Escalating energy costs and technological advances are making solar energy an attractive alternative for manufacturers.
Besides reducing overall energy costs, solar offers other advantages to manufacturers:
- Using sunlight to generate electricity provides an almost unlimited source of fuel.
- Generation of solar energy leaves virtually no environmental or carbon footprint.
- Solar generators have few moving parts and thus require very little maintenance compared to fossil fuel generators.
- Solar energy essentially frees companies from the grid, making them less susceptible to blackouts and brownouts.
- Solar can be used in conjunction with other alternative energy sources such as fuel cells, wind, and hydropower.
As technology improves, costs go down relative to fossil fuels, and as environmental concerns rise, solar energy will continue to be the No. 1 alternative energy available to manufacturers. According to one survey, 72 percent of businesses looking into alternative energy sources planned to research and invest in solar. Some reasons for this trend include the following:
- Rising energy costs, particularly in terms of petroleum-based sources of energy
- Finite supplies of traditional energy sources, such as fossil fuels (leading to possible future shortages)
- Environmental impact and carbon footprint issues
Cumulative global output from solar energy has risen from 5 megawatts in 1979 to more than 2,000 megawatts in 2006. In this period, the wholesale price of the conversion of sunlight into electricity, known as the photovoltaic effect, fell from $32 per watt to about $3 per watt. The cost is expected to drop to below $2 in the near future, making solar an even more attractive energy source for manufacturers.
Photovoltaic solar cells, made from the same type of materials used in computer chips and semiconductors, absorb sunlight and separate electrons from their atoms. In the process, the electrons produce electricity as they move through the materials in the cell. This electricity is in the form of direct current, or DC, which often needs to be converted into alternating current, AC.
Miasolé, a Silicon Valley company specializing in computer disk drives, has begun taking manufacturing technology that was originally invented for the data-storage industry and applying it to the production of solar cells. This enables the company to manufacture low-cost cells that are extremely thin and energy efficient, so less silicon is needed in each cell, which again reduces the manufacturing cost of the cell.
The leading semiconductor equipment manufacturer of computer chips in Silicon Valley, Applied Materials, is also delving into the solar industry. The same technologies that brought computer costs down in the past several decades are now bringing down the costs of solar energy systems. Computer technology revolutionized the manufacturing industry in the past 20 years. Solar technology now stands ready to have a similar effect over the next 20 years.
Even with the reduction in cost for photovoltaic solar cells, the initial investment for installing a solar system can still be a financial burden. One of the solutions to this startup expense is to involve investors who buy the solar system and then sell the electricity at a reduced rate to the manufacturer. This arrangement is financially beneficial to both the investors and the manufacturer.
Here’s an example. General Motors wanted to install a solar system at a parts warehouse but the upfront cost was a stumbling block. GM entered into an agreement with Developing Energy Efficient Roof Systems, which purchased the solar equipment with money raised from investors. The solar system on the GM warehouse now generates as much as 1.5 million kilowatt hours of electricity a year, supplying 50 percent of the building’s electricity needs while reducing its electricity costs by 10 percent a year.
Other manufacturers who have jumped on the solar bandwagon by using outside investors to fund installation include General Electric and Alcoa.