“Solar power will soon be the cheapest form of energy in U.S…” – Danny Kennedy, President, Sungevity
Of all of the solar industry spokespeople, experts, and pundits, I like Danny Kennedy most. He’s a straight talking Australian and I love it when he gets going on a good rant. Passion aside, the fact is I usually find myself in agreement with the guy on most topics. Kennedy says, “We don’t need to build a new technology, the solar tech we have today is excellent … what we need to do is sell it better. What is required to scale this industry … is financial engineering.” He pointed out that there are three major costs involved: (1) cost of goods, (2) cost of sales, and (3) cost of capital. The solar industry has shown great improvement in the first two categories, he said, but not much on the third.
Today, he and his panel cohorts are telling the audience the solar industry needs to change its message. Kennedy says, “We are way too modest as an industry.” They tell us the solar industry is spotlighted to be responsible in the following areas …
That’s all?! Well, this is a challenge.
Mike Casey, President of Tiger Comm, a media-communications company working for SEIA, pointed out the solar industry is matched up against entrenched technologies and fossil fuel industries who own Congress. The coal industry has over a hundred years of political and industrial influence that is tied heavily to transportation, especially the freight train industry because much of it is transported by rail. Lobbyists for these industries have long been instituted in Washington D.C. and their clout is indisputable. Even so, it is evident that the solar industry is making progress on all fronts, but we need to promote these advances, especially in light of the recent failures of Solyndra and Evergreen.
Although solar power is considered the most popular form of energy sector by most Americans, it is the least supported energy in the nation. People know that sunlight has been around for billions of years and will be available for billions more to come. There isn’t a peak problem with the Sun like there is for fossil-based fuel sources. So, we got that going for us.
SolarWorld declares war on China
Of course, the big buzz of the day belonged to the announcement that SolarWorld filed a complaint with the U.S. Department of Commerce and International Trade Commission claiming unfair practices on the part of Chinese solar manufacturers. The complaint identifies 200 subsidies that the Chinese government provides its solar industry — including raw materials, tax exemptions, below-market loans and huge discounts on land, power and water. Although the filing appeared timed to correspond with the SPI, the news was unwelcomed by many here at the conference. It put a damper on the entire show and was topic of conversation on the exhibit floor. Maybe it was my imagination, but it seemed quieter at the Chinese company booths after that announcement was made.
Sure, I have an opinion, why do you ask?
I was invited by the Solar Energy Industries Association (SEIA) to give my opinion about solar energy and the role SEIA plays in the industry. An outside agency was hired to conduct focus groups to gain insights on developing the brand. The purpose of this research is to determine if the brand captures the value that the organization offers to its members and the industry. I chose the afternoon session which lasted about 90 minutes. My group of twelve included a good cross-section of the solar industry and it was a fun exchange.
These are the sessions I attended:
- Expanding Residential Solar Markets
- The Utility and Industry Case for Community Solar
- Financing Residential Systems
- Market prospects for solar in North America: New data and emerging trends
- Merger & Acquisition: Strategic Partnering and Consolidation in the Solar Space
- Solar Jobs: Real & Growing
- Corporate Social Responsibility – hosted by SEIA’s EHS Committee
At a session on residential solar a graph was displayed which showed the U.S. residential solar market (installed) way behind Japan, Germany and … Belgium. Belgium?! One speaker said, “surely we can match a country of only 10 Million. How can we hold our head up if we don’t? Our rally cry should be – let’s catch Belgium!” Indeed.
As we head into Q4 2011, solar module (over)supply is about double the current demand. We’ve seen this coming, but it still is surprising how much inventory is available at such lower prices. We wanted scale, well now we’re getting it, so next is to build demand and I, for one, am ready to do just that.
Europe will be one-half of past demand, while Japan and U.S. markets are increasing year-over-year. Estimates are that U.S. solar market will account for 25% of the entire global market and we should get close to 10 Gigawatts by the end of 2015. Getting to scale is costly for everyone, especially manufacturers. A major market driver is the dropping prices of solar modules, but this situation has a negative impact in that lower prices = lower margins, and solar manufacturers are struggling to survive. I think we’ll see a few more fall to the wayside over the next year. Won’t Fox News be absolutely giddy?!
Even thin film products, such as what First Solar produces, are dropping in price and experts predict that thin film will make inroads against silicon products by taking 25-30% of the market in the near future. I’ve heard this before.
