Don't count Nanosolar out of the thin film solar competition just yet.

The firm just closed on another $70 million in VC funding to allow its CIGS thin-film photovoltaic factory to continue to scale and improve.

A release from the company describers the round as "over-subscribed" with funding from existing investors and new investors including OnPoint Technologies, Inc., Mohr Davidow Ventures, and Ohana Holdings.  

Nanosolar received a small $20 million sum earlier this year from existing investors along with new investor Aeris CAPITAL. (Aeris is a Zurich, Switzerland-based family fund. And the interesting piece here is that Erik Oldekop of Aeris CAPITAL was a Managing Director at Nanosolar from 2006 to May 2011. It's a connection that can be interpreted in a variety of ways -- he's likely still a personal shareholder in Nanosolar, but he also knows its dark secrets and angelic potential.)

“We believe solar printing is the future of low-cost harvesting of solar energy,” said Oldekop in an earlier press release.

Nanosolar prints CIGS inks on aluminum foil in a roll-to-roll process without using high-vacuum manufacturing equipment. 

Nanosolar has had some recent personnel shifts. Brian Stone, a VP at Nanosolar, left the firm. Geoff Tate, CEO for about two years, was replaced by Eugenia Corrales. John Rayfield, VP of Worldwide Marketing, also left the firm recently.

Nanosolar has had a history of technical and commercial promises, most recently these relating to cost:

• Below $1.00 per watt factory cost by the end of 2011
• Low $0.80s or high $0.70s per watt by late 2012
• In the $0.60s in 2013
• Below $0.60 per watt in 2014

Nanosolar produced 2.5 megawatts of panels in 2010. The firm has only shipped a cumulative total of 10 megawatts in its history.

The firm has suggested that it will ship megawatts measuring in the "triple digits" in 2012. Cell production capacity was to be 115 megawatts at the end of 2011, and the next step jumps the firm to 250 megawatts of cell capacity at the San Jose facility. Panel assembly is performed at Nanosolar's factory in Luckenwalde, Germany.

The firm is shipping 10-percent-efficiency panels today, with a target of 12 percent efficiency this year. Expectations are for 13 percent in 2013 and 14 percent in 2014. However, attaining a 4-percentage-point increase in efficiency in the space of four years would be an unprecedented feat never before achieved by any solar firm.

The company is focused solely on utility-scale deployments. Its large utility-size panels are currently rated at 200 watts, with additional output gains expected as efficiency rises.

Nanosolar also announced that it has signed long-term supply agreements for up to one gigawatt of PV panels with Belectric of Kolitzheim, Germany; EDF Energies Nouvelles of Paris, France; and Plain Energy of Munich, Germany.

Take that "long-term supply agreement" lingo with a grain of salt, however. These contracts are not binding, are not take-or-pay, and are predicated on Nanosolar's ability to achieve its cost and efficiency targets as promised. Still, although those agreements don't translate as real backlog, they do translate to patient customers who appear willing to work with Nanosolar. Nanosolar, as a new supplier without a field performance track record, employs module warranty insurance to help financiers and customers feel comfortable and improve the firm's bankability.

Ed Gunther reported on a number of other promises made by the company at a recent solar event.

An investor in Nanosolar I spoke with recently still maintains that Nanosolar is one of the few firms that can give First Solar and the Chinese c-Si vendors a run for their money in terms of cost per watt.


 

Following up on Part One of our series on thin-film PV based on GTM Research's Thin Film 2012–2016 report, we take a more incisive look at the manufacturing and competitiveness of thin film, as well as the levers suppliers can use to drive down costs.

In order to understand the competitive dynamics between crystalline silicon (c-Si) and thin-film PV, we must first look at the staple of PV market competitiveness: manufacturing costs. In the figures below, we break down the typical cost structures for a leading Chinese multicrystalline silicon PV module manufacturer and our estimates for First Solar’s Malaysia facility running at full utilization in 2012. Although overall costs are dissimilar, the cost of the multicrystalline silicon comes to about $0.82/W versus just $0.63/W for First Solar (not including stock-based compensation, warranty, and recycling). These examples serve as a benchmark for cost-structure comparisons of mature facilities.

FIGURE: Chinese c-Si Module vs. First Solar CdTe Module (Malaysia), 2012E

Source: Thin Film 2012-2016: Technologies, Markets, and Strategies for Survival (GTM Research)

As exhibited in the cost breakdowns, raw materials for c-Si PV amount to 72 percent of the total cost structure, with polysilicon as the single largest contributor to underlying costs. In contrast, CdTe feedstock contributes only 10 percent to the total cost structure of a CdTe panel, which underscores thin film’s limited dependency on a potentially volatile commodity metals markets. For CIGS and thin-film silicon, this cost component can be less than 10 percent of the total cost of the module. This advantage, however, can be a double-edge sword; the cost structures provide a large incentive for c-Si manufacturers to reduce silicon costs and usage, whereas thin film suppliers remain dependent on commodity material costs like glass, edge sealants, and junction boxes. 

Without a dramatic lowering of raw material costs on the horizon, thin film manufacturers will have to rely on other levers to reduce costs. Efficiency is the most obvious, and improvements provide a two-fold benefit: efficiency gains reduce material costs on a per-watt basis and reduce the balance-of-systems penalty suffered by low-efficiency products.

2011 was full of record efficiency announcements, including First Solar’s CdTe record cell at 17.3 percent, Solar Frontier’s 17.8 percent cell aperture-area efficiency, and SoloPower’s flexible module aperture-area efficiency of 13.4 percent. Understandably, these announcements do not represent commercially available technologies; the actual best commercially available module efficiencies are much lower. However, the record efficiency announcements are a promising indication that high-efficiency thin film products could be available in the next few years.

FIGURE: Record vs. Average Annual Efficiencies by Technology


Source: Thin Film 2012-2016: Technologies, Markets, and Strategies for Survival (GTM Research)

But to what degree can efficiency bridge the gap between thin film and c-Si PV manufacturing costs? The answer varies depending on manufacturing process and technology, but generalizing a fully utilized reference 500-megawatt CIGS manufacturing facility based in the U.S., Europe or Japan producing a 12.5-percent-efficient CIGS module, we find that, unsurprisingly, efficiency can lead to significant savings across the cost structure. Assuming that the capex is the same and efficiency tweaks come only from minor changes in process that do not affect uptimes and yields, we isolate the effect of efficiency on CIGS module manufacturing in the following figure.

A 0.5 percent absolute gain in module efficiency (from 12.5 percent to 13.0 percent) nets a 5 percent savings in module manufacturing costs. However, the benefits decay as manufacturers push efficiencies higher. For example, while pushing from a 12.5-percent to a 14-percent efficient product saves approximately 12.1 percent in module manufacturing costs, the savings-per-percent-efficiency is only 8 percent, as opposed to the 10 percent we saw moving from 12.5 percent to 13.0 percent. 

In absolute terms, a module manufacturer pushing from 12.5 percent efficiency to 14.0 percent efficiency nets a $0.10 per watt savings. GTM Research estimates that actual fully loaded costs for a leading CIGS manufacturer in 2012 could be as low as $0.89 per watt dc (note that this reflects underutilization). Thus, a $0.10 per watt dc savings could pull CIGS manufacturing costs below estimated c-Si manufacturing costs. This CIGS manufacturer would still have to sell at more than the $0.03 per watt difference (vs. our 14.5 percent, $0.82 per watt dc Chinese c-Si reference) to account for the efficiency discrepancy between CIGS and c-Si. Nevertheless, manufacturing high-efficiency thin film is a key factor toward competitiveness, especially at the lower end of the efficiency spectrum.

FIGURE: CIGS Costs vs. Efficiency for 500-Megawatt Plant in Europe/North America/Japan

Source: Thin Film 2012-2016: Technologies, Markets, and Strategies for Survival (GTM Research)

Yet efficiency isn’t the only lever for thin film manufacturers to capitalize on to triumph over c-Si PV. Other levers available to thin film manufacturers include process yields, throughput/uptime, and the always-important scale. According to a 2009 publication by the Boston Consulting Group study, quadrupling scale from 100 megawatts to 400 megawatts can create a 15 percent to 25 percent, 20 percent to 30 percent, and <10 percent drop in production costs in c-Si wafer, cell, and module costs, respectively. These reduction estimates don’t necessarily translate to thin film, but they do provide a basis for the range of scale improvements that can be expected from module manufacturing, regardless of technology. Based on industry channel checks, we model an upper limit of 10 percent decreases in cost for the doubling of production capacity, which means that the benefits of scale begin to peter out after the one- to two-gigawatt mark. Given that 90 percent of thin film facilities are smaller than 250 megawatts, thin film manufacturing still has a lot of room to grow -- if (and that’s a big 'if') the demand market and current oversupply environment has room for it.

