisys. Honeywell redefined itself. GE exited the computer field. An industry thrived instead of died. The transition made the United States the global leader in the Internet and technology innovation, creating millions of jobs.
Big corporations resist change, yet change they must. To grow and be profitable, the United States transportation industry must be innovative and responsive to customers.
Car customers are voting with their pocketbooks. The average car owner spends $8,000 on their car. The average household with two cars spends $16,000. People are demanding fuel economy. They have stopped buying vehicles with lousy mileage. They want hybrids that deliver over 40 miles per gallon. There is a pent-up demand for millions of electric vehicles and plug-in hybrids.
Only a smaller innovative customer-oriented GM can create permanent jobs. Yes, a GM bankruptcy reorganization could lead to the short-term loss of over 100,000 jobs at GM, its suppliers, and some of its dealers. These laid-off workers, however, could be part of a million new workers. Federal government tax credits could be given to any company hiring laid-off auto workers. Community colleges could be funded in Michigan and other states to retrain workers for jobs of the future.
$25 billion invested in public transportation would create over one million new jobs in the United States. The America Public Transportation Association has learned that every $1 billion invested in public transit capital projects generates 30,000 jobs, and the same amount invested in transit operations generates 60,000 jobs.
U.S. citizens want better public transportation as ridership soars to 11 billion this year. This November, voters across the country in 16 states approved 23 measures out of 32 state and local public transit ballot initiatives, authorizing expenditures approximating $75 billion. Clean Fleet Report
Senate Majority Leader Harry Reid plans to move forward with a bill that would give the auto industry access to the $700 billion Troubled Asset Relief Program set up by the government in October to help ailing banks and other financial firms.
As Ben Franklin observed, “Great haste makes great waste.”
Congress may release the total $50 billion by Thanksgiving. Such haste sends all taxpayers a message, “Enjoy this turkey. You can pay for it later with interest.”
John Addison publishes the Clean Fleet Report.
California is moving ahead with an 800-mile high-speed train system serving Los Angeles, the San Francisco Bay Area, Sacramento, the Central Valley, the Inland Empire, Orange County and San Diego. High-speed trains will be capable of maximum speeds of 220 miles per hour, covering San Francisco to Los Angeles in 2 hours and 40 minutes. The system is forecast to carry over 100 million passengers per year by 2030.
California voters approved the bond measure that commits state funds of almost $10 billion only when matched by $10 billion of federal funds and another $10 billion of public-private partnership funds. Congress and the new president are likely to support matching federal funds for high-speed rail. In this tight economy, high-speed rail will get better results for less money than using federal funds to widen California’s freeways.
Last May, President-elect Obama said. “We are going to be having a lot of conversations this summer about gas prices and it is a perfect time to start talking about why we don’t have better rail service. … [I]t works on the Northeast corridor. They would rather go from New York to Washington by train than they would by plane. It is a lot more reliable and it is a good way for us to start reducing how much gas we are using.”
Public-private partnership funding is also likely, because the rail system will be profitable. Build-own-operate models are popular in transportation with those that are likely to bid on building the system and providing the equipment. The McKinsey Quarterly in February 2008 reported that the world’s 20 largest infrastructure funds now have nearly $130 billion under management.
Support for rail and public transportation is nationwide, not just in California. Voters across the country in 16 states approved 23 measures out of 32 state and local public transit ballot initiatives, authorizing expenditures approximating $75 billion. For example, in Los Angeles, a $40 billion measure passed that will finance new and existing bus and rail lines. In the Seattle area, people voted to expand commuter rail and express bus service and to create a 55-mile light rail system by approving $17.8 billion.
Will Californians park their cars and ride the rails? Last year, LA Metro carried 64 million riders. In the Bay Area, BART carried 104 million riders. The new California High Speed Rail will link both these systems and 25 multi-modal public transportation systems in total. The forecast of 100 million passengers per year by 2030 may be conservative.
Because the rail will be powered by electricity, it is valuable to look at the power sources. In California, by law, 20 percent of the electricity will be from renewables by 2010. By 2020, it must be at least 33 percent. California is subsidizing one million solar roofs that include net metering. Pacific Gas and Electric is installing 800 megawatts (MW) of utility scale solar photovoltaics (PV). For 20 years, Kramer Junction has been delivering 350 MW of concentrating solar power. Added megawatts of wind, geothermal, and biogas projects are being added. By law, utilities must be 33% renewable by 2020. With California’s implementation of greenhouse gas emission cap and trade, renewables are likely to be the low cost source of electricity by 2030.
Using renewable energy, California’s High-Speed Rail is likely to be zero emission before 2030, saving over 20 billion pounds of CO2 annually and over 12 million barrels of oil annually.
