Speaker 1: Welcome to zero. I'm Kshatrati this week booms bus and bargains.
Speaker 1: Solar is the cheapest source of energy. You know. Within
Speaker 1: the last two decades, it has gone from being a
Speaker 1: cool technology that rich countries should fund to being mainstream.
Speaker 1: You can see solar panels everywhere. It now contributes four
Speaker 1: percent of the world's electricity, which sounds tiny, but the
Speaker 1: extraordinary pace at which it has grown means that analysts
Speaker 1: think it could contribute as much as fifty percent within decades.
Speaker 1: This is partly thanks to how cheap the panels have become.
Speaker 1: The technology was created in the US, but brought to
Speaker 1: massive scale in factories in Japan, Germany, and then finally China,
Speaker 1: which today is responsible for more than eighty percent of
Speaker 1: global supply, and that dependence is bringing disruption to the industry.
Speaker 1: Countries from India to the US want to make sure
Speaker 1: that their supply chains aren't too dependent on China. That's
Speaker 1: forcing governments to come up with policies that incentivize manufacturing
Speaker 1: solar domestically.
Speaker 2: Solar manufacturing is a horrible business. I don't know why
Speaker 2: governments want to have it in their countries when they
Speaker 2: could just buy really cheap modules on the global markets.
Speaker 1: That is Jenny Chase, solar power analysts for Bloomberg NEF,
Speaker 1: who I think is basically the world's best expert on
Speaker 1: the business of solar. She's covered the industry for two
Speaker 1: decades and seen lots and lots of disruption Despite the
Speaker 1: massive growth, The technology cycle of solar is so rapid
Speaker 1: that few investors are able to recoup their investments, and
Speaker 1: yet the demand for solar keeps rising, which keeps motivating
Speaker 1: new people to try. The latest attempt is thanks to
Speaker 1: the US Climate Bill, which is going to heavily subsidize
Speaker 1: the production of solar panels domestically. One of those companies
Speaker 1: is Hanuak Q Cells, which is building a plant in
Speaker 1: the state of Georgia.
Speaker 3: We are doing it all here. We are doing it
Speaker 3: vertically integrated. We're going big.
Speaker 1: That's Lindsay Cherry from Q Cells, who we'll hear from
Speaker 1: later in the episode. But first Jenny tells me all
Speaker 1: about how solar panels are made, starting with sand, the
Speaker 1: history of solar booms and bus and how scaling this
Speaker 1: technology has needed successive governments from the US to Germany
Speaker 1: to China to spend vast sums for the benefit of
Speaker 1: all humanity. Jenny, Welcome to zero.
Speaker 2: Good morning, Ashat. Nice to be here.
Speaker 1: So I have a bookcoming. It's called Climate Capitalism, and
Speaker 1: one of the chapters is focused on solar and when
Speaker 1: I was doing the research on it, something shocked me.
Speaker 1: You know, even as a science student, I didn't know
Speaker 1: that the history of solo goes back to eighteen thirty nine,
Speaker 1: all the way back to a French scientist who first
Speaker 1: figured out that if you shone light on a combination
Speaker 1: of metals you can get electricity. Now, if you take
Speaker 1: that as the moment of invention of solar, from then
Speaker 1: until twenty twenty two, it took about one hundred and
Speaker 1: eighty three years to build one terrawat of solar. Now
Speaker 1: we can figure out what one terrawat is, but it's
Speaker 1: a big number. What shocked me is that, according to
Speaker 1: Bloomberg and e f estimates, the next terawater solar will
Speaker 1: be built in three years. Is that right?
Speaker 2: That is right? The growth of solar has been phenomenal.
Speaker 2: I started doing this in two thousand and four, and
Speaker 2: if I'd given a completely accurate forecast of solar growth,
Speaker 2: everyone would have thought I was crazy. They would not
Speaker 2: have listened to me. That I would have got fired
Speaker 2: and we would not have been a success. I thought
Speaker 2: then that if solar was one day one percent of
Speaker 2: world electricity supply, I would be astounded. But at the
Speaker 2: time I was I thought, well one percent is not nothing.
Speaker 2: I'm happy to work on this. Now I'm starting to
Speaker 2: wonder will it hit fifty percent? Will it ever be
Speaker 2: more than fifty percent? Well, electricity.
Speaker 1: Now, before we get into the explosion of solar in
Speaker 1: the business of solar, let's just understand what a silicon
Speaker 1: photovol take cell is and maybe go from its absolute
Speaker 1: starting point which is sand, all the way to putting
Speaker 1: it on a roof or at the utility scale in
Speaker 1: a farm. Just walk us through the steps.
Speaker 2: So by weight, most of a solar module is glass
Speaker 2: and aluminium, but the active ingredient is the actual cell,
Speaker 2: and the active ingredient in that is a silicon wafer.
Speaker 2: That silicon wafer is made of ultrapure refined polysilicon that
Speaker 2: has been crystallized in a very particular structure and dope
Speaker 2: in a particular way. To make polysilicon, you start with sand,
Speaker 2: which is silicon dioxide, and you heat it up with carbon,
Speaker 2: so a pretty clean coal or a charcoal You can
Speaker 2: do that in your garage if you want. And then
Speaker 2: what you have is metallurgical grade silicon, which is about
Speaker 2: ninety eight percent silicon.
Speaker 1: And what's the two percent there?
Speaker 2: It's carbon bore on a bit of phosphorus stuff that
Speaker 2: would mess up the electrical properties of a silicon wafer.
Speaker 2: Most of that is actually used for smelting steel. It's
Speaker 2: a traded commodity. It costs about two dollars a kilogram.
Speaker 2: It's some dirty silicon. To make that into polysilicon that
Speaker 2: is pure enough to be useful electrically in a solar cell,
Speaker 2: you need to do a very capex and very expertise
Speaker 2: intensive process.
