[MUSIC] Solar power looks amazing. You take a piece of silicone, put a little stuff on it, connect some wires to it, and free electricity comes out whenever the sun shines. Well, is it really free? In all things about energy, economics comes into play. If I can make my electricity cheaper one way versus another, on average, I'm going to make it the cheaper way. So let's look at the economics. And to do that, the first thing we should ask is, how good are these things at capturing the sunlight? The first solar cell I told you about, it wasn't very good. Just rubbing some phosphorous on a piece of silicon, not going to give you very high efficiency. Efficiency is defined as the amount of energy from the sun in versus the amount of energy from the electricity out, a very logical number. Let me show you a graph of efficiency over time. So we got dates on the bottom, this goes all way out to the latest data from when we were filming this in late 2015. And on the side is the efficiency, and you can see the very, very best cells are over 40%, 44% efficient. That's amazing! Of 100 photons coming in, or 100 units of energy coming in, 44 of those units of energy were turned to electricity. Now these world record cells have multiple layers, multiple junctions, and they cost a lot. If you're building a space shuttle or international space station, that's what you want. If you want to just get inexpensive solar PV on your roof, it's not what you want. We can look here in the mid-levels. These are our single crystal silicon cells, and we're in the 20s of percent, that's pretty good. And then you have a whole bunch of new technologies. Places that don't have to start with an actual single crystal ingot of silicon, but can make this in modern film deposition techniques. And there's a variety of them, and there's some very exciting ones that are having a very rapid rise. This is awesome because these promise the ability to do it cheaper, and to do it on a more mass-produced scale. In the end, this doesn't tell you dollars, this just tells you how much area you need to get a certain amount of wattage. Still, though, if you could make a sale for the same price at a high efficiency versus a low efficiency, clearly you're going to be able to buy it for less money. The real key here beyond efficiency, when you look at economics, is the concept of dollars per peak watt. All the efficiency is taken into this graph, because I don't care how big the cell was, I'm selling it to you per watt. Well, not exactly per watt, per peak watt. If I have the brightest possible sunshine on the planet shinning on it, at noon, with no clouds, this is how many watts I can get out. And this is a remarkable graph because we've gone from 25 years ago, at $6, to today to under $1 per peak watt. Tremendous variation of this. For a long time before this in the 80s, it was stuck at this number and then it really looked like it was going to be stuck at $3. And then more innovations in manufacturing have pushed this dramatically lower. Especially with the rise of Chinese massive solar PV investment into the factories that make it out of single-crystal silicon. Still, though, this is price per peak watt, and we don't buy electricity that way. We pay dollars or some type of currency per kilowatt hour or per joule, right. We pay per the energy produced, not the energy it could hypothetically produce on a bright sunny day. How do I convert these? Let's do a little math. Okay, dollars per peak watt. And we can multiply in the end, let's start out by saying I could buy those cells for $1 per peak watt. There's one other thing I have to ask. How long is the cell going to last? Am I going to put it on my roof and next month it'll be broken, it'll be garbage, it'll have worn out, sort of like a battery? In which case, it's not a very good investment. Or will it last on my roof forever? Well, forever's a long time. To figure out how long it really lasts, you probably should ask the manufacturer, how long are they going to guarantee this? How long's my warranty? How long that if it breaks because of a manufacturer's fault, you'll give me a new panel? And these days this is for about 20 years. We're going to need that data. Now there could be natural disasters, a hail storm, your house could burn down, right? That'll break it a lot sooner, but that would break a lot of things a lot sooner. So let's take this dollar for peak watt that'll last for 20 years. And let's try to convert it in the end into the way we buy electricity in the US, dollars per kilowatt hour. A watt second is a joule, so this is some number of joules. How do we get from here to there? First thing we have to do is we need to convert this peak watt, 1 peak watt, to an average watt. A plain old normal, hey, can I make electricity out of this? And this number right here depends on your location. If you live in a sunny desert, this number might be 0.4. If I live here in Illinois, it's 0.2. Only one-fifth of the time is the sunlight super bright and shining straight down. Well, actually, you all know the sun is going to be totally gone at night and then it's going to rise, then there'll be some peak, and it'll be gone. But if I average this over my whole 24 hours, whereas maybe this is the number that should come across here at 1. And I average this whole thing together, right, I get one-fifth of that, 0.2. So in counting day and night variation, in counting how many clouds come into the city on a annual basis, I can get this number for my location. I'll do the one for here, in Champaign–Urbana. Okay, that's great, I've gotten rid of peak watts. Now I've got plain old watts, and I want kilowatts. Well, that one's pretty easy, right? So there's 1,000 watts per kilowatt, okay? Got kilowatts on the bottom, my watts cancel. What about this time I need here, this hours? And how do I utilize the fact this is going to last for 20 years? Well, we've got time on the bottom in years, so we just have to know that 1 year is 8,760 hours. Years, we'll cancel out, what I'm left with is dollars per kilowatt hour. If I multiply these numbers together, including the 20 down here, this comes out to be $0.0285 per kilowatt hour. Little under 3 cents per kilowatt hour if my solar cell cost $1 per peak watt. Seems very, very good, almost too good to believe. This is about the price that centralized coal power stations can make electricity. So why hasn't the whole world switched to solar? Well, got a couple other considerations to think about. One is that I'm really only making all of this electricity during the