FIGURE: Thin Film Facilities by Production Capacity, Year-End 2011

Source: Thin Film 2012-2016: Technologies, Markets, and Strategies for Survival (GTM Research)

To that last point, blind expansion is not a wise move in the current environment. Even with industry-leading costs and a strong captive pipeline to absorb demand, First Solar still expects utilization rates could drop to 85 percent on the year. While that’s not to say other thin film manufacturers won’t find a secret sauce unobtained by First Solar (e.g., access to significant Chinese or Japanese downstream pipeline), it does call into question announcements by thin film manufacturers like Hanergy that targeting gigawatts of production capacity by year's end (but in fairness, we were skeptical about Solar Frontier's desire to immediately scale from just 80 megawatts to 980 megawatts, too). Growing too quickly will result in significant underutilization, which greatly affects the fully loaded costs (i.e., costs including depreciation) of PV modules. 

Whereas depreciation of c-Si capital equipment amounts to only 6 percent to 10 percent of module costs, it can account for a quarter of even a fully utilized thin film manufacturer’s costs. A large supply chain of commodity manufacturing equipment for c-Si has allowed equipment costs to come down dramatically. With current global producible capacity of c-Si PV modules above 31 gigawatts, utilization rates have fallen dramatically. However, the actual effect of low utilization on costs is limited by the relatively low capex for c-Si manufacturing. Contrast this to thin film manufacturing, where capex can easily approach and even exceed $1 per watt. Only industry-leading capex for capital equipment (minus building and facility upgrades) brush against multicrystalline silicon capex costs. While demand markets are still sorting themselves out, expansion of scale to reduce costs may only increase cash burn while crystalline competitors continue to push product at razor-thin and even negative margins.

FIGURE: Capex Costs' Effect on Module Costs, 2012

Source: Thin Film 2012-2016: Technologies, Markets, and Strategies for Survival (GTM Research)

Looking at thin film cost structures, the road for thin film competitiveness continues to be an uphill struggle. However, in the next and final part of this series, we will explore how changing market dynamics and a maturing understanding of thin film performance will ultimately drive thin film competitiveness and the long-term success of leading players.

As foreign markets mature, Terry Sholin talks about where the module manufacturer is looking to go next.

Swiss grid giant ABB has earmarked $9 billion to $18 billion for acquisitions over the next five years, and while it's already spent about $9 billion of that, it hasn't stopped buying. The latest addition to its stable is Tropos Networks, a 55-employee Sunnvale, California-based wireless mesh networking startup that links up municipal wi-fi smart grid networks around the country.

Terms of the deal were not disclosed. Tropos has raised more than $30 million from investors including Benchmark Capital, Duff Ackerman & Goodrich and Voyager Capital, and serves utility customers including customers including the City of Fort Collins, City of Naperville, Illinois, Silicon Valley Power and Burbank Water and Power — a testament to its roots as a municipal wi-fi vendor.

Last year Tropos CFO John Eichhorn described Tropos's financial status as "Slightly cash flow negative, but... right on the cusp of being break-even," with deployments on the way.

“To really make the smart grid smart, distribution automation -- how [to] actually move the electrons around -- is the next big bottleneck,” said Eichorn.  “Substation automation or substation security… [is] not what is holding [utilities] back from having a smart grid.  It is being able to manage the reclosers, transformers [and] switchers -- all the stuff that is in the middle of the distribution area network.”

Adding intelligence to the grid, and particularly the last few miles of it, has just begun: sales of distribution automation equipment will grow from $2.3 billion to $5.6 billion by 2015, according to GTM Research.

Although Eichorn believes that “there is a place for cellular, a place for WiMax, and a place for Wi-Fi,” Tropos will continue to pursue aggressive growth, with the hope of winning business that might otherwise go exclusively to Silver Spring Networks, Trilliant, On-Ramp Wireless or another smart grid networking provider.

It's an interesting move for ABB, which hasn't invested heavily in wireless communications amidst its $9 billion, multi-year acquisition spree. ABB’s big buys on the hardware side include efficient motor maker Baldor Electric for $4.2 billion in 2010 and low-voltage equipment maker Thomas & Betts for $3.9 billion in January. On the software side, it bought Ventyx for $1 billion in 2010, and combined its distribution grid software with Ventyx’s market forecasting, planning and data management smarts, as well as asset management from acquisitions like Insert Key Solutions, and Obvient.

ABB also bought Powercorp, an Australian provider of technology that integrates intermittent renewables like solar and wind into the grid. Hogan has identified wind and solar power as key growth areas for the company. As for investments, ABB has put money into data center efficiency software startup Power Assure and plug-in car charging startup ECOtality, both involving future nodes -- data centers and plug-in charging stations -- that will need lots and lots of electricity over the coming years.

Tropos, for its part, has found a small niche in municipal utiltiies, where it can promise a smart meter or distribution automation radio network that also supports police, fire, ambulance and even city maintenance work trucks. It's all wireless IP (Internet Protocol) broadband, and ABB plans to integrate it into its existing offering of communications solutions for the power distribution sector. The two started doing distribution automation together in 2009, so presumably they've decided they work well together.

Tropos also offers ABB yet another foothold in the U.S. market, which has just surpassed Europe as the comapny's top region, driven by the Thomas & Betts acquisition. As Jens Birgersson, head of network management for ABB's Power Systems division, put it n Friday's announcement, “With a strong presence in North America, this acquisition will provide ABB with additional access to US markets, where we still have considerable room to grow.”

Stay tuned for more M&A in smart grid, and not just from ABB. Siemens, Schneider Electric, GE, Alstom and Toshiba have all spent billions over the past few years, and will likely spend more.

We look forward to providing these podcasts as a regular feature and bringing you the events of the week in a different format. You'll hear from GTM research analysts, editors, reporters and the occasional special guest. Stay tuned.

Image Credit: SSE

Move over California. Scotland has ambitious smart grid plans, to say the least. The country will need to see those plans through if it is going to reach its 2020 goal of having 100 percent of its energy capable of being provided by renewables.

The recently released Scottish Smart Grid Sector Strategy includes jobs for 12,000 people in smart grid and another 28,000 in wind, potential microgrids on outlying islands, smart meters at every home and business, and harnessing enough offshore wind to power Scotland and export excess power to other countries. More than £7.7 billion ($12 billion) has been approved for infrastructure projects alone.

“The strategy that we've got is that what we are trying to do is look at it holistically, well beyond the physical infrastructure,” said Andy McDonald, director of renewables and clean energy at Scottish Enterprise, a business development organization that helped draft the strategy.

Rather than just adding in transmission capabilities or just smart meters, the strategy touches on all areas of smart grid, with a careful focus on ensuring that customers know, and receive, the benefits of the investment. Pilot projects will be designed as accelerators for commercialization of new technologies, rather than one-off tryouts. There will also be a focus on bringing in companies that could apply their technologies to the smart grid, such as telecoms and software engineers.

“We are an innovative country with a strong company base and entrepreneurial spirit. Initially, around 150 Scottish companies have been identified as having a potential role to play in smart grids, and we will work closely with them as they investigate the opportunities to diversify and seize new market opportunities ahead of the competition,” Lena Wilson, chief executive of Scottish Enterprise, said in a statement.

The strategy is centered on a working group, which currently includes SSE, Scottish Power, GE Energy, Cisco, University of Strathclyde and Scottish Enterprise in consultation with Highlands and Islands Enterprise, Skills Development Scotland, Scottish Development International and Consumer Focus Scotland.

At the heart of the need for smart grid is the 100 percent renewable goal for 2020. Currently, renewables make up about 35 percent of Scotland’s generation. However, even if the country develops 100 percent renewables for available generation, it is likely that there would still be some baseline generation used.

Scotland is not alone in its ambitious plans. The entire U.K. has a mandate for a full smart meter rollout by 2020, and all of the European Union has a goal of 20 percent renewables by 2020.