Speaker 1: Yeah, capex being just that the building of this plant
Speaker 1: would be really exciting. Building of the factories.
Speaker 2: Building a polysilicon factory is very expensive and it uses
Speaker 2: a lot of electricity to run. And when I started
Speaker 2: in this industry in two thousand and four, there were
Speaker 2: really only five companies worldwide who knew how to do it,
Speaker 2: and they were doing it for the semiconductive industry. So
Speaker 2: you've got this metallogical grade silicon and you react it
Speaker 2: with acid to make it into a gas, and then
Speaker 2: you have to set a seed of really pure silicon,
Speaker 2: and the gas swirls around the chamber, and you're heating
Speaker 2: some parts of the chamber and cooling different parts of
Speaker 2: the chamber, and this gas sort of dissociates and crystallizers
Speaker 2: on the seed, and so you get a rod of
Speaker 2: really pure silicon coming out, and you've got all kinds
Speaker 2: of nasty gases you wel Silicon tetrichloride is a byproduct,
Speaker 2: which if you're a good polysilicon manufacturer, you then recycle
Speaker 2: and get that silicon back out, and also that hydrochloric
Speaker 2: acid backout. Is hugely energy intensive because you're heating and
Speaker 2: cooling different parts of the same reactor. It's called a
Speaker 2: semens reactor, and sweet talking a semens reactor into making
Speaker 2: polysilicon is actually really difficult, which is why it took
Speaker 2: years for Chinese companies to get the hang of it.
Speaker 2: After two thousand and four.
Speaker 1: I had no idea that it was actually vapor deposition
Speaker 1: that is extremely energy intensive, especially when we're talking metal.
Speaker 1: What temperatures are.
Speaker 2: We talking here, It's over a thousand degrees celsius one
Speaker 2: hundred degrees celsius or so. So what you get out
Speaker 2: of a Semens reactor is a long rod of what
Speaker 2: we call polycrystalline silicon. It's not electric very useful because
Speaker 2: it's a lot of little crystals.
Speaker 1: Wait, so there's one more step.
Speaker 2: There is. There is one more step. So you got
Speaker 2: your rod of polycrystalline silicon and you smash it up
Speaker 2: with a hammer, and you put it in little sacks
Speaker 2: and you ship it to usually another company which makes
Speaker 2: ingot sound okay to make an in goot. You melt
Speaker 2: down that polycrystalline silicon into and then you're getting it
Speaker 2: to crystallize into larger crystals that are more electrically useful.
Speaker 2: Until twenty eighteen, the dominant technology was multi crystalline silicon,
Speaker 2: so you let it crystallize from multiple points at once
Speaker 2: and you got some fairly big crystals that you could
Speaker 2: then use for solar And even then there was another
Speaker 2: technology that existed, monocrystaline silicon, where the whole ingot was
Speaker 2: one crystal.
Speaker 1: Wow. So as a chemist, I actually grew crystals in
Speaker 1: the lab, and I did many things as a chemist,
Speaker 1: but the hardest thing I've done is crystallography. Trying to
Speaker 1: grow a crystal the way you want is so hard.
Speaker 1: It's sort of hard than science.
Speaker 2: It's so hard, and you're trying to make something that's
Speaker 2: twelve feet long and a foot wide into a single crystal.
Speaker 2: When you're making a monocrystalline silicon in goot, you have
Speaker 2: to be so careful, and it's taken companies quite a
Speaker 2: long time to perfect it. And so monocrystallines silicon is
Speaker 2: it makes a more efficient cell than multi but it
Speaker 2: is much more expensive and much more difficult.
Speaker 1: And the efficiency comes from the fact that a monocrystalline
Speaker 1: cell will have sort of fewer defects, which is to say,
Speaker 1: how electrons travel across the surface would be easier, simpler,
Speaker 1: and that is why it becomes more efficient.
Speaker 2: Precisely, the grain boundaries are less of a problem because
Speaker 2: they want any grain boundaries and mono solar. But it
Speaker 2: was much more expensive, so it took a long time
Speaker 2: to become the dominant tech.
Speaker 1: And then there's a fun step after this, which is
Speaker 1: to cut it into wafers which are then made into
Speaker 1: silicon PV cells. And the cutting of the wafers itself
Speaker 1: is quite complex, right.
Speaker 2: It's quite difficult because they are really really they are,
Speaker 2: so we're talking today, it's about one hundred and eighty microns.
Speaker 1: For a microns, that's roughly the width of human hair.
Speaker 2: I think, twice the width of a human hair. But
Speaker 2: it's they're very very thin. You have to be very
Speaker 2: careful not to break them when you're working with them.
Speaker 1: And what do you have to do to get that
Speaker 1: kind of thickness.
Speaker 2: Well, of course we've been working on this. In two
Speaker 2: thousand and four, wafers were much thicker than they are today,
Speaker 2: and back then you would be using about ten grams
Speaker 2: of silicon per watt of modules. I know, we haven't
Speaker 2: talked about what is but for comparison today, the average
Speaker 2: is about two point six grams per what They were
Speaker 2: much thicker in those days because it's really difficult to
Speaker 2: slice up things that thinly. And originally the technology was
Speaker 2: a slourwry based wire sauce, so literally it was like
Speaker 2: an abrasive wire that you poured liquid sandpaper over and sword.
Speaker 1: And what is it now?
Speaker 2: So in twenty eighteen I went off to baby and
Speaker 2: when I came back four months later, the whole market
Speaker 2: had moved with diamond wire saws, where you don't use
Speaker 2: this slurry based abrasive material at all. But you just
Speaker 2: diamond diamond as a wire.
Speaker 1: It's so cool.
