California's Community Choice Aggregation Act [AB 117] looks like it may have been TOO good an idea.  Following on the heels of San Francisco and Marin issuing RFP's for community power, there is now a proposed ballot initiative that would change the power customer opt-out provision to basically an opt-in provision.  This makes quantifying the rate base asset much more difficult.  And if you ain't got the rate base, you got nothin'.

No word yet about how the SFPUC and the Marin Energy Authority are planning to handle this initiative--called the Taxpayer Right to Vote initiative but what should really be called the CCA Killer ballot initiative.

Follow the math, and you can understand how much this means to California's investor owned utilities.  PG&E, as one example, has about $1B in annual ratebase revenue.  San Francisco's CCA would have ripped about $200M in ratebase, and Marin would have pulled another $80M.  This represents a 30% reduction in PG&E revenues in 2010--a change from forecasts in 2006:

"In its medium case, PG&E assumed that 3% of its customers would begin to migrate to community choice aggregation in 2006 and the rate of loss to this market will increase by 1% annually, reaching 10% in 2013."[p 26]

A $240M delta in 2010.  So you can see why the money spent putting together the Taxpayer Right to Vote Act looks like a really good investment.  Efforts to defeat this initiative look insufficient at this point.

As a solar developer, a CCA is a great customer, typically with higher demand for renewables--Marin is planning on offering a 100% renewable program for customers.  More customers means more demand for clean renewable power.  Is this initiative bad news?  There is an interesting carveout in the initiative:

"This section shall not apply to any bonded or other indebtedness or liability or use of public funds that...is solely for the purpose of purchasing, providing, or supplying renewable electricity from...photovoltaic...[or other renewables].

This carveout sounds like it preserves the property assessed energy district financing that is a real innovation, but will it save a CCA if it is sourcing 100% renewable power?  Does this work if you are on the utility side of the meter? Looks like we stay on the customer side of the meter, and compete against retail power rates.  Or we focus on the feed in tariffs working their way through the CPUC and the legislature.

I will vote against this initiative if it makes it to the ballot this fall--the issue is about communities having the right to "own" their ratebase assets instead of the investor owned utility, not about taxpayers and right to vote. 

A close reading also leads me to conclude that it stops any municipally owned utility [MOU] from raising any additional capital or expanding their service territory without a 2/3 majority vote at the ballot box--a very tough restriction in a capital intensive industry.  No capital to establish or expand electric delivery service without first winning a 2/3 majority at the ballot box--this is going to slowly strangle a lot of MOU's. 

Competition in power is a good thing--and this initiative cripples competition because it locks in the rate base with the IOU.

Am working through a request from Marin County and looking at the request from San Francisco to understand one, whether community power is a good thing, and if so, how solar can help.

Conceived about five years ago as a response to the 2001 California energy crisis, local communities can own their power generation assets and supply power via wires and poles maintained by the investor owned utility.  Areas such as Palo Alto, Los Angeles and Santa Clara [all municipally owned utilities, or MOU's] stood out during the crisis because they did not suffer, but had sufficient energy independence to avoid blackouts and actually sell surplus power back during the crisis.  Now, using the in-place rate base for the community as an asset, local power authorities have the power to not only choose who provides their power, but also where it comes from.  Called a Community Choice Aggregator [CCA], these joint power authorities are being set up in a number of California communities who want greener, and cheaper grid power.

Marin CCA revenues paid in power rates would be about $80 to $90 million per year, San Francisco's about $200 million.  The key assumption that is being tested is whether CCA's can source power that is greener and cheaper than the investor owned utilities doing business here.

CCA's can be a great ramp and job creation engine for local distributed generation assets.  San Francisco's plan shows a need for 31MW of solar in the city, for example.  The question is how best to use the CCA format to capitalize the development of this local green power.  The goal is using inexpensively generated baseload power to help fund development of lots of cheap, green power.

The Marin request has the following main points:

1. power generated must meet or beat local utility cost, be load following, and be quoted for a five year term.  Resource adequacy must be guaranteed.
2. power generated must have at least a 25% renewable component
3. market size is estimated, not guaranteed.  Customer re-entry charges are not set.

Here is Marin's forecast energy demand:

To date, no CCA has been established in California. Uncertainty due to true-up costs related to utility stranded costs and customer drop-outs and the short term meet or beat requirement has stopped CCA implementation.  San Francisco, Kings River and Marin are now testing the primary premise of whether an energy service provider can meet or beat  investor-owned-utility pricing.  

