Grantham Institute for Climate Change

Briefing paper No 1
June 2009

Solar energy for heat and electricity:

the potential for mitigating climate change
Dr N.J. Ekins-Daukes
Executive summary
Why are we interested in using solar energy?
Sunlight provides the energy source that powers the Earths climate and
ecosystem. Harnessing this energy for hot water and electrical power
could provide a renewable, low carbon energy source, and presents an
attractive way of mitigating climate change. In developing countries, solar
technologies are already in use to enhance the standard of living. They are
a natural choice where solar influx is high and grid services are unavailable
or limited. In developed countries, solar energy can seem less attractive
than conventional sources due to its intermittent nature, but with the
right technology it can have considerable benefits in terms of reduced
carbon emissions and improved energy security. In developed countries,
most forms of solar energy are currently more expensive than conventional alternatives. At this pre-competitive stage, incentives are needed to
encourage their uptake.

How can we use solar energy?

We can use solar energy either to provide heat or to generate electricity.
Solar hot water systems could be used to supply up to 70% of household
hot water in the UK; in sunnier climates, virtually all domestic hot water
could be provided for. The main cost for solar hot water systems is the
installation itself, although they can be incorporated into new buildings
with minimal overhead cost. The largest installed capacity is found in China,
where solar hot water collectors are a cost-effective means for easing the
rising demand placed upon conventional energy generation. The use of
solar heat in commercial and industrial environments is also feasible but
much less widespread.
Solar electricity can be generated directly using photovoltaic (PV) panels.
These panels are suitable for use on roofs and are now manufactured in
sufficient quantity that the electricity generated in some favourable locations has almost reached grid parity (the point where the cost of photovol-

Contents
Executive summary ...... . 1
Introduction ...............3
Technical review .......... 4
Policy and
international context ..... 9
Research agenda ........10
Conclusion . . . . . . . . . . . . . . . 11
References ...............12

The views expressed in this paper are those of

the author and do not necessarily reflect the
views of the Grantham Institute for Climate
Change or Imperial College London.

Imperial College London

Grantham Institute for Climate Change

taic electricity matches the residential grid price). The growth in photovoltaic manufacturing has been driven by government incentives that subsidise the cost of electricity
and drive technological innovation.
First generation PV panels are made from silicon wafers at relatively high cost. They
represent the industry standard, delivering efficiencies between 12-20% and are particularly durable.

With almost one

third of the worlds
population living
without electricity,
solar energy offers
great promise to
improve living
standards and
reduce greenhouse
gas emissions.

Second generation PV devices are made by depositing a thin film of semiconductor

directly onto glass, metal foil or plastic, reducing the cost of materials but resulting
in a loss in efficiency (usually to 10% or less) when manufactured over large areas. All
plastic, flexible solar cells have the possibility of very low manufacturing cost, but the
efficiency (4%) and lifetime (typically one year of operation) need to be improved.
Third generation PV devices, currently under development, aim to improve the efficiency of solar conversion towards the thermodynamic efficiency limit of 86.8%. Currently,
the highest efficiencies achieved are around 40%, with very high costs. Nevertheless,
these technologies are used in terrestrial concentrator solar power plants and used to
power modern communication satellites.
On the domestic scale, the quantity of electricity that PV panels can provide depends
upon their efficiency, size and local level of solar illumination. PV panels suitable for
use on roofs are now manufactured in sufficient quantity that the electricity generated in favourable locations has almost reached grid parity. Where a grid connection
is available, it may be possible to sell surplus electricity back to the grid if a feed-in
tariff is in place.
On a larger scale, solar electricity can be generated by concentrating the suns rays using lenses or mirrors. These concentrator photovoltaic (CPV) power plants focus light
onto high-efficiency third-generation PV cells to generate electricity directly.
Concentrator solar thermal (CST) power plants work indirectly by focusing light onto a
collector which is then used to heat a fluid, generating steam to drive a turbine. They
have the advantage of being able to store energy in the form of heat and thus smooth
out some of the fluctuations due to intermittent solar influx. An alternative approach is
to replace the steam turbine with a dish-mounted Stirling engine, which is up to 31%
more efficient.

How much can solar energy

contribute to climate mitigation goals?
In terms of greenhouse gas emissions, solar energy systems rank alongside other low
carbon energy technologies such as wind and nuclear. The energy required to make
any solar collector is typically equivalent to one to four years of operation so, as panels
typically last for 30 years, there is a significant carbon saving overall. To make significant reductions in carbon dioxide emissions, we need to install very large numbers of
solar collectors in the next few years. The International Energy Agency suggests that
solar energy could provide up to 11% of global needs by 2050, but this will require
early and sustained investment in existing and future solar technologies. The prospect
of harnessing intermittent solar energy generation on a large scale provides a strong
motivation to implement demand-side management.

How can we reach these goals?

Different approaches are possible. A mix of subsidies, obligations and support through
a carbon price and trading scheme may be appropriate until the market for solar devices becomes self-sustaining.
Feed-in tariffs make small-scale electricity production viable by guaranteeing a
minimum price for sale of energy back to the grid. These are appropriate while the
technology is in early stages, until the price of electricity generated is comparable to

Briefing paper No 1 June 2009

Solar energy for heat and electricity: the potential for mitigating climate change

Grantham Institute for Climate Change

Imperial College London

consumer retail prices. Installation grants may overcome obstacles such as unwillingness to invest money upfront and also provide training to improve installation procedures. Obligations requiring suppliers and consumers to source a certain percentage
of electricity from renewable sources, combined with a clean energy market, could
provide financial incentives for renewable sourcing while allowing the costs to be met
in the most efficient manner. Carbon pricing would work in a similar way, increasing
the cost of grid electricity in line with its carbon intensity and so providing incentives
for developing and using cleaner technologies including solar energy, both for heating
and electricity.

