The CEO of America's Biggest Solar Maker Doesn't Believe in Distributed Generation

Which just so happens to be a key plank in most greens' vision of the energy future.

What 1.3 million First Solar modules look like at the Sarnia Solar Farm in Ontario, Canada (First Solar)

File this under unlikely foes: James Hughes, CEO of First Solar, the largest American photovoltaics maker, doesn't buy a big part of most green advocates' vision for the future. In a deep (and very wonky) interview with Australia's Renew Economy, Hughes said that he doesn't think rooftop, distributed solar will disrupt our current centralized system of electricity production and distribution.

The contention among many renewable energy fans is that we could have a more resilient energy system if more electricity production was located at its point of use. They also note that while there are very large scale efficiencies in thermal power plants that burn fossil fuels, photovoltaics work about the same in a 100 megawatt array as in a 10 kilowatt array. A distributed system would tend to use technologies that could be efficiently scaled down.

Even before photovoltaics were a real option, many solar advocates supported making energy systems more local. That way, communities could control how they got heat, light, and power. Beyond the natural fit between the small-scale renewable energy systems of the time and distributed systems, cybernetics-influenced thinkers like Donella Meadows argued that centralization had disrupted the feedback loop between energy usage and the reality of energy production. And creating a more distributed energy system tracked well with the anti-nuclear sentiments of the 1970s, too. Distributed energy systems were "soft," as promoted by Amory Lovins, in opposition to the hard energy systems based on nuclear fuel, coal, and oil.

So, in a great document on "humanistic energy choices" that I got from the National Renewable Energy Laboratory -- formerly known as the Solar Energy Resource Institute -- you can find thinking like this: "For Mr. Lovins, energy independence is the indpendence that indivdiuals and small groups of people might reasonably be expected to enjoy as they reverse increasingly elitist, inflexible, and centralized energy postures."

Meanwhile, First Solar is the most successful American manufacturer of solar panels. The company has 2.3 gigawatts of solar production capacity, which is more than the entire thin-film solar industry had in 2010*. One would expect the company to be a standard bearer for the packet of values that have long animated solar advocates.

But that's not how Hughes sees things. Here's what he told the Australian publication:

I am not a huge believer ... in the idea that the centralized model of energy distribution is outdated and a more distributed model is what makes sense going forward.  Some degree of distributed generation does make sense. I believe community solar has a bright future. I believe off-grid has a bright future.


Taking it to the residential level, the difficulty is that storage is very expensive, and the difficulty is that unless you disconnect from the grid and use storage, then there is a huge subsidy inherent in a metering type of model. You also ignore the patterns of industrial use and the synergies between residential usage patterns and industrial usage patterns, and you lose that synergy when you got to highly distributed model, and I simply don't believe that the synergies of generation at a household level overcome the value of the generation on a centralized basis. 

There is another reason, though, that he mentioned elsewhere in the interview. First Solar is having a lot more success selling into the more demanding utility market than residential and commercial installations. 

[W]e believe we have a competitive advantage in engineering and power production   stand point.  We deliver a product that is well engineered and can deliver a highly predictable result for the customer. The rooftop market, the installations are too small and there are too many variables to do a system level power prediction with that degree of precision. In addition, you don't have meters and diagnostics to measure the output, so the quality measure for the rooftop panel is what does it flash test at, and the end user doesn't really know if they got what they paid for - you have different levels of soiling, of shading, of insulation, uncertainty over ambient temperature,  variability in installation circumstances.

I would rather sail into a market where there's a much stricter quality standard, as opposed to one that is more commoditised. And there are some major structural issues in most of the regulatory systems around the world with respect to rooftop installations. They are being facilitated with either net metering of feed in tariff programs. Neither of those, long term, is sustainable. You have to fundamentally restructure the regulatory system if you really want to accommodate rooftop at any sort of significant penetration level.

I don't have too much commentary to add here other than to say: the politics of the major renewable energy players consistently surprise me. 

* Thanks to Lee Kasten for pointing out that I needed to clarify my language here on precisely which industry I was talking about.