However, Scotland is looking to do more than just meet mandates. It has an overarching vision to merge power engineering with information and communications technologies and launch new business models for its energy suppliers. The latter is an area in which the U.K. will likely lead, with energy suppliers shifting to service providers.

The proposal does not go as far as to say what type of networks Scotland will need to manage up to 100 percent renewables within the decade, but there is an awareness that it will have to be supported by an entire new workforce with the right technical training coming out of universities.

Many Scottish universities have already formed an Energy Technology Partnership to collaborate on smart grid research. The government is also supporting thousands of modern apprentices in the energy and low-carbon sector in coming years.

Of course, heavy infrastructure is a part of the picture as well, with various high voltage DC cables being planned for offshore wind.

Scotland is already moving forward with various pilots to test new distribution networks at Universities and on Orkney Island, where a new network is already integrating high levels of renewables by managing generation in real time to match network capacity. The network, developed at the University of Strathclyde, helped avoid traditional network upgrades that would have cost £30 million ($46 million). Instead the network cost about £500,000 ($775,000).

The country is hoping to replicate the success of Orkney Island by helping other local communities assess their renewable energy needs and help bring in the technology necessary. Consumer education and focus is an enormous part of the effort as well, with various plans to help homes and businesses leverage new energy tools to their benefit. “One big part of the change in all of this is how the consumer benefits,” said McDonald. “You can’t ignore the fact that this is going to happen, so you have to focus on how the consumer will take it up.”

The Silicon Valley Toxics Coalition (SVTC) 2012 Solar Scorecard, intended to push the photovoltaic (PV) panel manufacturing industry to do the right thing, was just released.

Compelling an industry struggling to weather economic, political and technological upheaval is challenging, but the SVTC is making progress. In its first year, the scorecard got fourteen responses, representing 24 percent of the PV industry market share, from the approximately 200 queried companies. Last year, it got 46.6 percent. This year the number of queries was pared to 116 and fifteen responses covered 51 percent of the market.

In defiance of clichés about Chinese manufacturers, China’s Trina Solar, which manufactured 1,702 megawatts in 2011, was first on the scorecard, with 94 points out of a possible 100. It got perfect scores in Extended Producer Responsibility (25), Worker Rights, Health, and Safety (20) and Sustainable Design and Life Cycle Assessment (15) and high scores in Chemical Use (16 of 20) and Supply Chains (18 of 20).

Trina’s high ranking “flies in the face of a lot of what American consumers have heard about how business is done and how products are produced in China,” said Trina Solar Americas Director of Marketing Mike Grunow.

“We are one of the two industry leaders [with Yingli Solar] and we are doing all this while maintaining cost leadership,” Grunow said. Trina “would not make such investments,” he added,” if they didn’t make sense from a return on total capital perspective.”

Industry observers are expecting “a solar shakeout, a consolidation, where we go from 100-plus suppliers to fewer than ten key ones,” Grunow said. “We think the SVTC award should reinforce the concept that we are stewards of our environment as well as stewards of our balance sheet.”

SunPower, which manufactured 837 megawatts in 2011 at facilities in Malaysia, Mexico, the Philippines and the U.S., was second, with 93 points. SolarWorld, which made an estimated 800 megawatts at U.S. and German facilities, was third, with 91 points. Chinese manufacturer Yingli Solar, which produced 1,600 megawatts, was fourth, with 88 points. And REC, which manufactured 700 megawatts in 2011 at its Singapore facility, rounded out the top five with 87 points.

The bottom five were all survey non-responders. China’s Jinko and LDK scored zeros. Canadian Solar (China), HanWha Solar One (Korea) and Schott (Germany, China, U.S. and the Czech Republic) each got two points for having some information on their website.

“We give them every opportunity to respond,” said SVTC Campaign Director Lauren Ornelas. “It seems some are more concerned about how well they would do than in being transparent.” In an effort to drive participation, Ornelas said, SVTC this year began using information from the companies’ websites and scoring them even if they didn’t respond. 

That, said San Jose State University Assistant Professor of Sustainable Energy Resources Dustin Mulvaney, “is probably the most important aspect of this survey.” No longer can companies like Jinko and LDK “hide behind their ‘did not reply’ instead of actually engaging,” he said.

 “We’re talking about an industry that has a reputation of being green,” explained Ornelas. The point of the scorecard, she said, is “making sure they live up to their reputation.” SVTC supports the solar industry, Ornelas insisted. “We just want to make sure the industry confronts these issues right now instead of looking back in twenty years and asking why they didn’t think about them sooner.”

PV panels’ expected 30-year lifespans means recycling won’t be a big issue for another two decades, but the SVTC scorecard allots 25 points, the biggest single portion of its score, for a company’s take-back/recycling program. “When you have millions of solar panels coming off roofs,” Ornelas explained, “that’s not the time to say, ‘Oh my gosh, now we have a toxic waste issue.’ We want them to start thinking about it now.”

The European Union’s PV Cycle program led the way with a voluntary “pre-pay” fund that will cover the cost of recycling whether or not the manufacturer is around in 30 years, noted Ornelas. But SVTC is pushing for a mandatory program because it has seen that voluntary e-waste programs are inadequate.

Worker health and safety issues, at twenty possible points, were almost as important in the rankings. “We don’t think you can have a green industry,” Ornelas said, “unless it matters how workers are treated.”

Chemical use is another twenty-point issue. Mulvaney noted that cadmium used in CdTe thin film panels, selenium used in CIGS thin film panels and lead used in silicon panels are the three top toxicity concerns, but many other chemicals used in processing are also hazardous. Obtaining information about how chemicals are used and disposed of is very difficult, Mulvaney said, so SVTC chose to reward participation.

“We gave them points just because they told us they had taken federal or state tests,” Mulvaney explained. “The direction the scorecard is headed is more external evaluations, not relying so much on companies self-reporting, and actually getting at data that reveals practices and performance.”

Encouraging participation, Ornelas said, seems to be slowly turning the industry toward greater disclosure. Both Trina and SunPower, she noted, were non-responders in previous years. But “solar companies are looking at the questions we are asking and that is guiding them,” she concluded. “What solar company wouldn’t want to score high in social responsibility? That’s what they’re all about.”

Earnings season is upon us again, and it comes as no surprise that difficulties persisted for PV manufacturers throughout the first quarter.

The market continues to be structurally oversupplied and the outlook for 2012 installations is generally flat over 2011. With policy adjustments and uncertainties in the key markets of Germany and Italy, the mood is particularly tense. Amidst continued market challenges, this month, GTM assesses industry trends from the initial earnings releases of the following four companies.

Canadian Solar

Canadian Solar, the vertically integrated manufacturer of wafers, cells, modules, and systems, shipped 343 megawatts in the first quarter of 2012, an increase of 41 percent year-over-year and a decrease of 21 percent quarter-over-quarter, with 7.4 megawatts going into its total solutions business. Persistent pricing pressure continued to adversely affect the company’s balance sheet, with gross margin of 7.7 percent, down seven basis points year-over-year and one basis point quarter-over-quarter. The company reported a Q1 blended all-in cost of $0.73 per watt, catching up to the cost structure of thin film competitor, First Solar. This achievement speaks to the significant cost reduction potential of c-Si; management attributed this cost reduction to improvements in factory automation and guided a further reduction to $0.55-$0.60 per watt by the end of the year. However, Canadian Solar’s industry-leading cost structure is also likely influenced by its relationship with GCL-Poly, from which it buys a significant portion of its wafers.

Source: GTM Research

As the global PV equipment market remains an increasingly difficult space in which to play, Canadian Solar has outlined a shift away from modules sales and into the project business. Full systems sales made up approximately 10 percent of revenues in 2011, with the company calling for growth to 25 percent in 2012 and 40 percent in 2013. Going forward, management also stated that it expects nearly three megawatts of projects turning into revenue every quarter in 2013 and 2014. Furthering its downstream push, Canadian Solar looks to be buying up projects in order to create a captive pipeline for its modules -- in April, the company formed a joint venture with SkyPower Ltd. for a majority stake in sixteen Ontario projects. It remains to be seen whether Canadian will expand its downstream push into markets outside of North America.

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The answer? "More opportunities in more parts of the world."

Image Credit: Associated Press (AP)

Last week, GTM Research released its latest smart grid report, The Smart Grid in Asia, 2012-2016: Markets, Technologies and Strategies. This article is the first in a series of perspectives from the report's author on the tremendous smart grid opportunity in Asia.