In addition to 160,000 construction jobs over the next two decades, high-speed trains will generate 320,000 permanent jobs by 2030, growing to 450,000 jobs in 2035, according to the business plan.
For the LA to SF travel, train fares are expected to be 50 percent of an airline ticket. In 2030 LA-SF travel is forecasted at high-speed trains will carry 45%, air transportation 26%, and the automobile 29% of the total transportation market between the two biggest metropolitan areas in California. This will keep intra-state air travel constant and avoid an airport overcapacity crisis.
California High-Speed Rail builds on the success of other systems around the world.
The 456-mile Northeast Corridor (NEC) which links Boston, New York and Washington D.C. is a successful rail corridor which is vital to the economy of the northeastern United States. It currently carries well over 200 million rail passengers. There are over 500 passenger trains per day in and out of New York City, 400 commuter trains, and 100 Amtrak trains.
Amtrak’s Acela service which operates on the NEC between Boston, New York City and Washington, D.C. is the only passenger rail service in the United States that approaches high-speed standards traveling at maximum speeds up to 150 mph on about 35 miles. In comparison with high-speed trains operating in Europe and Asia, the Acela service would be considered a conventional rail operation. For example, Acela trains make the 226-mile trip between New York and Washington D.C. in about 2.75 hours, traveling at an average speed of about 80 mph.
In years past, I conducted many workshops on the east coast. It was always faster and easier to take Amtrak from Washington D.C. to Philadelphia and on to New York, than to fly. The stations are conveniently connected to public transportation, rental car service, and car sharing.
For 40 years, Japan, has been the role model in high-speed rail. The entire Japanese high-speed train network of 1,350 miles currently carries over 335 million passengers a year.
In France the TGV network, consisting of over 1,160 miles of new interconnected high-speed lines, carries over 100 million passengers each year. Spain and Germany continue to expand high-speed rail. London to Paris can be pleasantly traveled in 2 hours and 15 minutes. Eventually most of the European Union will be seamlessly integrated.
Twelve countries around the world take advantage of high-speed rail – from the United States to China. Soon the number will be 20 countries as Mexico, Russia, and others add their systems.
Oil usage in the United States and many other countries has peaked. At the moment, this is largely thanks to drivers’ reacting to high oil prices and a recession by replacing solo drives with employer commute programs and public transportation. Oil usage is likely to continue declining as efficient multi-modal transportation systems are linked together with high-speed rail – a cool solution for a heating planet.
A record number of Americans are saving thousands per year by using public transportation from one day per week to living car free. In 2007, a 50-year record was set of 10.3 billion transit trips per year, saving over 4 billion gallons of car gasoline use. 2008 will set a new record that may approach 11 billion trips as more commuters leave their cars parked to brave standing-room-only train and bus rides.
Public transportation and corporate commute programs have helped America finally reduce its dependency on oil, with vehicle miles traveled reduced for the first time. Now, our financial crisis is putting this in jeopardy.
Although public transportation is rescuing Americans, will Americans rescue public transportation? Record ridership, shrinking tax revenues, frozen funds, and fuel prices are overwhelming transit budgets. Where more routes and buses are needed, cutbacks are instead being made.
This Tuesday votes in 33 states will make decisions about the fate of transit funding. In California, decided will be the fate of California’s High Speed Rail.
The American Public Transportation Association (APTA) called on Congress on October 29 to pass economic stimulus legislation that includes funding public transportation projects to create new jobs. APTA has identified 559 public transit “ready-to-go” projects, worth $8 billion, from Chicago to Atlanta, and from NY to LA.
Testifying before the House Committee on Transportation and Infrastructure, APTA Chair Dr. Beverly Scott, who is also general manager and CEO of the Metropolitan Atlanta Rapid Transit Authority (MARTA), testified, “We simply must get our economy back on track, and the most important way to do that is to create new jobs, and give our citizens the tools they need to find jobs and keep working.”
Dr. Scott continued, “Not only do transit systems need assistance for capital projects, transit providers also need help to maintain their current services. Transit systems across the United States are being forced to choose between raising passenger fares or cutting service to make up for shortfalls in local funding and the increased cost of diesel fuel this past summer. The burden is so great that 35 percent of public transportation providers who responded to another recent APTA survey have been forced to cut or plan to cut the level of passenger service they provide in spite of the growing demand. Transit needs to be part of the solution to – not the victim of – the current economic crisis. This could not happen at a worse time. Public transportation ridership has grown dramatically this year, and we need to continue that growth.”
