MIT Technology Review recently published an interesting article discussing the replacement diesel generators with solar panels and batteries in off-grid applications, an issue we’ve touched on in several of our previous posts. Written by Kevin Bullis, the article quoted two off-grid solar installers and operators, Optimal Power Solutions (OPS) and SunEdison. SunEdison now entering the market in developing countries, installing a solar array and distribution system to power a village of 70 homes. The article touched on several key points:
- Solar Prices and Trends: SunEdison does not expect their first installation to be profitable. However, they feel that with rapidly declining solar prices and efficiencies from scale, they could be profitable in a few years. By focusing on diesel displacement, the industry could grow and prosper.
- Path of Least Resistance: Bullis points to irrigation pumps as a point of entry for solar replacement of generators. These pumps do not operate at night and could therefore run solely off of panels without the use of batteries. This brings out another key problem: energy storage is holding back solar deployment. Like the solar panels, it must provide enough value to the end user to justify the cost. SunEdison recently built a PV system for pumping water in India, as discussed in an article by SmartPlanet.
- Diesel Costs: The consulting firm McKinsey is quoted as stating that diesel costs range from 30 cents to 65 cents per kWh. Currently, solar produces power at 12 to 35 cents per kWh, beating out diesel in many applications. For solar to replace diesel entirely, energy storage is necessary, adding to the cost. This can be two to three times higher in remote locations where transportation and theft are major issues.
- Current Backup Solutions: OPS typically installs diesel generators for backup during stretches of cloudy weather. Energy storage is too expensive on a total cost of system basis. But that’s changing, says Stephen Phillips of OPS. “Solar with batteries can compete directly with diesel-powered village electrification.”
Bottom line: Off grid installers are betting big on solar power for remote villages in developing countries. Unfortunately, energy storage is the limiting factor, and must evolve to meet the needs of these applications.