In 2009, China embarked on a three-stage journey to become a world leader in smart grid technologies with its aptly named "Strong and Smart Grid" 11-year plan. The plan encompasses all aspects of the grid, including increasing generation and transmission capacity, a nationwide smart meter deployment, large-scale renewable energy integration, and a large substation build-out. Four years later, State Grid Corporation of China, the largest utility in the world and the brains behind China's smart grid plans, is in full swing with phase two of its ambitious smart grid deployment plans -- the Construction Phase, running from 2011 to 2015.

New transmission lines are a major focus for State Grid in the Construction Phase, which is struggling to meet the growing energy demands of the rising middle class in the East and South. Most coal, hydro, wind, and solar load sources are over 1,000 kilometers away from the populous east and south. High voltage (HV, under 300 kilovolts), extra-high voltage (EHV, 300 kilovolts to 765 kilovolts), and ultra-high voltage (UHV, 765 kilovolts and up) lines are being installed currently, with at least one 1,000-kilovolt UHV AC or DC line installed annually until 2015. Overall transmission line investments for 2015 are approximately $269 billion, equivalent to the combined market cap of ABB, GE, and Schneider Electric as of May 21, 2012. China is adding so much new transmission capacity and so many power lines that it could build three quarters the length of a new American transmission grid in just five years. When the dust settles, there will be over 200,000 kilometers of new 330-kilovolts-and-up transmission lines built, for a total of 900,000 kilometers of transmission lines, compared to 257,500 kilometers of transmission lines presently in the U.S.

Figure: Current and Future Transmission Line Length in China

At a cost of $1.05 million per mile for UHV transmission line and equipment, each UHV line requires billions of dollars to build, and State Grid put in a staggering $80 billion investment into 40,000 kilometer of UHV lines for the 2011 to 2015 Construction Phase. The business case is readily apparent: a 2,000-kilometer, 800-kilovolt UHV DC line has an incredibly low 3.5 percent line loss rate per 1,000 kilometer and a high 6.4-gigawatt transmission capacity, all the while being 30 percent cheaper than a 500-kilovolt EHV DC or 800-kilovolt UHV AC line of the same length. By 2020, UHV lines will have 300 gigawatts of transmission capacity, roughly split 60 percent AC and 40 percent DC.

The competitive business environment seen in the transmission grid build-out is indicative of the rest of the smart grid market in China -- high-quality goods, competitive costs, and a well-built relationship with State Grid all go a long way toward winning a contract. Fierce vendor competition exists, due in part to State Grid’s competitive construction procurement process. All projects costing over $300,000 to build are required to go through an open bidding process that aims to enforce fairness and transparency, but State Grid still holds the reigns tightly on choosing project developers. In the process, State Grid has the final say and does a rough 45/45/10 split when evaluating meters, based on quality, cost, and bankability of the company.

With the promise of power shortages disappearing and a stable energy supply base, the build-out of the transmission grid is ushering in the next era of smart grid opportunities in China. Smart meters and renewable integration are already big businesses, and new substation infrastructure has brought with it a vibrant and growing substation automation market. The need for better monitoring equipment has risen as China is keen on decreasing its system average interruption duration index (SAIDI) and improving power quality to its customers. State Grid has earmarked over $40 billion toward these smart grid technologies between 2011 and 2016, with smart meters alone being a $2.5 billion to $3 billion annual market.

State Grid has paid special attention to substation automation technologies, and plans on installing 74 new digital substations for 63 kilovolts to 500 kilovolts by 2015. While this number is small compared to the existing 40,000+ substation base, State Grid has stated it intends to include digital technology in all new substations built. Companies such as BPL Global have been expanding their substation operations in China, which has been met with stiff domestic competition. The substation market offers promising growth over the next ten years.

Figure: Digital Substation Investments From 2011 to 2015

The transmission grid build-out also has an impact on technologies at the distribution level and downward. China is building 36 million new urban homes between 2011 and 2015, and modern building automation and smart meter technologies will be utilized. The coming years promise to create a new and vibrant building automation market, but for the time being, the market continues to focus on meeting demand shortfalls and other key infrastructure challenges. Expect to see an exciting shift toward technologies at the distribution level and downward in the next five to ten years, as China’s grid solidifies its transmission grid and generation sources. If the past three years have been any indication of future progress, expect to see China become a leading smart grid market for the next five to ten years. The distribution grid build-out and digitization will be the next major indicator of China’s smart grid prowess. 

For more information on China's grid build-out and The Smart Grid in Asia, 2012-2016: Markets, Technologies and Strategies, visit www.greentechmedia.com/research/report/smart-grid-in-asia-2012-2016.

Image Credit: Guardian / Soltecture

Solar products from flat photovoltaic (PV) modules to concentrated solar power (CSP) mirrors to the ever-and-always emerging BIPV (building-integrated photovoltaics) sector will be using glass in their bill of materials (BoM) for the foreseeable future. Flexible solar in a non-glass encapsulant might have its place in the market someday, but for now it is a tiny piece of the market.

Guardian Industries builds glass for the automotive and building industries. The firm was on the Forbes Top 100 Private Companies list recently, with $4.48 billion in 2009 revenues and 18,000 employees across the globe. I spoke with a few grizzled veterans in the building trade and heard only respectful views of the firm.

So when Guardian takes notice of a market like solar and makes a variety of glasses for a range of solar sub-sectors -- it's a good sign that solar has hit a respectable size.

Here's a rundown of some of Guardian's activity in solar:

• BrightSource Energy's 392-megawatt Ivanpah Solar Electric Generating System (ISEGS) in California's Mojave desert will be using mirrors from Guardian. (We've covered BrightSource at length and will report on their forthcoming April 11 IPO.) Guardian began shipping the first of 160,000 of its Solar Boost mirrors to ISEGS in November 2011. The mirrors have to withstand desert temperature swings and conditions while providing extreme reflectivity.
• Guardian and Israel-based Pythagoras Solar are collaborating to manufacture and sell a solar PV window, meant to replace standard vision and spandrel glass or skylights. Pythagoras will provide production-ready units to Guardian, which will perform the final assembly. The startup has found a strong partner in Guardian, but the building materials and window business is a ruthless and difficult one in which to innovate (see the saga of Serious Materials). Pythagoras cites a total market for BIPV glass "estimated to reach $6.4 billion in revenues in 2016," but that number is hallucinatory in the view of this reporter.
• Guardian also provides float glass and patterned glass in a variety of flavors for a range of PV absorber materials: low-iron float glass to maximize solar transmission, molybdenum-coated glass to optimize the conductive characteristics of PV panels using copper indium sulfide (CIS) and copper indium gallium diselenide (CIGS) solar cells, and coated glass designed to optimize the conductive characteristics of PV panels using CdTe solar cells.

If that wasn't enough for Guardian in trying to get in front of new industries, the firm has added electrochromic glass for dynamic window shading as part of its portfolio, partnering with Soladigm. Guardian will incorporate Soladigm’s Dynamic Glass product into its architectural glass offering: a glass that can switch from clear to tinted on demand, allowing control of heat and glare in buildings. Soladigm just raised another $4.5 million in debt. Previous investors in Soladigm include Khosla Ventures, DBL Ventures, Sigma Partners, The Westly Group, Navitas Capital, Nano Dimension, and GE Energy Financial Services. 

The electrochromic glass sector has seen some action lately -- French glass giant Saint-Gobain recently acquired Sage Electrochromics for its dynamic glass.  

Earlier this month, GTM Research released its latest smart grid report, The Smart Grid in Asia, 2012-2016: Markets, Technologies and Strategies. This article is the second in a series of perspectives from the report's author on the tremendous smart grid opportunity in Asia; to read part one of this series, click here.

Japan’s ten utilities have turned their attention toward demand-side management in recent years. Now a strong, government-led push is driving the home and building energy management system (HEMS and BEMS) markets out of the research lab and into the product development and deployment stages. With 50 million homes in Japan, the HEMS market alone will be worth well over $2.3 billion by 2015, and the BEMS market will be significantly larger. Three factors influenced the rapid evolution of HEMS and BEMS technologies in Japan: a mature transmission grid, a pressing need to reduce energy demand, and the opportunity to become a world leader in a new technology market.