Introduction
The sun supplies the majority of the energy available on the Earth; wind power, hydropower, biomass and all fossil fuels can trace their energy source back to the sun. These
indirect routes for deriving solar energy have certain advantages: storage of energy
in the case of fossil fuels and hydropower, and transportation of energy in the case of
wind. However, the challenges involved in harnessing solar energy directly and on a
large scale are such that it remains an elusive but still fundamentally attractive way
of mitigating climate change. This paper describes the present status of solar energy
worldwide, and outlines the competing technologies, the magnitude of energy they
could produce, and the extent to which they could be used.
Human use of solar energy spans natural lighting and agriculture, from simple
technologies such as the outdoor clothesline through to centralised electrical power
plants equipped with storage. It is almost impossible to quantify this habitual use, as
most uses of solar energy, such as passive heating, are classed as energy efficiency
measures. While these simple solar approaches are important, this paper is primarily
concerned with active solar power conversion that can displace conventional power
generation and contribute towards a truly sustainable energy supply.
The solar radiation continuously available to the Earth [162,000 terawatts (TW, 10 W)]
greatly exceeds the average worldwide primary power consumption in 2004 (16TW),
86.5% of which came from fossil fuels1. The combined output of active solar energy
systems currently meets only 0.1% of the worlds primary energy consumption.
12

Figure 1. Worldwide variation in

mean annual solar irradiance. Data
re-plotted from NASA International
Satellite Cloud Climatology Project
(ISCCP)3.

The efficiency of solar energy

systems is rated according
to their performance under
a standard test irradiance of
1000 W/m2, which corresponds
to the maximum irradiance
expected on a clear day in summer at moderate latitudes. The
actual level of solar irradiance
will depend on the latitude
and local climatic conditions,
but the annual average solar
energy density lies in a range
from 100-250 W/m2 for most
locations, as shown in Figure
1. The capacity factor for solar
collectors (actual output power
/ rated output power) therefore
lies at 10-25% depending on
location. This fluctuation is significant in determining the broad economic suitability
of solar energy technologies2. However, the extent to which solar energy can help mitigate climate change depends on the carbon intensity of the local energy supply being
displaced and the matching between supply and demand.
Solar energy for heat and electricity: the potential for mitigating climate change

Briefing paper No 1 June 2009

Imperial College London

 

Grantham Institute for Climate Change

Were climate change of no concern, a natural, gradual shift to solar energy technologies might be envisaged as conventional energy sources become depleted and housing stock over the next century is replaced and upgraded. However, to make a significant contribution to the problem of climate change, an accelerated adoption of solar
energy technologies is required. Appropriately designed feed-in-tariffs have proven to
be effective in achieving this with photovoltaics, driving both technological development and market expansion and providing the motivation to overcome non-technical
barriers such as limited training and local installation expertise. Solar electricity technologies require roughly another decade of government support to achieve sufficient
cost reduction with present
technologies to enable them

 
QFS
BOOVN
HSPXUI
to become self-sustaining.

 

*OTUBMMFE
DBQBDJUZ(8Q

 CO

(%1

scenario for solar electricity5.

A capacity factor of 13% is
assumed for translating from
peak capacity (GWp) and
energy delivery (TWh/year).
$1bn=$10 9.

4PMBS
FMFDUSJDJUZ
HFOFSBUFE
58IZS

The International Energy

Agency (IEA) predicts that
CO
approximately one quarter
*&"

(%1
of renewable power, or 11%

17
of worldwide electricity,
 
 
could be supplied from solar
CO
CO

(%1

(%1
energy in 20504 (Figure 2).
The IEA projections indicate
CO


that it is both technically and

(%1
economically feasible to be
generating terawatts of solar
4PMBS
IPU
XBUFS


energy within the timescales
8JOE
required to limit global tem4PMBS
FMFDUSJDJUZ
perature rise to around 2 C.
*&"
#MVF
TDFOBSJP

The speed of transition from


fossil fuel combustion to a






portfolio of low carbon tech:FBS
nologies is constrained by
manufacturing capacity and
ultimately cost. Figure 2 shows the annual costs of maintaining compound 33% per
Figure 2. Chart showannum growth and those incurred in the IEA scenario. For technologies such as solar
ing growth in capacity of
energy, early and sustained investment is required to reduce costs and ensure that the
solar hot water, wind, solar
necessary manufacturing and installation infrastructure is built.
electricity and the IEA Blue

 

The 2,000 million people in developing countries without access to grid electricity represent important potential consumers of solar energy. People living in isolated areas
could enjoy improved standards of living with relatively simple solar-powered devices.
With the recent advent of low-cost PV panels and efficient LED lighting, the technology
could now displace traditional kerosene lamps as a cost-effective and safer alternative. In many developing countries, there is a surprisingly high level of mobile phone
usage, despite a limited infrastructure for recharging the battery. With almost one third
of the worlds population living without electricity, solar energy offers great promise to
improve living standards and reduce typically associated greenhouse gas emissions.

Technical review
This section presents the main technological options for using solar energy on domestic and utility scales, for providing heat and generating electricity. Table 1 compares
currently available technologies.