My interest is how you use CCA purchasing power to increase the amount of local solar.

The implementation of the American Recovery and Reinvestment Act's renewable energy provisions is a huge stimulus for the deployment of renewables.

Combine this with the oversupply situation of silicon and modules, and we have a situation where I forecast where we will be able to provide carbon-free peak power at a lower cost than fossil fuel within five years.

Add to this the carbon cap-and-trade legislation in the Congress right now, and there is a nice tailwind developing.

The trend is our friend, the question is becoming one of implementation.

Issues I am working through include:

1. how to structure a relationship with an energy service provider to give us a good ramp to develop local distributed generation assets in the service area,
2. how to leverage revenue bond financing to provide a discounted purchase price for the asset once the tax attributes have fully vested either through a lease or partnership structure,
3. how to effectively deploy energy productivity [efficiency] and demand management initiatives given that CCA entities can access a pro-rata share of energy efficiency funds,
4. what kind of monitoring equipment will be needed at substations and at larger end users to balance load with distributed and variable generation assets, and
5. what the cost of this shaped power looks like, given a combination of long term, tolling, opt-outs, energy efficiency, and spot market contracts.

"Even in this time of enormous financial uncertainty (not to mention a deepening concern, if not panic, about the health of the planet), the sense of boundless potential, the promise of The Graph, is palpable."

From the DEC08 Fast Company article.

President Obama is due to sign HR1, the $787 billion American Recovery and Reinvestment Act tomorrow in Denver.  Contained in HR1 are 19 provisions that provide critical incentives to reduce our dependence on foreign oil, help create over 100,000 jobs, and starts to put in place a smart energy grid that doesn't carbon load our atmosphere.  This is a great extension to the pipeline created by the 2 to $3B of venture capital that has gone into funding renewable energy startups over the past twenty-four months.

This Mother-of-All project finance incentives--$25 billion--is just what our industry needs to retake the USA's global leadership in the solar industry--a position we last held more than twenty years ago.  

Project finance was the single largest obstacle in continuing our path to a cleaner future.  HR1 is a huge win for energy independence.  Kudos to our President for getting this achieved so quickly.  Now that's Shock and Awe...

1.  Renewable Energy Grants

With the goal of doubling renewable energy generating capacity over three years, this legislation restarts our project pipeline.  HR1 creates a new program through the Department of Treasury that gives us another option to placing the solar investment tax credit with a bank or life company.  Treasury is now authorized to buy our Section 48 Solar Investment Tax Credits with cash grants equal to 30 percent of the cost of solar property placed in service during 2009 and 2010. 

Projects we don't power up prior to 31DEC10 qualify for the grant program as long as we begin construction prior to 31DEC10 and we place in service by 1JAN17. Applications must be filed by 1OCT10.

The single biggest impediment to capitalizing commercial projects was the inability to monetize the tax equity [PTC/ITC above] because the banks were kaput. HR1 fixes this.

Solar's big advantage in being shovel-ready is that many of our projects take only six to twelve months to complete--no discretionary planning approvals required for California.  My projects can be powered up by the time another technology gets through running the gauntlet of discretionary approval.

Stay tuned--Treasury will have to clarify how to apply and what it means to commence construction.

2.  Coupling Renewable Energy Grants with Subsidized Renewable Energy Financing 

Starting in 2009, our projects can now qualify for the full amount of the solar tax credit, or the above grant, even if we are capitalizing a solar project with subsidized energy financing (e.g. below market loans, tax preferred bonds, state grants etc.). Winners here are public entities who need us to capitalize their solar plants as well as programs funded through district energy financing--Berkeley's being one of the first.  Together with state legislation authorizing non-charter cities to offer solar system loans through property tax assessment districts [CA AB811], this funding structure brings our cost of power down to below grid cost here in Northern California.

3.  Renewable Energy $60B Loan Guarantee Program

Leveraging off of a forecast $100B in private sector clean energy investments, HR1 includes a two year DOE loan guarantee program for renewable energy projects, renewable energy manufacturing facilities, and electric power transmission projects. The legislation appropriates $6 billion to pay the credit subsidy costs, which should support $60 billion worth of loan guarantees. Eligible renewable projects are those that generate electricity or thermal energy and facilities that manufacture related components.

One side benefit of these loans financing incremental renewable generation is that we insulate our economy and our standard of living from fossil fuel price spikes.

