US to cut installation costs to $1/watt with SunShot initiative

Energy Secretary Steve Chu formally unveiled SunShot last week and $27.3 million in funding to kick start this drive. The initiative aims to fund research and deployment efforts that will make solar electricity cost competitive as wholesale electricity rates of conventional sources of power by 2020, without needing government subsidies.

"We want (solar) to be competitive without subsidies. If it’s achievable, then, boy, the companies and the installers will have a huge world market," said Chu during a press conference.

At $1 per watt, solar electricity would cost about $0.06 per kilowatt hour, which would include everything from equipment and labor to a built-in profit margin for developers. A press release about SunShot, issued by the Department of Energy, said the cost target is for utility-scale projects, though it didn’t specify the sizes.

Solar power plants built for utilities have costs from $3.50 per watt to more than $7 per watt, depending on the size and whether the solar panels are installed on the ground or the roofs of commercial buildings, according to GTM Research.

Chu unveiled SunShot more than a week after Obama said he wants the country to get 80 percent of its electricity from clean sources by 2035. "Clean sources" include not just renewable energy, but also natural gas, nuclear and coal-fired plants that use carbon capture and sequestration technology to reduce their carbon dioxide emissions.

In the U.S., nearly 45 percent of the electricity has come from coal-fired power plants, according to the most recent data compiled by the Energy Information Administration. The breakdown also includes natural gas (24.2 percent), nuclear (19.4 percent) and hydropower (6.2 percent). Solar is lumped with wind, biomass and geothermal, and they collectively account for 4.2 percent. The average retail price for electricity in October 2010 was nearly $0.10 per kilowatt hour, the EIA says.

The DOE says SunShot represents a different approach to investing in solar and making it affordable. Instead of putting the bulk of the money on improving the sunlight-to-electricity conversion efficiencies of solar cells or systems, the DOE wants to also fund efforts to reduce costs of securing permits and installing a project. Examples of these efforts include "digitizing local permitting processes," the DOE says.

Since SunShot is more of a strategy than a program that requires its own funding and regulation, it will make use of exciting research and development programs. And here is where the $27.3 million comes in.

Five manufacturers will get a total of $20.3 million to develop new components or equipment. Winners are 3M, 1366 Technologies, Veeco, PPG and Varian Semiconductor (see the list of winners, project descriptions and funding). 3M is working on a polymer front sheet to replace glass and make it possible to create flexible modules. Veeco is engineering a factory equipment to make copper-indium-gallium-selenide cells, while 1366 is developing a process to make silicon wafers without the need to saw ingots.

The additional $7 million will go to Caelux, Solexant, Stion and Crystal Solar. The funding is coming from the Photovoltaic Solar Incubator Program, which isn’t new and whose mission is also to fund early-stage companies and help them reach pilot or even commercial production. Crystal Solar is working on ultra-thin silicon wafers while the other three are working on solar cell-related processes.

Of course, the DOE already has invested heavily in solar technology development long before it came up with SunShot. In the past two years alone, it has given $935 million in loan guarantees to Solyndra and Abound Solar for building factories. The loan guarantees enabled both companies to borrow money from the Federal Financing Bank, which is overseen by the Secretary of the Treasury. The government also has given $472 million in grants to developers for installing solar power generation projects throughout the country.