Speaker 2: Or it's a really thin wire with chips of diamond,
Speaker 2: and you just literally saw through these wafers. Once those
Speaker 2: had happened, diamond wire saw and monocrystalized silicon just swept
Speaker 2: the market. And I mean, really, it felt like I
Speaker 2: went left how a baby, and I came back and
Speaker 2: the dominant technology was a little bit different.
Speaker 1: It kind of explains to you just how explosive the
Speaker 1: industry is, both in the tech advancing as quickly as
Speaker 1: it is now. After that, once you have the wafer,
Speaker 1: you have to turn the veafer into a working solar panel.
Speaker 1: What are the steps involved there?
Speaker 2: They're complicated, and I have to admit that as an analyst,
Speaker 2: I seldom have to understand them very well. But the
Speaker 2: steps are. You dope the wafer with boron a phosphorus
Speaker 2: so that it was set up an electric potential. When
Speaker 2: sunlight falls off, and when the sunlight knocks the electrons free,
Speaker 2: they will flow. Then you have to use a silver
Speaker 2: paste to make electrical contacts to get the electrons off
Speaker 2: the cell, and then you wio them up into modules.
Speaker 2: And connect them to your invertero and feed it into
Speaker 2: the grid.
Speaker 1: So what you've described, obviously is a pretty sophisticated piece
Speaker 1: of technology today, but in principle it's kind of the
Speaker 1: same solar cell that was invented in Bell Labs in
Speaker 1: nineteen fifty four.
Speaker 2: Rate it absolutely is. It's probably three or four times
Speaker 2: a sufficient but it is the same silicon based technology
Speaker 2: as was invented by Bell Labs. We've just got better
Speaker 2: at making it as we've made more and more of
Speaker 2: these things. That's the great thing about humans. We get
Speaker 2: better at things when we do more of it.
Speaker 1: But why is it that the explosion in the industry
Speaker 1: has only really happened in your period working as a
Speaker 1: solar analyst sort of two thousand and four onward.
Speaker 2: I think on some level it was an explosion that
Speaker 2: was waiting to happen. But what has really driven it
Speaker 2: over the years has been government policy to get companies
Speaker 2: manufacturing these things and developing the technologies to do this
Speaker 2: manufacturing at scale and cheaply and well.
Speaker 1: And in green technologies. Solar is sort of the poster
Speaker 1: child because invented in the US, there was a little
Speaker 1: bit of an industry there when the US government was
Speaker 1: funding solar development through installation of solar on satellites, but
Speaker 1: really when it came to consumers, it was Japan first,
Speaker 1: then Germany, then Spain. Right, these are the governments that
Speaker 1: came in with support and what kind of support.
Speaker 2: So the way the solar industry works is you tend
Speaker 2: to get government policy in different places driving the global
Speaker 2: market at different times. And it was definitely the US
Speaker 2: that find out a lot of the R and D
Speaker 2: in the seventies and eighties, and weirdly enough exceon Mobile,
Speaker 2: which is not really famous for its environmental credentials. I
Speaker 2: would say there's a lot of the early research into
Speaker 2: photovoltaics and actually sold a panel quite early on. Japan
Speaker 2: has a very long running program to build solar on roofs,
Speaker 2: which supports companies like shar Admitsubishi, and that that certainly
Speaker 2: developed the industry in that sense for Japan, given its
Speaker 2: a resource poor country that has little access to fossil fuels.
Speaker 1: So Japan one side built a lot of nuclear power plants,
Speaker 1: but the other side also tried to develop solar as
Speaker 1: a technology.
Speaker 2: It did Japan invested strategically in developing a solar industry.
Speaker 2: I'm not quite sure you can say it made sense
Speaker 2: because even then it was wildly expensive electricity, and to
Speaker 2: be honest, Japan doesn't have many companies anymore that are
Speaker 2: big in solar. But it certainly contributed to the development
Speaker 2: of a successful industry.
Speaker 1: But does it make more sense that Germany was the
Speaker 1: next country that came out with a no.
Speaker 2: That makes no sense whatsoever. Germany is a really bad
Speaker 2: country to do solar. It's not particularly sunny, it's it's
Speaker 2: not particularly windy for wind either. But Germany did decide
Speaker 2: in the year two thousand to do this energy vendor,
Speaker 2: the energy turnaround. They were going to get off nuclear,
Speaker 2: which was maybe the side of I agree with less
Speaker 2: and replace it with renewables. So there were some early
Speaker 2: programs to build more solar in Germany, and then in
Speaker 2: two thousand and four Germany came crashing in with what
Speaker 2: they called the feed and Tariff Freedom. TAFF is a
Speaker 2: really weird word. It's a direct translation from the German Unschpeizerguchingen,
Speaker 2: which is it doesn't sound better in German, but it
Speaker 2: literally does just mean freed and tariff because you feed
Speaker 2: your electricity into the grid and you got paid a
Speaker 2: lot for it. You got paid over four hundred years
Speaker 2: and mega.
Speaker 1: Hour for it. Right, And if you compared to today
Speaker 1: sort of record solar is, I would say.
Speaker 2: That SOLO in Germany today costs about about eighty years
Speaker 2: and mega what hour.
Speaker 1: Right.
Speaker 2: It has cost less in the past, but that's a
Speaker 2: complication we shouldn't go into. So solo has cost as
Speaker 2: little as fifty year as a megal hour in Germany.
Speaker 1: But when we talk about solo today, it's mostly a
Speaker 1: China story. So how does China come into this picture?
