Is Solar Energy Becoming Economically Competitive with Fossil Fuels?

The stated mission of 1366 Technologies, Inc., a start-up solar energy company, is to make the cost of solar power competitive with coal power. The company plans to do that with high-efficiency multi-crystalline solar cells. According to the company, its innovations, which were developed in the Massachusetts Institute of Technology, will cut costs by more than 50%, using thin silicon wafers in solar photovoltaic cells.

Silicon is commonly used in solar photovoltaic cells. But 1366 Technologies has invented a way to cast thin sheets of silicon with a thickness of 200 microns without having to slice them from solid chunks of silicon, where up to half the material is lost as dust. Instead of cutting the wafers from blocks of silicon, 1366 Technologies can make the wafers directly from molten silicon, similar to making sheets of glass.

In June, 2011, the U.S. Department of Energy announced a conditional loan guarantee commitment of $150 million for 1366 Technologies, Inc. for the development of the multi-crystalline wafer manufacturing project. Phase I of the project will be located in Lexington, Massachusetts. The original development of the technology was supported with a $4 million grant from the Department of Energy's Advanced Research Projects Agency and a $3 million grant from the Solar Energy Technology Program.

As reported by Katie Fehrenbacher in Gigaom in March, 2011, 1366 Technologies, Inc. has also received private financing. GE Energy Financial Services and VantagePoint, a venture capital firm, provided $28.4 million in funding for 1366 Technologies. This is an extension of the $20 million funding announced in October, 2010.

The goal is to make renewable energy, solar in this case, economically efficient enough to compete with fossil fuels without federal subsidies. Then the market would theoretically take over and the shift would be made to investing in the cheaper source of energy.

But as pointed out by David Rotman for Technology Review, new technologies will not change the energy mix unless they can be scaled up. Intermittent sources of power such as solar and wind require storage and backup power systems in order to deliver as much electricity as is needed, where it is needed. And that may be too difficult and expensive to do without the help of continuing government subsidies and other incentives.

One way to avoid the need for continued subsidies for the renewable energy industry and to reduce the use of fossil fuels would be to establish a carbon price, either as a carbon tax or a cap-and-trade system. But that type of legislation has proven difficult to pass.

In an article on The Huffington Post, Alex Wagner quotes Lew Milford, president of the Clean Energy Group, a non-profit energy and climate advocacy group, as indicating that a Clean Energy Bank may provide access to capital to finance clean energy initiatives. Milford also points out that a better relationship with state governments is essential for the success of these investments, and that state policy would increasingly create these markets.

Sources:

1366 Technologies

Alex Wagner, Department of Energy Makes $150M Bet on Solar Tech, The Huffington Post

David Rotman, Praying for an Energy Miracle, Technology Review

DOE Offers $150 Million Conditional Commitment for a Loan Guarantee to Support Breakthrough Solar Manufacturing Process, Energy.gov