How New Financing Models Could Make Solar the Facebook of the Energy Industry

I don't think I would have used Facebook as the analogy, but I guess the author wanted to catch the eye of more casual readers with her headline.  There is no doubt that my prediction of renewable energy surging this decade is slowly coming true.  The other half of the prediction is that it would pull us out of recession through investment in manufacturing and by bringing down energy costs.  I guess time will tell if that comes to pass.

From Forbes:

Rapidly dropping polysilicon prices over the past year have inspired several utility-scale solar developments to move forward after many months’ pause. At the same time, those in favor of distributed generation (placing solar on every available rooftop to supply energy locally) have also made strides in improving the business case for small-scale solar, particularly with respect to what is being called “community solar”–centrally located solar projects that enable those who can’t necessarily put solar on their own roofs to support and benefit from solar energy.
Now, two emergent financing mechanisms are shaking up the energy business case, creating models that could work for a variety of renewable energy sources. Berkeley-based Solar Mosaic has taken a crowd-funding approach to solar. Much in the way that Kickstarter enables average citizens to fund creative projects, Solar Mosaic enables citizens to support local solar development. The difference is that those citizens earn back their investment once the solar has been installed.
The solar garden approach also enables those without the option of putting solar on their roofs–renters, people who live in historical buildings, people whose homes are in a Homeowners Association, or people whose roofs aren’t positioned to make efficient use of the sun–to reap the rewards of solar energy. The idea is to use marginalized or un-used land to install solar panels, creating community solar gardens. Much the way community-supported agriculture operates, community solar gardens would enable local residents to pay to be members of the garden. Rather than fresh local produce, those members would receive credit from the local utility for generating solar energy.
The first such project in the country is currently underway in Colorado Springs, Colo., where an old landfill is being given a second life as a community solar garden. Three-and-a-half acres of the 40-acre site will soon host 500 kw of solar panels, all owned by local residents who will be seeing an average 10-percent reduction on their energy bills (the panels cost $550, with a minimum purchase of two panels). Recent changes to legislation in Colorado and Massachusetts have made solar gardens possible in those states, and California is currently considering legislation that would do the same.
The California Public Utilities Commission (CPUC) already allows virtual net metering (VNM)–the mechanism through which someone can receive credit on their utility bill for solar power that is not generated on their roof–for the multi-family affordable solar housing (MASH) program. Previously, solar installed on apartment buildings would just be used in common areas, because extending solar to the units themselves would require separate panels and meters for each apartment. Using VNM, the developer and utility can take an entire solar array, feed it into one meter and then send that out to several virtual meters (e.g., 1/56th goes to this bill, that bill, and so on). The currently proposed legislation (SB 843) would extend that capability to community solar projects.
The solar garden idea isn’t just about making everyone feel like they’re a part of the solar energy push, it also makes small-scale solar developments less risky for banks.

One of the real challenges we have when we have conversations with potential solar investors is the collaterization of the underlying asset,” says Lee Barken, Energy and Cleantech practice leader at accounting and consulting firm Haskell & White, LLP and a member of the board of directors of CleanTECH San Diego. “With the traditional solar leasing model, if you approach a typical institutional investor they’ll say what happens when Bob the homeowner defaults on his lease, what’s the salvage value? And they’ll assume zero. I know those solar panels are still worth something, but from an investor perspective they see a lack of a secondary after-market, and the cost of removing the panels from Bob’s roof, and those panels are valued at zero. The elegance of the solar garden approach is that people buy in and pay a share, so if Bob stops paying his subscription, you don’t have to go remove his solar panels, you just sell his share to the next person. That means the collateralization of the loan could be secured by the underlying asset because it’s not on Bob’s rooftop.

Solar Mosaic co-founder Daniel Rosen is similarly enthusiastic about the crowd-funding approach to solar. Rosen is a passionate advocate of solar energy, but beyond that he is a big believer in innovating business models.

Solar lends itself to an innovative financing model, such as Mosaic, that is decentralized, democratized, and agile,” he says. “These are the business models that matter in the 21st century. Look at what Facebook did literally overnight to the media industry. It empowered every person to be their own media clearinghouse. A similar trend will happen with “clean-web” or where energy meets IT/ web/ mobile innovations. And we think it will be an even bigger opportunity than Facebook, because energy and finance are the largest markets in the world. The Age of the Internet has transformed nearly every other industry on the planet, but we are still trapped and constricted by 19th century energy sources and business models.