Speaker 2: When Germany started buying solar panels to put them on
Speaker 2: German fields and German roofs, Chinese company said, you know what,
Speaker 2: we can make these things. You know, it's maybe we
Speaker 2: can't make the polysilicon immediately, but we can slice stuff
Speaker 2: into wafers, we can make them into cells, we can
Speaker 2: make him into modules. And so the Chinese government did
Speaker 2: provide some strategic support, and technology came in from Australia,
Speaker 2: from the US, A lot of R and D from
Speaker 2: other places came to China to do the manufacturing. And
Speaker 2: so you've got companies like Suntech and solar Fun and
Speaker 2: Yingli and Trina and what is called Canadian solar but
Speaker 2: is also significantly associated with China. And so the companies
Speaker 2: came and deployed the technologies developed elsewhere in large factories
Speaker 2: in China, larger factories that had ever been seen before,
Speaker 2: and they brought the costs down.
Speaker 1: In each of these transitions from country to country, there
Speaker 1: were sort of national champions companies that were formed that
Speaker 1: were supportive of a domestic industry. So Japan had q
Speaker 1: Serra for example, Germany had q Cells. Then China got
Speaker 1: all these companies, but most of the time those companies
Speaker 1: were first reaching out for a domestic market because the
Speaker 1: country was supporting some sort of policy. But China i
Speaker 1: was the first to only focus on exports, right.
Speaker 2: Absolutely, I mean from China's point of view, the Germans
Speaker 2: wanted to buy solar modules, so China would sell them.
Speaker 1: And yet today China is the largest installer of solar.
Speaker 1: So what happened for it to go from being so
Speaker 1: export focused to installing so much renewables domestically.
Speaker 2: Well, first of all, what you have to understand is
Speaker 2: that solar is not expensive anymore. Now it's probably the
Speaker 2: cheapest source of bulk electricity and most sunny countries in
Speaker 2: the world. I'm carefully saying of bulk electricity because solar
Speaker 2: does not generate at night, and we know this. But
Speaker 2: one major reason China has started building solar is that
Speaker 2: China likes cheap electricity. But the point when China started
Speaker 2: supporting its domestic installation industry was the point when the
Speaker 2: European market went into a bust situation. So Germany had
Speaker 2: its speed and tariffs that started in two thousand and four.
Speaker 2: They were wildly successful from my deployment perspective, because they
Speaker 2: were a licensed to print money. Spain decided this is
Speaker 2: a great idea and launched a similar feed.
Speaker 1: In tariff and what are you talking?
Speaker 2: After a couple of years after two thousand and four,
Speaker 2: Spain launched its own feed in tariff, which was a
Speaker 2: little bit like the German one, but probably even more
Speaker 2: generous because Spain's sunnier than Germany, so they set the
Speaker 2: level similarly. But a solar panel that you put in
Speaker 2: Spain generates a lot more electricity, and Spain intended to
Speaker 2: get about four hundred megawatts of solar through that program,
Speaker 2: which was a lot at the time. The rule was
Speaker 2: when the Spanish market had got most of the way
Speaker 2: to its four hundred megawats solar installation target. The government
Speaker 2: would give the companies a grace period of twelve months
Speaker 2: to finish up really, and that would be how they'd
Speaker 2: get about four hundred megawats. It turns out you can
Speaker 2: build a lot of solar in twelve months, an unbelievable
Speaker 2: amount of solar at the time, and so the country
Speaker 2: ended up with about two point seven gigawatts or so
Speaker 2: like two thy seven hundred megawatts of solar from that
Speaker 2: program was meant to build four hundred megawats, and then
Speaker 2: they had to pay for all that to get subsidies.
Speaker 1: And this is the period when the financial crisis was
Speaker 1: about to yes.
Speaker 2: And then at the same time, it was actually the
Speaker 2: last day of September two thousand and eight was the
Speaker 2: end of the solar boom. And that was more or
Speaker 2: less when the financial crisis kicked off.
Speaker 1: And so you get a bunch of bankruptcies in the
Speaker 1: solar industry following that period in Europe, and that's when
Speaker 1: the Chinese companies go, oh, but we've invested all this
Speaker 1: to try an export solar, what do we do now?
Speaker 2: Exactly? So, basically, when the sunset on the last day
Speaker 2: of September two thousand and eight. The solar market flipped
Speaker 2: from under supply and all the modules in the world
Speaker 2: going to Spain and Germany with this big sucking sound,
Speaker 2: to oversupply. There were new factories built, there were loads
Speaker 2: of polosilicon to make more modules. Now the price started crashing,
Speaker 2: and of course that meant that the solar manufacturers went bankrupt,
Speaker 2: and the first to go bankrupt were the German manufacturers.
Speaker 2: They had generally the oldest factories to make cells in modules,
Speaker 2: and they were often locked into polysilicon contracts at eighteen
Speaker 2: ninety one hundred dollars a kilogram, when the price of
Speaker 2: polysilicon was crashing towards forty thirty twenty dollars a kilogram.
Speaker 2: They say that when the tide goes out, you see
Speaker 2: who's swimming naked, and the Germans were swimming naked, whereas
Speaker 2: the Chinese new factories, more efficient, not generally locked into
Speaker 2: polysilicon contract some of them were. They went bankrupt and
Speaker 2: so the Chinese companies survived better. So the fallout from
Speaker 2: the European market not growing as fast and in fact contracting,
Speaker 2: was that solar models were much much cheaper, and the
Speaker 2: companies were having a hard time. So the Chinese government
Speaker 2: came in and said, we want to provide strategic support
Speaker 2: for our domestic industry. Plus we're not uninterested in this
Speaker 2: whole cly energy thing ourselves, and China started building massive
Speaker 2: amounts of solar, and China has been the largest market
Speaker 2: for solar panels since about twenty ten, and.
Speaker 1: The numbers in China are stunning. This year, Blomogin f
Speaker 1: estimates that one hundred and fifty gigawarts of solar is
Speaker 1: going to be built in China now, just to put
Speaker 1: that in perspective. Europe, which was on sort of steroids
Speaker 1: to try and build renewables last year after Russia attacked
Speaker 1: Ukraine and in Europe wanted to free itself off Russian
Speaker 1: energy imports, it built about forty gigawards of solar and
Speaker 1: China just as usual as building about one hundred and
Speaker 1: fifty gigabots.