Even the collapse of AIG is having a devastating effect on transit. Dr. Scott as testified, “From the early 1990s to 2003, the Federal Transit Administration urged transit systems to enter into innovative financing deals known as Sale-in/Lease Out and Lease-In/Lease Out (SILO/LILO) transactions. These transactions helped transit systems finance large, capital intensive projects by selling their assets to investors and leasing them back. The transit agencies received up-front one time payments in consideration for future tax benefits for the investors, until these transactions were prohibited in 2003. To secure these transactions, sale proceeds in the form of Treasury securities were placed into an account that AIG and a small number of other insurers guaranteed. Under the terms of the contracts, transit agencies are responsible for replacing the guarantors of the secured assets if they fail to maintain a certain bond rating- often ‘AAA’ status. Unfortunately, because AIG and the other insurers have lost their ‘AAA’ rating, and there are no available financial institutions to replace them, the equity investors are able to find the transactions in default. Under this scenario, through no fault of their own, transit agencies could be forced to pay hundreds of millions of dollars in fees to make the investors whole. The banks have the opportunity to gain 100 percent of the tax benefits that have been disallowed, which would in turn devastate transit agencies, which will be required to pay more than $2 billion to the banks immediately.” Congressional Testimony
Will we keep America moving, our will be go back to being stuck in our cars in gridlock, burning billions of dollars of extra gasoline from countries that are glad to take our money?
John Addison publishes the Clean Fleet Report.
Solar is powering more vehicles. American’s have reduced their use of petroleum 5 percent this year. So far, petroleum reduction is the result of fewer miles traveled solo as people cut travel to deal with high gas prices and a slowing economy. At the margin, however, solar power is replacing oil.
There are now 40,000 electric vehicles in use in the United States. They are primarily the 25 mile per hour light electric vehicles. Fleets are starting to use heavy electric vehicles, and plug-in hybrids, that formerly required copious gallons of diesel and gasoline. In 2010, consumers will start buying freeway speed electric vehicles.
The U.S. Marine Corp at Camp Pendleton, during my last visit, showed me an 8-station solar car port that they use to charge their 320 light-electric vehicles. Petroleum fuel is a multi-billion dollar part of the U.S. Defense budget. Once the solar panels are installed, however, the sunlight is free. Solar is increasingly also used by the Marines and Army for stationary power in the U.S. and Iraq, reducing the need for petroleum in the form of diesel and JP8 jet fuel for running gen sets to air condition tents and buildings.
Every 44 minutes, sufficient energy from the sun strikes the Earth to provide the entire world’s energy requirements for one year, including the energy needed to move vehicles. Solar power grows 40 percent per year, as we become increasingly efficient at turning sunlight into electricity and heat.
Most importantly, with continued innovation and larger scale manufacturing, the price of solar keeps dropping. There is enthusiasm for advancements in photovoltaics (PV) and for large-scale concentrating solar power (CSP). As I researched and wrote this article at the Solar Power 2008 Conference, last week, the evidence of growth was everywhere. 17,000 from 92 countries attended the conference in San Diego, California. 425 companies exhibited, with 450 more turned away due to lack of convention floor space.
200 GW of solar power are now installed globally. Deutsche Bank forecasts that the photovoltaic market will grow from $13 billion in 2006 to $30 billion in 2010. Polysilicon supply is expected to triple by 2010. New technology continues to delivers more electricity output with less silicon. These technologies include thin film, high efficiency PV, organic, concentrating PV and balance of system improvements.
For those interested in transportation, one notable area of growth is solar covered parking structures – a cool solution for a planet that is getting hotter.
When California Governor Arnold Schwarzenegger opened the Solar Power International conference, he highlighted Applied Materials’ 2 MW solar power that also shades their parking lot. The vast solar shading is designed to efficiently capture energy using SunPower 19% efficient panels implemented horizontally with a system that rotates the panels to track the sunlight.
For the next 30 years, solar will pay for itself many times at Applied by reducing the purchase of grid-electricity. While visiting Applied Materials the Governor also viewed a working, SunFab™ thin film solar panel, the largest commercially-available solar panel in the world. Applied also showed how a gigawatt-scale SunFab factory with multiple production lines could produce 2 MW in one day, supporting the industry’s rapid growth.
Applied’s substantial parking structure stretches 14 feet high with support poles going over 20 feet into the ground. This would be too expensive for many organizations. Solar Integrated Technologies told me that the cost of their customer’s solar parking structures is less than adding solar to commercial rooftops because of the light weight of thin-film silicon PV.
