SAN DIEGO--People in the solar industry are hopeful that the sun is a good place to put money these days.
To be sure, the financial crunch is rippling through even the fast-growing solar business: With falling house prices and general belt-tightening, consumers may be more reluctant to purchase solar panels, even if they want renewable electricity. And less available capital makes it difficult to finance large-scale projects, like corporate rooftop arrays or solar power plants.
But even with the gloomy economic outlook, the mood at this week's Solar Power International 2008 conference was decidedly upbeat.
The solar industry scored a major policy win, getting an eight-year extension to federal tax credits that tacked on more generous terms for homeowners.
And in a volatile investment environment, solar looks solid, purely from a financial point of view, many executives argued.
"I think there's a flight to quality and we believe there's a flight to solar because of that," said Tom Werner, the CEO of California-based solar panel manufacturer and installer SunPower. He noted that big solar projects over the past three or four years have created a track record of delivering expected financial returns.
"Now having said that...the credit markets are different and more measured. Banks are studying things more--the risk profiles and the balance sheets of companies," Werner said.
Long meetings with bankers
Discussion of the impact of the credit crisis and an economic slowdown at the conference alternated between "glass half full" and "glass half empty" perspectives.
The returns on solar projects for utilities and corporations have the advantage of being predictable and thus low-risk, said Bill Gross, CEO of a tech incubator called Idealab, which has spawned two solar companies targeting utilities--Energy Innovations and eSolar.
New technologies are bringing the cost of solar electricity closer to fossil fuel generation. And policies that encourage clean-energy production improve the financial return on big projects.
"It's so tight trying to beat the price of fossil fuel electricity. If you can cut the price at all with totally green energy, that's awesome," Gross said.
Sempra Energy, which builds and operates natural gas power plants, plans to invest billions in solar power plants in the coming years and expects to get about the same 10 percent return on the capital it typically gets, said Michael Allman, president and CEO of Sempra Generation. Because of the credit crunch, other firms may have a harder time than Sempra launching large projects, he said.
Matt Cheney, CEO of solar financing firm MMA Renewable Ventures, said solar company executives should expect to have long meetings with financial analysts and bankers as they seek to clamp down on risk and get better terms.
Click on the image to launch a photo gallery of products and solar installations from this week's Solar Power International conference.
(Credit: Martin LaMonica/CNET News)"Historically, with respect to an impact, a shock like we've just experienced...takes about four years for things to settle down to the point where we can access capital at a rate that we were getting just six months ago," Cheney said during a CEO panel at the conference.
Other executives were more sanguine about the commercial market, noting that many funds set up to invest in renewable energy projects already have the money to invest.
Large deals are still "financeable" because the government incentives are generous and the demand strong, said Steven Chan, chief strategy officer at solar cell and panel manufacturer Suntech Power. Financiers, however, are likely to shift terms around.
A recession in the general economy can put a damper on solar in another way. If corporations see their tax bills drop because of falling earnings, they are less likely to purchase a rooftop solar array because they won't have the "tax appetite" to benefit from government incentives.
For solar companies themselves, the financial turmoil can stall plans to expand. Raising money on the stock market to build a new manufacturing facility, for example, is likely to be delayed as there are few initial public offerings.
Residential looks strong
For consumers, meanwhile, solar power looks more attractive than ever.
That's helped by the recently changed federal policy that gives homeowners a 30 percent tax credit on solar electric panels. Before, that credit was capped at $2,000.
"Without that cap, an average suburban home system could probably get a $9,000 tax credit on a system that might cost $30,000," Chan said. "It's real money now. The economics have gotten a whole lot better for the residential homeowner."
Significantly, the tax credits, which go into effect next year, were extended for eight years, a relatively long period for people to take advantage of them. Also, because solar cell efficiency continues to improve, homeowners can purchase more productive panels for about the same price, Chan said.
For a business that caters to environmentally minded consumers, talk at the Solar Power International conference was laced with hard-boiled financial terms like "tax equity investors" and "internal rate of return."
(Credit:
Martin LaMonica/CNET News)
Shifting to an economically driven business is a very deliberate attempt to scale up solar adoption rapidly in the next five years, according to Julia Hamm, executive director of the Solar Electric Power Association.
Technology enhancements are helping bring the price of rooftop solar panels closer to the retail electricity rate, or "grid parity."
To lower the upfront cost barrier, start-ups like SolarCity and SunRun are offering financing options, such as leases, for consumers and small businesses. A handful of utilities, too, are getting into solar as well, a move that could make it more accessible.
All the numbers talk, though, is not to say that the environmental attributes of solar energy are insignificant. On the contrary, the existing federal and state policies place a value on renewable energy, executives said. The industry is lobbying for more policy initiatives, such as plans to modernize and bulk up the electricity grid.
Sempra Generation's Allman said that policies like a renewable portfolio standard, which mandates a certain percentage of renewable electricity generation, act as a market signal.
"Nobody would sign up for solar power today without the environmental attributes it offers. It's just too expensive," he said. "I think of it as two separate markets--one for brown power and one for green power."
Today's economic and political environment favors a push toward energy independence and environmental protection. For that reason, most solar company executives are bullish when they take a long-term view.
