Introduction

Solar energy has the largest share of power output and capacity growth within the renewable energy transition for most developed and developing economies. In a few countries such as Switzerland, where yours truly is located, hydropower is the largest source of renewable energy.

In today’s article we see how both can work together, with a broader insight into the Floating Solar Photovoltaics (FSP) market and its use case / benefits around the world. We trust this niche sector will see continued double-digit growth throughout this decade, with tremendous investment opportunities. We’ll share actionable recommendations for this trend towards the end of the article.

What are Floating solar Photovoltaics (FSP)

Floating solar Photovoltaics (FSP) offers a promising solution that can address many of the challenges associated with traditional (land/roof-mounted) solar energy systems. Floating Solar Photovoltaics are an innovative way to harness solar energy, using systems installed on bodies of water, such as ponds, lakes, and reservoirs, to generate renewable energy without taking up valuable land. By leveraging the water surface, Floating Solar Photovoltaics not only maximize the use of available space, but also offer additional benefits, like reduced water evaporation and improved panel efficiency due to the cooling effect of water.

This eco-friendly technology is gaining popularity as a sustainable energy solution for a greener future, and an alternative to making land adjustments for land-mounted solar panel farms.

Higher efficiency with Environmental Benefits

The cooling effects

The optimal temperature for solar panels typically falls around 25°C (77°F), the temperature that manufacturers and agencies use to determine the efficiency and output of solar panels. As temperatures increase above this, the efficiency will decrease. Solar panel efficiency tends to decrease as temperatures rise above this point. Temperatures that fall below 25°C (77°F) usually leads to even an improved performance due to the electrical resistance in the solar cells decreasing as well.

Most large solar farms around the world are located at warmer locations, due to the higher available hours of sunlight. The higher temperatures however affect the performance. This is why the solution of floating solar farms are necessary to create an optimal rate of return, both financial and environmental.

Here are 5 reasons why Floating Solar Photovoltaics perform better.

Temperature: Floating solar panels are naturally cooled by the water beneath them, which helps maintain a lower operating temperature compared to land-based solar panels. As solar panel efficiency typically decreases with higher temperatures, floating solar systems may exhibit better performance under similar irradiance conditions. Remember the loss of efficiency above 25°C (77°F)?

Albedo effect: The albedo effect refers to the reflection of sunlight off surfaces. Water bodies tend to have a higher albedo than most land surfaces, which means that floating solar panels may receive additional reflected sunlight, potentially increasing their energy output.

Soiling: Land-based solar panels are more susceptible to soiling from dust, dirt, and other debris, which can reduce their efficiency over time. Floating solar panels, being installed on water, are less prone to such soiling, which can contribute to better overall performance.

Space utilization: Floating solar systems utilize water surfaces, which is particularly advantageous in areas where land is scarce or has competing uses, like agriculture or urban development. Land-based solar systems, on the other hand, may require large swaths of land, potentially leading to deforestation or conflicts over land usage. The New York Times published an excellent opinion article on it.

Environmental impact: Floating solar systems can reduce water evaporation and algae growth, providing added benefits to the local ecosystem. However, they may also create shading that can affect aquatic life. The aspect of aquatic life is case dependent, as the determination whether it’s positive or negative fully depends on the location and depth of the water. Land-based solar systems however often have varying environmental impacts, including potential disruption to local ecosystems or habitats

What does this mean?

The last argument might even be the most important to jumpstart an accelerated adoption of this solution.

Let’s take the U.S. state of California as an example to determine the impact of water evaporation and algae growth.

In recent years, the state has faced challenges with overuse and depletion of its water resources, leading to increased reliance on surface water sources like rivers. Under the warm Californian sun, these rivers will have increased algae growth and evaporation, which causes further shortages of water. One does not need a reminder of the countless times in which California issued drought alerts…

By shading the water surface, solar panels can help reduce evaporation rates and algae growth in Californian waterways, which is particularly important during these critical periods of drought. Aside of that, it doesn’t harm the State to add solar power (located closely to high-demand cities) given the current stability of the power grid (looking at your PG&E)…

The environmental benefits of water-based solar instead of land-based is abundantly clear, but how about the costs?

