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.
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: And the New York Times version of what really happened out on the test track...
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.