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MARCH 23, 2022

Good morning from Seattle, after a sun-soaked week in Hawaii (this week’s energy photo is from my trip).

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Send your energy photos, ideas and more to news@ciphernews.com or to me directly at amy@ciphernews.com.

VOICES
How America can reclaim its solar manufacturing prowess
BY: FRANK VAN MIERLO

Frank is CEO of CubicPV, a solar technology company. You can reach him at mierlo@cubicpv.com.

Clean energy can free us from our dependence on bad actors.

Given current events, we need to work on the energy transition with renewed urgency. The United States has an opportunity to accelerate this crucial transition.

Legislation pending in Congress will ensure we lead the solar industries of the future and unlock a tremendous amount of domestic manufacturing potential.

Included among the more than $300 billion in clean-energy tax credits Congress is considering is the Solar Energy Manufacturing Act (SEMA) sponsored by Sen. Jon Ossoff (D-Ga.). It would lower the cost of U.S. manufacturing through refundable tax credits.

The free market is a powerful concept. It’s popular for good reason, having fueled the prosperity of the last century. In the face of Chinese state-sponsored capitalism, however, this 19th century idea falls short.

The Chinese government heavily subsidizes investments in new factories, carefully controls its currency and depresses labor costs. If we were to simply let free market forces operate, then we would keep watching industry after industry relocate to China.

It’s a dependency we cannot afford, and there is bipartisan agreement (most recently in the form of trade measures) that we need a different approach to build and sustain our domestic industries, including solar.

Passing SEMA would make U.S. solar manufacturing highly competitive because it would lower the cost of production, which is key to attracting companies to invest in modern American factories.

I have worked in solar for the last 12 years, and I personally know most of the CEOs. Every fellow executive I speak with plans to invest in new factories if SEMA passes.

The bill would stimulate massive private investment in renewable energy manufacturing by enabling U.S. factories to operate at the scale and cost structure to compete with anyone in the world.

That surge in U.S. production would generate profitable exports to the benefit of our trade balance. The boom in domestic production would in turn drive down the price of solar panels even more and accelerate the adoption of clean energy.

Most importantly, durable policy like SEMA would give the U.S. the opportunity to lead the next era of innovation.

For companies like CubicPV, this is particularly important. Our core technologies are essential to a new kind of solar module called tandem, which extracts even more energy from the sun than traditional solar panels. SEMA would accelerate their introduction in the U.S. market and make it possible to harness the ingenuity that creates long-term global leadership.

Every 15 years, solar leadership has transitioned from one country to another. Solar began at the New Jersey-based Bell Labs in 1953. Fueled by the space race and the need to power satellites, the U.S. invented solar panels and created the technology to harvest electricity from the sun.

After the oil shocks of the 1970s, leadership moved to Japan and the first consumer products—developed by Sanyo, Sharp and Kyocera—became examples of innovation.

In the wake of the 1986 Chernobyl nuclear power plant accident, leadership transitioned to Germany and the country’s feed-in tariff created a strong domestic solar industry.

In 2010, we entered the current phase, dominated by China. The country’s government investment of approximately $200 billion, as well as its ability to replicate and massively scale western innovation, has created a near monopoly on silicon solar modules and their components. SEMA is the law we need to shift solar leadership back to the United States once more.

SEMA will re-shore solar leadership because it will spur investment and create significant manufacturing scale. These activities are vital to fueling the innovation that underpins long-term industry success.

It is this combination of strong policy, scale and breakthrough technology that will ensure the U.S. reclaims its seat at the solar manufacturing table and keeps it for decades to come.

Editor’s note: CubicPV’s investors include Breakthrough Energy Ventures that is affiliated with the broader Breakthrough Energy network, which supports Cipher.
Lunchtime Reads and Hot Takes
A pro-fossil fuel Disney ride voiced by Ellen DeGeneres and Bill Nye? Yes, it existedThe Guardian
Amy’s take: This is pretty wild, and it’s a reminder of all the various ways companies have influence. It’s too bad DeGeneres and Nye didn’t offer comments. They could have acknowledged their participation and used it as an opportunity to underscore the need for urgent action.

Koch Industries, Built on Oil, Bets Big on U.S. Batteries
The Wall Street Journal (paywall)
Amy’s take: The fact that an oil conglomerate’s conservative founders—who have funded climate deniers—are now funding batteries is a pretty darn good sign the clean energy transition is going mainstream and could even pick up steam.

Johnson announces aim for UK to get 25% of electricity from nuclear power The Guardian
Anca’s take: This underscores how differently countries react to the current energy security and energy price crises—and to nuclear energy. For example, while Germany won’t budge on its planned nuclear phasedown, Belgium decided to extend the lifespan of its nuclear reactors and the UK decided to add more.

