Solar Energy Technology and markets

Eero Vartiainen Solar Business Development 12.3.2014

Transition towards Solar Economy

2

Res

ourc

e &

sys

tem

effi

cien

cy

Finite fuel resources Large CO2 emissions Infinite fuel resources Emissions free production

Hig

h Lo

w

Geothermal

Hydro

Wind

Sun

Ocean

Bio

Oil Nuclear today

Nuclear tomorrow

CHP

CCS

Traditional energy production Exhaustible fuels that burden the environment

Advanced energy production Energy efficient and/or low-emission production

Copyright © Fortum Corporation

Solar Economy Solar based production with high overall system efficiency

Coal Gas

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Solar energy availability

Source: Research Institute for Solar Energy

Global horizontal irradiation (kWh/m2 per year)

Total amount of solar energy incident on the surface of the Earth is 800 million TWh per year. That is more than 5000 times the annual global primary energy demand.

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Solar energy availability in Europe Yearly solar horizontal irradiation availability in Europe

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Sicily

Rome

NicePari

s

Hollan

d

Lond

on

Copen

hage

n

Helsink

i

Jyvä

skylä

Sodan

kylä

kWh/

m2

DiffuseBeam

Source: Beam direct sun and diffuse sky irradiation calculated from European Test Reference Years

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Monthly solar electricity for Helsinki and Sicily

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Monthly PV production (kWh/kWp)

Helsinki

Sicily

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How much electricity could be produced in theory ?

With a PV system of 15% efficiency, a module area of 25 km x 25 km would be needed to produce the yearly electricity consumption in Finland.

To produce all world’s electrity consumption, an area equal to 40% of Finland would be needed.

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How much solar PV would fit in the Finnish market ?

• About 20% of the Finnish electricity consumption could be produced with PV without significant surplus

• With a small storage, the penetration of PV could be increased to 40%

• Increasing PV penetration much higher than 50 % requires seasonal storage

• The economically optimal storage size increases with the lowering storage cost

Calculation is made with Helsinki weather data and 2011 hourly Finnish electricity consumption (annual sum 82 TWh).

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0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100

Annual PV production / electricity consumption (%)

Use

ful P

V pr

oduc

tion

/ ele

ctrc

ity

cons

umpt

ion

(%)

3 kWh/kWp 2 kWh/kWp 1 kWh/kWp no storage

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Three main solar energy technologies with unique characteristics

Photovoltaics, PV/CPV Solar Thermal, ST Concentrating Solar Power, CSP

Power Residential to utility scale

Power & heat Commercial to utility scale

Heat & cooling Residential to comm. scale

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Solar energy conversion technologies

Photovoltaics (PV) global installed capacity 140 GW • Can utilise both direct beam sunlight and diffuse skylight • Crystalline silicon cells (90% of the current PV market) • Thin film cells (10% of the current PV market) • Organic and dye-sensitised cells (laboratory to pilots) Concentrating solar thermal power (CSP) installed capacity 3 GW • Conventional technology with steam turbines, requires high direct sunlight Concentrating Photovoltaics (CPV) mainly pilot projects, installed capacity 0.2 GW • High efficiency systems with lenses, requires high direct sunlight Solar thermal heating systems installed capacity about 300 GW • Collector systems that heat air or water • China the biggest market by far

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Solar PV cell technologies and typical module efficiencies Monocrystalline silicon

15-21% Multicrystalline silicon

14-17% Thin film 7-14%

Polymer < 10%

Dye-sensitised < 10%

Concentrating PV 30-35%

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Solar PV cell efficiency development

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Concentrating PV (CPV) To increase the efficiency of PV, it is possible to join together several thin layers of semiconductors that each capture a different wavelength of the solar spectrum. Best 3-junction cells (Ge/GaInAs/GaInP) exceed 40% efficiency. New 4-junction cells are expected to reach 50%.

These cells are expensive and to reduce material cost, they are used with concentrator systems (lenses and mirrors). Concentration ratios can be up to 1000X which means that only 10 cm2 of cell is needed for 1 m2 module. Concentrating PV requires high direct sunlight and a sun-tracking device.