Mapping Solar Grid Parity

Here's an interesting animation that shows how soon solar will be as affordable as other forms of electricity:
energyselfreliantstates.org

U.S. Solar Energy in 2011

As early as 2008, I predicted that Green Power, including solar energy, would be the industry that brings the U.S. out of recession.  Not only was this an area that was showing growth, but it was one on which our future depended.  Whether through technical innovation or government subsidy, the attractiveness of renewable energy sources compared to fossil fuels is going to keep growing over the remainder of this decade.

From Clean Technica:

Rhone Resch, president and CEO of the Solar Energy Industries Association, today published the following review of the U.S. solar energy market in 2011:
“In contrast to some of the recent headlines, the solar energy industry is a strong, thriving industry in the United States that is creating jobs and lowering costs for the consumer. In 2011, a number of myths about the solar energy industry circulated nationally. Let’s set the record straight. Here are seven truths about this thriving American industry:
1.      Solyndra did not kill the industry. In fact, the solar energy industry is expanding rapidly and has become a highly competitive, thriving industry in the United States. Solyndra’s high-profile bankruptcy in August was an anomaly in what proved to be the industry’s most successful quarter on record. Although Solyndra couldn’t compete, the rest of the industry grew by 140 percent in the last year and costs came down by 40 percent. America discovered that one company’s failure does not reflect an entire industry. In fact, 9 out of 10 Americans feel it’s important to develop and use more solar in the U.S., according to an independent national poll conducted a month after Solyndra declared bankruptcy.
2.      Today, U.S. solar is an economic force: employing more than 100,000 Americans at 5,000 businesses across all 50 states. The solar industry proved itself to be a strong job creator in the United States. The vast majority of the 5,000 companies that make up the industry in the U.S. are small businesses, engines of growth for our economic recovery. These are real people in real solar jobs as reported by The Solar Foundation’s National Solar Jobs Census 2011. The solar value chain includes engineers, sales people, and other administrative professionals as well installers, roofers, electricians, plumbers and contractors – skilled labor professions hit hard by rampant unemployment in recent years – now finding new opportunities to put their expertise to work in the solar industry.
3.      The solar industry is one of the fastest growing sectors in our economy.The solar industry set a record for installations and achieved 140 percent annual growth in thethird quarter of 2011. In fact, more U.S. solar electric capacity came online in Q3 2011 than in all of 2009 combined; Q4 2011 is forecast to be even larger as solar becomes a cost competitive choice for more homeowners and businesses across America.
4.      Consumer, business and industry support for solar continues to grow. Solar’s growth is leading to rapid innovation across the spectrum – from factory improvements to new financing and sales mechanisms – that allow more and more Americans to turn to solar energy. Target, Walgreens, Whole Foods, Johnson & Johnson, Safeway and others are powering their businesses with solar. In addition to GE’s investment in new manufacturing in the U.S., 2011 also welcomed new household-name corporations to the solar industry, with Warren Buffett’s MidAmerica Energy, Total Energy and Google all making sizeable investments in solar in 2011.
5.      Solar is now affordable for more Americans. Today, there are 1.5 million households using solar water heating and enough solar electricity to power 730,000 homes. And solar is becoming more affordable every day with technology innovation, scaled up manufacturing, faster installation techniques, and new financing options. The price of solar panels dropped 40 percent since the beginning of 2010 and the average installed system price dropped 14.4 percent from Q2 to ch allows the market to choose winners and losers, was the single most effective policy for deploying a dozen energy technologies in the last year. The program has spurred completion of more than 22,000 energy projects across all 50 states and attracted $23 billion in private investment. The industry will push to renew this successful program when Congress returns in January 2012.
Solar works for America and 2011 was a record year for the U.S. solar industry. Although the past year presented challenges to the solar industry, with American ingenuity, hard work, and smart and consistent energy policies our industry is on track for another record year in 2012.”

