Technology development in the solar industry continues to accelerate at an unprecedented rate. Over $3 billion was invested in new companies and technologies in 2008 alone, and investments in solar have doubled every year for the last five years.
Manufacturers of traditional photovoltaic (PV) panels continue to drive improved efficiencies, inverter manufacturers boast higher reliability, and as in the case of micro-inverters even offer a different take on older technology– producing AC current at the panel or string level. A variety of innovative new thin film technologies and material systems are also emerging with the potential to offer unprecedented new and lower cost structures. Entrepreneurs are addressing the balance of system as well–looking for ways to reduce costs and accelerate the deployment of PV systems while also increasing quality and reliability.
All of this investment is aimed at reaching renewable energy’s holy grail– grid party, the point at which solar power becomes less expensive than traditional polluting sources of energy. The Levelized Cost of Electricity (LCOE) for solar is rapidly closing in on traditional power due to increasing fuel costs for carbon-based energy sources joined with the introduction of new technologies reducing total solar system costs.
Since my last post from the Solar Power International 2008 conference in San Diego, large amounts of the bailout bill have been distributed, Obama has taken office, and the automakers have their bailout as well. “Change” is coming in many forms. In San Diego, we experienced a surge of exuberance around the passing of the solar investment tax credit (ITC) as the logjam of pent-up deals began to move forward. But now, having a couple months for the market to digest what has happened and for people to realize what all these changes mean, a very different renewable energy world is emerging.
I’ve had a lot of queries since October about how significantly the financial crisis has crippled alternative energy – specifically, tax equity-based solar projects. Certainly, albeit temporary, declining costs for petroleum-based energy further raises questions about the timing to move to renewable energy. The industry momentum that was building has undoubtedly faltered.
That said, the financial crisis hasn’t been all bad. It has, in some ways, supported the business model for companies like Tioga. For some time, people were predicting Power Purchase Agreements (PPAs), a third-party project finance mechanism, to represent 50% to 80% of the commercial solar market and a recent Alta Terra survey shows this number now over 70% for 2008. The financial crisis has helped this along because more than ever, companies want to hold onto their capital to help ride out this financial storm and save money where they can. One way to do that and go green is through a solar PPA that allows them to trade a portion of their current utility bill for a potentially lower one via solar, without the burden of additional debt or capital outlay. And, despite the plummeting costs of oil and natural gas (which never seems to translate into lower utility prices nearly as quickly as they went up), it only serves to demonstrate the hedge value a PPA offers against volatility in energy prices.
Solar Energy experienced huge growth in 2008 and that was clearly reflected in the attendance at Solar Power International 2008. The number of manufactures, installers, and investors in attendance doubled from 2007, to 20,000. This rise in attendance and growth in the solar power industry was coupled with a high level of optimism, despite current turmoil in our financial markets. From the outside, people were being told to beware the looming, global economic distress, but the walls of Solar Power International acted like a fortress and generally shielded the Solar Power populous from thoughts economic weariness weighing so heavily on the average America.
As trade shows go, this was one of the best I’ve experienced. The parties were great, stocked with more free food and drink than one could wish for. The historical waterfront Gaslamp district was fabulous and the conference hall was comfortable and relaxing. Not a single person came to the Tioga Energy booth and asked what a PPA is, revealing a more educated industry than in prior years. This high market acceptance means future interactions between clients and investors may go smoother and faster, and there just might be more of them.
The Solar Power International 2008 exhibit hall has a tradition of showcasing new product launches and the latest in solar technology, and this year was no exception. The hardware represented this year, as well as conversations in the halls and conference sessions, highlighted one notable theme absent from past solar industry conference tradeshows I’ve attended in the US: the PV industry is facing a shortage of qualified installers.
With increasing focus on clean, domestic energy generation and federal ITC support now in place, a lack of qualified technicians and installers presents a potentially serious bottleneck to industry growth. In California alone, if the state is to reach its 1 million solar roofs initiative in 10 years, it will require more than 10,000 additional certified installers. This year’s innovative products on the floor attempted to address the problem by reducing the time and complexity of the installation process.
Product Innovation Focuses on Installation
The expo floor showcased a new breed of simplified panel technologies, including wiring, grounding, and mounting elements incorporated into the module framing systems themselves, and simplified wiring harnesses. Developers of microinverters module-integrated inverter systems also demonstrated powerline communications that promise to virtually eliminate all DC and communications wiring, reducing system design and installation requirements to an absolute minimum.
Detering is CEO of Tioga Energy. He is a veteran entrepreneur with 20 years experience in clean technology.
Right now I’m in San Diego, which has become the Mecca of Solar, literally overnight. Solar Power International 2008 has drawn thousands of people from around the world to talk shop and deals. And where I feel like I am living The Strange Case of Dr. Jekyll and Mr. Hyde.
There is tremendous excitement and enthusiasm here in San Diego’s convention center and Gaslamp district.¬† My breakfast meetings start early (7AM) and the days are filled with meetings about very real opportunities and projects. ¬†¬†Finding a quiet corner to meet is impossible.¬† Occasionally, I meet in one of the private meeting rooms hosted by some of the big players attending the conference. But usually it is in one of the many large “meeting rooms” on the upper level.¬†
These rooms are great.¬† They typically have 5 to 10 tables and are well stocked with water, sodas and ice where 3 or 4 meetings are underway simultaneously in multiple languages – German, Spanish, Japanese, English – the Solar World right before my eyes. Very exciting. ¬†
At the conference day’s end, its thousands of solar enthusiasts spill out of the convention center and cross the street. Some people are so eager to get to the Gaslamp District and continue making their solar connections, that they attempt jaywalking. A crossing guard, looking out for our safety, has been kindly, but firmly, threatening people with tickets to keep us in line.¬†