Daniel Englander
Phil Giudice Goes to the Mountain May 28, 2008 at 10:38 AM
Phil Giudice, Commissioner of the Massachusetts Department of Energy Resources, spoke today at Greentech Media’s PV Annual 2008 on the Commonwealth’s plan to hit grid parity with PV in the near future. The Commish took an interesting tack, though. Instead of waiting for module and installed costs to come down, he’s going to wait for retail electricity prices to go up. Massachusetts has one of the highest retail electricity rates in the country - about $0.15/kWh, putting it up there with Hawaii, New York and California. According to Giudice, rising natural gas prices will push this price up to (and past) $0.20/kWh. Wholesale natural gas prices have risen close to 40 percent in the last few years, which has had a drastic effect on the cost of electricity generation in the Commonwealth.
But how will this affect PV prices? Most analysts have pointed to $4.00 per watt as the tipping for explosive demand growth in the PV market. However, given the still unpredictable polysilicon supply market, the inability of a-Si and CIGS manufacturers to ramp up volume production to meet demand, and the likely failure of production tax credits in the U.S., it is unlikely the installed system cost will drop to this level until 2012 at the earliest. Giudice thinks this is relatively unimportant. Backed by the right policy-based incentives, like Massachusetts’s Commonwealth Solar Initiative - a $68 million plan to increase PV capacity in the state to 250 MW by 2017, pushing PV on the market at prices above $4.00 per watt will work as long as the natural gas-based retail electricity rates continue growing at their precipitous rate.
Hearing this argument, Prometheus Institute President Travis Bradford put his head in his hands and exclaimed, “That’s good. I was right. That was lucky.” Travis has long predicted possible tipping points occurring before the $4.00 per watt price mark. The Commonwealth Solar Initiative, combined with Massachusetts’s participation in the Regional Greenhouse Gas Initiative, as well as Giudice’s work promoting the expansion of net metering and RPS caps, means the PV market in Massachusetts has the potential to exhibit a 40 percent cumulative annual growth rate. Based on this, Giudice thinks it may be possible to generate between 20 percent and 40 percent of the state’s electricity from PV if retail electricity rates remain at the $0.20/kWh level - or maybe more if they go higher. This is equivalent to 2.5 GW to 5 GW of installed PV capacity.
With global installed levels hovering around 7 GW, and with projections for 10 GW to 12 GW by 2011, Giudice’s goal is nothing but ambitious. However, countered against rising electricity prices, Giudice argues PV is the most “effective hedge against a rising fossil fueled future.” Proposals to resurrect the state’s whale oil industry failed to gain the necessary votes in the State House. Something about the smell.
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