Elon Musk's Solar City Is Ramping Up Solar Panel Production

MarkWhittington writes: Elon Musk is well known as a private space flight entrepreneur, thanks to his space launch company SpaceX. He is also a purveyor of high end electric cars manufactured by his other company, Tesla Motors. But many people do not know that Musk has a third business, Solar City, which is a manufacturer of solar panels. On Tuesday that company announced a major play to increase the output of solar panels suitable for home solar units. Solar City has acquired a company called Silevo, which is said to have a line of solar panels that have demonstrated high electricity output and low cost. Silevo claims that its panels have achieved a 22 percent efficiency and are well on their way to achieving 24 percent efficiency. It suggests that 10 cents per watt is saved for every point of efficiency gained. Solar City, using the technology it has acquired from Silevo, intends to build a manufacturing plant in upstate New York with a one gigawatt per year capacity. This will only be the beginning as it intends to build future manufacturing plants with orders of magnitude capacity. The goal appears to be for the company to become the biggest manufacturer of solar panels in the world.

Comments

Why Silevo didn't aim to be biggest?

[paziek]

Why Silevo didn't aim to be biggest? If their panels are so good and cheap, then why not just keep selling them? Why sell company that is making profit and will most likely grow? Fast cash grab, or those panels aren't so special after all? And why not just use some cheap 16% China panels in higher volume? Sure there is limited real estate on house for panels, so you might not get all your need covered by solar, but with unstable weather you wouldn't anyway.

Re:Why Silevo didn't aim to be biggest?

[Jaime2]

They didn't have enough cash. The reason they are building the plant in Buffalo is because New York State as paying for most of the up front capital. Before Musk, they had to find creative ways to grow the company and were likely to get trampled in the market by a competitor with the money to make market moves that Silevo couldn't afford to do. With Musk behind them, they can grow at whatever pace they can convince Musk they can be profitable at.

Re:Why Silevo didn't aim to be biggest?

[sribe]

Why Silevo didn't aim to be biggest?

Legitimate question, to which the summary provides no clue as to the likely answer.

Solar City is not just a manufacturer, they are also, in a sense, a distributed alternative utility. They do not sell panels to homeowners. Instead, they install solar systems on homes and sell the electricity produced to the homeowner. The advantage is that the homeowner has $0 upfront costs, and is guaranteed a specified level of savings over their current utility prices. So it's a much easier sell, since homeowners don't have to apply for a loan, cough up a down payment, make monthly payments and so on.

This model has been very successful at brining in sales, and Musk has been pretty successful at raising the enormous amounts of capital required to scale this model. (Solar City fronts the whole cost of installation, then earns that + profit back over a pretty long period of time.) It would be a heck of a challenge for a manufacturer of panels to go out and build the kind of business that Solar City has built.

Sustainability

[Anonymous Coward]

http://en.wikipedia.org/wiki/Silicon

"Over 90% of the Earth's crust is composed of silicate minerals..."

I don't think Silicon is the problem here. Most (if not all) solar panels depend on other rare earth materials that may be in short supply tho.

The man has vision

[Jheralack]

Musk really has the vision and guts to push us in these areas that have languished for years (private space travel, electric cars, and now domestic electric power generation), and seems to be making them working concerns. If he gets even one past the tipping point, it's a lifelong career's worth of accomplishment. He may get the hat trick! Maybe we should pay attention to his alternative to the California high speed rail project...

Re:The man has vision

[amiga3D]

Nice to see a billionaire that actually has interests in using his money to build things instead of just buy things.

Re:The man has vision

[NatasRevol]

He's like an actual, decent version of an Ayn Rand book.

Re:The man has vision

[tbannist]

It's pretty simple, Bill Gates built two things: Microsoft and the Gate Foundation. Most of the innovative things that Microsoft has done have come from company's that Microsoft bought. Furthermore, Microsoft's (and Gate's) money comes mostly comes from anti-competitive and illegal agreements that shut competitors out of the PC marketplace and the monopoly rents those agreements enabled. The money came from overchanging PC manufacturers for an operating system, and those manufacturers, in turn, passed that cost onto computer purchasers. Microsoft skimmed money from the entire computer industry for over a decade by hiding the cost in the price of a new computer. They required every computer to have Windows on it. If a distributor didn't put Windows on every computer or at least charge for it on every computer, then Microsoft would prevent them from putting Windows on any computer. Ditto if they promoted any computer that didn't have Windows on it.