Small-scale heating systems

Current technology. Solar hot water is the simplest and most technologically mature
way of collecting solar energy. It is cost effective for many applications and accounts
for more than 90% of installed solar energy capacity worldwide6. Apart from providing
hot water for sanitary purposes and swimming pools, it is also used for heating/cooling

Briefing paper No 1 June 2009

Solar energy for heat and electricity: the potential for mitigating climate change

Grantham Institute for Climate Change

Imperial College London

spaces, and some industrial processes. The most widespread technology is the evacuated tube collector where a specially engineered energy absorber is deposited on the
inside of an evacuated tube. Flat plate collectors have a similarly engineered absorber,
but do not employ a vacuum for insulation. Both are used for heating hot water for
domestic and commercial purposes. Unglazed energy collectors are less energyefficient and are used to heat swimming pools, where a large area of collectors can
be installed. This type of installation is the dominant application for solar hot water
systems in the US and Australia. In some locations, such as China, solar hot water has
a self-sustaining market position. Figure 3 shows the
installed capacity and per capita capacity for leading
6TBHF
4NBMM
TDBMF
countries.
4PMBS
UIFSNBM
DPMMFDUPS
4PMBS


EJSFDU
VTF
UP
IFBU
XBUFS
In 2006, the installed capacity for solar hot water
UIFSNBM


JOTUBMMFE
PO
CVJMEJOH
SPPG
systems was 127 gigawatts of thermal power (GWth),
FOFSHZ

NBUVSF
UFDIOPMPHZ
almost ten times the present solar electricity capac
QBSUJBMMZ
SFQMBDFT
HSJE
HBT




ity. Despite this level of installed capacity, solar therBOEPS
FMFDUSJDJUZ
mal power does not usually feature in official energy

VTFE
JO
$IJOB
64
BOE

*TSBFM
statistics because until 2004, the industry quoted
installed area capacity rather than power capacity.

Table 1. Overview of the

main technologies for
small- and large-scale
provision of heat and
electricity.

Figure 3. Total installed

capacity of solar hot water
collectors for the leading
eight countries and the
UK5. The installed thermal capacity per capita is
stated above each bar.

Small-scale electricity production

8


(MB[FE



6OHMB[FE



8




8

8

8

8

8

8


8

6,

MJB

Briefing paper No 1 June 2009

USJ

T
"V

FM
SB
*T

USB

T
"V

BO

QB
+B

SN
(F

F
SL
5V

Solar energy for heat and electricity: the potential for mitigating climate change

64

B
JO

$I

4PMBS
IPU
XBUFS
DBQBDJUZ
BU
UIF
FOE
PG
(8UI

MJHIU
DPODFOUSBUFE
UP
IFBU

XBUFS
TUFBN
QSPEVDUJPO
ESJWFT

UVSCJOF
UP
HFOFSBUF
FMFDUSJDJUZ

QMBOUT
MPDBUFE
JO
TVOOZ
SFHJPOT


ZFBST
PG
PQFSBUJPO
JO

$BMJGPSOJB


.8
QMBOU
DBQBDJUZ
FOFSHZ
TUPSBHF
BT
IFBU
PO
HSJE

VTFE
JO
64
BOE
4QBJO

MJHIU
DPODFOUSBUFE
PO
17
DFMMT

QMBOUT
MPDBUFE
JO
TVOOZ
BSJE

SFHJPOT

VTFT
IJHIMZ
FGGJDJFOU
TPMBS
DFMMT

EPFT
OPU
DPOTVNF
XBUFS
GPS

DPPMJOH

.8
QMBOU
DBQBDJUZ

CPUI
PO
BOE
PGG
HSJE

VTFE
JO
$BMJGPSOJB
4QBJO
BOE

"VTUSBMJB

More sophisticated applications of solar heat are possible in larger buildings and industrial environments. Standard solar hot water collectors provide water temperatures
of 60-100 C, which is sufficient for applications such as food processing and desalination. It is also possible to use solar heat for local cooling, using an absorption/refrigeration cycle or a desiccant system9. In general, heat-driven refrigeration cycles are less
efficient than mechanically-driven systems, but they represent a useful application for
excess solar heat in times of oversupply during the summer months.



$PODFOUSBUJOH
TPMBS
UIFSNBM

$PODFOUSBUJOH
17

17
QBOFMT
1IPUPWPMUBJD
EJSFDU
VTF
PG
BNCJFOU

Potential capacity and cost implications. In the UK
FMFDUSJDJUZ
TVOMJHIU
domestic sector, hot water amounts to 22% of the

JOTUBMMFE
PO
CVJMEJOH
SPPG
domestic primary energy usage7, so there is a large

DPTU
BOE
FGGJDJFODZ

potential for cost and carbon-efficiency improveJNQSPWJOH
ments. A recent case study in the UK showed that

L8
UP
.8
TDBMF
JOTUBMMB
UJPO
CPUI
PO
BOE
PGG
HSJE
even in a northern, maritime climate, a solar hot

VTFE
JO
+BQBO
(FSNBOZ

water system can provide 50-70% of the hot water
BOE
4QBJO
8
used by a household over a year . Typical panel costs
for a domestic home in the UK are around 1,440
and installation costs push this figure up to 4,000. For new buildings, the installation costs can of course be subsumed into the overall construction costs with minimal
impact to the overall budget.