The Japanese power grid is one of the most efficient grids in the world. Japan has only 17 minutes of blackout time annually (138 minutes in the U.S.), an incredibly low 5.1 percent line loss rate thanks to a $100 billion transmission grid build-out in the 1990s, an average of 41.3 percent thermal efficiency in its thermal power plants (34.1 percent in the U.S.), and nearly 100 percent penetration of digital substations. Japan also has one of the most mature grids in the world. While Japan has just 9 percent of the population of China, it has 50 percent of the substation capacity, 25 percent of the energy consumption, 60 percent of the utility revenues, and 110 percent of the grid assets compared to its gigantic Sino-neighbor. With established grid infrastructure in place since the 1990s, Japan has been able to shift its focus toward optimizing energy management in the past few years, and as of last year, it was forced to make a huge push to meet its goals.

When the Fukushima Daiichi nuclear disaster struck Japan in March 2011, the want for demand-side management technologies became a need, and overnight the Japanese government accelerated its demand-side management and energy efficiency project timelines from 2020 to 2015. What was seen a year ago as a lukewarm smart grid market without a clear focus has since changed into a national, unified focus to reduce energy demand as much as possible. In the past year, most of the major Japanese conglomerates have announced HEMS and BEMS products and pilot studies, including Toyota Housing Corp, DENSO, Fujitsu, Panasonic, Sharp, Toshiba, TEPCO, Tokyo Gas, Osaka Gas, Omron, Hitachi, NTT DoCoMo, and many more.

The market for energy management system (EMS) products has been growing for the past few years, and Japanese firms are preparing to capitalize on the opportunities both domestically and abroad. EMSs are the next step in the logical progression from supply-side management to demand-side management, with Toshiba going so far as to show its vision of the future power grid as a network of EMSs controlling loads from the local to the regional level. Across the globe, there has been a call by utilities for more granular and responsive control of load sources, and the product responses have been different flavors of an EMS, including: demand response, ancillary services, increased appliance energy efficiency, networking load controllers, home area networks, and more solutions.

By the numbers, Japan’s energy consumption is around 25 percent of that of the U.S., which is the second largest electricity consumer in the world after China. Japan, like the U.S., spends around 30 percent of its electrical energy on the residential sector, aiding in the growth of the domestic HEMS market. The commercial & industrial (C&I) market includes office buildings, stores, manufacturing plants, and other large load sources (typically over 15 kilowatts to 50 kilowatts of peak demand). The C&I market is by far the largest market for EMSs, of which a large part is BEMS. The figure below shows why a HEMS market exists in Japan and the U.S., and why BEMS is a larger market overall.

FIGURE: Country Electrical Energy Consumption by Customer Type

Source: The Smart Grid in Asia, 2012-2016: Markets, Technologies and Strategies (GTM Research), EIA

A clear business case exists for reducing load for C&I customers, including quicker return on investments, higher profit margins, larger customers, and a more reliable market. That being said, HEMS is a promising market that includes home automation technologies, and Japanese firms are actively pursuing both markets. An AMI meter connects a HEMS or BEMS to the grid; therefore Japan has mandated a rapid smart meter rollout -- TEPCO will install 17 million AMI meters in homes over the next five years, and another 10 million AMI meters in buildings over the next 10 years. With the communication infrastructure in place, Japan is moving closer to widespread use of HEMS and BEMS.

To facilitate productive competition, the Japan Smart Community Alliance (the Japanese partner of the national Gridwise Alliance) along with the Ministry of Economy, Trade and Industry (METI) and New Energy and Industrial Technology Development Organization (NEDO) have helped form domestic and international standards in HEMS and BEMS technologies. ECHONET is one such example of a communications standard for HEMS. Developing and following open, national and international standards speeds up time to market and the proliferation of HEMS and BEMS products.

Another action Japan took to speed up HEMS and BEMS is the initiation of a series of smart city projects, led by NEDO and organized by Accenture Japan. Between 2009 and 2013, private companies and government are spending $1.64 billion on four smart city pilot projects, with HEMS, BEMS, and community EMS (CEMS) taking up a large chunk of the budget. These smart city pilot projects are expected to expand the smart city concept across Japan, and the nation will become a world leader in smart city technologies, especially HEMS, BEMS, and CEMS. Companies including Toshiba and Panasonic soon may offer “smart city” packages to cities globally, incorporating various HEMS and BEMS solutions into their product lines. The figure below shows one part of a smart city project taking place in Yokohama City.

FIGURE: Smart City Project in Yokohama City, Minato Mirai 21 Area

Source: The Smart Grid in Asia, 2012-2016: Markets, Technologies and Strategies (GTM Research), NEDO

The domestic market for HEMS and BEMS products is growing at a rapid clip, and Japanese firms are poised to develop some of the most advanced EMS technology in the world. While Japan’s market is mature, smart cities and HEMS/BEMS technologies are well suited for both young and mature power grids around the world. In the next five years, expect to see citywide deployments of smart city and EMS technologies in Japan, along with a growing presence of Japanese technologies in world markets.

From localized load control to smart cities, the growth of the energy management system markets in Japan is definitely worth watching.

For more information on Japan's smart grid build-out and The Smart Grid in Asia, 2012-2016: Markets, Technologies and Strategies, visit www.greentechmedia.com/research/report/smart-grid-in-asia-2012-2016.

Ostara Nutrient Recovery Technologies is a clean water firm that extracts phosphorous, nitrogen, and other nutrients from wastewater and then recycles it into fertilizer. 

The firm just completed a $14.5 million VC round led by VantagePoint Capital Partners, along with Frog Capital and a team of new investors including Waste Resources Fund L.P. VantagePoint venture partner Robert Kennedy, Jr. is on Ostara's board of directors.

Ostara's equipment can extract more than 90 percent of the phosphorus and 40 percent of the ammonia load from a sewage sludge stream of 500,000 liters per day, according to the firm. The resulting mixture is used to make roughly 500 kilograms of what the company calls Soylent Crystal Green, a slow-release fertilizer.

Ostara estimates that approximately 200 wastewater plants in North America and several hundred plants in Europe and the rest of the world are candidates for the technology. The firm looks to expand beyond waste water treatment plants to other industries.

The system is installed at Clean Water Services, a water utility with more than 500,000 customers in urban Washington County, west of Portland. Ostara's process provides revenue from the sale of the fertilizer, as well as reducing the O&M usually spent in de-scaling the equipment from the built-up nutrients. Phosphorous accumulates on equipment in what is called struvite scale and reduces plant performance and lifetime.

Wastewater is a new frontier for a handful of companies. Israel's Aqwise has new solutions for processing wastewater more efficiently. In Singapore, NEWater -- which makes up a small portion of the country's drinking water -- is recovered from the sewage system. Israel's Emefcy uses uses wastewater to power a fuel cell as it treats the water.
                                                                                                                             

Six states got 10 percent or more of their power from wind, solar and geothermal power in 2011. That's double the number from just a year ago. Not bad for a down year.

CleanEdge released its State Clean Energy Index on Wednesday, tallying up the state of green energy and technology across the 50 states of the union as of the end of 2011. Among the milestones, the Portland, Ore.-based research firm marked a doubling in the number of states that have 10 percent or more of their utility power coming from renewable sources, not including hydropower.

The list included South Dakota at 22.3 percent, Iowa at 18.8 percent, North Dakota at 14.7 percent, Minnesota at 12.7 percent, California at 11.2 percent and Wyoming at 10.1 percent. Last year’s top-three states were North Dakota, Iowa and California.

By the way, CleanEdge’s six-state figure doesn’t match the U.S. Energy Information Administration’s 2011 tally of nine states with 10 percent or more renewable generation. That’s because CleanEdge excluded biomass -- a big contributor for the forested states of Maine, Minnesota and Idaho that made EIA's list, said Ron Pernick, CleanEdge’s co-founder and managing director.

CleanEdge's figure also measures in-state generation, Pernick said. While California gets above the 10-percent mark by importing solar, wind and geothermal power from neighboring states like Nevada and Arizona, plains states are generally net exporters of wind power, he noted.

“Some people say that renewables are a rounding error. This shows that is not the case,” he said. “Coal plants are being shuttered; new ones are not being permitted. We’re seeing a future mix of natural gas and renewables.”