So because Gate's wealth was won mostly through deception and illegal practices, and Microsoft has a habit of buying new and interesting things and then letting them die, Bill Gates simple does not seem praiseworthy as a visionary. Jobs, on the other hand, was an asshole but it's reasonable to credit to his obsession and micromanagement as being integral to the success of the iPod and iPhone, which earns him the visionary credit (even if we ignore his role in the original idea that personal computers could actually be a thing).

So Bill Gates can be legitimately viewed as a con man because most of his wealth was earned through anti-competitive practices and extortion. Furthermore, as Bill Gates has been moving into charitable work, there have been disturbing indications that he's been repeating the boot stomping that Microsoft did while it was trying to be "the only company in computers". The rumours of NDAs or other agreements requiring research exclusivity with the Gates Foundation, for example, seem to indicate a greater concern for control and credit than results.

I suppose it comes down to the simple question: Can you actually name anything revolutionary that Gates has done? If you can't (and I can't), it's very difficult to justify calling him a visionary.

Personally, I tend to view Bill Gates as a very successful parasite, more than a con man.

Re:OMG with orders of magnitude capacity?

[queazocotal]

Well - one - sure.
The largest players in the market are at the moment shipping a gigawatt a quarter or so.
Ten gigawatts a year would make them the largest in the world by a comfortable margin.
And likely depress the price to well below $.50/W.
If they can get the price well under this - say $.25/W - then solar becomes economic in a lot
more places.
At that price, I'm buying 6kW or so.
At $.25/W, that is a price of $50/m^2.
This is in the range where it's sort-of-comparable with other roof claddings.

Re:Not more solar energy!!

[OneSmartFellow]

The sun is the BEST source of power there is. It powers all life on this planet.

The problem is not the power source, it's how to store it. Plants do that pretty well, our problem is we're inneficient at extracting that power to produce electricty.

Luckily we're highly efficient at extracting it to produce body heat.

Re:I'm confused

[jonnythan]

They're talking about purchase and installation:

"Because less modules are needed for the same power output, less land, labor, mounting structures, wiring and support racks are also required, saving an estimate of 10 cents a watt for every point of efficiency gained."

So if you're installing 4000 watts worth of panel, using 23% efficiency panels costs $400 less to purchase and install than 22% efficiency panels.

Higher capacity for smaller roofs

[crow]

For many people, the limit on the size of their solar array is the size of their roof. If you want to offset your full usage, you may need higher-capacity panels than the standard 250W base panels. There are a number of higher-efficiency panels available, but the cost per Watt is higher. They probably don't cost much more to manufacture, so the more efficient panels have a higher profit margin.

Also, you have to keep improving your technology or you're out of the business when the cheap panels get to be as efficient than what you're producing.

Re:Higher capacity for smaller roofs

[ShanghaiBill]

For many people, the limit on the size of their solar array is the size of their roof.

If you have an unobstructed, south sloping roof, it is likely you can offset all of your electricity needs with standard panels. I looked into this last year, and we needed panels on less than half of our roof. However, we decided against it because it was far more cost effective to invest in cheap LED light bulbs ($2 each on eBay) and attic insulation. That pushed all of our electricity consumption into the lowest billing tier, and the solar panels no longer made financial sense.

Re:Higher capacity for smaller roofs

[bobbied]

"the lay of the land today, where there are indeed too many suppliers, most of whom are producing relatively low photonic efficiency solar cells at uncompelling costs" (Quote from http://blog.solarcity.com/sile...)

You have indeed discovered the unvarnished truth, solar is not viable in terms of cost and this is unlikely to change anytime soon. Conservation is usually the best bang for the buck, but even that has it's limits.

Re:Higher capacity for smaller roofs

[pla]

And they would generate twice as much energy in the same land area with lower cost of manufacture if they had used parabolic reflector dishes and sterling engines attached to dynamo.

Quite a bit of difference between having a dedicated solar furnace in your back yard, vs covering already-wasted space on your roof with more-or-less passive 2x4ft "tiles" that just happen to produce a significant portion of your home's electricity.

That said, I think the big manufacturers have really missed an opportunity in exactly the opposite direction of that you suggest - I don't give a damn about efficiency or how much space it takes up, I care about price per watt. Sell me 10-20KW of 5% efficient panels for 25 cents per watt, and you'd have a very happy customer. Hell, I might even go out and rearrange them weekly to decorate the "back 40" with messages for passing airplanes.

Yes, we need more efficient solar cells to make up for the fact that people have a psychotic preference for living under stressful ultra-high density conditions (aka "cities"). We still have the other half of the human population living in places that don't stack housing like Tyson stacks chicken cages, however.

Not more solar energy!!

