Marketing PV solar panel energy with a profit

K. C. Somaratna Managing Director, Somaratna Consultants (Pvt) Ltd., Chief Executive Officer, SCL Technologies (Pvt) Ltd.

When we started R & D work on coir dust at Haycarb Ltd. in 1986, everybody else was trying to dry it from 90% moisture to 20% - both on wet basis - and briquette it for sale instead of firewood which was selling at Rs 1.50 per kilo.

But, fortunately, nobody was able to dry it to the required level by spending energy which was less expensive than the cost of firewood.

Some tried to dry it using solar energy by spreading it on the fibre mill premises, and by drawing a comparison with coir fibre drying it was even shown that coir dust cannot be dried beyond 30% moisture on wet basis using solar energy.

But in November, 1986 we managed to identify a method of drying it to 20% moisture on wet basis, using solar energy on the top of the coir dust heap and in adequate quantities on a daily basis.

That was the beginning of coir dust industry in Sri Lanka.

Then there was Malcolm Edwards of Eurocarb Ltd of UK - a subsidiary of Haycarb Ltd - who showed us that coir dust briquettes could be used as a substitute for peat briquettes as a moisture retainer in horticulture.

Making use of this clue and doing desk research on peat briquettes - pricing, physical properties like electrical conductivity, porosity, we managed to develop a briquette which would be a perfect substitute for peat.

This was also the time when environmentalists in both UK and Australia were strongly campaigning against the peat bogs.

With all the collected information about peat briquette prices and properties, we started to market these coir dust briquettes and we did not price it on a cost plus margin basis at about Rs 2.50 per kilo; but priced it to match the price of what it replaced.

Going on this basis we priced coir dust - that waste material which was a permanent menace to most of the fibre millers who were willing even to pay a small amount to get rid of it - at Rs 21.00 per kilo which was the price of sugar at that time.

This is why I said “fortunately” about other researchers’ failure in drying coir dust for, if they had succeeded and used it as substitute for firewood we would not have had enough coir dust to export.

This industry brings in Rs 2 billion every year as foreign exchange and it is probably the industry which earns the highest amount of foreign exchange by using solar energy as the main source of energy.

What is mentioned in the above three paragraphs taught us the following three very important lessons. (a) A product which performs miserably in one market could be a superb performer in another market. (b) Information is the vital ingredient which will enable us to identify the market where it would perform superbly. (c) Always price your new products leaving room for confronting effectively and successfully subsequent price cutting by competition.

Talking about the first lesson, coir dust briquettes would have never performed in the firewood arena and survived twenty years.

Second lesson is the most important thing as the power, information would give to an organization or an individual is enormous and can never be overestimated.

If we had priced the briquettes even at 300% mark up at Rs 10.00 per kilo, with subsequent price cutting it would have ended up as a lackluster industry, probably earning about Rs 200 million/year at the most, as foreign exchange today.

It was our insatiable craving for information about prices and properties of peat briquettes which gave us the comfort and the courage to quote the price of sugar for this waste material called coir dust.

Of course, behind this entire endeavour was the able and visionary leadership provided by R Yatawara, who was then the CEO of Haycarb and his able lieutenant Ananda Hettiarachchi who succeeded him as CEO.

I am sure that they feel happy today that they promoted a concept which not only rose to be a significant foreign exchange earner for the country, but also saved the global environment from at least a part of the hazards related to peat bogs.

Use of solar energy today

There are many global industries - like our own coir dust industry - which uses solar energy in one form or another with no technical appliances supporting them. And then there are those very large number of instances where technical appliances are used to capture solar energy and convert the same to the different forms of energy in which mankind uses them.

Optimisation of solar energy capture and conversion is achieved today using three main types of mechanisms. The first, the best known and the most common technology is photovoltaic solar panels - which would capture the photons in the solar energy to create charge carriers which travel in an external circuit and thereby generate electricity.

The second mechanism is concentrated photovoltaic solar energy where a curved solar concentrating surface focuses solar rays to a point to achieve higher efficiencies.

The third is the concentrated solar thermal technology where a parabolic reflecting surface would concentrate solar energy to a pipe carrying a thermal fluid which transfers the heat captured to run a steam turbine and generate electricity. It is this first technology that has been used in a power plant by the Ceylon Electricity Board. Here it will be competing with main grid electricity generated using hydro, thermal powered by oil and thermal powered by coal which would be cheaper than electricity from the PV solar panel powered plant.