Up-and-coming states like Idaho and Nevada (at 9 percent) and Oregon (at 8 percent) are pushing at the border of inclusion in the 10-percent club, Pernick said. What’s needed is better regulations for interstate power transmission, to allow wind power growth in the Midwest, or solar power growth in the Southwest, to continue to increase without constraints, he said.

Renewable energy per capita was just one of many figures that went into CleanEdge’s index, which also tracks overall investment trends, patents, regulatory and policy issues and other factors to come up with its top 10 states list. That list put California on top, based on generation and its commanding lead for venture capital investment, followed by Oregon, Massachusetts, Washington, Colorado, New York, Illinois, New Mexico, Vermont, and Minnesota.

In other statistics:

-       CleanEdge found 2 million hybrids registered in the U.S. as of last year, but only 50,000 all-electric vehicles -- not surprising, given Chevy Volt and Nissan Leaf sales figures.

-       State-level renewable portfolio standards are becoming a key factor in the country's most energy-intensive regions. The 29 states (and Washington, D.C.) that have RPS requirements make up nearly two-thirds of the countr's total power generation, the report found.

-       Patents granted for clean energy surpassed 1,000 for the first time last year. The USPTO's fast-track program for green tech IP may have helped this along.

-       California’s dominance in green VC continues unabated. The Golden State saw more clean energy venture capital invested than the other 49 states (and D.C.) combined, CleanEdge found.

There are a lot of smart lighting startups trying the wireless route to network lights for better efficiency. Then there’s Redwood Systems, the startup that wants to control your lights over Ethernet cable. On Wednesday, the Fremont, Calif.-based startup announced a $11.75 million Series C round, with investors including Battery Ventures, U.S. Venture Partners, Index Ventures and Mitsui & Co, Ltd.

Redwood has raised about $30 million since its 2008 founding for its unusual LED-over-Ethernet power and control technology, and now deploys its system with customers including Johnson Controls, SAP, Volkswagen and Facebook.

It’s also branched out into controlling fluorescent lights, high intensity discharge (HID) lights, and others via its controller-to-fixture low-voltage wiring network. Early this month, it made its first move outside the United States, announcing  a partnership with French mega-utility EDF and cabling partners Anixter and CommScope.

Sam Klepper, Redwood's chief marketing officer and executive vice president of building solutions, said in a Wednesday interview that the Series C round is aimed at expanding growth into new markets. Asia is a particular focus, he said, given the company’s strategic partnership with Mitsui, which invested $3.5 million in the company in June 2011. The company raised $15 million in a Series B round in October 2011, and $4 million in a Series A round.

The new round is also aimed at bringing some new features to Redwood’s network in the ceiling, he said, with potential uses like occupancy sensing that feeds into conference room management systems. Klepper didn’t give any particulars on what Redwood was working on or with which partners, though he said an announcement is expected in June.

While the equipment costs of Redwood’s networked LED lighting architecture are about 10 percent to 20 percent more than traditional lighting setups, it can pay itself back in reduced installation costs alone, Klepper said -- low-voltage cables for power means no expensive electricians and faster deployment. That doesn’t include the plummeting costs of LEDs, which have fallen roughly in half over the past 18 months or so, he noted.

Once they’re in, Redwood’s installations have yielded 70 percent to 80 percent energy savings, compared to a typical, high-efficiency fluorescent lighting system, in customer environments like offices and data centers, he said. Those benefits can come both from the high efficiency and long-life features of LEDs to replace fluorescent tubes, or via controls alone, he said.

One data center client was able to shave 85 percent from its fluorescent lighting bills by dimming the lights just enough so that the security cameras could make out what they were looking at, and no more, for example. Office environments require more sensitive controls, like occupancy sensors, which come on board Redwood’s lighting control node that sits at, or as part of, every lighting fixture.

One big question for Redwood is how quickly LEDs will take hold as a viable alternative for mainstream building lighting. The startup’s February decision to support multiple lighting types would appear to lessen the company’s dependence on this growth to some extent.

Another big question is how well a cabled solution pencils out against the host of wireless lighting networks out there. Startups like Adura, Daintree Networks, Enlighted, Digital Lumens and others say their wireless networks cost far less than hard-wired alternatives. These companies have millions of square feet of projects underway to test their reliability and energy efficiency benefits.

Still, less than 10 percent of buildings now have smart lighting systems installed, making it a potentially wide-open market for startups, as well as lighting giants like Philips, which estimates the global lighting market at $75 billion and growing. Even a small increase in the share of that pie that goes to next-generation smart lighting systems could make a significant market for contenders in the field.   

For the second time this week, Illinois regulators have slapped down big utilities' smart grid spending plans. First it was downstate utility Ameren, and now it's Chicagoland utility Commonwealth Edison.

Yesterday, the Illinois Commerce Commission told ComEd it had to cut about $146 million from the rates it can expect to collect from customers this year. That's about four times more than the $40 million the utility had targeted in cost reductions in a February filing.

That math is open to some interpretation, since ComEd has filed a complex set of formulae for how it's accounting for its costs, which include pension costs and other issues unrelated to the grid itself. Just how the ruling will affect ComEd's $2.6 billion in smart meter and distribution automation projects is unclear. ComEd wants to deploy about 4 million smart meters over the next decade, with Silver Spring Networks as a key partner, along with substation and distribution grid sensors and controls.

ComEd and Ameren are both trying to prove that their plans for a combined $3.2 billion in smart grid spending are worth it to their customers, as per an Illinois state law passed in December. So far, it's not looking so good, although ComEd has filed for a 2013 rate increase that would cover losses this year.

Here's what Greentech Media reporter Katherine Tweed had to say on the ICC's rejection of Ameren Illinois' smart grid proposal on Tuesday:

The final ruling has not been posted, but the ICC said it is asking Ameren for more information about how the technology would benefit customers before it allows it to proceed. The ICC's concerns are in line with many of the concerns posted in the Attorney General’s filing a few weeks ago, the regulator said in a Tuesday statement.

The state Attorney General has asked questions on assumed savings including "truck rolls," or the number of onsite work crews that need to be dispatched to fix grid problems or deal with customers. The catch is, there's a rule on the books that people have to be contacted in person “at the time the service is being discontinued” when they’re being disconnected for nonpayment.

That's just the type of cost that automating the grid, via smart meters and other systems, is meant to end. In Ameren’s proposal, the utility estimated that it received about 247,000 disconnect/reconnect orders per year, about 89,000 of which were disconnects for non-pay, more than a third of the total figure.

Besides the remote disconnect issue, there are also questions about the verification of benefits for customers and the details of where and when the technology will be deployed, since some of Ameren’s territory already has some automatic meter reading.

At stake is a $300 million investment in Ameren’s grid over the next decade, including distribution automation and smart meters.

The rejection harks back to Baltimore Gas & Electric’s rejected proposal nearly two years ago, when the Maryland Public Service Commission told the utility that the plan’s surcharge to customers was not justified and that it lacked sufficient consumer education. Eventually the plan was approved with a far lower surcharge, more robust consumer offerings, and no mandatory time-of-use pricing.

In Illinois, smart grid has had a hard road so far, as the state’s two largest utilities have been repeatedly chastised for not spelling out the benefits to customers well enough.

The issue seemed settled at the end of last year, when the state ordered that Ameren and Commonwealth Edison will have to reduce outages by 20 percent, energy theft by 50 percent, and inactive meters (those delivering power to unoccupied homes) by 90 percent under the new rules. 

Illinois utilities have to prove the benefits up front, but they’re not alone. California utilities have to file smart grid metrics every year, showing the progress on various projects, from consumer access to energy information to distribution automation.

ComEd received approval from the Illinois state legislature for its $2.6 billion smart grid plan, but the details are still awaiting final approval from the ICC, according to the Chicago Tribune. ComEd's plan includes year-over-year performance metrics that it will be measured against. 

Ameren will likely take a page out of ComEd's book and offer up all of the necessary information that is missing to gain approval. The process is being repeated in various other states, where utilities have to be clearer about where the benefits of smart grid lay. Many of the operational benefits from smart grid are for the utility’s bottom line, not the consumer. Bolstering the consumer benefits of smart grid is not important; it is critical for future smart grid projects.

ComEd has signed on to the Green Button initiative to allow consumers to access their data in a standardized format that can then be leveraged by third parties, if the customer chooses, for energy savings applications. Many other utilities that have suffered public concern (or outright backlash) have also signed on to the initiative.