Speaker 2: That's right. China is a big country, and when the
Speaker 2: Chinese government decides to do something, it does it.
Speaker 1: But the discussion now in the solar industry, especially here
Speaker 1: in Europe and in America, is to try and build
Speaker 1: a domestic market, which is to try and free itself
Speaker 1: off the Chinese supply chain, give what had happened with Russia,
Speaker 1: and trying not to depend on other countries for crucial
Speaker 1: energy technologies. And that brings us to the Inflation Reduction Act.
Speaker 1: As a climate build it has some really big solar incentives.
Speaker 1: What are they and would they work?
Speaker 2: So I've seen a lot of solar booms and busts,
Speaker 2: and the IRA looks to me like something that's going
Speaker 2: to kick off a massive boom which will inevitably be
Speaker 2: followed by a bust and will probably result in some
Speaker 2: somewhat counterintuitive behavior. I feel like China's strategic support for
Speaker 2: its solar industry is the reason the solar industry is
Speaker 2: not a cottage industry anymore. It's the entire reason why
Speaker 2: solar is now the largest source of new installed capacity
Speaker 2: every year.
Speaker 1: And when we are talking strategic support, it's really subsidies,
Speaker 1: tags benefits, creation of demand. Domestically, it's a.
Speaker 2: Little less transparent in China, but it's mandates from above.
Speaker 2: It's support for domestic installation. It's telling the local utilities
Speaker 2: and companies what to do. It's sometimes free land, it's
Speaker 2: sometimes debt support for expansion. Now the IRA you can
Speaker 2: actually read, unlike the Chinese policies, which were never in
Speaker 2: a single document or even a single set of legislation.
Speaker 2: But the IRA offers makers of wafers, cells and modules
Speaker 2: about sixteen cents per what in tax crest.
Speaker 1: And just put that in context of the cry.
Speaker 2: Now you can buy a module for seventeen point eight
Speaker 2: cents to what. So it's essentially paying for a price
Speaker 2: almost all the price of a module made in Chia,
Speaker 2: best in class company in China. Of course, if you
Speaker 2: make it in America, it's going to be more expensive,
Speaker 2: is going to be more expensive because America is a
Speaker 2: very difficult business environment. Why is that, Well, for one thing,
Speaker 2: these are all tax credits, so you have to hire
Speaker 2: an army of tax lawyers to get them. Secondly, it's
Speaker 2: pretty difficult to negotiate locations for factories. Electricity is often
Speaker 2: relatively expensive compared with China. There's not necessarily a trained
Speaker 2: workforce the way there is in Jiangsu. In Jiangsu, you
Speaker 2: have a lot of high tech in manufacturing industries next
Speaker 2: to each other, so you have a workforce of people
Speaker 2: who can come and work at the new factory and
Speaker 2: have done this sort of thing before. So there's competition
Speaker 2: for workers in Jiangsu too, but they're there. The US
Speaker 2: doesn't really have any of that. And also China has
Speaker 2: the manufacturing for all the supporting industries, so they make
Speaker 2: that silver paste there, they make the glass there, they
Speaker 2: make the encapsulent which holds the back of the module together,
Speaker 2: and it is just much more convenient to get all
Speaker 2: the components in one region.
Speaker 1: So when there is a boom in solar manufacturing in
Speaker 1: the US, it will still rely on supply for certain
Speaker 1: steps from other countries. Right, what are those steps in
Speaker 1: which countries will they rely on?
Speaker 2: So it's I'm not really that interested in the US.
Speaker 2: So I haven't looked at their manufacturing capacity for junction
Speaker 2: boxes and glass, et cetera.
Speaker 1: And you're not interested because the US is a small market.
Speaker 2: Well, the US is about thirty thirty five gigawatts of
Speaker 2: installation a.
Speaker 1: Year, which is about ten percent of demand today.
Speaker 2: It's actually less than that, to be honest, I'm more
Speaker 2: interested in the Polish solar market than the US solar market. Obviously,
Speaker 2: the US is very interesting to Americans, and from a
Speaker 2: climate perspective, we'd all like Americans to sort their carbon
Speaker 2: emissions out. That is very important, and the Inflation Reduction
Speaker 2: Act is probably for that reason, the most important piece
Speaker 2: of climate legislation globally for the last ten years.
Speaker 1: So because of the IRA, there are going to be
Speaker 1: a lot of people trying to manufacture solar in the US.
Speaker 1: One of the companies is q Cells. Why is hanwak
Speaker 1: q Cells interesting?
Speaker 2: As you say, there are a lot of companies that
Speaker 2: are planning to set up factories in the US, including
Speaker 2: a lot of Chinese companies considering it, but most of
Speaker 2: them are only planning to do the last step the
Speaker 2: module assembly. In the US, or at most modules and cells,
Speaker 2: their module assembly is relatively low tech. You can assemble
Speaker 2: modules in your garage. They wouldn't be very good modules
Speaker 2: because you're probably not very good at it, but you
Speaker 2: could do it. So what that is is dipping a
Speaker 2: toe tentatively in the water of investing in the US,
Speaker 2: whereas what hanwak q Cells has done is come crashing in.
Speaker 2: We're going to build a factory in Georgia which makes
Speaker 2: angles and wafers and cells and modules, and that is
Speaker 2: a big investment. It's a big chunk of the value chain.
Speaker 2: It's betting that they can do this whole thing well
Speaker 2: enough to make you pay with the Inflation Reduction Act.