[Anonymous Coward]

" It's the worst source of power there is"

Funny, virtually all energy sources are based on it. Wind energy is simply temperature differentials in the atmosphere created by the sun, hydroelectric is only possible because the sun heated oceans evaporate and the resulting rainfall can be harnessed, even fossil fuels are the remnants of ancient plants (which use sunlight) compressed into a energy source over millions of years by heat & pressure. The only thing we need to make it a viable energy sources is come up with a cheap, high density storage medium and refine our ways of capturing it (solar panels of course have issues). At a minimum solar thermal use should be expanded (hot water preheating, supplemental furnace, industrial, etc)

um

[Charliemopps]

Haven't we all watched enough James Bond and Super Man films to know that Elon Musks true goal is to build a Giant Robot and/or Start WW3?

It's not the materials, per se

[Overzeetop]

The sustainability of solar panels is tied to the end-user cost per kWh. Here's how I see it: every dollar spent at the consumer end is a dollar in non-renewable energy cost. Why? Every material in this world is free. What is not free is the energy it takes to extract, refine, and manufacture. And no matter how you slice it, that dollar is going to end up in energy - as fuel for an agricultural tractor, or as fuel to smelt ore, or as fuel to drive a boring machine to extract materials, or as fuel to power a ship, a plane, or a truck to deliver your raw and processed goods. Even the money you pay to Musk will get burned in jet fuel for his plane or yacht, or in his employees cars to get to work - even the ones who drive Teslas who recharge using oil, gas, or coal fired plants (which is the majority).

So look at your MSRP, and divide it through by the life of the panel and the average output. Until we break about 12c/watt we're just "storing" fossil fuel energy in batteries which only work when the sun is shining. It is getting closer. Right now a typical installation (complete, by a contractor, not DIY) is $7/watt for residential, and sunny places like LA get 5-5.5 hours/day, or 1800-1900h/year, with most panels warrantied for 20 years. That's 37000Wh life per panel watt, or 37kWh. At 8c/kWh, that $7 panel is worth $4.50 in energy. (note that the panel costs are down to the $2-3/W range, so they're positive on the panels, but negative on the system). That's not break even on small installed systems, but large systems are getting efficiencies greater than their cost to built. Hopefully it will trickle down, and more solar power will be used to assist manufacturing, which will tilt the balance in favor of solar even more.

Re:It's not the materials, per se

[drinkypoo]

The sustainability of solar panels is tied to the end-user cost per kWh.

Unfortunately, it has to compete with forms of power for which sustainability is not even being considered, obviously namely coal and oil. As long as the cost of cleaning up the pollution of using "traditional" energy-generating sources is handwaved away, solar's gonna have a bad time.

Re:It's not the materials, per se

[necro81]

Right now a typical installation (complete, by a contractor, not DIY) is $7/watt for residential, and sunny places like LA get 5-5.5 hours/day, or 1800-1900h/year, with most panels warrantied for 20 years. That's 37000Wh life per panel watt, or 37kWh

you need to refresh your dimensional analysis, because you are missing a term or two. 1800-1900h/year * 20 years = 37000 hours of productive life per panel, not 37000 watt-hours of total output. If the total lifetime output of a solar panel over 20 years was a measly 37 kWh (roughly the daily energy consumption of a home in the United States) no one would buy them.

What's missing in your analysis is the power output of the panel during those daylit hours. For the 5 hours of peak generation during the day, you could expect about 200 W for a "standard" panel. (You'll get not-insignificant power generation during all daylight hours, but we'll focus on peak generation for now.) That brings the lifetime output to something like 7.4 MWh, which at wholesale (not residential customer) electrical rates of $50/MWh equates to $370 worth of electricity. Even taking net present value into consideration, the energy cost breakeven for manufacturing solar cells is measured in years, if not months.

Solar panels are not merely an energy storage device that captures conventional energy sources during their manufacture, only to trickle that energy out with sunshine. They are a net energy producer many times over. With (currently impractical, not-at-scale) methods for storing and buffering the power, it is feasible to power the entire PV manufacturing and installation pipeline entirely with solar power.

Re:It's not the materials, per se

[K. S. Kyosuke]

The sustainability of solar panels is tied to the end-user cost per kWh. Here's how I see it: every dollar spent at the consumer end is a dollar in non-renewable energy cost. Why? Every material in this world is free. What is not free is the energy it takes to extract, refine, and manufacture.

You're completely omitting labor costs. Your calculation would make somewhat more sense in a fully robotic economy, which we don't have. Not to mention that given how a solar panel generates much more energy in its lifetime than what is necessary to produce it, by your logic, the problem really is that we don't have nearly enough solar panels manufacturing themselves (or, generating energy to power the manufacturing process for their own replacements, and then some). So you're arguing in favor of more solar panels, not against it.