Current technology. PV panels convert sunlight into

electricity directly using semiconductor materials.
These panels were initially used in remote off-grid
locations where their reliability suited them to
critical applications such as telecommunication
relay stations and satellites. Since the late 1990s,
a significant shift has occurred and now the majority of PV installations are connected to the grid.
This transition began first through the Japanese
New Sunshine subsidies and subsequently
through feed-in tariffs in key European countries,
most notably Germany10. As a result, manufacturing output leapt to over 5GW in 2008, leading
to a cumulative worldwide installed capacity of
14.8GW11. Figure 4 shows installed photovoltaic
generating capacity and demonstrates the effect
of domestic incentives. Spain overtook Germany

-BSHF
TDBMF

Imperial College London

Grantham Institute for Climate Change

$VNVMBUJWF
JOTUBMMFE
DBQBDJUZ(8Q

as the largest market for photovoltaic panels due to a generous support scheme that
has since been capped at 500MW. Germany is a surprising market for photovoltaics as
it has a modest solar resource, but the largest installed capacity. The UK has similar
sunshine levels to Germany yet has only 0.3% of its installed PV capacity.
Potential capacity and cost implications. The rapid growth of photovoltaics has
resulted in dramatic cost reduction of the technology. Figure 5 shows the actual and
projected system cost per watt installed over time. The two areas of the chart correspond to the cost of the photovoltaic panel (module) and the other systems costs
incurred during installation, the so-called Balance of Systems costs (BOS), and include
cabling, AC-DC inverters and mounting structures. The BOS costs vary considerably
depending upon location, installation type and size, so an annual average estimate
has been collated from data available 13,4,14. Savings in
module cost are achieved through mass production
and the introduction of extremely cost-effective thinfilm technologies, discussed on page 7.












U
P

T
3F

6,

MZ

*UB

64

BJ

4Q

G
X

BO

SN

QB

+B

(F

ME

PS

1IPUPWPMUBJD
TZTUFN
DPTU
8Q

Figure 4. Cumulative installed

photovoltaic capacity in 2008
for the five largest contributors;
UK and rest of world shown for
comparison12.




#04
DPTU
8Q
.PEVMF
DPTU
8Q


















If panels are installed as part of a solar photovoltaic farm, the electricity generated has to compete
with wholesale electricity prices, which is presently
difficult to achieve without subsidy. However, when
installed on a domestic roof, the electricity generated by PV panels offsets grid electricity, which is
supplied at much higher consumer prices. For example, in Italy the cost of electricity to the consumer
is high (0.2 per kilowatt-hour, kWh). With favourable levels of sunshine PV panels are projected to
reach consumer grid parity around 2010 if the cost of
residential grid electricity is extrapolated at a fixed,
historical rate. Grid parity in Germany is predicted
around 2016 and in the UK around 2020; levels of
sunshine and consumer electricity price both dictate
the parity point.
In the long-term, module costs of $0.4/W are considered attainable through development of some
present technologies. Even today, some highly profitable companies are already manufacturing their
product at $0.98/W, with clear technological routes
to further cost reduction in the future. It is worth
noting that BOS costs play a significant component
in the cost of PV electricity and are projected to
become dominant around 2015. As with solar hot
water systems, the cost of retrofitting is inevitably
high, demonstrating again the opportunity that exists for new buildings and the need for a well-trained
workforce to install solar collectors efficiently.

:FBS
Figure 5. Reduction in PV
system costs. Data pre-2007
are historical; post-2007 are
projected from industry estimates4,13,14.

Briefing paper No 1 June 2009

Generations of PV technology. Three broad classes of photovoltaic technology can be

identified with different operating characteristics, cost and efficiency; these are plotted
as generations I, II and III in Figure 6.
First Generation: high cost, <20% efficiency. Of the 14.8 GW cumulative PV capacity
installed in 2008, 86% is composed of cells made from silicon wafers, using processes inherited from the microelectronics industry16. This first generation technology has led to some high performance solar panels with up to 20% efficiency, but
the cost of manufacturing remains high. This is due to the large volume of silicon
used and inefficiencies in the manufacturing process, giving a cost per square metre
in the range of $200-500. However, when coupled with panel efficiencies of 12-20%
Solar energy for heat and electricity: the potential for mitigating climate change

Grantham Institute for Climate Change

Imperial College London

and process improvements, module manufacturing prices of $1.4/W are considered

feasible17. Life-cycle analyses of crystalline silicon modules indicate they generate
40g CO2 equiv./kWh18.

8

&GGJDJFODZ


Thanks to the sustained growth of the PV panel manufacturing industry (over 30% per
annum over the past decade), the industry now uses more silicon feedstock than the
microelectronics industry, resulting in a supply bottleneck for polysilicon. This has led
to an expansion of polysilicon capacity, using both the conventional Siemens method
in China and potentially less expensive solar grade silicon production routes elsewhere. From a climate change perspective, the expansion of the Siemens process in
China is regrettable, as it is an
electrically intensive process,
8
8
which takes place in a country

that already has high carbon
intensity. Some reduction
in the PV green house gas

emissions in the future will
be achieved through much
more efficient crystallisation
processes using fluidised bed

reactors19 or through direct
***
upgraded metallurgical routes.
The polysilicon supply short
age is expected to ease by
2010, resulting in the anticipated drop in the module price

shown in Figure 520.

**

Second Generation: low cost,

10% efficiency. Very sig
nificant cost reduction can be




achieved by moving to second
"SFBM
DPTU
N
generation, thin-film technologies, in which the semiconductor is deposited directly onto glass, plastic or metal foil21, minimising the amount of
semiconductor material required and increasing the size of the manufacturing units
up to 6 m2 in some cases. These savings result in technologies in region II of Figure 6,
with low cost per unit area, but also with low efficiency. Small area devices can achieve
efficiencies between 16-18%, but this efficiency drops when large area panels are
manufactured. Leading thin-film manufacturers currently manufacture cadmiumtellurium (CdTe) modules at $0.98/W with an efficiency of 10%. Other companies pursuing silicon-based approaches anticipate similar results, but to date First Solar remains
the only company to have achieved this cost breakthrough. Life-cycle analyses of thinfilm CdTe modules indicate they produce 20g CO2 equiv/kWh18.
All plastic organic photovoltaics represent the ultimate second generation technology,
where large areas of flexible plastic substrate are coated very rapidly. This has clear
advantages over processing glass in cost, weight and shock-resistance. At present the
relatively low efficiency and short working lifetime of cells made from these materials
has moved them towards applications in consumer electronics where flexibility, physical strength and low weight are more desirable than high power output. The dye-sensitised solar cell represents the principle commercially available organic PV technology.