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Concentrating solar (thermal) power (CSP) Another way of utilising direct sunlight with tracking systems is concentrating solar thermal power (CSP). Reflectors are used to concentrate sunlight to a receiver and heat a medium (syntethic oil, water or molten salt) which in turn will heat up steam that is driven to turbine to generate electricity. Typical solar-to-electric efficiencies range from 15% (throughs) to 25% (dishes). A benefit of CSP is that heat can be stored or backup fuels used to generate electricity when the sun is not shining.

A CSP tower with a molten salt storage

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CSP reflector systems Parabolic through Linear Fresnel reflector

Solar tower with heliostats Parabolic dishes

Parabolic throughs and linear Fresnel reflectors (LFR) have a line focus. Throughs have a mobile receiver whereas LFR receiver is fixed. Solar towers and parabolic dishes have a point focus. Tower receiver is fixed whereas dishes are mobile and have an independent engine/generator (such as Stirling engine or microturbine)

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Solar thermal heating

Solar collectors can be used to produce domestic hot water. When the sun is shining, cold water is heated in the collectors and the heat is transferred to the storage tank. Space heating by solar heat is limited because the heat load is small during the summer. However, it is possible to utilise passive solar heating and daylighting during winter.

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Solar PV growth has moved from Europe to China, Japan and US

• Strong growth has continued despite economic downturn, decreasing feed-in tariffs and trade conflicts

• European share of the global market has dropped from 55% in 2012 to 28% in 2013

• China, Japan and USA were the biggest markets in 2013 and are expected to remain so

• Especially rooftop market is growing fast thanks to new business models and decreased costs; grid parity with retail electricity prices has been reached in many areas

History source: Global market outlook for photovoltaics 2013-2017 (EPIA, May 2013),

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arke

t (G

W)

Other

India

Australia

Japan

USA

China

R. of Europe

UK

France

Spain

Italy

Germany

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Cumulative capacity will be doubled in three years

• Cumulative capacity will be doubled from 2013 to 2016

• European share of cumulative capacity will decrease below 50% at the end of 2014

• China likely to surpass Germany’s cumulative capacity in 2015

• Germany and Italy are already producing 6-8% of their electricity consumption with PV and the share is increasing

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Cum

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OtherIndiaAustraliaJapanUSAChinaR. of EuropeUKFranceSpainItalyGermany

History source: Global market outlook for photovoltaics 2013-2017 (EPIA, May 2013)

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Solar PV (multicrystalline silicon) manufacturing process

Balance of system includes all other system components except the module: inverters, cables, mounting, installation work etc.

PV (large) system cost breakdown

Silicon

Ingot/wafer

Cell

Module

Balance of system

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Top10 module manufacturers 2013

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Top10 module manufacturers 2013

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Top10 cell manufacturers 2013

Excluding thin film manufacturers

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Top10 cell manufacturers 2013

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PV module spot market price decreased by 80% during 2009-12, increased 10% in 2013

Sources: Photon International, PV magazine

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odul

e pr

ice

(eur

o/W

p)

German spot market price for PV modules

Factory gate c-Si Mono c-Si Multi c-Si a-Si CdTe

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Polysilicon spot price has now stabilised to about 20 USD/kg

Sources: Photon International, PV magazine

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olys

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German PV rooftop system (< 10 kW) price development

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Historical data: German Solar Industry Association (BSW)

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yste

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Historical price Price forecast

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Global average turnkey PV system prices 6/2013

System price source: PV Status Report 2013 (European Commission Joint Research Centre, 9/2013)

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Residential average Utility-scale average Utility low end

PV s

yste

m p

rice

(eur

o/W

p)

BoS

Module

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Main parameters which influence LCOE

Base case: India Utility average, lifetime 30 years, O&M 10 EUR/kW/year; with 0/3/6% real interest rates; no subsidies or taxes

Investment costs on previous slide; utilisation Finland 900, France 1400, India 1700, Chile 2300 Wh/Wp

1) Real interest rate (nominal interest - inflation) 2) Investment cost (system price) 3) Irradiation of the location 4) Lifetime of the system 5) O&M cost

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PV has already reached retail grid parity except for Nordics • Retail grid parity means that self-generated PV electricity cost is lower for the end customer than

variable part of the electricity retail price*. This is the case already in many countries, Fortum home markets (Nordics, Poland, Russia) are exceptions because of the low retail price.