Re:It's not the materials, per se

[Jeremi]

They'd be stupid not to consider, "how much will it cost to clean up the mess?" in today's day and age where the EPA can come in and pretty much regulate you out of business for messing things up.

That's true, which is one reason why not many coal plants are being built in the USA today.

However, solar panels aren't competing against new coal plants -- they are competing against the many existing coal plants which have been running for years, and whose construction has already been paid for. Those plants' only ongoing costs are maintenance and fuel, which makes them relatively inexpensive to operate.

The cost of repairing the damage to the climate that those plants cause, OTOH, may be quite large, but the owners of the plants will not be responsible for paying that cost, so they don't care.

Re:It's not the materials, per se

[Immerman]

Down-and-dirty logic for doubters:
Solar panels are cost effective to install in most locales, even without subsidies
Manufacturers are making a profit selling them
Manufacturers have to pay for the energy to make them, plus materials, labor, rent, etc.

Therefore the cost of producing the panels MUST be substantially lower than the cost of buying grid energy. Given that basis, the only way to call energy effectiveness into question is to assume that manufacturers are paying so much less for energy that even the added costs of materials and labor are insignificant in comparison.

Re:It's not the materials, per se

[Immerman]

Actually no - the original numbers didn't factor in panel size, dealing instead in watt-normalized panel sizes: the 20-year output of one watt worth of solar panels is indeed ~37kWh. I wonder at their costs though - $7/watt would imply your average 200W panel costs $1400 installed. Considering that the panel itself costs in the neighborhood of $200 that's an awful lot of installation costs for one little panel...

Re:Engineering win

[GameboyRMH]

Once I heard that solar panels output more energy in their service lifespan than it takes to manufacture them. Is that true?

For all solar panels except those used on satellites, yes.

Then there is no reason to not make as many as possible. It's an epic win on the engineering/physical science level.

It would not be an epic win for our monied overlords so it's not so straightforward.

Re:Tie this in with the battery tech from Tesla...

[Jeremiah Cornelius]

They SAY they are a solar panel company.

Really? They are a finance company - selling debt. The sales come-on is laid on pretty thick, by cold calling with a claim to having you pay negative energy bills.

If the actual numbers work out when their quota sales guy arrives? Then you buy their SolarCity system, which you cannot modify or upgrade. Do you want emergency off-grid capability? Sorry, no can do. Thiel has arrangements with the big, incumbent local monopolies. When they are down? You are down.

There are better options, and cells with better efficiency. Shop around if you want solar, and don't get stuck with a 15 year finance deal on panels that become obsolete several years before they add equity.

Re:Sustainability

[iggymanz]

none of the doping materials in common use for these high efficiency cells are really "rare" either. Indium is probably the "rarest", and there is three times as much ore of that as silver on this planet. You'll see some sensationalist investor "doomsday" reports of exhausting Indium by 2017 or so, which are just rubbish disconnected from reality.

Re:Gigawatt Per Year??

[Anonymous Coward]

He wants to produce 1GW of solar panels. If one solar panel is rated at 250W he wants to produce 4 million panels in a year.

How much energy each panel actually produces over a year depends on where and how they are installed. If you are in a very sunny climate like Phoenix you might get 375kWh out of each south facing installed 250W panel. If all 4 million panels were installed in a similar location they could generate 1500 GWh of power per year.

Re:Tie this in with the battery tech from Tesla...

[Jeremi]

There are better options, and cells with better efficiency. Shop around if you want solar

Sure, there are better systems to be had, if you are willing to shell out cash up front. If that's something that you're unwilling or unable to do, however, it's hard to beat cutting your electric bill in half for free.

There's also something to be said for not having to maintain and support the system yourself. Non-technical people feel better knowing that if the system fails or performs poorly, it's SolarCity's problem, not theirs.

Retiring to Mars....

[stiggle]

SpaceX to get Musk to Mars.
Tesla to move him around on Mars.
Solar City to power everything on Mars.

Musk is sticking with his plans to retire on Mars and all his companies are helping him get there.

Re:Tie this in with the battery tech from Tesla...

[Burz]

Lithium won't be a prime target for grid storage for quite some time (if ever). There are dozens of interesting energy storage techs actually coming to market that have much lower cost/KWh and longer lifetimes. Some are batteries like this or flow batteries and some are not, like the 'icebear'. Even used lithium batteries taken from cars will probably get more of the storage business than new lithium batteries; for now, its just more cost effective and efficient.