Ameren can be expected to gain approval eventually, but it will take a clear plan, with clear benefits for all, to get there.

With a steep growth of power generation from photovoltaic (PV) and wind power and with 8 GW base load capacity suddenly taken out of service, the situation in Germany has developed into a nightmare for system operators.



The peak demand in Germany is about 80 gigawatts. The variations of wind and PV generation create situations which require long distance transport of huge amounts of power. The grid capacity is far from sufficient for these transports. The result is a remarkably large number of curtailments of RES (renewable energy sources).

Reports from the European Network of Transmission System Operators for Electricity (ENTSO-E)[1] and the German Grid Agency[2] reflect concern for the operational security of the power system. The risk of a prolonged and widespread power blackout was earlier recognized by the German Bundestag and discussed in an interesting report[3].

This note will present the main conclusions from the three reports combined with data, collected from the German system operators.


A New Operating Pattern

Since January 2012, all four German system operators have published estimated photovoltaic generation based on representative samples. The data will give research environments a new opportunity to analyze the impact of RES in Germany.

Some observations are possible from the charts above and other evidence:

• Wind power peaks seem not to be simultaneous with PV peaks. This means that PV does not add its full peak capacity to the grid problems during high wind periods.
• Most German wind power is installed in the northern part of the country, while most PV capacity is installed in Bavaria. The nuclear moratorium has created the most serious supply problems in the southern part of Germany. This observation suggests additional PV generation is needed to relieve the supply problems.
• PV generation cannot reduce the need for peak capacity. The reason is that there is no PV generation during the evening peak load.
• The regulating work which must be made by controllable power sources grows considerably with the growth of wind power and PV. TenneT is one of Germany’s four main grid operators. In the TenneT area, a calculation for April 2011 has shown that wind power alone would extend the regulating range by more than 50 percent, while the actual combination of wind power and PV has doubled the regulating range.

Although PV may be able to give some relief to the grids, PV cannot reduce the need for peak capacity and additional PV will cause a considerable growth in the need for regulating capacity.

The German Grid Is a Backbone in Europe

On November 4, 2006, a German 380-kilovolt line had to be temporarily disconnected. Due to insufficient coordination of protection systems, a circuit tripped and started cascading outages. The result was that the continental grid in Europe was divided into three islands and about 17 gigawatts of load was shed. The case demonstrates how a local event in Germany can turn into a widespread European disturbance.

In April 2012, the president of ENTSO-E[4], Daniel Dobbeni, stated his concern about security of power system operation in Europe in a letter to the European Commissioner for Energy, Günther Oettinger.

ENTSO-E: “As long as RES generation in certain regions expands faster -- partly as a function of national support schemes -- than the transmission network can accommodate, the risk of insecure system operation coupled with costly generation curtailments will rise significantly.”

A recent briefing paper gives an overview of the current situation. The rapid increase of wind power and other renewable energy sources (RES) without a corresponding reinforcement of the electric grids has caused the problems. The paper explains: “Heavy ‘unplanned’ transit flows added to scheduled flows cause severe loading on southern interconnectors (PL/CZ, PL/SK, DE/CZ, and also SK/HU and SK/UA) and lead to non-compliance with fundamental network security criteria. The high level of flows on the interconnectors leads to overloading of the network in Germany and neighboring countries Poland, Czech Republic, Slovakia and Hungary.”



Among the countermeasures of the transmission system operators (TSOs) is the use of the HVDC links across the Baltic Sea for a redistribution of power flows. A common procedure has been developed by German and Polish TSOs and two Nordic TSOs (Energinet.dk and Svenska Kraftnät). However, the remedial actions cannot be guaranteed, as they depend on prevailing system conditions.

The countermeasures have cost implications and cannot be implemented without cost sharing agreements.

ENTSO-E makes reference to its Ten-Year Network Development Plans (TYNDP). The timely implementation of the projects will require the active support of European policy makers.

The paper estimates the necessary investment for reinforcement of the western and the eastern transport corridors in Germany to be 30 billion euros for the next decade. The German reinforcements must be coordinated with investments in neighboring countries.

Efficient market arrangements are important for efficient congestion management, secure grid operation and overall market efficiency. Therefore, the organization of more consistent markets and redefinition of bidding areas deserve consideration.

The ENTSO-E paper concludes: “If this infrastructure does not materialize in due time, then the rate of RES increase should be examined under a more pragmatic prism."

A German Performance Report for Winter 2011-2012

The Federal German Grid Agency has confirmed the assumption of a strained grid in a 120-page report on the supply situation for electricity and gas in Germany during the winter season of 2011-2012.

It is useful for the general understanding of the significance of the infrastructure when an authority evaluates actual system conditions and publishes annual reports for better or for worse. Unfortunately, that sort of report is rare in the electricity business.

This is my translation of the 10 points of the summary:

• The situation of the power grid was very strained during winter 2011-2012.
• Besides the scenarios described in the Grid Agency report of August 31, 2011 the shortage of natural gas in February 2012 was followed by an unexpected event which added to the load on the electric grids and required additional measures from the transmissions system operators for maintaining system security.
• In addition to that, an unusually large number of forecast errors caused an exhaustion of the regulating reserves. Therefore, the transmissions system operators had to resort to additional measures. The Grid Agency will create incentives for improvements of the forecasts by adaptation of the price system for balancing power.
• The synchronous compensator Biblis was commissioned in February 2012 and provided the expected relief of the voltage problems.
• German and Austrian power plant reserves were used in several cases for the relief of power lines and as a supplement to already exhausted regulating capacity. About the same magnitude of power reserves will be needed next winter.
• The power plant capacity has developed unfavorably. Planned extensions have been delayed. Further decommissioning of conventional power plants cannot be defended in Germany for the time being. The prevention of decommissioning of power plants for conventional production will require regulating and legal measures. If more power stations nevertheless should be decommissioned in southern Germany, the needed reserve capacity would increase correspondingly. Besides, the need for capacity mechanisms should be intensively investigated in the medium term.
• The supply of more power from renewable sources than can actually be transferred by the grid would add to overloading of the grid, because the price signals would displace conventional power plants in the merit order and the electricity export from Germany in the internal market would increase. It is the understanding of the grid agency that the existing legal framework allows the transmission system operators to use measures which can reduce the supply to a level that can be transferred by the grid. Nevertheless, a normative clarification seems to be expedient.
• The cooperation between grid operators for electricity and gas must be improved in order to take account of the growing significance of gas power plants and gas supply to the security of supply of the electric grids. Even here, changes of the legal framework are recommended.
• No technical valid measures can replace grid extensions. A consistent use of the established instruments for acceleration of the reinforcement of the grids is required.
• The reduced supply of gas in February 2012 has revealed the weak points of the gas grids. Action is needed for the gas grids. Fortunately, this need is clearly inferior to the need for action in the electricity grids.

The general view seems to be concern for the future capacity of power plants, regulating power and reserves. The rigid point 9 seems surprising, but it may reflect a typical view of a grid agency. A strong grid is important, but several other integration measures deserve careful consideration.

The increasing trend in the use of §13.1 of the German Energy Industry Act (EnWG) for re-dispatch and in the use of §11 of the RES Act (EEG) and §13.2 of EnWG for reduction of feed-in of power is demonstrated in report. The data is valid for the transmission grid.

Re-dispatch is used for the relief of highly loaded grid components.



For both years, most re-dispatch concerned the Remptendorf-Redwitz line between Germany and Austria.

Feed-in reduction was initiated 197 times during the winter season of 2011-2012, compared to 39 times the previous year.

In 184 cases, wind power caused high feed-in from distribution grids into the transmission grids. Five cases were remarkable and affected the entire grid:


This information confirms that the German electricity supply had narrow margins during the winter of 2011-2012 without room for additional heroic political decisions. Hopefully, the messages of the Grid Agency will be understood, so a better harmony between the transition of the production facilities toward green solutions and the necessary adaptation of the infrastructure can be achieved.

A Critical Case

Welt Online has reported on “alarm level yellow” for German power grids on March 28-29, 2012[5].

German grid operators are obliged to report all operational interventions aimed at avoiding overloads or power failures. The grid operator for the eastern Germany, 50Hertz, has published a very brief report on the event in German. More details are given in the Grid Agency report.

