of capital investment from the energy production sector to the energy consuming sectors. It opts for dispersed energy conversion so that productive uses of "waste" heat are easier to capture, consequently it tends to push technology toward smaller scale economy. But it does not seek higher productivity via venial of amenities. Rather it rests upon the reality that human ingenuity, applied through both technological and institutional innovations, can substitute for energy to a major degree. In this light the "soft" path can be interpreted as a new level of technological and institutional sophistication, adapted by a society that seeks its affluence in a way that ismore harmonious with the rest of nature. Such an application of human wisdom could translate the specific issue of "Prospects for Energy Conservation" into a more general one: To what extent can mankind substitute ingenuity for resource consumption? As a consequence our measure of progress could become less that of counting how much material and energy resources we consume and more that of how little we require to provide a given level of amenities. References 1. See Gibbons, J. H., "Long Term Research Opportunities", a chapter in "Improving the Energy Productivity of the American Economy", ed. by John Sawhill (Prentice Hall, 1979) to be published. 2. Gibbons, et al, Science 200, 142 (April 14, 1978). 3. Charles Ince, AIA Research Institute (private communication, 1978). 4. E. Hirst and J. Jackson, Energy 2, 131 (1977). 5. C. Berg, Science 199, 608 (February 10, 1978). 6. G. N. Hotsopoulos, E. P. Gyftopoulos, R. W. Sant, and T. F. Widner, Harvard Business Review (pg. 111ff, March/April 1978). APPENDIX I, No. 8 SERI/TR-52-040 UC CATEGORIES: UC-63A UC-63D PHOTOVOLTAIC VENTURE ANALYSIS FINAL REPORT JULY 1978 DENNIS COSTELLO DAVID POSNER DENNIS SCHIFFEL JAMES DOANE CHARLES BISHOP Solar Energy Research Institute 1536 Cole Boulevard Golden, Colorado 80401 A Division of Midwest Research Institute Prepared for the US Department of Energy Division of Solar Technology Under Contract EG-77-C-01-4042 PHOTOVOLTAIC VENTURE ANALYSIS Final Report EXECUTIVE SUMMARY A. INTRODUCTION AND OBJECTIVES In A variety of federal programs have been proposed to accelerate the market and industrial development of photovoltaic systems. This study investigates the costs, benefits, and risks of one proposed program. particular, the option under study is an eight-year $380 million program (Fiscal Years 1979 to 1986) in which the federal government subsidizes the difference between the price charged by photovoltaic producers and the maximum price the consumer will pay. The program is called the "procurement initiative" or the "market pull initiative" in this report. The market pull initiative is designed to reduce photovoltaic system prices from their present levels to the range of $1 to $0.50/Wp by stimulating a large demand for photovoltaics at relatively high prices. The stimulated demand will then presumably induce the industry to make production investments that will achieve lower unit costs. Lower costs and competition among suppliers should result in lower prices which will then stimulate additional demand and lead to further investment. These reinforcing events are assumed to continue until grid-connected markets are penetrated and photovoltaics begin to replace conventional energy supplies. The primary objectives of the venture analysis are to: estimate the benefits and the costs of the market pull initiative; and compare the procurement initiative to a limited number of alternative government approaches to accelerating the commercial development of photovoltaics. These are achieved by: (1) estimating the expected responses of photovoltaic producers and markets to the market pull initiative, (2) assessing the initiative's effect on photovoltaic system prices and sales over time, and (3) clarifying the uncertainties that will influence the initiative results. B. APPROACH The main focus of the venture analysis is on the incremental costs and benefits of the initiative. To accomplish this, a "base case" strategy of continued federal R&D without the initiative is first analyzed. Next, the eight cycles of the initiative are added to this base case, and the changes in photovoltaic prices, production, and sales are examined. To add perspective to the analysis, an alternative program of increased R&D (over the base case) without the initiative is also considered. The venture analysis consists of three major parts: estimation of (1) supply responses, (2) demand responses, and (3) net benefits. Within each of these major parts, multiple parallel approaches were used to estimate key parameters. The estimate of the photovoltaic supply response is derived using three approaches including: (1) a workshop with representatives of photovoltaic industry decisionmakers, (2) an assessment by an independent market research firm with experience in photovoltaics, and (3) a SERI/JPL analysis of photovoltaic industry responses. Two approaches were used to assess the markets for photovoltaics, including reviews and comparisons of available market studies, and a workshop attended by representatives of potential buyers in selected markets. The study involved almost all organizations that have conducted photovoltaic market studies to assist in this task. |