The idea of using electric cars themselves as grid storage is an elegant one, but don't hold your breath waiting for it to become a big thing.

Re:Engineering win

[GameboyRMH]

And how many above and below him on that list are in the business of extracting fossil fuels from the ground and burning them, or building the machines that do the burning, or the machines that do the killing to keep the extraction and burning going?

Re: Sustainability

[TheRaven64]

The only reason China 'controls' rare earth production is that they spent a few years dumping them on the market at less than the cost of extraction, pushing the other mines out of business (or, at least, into mothballing). Now that the prices are sane again, other countries are bringing their mines back online.

Re:Tie this in with the battery tech from Tesla...

[Jeremi]

It is not cut in half.

Well, our electricity expenses (i.e. the sum of the money we send to the power company, plus the money we send to SolarCity) went from $1000/month to $650/month.

You're right, that's not quite "cut in half", but $350/month in savings is nothing to sneeze at either, especially since achieving it cost us nothing but some roof space we weren't using anyway.

Externalities

[sjbe]

Handwaved away? On that issue I disagree with you. Such costs are routinely considered when a company goes though the decision cycle of "should we build a new plant?

Fossil fuel plants are not required to pay for or clean up substantial amounts of pollution they generate. They dump vast quantities of CO2 and other pollutants, both gaseous and particulate, and never are required to pay for the full impact they have. Sure, there are some emissions controls and cleanup they are required to consider but they do not and never have been required to pay for the full cost of their pollution. Good luck getting them to pay to "clean up" their toxic byproducts too. This is called an externality.

Right now, if one considers the TCO of solar, they come up way short of other options.

Hard to compete with a competitor that not only doesn't have to pay the full cost of their pollution but gets (unnecessary) subsidies to generate said pollution.

Environmentally they fail too, but you have to open up your aperture to the total life cycle of the system to be totally fair.

I'll discuss the total life cycle of solar if you account for all the externalities of coal and natural gas and oil. I think if you do that you'll find that the cost of solar isn't nearly as different as you think it is.

Musk, please takes steps and be careful.

[140Mandak262Jamuna]

Musk is treading on some big toes. When he went into electric cars, no one took him seriously. But he proved them wrong, smeared eggs on the faces of performance/luxury car makers, earned the enmity of car dealers across the nation. That has earned him a reputation and now he is being taken quite seriously.

Now he is upsetting another huge industry with trillion dollars in assets, the electric utility companies. And the technique he is using requires someone with great credibility to raise incredible sums of money. Solar never threatened utilities before because, the system cost was high, and individual home owners had to do some complex breakeven analysis, raise funds and take some risk. But Solar City is zero risk to the home owners, perfect distributed competitor to the utilities, plans to make electricity using zero cost fuel (sunlight). The entire cost is cost of servicing debt. Interest rates are lowest in known memory.

The technology and the business model will make it immaterial who the prime-movers are backing it. But the speed at which change happens depends on a charisma and credibility of players like Musk. The utility companies would not hesitate to find scandals, astro turf to create fake scandals, engage in character assassination etc to bring him down personally. So he should be careful with his dealings.

Re:Where's the new ROI calculator?

[djrobxx]

Solar panels typically have a 20 year warranty, and are guaranteed to output 80% of their power at year 20 (these figures are required to be met in order for the systems to qualify for tax incentives, so they're pretty common amongst manufacturers). They'll most likely continue working after the warranty. I will, however, probably have to replace my inverter every 10 years or so. It looks like I can pick up a new one on ebay for around $2000 right now. I'm hoping the cost of these drops over time or the technology improves such that my next one is more reliable.

As for ROI, my break even was only 5-6 years. In Southern California we pay dearly for electricity (over 30 cents per kWh once you get past some scant "baseline"), but we have plenty of sunshine. It's been almost 3 years now. The estimated savings for my $15k investment was projected at $100k or so over 20 years. I feel they're using too high of a percentage year-over-year increase of utility power, but even if I only make half that, it's still a good investment.

I did opt to buy instead of a pre-paid lease. The salescritters promised that the leasing companies would effectively gift me the system for $0 at year 20 because it would be too costly to remove, and that the real money was in the accelerated depreciation in years 0-5. However, if I think of the solar panels as a money printing machine, it seems unlikely that the panels, even if they're 20 years old, would have a fair market value of $0. No business would give away something that they can get money for, so I have to assume that at year 20 they will do something to ensure they continue to get a profit from the system that they legally own on my roof. Forget that uncertainty, I decided to just buy it so there are no unknowns. I think it will be really fascinating to see what happens to all of these ultra-long leases in the 2032 time frame.