Projects must commence construction by 30SEP11. Davis-Bacon wage requirements (prevailing federal wage) apply to any project receiving a loan guarantee.  Missing piece is now a widely deployed feed in tariff [FiT] that allows us to harvest the available sun and not just offset onsite demand.  Both California and Hawaii should have a FiT in-place by mid 2009.

4.  Renewable Energy Manufacturing Investment Credit

Treasury will provide $2.3 billion to fund a 30 percent investment tax credit for manufacturing assets used to manufacture advanced energy property. Projects must be certified by the Treasury, in consultation with the Secretary of Energy, through a competitive application process. Effective upon enactment.

5.  Remove Limits on Solar Water Heating

Solar water heating is actually the most economic way to harvest daylight--it works in diffuse daylight conditions [cloudy days], in northern climates where you have a higher heat demand than a cooling demand [Seattle instead of Santa Barbara] and to date has not been well incentivized here in the US.  Section 25D of the Code provides a 30% personal tax credit, claimable against AMT, for the purchase of qualified solar water heating property that is used for a purpose other than heating swimming pools and hot tubs.

6.  Extend Bonus Depreciation

PV systems benefited from bonus depreciation in 2008.  HR1 extended bonus depreciation until the end of 2010.

Small business taxpayers are allowed to write-off up to $125,000 (indexed for inflation) of capital expenditures subject to a phase-out once capital expenditures exceed $500,000 (indexed for inflation).

7.  Solar and Green Renovations on Federal Property

HR1 added $5.5. billion to be deposited into the Federal Buildings Fund to construct, repair and make alterations on federal buildings to increase energy efficiency, including installing solar energy equipment.  $4.5 billion shall be available for measures necessary to convert GSA facilities to high-performance green buildings.

The Department of Veteran's Affairs was appropriated $1 billion for non-recurring maintenance on their facilities, including energy projects.

GSA estimates that 75% of the anticipated projects will include a solar component.

8.  Department of Energy Funding

Appropriates $16.8 billion to DOE’s Office of Energy Efficiency and Renewable Energy, including $2.5 billion for applied research, development, demonstration, and deployment projects.

The total amount includes specific appropriations for the following:

1. Conservation block grants  of $3.2 billion
2. Weatherization $5.0 billion
3. Batteries $2.0 billion
4. State Programs $3.1 billion and of these;

• California is allocated $172M,
• Hawaii, $25 million,
• Oregon $50 million,
• Washington $50 million.

9.  Department of Interior Funding

There are about 60GW of renewable projects planned on BLM lands in the Mojave Desert--more than California's current 33GW peak power need.  Lack of transmission and distribution (T&D) and permit approvals from the Bureau of Land Management have stymied these projects.  HR1 appropriates $125 million to BLM for the management of lands and resources and suggests funds be used for renewable energy rights-of-way and related permitting projects.

10.  New Clean Renewable Energy Bonds (“New CREBs”)

HR1 provides an additional $1.6 billion for new clean renewable energy bonds to finance facilities that generate electricity from renewable energy sources including solar facilities.

11.  5 Year Carryback of Net Operating Losses

For tax years 2008 and 2009, extends the maximum carryback period for net operating losses from two years to five years.  Eligible small business may elect to increase the carryback period for an applicable 2008 NOL from two years to any whole number of years elected by the taxpayer that is more than two and less than six. An eligible small business is a taxpayer meeting a $15,000,000 gross receipts test. (see Sec. 448(c))

An applicable NOL is the taxpayer’s NOL for any taxable year ending in 2008, or if elected by the taxpayer, the NOL for any taxable year beginning in 2008. However, any election under this provision may be made only with respect to one taxable year.

12.  Qualified Energy Conservation Bonds

HR1 authorizes an additional $2.4 billion, up from $800 million, in bonds to finance State, municipal and tribal government programs to reduce greenhouse gas emissions.  These bonds can be used by government agencies to reduce energy consumption in publicly-owned buildings by at least 20 percent, implement green community programs, or develop electricity from renewable energy resources. 

Demonstration projects that reduce peak electrical use also qualify.  Public education campaigns to promote energy efficiency can also be funded. 

13.  Electric Transmission Infrastructure

3,000 miles of new or modernized power transmission lines and 40 million smart meters.  HVDC grids need to run east/west to follow the sun.  Current HVDC transmission runs from Bonneville Power's dams on the Columbia to Los Angeles.  HR1 remedies this by permitting Western Area Power and Bonneville Power Administrations to borrow funds (up to $3.25 billion each) to construct or finance transmission lines.   It's a big, multivariable problem--here is the current report on available renewable resources.

