Solar panels now only account for approximately 40 percent of the cost of a solar power system. And most technology studies project the cost of panels to continue its drop as a percentage of plant cost with continued advancements in technology and manufacturing.
While this lower cost curve for solar technology is important, terms and availability of financing will determine solar’s future growth. From a financing perspective buying solar is “going long” on electricity. It is a 20-year “put” that locks in an amount and price of electricity. And this upfront 20-year financial put means the cost and terms of financing are as critical, or more so, to the economic viability of a solar installation as the cost of panels.
For this reason I am attending the 2nd Annual Solar Energy Investment & Finance Summit being held November 12-13 at the Hotel Nikko in San Francisco. It is a great opportunity to hear what the big money people like GE Energy Financial Services, Lazard Freres & Co and Morgan Stanley think the terms and conditions should be for financing a solar system.
Also speaking will be representatives from the electric utilities. They set the terms and conditions for Power Purchase Agreements and the potential for feed-in tariffs that underpin any solar financing, from roof top to utility scale. The big three of PG&E, Southern California Edison and San Diego Gas and Electric will all have speakers.
But I am a numbers guy, so let me give you the number that is driving my attendance. It is $100 billion. That is the estimated financing needed to execute the renewable energy goals now in place in 39 states. And how to finance it, determining who will receive financing and under what terms and conditions is what will be discussed at this conference. I will be the bald guy smiling in the back of the conference room listening real close to figuring out how I can contribute toward earning .00001 ($1M) through enabling the financing of solar power. And the idea of the Hotel Nikko filled with like-minded entrepreneurs is the reason I think we will see both a sustainable environment and economy. Hope to see you there!