This corresponds to the coir dust - firewood scenario where it would be a poor profit performer.

If it is not a more profitable proposition than other sources, we will be using it only in order to improve our carbon foot print.

In other words we will use PV solar in order to eliminate emitting green house gases - mainly carbon dioxide - to the environment in respect of generating the same amount of electrical energy by thermal means.

If one wants to optimize this elimination of greenhouse gases, one needs to identify a situation or a solution where this elimination would be the highest for a solar panel of given capacity, size and efficiency. Even with the current usage pattern of PV solar panel technology the industry has expanded tremendously from 1.4 GW in 1999 to 40.7 GW in 2010, that is a cumulative average growth rate of 65% per annum and it is expected to reach 297 GW in 2020, even without the impact of what we are going to mention below.

Information to identify the super performer scenario

In order to collect enough information and filter the same to identify worthwhile relevant bits to help locate the super performer scenario, it takes time and it also needs luck.

When many trillions of megabytes are available on any given topic, been able to land on the most relevant and wanted material is nothing but luck and perseverance. Coming to those relevant bits of information, we noticed and made use of the following bits of information.

(1) After studying the entire Intergovernmental Panel for Climate Change Technical Assessment Report four we identified the following.

(a) PV solar technology could generate more than 450,000 TW hours of electrical energy, but it is hampered by the following four characteristics: (i) Distributed nature of solar energy, (ii) Need to store energy, (iii) Large land area required and (iv) High Investment.

(b) Even at a PV panel cost of $3-4 /Watt and an installed cost of $6-7/ Watt, PV solar could generate 1 MW hr of energy for $250 in a good sunshine area.

(c) 13 % of total global greenhouse gas emissions in 2004 was due to transportation and this quantity of GHGs from transportation had increased by 120 % during the period 1970 to 2004. Furthermore 75 % of this transportation related GHGs are from road transportation.

(d) All over the world scientists and engineers are working on a multitude of new fuel-vehicle combinations and out of these, IPCC had identified eleven options out of which bio-fuels, hydrogen fuel cell vehicles and vehicle electrification are the three main contenders today.

(e) In 2004, the total global electrical energy delivered to buildings and industry and transport was 60.9 EJ while 111 EJ was wasted in generating/delivering this electrical energy. The total energy provided to transport by liquid fuels was 77.9 EJ in the same year.

(2) We studied “On the road in 2035” published by the Massachusetts Institute of Technology which had this to say about Internal Combustion Engine powered vehicles and battery electric vehicles.

(a) Out of the total energy developed in an internal combustion engine 74 % is lost in the engine itself and only 16 % is used to move the vehicle forward overcoming air resistance, rolling and providing power for braking.

(b) A normal Toyota Camry would use 2.85 MJ/km and emit 250 grms/km of carbon dioxide while a completely battery driven Toyota Camry would use only 0.54 MJ/km and emit 115.6 grms/km of carbon dioxide. This total carbon dioxide emission (115.6 grms/km) is due to generation of electricity in the current power generation points.

(3) We studied USA Energy Information Administration’s document ‘Energy Outlook - 2009’ in its entirety and collected the following very salient bits of information.

(a) USA used 16.93.Quadrillion BTUs of energy in gasoline in 2010 for transportation and generated 1851 Mt of greenhouse gases.

(b) USA used 41.02 Quadrillion BTUs of energy in fossil fuels, nuclear fuels and renewables to generate electrical energy and delivered only 12.91 Quadrillion BTUs.

Then there were those many articles and reports on bio-ethanol - one notable instance was by University of California at Berkley Geo-engineering Professor Tad W. Patzek which said when the total life cycle is considered, the total cumulative energy consumed in corn farming and ethanol production is six times greater than what the end product provides to the car engine - and hydrogen fuel cell vehicle where thermodynamics and free energy considerations are used to prove that the efficiency of the total set up would never provide support to the proliferation of the concept.