DOE is directed to include analysis of renewable energy sources, including solar, in its 2009 National Electric Transmission Congestion Study.

14.  Solar for Schools

HR1 has a provision for a $53.6 Billion state fiscal stabilization fund.  Approximately $10B of this shall be used for public safety and other government services, including the renovation of facilities and schools to meet green building standards--including installation of solar electric and solar thermal.

15.  Green Collar Jobs

Appropriates $500 million to fund job training programs in energy efficiency and renewable energy.  Also appropriates $250 million for rehabilitation and construction projects on Job Corps Centers, including energy efficiency and renewable energy projects.

16.  Smart Grid

HR1 provides up to 50% reimbursement to smart grid demonstration projects in urban, suburban, tribal, and rural areas, including areas where electric system assets are controlled by nonprofit entities or investor owned utilities.  The Secretary of Energy is also required to maintain a smart grid information clearinghouse.  As a condition of qualification, demonstration projects are required to use open protocols and standards. This sounds like a great idea for our Marin Energy Authority.

The legislation provides a 30% tax credit for property designed to produce energy conservation technologies (including energy-conserving lighting technologies and smart grid technologies).

17.  Solar for the Military

The military is one of the biggest energy users in the Federal Government, and its operations are often in locations with limited or non-existent grid power.  HR1 appropriates $300 million for DOD research, development, testing and evaluation of projects to improve energy generation, transmission, and energy efficiency.

An additional $100 million is appropriated for Navy and Marine Corps facilities, and further specifies that funds are for energy efficiency and alternative energy projects.

18.  Remedy for AMT and R&D Credits in Lieu of Bonus Depreciation

Where a taxpayer is in a loss position, deductions in excess of income are unable to enjoy the benefit of bonus depreciation. HR1 extends the allowance in the Foreclosure Prevention Act of 2008 that permits AMT and loss taxpayers to receive 20% of the value of their old AMT or R&D credits to the extent such taxpayers invest in assets that qualify for bonus depreciation. The amount is capped at the lesser of 6% of outstanding and unused AMT and R&D credits or $30 million. 

The extension of the additional first-year depreciation deduction is generally effective for property placed in service after December 31, 2008. The extension of the election to accelerate AMT and research credits in lieu of bonus depreciation is effective for taxable years ending after December 31, 2008.

19.  Solar Water Treatment Plants

Water treatment is a huge energy user.  The stimulus bill provides $6 billion for the State and Tribal Assistance Grants account ($4 billion for the Clean Water State Revolving Funds and $2 billion for the Drinking Water State Revolving Funds). To ensure that the funds are used immediately to create jobs, the money must be committed to projects under contract or construction within 12 months of the date of enactment.

HR1 requires that not less than 20 percent of each Revolving Fund be available for projects to address green infrastructure, water and/or energy efficiency, or other environmentally innovative technologies. The bill allows States to use less than 20 percent for these types of projects only if the States lack sufficient applications.

________________________________________________

The single biggest issue to me is the lack of confidence among our customer base--solar happens when your customer believes it is the right thing to do, and commits.

Predictions are always wrong.  The real point is how wrong are they? 

I queried many solar professionals at the end of 2008 on what they believe will happen in our industry in 2009.  Solar power has been growing much faster than people believe.  Renewables are a major plank in the new administration's pragmatic platform--creates green collar jobs--and the economics are getting dramatically better. We need to get past this financial train wreck unfolding before us and then watch distributed [variable] generation become a major part of how we source cheap, green power.

 10.  Where Do We Install It All? 

Supply is doubling in 2009 from 7GW to 14GW of production, if you believe Rogol and Photon, on its way to 50GW of production by 2012--130GW to be developed and powered up in the next 48 months.  Germany is good for 1GW/yr, rest of Europe for 1GW/yr...where will the rest be integrated into? 

Aidan Foley notes potential solar development market in US doubles in size in 2009, as cap and trade, RPS, and incentives make developers, investors, and host customers all see--and want--solar's economic value-add.

9.  European Energy Companies Enter the US Market. 

The US is the largest, fastest-growing market in the world at this point.  We have a new president who understands the value of renewable energy from a national security, job creation, and environmental standpoint.   Demand is growing.  This giant sucking sound will attract independent power producers from Europe and elsewhere, wanting to profit from the retooling of our power grid. 