8



8



Figure 6: Three generations

of PV technology: I crystalline silicon, II thin-film PV
and III high performance
technologies22. Broken
lines indicate contours of
constant price per watt
capacity ($/W). For reference, some roofing products exceed $100/W and
decorative facades can
reach $400/W15.

Third Generation: low cost, high efficiency. As with any energy conversion engine,
the laws of thermodynamics determine the maximum efficiency at which the process
can operate. Fundamental losses arise from the broad solar spectrum and irreversible absorption of sunlight, placing an upper thermodynamic efficiency limit for solar
energy conversion at 86.8%22. Most conventional solar cells that use a single absorber
are limited to an efficiency below 31%, but a couple of approaches exist that can exSolar energy for heat and electricity: the potential for mitigating climate change

Briefing paper No 1 June 2009

Imperial College London

Grantham Institute for Climate Change

ceed this limit22. The very highest efficiencies of up to 41.1% have been attained using
multi-junction solar cells23, but these have very high manufacturing costs of around
$140,000/m2. These technologies are routinely used to power satellites in space, but
are increasingly finding application in terrestrial concentrator power systems, discussed in the next section.

Large-scale electricity production

Even in the UK,

a solar hot water
system can provide
5070% of the
annual hot water
used by a
household.

Concentrator photovoltaic technology. CPV systems use mirrors or lenses to focus

sunlight onto small, high-performance photovoltaic solar cells. Their appeal is that
large areas of semiconductor material are replaced with large areas of glass and steel
that can be manufactured at existing foundries, at relatively low cost24. High solar
cell efficiency is the key to reducing costs with this technology, so the development
of third generation solar cells with efficiencies of more than 40% has led to renewed
enthusiasm for CPV. The Australian company Solar Systems has successfully powered
several remote communities in the Outback and is now building a large 154 megawatt
(MW, 106 W) plant in North West Victoria, Australia. The cost per unit area is approximately $200/m2, but at a system efficiency of more than 30%, CPV can become
competitive with other low-cost PV technologies in areas of high isolation. In terms
of greenhouse gas emissions, the high efficiency offsets the large quantity of steel
required to fabricate the collectors resulting in life-cycle figures ranging from 30-40g
CO2 equiv/kWh25,26 broadly comparable to the figures quoted for flat-plate PV.
Concentrator solar thermal technology. CST systems again employ mirrors to focus
light, but in this case it is used to heat a fluid, generating steam to drive a conventional
turbine. The Solar Electric Generating Systems (SEGS) with a combined capacity of
354MW electrical power (MWe) have been in operation in California since the late
1980s and cost $3.9/W with 3L/kWh of water used for cooling27. These costs remain
typical of modern installations28. Efficiencies of 14%27 are attained for systems based
on steam turbines, but efficiencies of 31% have been demonstrated using a dishmounted Stirling engine. Life-cycle analyses estimate the greenhouse gas emissions
for these concentrating solar thermal technologies to be 30-150g CO2 equiv./kWh29.
One key advantage that CST holds over all photovoltaic technologies is that it is relatively easy to store thermal energy compared to electrical energy, offering the potential
to increase significantly the capacity factor of the plant and better match electrical
demand patterns30. To date storage has been demonstrated on the timescale of hours
and attempts are underway to store steam for days31. This advantage alone makes CST
attractive for large desert-based installation. 390GWe of CST is estimated to be feasible by 2050 from the Mediterranean region desert32; roughly one third of the present
European capacity for electrical generation.
Technical aspects of managing intermittent supply. With any intermittent energy
technology, matching supply and demand is important. Once sufficient capacity is
installed that periods of surplus energy arise, storage becomes desirable. Several contenders exist, namely battery storage, hydrogen fuel or compressed air, but all must
be efficient and durable to be cost-effective. At present, storage of electricity using
batteries is fairly efficient (>80%) but expensive (adding $0.2/kWh33) as their lifetime
is limited to ten years or less. The round trip electrical efficiency of hydrogen storage is
currently less efficient (40%) but represents a possible long-term storage opportunity.
In the absence of integrated storage capacity, direct solar electricity generation can
be combined with another complementary energy supply, such as a biofuel combined
heat and power plant34. Finally it should be noted that long-term thermal storage of
solar energy can be achieved in subterranean reservoirs.
In terms of integrating intermittent energy sources in the UK, the grid can accommodate around 20% intermittent electricity generation at the additional cost of
0.5p/kWh35. Further market penetration by intermittent sources pushes these costs up
significantly and makes dynamic management of the electrical demand an attractive
option, for example varying the load placed upon the grid by switching off non-essential loads in order to balance supply and demand.