*) Retail price here = energy + grid + taxes, fixed costs are excluded

PV Investment cost 2013 rooftop averages: Germany and India 1.5, Italy and Turkey 2.1, Nordic and Australia 2.4 €/Wp + VAT VAT: Nordic 25%, Italy 22%, Germany 19%, Turkey 18%, India 13.5%, California 10%; O&M cost: 10 €/kWp Real interest rates: Nordic, Germany and Australia 3%, Italy 5%, Turkey 5.5%, India 7.5%; System lifetime 25 years Yearly electricity production: Nordic 810, Germany 900, Italy 1350, Turkey 1440, India 1620, Australia 1800 Wh/Wp

Nordics Germany Turkey Italy India Australia (Queensland)

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Energy payback time of PV has decreased significantly

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Ener

gy p

ayba

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(yea

rs)

Energy payback time development according to different studies during 1976-2009

Source: Update of energy payback time data for crystalline silicon PV modules (Thomas Wetzel, 26th European PVSEC, 2011)

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Energy payback time depends on the solar conditions

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Monocrystalline Multicrystalline

Ener

gy p

ayba

ck ti

me

(yea

rs)

Sun beltSouth EuropeGermany

Source: Update of energy payback time data for crystalline silicon PV modules (Thomas Wetzel, 26th European PVSEC, 2011) Solar PV electricity production: Sunbelt 1800, South Europe 1275, Germany 1000 kWh/kWpeak

Energy payback time for crystalline silicon modules at various locations

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Average PV lifetime CO2 emissions compared with average European and Fortum generation mix

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Fortumaverage

mix 2010

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mix 2010

PV SouthItaly,

manuf. withEuropeanaverage

mix

PV inSouth Italy,manuf. with

Fortumaverage

mix

PV inSouth Italy,manuf. withFortum EU

averagemix

PV inNordic,

manuf. withEuropeanaverage

mix

PV inNordic,

manuf. withFortumaverage

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PV inNordic,

manuf. withFortum EU

averagemix

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2 em

issi

ons

g/kW

h

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Largest solar PV plants are already bigger than 100 MW

Agua Caliente PV plant (250 MW) Arizona, US

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Solat district heating in Denmark

Source: Ramboll

Fortum – business in solar energy

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• Fortum buys back surplus energy from solar energy systems • Price is linked to NordPool spot-price – Fortum commission (0.003 euro/kWh) • Remote readable and hourly measurement based energy meter is required

• Launched 2012 in Finland and Sweden • Fortum as interface to the customer and system integrator of turn-key solutions • Standardized solar kits of 6, 9 12 or 18 panels – 1.3 to 3.8 kW

• Fortum is seeking for growth opportunities in countries where there is fundamentally good solar energy resources and synergies for other Fortum growth initiatives

• Fortum as owner and operator of solar power plants. Typical size > 5 MW • In June 2013, Fortum acquired a 5.4 MW solar power plant in India

Solar kits for residential customers B2C

Buyback of surplus production

Energy producer with large scale solar energy farms

Solar solutions for commercial customers B2B

• > 20 kW tailored systems for commercial customers • Fortum as energy partner offering turnkey solutions according to facility specs

and customer needs • Supply and installations in cooperation with 2-4 trusted partners

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Fortum India 5.4 MW plant

Amrit 5,4 MWp solar plant • In operation from March 2012 • Fortum acquisition Finished in June 2013 • Yearly output 9200 MWh (~1700kWh/kWp) • First Solar modules - leading thin film module

technology • SMA inverters - market leader in solar

inverters

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Fortum solar projects: Glava Energy Center in Sweden – a 208 kW PV system connected to Fortum’s grid

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Fortum solar projects: Espoo City car depot in Finland - a 55 kW PV system to charge electric vehicles

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Fortum solar projects – 20 kW Café Carusel (Helsinki) • Commissioning 2013 • Annual yield 19 500 kWh • Peak power 19,6 kW • 80 pcs Naps 245W solar

panels • 2 pcs SMA inverters • Mounting system from Hilti

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First PV system (1.8 kW) sold by Fortum in Finland installed 31.10.2012

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Production 2013

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July 2013 production

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Production 15.7.2013