Then there is the most recent publication by Prof. Henry Lee and Grant Lovellette of Harvard Kennedy School which says that when all considerations are taken into account, Battery Electric Vehicle will emerge as the ultimate winner as the most favoured alternative to current ICEs. In addition to all these studies we did numerous computations to compare how these different fuel-vehicle alternatives would influence waste heat, carbon dioxide, water vapour emission scenarios arising out of road vehicular transportation.

Identification of the super performer scenario

In order to identify the super performer scenario we will use the revenue or profit and the impact on the climate change considerations per an installed panel as the criteria. The revenue or profit for a given panel would be the highest where the current usage of fuel is the most wasteful.

This consideration automatically points at use of energy for vehicular transportation.

From MIT article data (2 (a) and (b) above) it is clear that ICE vehicles operate at a thermal efficiency of nearly 20% and when this is combined with $250/MWhr data from IPCC TAR 4, it amounts to that PV solar energy could lead to a petrol litre equivalent of energy at $ 0.36 per litre.

If one wants to identify the most wasteful use of energy from fossil fuels, it is the use of gasoline in automobiles. Not only it emits 80% of energy as waste heat to heat up the environment but also prevents this waste heat from exiting our environment by emitting the two greenhouse gases carbon dioxide and water vapour.

In fact the total fossil fuel derived energy wasted by automobiles is more than the total electrical energy delivered to industry, commercial and residential buildings for both the USA and the whole world.

Now that we know PV solar energy is much cheaper than petrol ($ 0.36 vs $ 1.00) we need to identify how and where we would generate this energy for use by electric vehicles.

Of course users of battery electric vehicles would like to have recharging facilities on the highway itself so that limited range of these vehicles will not be an issue for them.

If these drivers want energy availability on the highway itself, the most natural solution would be to generate this PV solar energy on the highway itself and we consider this as the best solution for climate change as well. So installing PV solar panels along and above the highways to charge batteries for battery electric vehicles is the super performer scenario. When we do this, one could see that the three disadvantages of PV solar energy as identified in (1) a (i), (ii) and (iii) above are all eliminated.

We make use of the distributed nature of PV solar energy as what we want is energy distributed along the highways. We use solar energy purely for storage in batteries so that the electric cars can make use of the stored energy.

Large land area is not a problem as the highway space is not used for any other purpose.

The investment cost is also not an issue as it is cheaper than the petrol on a cost per unit of energy actually used basis. If one looks at the reduction of emissions of waste heat, carbon dioxide and water vapour per unit of energy used, this application will give us the optimum benefit out of all the currently conceivable uses of this energy.

Using the third lesson we learnt earlier, we suggest that we market this energy not at $ 0.40 per litre of oil equivalent of energy plus margin; but approximately at the price of oil it replaces.

As such this litre of oil equivalent of electrical energy could be marketed at $ 1.00 and it would lead to this been the most profitable market for PV solar energy.

Earning Rs 25 million revenue per hectare per year

When we use PV solar panels in this fashion above and along the highways, we would be able to generate about Rs. 25 million revenue per year per hectare of highway and all this without using a single square metre of arable land.

If one looks at the total Southern expressway which is 128 kms in length and about 20 m wide, it would be able to generate about Rs. 64 billion as revenue per year.

Of course this would not happen till we have enough battery electric vehicles to purchase this power.

Whenever we mention this to important personnel, one of the first questions asked is where those electric cars to purchase this energy are.

Most of the time we respond by saying that if we go by Gatzby principle of leadership which wants hockey players on the field to run to where the ball is going to be and not where the ball is, we would not wait till the battery electric vehicles have arrived and looking for charging facilities on the highway, but create the environment conducive to their use by starting work on this dedicated infrastructure and providing adequate facilities for the vehicles to be brought in so that they happen simultaneously.

The other beauty of this is that we could install these panels on a staggered basis; say at 5 points of the expressway each with a charging station and about 1 km length and extend the solarisation as more battery electric vehicles start using the expressway.

We would like to see Sri Lanka playing a leadership role amongst the developing countries in moving towards vehicle electrification.

This concept would not only provide for zero emission transportation; but also move towards fixed cost transportation. Oil is definitely going up in price for two very important and predictable reasons. Easy to obtain conventional oil at a depth of less than 5000 ft is simply not available.