Briefing paper No 1 June 2009

Solar energy for heat and electricity: the potential for mitigating climate change

Grantham Institute for Climate Change

Imperial College London

Policy and international context

Installation incentives
In developing countries, solar energy has an immediate and desirable impact on the
standard of living at a local level, enabling lighting, water pumping and telecommunication. When considering the costs of establishing an electrical grid, the installation of
solar energy technologies often compares favourably. For example, most solar hotwater systems in China have been installed to relieve some of the burden on the
rapidly growing energy generating capacity. In general, solar hot-water systems are
installed without subsidy.
The situation is different in developed countries, where solar energy provides the same
services as well-established energy utilities, but with the disadvantage of intermittency. The incentive for installing solar energy then becomes a combination of energy
security or self-sufficiency and a desire to reduce carbon dioxide emissions. These factors have prompted countries such as Germany and Japan to introduce financial incentive programmes to encourage the adoption of solar energy, thereby diversifying their
energy supply, generating clean energy, and investing in their domestic industries.
Feed-in tariffs. Germany has adopted a feed-in tariff to accelerate the installation of
both solar electricity and wind power36. The tariff is a pricing structure that pays producers of solar electricity a pre-determined, premium rate for each kWh supplied over
a twenty year time period, starting from the moment the system is connected to the
grid. This simultaneously gives investment security and encourages early adoption, as
the tariff is reduced each year in line with anticipated improvements in the technology.
The tariff is funded by a levy paid by electricity consumers (0.20 per person per month
in 2006, 192M per year)37.
Grants and obligations. By contrast, Japan has used a mixture of investment grants
covering some fraction of the installation and a quota obligation scheme that requires
suppliers and consumers to source a certain percentage of their electricity from
renewable energy. Under the quota obligation scheme, a party producing a surplus of
clean energy can profit by selling credits to another party in deficit. This establishes a
market, providing financial incentives for generating clean electricity and passing on
the costs to those who are unable or unwilling to meet their renewable energy quota38.
For either scheme to be effective, remuneration must be high enough for the investment to be paid off in a couple of years, leaving several decades of profitable operation. In practice, feed-in tariffs have provided the most effective means for accelerating the installation of PV panels. The pre-determined pricing gives high investment
security, enabling consumers to obtain bank loans for their installation. By contrast,
the value of credits in a quota scheme fluctuates, leading to uncertainty in the return
on the investment37,39. The added complexity of the scheme also becomes a barrier for
small investors.

Feed-in tariffs
simultaneously give
investment security
and encourage early
adoption.

However, simply introducing a feed-in tariff is not a guarantee of success. Several European countries, most notably France and Italy, operate seemingly attractive feed-in
tariffs that have not yet stimulated the demand witnessed in Germany. This highlights
the need to eliminate regulatory barriers that stall applications and hinder access to
the grid38. Overgenerous subsidies should also be avoided or demand can be so high
that the subsidy scheme has to be capped, leading to uncertainty for investors, manufacturers and installers, as witnessed in Spain in 2007-08. Only under the conditions
of stable and long-term investment will a well-trained, local workforce emerge to carry
out installation efficiently and effectively. Finally, it is important to note that feed-in
tariffs are only a temporary measure, to stimulate growth of industries during their precompetitive phase. Once grid parity is surpassed, the market should become increasingly self-sustaining, although loans to assist consumers to pay the up-front cost of
electricity for 30 years will still be desirable.
Solar energy for heat and electricity: the potential for mitigating climate change

Briefing paper No 1 June 2009

Imperial College London

Grantham Institute for Climate Change

Policy aspects of managing intermittent supply

As long as the electrical transmission grid can match an intermittent supply with fluctuating demand, then effective electrical storage technologies are not critical (either in
terms of cost or carbon emissions) to the successful deployment of solar electricity
in its early stages. Instead, modern computer networks can enable smart electrical
grids to play an active role in balancing consumer demand with intermittent supply.
Research is required on the fundamental operation of such networks and their practical and cost-effective deployment.
Unlike flat-plate PV installed on domestic roofs, which only needs to match the consumer grid electricity price, large-scale solar energy plants must compete with wholesale electricity prices that are typically three times lower than the consumer retail
price. It is important to recognise that in some areas, the intermittent nature of solar
electricity can be well matched to urban electricity demand, especially where air conditioning forms a significant fraction of the load. Instances of major stress to electricity
grids often occur during exceptional heat waves; conditions in which solar electricity
is usually available40. The financial advantage for solar electricity on the wholesale
market is that solar power often matches the peaks in demand and can take advantage
of the correspondingly higher spot prices15. Nevertheless, solar electricity sold on the
wholesale market makes grid parity hard to achieve without carbon emission trading,
or other adjustment to energy pricing.

Research agenda
Heating

Intermittent solar
electricity can match
urban electricity
demand from air
conditioning.

Solar hot water. Low temperature (< 100 C) solar hot water collector technologies are
well established: they operate close to their thermodynamic limit and can be manufactured fairly cheaply. The key short-term research opportunity with this technology is
integrating it into efficient and intelligent heat control systems within buildings or industrial plants. For higher temperatures (150-250 C), for example to supply industrial
process heat, further development of medium temperature collectors is necessary. In
all cases, if solar hot water is to contribute effectively to any climate change mitigation
strategy, it is essential that there is sufficient professional experience and working
knowledge with these technologies to deploy them in a timely and efficient manner.
The low penetration of solar hot water systems in most countries suggests that effective policies for deployment of this technology are lacking.

Electricity
Concentrating solar thermal. New 50 MWe steam turbine demonstration plants are
under construction in the Mediterranean41 and US. Schemes for raising the conversion
efficiency through higher operating temperatures are under development, alongside
air-cooled, low-temperature designs that promise low cost and eliminate the need for
cooling water towers.
Photovoltaics. First generation photovoltaics are nearing maturity, with much of the
research and development taking place within companies or in close co-operation
with universities. Apart from general process optimisation and associated incremental improvements in cell efficiency, there are three key areas where research is
necessary17:

reducing the quantity of silicon used through thinner wafers and more efficient
ingot sawing;

developing new high-volume, energy-efficient routes for purifying silicon to

provide low-cost solar grade silicon;
optimising cell processing to achieve production efficiencies approaching 20%
for standard crystalline silicon cells and up to 16% for cells made from low-purity
upgraded metallurgical grade silicon.

