AltEnToday

Here’s some of my thoughts and reactions from the Solar Power 2008 show. I’m trying to break down the sessions by day and topic, so please bear with me - some of these posts may get rearranged as time goes by…

Conference Session: Friction-Free Solar Market

Chuck Hornbrook, Daniela Schreiber, Joe Henri, JP Ross, Pam Newell, Nat Kreamer

This session focused on trying to discover where friction exists within the solar industry, and identify ways to free up capital, reduce stresses on the companies, governments, customers, and employees involved.

One of the first points was made by Chuck Hornbrook, who stated that the current solar incentives in California were burdened by internal costs. Up to 5% of the CSI (California Solar Incentive) was internal management & processing costs. Next, Daniela Schreiber provided insight from the European market. She described the actors in the marketplace including: Governments, Installers, Service Providers, Customers, and Utilities. She stated that industry clustering (like what is currently going on in the Silicon Valley as well as in Germany and southern Spain) increases efficiency by reducing logistical hurdles and increasing collaboration. The uncertainty and insecurity about the industry is creating transaction costs (in delayed decision processes and increased due diligence periods). All the markets across the globe are still in emergence stage, although Germany (where solar conditions are no better than anywhere in the United States) is leading in installed capacity and integration.

Pam Newell of Xcel Energy (a Colorado utility company) identified several ways to improve the customer process, especially where so much paperwork and processing was necessary to provide the government rebates and incentives. She stated that the key to widespread adoption may be as simple as simplifying the communications between parties. She identified the working group within their company, the “Solar Rewards Staff” as streamlining the process between customer, installer, the utility, and the government agencies involved. JP Ross, CEO of Sungevity, a solar sales and marketing firm, has built a unique online purchasing system that allows virtually any homeowner to virtually try out a system. He stated, however, that the biggest challenges that his part of the industry (home-based installations) faces will come down the road, when systems need maintaining. If even 1% of currently installed capacity were to fail, that would mean 14,000 failed solar modules. Unfortunately, without standardization, that means each repair or maintenance cycle is essentially a brand new installation. Standardization is key. (This sentiment, by the way, was echoed by many other speakers and attendees that I spoke with.)

Other presenters at this session included Nat Kreamer, CEO of SunRun, and Joe Henri, CEO of SunEdison (both power purchasing agreement (PPA) providers – solar leasing companies). Both men highlighted the need to simplify the message about solar power, as well as to simplify the way people buy it. Instead of forcing homeowners to face the high upfront-costs of basically starting their own rooftop utility company, PPA providers retain ownership of the panels by leasing the equipment to the homeowner, taking care of maintenance, support, and installation, and send just a simple monthly bill to the homeowner just like a cable bill. Mr. Henri brought up an interesting issue that I had not heard as well in that many fire marshals throughout the state of California were bringing up concerns about firefighters being on rooftops with high-voltage solar panels, and that is something the industry should address.

Conference Session: How to Monetize Solar Revenue Streams

David Kopans, Paul Detering, Hanson Wood, Jan McFarland, Andrew Byrnes

This session focused on identifying ways to make money from solar power outside of the obvious task of “selling power.” This dealt with energy markets as well as environmental ones.

This session was an interesting mix of business, environmental, and regulatory minds. Mr. Detering provided insight in to the hedging side of the industry – using consisdent and relatively predictable solar power to hedge against the volatility of the utility power marketplace. He provided some unique statistical models that broke down both the aggregate curve of increase in the costs of energy over the past twenty years, but also identified the statistical probabilities of future increases, both in amplitude (how much the rate may increase) and frequency (how often those rate increases may occur.) The end result was that in the past, the mean increase in prices in California is 6.8% per year; but volatility is increasing (towards both the up- and the down-side). Companies can purchase solar at a pre-determined rate of return, and the more solar they purchase and install, the greater their resistance to market volatility. Hanson Wood spoke about the Renewable Energy Credits (REC) market. He identified that there are two markets, the voluntary one of customers who want to “go green” and the compliance markets created by state Renewable energy Portfolio Standards (RPS) that mandate certain amounts of adoption of solar or renewable energy technology.

Alternatively, Andrew Byrnes of Spinnaker Energy spoke about the offset market, and painted a rather glo0my picture in relation with solar power. Simply put, there is as he described it a “gas bias” towards offsetting greenhouse gases other than CO2, and that solar will only “count” towards carbon offsets, making it an unattractive option. Some legislative ideas are in the works to update this bias and allow solar to participate more freely. The other point of note from this particular session revolved around a comment Jan McFarland mentioned that there should be incentives and value in zero net energy; business, buildings, or other things that traditionally use power but can be made energy neutral (or even energy-providers).