Solar panels use the photoelectric effect to convert solar energy (the light of the sun) into electricity. They are measured in a capacity of Watts (a unit of power). They produce an amount of kWh (a unit of energy) per hour (a unit of time).

There are several key metrics here:

• Watts per dollar of capex (aka “depreciation” expense)
• Watts per dollar of depreciation + opex
• Watts per dollar of depreciation + opex + land
• Watts per meter of solar panel (aka “land” expense). Generally measured as “percent efficiency”.
• Watts per unit (unit of divisibility). This is important when considering the assembly of solar cells into solar panels, but is irrelevant to the purchaser of solar panels.

It is not reasonable or useful to talk about opex on its own. Most solar panels have almost no opex initially, until they don’t.

A Two-Step Hop

The most interesting problem will be manufacturing “solar cells”. But the only people who will buy solar cells are solar panel manufacturers. So we will start with a solar panel manufacturing business.

The main issues with manufacturing solar panels are:

• Weatherization. Panels need to withstand golf-ball sized hail, being showered with water, temperatures between 250K and 325K (and ideally beyond that range), shaking, humidity, and other environmental hazards. This can be difficult not just for the solar cells but for other materials in construction.
• Construction. Fully manual construction is unlikely to be cost-competitive. It is possible for prototypes.
• Monitoring and Security. It should be difficult to steal panels, and there should be sufficient debugging tools to quickly diagnose partial failures.
• Rotation. The panel should “follow the sun” by physically tilting. This is generally a beneficial cost tradeoff for commercial installations that account for the cost of land, but unnecessary for roof-based systems.
• Depreciation. The target depreciation is 100 years. Initial products will not have that longevity.
• Price. We estimate that solar cells cost $1/watt and target $2/watt for finished assembly before $1 million/year revenue scale is reached.
  • At a retail price for electricity of 10c/kWh, the ROI is 20000 hours. There are approximately 4000 hours per year of daytime.
  • A solar panel is generally around 60 inches by 40 inches (2400 square inches ~= 16 square feet), and is estimated to produce 250 watts. That is around 1 watt per 9 square inches (or 100 square centimeters).
    • Without accounting for the earth’s atmosphere and the angle of placement, the sun’s brightness is 13.6 watts per 100 square centimeters. Systems beyond 25% efficiency are unlikely to be economical at current efficiencies.
  • Manufacturing cost:
    • Solar cells $250
    • Other materials $75
      • Metal housing
      • Clear facing
      • Wiring
    • Costs of manufacturing $75
      • Facility rent
      • Assembly machine depreciation
      • Labor
    • Profit / Margin of Error / Startup Cost recovery $100
  • We expect the long-term profit margin for the solar panel manufacturers to be approximately 5%.
• CO2 emissions - the use of solar panels should be a net benefit
  • 100 gallons of gasoline produces one ton of CO2 emissions and 3600 kWh of energy. Its retail price is approximately the $360 the price above for electricity suggests.
  • The state-of-the-art cost of CO2 removal is a company named ClimeWorks based in Iceland, and it charges approximately $600 per ton of CO2 for capture.
  • Ethanol has approximately the same amount of energy per ton of CO2 as the larger hydrocarbons in gasoline.
    • It is apparently cheaper to buy ethanol and bury it than to buy CO2 removal.
    • It is probably cheaper to use solar panels on an acre of land than to use it to grow corn for ethanol.
• Installation
  • Solar panels must be wired to the house’s electrical grid. Without sufficient on-site battery capacity, there is a currently un-accounted subsidy for “net metering”.
    • I cannot start a solar panel company and a battery company at the same time.
    • The most interesting problem in batteries is an efficient 6-month storage system.
      • For example, pumping water from the Pacific Ocean to 2000ft elevation.
      • Or generating methane from electricity.
  • The wires from the panels to the electric interchange must also be weatherized and buried.

Solar Cells