10

Briefing paper No 1 June 2009

Solar energy for heat and electricity: the potential for mitigating climate change

Grantham Institute for Climate Change

Imperial College London

Second generation, thin-film PV research based on inorganic semiconductors has

recently shifted from university laboratories and small pilot lines to large-scale
manufacturing. However, the fact that small area devices can achieve almost double
the efficiency of large area panels, highlights the opportunity to improve the deposition conditions and uniformity to enable high efficiency operation over a large area. To
make significant contributions to tackling the problem of climate change and to compete effectively with first generation crystalline silicon panels, all thin-film technologies should aim for efficiencies greater than 10% and be fabricated from sufficiently
abundant materials.
In particular, this demands:

indium-free transparent conducting glass integrated into all thin-film solar

panels (indium is a scarce element);
module efficiency of all thin-film panels improved at manufacturing level to at
least 10-15%;
plastic organic PV solar cells with longer operating lifetimes.
Third generation photovoltaics will become necessary to sustain significant annual
growth in installed capacity on the terawatt scale, probably from 2020 onwards. At
present, much of the work takes place in academic research groups and the main commercial work in this area is in the development of highly efficient concentrator solar
cells. Near term, achievable research goals in this area are:

Demonstration of a 50% concentrator solar cell using multiple semiconductor

junctions.
Reduction in concentrator solar cell manufacturing cost to below $60,000/m2,
achieved via automated manufacturing and either a lift-off and substrate reuse
technique or direct growth on silicon substrates.
Development of efficient (>80%) optical concentration schemes that are practical to manufacture, as well as lightweight module and tracking designs.
In the long term, possibilities remain for achieving the ultimate goal of a low-cost,
high-efficiency flat-plate third generation photovoltaic panel22. The ability of some
materials to manipulate the spectral distribution of light suggests that the efficiency
of conventional solar cells could be enhanced without requiring a completely new
manufacturing infrastructure. Conceptual photovoltaic schemes such as hot carrier
solar cells and intermediate band solar cells hold great promise, if suitable materials
can be found.

Conclusion
Harnessing solar energy directly and on a large scale is an attractive, long-term means
for reducing carbon dioxide emissions associated with electricity generation. However,
to have a significant impact in overall emissions by 2050 the industry must continue to
expand rapidly. Existing technologies are beginning to become cost effective in favourable locations and with continued investment, likely to become cost effective in more
marginal locations by 2020. Thereafter compound growth will depend upon the ability
of new technologies to attain high power conversion efficiency at low cost and to manage intermittent supply. They must go hand in hand with policy incentives to overcome
the barriers to adoption. With sustained effort, solar energy has the potential to play a
pivotal role in mitigating climate change.

About the
Grantham Institute
The mission of the Grantham Institute
for Climate Change is to drive climate
related research and translate it into
real world impact. The Institute, based
at Imperial College London, was established in 2007 by a multi-million pound
donation from Jeremy and Hannelore
Grantham of the Grantham Foundation
for the Protection of the Environment.
Drawing on Imperials high quality expertise across areas such as earth sciences, ecology, engineering, medicine,
physics and economics, the Institute
focuses on driving multidisciplinary
research across four themes:

Earth systems scienceto

improve our understanding of
key climatic processes
Sustainable futuresto meet
the 2050 emissions targets
Vulnerable ecosystems and
human wellbeingto predict
impacts to enable us to protect
and adapt
Risks, extremes and
irreversible changeto foresee
and prepare for extreme climatic
events
The Grantham Institute is tackling
climate change by:
Translating our research into
communications to shape global
decision making
Creating new cross-disciplinary, strategic networks at Imperial and beyond
Funding new climate-related
academic appointments and
studentships across the College
Coordinating an outreach
programme of events and
lectures for a wide audience
www.imperial.ac.uk/climatechange

Solar energy for heat and electricity: the potential for mitigating climate change

Briefing paper No 1 June 2009

11

Imperial College London

Grantham Institute for Climate Change

References
1. U.S. Department of Energy, Energy Information
Administration. World consumption of primary energy
by energy type and selected country groups, 19802004, 2006.

About the author

Dr N.J. (Ned) Ekins-Daukes is a physics lecturer at the Grantham Institute
for Climate Change, Imperial College
London. His research is about developing new photovoltaic solar energy
technologies, especially unconventional,
high efficiency routes to photovoltaic
energy conversion. Previously, he worked
as a physics lecturer at the University
of Sydney, Australia. He was awarded
his PhD from Imperial College London
in 2000, and subsequently worked as a
research fellow at the Toyota Technological Institute in Nagoya, Japan.
[email protected]
www.imperial.ac.uk/qpv

About Imperial College London

Consistently rated amongst the worlds
best universities, Imperial College London is a science-based institution with a
reputation for excellence in teaching and
research that attracts 13,000 students
and 6,000 staff of the highest international quality.
Innovative research at the College
explores the interface between science,
medicine, engineering and business,
delivering practical solutions that improve quality of life and the environment
- underpinned by a dynamic enterprise
culture. Since its foundation in 1907,
Imperials contributions to society have
included the discovery of penicillin, the
development of holography and the foundations of fibre optics.
This commitment to the application of
research for the benefit of all continues
today, with current focuses including interdisciplinary collaborations to improve
health in the UK and globally, tackle
climate change and develop clean and
sustainable sources of energy.
www.imperial.ac.uk