At 8:48 p.m., one of two circuits of the 380-kilovolt Wolmirsted-Helmstedt line tripped. The other followed 12 minutes later. The reason was a technical defect in TenneT’s substation Helmstedt. Wolmirsted-Helmstedt is the northernmost link between the 50Hertz area (the former DDR) and the other German system operators.

The wind power peak level was not extreme. Nevertheless the remaining links had to be relieved and 50Hertz had to activate comprehensive measures. This is probably the reason why this event caught the attention of the media.



The interventions included about 2,000 megawatts of re-dispatch and about 4,000 megawatts in feed-in reductions.

The case reveals the vulnerability of the German power system. Through April 9, 50Hertz has issued 23 similar reports on strained grid conditions in 2012.

23 Percent of the Hours in Q1 2012 Affected by Interventions

The number of interventions has increased dramatically in Germany from 2010-2011 to 2011-2012. In spite of the obligation to publish information on all interventions, it is difficult to form an overview.

The practical administration of the rules and the compensation is quite complex. There are four grid operators for the primary level (380 kV) and a number of grid operators at lower voltage levels. Bottlenecks are often detected in local grids. It makes no difference to the owner of a wind turbine if local or national grids are congested.

In an attempt to establish an impression of the extent of interventions in Germany, EON Netz will be used as an example. EON Netz is operating the largest secondary grid in Germany. The primary grid in the same area is operated by TenneT.

The control area is divided into a number of local areas (Landkreise). An intervention concerning EEG § 11 is valid for electricity production in one local area. The severity is indicated in steps between 0 percent and 100 percent.

Each intervention record specifies start time and duration. Interventions for different local areas are usually overlapping. One of the main purposes of the lists of interventions is to support the calculation of economic compensations for the owners of the affected power plants.

During the first quarter of 2012, EON Netz has issued 257 interventions. The average length was 5.7 hours. Up to 10 interventions have been issued for the same hour. A total of 504 hours had one or more interventions.

Thus, there have been interventions active for 23.1 percent of the hours during the first quarter of 2012.

The total amount of curtailed energy from wind and CHP is probably modest, but the observations seem to indicate that German grids are frequently loaded to the capacity limits. Strained grids have a higher risk of cascading outages caused by single events.

What Happens During a Blackout?

The Federal political system in Germany has for some time been conscious of the risk of a large blackout.

In 2011, the Office of Technology Assessment at the German Bundestag (TAB) published an interesting report on the consequences of blackouts lasting up to two weeks.

The following infrastructure sectors are considered:

• Information technology and telecommunications
• Transport and traffic
• Water supply and wastewater disposal
• Food supply
• Health care system
• Financial services
• Public institutions (e.g., a case study on prisons)

The conclusion is that an interruption of the power supply will be tantamount to a national disaster after only a few days. Though the probability of this event is very low, the report recommends further efforts at all levels in order to “increase the resilience of critical infrastructure sectors in both the short and medium term and also to further optimize the capacities of the national system for disaster control.”

Planning for blackouts is often neglected. One reason for this is the optimistic assumption that blackouts can be avoided. Another reason is the high cost of measures which are supposed to be superfluous.

However, large blackouts do occur. They cannot be completely avoided, but the restoration process can be more or less well prepared. Therefore, vital infrastructure sectors should be prepared for power failures and the necessary facilities for a black start of the power system should be installed and ready for action.

***
[1] Interconnected system operation conditions in Continental Central Europe: A briefing paper to the European Commission, EMTSO-E, 13 Mar 2012.

[2] Bericht zum Zustand der leitungsgebundenen Energieversorgung im Winter 2011/12 Bundesnetzagentur, 3 May 2012 (in German)

[3] What happens during a blackout?, Office of Technology Assessment by the German Bundestag, 7 Apr 2011,translated from: “Was bei einem Blackout geschieht.”

[4] The European Network of Transmission System Operators for Electricity

[5] http://www.welt.de/dieweltbewegen/article106143921/Stromnetz-geht-ploetzlich-auf-Alarmstufe-gelb.html

***

This is a guest post by Paul-Frederik Bach. Paul-Frederik has more than 40 years experience in power system planning. He worked with grid and generation planning at ELSAM, the coordinating office for west Danish power stations, until 1997. As Planning Director at Eltra, Transmission System Operator in West Denmark, he was in charge of West Denmark's affiliation to the Nordic spot market for electricity, Nord Pool, in 1999. Until his retirement in 2005, his main responsibility was the integration of wind power into the power grid in Denmark. He is still active as a consultant with an interest in safe and efficient integration of wind power. Check his website for more information.

This article was originally posted on The Oil Drum.

GTM Research just released its latest smart grid report, The Smart Grid in Asia, 2012-2016: Markets, Technologies and Strategies. In this podcast, the report author, Kamil Bojanczyk, provides some insight into the report and enormous scale of investment being made in the smart grid by China, Korea, and Japan.  

China, Japan, and Korea have completely different utility structures and are all building out their smart grids in aggressive but very different ways.

There is an enormous opportunity for U.S. smart grid companies in Asia, as well as a daunting competitive threat. The sheer scale of China's transmission build-out serves as a lesson in the differences in the way China's energy policy works and the manner in which U.S. energy policy doesn't.

Listen in:

Lighting Science Group has raised a new round of funding totaling approximately $140 million. The money will be used to finance the company’s growth, expand manufacturing and help keep its place as one of the leaders in the consumer and commercial LED market.

Approximately $88 million of the money is new equity funding and commitments, and another $52 million is the conversion of existing bridge financing since the fourth quarter of last year.  

Lighting Science Group produced 4.5 million LEDs in 2011, a 450 percent increase over 2010. The LED market continues to mature, particularly in certain commercial applications. Lighting Science also began embedding a chip from semiconductor giant Marvell, which was named a 2012 CES Innovations Design and Engineering Award Honoree.

The funding was led by Riverwood Capital and Pegasus Capital Advisors, Lighting Science Group’s majority owner, also participated in the equity financing.

The money will be used to meet the demand of commercial networks, including products for retailers, the hospitality industry, military installations, municipalities and big-box home improvement stores. Lighting Science Group said $10 million will also be used to retire a related-party obligation.

Two executives who have worked with Riverwood Capital, Brad Knight and Keith Scott, will also be joining the management team of Lighting Science, as chief operation officer and chief commercial officer, respectively.

Groom Energy and GTM Research predict that the LED enterprise lighting market will grow by 30 percent in 2011 and surpass $1 billion in annual revenue by 2014. Most of the early growth will come in the commercial and industrial LED lighting space, where the 2010 U.S. market stood at about $330 million in annual revenue. 

Lighting Science Group is successfully competing against lighting giants like Philips, General Electric and Sylvania in the LED space. The incumbents are also looking to stay on top of the market with more innovative offerings. Sylvania recently partnered with Daintree Networks for networked lighting. Falling prices of LEDs are also lifting the prospects of nearly all players in the market, both large and small. 

For the moment, the market is still wide open, and there’s space for everyone to play.

Jigar Shah, former CEO of The Carbon War Room and Founder of SunEdison has joined Inerjys, an equity fund and green finance firm, as Partner, where he will focus on the firm's international renewable energy project strategy. Inerjys, based in Montreal, is looking to raise $1 billion to "reinvent the clean technology and renewable energy sector by investing vertically across the value chain." The fund, which has yet to announce its first close, purports to "overcome market barriers and accelerate the pace of innovation" by investing growth equity "while simultaneously building utility-scale clean technology projects worldwide."
 
 

SCIenergy's board of directors replaced CEO Russ McMeekin, who led the company through last year’s acquisition of energy services company Servidyne and this year’s purchase of efficiency financing startup Transcend Equity, with Steve Gossett Jr. of Transcend Equity. Gossett Jr. brought in a new executive team including his father Stephen Gossett as COO, confirmed in a Friday interview that the company did recently downsize its workforce, though as part of an integration of SCIenergy’s software business, Servidyne’s building auditing and retrofitting business and Transcend’s novel efficiency project financing.

FirstFuel Software, a building energy analytics company, today appointed John MacPhee as CFO, Sam Krasnow as VP Regulatory Affairs and Market Development, and Domenic Armano as Director of Customer Solutions. These strategic hires will help to drive FirstFuel’s future growth and expansion plans for 2012 and beyond.

Cree, the solid-state lighting manufacturer, saw its CFO John Kurtzweil depart to join Extreme Networks. Cree's stock price has stumbled in the last month.