It's not easy--note the near disappearance of German company Conergy AG.  Losing up to $50M in the US market over the last three years, Conergy pursued a flawed strategy of breakeven-at-best projects.  They made the odds even worse by buying small companies to aggregate a US footprint.  They shoulda bought PowerLight when they had the chance.

8.  Electric Car Charging Stations become Standard Equipment in Parking Garages.  Transferring 10kWh of power from the grid to your plug-in car is becoming an oft-requested design element of our parking garage solar arrays.  How close are we to a tipping point for plug-in hybrids? 

What better way to tell your customers and employees that you are serious about reducing your carbon footprint than allowing them to plug their hybrids into the sun?

7.  Finding Out the True Meaning of A Warranty.  There will be a major component recall during 2009 that will cause our industry to focus on product and production warrantees.  There are a number of bleeding edge technologies that are starting to be deployed--some will be great, some will become a footnote--reminding us a warranty from a reputable manufacturer is different from a startup's.  Historical warranty reserves may not be sufficient if we are deploying a "cool" technology.

6.  Micro-inverters own the residential market.  Enphase Energy is producing a game changing product for the residential market.  Better communication, easier wiring, and less susceptibility to ground-fault interuption.  Now they just need to get the cost down to big dumb inverter pricing.  Several more to follow, but enphase has a 12 to 18 month jump on the competition.

 5.  Second Solar is Already Here.

First Solar--the Ohio based lowest-cost solar PV producer in the world--with an impressive manufacturing ramp and 2009 pricing of $2.20/W for long term contracts [versus $3.40/W for multi-crystalline currently] is a force in getting us to the $1/W coal-equivalent cost of power . 

$1.7B of venture capital was invested in the first three quarters of 2008 on bets as to who will be the next industry leader.  Capital has since dried up, but I like Solyndra's cylindrical modules, CaliSolar, and 1366 Technologies.

A recession is the best time to start a company, and with a new president and a new administration focused on climate change and energy independence, I am optimistic.

Here is Nanosolar CEO Martin Roscheisen's take on the solyndra product, although he does not mention it by name.

4. AB 32/Cap & Trade ReFrames the Growth Debate. 

33% renewables by 2020 means we need to get started yesterday.  This is California's mandate on global warming--costing $25B in 2020, but providing $40B in energy savings alone.  Cap and Trade means no new coal fired power plants have been approved recently, and none are likely to be permitted in 2009.  Combine this with increasing fuel costs, and the difficulty of extending operating licenses on older, polluting power plants, and you get increased demand for green power.  More compact development patterns [SB 375] means that marginal real estate--rooftops, parking and walls--is used to harvest daylight.

3. Component Costs Drop, Capital Costs Rise. 

Industry expert Andy Black predicts module prices will drop 40% by the end of 2009, taking $1.50/watt out of the cost stack.  Currently PV system costs are far below prices--driven by demand from Spain, Germany and increasingly California.  High-margin sectors such as polysilicon and wafering take a hit as system prices drop to a more normal relationship with costs, opening up demand.  

System prices move from $7-$7.50 per watt to $5 to $5.50 per watt.   Cost per kWh for ppa deals rises slightly as tax equity is 20% more expensive than it was eighteen months ago, before dropping down to the 8% after-tax range by the end of the year.  Tax equity costs go from 7% in early 2008, to 11% in early 2009, dropping to 9% by the end of the year.  Solar tax equity is priced against the low income housing tax credit, and the wind production tax credit.  Solar is a more straight-forward, lower risk transaction--question is when will the market recognize the lower risks of the solar ITC and price it accordingly.

Tobin Booth of Blue Oak Energy predicts grid power prices will go up 8%+ in 2009--meaning solar equivalent power pricing in our markets goes from $0.173/kWh to $0.187/kWh.

2.  Significant Consolidation of Module Manufacturers. 

Shift from a demand constrained [~6GW] to a financing constrained market [~12GW] means that prices will drop and smaller manufacturers will be slammed together into companies that can make it through the repricing that will occur between 2009 and 2012.  Companies will be merged and assets bought for pennies on the dollar.