2. M. Suri, T.A. Huld, E.D. Dunlop, and H.A. Ossenbrink. Potential of solar electricity generation in
the European Union member states and candidate
countries. Solar Energy, 81(10):12951305, 2007.
3. Y. Zhang, W.B. Rossow, A.A. Lacis, V. Oinas, and
M.I. Mishchenko. Calculation of radiative fluxes from
the surface to top of atmosphere based on ISCCP and
other global data sets: Refinements of the radiative
transfer model and input data. Journal of Geophysical
Research, 109:D19105, 2004.
4. International Energy Agency. Energy Technology
Perspectives: scenarios and strategies to 2050, 2008.
5. M. Weiss, I. Bergmann, and G. Faninger. Solar heat
worldwide. markets and contribution to the energy
supply. International Energy Agency, 2008.
6. European Solar Thermal Industry Federation. Solar
Thermal Markets in Europe 2007, 2008.
7. Energy consumption in the United Kingdom:
domestic data tables. 2008 update. Department for
Business Enterprise and Regulatory Reform, 2008.
8. Building Research Establishment Ltd. Viridian Solar
- Clearline solar thermal field trial, 2008.
9. G. Grossman. Solar-powered systems for cooling,
dehumidification and air-conditioning. Solar Energy,
72(1):5362, 2002.
10. A. Jager-Waldau. Status of PV research, solar cell
production and market implementation in Japan, USA
and the European Union. European Commission, Joint
Research Centre, 2002.
11. European Photovoltaic Industry Association.
Global market outlook for photovoltaics until 2013,
2009.
12. International Energy Agency. Co-operative
programme on photovoltaic power systems: National
survey reports, 2008.
13. Solar Buzz. Photovoltaic industry statistics: Costs,
2006.
14. R. Wiser, M. Bolinger, P. Cappers, and R. Margolis.
Analyzing historical cost trends in Californias market
for customer-sited photovoltaics. Prog Photovoltaics,
15(1):6985, 2007.
15. PV Upscale. PV Upscale photovoltaic systems:
demand and side value of PV. EU Report, 2006.
16. 25th annual data collection results. PV News, April
2009.
17. C. del Canizo, G. del Coso, and W.C. Sinke.
Crystalline silicon solar module technology: Towards
the 1 euro per watt-peak goal. Prog Photovoltaics,
17(3):199209, 2009.
18. V.M. Fthenakis, H. C. Kim, and E. Alsema. Emissions from photovoltaic life cycles. Environ Sci
Technol, 42(6):21682174, 2008.
19. H. Flynn and T. Bradford. Polysilicon: supply,
demand and implications for the PV industry. Prometheus Institute, 2006.
20. R.M. Swanson. A vision for crystalline silicon photovoltaics. Prog Photovoltaics, 14(5):443453, 2006.
21. Martin A Green. Consolidation of thin-film photovoltaic technology: The coming decade of opportunity. Prog Photovoltaics, 14(5):383392, 2006.

12

Briefing paper No 1 June 2009

22. M.A. Green. Third generation photovoltaics:

advanced solar energy conversion. Springer Verlag
2003.
23. Fraunhofer ISE. World record: 41.1% efficiency
reached for multi-junction solar cells at Fraunhofer
ISE. Press Release, 2009.
24. R.M. Swanson. The promise of concentrators.
Prog Photovoltaics, 8(1):93111, 2000.
25. H. Kim and V. Fthenakis. Life cycle energy demand
and greenhouse gas emissions from an Amonix high
concentrator photovoltaic system. Proc. IEEE Photovoltaics Specialists Conference, p 628, 2006.
26. G. Peharz and F. Dimroth. Energy payback time
of the highconcentration PV system FLATCON.
Progress in Photovoltaics: Research and Applications,
13:627634, 2005.
27. C. Philibert. The present and future use of solar
thermal energy as a primary source of energy. International Energy Agency, 2005.
28. Photon International. Photovoltaics vs. solar
thermal, Nov 2008.
29. M. Lenzen. Greenhouse gas analysis of solar-thermal electricity generation. Solar Energy, 65(6):353
368, 1999.
30. U. Herrmann and D.W. Kearney. Survey of thermal
energy storage for parabolic trough power plants. J
Sol Energ Eng ASME, 124(2):145152, 2002.
31. D. Mills and R. Morgan. Solar thermal power as
the plausible basis of grid supply. Ausra Inc, Palo
Alto 2007.
32. F. Trieb. Concentrating solar power for the mediterranean region. German Aerospace Center (DLR),
2005.
33. D. Sollmann. Nocturnal solar power. Photon
International, 88, Jan 2008.
34. S. Abu-Sharkh, R.J. Arnold, J. Kohler, R. Li, T.
Markvart, J.N. Ross, K. Steemers, P. Wilson, and R.
Yao. Can microgrids make a major contribution to UK
energy supply?, Renew Sust Energ Rev, 10(2):78-127,
2006.
35. UKERC. The costs and impacts of intermittency:
An assessment of the evidence on the costs and
impacts of intermittent generation on the British
electricity network, 2006.
36. Renewable energy sources act. Federal Ministry
for the Environment Nature Conservation and Nuclear
Safety, Germany, 2000.
37. European Photovoltaic Industry Association. Supporting solar photovoltaic electricity an argument
for feed-in-tariffs, 2008. EPIA, 2008.
38. International Energy Agency. Deploying renewables: Principles for effective policies. International
Energy Agency, 2009.
39. UKERC. Investing in power: The role of cost projections, incentives and risk, 2007.
40. E. Caamano-Martin, H. Laukamp, M. Jantsch, T.
Erge, J. Thornycroft, H. De Moor, S. Cobben, D. Suna,
and B. Gaiddon. Interaction between photovoltaic
distributed generation and electricity networks. Prog
Photovoltaics, 16(7):629643, 2008.
41. European Commission. Concentrating solar power,
from research to implementation, 2007. ISBN 978-9279-05355-9.

Solar energy for heat and electricity: the potential for mitigating climate change