daytime. So if I want to switch to a complete solar system, I have to store that energy I make to be available to use at other times of day. Like at night when you want to have lights, and you still want to have your electronics working. Storage is expensive. But still, being able to run everything, if it really only costs this much during the daytime, would still be a tremendous boom. Well, let's look at a couple other factors. So one of those other factors is that location number. Remember I said that here in Illinois, it's about 0.2. Here down in Arizona, that number's about 0.4. In some places where you really won't think of putting solar power, like the Portland area where it rains a lot, that number would be more like 0.1. This graph shows where you get the sunshine, and therefore, where it makes much more economic sense to put in a PV system. You can take that data, the amount of sunshine, and you can also take into account the price of electricity from alternate sources. This is really a fascinating graph. Because each of these lines like this represents the price at a solar panel at which it makes economic sense for that location. Something here in Honolulu, Hawaii, makes enormous amounts of sense. Because one, their normal price of electricity, I mean, Hawaii is a island state. It's a long way away from any fossil fuel. You have to truck and ship everything there and refine it, that's a lot of money. So their price of electricity per kilowatt hour is very high from conventional sources. Their amount of total solar insulation, the amount of sunlight they get, is extremely high. Absolutely makes sense to have solar panels in Hawaii. We can go across here. You see LA is very, very sunny and the electricity is still pretty expensive. Phoenix, yes, sunny all the time, but their fossil fuel costs are also pretty low. Then you get into maybe the less likely areas, I mentioned Portland, Fargo, North Dakota, not a lot of sun. But very cheap fossil fuels. Notice that this graph has a suppressed 0, 0 is literally down here so it's not twice as expensive from here to here. But if you then think about this graph and you think about what we just calculated as the price per peak watts, it looks like it makes sense to do solar power everywhere. But what I gave you before was the price per peak watt, At the manufacturer, not the price of installed capacity. And the economic numbers really need to take into account the actual amount of money you spent to get those panels in operation. This is an average price of installed solar power. And while it only goes to 2013, I'll tell you the current numbers. Notice that this is up in the $6 to $7 per peak watt. Why are there three lines on here? Well, the different lines are depending on how many solar panels you're putting in all at once. Clearly if you're putting in a much, much bigger system, you're going to have a lower price per installed watt. But even in 2013 here, these prices were close to $2, yet our installation prices are still $6. And if I continue these lines down to 2015, it's still costing $5 even for the largest system to install new solar capacity. So let's go back a slide. We're at the $5 per watt install line, this one. LA, San Francisco, Las Vegas, Hawaii, make sense economically. Fargo, Seattle, Salt Lake, Denver, don't at $5 per installed capacity. So even though you can buy this stuff for under a dollar per peak watt for the panels, you can't install it in the United States for less than 5. What's up with that? Well, the thing is that the solar panel has to go on something, so you've got to build the thing it goes on. And you might say, hey, I already have a roof on my house, just slap them up there. Well, you can't quite slap them up there because your roof might not have been designed to have heavy solar panels on top of it. And you have to get the wires, and the electricity you make is direct current. But the stuff you use is AC, so there's a device called an inverter that you have to buy as well. There are certainly some real costs, but there's also some costs that definitely could be trimmed. Let's look at this graph. This is a graph of the installed capacity price in Germany versus the US. And you notice, for many times, this was very, very similar. Then somewhere around the middle of the 2000s, there was fantastic divergence. And again, this is a 2011 graph, these numbers have continued and this trend has continued as well. That the price to install it in Germany maybe is no longer half, but it's definitely significantly less than the price to install in the US. Well, this always floored me. Our labor costs don't seem to be dramatically different. Our standards of living don't seem to be dramatically different, we're both developed countries. So I looked into this a bit more. One of the biggest problems of why it costs so much in the United States to install solar panels, even when you buy them cheap, is regulation. And that regulation is born from lack of standardization. In Germany, you have much more uniform building code, installation code, and everyone's roof looks pretty much the same. In the US, we have an enormous wide variety of building types, of local municipalities, local counties, local states, that provide different degrees of regulation. And different degrees of paperwork that has to be filled out. Now, I'm not saying paperwork's bad. Clearly you don't want people doing things that become an unsafe hazard to themselves or their community. And I'm not exactly sure the right way to solve this, but I definitely want to point out the issue. Because when you do have these levels of different types of installation that need to be done because everyone's roof is custom. And different types of regulations to be taken an account of in every municipality, city, or state. Well then, you're going to need to actually pay the people who do it more. The typical solar installing company has a lot of college graduates in the US. In Germany, it's a trade, and you can do the labor much cheaper, you can do the installations much faster. Because each installation looks exactly like the last installation that company did. I do hope over time that our installing cost will decrease. But even if the solar panels are free, there is still a cost because you have to buy some structural stuff. You've gotta actually put it up, and you actually have to convert the DC. Still though, with prices of panels going down, the economic availability of solar is certainly going to increase. That's what you need to know about solar economics. [MUSIC]