Speaker 1: Q Cells as a brand has existed for decades and
Speaker 1: has been present during every one of those solar Eras
Speaker 1: Jenny described, it went public in the German Boom, bankrupt
Speaker 1: following the two thousand and eight financial crisis, and after
Speaker 1: an acquisition from a South Korean company, is now building
Speaker 1: an American supply chain, the entire supply chain, and that's
Speaker 1: going further than any other US solar manufacturer. I wanted
Speaker 1: to hear more about this big bet directly from the source.
Speaker 1: I spoke to Lindsay Jerry, policy manager at q Cells
Speaker 1: about how much they stand to get from the Inflation
Speaker 1: Reduction Act. Lindsay, welcome to zero.
Speaker 4: Thank you so much for having me. I really appreciate it.
Speaker 1: Q Cells is not the only company that's going to
Speaker 1: manufacture solar panels in the US. There's First, NL, Cubic, PV.
Speaker 1: All of them have announced plans. So what is different
Speaker 1: about q cell splan.
Speaker 3: Yeah, so we are the only vertically integrated solar panel
Speaker 3: manufacturer that will be operating in the US. We have
Speaker 3: been very intentional that we want to do it all here.
Speaker 3: So we you know, of course, have announced that we
Speaker 3: are doing our vertically integrated factory.
Speaker 4: In Cartersville, Georgia.
Speaker 3: That will be three point three gigawatts of fully vertically
Speaker 3: integrated panel. So that is what makes us different. We
Speaker 3: are doing it all here. We are doing it vertically integrated.
Speaker 4: We're going big.
Speaker 3: Of the five primary manufacturing steps for a solar panel
Speaker 3: that is polysilicon, inga wafer, sell in module. The US
Speaker 3: is really only home to polysilicon and module production, so
Speaker 3: inga wafer and cell manufacturing have been entirely missing from
Speaker 3: the US supply chain for quite some time now, and
Speaker 3: they are heavily concentrated in China and Southeast Asia.
Speaker 4: So this is really.
Speaker 3: Exciting because you know, this heavy concentration of manufacturing creates
Speaker 3: issues within the supply chain, and so having a more
Speaker 3: diversified supply chain creates a more stable solar industry. And
Speaker 3: that is something that we didn't think was possible. Just
Speaker 3: a couple of years ago. People you know, thought we
Speaker 3: had a pipe dree and then never thought it would
Speaker 3: come to fruition.
Speaker 4: But we're really starting to see these investments come through, and.
Speaker 1: So what specific policies are enabling this boom to happen,
Speaker 1: and let's just break them down absolutely.
Speaker 3: The primary policy that we point to is a production
Speaker 3: based tax credit. So for the Solar Energy Manufacturing for
Speaker 3: America Act, this bill creates a production based tax credit
Speaker 3: so that manufacturers will receive credit for producing polysilicon inga
Speaker 3: wa for sell module and backsheet. So this is the
Speaker 3: type of long term incentive that we need to confidently
Speaker 3: be able to say, yes, we can operate in the US,
Speaker 3: and we can do so efficiently in cost effectly.
Speaker 1: And what does it mean in dollar and how many years?
Speaker 3: So if you do so vertically integrated, this tax credit
Speaker 3: will be about seventeen or eighteen cents in dollars per
Speaker 3: walk and that's against you know, a forty cent panel.
Speaker 4: So it's a very lucrative tax credit. We are very excited.
Speaker 1: Yeah, almost fifty percent of the price of the panel.
Speaker 3: And you know, when we're trying to compete and stand
Speaker 3: up an industry, every little bit of policy support helps,
Speaker 3: and so we think this is the right policy solution
Speaker 3: to really provide that long term certainty for manufacturers such
Speaker 3: as Q sells to invest.
Speaker 1: It's not just about how you make it, but also
Speaker 1: what happens after panels are useless, which you know, for
Speaker 1: what they are, they last twenty five years, which is fantastic,
Speaker 1: But what are you doing to deal with the end
Speaker 1: of life?
Speaker 3: This is a really important topic that I think the
Speaker 3: industry is kind of starting to wake up on. Panels
Speaker 3: have a life span of about twenty five to years,
Speaker 3: so solar really started to pick up in the mid offs.
Speaker 3: So hypothetically we have another like ten to fifteen years
Speaker 3: before we start seeing solar farms reach the end of
Speaker 3: their useful life, So we need to start kind of
Speaker 3: figuring recycling out sooner rather than later. So the main
Speaker 3: issue that we currently see right now is that panels
Speaker 3: are really expensive to recycle. There isn't federal legislation that
Speaker 3: mandates solar panel recycling, and because of this, there isn't
Speaker 3: a lot of existing infrastructure, which means.
Speaker 4: It's very expensive.
Speaker 3: In the US, we see panel recycling cost about eighteen
Speaker 3: to forty five dollars per panel, compared to land filling
Speaker 3: a panel, which is about one dollar per panel, which
Speaker 3: is really expensive. So if it's eighteen dollars, I think
Speaker 3: I think that would probably be about like twenty percent
Speaker 3: of the price of the panel. You know, I don't
Speaker 3: want to create like a doomsday scenario where we're going
Speaker 3: to just be like drowning in solar waste.
Speaker 4: That is not going to be the case.
Speaker 3: So the e you has mandated panel recycling for the
Speaker 3: last ten plus years. As a result, panel recycling in
Speaker 3: the U is as low as seventy cents per panel,
Speaker 3: so that I think is an optimistic outlook for us.
Speaker 1: Thank you for coming on the show.
Speaker 4: Thank you so much.
Speaker 1: Action after the break, we hear more from Jenny Cheese
Speaker 1: about why solar is a horrible business. So you're famous
Speaker 1: for many things, including a book which is Solar power
Speaker 1: Finance without the jargon. And I understand a second edition is.
Speaker 2: Second edition coming out this autumn, so don't buy the
Speaker 2: old one.