Envision Solar specializes in solar parking structures. Designed by architects, Envision uses biomimicry to have parking structures that suggest groves of trees. NREL in Colorado uses an Envision solar carport with a charging station for two vehicles including its plug-in hybrid and EV. Other organizations have installed Envison solar parking structures with the support poles pre-engineered with wiring for future charging or integration of nighttime energy-efficient lighting. These organizations include the University of California San Diego and major solar panel maker Kyocera.
New Jersey Transit is preparing for a future where parked cars can be charged with sunlight while people use public transportation. Premier Power Renewable Energy recently completed the first of two 201kW solar canopies, on the rooftops of two large six-story parking garages at the new Trenton AMTRAK Transit center. Each project includes more than 600 solar panels. The solar systems will eliminate approximately 141 tons of CO2 emissions annually.
The New Jersey parking structures are also equipped with 110v charging stations for Plug-in Hybrid Electric Vehicles (PHEVs) and Electric Vehicles (EVs). Participating in the October 14 ribbon cutting was the Mid-Atlantic Grid Interactive Cars (MAGIC) consortium, which includes the University of Delaware, Pepco Holdings, Inc., PJM Interconnect, Comverge, AC Propulsion and the Atlantic County Utilities Authority, created to further develop, test and demonstrate Vehicle-to-Grid technology.
At Google, part of their 1.6 MW solar PV installation is a solar carport structure that includes charging stations forGoogle’s plug-in hybrid converted Toyota Priuses and Ford Excapes.
The conference included many lively debates about whether the financial crisis would stop solar’s growth in 2009. Large projects usually require millions for project financing. Allowing customers to pay by the kilowatt with power purchase agreements requires long-term financing. Illiquidity will surely slow growth.
In most U.S. states, however, electric utilities are required by law to expand the percentage of power that is delivered with renewables. In California, for example, the renewable portfolio must be 20 percent by 2010. Pacific Gas and Electric is installing 800 MW of utility scale solar PV to meet part of that. Arizona Public Service has contracted with Abengoa to install 280 MW of concentrating solar thermal that includes molten salt towers to store six hours energy for delivery during peak hours.
Utilities have deep pockets and these volume projects are lowering costs. With illiquidity in other sectors, utilizes will increasingly drive centralized solar. In areas with positive regulatory environments and with robust grids, utilities will also encourage decentralized solar PV as part of their mix.
Solar power continues its rapid growth as costs drop. Dr. Richard Swanson, founder of SunPower explains that in 1975 solar modules cost $100 per watt. By 2002, the cost had fallen to $3 per watt. The industry learning curve of 30 years has been consistent – each time production doubles cost drops 81 percent. Dr. Swanson expects $1.40 per watt by 2013 and 65 cents per watt by 2023. Solar power has reached grid-parity pricing in locations such as Hawaii. At the Conference, Anton Milner CEO of Q-Cells forecasted that would soon reach grid-parity in Italy.
United States power utilities spend $70 billion annually for new power plants and transmission, plus added billions for coal, natural gas, and nuclear fuel. For $26 to $33 billion per year investment, ten percent of United States electricity can be from solar by 2025, details the Utility Solar Assessment Study, produced by clean-tech research firm Clean Edge.
By 2050 solar power could end U.S. dependence on foreign oil and slash greenhouse gas emissions. In their Scientific American article, Ken Zweibel, James Mason and Vasilis Fthenakis detail the scenario. A massive switch from coal, oil, natural gas and nuclear power plants to solar power plants could supply 69 percent of the U.S.’s electricity by 2050. This quantity includes enough to supply all the electricity consumed by 344 million plug-in hybrid vehicles.
The price tag for the transition would be $400 billion, but this could be spread over a number of years. Should this seem too expensive, consider the alternatives. This is a fraction of what the U.S. has spent for the war in Iraq.
In the final keynote of the Solar Power International conference, U.S. Senator Maria Cantwell (D-WA) explained that both Republicans and Democrats ultimately supported an 8-year extension of solar and other renewable investment tax credits in the Emergency Economic Stabilization Act of 2008. This bill also included $7,500 tax credits for the purchase of new plug-in hybrid and electric vehicles. Senator Cantwell also strongly supports United States investment in a smart and robust grid, and in bringing high-voltage lines from major sources of renewable energy to major markets.
The transition to clean energy is increasingly recognized as an excellent investment. Due to rapid cost reduction, solar is a growing part of the solution that includes electric vehicles, energy efficiency, wind, bioenergy, geothermal, and other renewable sources. Compared to business as usual with oil and coal, renewable energy is downright cheap. The International Energy Agency estimates that by 2030, $5.4 trillion must be invested to increase global oil production.
John Addison publishes the Clean Fleet Report. He has a modest stock holdings in Abengoa and Q-Cells.