Rhone Resch, President and CEO
Solar Energy Industries Association

Solar paint to brighten up homes

Advances in technology, from the "3D" solar panels that have multiple transparent layers, each designed to capture energy from part of the light spectrum, to improved efficiency and lower costs, will gradually make solar power a true low-cost alternative to fossil fuels.  We're lucky in that the recession has brought down energy costs for a few years, giving us a reprieve from the urgency to find alternative energy.  If enough advances can be made this decade, by the time energy prices begin to soar again, we'll have many more solar installations and homeowners will have many more options for powering their homes.

From TechEye.net:


Next time an apprentice builder gets sent to buy some left-handed screwdrivers, stripy paint or a long weight from a hardware store they may one day have another unusual item on their list.
This is because a group of researchers are attempting to do away with bulky photovoltaic solar panels by developing solar cells that can be painted directly onto the outside of a house.
The team at the University of Notre Dame has, it says, succeeded in making prototype versions of ‘solar paint’ in an attempt to move beyond conventional silicon based solar methods.
This involves using quantum dot nanoparticles, consisting of titanium dioxide and cadmium sulfide or selenide, mixed with a water and alcohol concoction.  While it might not sound very appetising as far as Christmas cocktails go, the resultant semiconducting paste can be cheaply and effectively slapped on the front of a house.
The researchers believe that the paint can be produced inexpensively and in large quantities, but it does seem that they are a while away from making it a commercially viable product.  Conversion efficiency rates are at a measly one percent, a long way off the efficiency rates over 10 percent that are seen in conventional panels.
Of course, small efficiency cells can still have applications, with developments in cheaper thin film solar cells potentially offering larger areas of coverage to gain sunlight in countries with less space restrictions, for example. The team is now working to push the efficiency levels of the compound higher.
Perhaps the team should spend a little more time on the name of the ingenious new paint, which has so far been left with the truly atrocious ‘Sun-Believable’.

Google Puts $94 Million More in Solar Energy

Nearly $1 billion invested so far.  Much of that is because Google likes to do "the right thing."  But much is because Google is a profitable, forward-thinking company that can see the future.  The future is renewable energy.

From eWeek:

Google (NASDAQ:GOOG) Dec. 20 invested $94 million more on solar energy, bringing its clean energy investments to a grand total of more than $915 million through 2011.
The search engine giant, which consumes a lot of power by using dozens of data centers and hundreds of thousands of server computers to fuel Web searches and applications, invested in four solar photovoltaic (PV) projects being built by solar developer Recurrent Energy near Sacramento, Calif.
Google's $94 million will be allocated by global investment firm KKR, which has created a new venture called SunTap Energy to pump money into U.S. solar projects. KKR is funding the difference.
Google said energy produced by these projects is already contracted for 20 years with the Sacramento Municipal Utility District, which created a tariff program to help "green the grid" for Sacramento-area residents.
The move means Google has committed to funding solar powered-panels for more than 10,000 homeowners this year.
Google invested $75 million to provide solar panels on residential roofs for up to 3,000 homeowners in September. That funding  followed a $280 million investment to outfit homes and offices with solar panels that harness heat from the sun to power buildings.
However, while those funds went toward financing solar panels for home and business rooftops, this new round constitutes Google's first U.S. investment in solar PV power plants that generate energy for the grid.
These projects have a total capacity of 88 megawatts, or roughly the amount of electricity consumed by more than 13,000 homes.
Google's clean energy spend has certainly accelerated in 2011, with $880 million-plus of the company's total investments coming since January of this year alone.
"We believe the world needs a wide range of solutions—from wind, to transmission, to solar PV and concentrated solar—and we look forward to new opportunities next year to further expand our portfolio of clean energy investments," said Axel Martinez, the assistant treasurer for Google Treasury, in a blog post.
GigaOm has a short and sweet summary of Google's total clean energy spend.

U.S. Solar Industry Reports Record Power Installed

This is the type of news I would like to see every year for the next ten years.  Growing the number of solar installations will do more to make us energy independent than drilling for oil in everyone's back yard.