The cost comparison

Will we be able to equalize the cost of Floating Solar Photovoltaics to land-based solar? There are many varying factors that influence the answer, such as the cost of land at the location of installation, the distance to the power grid, the local government regulation, and the local energy market in general.

The proximity to the electricity grid is highly important in determining the cost of any solar project, whether land-based or water-based.

This is why locating Floating Solar Photovoltaics on reservoirs at dams is a match made in heaven, due to 3 critical benefits:

1. The existing infrastructure (transmissions lines, access roads etc.) can be utilized.
2. Floating Solar Photovoltaics reduce water evaporation, which ensures more water is kept for hydropower generation, thereby increasing the energy output.
3. Solar power works best during dry season, and hydropower works best during wet season. This creates more reliable energy output throughout the year.

As the reservoir ponds are not actively used for commercial purposes, there is no land cost either. Thereby reducing the initial costs. There will be an increased cost for manufacturing specialized mooring equipment and other tools necessary to keep it afloat, but thus far these are not significant enough to be an obstacle. Once engineers develop further towards offshore solar farms, in which one has to manage oceanic conditions, it might become a wild cost overrun. Either way, we have no interest as of writing in that niche field.

Least cost overruns

Solar Farms in general have a reputation of being closest to budgeted price of any major energy investment, as identified by the Flyvbjerg database that has researched historical cost overruns on big projects. Solar plants have been closest to budget of any projects within the list, which doesn’t come as a surprise due to the high predictability of the project. There are very few factors in play that can disrupt the project.

Climate funding maintains focus on solar and wind

Solar energy has received significant attention and funding in recent years, in part due to its rapidly declining costs and the increasing efficiency of solar technologies. Many governments have set ambitious targets for increasing the share of solar energy in their energy mix and have provided incentives for businesses and households to adopt solar energy.

The $1.7 trillion Climate Funding Bill passed in the US support U.S. companies in innovation within green energy research and infrastructure buildout, whereby solar is a major player. The U.S. is currently well behind Asia in terms of FSP projects.

The 10 largest FSP projects around the world are as follows:

1. South Korea – Saemangeum floating solar energy project – 2.1GW
2. India – Omkareshwar Dam floating solar farm – 600MW
3. China – Hangzhou Fengling Electricity Science Technology’s solar farm – 320MW
4. China – Three Gorges New Energy’s floating solar farm – 150MW
5. Indonesia – Cirata Reservoir floating photovoltaic (PV) power project – 145MW
6. India – NTPC Kayamkulam solar project – 105MW
7. India – NTPC Ramagundam solar power plant – 100MW
8. China – CECEP’s floating solar project – 70MW
9. Singapore – Sembcorp’s Tuas floating solar project – 60MW
10. South Korea – Hapcheon Dam floating PV power plant – 41MW

Asia is currently leading with 10/10 of the world’s biggest Floating Solar Photovoltaics projects. With the production of solar panels, China is leading with a nearly full monopoly on the production.

We trust that the funding bill in the U.S., and the many government initiatives within the European continent, will accelerate the sector at a tremendous speed, thereby creating many investment opportunities for the individual investor.

Within our research service, we have recommended multiple listed companies in the solar field that we expect to outperform within the green energy sector.

How Big Projects Performed

Source: Flyvbjerg Database

Conclusion

With the growing demand for renewable energy, floating solar farms are expected to play a significant role in meeting this demand. As such, they should be a part of any investment portfolio focused on renewable energy.

1)    Of the ~92 million acres of corn planted in the US each year, roughly 40 million acres (1.6% of the nation’s land) are primarily used to feed cars and raise the octane of gasoline. If this land were repurposed with solar power, it could provide around three and a half times the electricity needs of the United States, equivalent to nearly eight times the energy that would be needed to power all of the nation’s passenger vehicles were they electrified. (https://pv-magazine-usa.com/2022/03/10/solarfood-in-ethanol-fields-could-fully-power-the-united-states/)

2)      Switzerland has more dams than any country in the world, and hydropower is the main source of energy. Placing floating solar farms on the reservoirs would be a very cost-efficient solution.

(Swiss Dams - Second to none)

3)     A video of China’s solar valley, an example of how it can work at large scale

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