1.  Utilities Learn to Love the Solar ITC.  The top 30 utilities pay an estimated $16B in federal income taxes per year.  The push towards renewable portfolio standards--20% in California in less that 12 months means increased demand for clean, cheap power.  Combine this with the drop in system costs and streamlined permitting available for distributed PV generation, and you get a spike in demand for solar investment tax credits from a new market segment. Renewable tax equity investment was about $6B in 07, trending to about $5B in 08--the utilities can double this with an additional $5 to $7B in tax equity. 

Current estimates are about 1GW in additional demand, 7x over 2007--7 to 8% of global production for 2009.  Utilities will have a tough time figuring out how to play this, but they are the logical candidate to replace/augment the banks in the cap stack--and have a better idea of what technology they want to own and generate power with.

BONUS Prediction: 

With all these plug-ins in our property parking lots, solar powered vehicle charging kiosks will be a valuable amenity.  You will park your Tesla in the parking structure, recharge it via the kiosk at $0.20/kWh and then permit your car to sell power to the building's grid at a price you choose when peak demand occurs--typically in the late afternoon, leaving you enough power to return home and charge up on your home grid.  

And it seems we will need those kiosks--the boys at Top Gear made a couple of interesting discoveries when test-driving a Tesla:

How many plug-ins will be in your parking lots by the end of 2009?  I bet they will be clamoring for solar powered re-charging kiosks.

Need to round out your understanding of commercial solar projects and how to get the math to work in our current difficult environment?    Check out this course I am instructing at UC Berkeley Extension in downtown San Francisco this spring.  The essence of the course is a team=based exercise in investment grade due diligence for solar photovoltaic [PV] investments in California and the West.  The capstone of the course is the preparation of your team's investment grade feasibility study for presentation to your classmates and a professional jury on 2MAY09.

I do a low gear flyby of current technology, and then get into demand, capitalization, and design of PV systems.  The recent shortage of tax equity--and the increased cost of this essential part of the capitalization stack-- has meant dramatic changes in solar project finance.  Need more info?  Here is the current draft of the syllabus. This will be updated between now and the start of class to reflect changes in component availability, pricing, and tax incentives.  A multi-disciplinary approach to underwriting solar is used--this course is designed for tax credit investors, commercial [ppa] solar integrators, lenders and attorneys to help them get solar deals done in today's difficult environment.

This is the text I use.  Purpose is to build a foundation--it is exhaustive enough you can really dive in, or you can just refer to it when needed.  I find this book the best current overview and reference on PV, and it covers what is happening in Europe and the world, for PV is truly a global application. 

My perspective is that of seasoned solar developer with over twenty years of commercial real estate investment and development experience here in NorCal. 

I hope you can join me for this course.  First session is Saturday 21MAR09 from 9A-5P, then five Tuesday evenings from 630-930P, then presentations on Saturday 2MAY from 9A-5P.

Robert Metcalfe, the guy who developed Ethernet, is now focused on clean, cheap power--and the world needs LOTS of it.

In this talk [real networks required] at MIT he discusses his concept of the Enernet and goes about mining the history--and his recollection, since he "was there"--of the Internet for lenses on how to view our current energy crisis.

His main thrust is that you can't do clean, or green, without cheap.  The current trends, cleantech and green, miss the target:

• Cleantech--omits the need for "cheap"--no permanent solution works if it is not affordable.
• Green--is too anti-corporate, anti-global, anti-everything. This Luddite tendency will backfire, because the solution is has never been to regress.

"The climate change problem is going to get solved really quickly...But once we have solved that, we are still left with an energy problem"

Political expediency results in answers like corn based ethanol--bad feedstock made into a bad fuel.  So Washington is not the answer.

"Spend less time telling us there are no silver bullets, and more time finding the damn silver bullets"

His answers have a lot to do with distributed generation, a (much) smarter grid, and welcoming the unexpected.  Thus informed, I went on a search at Intersolar for silver bullets.    Here is what I found:

Direct purification of metallurgical silicon to "upgraded metallurgical grade silicon or UMG Si" --BP, Elkem, Q-Cells, Dow Corning.  Crystalline silicon cells much cheaper--much sooner.  Warranties still an issue as degradation rates are not fully understood.  2008 production sold out.  Ramping from 1200T in 2007 to 10,000T in 2009.  Potential for silicon costs to go from $4.50/W [current spot] to $0.30/W [UMG Si at scale]--in under three years.