Speaker 1: And while Twitter was a thing, is a thing, depends
Speaker 1: where we stand on it. You also dated the annual
Speaker 1: thread of all the opinions you had about the solar industry.
Speaker 1: When's the next one coming?
Speaker 2: Probably when my book comes out, so probably October. I
Speaker 2: try and do it about October.
Speaker 1: Now, one opinion that's stuck with me, which you make
Speaker 1: every year, is that solar manufacturing is bad business. Can
Speaker 1: you see why.
Speaker 2: Solar manufacturing is a horrible business. I don't know why
Speaker 2: governments want to have it in their countries when they
Speaker 2: could just buy really cheap modules on the global markets.
Speaker 2: So the reason is that although the basic module technology
Speaker 2: has not changed since nineteen fifty four, there's this continual
Speaker 2: grind to make it better and cheaper, and that requires
Speaker 2: investment in new factories that can do it slightly better.
Speaker 2: It involves changes of technology generations. So we briefly discussed
Speaker 2: the change from multi crystalline to monocrystalline. What that meant
Speaker 2: was that a lot of the multi crystalline silicon factories
Speaker 2: were basically obsolete, and some of those were only a
Speaker 2: few years old. The company is still owned debt on those.
Speaker 2: This constant grind of getting better at making a commodity
Speaker 2: product means that it's very, very hard to make money.
Speaker 2: You have a factory that hasn't paid off its debt
Speaker 2: and already the products from it are slete and its
Speaker 2: operating costs above prices, and that's why the solar manufacturers
Speaker 2: keep going bust.
Speaker 1: But if you want to scale solar and re expect
Speaker 1: solar to grow, right, one terraw whatt in three years.
Speaker 1: It has to be a sustainable business. The manufacturing also
Speaker 1: has to be profitable. If that's not the case, why
Speaker 1: do we think solar will continue to scale beyond the
Speaker 1: one terror what?
Speaker 2: Well, it's a bit of a self fulfilling prophecy. If
Speaker 2: companies stopped investing in new solar factories, the ones that
Speaker 2: exist would probably make money more reliably. But I've been
Speaker 2: doing this seventeen years now, and there's always investors who
Speaker 2: want to get into this new great thing. Have you
Speaker 2: tried making solar panels? They mostly lose their money. But
Speaker 2: if they did stop, then we would probably have a
Speaker 2: period of relatively stable module prices and the market would
Speaker 2: just continue to grow because solar is so cheap. Now
Speaker 2: you can buy a Chinese solar model for seventeen point
Speaker 2: a US sense per what And when I started it
Speaker 2: was over four dollars a what.
Speaker 1: And in a capitalistic system, that shouldn't exist. If you
Speaker 1: know year after year that something is bad business, eventually
Speaker 1: people will stop investing in it. But that's not happening
Speaker 1: with sort of just because there's so much demand for it.
Speaker 2: I think you think capitalism is smarter than I do.
Speaker 2: The thing about capitalists is you only need a small
Speaker 2: number of them to get really excited about what they
Speaker 2: think is the next big thing. And this is actually,
Speaker 2: in this case a positive thing, since investors losing their
Speaker 2: shirts is one of the things that powers the drive
Speaker 2: towards better and cheaper solar modules. And now solar models
Speaker 2: are actually really great, but there is still competition between companies,
Speaker 2: between investors to have better ones, a sustainable business, a
Speaker 2: more efficient, cheaper module to make.
Speaker 1: And increasingly a nationalistic tone to it to have it
Speaker 1: in your country, making.
Speaker 2: It personally, I think that's just ridiculous. I think if
Speaker 2: our goal is to decarbonize human civilization, which that is
Speaker 2: actually my goal, it's not a race, it's a fitness program.
Speaker 2: We all want to get a fit. There's no advantage
Speaker 2: to being the first to decarbonized, but there is a
Speaker 2: huge advantage if we all managed to decarbonize. But hey,
Speaker 2: people like being nationalistic and if that makes them go
Speaker 2: and investing clean energy, I don't have a problem with that.
Speaker 1: And so, just going back to the start of your career,
Speaker 1: you'd sort of predicted that if solar contributed one percent
Speaker 1: of global electricity, that would be a huge achievement. And
Speaker 1: now you think we may not even stop at fifty percent.
Speaker 1: So what is it between now where solar is about
Speaker 1: four percent of global electricity supply to fifty percent that
Speaker 1: needs to happen for us to reach that kind of level.
Speaker 2: So, first of all, what's holding back solar at the moment.
Speaker 2: It's clearly not supply. The module prices are crashing, There
Speaker 2: is loads of supply on the market, it's cheap, It's
Speaker 2: probably the cheapest source of bulk electricity in so many places.
Speaker 2: What's holding it back from just building a terror What
Speaker 2: are here today is grid connections. Historically, solar has kind
Speaker 2: of been free riding on the existing grid, putting plants
Speaker 2: in where there is a grid connection already, and we're
Speaker 2: starting to run out of those easy sites. And also
Speaker 2: we need some really good grid planning in a lot
Speaker 2: of country to determine where we could still put solar
Speaker 2: farms and feed power into the grid. There's also site permitting.
Speaker 2: There is not an infinite number of very suitable sites,
Speaker 2: and European countries generally have the reasonable feeling that we
Speaker 2: probably shouldn't be putting solar on prime agricultural land, so
Speaker 2: put it on roofs is the obvious answer, but it
Speaker 2: does cost more to put it on roofs. You have
Speaker 2: to arrange different smaller plants. If you put it on
Speaker 2: car parks, you've got to put them on great, big
Speaker 2: poles to hold them off the ground. It's generally slower
Speaker 2: and more complicated to put solar on roofs, and there
Speaker 2: is a shortage of installation labor. So the bottlenecks to
Speaker 2: solar growth at the moment are grid, land and labor
Speaker 2: and organization. I'm hoping that some of those can be
Speaker 2: solved in the next ten years with organization, with competition,
Speaker 2: with government action. After that, the problem is going to
Speaker 2: be that solar eats itself.