Climate change: 'Madness' to turn to fossil fuels because of Ukraine war BBC News
Anca’s take: UN Secretary General Antonio Guterres used his first major energy and climate speech since the COP26 summit to remind nations there’s a parallel war happening, which the world is not winning: the fight against climate change. It’s a strong warning as the use of coal rebounds at a time when the world should be phasing it out.

Factbox: Global fuel subsidies ramped up to counter energy price spike Reuters
Amy’s take: I understand the urgency of these for the moment, but the key will be ensuring these don’t remain in place after the crisis subsides.

Europe’s phase-out of Russian energy over the Ukraine crisis could mean opportunity for African countries The Washington Post
Amy’s take: Europe could end up restricting financing to African natural gas as part of its climate agenda (see here) while simultaneously using African gas as part of its energy security agenda.

Finance Industry’s Climate Promises Leave Plenty of Room for Oil and Gas Bloomberg | Quint
Anca’s take: The main point is right at the top: “Fewer than half of 150 major financial institutions have restricted their business with the oil-and-gas sector, even though many of them have made high-profile pledges to reduce their contribution to climate change.” This analysis adds to the wider trend we’ve noticed. Actions need to match words for a significant shift toward a cleaner future.

More reading:
  • Analysis: Climate goals take second place as EU states cut petrol prices — Reuters
  • Scholz: Russian energy ban would mean European recession — Politico Europe
  • Corporate Venture Investors Boost Climate-Tech Spending — The Wall Street Journal (paywall)
  • L.A. needs clean energy. Hydrogen could be the answer—or gas industry greenwashing — Los Angeles Times
  • The SEC proposed a landmark climate disclosure rule. Here’s what to know. — The Washington Post
  • EU looks at an electric alternative to Russian gas: The heat pump — POLITICO
DATA DIVE
Renewables to dominate Africa’s soaring electricity demand
Source: Wood Mackenzie • Roughly half the nuclear is from small modular reactors. CCS stands for carbon, capture and storage technology. Not shown: Geothermal, hydrogen and biomass.

BY: AMY HARDER

Wind and solar power are set to account for roughly two-thirds of Africa’s on-grid electricity by 2050 in a future where the world drastically reduces heat-trapping emissions, according to a new study by consultancy Wood Mackenzie. That’s up from just 4% in 2020.

Hydropower, nuclear energy and natural gasboth with carbon capture technology installed and withoutare the other key sources projected to produce electricity on the continent.

“Africans are least responsible for and most vulnerable to climate change,” said Benjamin Attia, lead author of the report and a principal research analyst for Wood Mackenzie’s energy transition practice. “There’s a huge energy equity component here, and closing that gap presents a big market opportunity that our clients should be paying attention to.”

Resources not shown on the chart include geothermal, hydrogen and biomass, the first two accounting for less than half a percentage point each, and the latter less than 3%.

The study assumes the world keeps Earth’s temperature to an increase of 1.5 degrees Celsius by mid-century. That goal is increasingly out of reach, but it’s nonetheless important to keep striving for it because scientists say extreme weather could get infinitely worse otherwise.

Africa, which accounts for a tiny fraction of global energy consumption today, would have a nearly fully decarbonized (87%) electricity sector by 2050, per Wood Mackenzie’s model.

Because many African countries are still developing their economies and infrastructure systems to support them, the continent presents opportunities to build up cleaner, less centralized power systems than other more developed parts of the world, the study found.

“This is the beginning of the next generation of the utility business model,” Attia said.

This chart addressed on-grid electricity only, which currently accounts for the vast majority (between 93%-97%) of Africa’s power.

But the generation potential for off-grid resources (like solar and storage systems) could reach 20% of the total mix by 2030, according to Attia. That is huge compared to the developed parts of the world, where such off-grid power barely registers.
AND FINALLY...
School-top Solar
I snapped this photo of rooftop solar on a school in Hanalei, Hawaii, last week, while on vacation. Hawaii is the most petroleum-dependent state (including from Russia!). Sixty percent of its electricity comes from oil, according to the U.S. Energy Information Administration. Solar power provided almost 17% of the island state’s total electricity, mostly from the increase of small-scale, customer-sized solar panels like this, which have doubled since 2015. Although it was anecdotal, I noticed a lot of schools had rooftop solar.

Each week, we feature a photo that is somehow related to energy, the thing we all need but don’t notice until it’s expensive or gone. Email your ideas and photos to news@ciphernews.com.

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