CPV--Concentrating Photovoltaics.  The main players here are Concentrix, Solfocus, Greenvolts.  The big advantage CPV has is that it performance degrades less with increased temperatures than flat plate PV does, the tricky part is the harvesting--you have to be pointing directly at the sun or you harvest nothing.  Tracking is the killer app here.

cSi modules designed for high humidity environments--think HI, FLA, the Caribbean.  EVA, the gel the cells sit in, loves moisture, this approach uses an inert gas and vacuum instead.  Another harvesting technique.

And my favorite magic bullet wasn't even at Intersolar, since they are targeting the California market first.

Just returned from Intersolar--the global trade fair for the solar business.  Over 42 acres of space for 1,000 exhibitors and 50,000 visitors from over 130 nations planning and building a clean, affordable energy future.  My head is still spinning a week later.

The winners are the large solar parks.  The industry has clearly evolved towards larger installations.  Here is the breakout for solar power plant development in Germany:

Much more equipment--inverters, racking, trackers, security systems, and software related to running large solar parks was evident this year.  The dramatic growth in Spain over the last year has changed the tenor of the industry.

My top seven were:

1.  Cents per kWh is the new mantra--as we approach grid parity, the new benchmark is what you can sell power for.  With the present ITC, we will be at grid parity in large parts of California and Hawaii by next year.

2.  Applied Materials' Sunfab line produced a large format, 61SF, 220 pound, glass/glass module that is designed for groundmount installation.  AMAT has sold several lines for installation in Germany, India, and the UAE.  They predict a production cost of under $1/W in about 24 months--the magical grid parity number.

These large format, heavy modules are meant for solar fields/ground mounts.  Particularly suited to Germany and Spain where the array can float and not required to be grounded.  Heard that thin film degrades faster [on the order of 20%] if the array is grounded.

3.  Solar trackers really developed due to Spain and has a number of attractive offerings.  Cost is about $1.50 watt, and you generate 250 to 400 more kWh per kW per year.

4.  Concentrating PV--works well for arid and desert climates where cSi degrades under heat.  You need really accurate tracking--as the sun's rays are focused on a tiny solar cell--that is 99% accurate.  The installs are smaller than solar thermal fields, and don't use any fresh water, a big deal in an arid climate.  They do need to be kept clean--the Pilkington glass [enameled?] is a good candidate because it sheds dust easier.

5.  Racking systems that speed installation, including sliding in modules.  Labor in installation is going to become a critical installation cost component in getting installed cost to grid parity.

6.  Over thirty different module manufacturers from China.  Quality?  How do you value the 25 year warranty?  Production?

7.  Large solar thermal (>500MW) parks are making economic sense where you can interconnect, have access to a secondary heat source (CCGT or methane) and H2O.

The biggest deal may be the fact that Q-Cells announced that it is getting respectable performance from upgraded metallurgical silicon--this will increase module supply much faster than we originally forecast.

Predictions made over 20 years ago were that PV would be providing power cheaper than you can get from the grid by 2010.  Looks like we are going to be there.

is the latest column from Tom Friedman.  He is baffled by the complete lack of leadership from inside the Beltway on restoring America's leadership in global solar production.  Ditto.

In ten years, the USA has gone from providing 40% of global solar production to 8% last year.  Why?  The Europeans are putting their money where their mouth is.  And us?

"The McCain-Clinton proposal is a reminder to me that the biggest energy crisis we have in our country today is the energy to be serious -- the energy to do things in a sustained, focused, and intelligent way.  We are in the midst of national political brownout."

The impact?  Over 35,000 green collar jobs either lost or not created, and $8 billion worth of investment not made.  Where?  Primarily here in California.

With petroleum demand and pricing at historic highs, now is the time to catalyze this new industry, and California has the perfect mix of technology, awareness and climate.

Contact your legislators now.  Need their contact information?

Was back East last week, and in between meetings with bankers about helping my company capitalize projects in our pipeline, I took some time and talked to graduate students at Columbia University's Master of Science in Real Estate program and at my alma mater--the MIT Center for Real Estate.

The students are a great group--reaffirms my optimism that we will create a built environment that thrives in a time of expensive energy [relative to the last decade] and responds to the climate change challenges we currently face.  A very tall order, but they are smart, talented, and motivated.  And they will need all of that to fix this problem.

They asked great questions, and I really enjoyed meeting them and exchanging views on PV powering real estate.

Click on the image to download a copy of the slides [pdf, 3.8MB]

Many thanks to Michael Buckley, Tony Ciochetti, Marion Cunningham, and Maria Vieira for giving me this opportunity.