Recurrent Energy gets dough for solar-as-a-service

Solar company Recurrent Energy on Wednesday announced a $75 million partnership, a deal that highlights the financial models being developing to serve the clean energy industry.

Private equity firm Hudson Clean Energy Partners has committed the money to fund expansion of Recurrent Energy's business, where it installs and maintains large solar arrays at corporations and other organizations. The deal was announced at the Intersolar 2008 conference in San Francisco.

Rather than sell the panels, companies like Recurrent Energy install the solar panels on the customer's premises and then sell the electricity to the customer at a preset rate for 20 or 25 years.

This type of contract, called a power purchase agreement (PPA), is helping fuel the fastest growing segment in the solar business. Companies or municipalities don't need to front the expense of the solar gear, making a choice to use distributed energy much easier.

But these solar-as-a-service companies need to get financing to back their services. Venture funds focus on technology-oriented enterprises and don't have enough capital to finance large-scale solar projects.

As a result, private equity and hedge funds are starting to offer financing for clean-energy projects or to commercialize technology developed by clean-tech start-ups.

"We anticipate that this is just the beginning of an even larger financing relationship, and we are committed to providing Recurrent Energy with the resources it will need," said Neil Auerbach, founder and co-managing partner at Hudson, in a statement.

There are a handful of companies also seeking to apply the power purchase agreement model to residential solar installations.

[Joe Real]

There is a big risk on the part of the consumer. The major factor would be the severe drop of the prices of solar panels within a few years. When the price of residentially installed solar panels drop, it will now be feasible and be at par or cheaper than the utility rates. If you signed up, you will regret it for the next 20 to 25 years.

The oversupply of silicon, the ramping up of production of thin film from Nanosolar to gigawatt production capacity, and the ramping up of Solyndra's production, and the utility rates signing up with solar thermal start-ups instead of solar PV companies, all point to the lowering of prices of solar PV in the very near future. The solar thermal of Stirling Energy Systems for example are now a lot cheaper than thin film. They have achieved $0.31/watt cost, and for cheaper solar electricity, they will be preferred over the costlier solar PV, which makes them now more available for small scale retail uses. While solar PV is costlier to commercial providers, it is cheaper to residential consumers at the same pricing structure.

The main advantage of this lease agreement is that you don't need to spend a single dime if you wanted. There are various combination of lease agreement. This is long term, and the market for solar PV is still volatile, and the prices could collapse to the benefit of consumers. If you can afford the upfront costs, the best action will be to wait for residential solar PV to come down in prices that it would be feasible even if the rebates funds have dried up. By postponing the resiential projects as production is ramped up, this will bring down the prices to feasible levels at a much faster rate if no one is buying at the moment. You will save a lot more, and be more independent if you own your solar PV, as long as it is economically feasible compared to your retail electricity prices.

[mlamonica]

I haven't thoroughly researched the 'buy now versus wait' question on residential solar PV so I can't offer a strong opinion. But one point to consider on solar costs is that, for residential customers, the cost of installation is about half of the total. So solar cell costs are anticipated to drop dramatically in a few years but how much will that knock off the total bid? Probably a good chunk. But then you have to ask what the government incentives will be -- they could change. And incentives play a big role in how the math works out for a residential solar PV system.

On the financing side, leasing arrangements for consumers should make solar PV a lot easier decision. Some states also offer zero-percent financing for energy efficiency or renewable energy improvements.

[Manhattan2]

We agree, wait on Solar PV for prices and technology to come down. Where we do not agree and where we will continue to try to spread the word is that installing Residential Solar PV all over is a mistake. Our devices will help to improve the efficiency of PV but no matter how much we can bring the cost down should you put investment dollars into a solar panel system in a northern state? If you had 2 houses and only enough funds to put up one solar power system and the energy rates are the same in each state where to you put your panels? In New Mexico, or North Dakota? Email us at [e-mail] if you understand yet! We refuse to push solar on homeowners if the value and return on their investment is marginal at best. Others are trying to profit off of this solar power push by Al Gore and others but we tend to think thinks out. If GE, BP Solar, Al Gore, Barack Obama, or John McCain want a real solution have them contact us. Do the research, then email us to join the cause for more return on panel investments which will benefit the planet and your wallet.

[Solar_Connections]

Why so down on installing solar in a northern state? Most of your power is made between 10 am and 2pm anyhow, and my roof in Wisconsin makes probably about 75% as much as a sunnier spot in NM. It still makes sense for me, and with my electric vehicles, it pays off handsomely in displaced gasoline. If everybody waits until the price comes down, then nobody is buying it, and the price won't come down. Each and every consumer needs to vote with his or her pocketbook and spend money consistent with your values. We don't buy solar because it's cheap energy (yet). We buy it because it is readily available, clean, and by demonstrating to others a viable alternative to only relying on fossil fuels. Buy what you can afford now, and buy more later!