Utilities ownership of solar power has doubled. In 2010 ownership grew from 9% to 18% of the market by capacity.
JP Ross, VP of Sungevity, said “this unstable U.S. solar market is like living in the Bay Area earthquake zone, where many small to large quakes come and go. You never know when the next BIG ONE is coming, but you know it will eventually.”
SolarCity – John Stanton, VP, Gov’t Affairs
- 17,000 completed projects to-date with a solid pipeline.
- Currently has 1,300 employees with openings for hundreds more
- $1.4 Billion in project financing & capital acquisition
- Is connected to the emerging Electric Vehicle (EV) industry via company chairman, Elon Musk, who also owns Tesla Motors.
- Planning an IPO on NASDAQ for November 2011
Sungevity – Danny Kennedy, President and JP Ross, VP, Strategic Relationships
- Offers third-party financing for people who don’t have the up-front capital and want to “pay as they go” for their electricity
- Now in eleven states where (residential) rate structures are competitive – 5 new states in 2011
- Currently employs 300 people in Oakland California (up from 160 last Spring)
- Provides $1.5 Million of installed solar per day
SunRun – Ethan Sprague, Director, Gov’t Affairs
- Now has 25% market share in residential solar market (as of Q3 2011)
- Expanded into 9 states and data shows that their solar leases make up 58% of the U.S. residential market and that percentage is growing.
Only 1% of New York City residents can own and site a solar array on their household. That’s it. In fact, research shows that only 25% of the entire residential inventory in America can own rooftop solar, so this leaves 75% of our residents who cannot. This is a social inequity issue in many people’s eyes. Community solar, via virtual metering, aggregated metering, solar share programs, and the like, will allow for broader participation and create opportunities for people to invest in clean energy who otherwise cannot.
It can appeal to the 40 Million rental households in the U.S. who cannot contribute or participate in residential solar energy as they are outside the current market. If solar advocates and energy businesses can solicit these folks by developing “community” programs even a modest percentage will add megawatts more to the grid.
Tom Price, Director of Policy at Clean Path, is helping to create a favorable atmosphere for community solar in California. He mentioned California’s proposed solar gardens bill (SB 843 Community-Based Renewable Energy Self-Generation Program). This so-called “Solar Gardens” bill is similar to Colorado’s Community Solar Gardens Act of 2010. I like this idea and think all state houses should be considering this kind of legislation rather than the on-again/off-again incentives and rebates we’ve been carving out state by state. Oh, how I yearn for a comprehensive federal energy policy.
SPI Dallas – After Hours
The rather downbeat mood of the day wasn’t at all evident in the after-hours events – that’s for sure. Yeehaw … they sure throw a good party in Texas! I made it to a number of company-sponsored events, but the SPI-sponsored “Block Party at Gilley’s” was by far the largest single party I’ve ever been to in my entire life. Looked like more people were at this honky-tonk (the size of a football field) than at the conference itself.
In the spirit of the venue, SolarWorld hired a Mariachi Band to play at their reception at a downtown Dallas Tex-Mex place. There was buzz in the air about the unfair practices petition, but most people avoided the topic, and plenty were watching the local Texas Rangers play in the MLB World Series. The margaritas helped dull the pain. Come to think of it, I didn’t see a single Chinese person at the SolarWorld party. Huh! Well, I guess they were over at Gilley’s riding that mechanical bull.
Same Time Next Year
SPI 2012 will be in Orlando Florida. Ughhhh … another place I don’t particularly care for. This coming year will be one of chaos and consolidation in the solar industry, so I may attend just to keep a seat on the solar coaster. There are some huge questions for the solar industry that need to be answered, such as:
- Will U.S., Japan, and China markets evolve enough to gobble up the module oversupply?
- Will the U.S. become the largest global photovoltaic market as projected?
- Will the federal tax credit survive Congress and continue until the intended deadline of 2016?
- Will solar photovoltaic be able to compete with fossil fuel pricing by 2015? (rate parity)
This business is not for the faint of heart, my friends.
Quote of the day: “Levelized cost of energy (LCOE) will lead solar to be the lowest cost option for 66% of the U.S. housing market by 2015.” – JP Ross http://energytechnologyexpert.com/cost-of-power-generation/how-to-calculate-the-levelized-cost-of-power-or-energy/