Speaker 1: What do you mean by that?
Speaker 2: The thing about solar panels is they all generate at
Speaker 2: much the same time, are you when it's sunny, and
Speaker 2: then they don't generate at night or even when the
Speaker 2: sun starts to get lower, they generate less.
Speaker 1: Right, So you need a solution to store that electricity
Speaker 1: energy storage.
Speaker 2: But that costs money and you need to be cycling
Speaker 2: that energy storage very frequently to make that make any
Speaker 2: kind of economic sense. So we are going to have
Speaker 2: the problem that solar is going to crash the power
Speaker 2: price in the middle of the day every day, every
Speaker 2: sunny day, solar is going to be free between the
Speaker 2: hours of ten and three.
Speaker 1: And it's happened already in California, Germany, Spain, where there
Speaker 1: are what we call negative prices, essentially the grid paying
Speaker 1: you to use electricity because there is so much of it.
Speaker 2: Absolutely invested a toaster, But that I mean in ten
Speaker 2: is we will probably be looking at our app and going, ah,
Speaker 2: power is free right now. I think I should do
Speaker 2: some washing. I think I should charge my battery. I
Speaker 2: should The battery is probably automatic because electricity is going
Speaker 2: to be worth almost nothing when the sun's out. But
Speaker 2: then later in the day, hopefully we'll have decommissioned some
Speaker 2: of the gas capacity and all the cold capacity, and
Speaker 2: later in the day, when the sun's gone down, that
Speaker 2: power will be expensive and that's going to fundamentally change
Speaker 2: the way we operate things.
Speaker 1: So three years for the next tier award, what happens afterwards?
Speaker 2: And that's a very big question. And I get asked
Speaker 2: a lot why my team doesn't produce more optimistic forecasts
Speaker 2: for solar. You know, we basically get asked, why don't
Speaker 2: we just put a formula and to exceled to have
Speaker 2: it grow the new bill grow at forty percent forever.
Speaker 2: And the reason is, first of all, that you cover
Speaker 2: the entire world with solar panels pretty quickly at that rate. Secondly,
Speaker 2: that you do start to run into issues with a
Speaker 2: solar mostly generating when it's completely valueless because it's the
Speaker 2: middle of the day. And also because what my team
Speaker 2: is doing is putting forecast in four hundred and forty
Speaker 2: six different countries and I need to get the analysts
Speaker 2: who cover those countries to sign off on forecasts. And
Speaker 2: people are very, very bad at forecasting revolution. I'm sorry
Speaker 2: we call it transition now because revolution is too scary.
Speaker 2: But the energy transition is genuinely a completely new way
Speaker 2: of doing things, and it's very hard to model things
Speaker 2: that have never happened before. So analysts are cowards. They
Speaker 2: do not want to forecast that their country will get
Speaker 2: to fifty percent in the atity mixture.
Speaker 1: So when your boss comes to you, that's the answer
Speaker 1: you give.
Speaker 2: Yeah, they're cowards. My analyst are cowards, and I think
Speaker 2: all analysts are cowards because envisioning a totally different way
Speaker 2: of doing things is not so much an analytical process.
Speaker 2: It's something where you have to have a vague idea
Speaker 2: where you're going, and you had a set off, and
Speaker 2: keep looking at the sat NAV which is modeling, and
Speaker 2: current situation and what the bottom necks are and hope
Speaker 2: to keep steering in the right direction.
Speaker 1: But I'm still going to ask you, So one Terror
Speaker 1: award built, two terror ort by twenty twenty five, when
Speaker 1: will three Terror award happen?
Speaker 2: I think our technical forecast is twenty twenty six or
Speaker 2: twenty twenty seven.
Speaker 1: Wow, so fifteen months eighteen months period after that another shrinking.
Speaker 2: But again we are going to come up to limits
Speaker 2: in terms of when of high priced cannibalization, in terms
Speaker 2: of not covering the entire world with solar panels, and
Speaker 2: it's difficult to forecast that.
Speaker 1: Now, as a solar analyst, you'll probably hate this question,
Speaker 1: but it would be useful for listeners. What would be
Speaker 1: your advice to people who want to put solar on
Speaker 1: their rooftop?
Speaker 2: So I love this question. People ask it to me
Speaker 2: at parties all the time. I'm a lot of finite parties.
Speaker 2: A big part of the cost of putting solar on
Speaker 2: the roof is scaffolding. So if you've got a reason
Speaker 2: to put scaffolding on your roof, look into getting solar
Speaker 2: panels put up while they're up there. And secondly, a
Speaker 2: lot of solar installers are a cowboys, so don't believe
Speaker 2: everything they tell you, and don't necessarily rush to build
Speaker 2: solar from somebody you're getting bad vibes from.
Speaker 1: That was a lot of fun. Thank you, Jenny, Thank
Speaker 1: you Acshat. The growth story of solar is well known,
Speaker 1: but what's underappreciated is what Jenny calls solar eating itself. Basically,
Speaker 1: there being too much electricity when the sun shines, making
Speaker 1: solar unprofitable to build. That's a problem worth fixing if
Speaker 1: the growth story of solar is to continue. Thanks for
Speaker 1: listening to Zero. If you like the show, please rate
Speaker 1: and review, share it with a friend or someone who
Speaker 1: is a lot of fun at parties. Zero's producer is
Speaker 1: Oscar Boyd and senior producer is Christine Driskell. Our themes
Speaker 1: is composed by wonderly Special Thanks this week to Curbin
Speaker 1: rim Brian Echous, Nili Harameo Plata and a prayer Ruffin
Speaker 1: i'm Akshatrati back next week.