What is available is either (a) non conventional oil like oil in shale or oil in sand for which nonconventional methods of extraction like Steam Assisted Gravity Drain (SAGD) need to be used or (b) conventional oil at much greater depths. When the Deepwater Horizon met with the accident on April 20, 2010 in Gulf of Mexico it was working in 5000 ft.of water and drilling around 13000 ft. into the seabed.

Both these aspects would only lead to higher costs of exploration and production thus resulting in higher prices of oil at the pump. This is the supply side scenario leading to higher prices.

The second reason for higher prices coming from the demand side scenario is the huge anticipated increase in consumption. According to the latest reports, the oil consumption of China is expected to be 85 million barrels per day in 2035 while current global production is about 95 million barrels per day and forecast for the same in 2035 is 85 million barrels per day.

Both China and India had less than 10 private cars per 1000 people in 2004, while USA had more than 800 private motorized vehicles per 1000 people.

If India whose population is expected to be ahead of China at 1.38 billion in 2035, wants to have a similar private motorized vehicle density, where the price of a litre of oil is going to end up in 2035 is anybody’s guess.

As such if Sri Lanka want to be insulated from these possible and probable upheavals of oil prices, erecting this dedicated infrastructure for transportation will definitely be a move in the right direction and we could play it beautifully to bring in significant developments in the country’s economy.

Converting this to be a multibillion dollar industrial base

If we look at all these newer technologies, vehicle electrification, solar panels, lithium ion batteries, they seem to be so foreign to us. We need to get out of this mind-set. We need to remember that out of the top 25 companies in the Fortune 500 listing, 10 are from the oil industries (including Royal Dutch Shell a company from a country of around our country’s size) and 5 are from the automobile industry. It is a foregone conclusion that both these industrial sectors will undergo revolutionary changes during this decade and Sri Lanka should make an attempt to benefit from these changes.

We should promote battery electric vehicles in our country and put up this dedicated infrastructure and show the world that we have the necessary mind-set and capabilities even to help them move towards zero emission transportation.

Then we should convince them that Sri Lanka is a good base to manufacture these battery electric vehicles.

We have good quality silica in Embilipitiya area and we should put up solar panel factories there under licence from reputed manufacturers or otherwise.

And instead of using Hambantota harbour to import motor vehicles, we should try to export battery electric vehicles and solar panels from Hambantota harbour to those African countries which are waiting to awaken and develop.

Instead of considering developed countries’ cry about the need to reduce generation of greenhouse gases as a threat to our own moves in the direction of development, we should develop strategies to convert it to a perfect opportunity.

We should develop technologies which will enable us to bring in development of transportation without compromising the environment and show the developed countries how to do the same and earn money.

I believe the methodology promoted by this article is capable of doing this and we should promote it with them and earn valuable foreign exchange through the same.

If we establish this dedicated infrastructure here, we could export this technology to other countries in the SAARC region and beyond and earn foreign exchange. These countries would like this technology because it would lead to fixed cost transportation, insulate their economies from imminent increases in oil prices and save them from many travails of climate change like floods and cyclones.

In fact Climate Change Index of German Watch has identified Bangladesh, Burma, Vietnam and Philippines as four out of the ten most climate change affected countries in the world.

If we were to quote from the findings of International Strategy for Disaster Reduction, risk of deaths due to flooding has increased by 13% from 1990 to 2007 and during the same period, percentage of world population impacted by water related disasters has gone up by 28% and 75% of these risks are valid for a handful of countries like Bangladesh, Pakistan and India which are affected by monsoons.

So we believe that these Asian countries would also like this dedicated infrastructure as a solution to these hazards arising out of greenhouse gas instigated climate change disasters.

We, of course do not have the slightest doubt that adaptation of this methodology will pave the way to the beginning of a multibillion dollar industrial base which will project a few companies engaged in the same to the Fortune 500 listing within this decade. It may be worthwhile to quote here from “Plot to Save the World” by Brian Dumaine where John Doerr - the venture capitalist who backed Sun Microsystems, Yahoo and Google- is quoted to have said that “Green Tech is bigger than the internet. It could be the biggest economic opportunity of the twenty first century”. Brian Dumaine adds the following to it: “Energy is a $ 6 trillion global industry, and we’re talking about the emergence of a global power house industry that will take its place”.