From Talking Points Memo:


What Solyndra? Despite the unfortunate high-profile bankruptcy of the Freemont, California solar company and several other major U.S. solar firms, the third quarter was the best yet in the history of the American solar industry, at least so far as total power generation was concerned.
Over 449 kilowatts-worth of photovoltaic solar energy facilities, enough to power 600,000 homes, were installed across in the country between July and September, according to a report published Wednesday by market research company GTM Research and the Solar Energy Industries Association (SEIA).
That’s a 140 percent increase from the same quarter last year and a 39 percent increase over the second quarter of 2011. It’s also more solar power than was installed during the entirety of 2009.
“The U.S. solar industry is on a roll, with unprecedented growth in 2011,” said Rhone Resch, President and CEO of SEIA, in a press release. “Solar is now an economic force in dozens of states, creating jobs across America.”
The growth was driven by a sudden turn-around in the residential market, up 21 percent after two quarters of consecutive declines, and an even greater surge in the utility-scale solar market (that is, solar installations put up for, and by, utilities companies), up a whopping 47 percent.
23 utility installations alone accounted for 200 megawatts of photovoltaic solar during the period, a 400 percent increase form the second quarter and more than all types of solar installations in any single quarter up until the third quarter of 2010. The largest of these utility solar projects are located in Arizona, New Mexico and California.
But the underlying catalyst for more utilities turning to the sun for power was government funding. As the report’s authors come right out and admit: “Much of this growth is due to the Department of Treasury’s 1603 program, which is due to expire on Dec. 31 unless Congress extends it.”
The 1603 program was created under the 2009 American Recovery and Reinvestment Act, aka the federal Stimulus Package, to provide grants to reimburse qualifying businesses for installing solar projects on their properties, paying up to 30 percent of the cost of the installations.
So far, the program has leveraged about $23 billion in private sector investment for this purpose, according to 34 Senate democrats, who on Thursday sent a letter to Senate leaders calling for an extension of the program. A day earlier, 88 Democrats in the House signed a similar letter.
Solar companies and their trade organization, the Solar Energy Industries Association (SEIA) are unsurprisingly most keen on extending the program. The SEIA rounded up 750 companies in, or tangentially involved in, the solar industry, to send a letter to Congress to this effect, saying even a one-year extension would result in an “additional 37,394 jobs,” and 2 gigawatts of solar energy by 2016.
But given the “shadow” of the Solyndra bankruptcy looming over Congress, the chances for the program’s extension don’t look good, according to National Journal.
Meanwhile, the state of the commercial solar industry in the third quarter was also far from bright, with non-utility installations falling by 14 percent and non-residential installations declining even further, by 24 percent.
The decline is due to “the four largest non-residential state markets all shrinking simultaneously,” according to the report. As the authors explain:

The commercial markets in California, New Jersey, and Pennsylvania shrank in Q3, and our expectation is that the trend will continue at least through Q4 (and likely longer in New Jersey and Pennsylvania). Given that those states comprised well over 50% of installations in the first half of the year, overall market growth will necessitate substantial demand pick-up across a number of secondary states. In particular, we are closely watching trends in Massachusetts, Colorado, Ohio, Tennessee, and Hawaii - all of which could be near-term growth markets.

Furthermore, the growing solar trade conflict between the U.S. and China isn’t helping matters any, at least not yet. Everyone in the sector is waiting to see if the U.S. government, through the Department of Commerce, will levy tariffs on imports of cheap Chinese solar panels, as has been requested by a consortium of six solar companies with operations in the U.S., who allege that their Chinese competitors have violated international trade law by artificially lowering the prices of their panels and are “dumping” them into the U.S. with the financial support of the Chinese government. (It should be noted that China, for it’s part, accuses the U.S. of doing basically the same thing except concerning another product — polysilicon solar feedstock, that raw material needed to make the panels.)
As the report notes: “The impact of these tariffs would depend on their magnitude; small tariffs might have a negligible market impact, while large tariffs would drastically alter the makeup of the supply picture.”
The authors do predict that if substantial tariffs were imposed on Chinese solar panel imports to the U.S., it would make U.S. “suppliers more price-competitive, at least in the near-term” and could even “result in a material increase in domestic market share for U.S.-manufactured modules in 2012 and beyond.”
However, Chinese companies could attempt to mitigate the tariffs by shifting production to countries where production costs are lower, including South Korea and Taiwan.
Little wonder the report has a gloomy forecast for the future. Although another 500 megatwatts of utility photovoltaic solar power is currently under construction and expected to come online in late 2011 or early 2012, “Today, the U.S. market faces more uncertainty than at any time in recent history,” the authors write.