What's still unknown for solar--or other industries--is how badly the bruising from the current financial crisis will be.
"The price of electricity is determined in large part by the cost of capital," said Michael Ahearn, CEO of First Solar, which is recognized as having the cheapest solar panels. "We're in a temporary state where there is no real market functioning. The question is, where does the market reset?" he said during a panel.
SAN DIEGO--A walk around the conference floor at the Solar Power International conference will quickly teach you that solar energy comes in more shapes than the flat rooftop panels you see on people's homes.
Click on the image to launch a photo gallery of products and solar installations from this week's Solar Power International conference.
(Credit: Martin LaMonica/CNET Networks)At the conference, there were a number of companies that do solar concentrators of various types, which use lenses and mirrors to concentrate sunlight onto solar cells.
These new-fangled devices are aimed at either businesses with rooftop space or utilities, many of which have to meet state mandates to purchase renewable energy.
The flat-panel business is very active as well. Manufacturers are ramping up operations and exploring new thin-film cell technology to reduce the cost of delivering a product.
Solar hot-water systems, meanwhile, have a quicker payback than solar-electric installations.
Outside the conference floor, San Diego is home to a number of corporate solar installations. Conference organizers led a tour of a few solar arrays at businesses and nonprofit organizations.
SAN DIEGO--Two very different companies are developing ways to track energy usage in homes equipped with solar panels.
SolarCity, a company that leases solar panels to households, introduced on Wednesday a new version of its SolarGuard software that displays panels' production alongside a home's electricity usage.
In many states, people pay a higher rate for electricity during peak times in the middle of the day and early evening. By tracking usage--and solar panels' production--people can decide to run a washing machine at night, for example.
SolarCity's Web monitoring software tracks both solar panel production and household energy usage.
(Credit: SolarCity)"The biggest energy-efficiency challenge in every house is not changing light bulbs. It's changing behavior," SolarCity CEO Lyndon Rive said.
Foster City, Calif.-based SolarCity, like other solar installers, uses the Web monitoring system to ensure that there isn't a drop in panels' performance. Consumers get access to the energy usage application as part of their leasing program, Rive said.
Meanwhile, Open Energy, a Solana Beach, Calif.-based solar panel maker, is in the midst of developing a dedicated touch-screen device for tracking solar panel and home energy usage.
There are already in-home displays that show a home's energy usage at a given moment. But most of them simply display the electricity meter and can't show whether a home's panels are producing more electricity than the home is using at a given moment.
Open Energy's device, which has a wireless Zigbee connection to an Internet gateway, can show solar panel production alongside electricity usage. It can also pull in gas and water usage, said company product manager Mark Bettis.
The product is set to be released next year and will cost between $1,100 and $1,400, which includes five years of solar panel monitoring.
"People need to know whether they are getting their money's worth out of the solar panels," he said.
On Wednesday, Open Energy also introduced a roofing tile with a solar cell embedded in it.
The companies made their announcements at this week's Solar Power International conference here.
SAN DIGEO--Former U.S. general and presidential candidate Wesley Clark said that solar energy is part of a larger "tent" of different energy sources that should wean the United States from imported oil.
Clark gave a keynote address at the Solar Power International conference here Tuesday, where he focused on the role of renewable energies in national security.
"Everything we can do to reduce our carbon footprint and slow down climate change, which is upon us, is very important to energy security," Clark said. "Energy security is crucial to national security."
He said that the U.S. imports between $450 billion and $550 billion a year of oil from other countries, a situation that sends U.S. money to some countries hostile to the U.S. Imported oil also weakens the U.S. economy, which is the true source of the country's security, he said.
In addition, there are clear national security implications from climate change, a situation that military leaders are now aware of, he said.
Droughts and other weather events can cause large migrations of people and can adversely affect agricultural production. Rising sea levels can destabilize low-lying areas of certain countries. And the detrimental economic effects of climate change can destabilize countries, he said.
On the policy front, he said that a national carbon tax and cap-and-trade system for stemming greenhouse gas emissions should be put in place.
These regulations are expected to add a few cents per kilowatt-hour to utility bills, Clark said. There should also be stepped-up incentives for renewable energy, "just as we have had for fossil fuels."
Renewable sources of electricity--solar, wind, and geothermal--can bring the country better energy security, but they are not sufficient. The U.S. should continue to explore domestic sources of energy, such as biofuels and so-called clean coal, where carbon dioxide emissions are stored underground to keep them out of the atmosphere.
"We in the renewable energy sector shouldn't take on the immediate burden of replacing all other sources of energy," Clark said.
He also said that solar remains a "first-generation" technology that needs to become cheaper. "I'd like to see solar panels on the roofs of all strip malls in the U.S."
SAN DIEGO--The Solar Power International conference kicked off in a buoyant mood.
Despite concerns about the economy overall, the primary subsidy for the solar industry--a renewable energy federal tax credit--was extended for eight years, which solar industry experts say ensure the continued pace of fast growth.
Announcements from solar vendors at the conference reflect that optimism and the growing diversity of solar technologies.
• General Electric said Tuesday that it is investing $2.5 million in Soliant Energy, part of a $21 million investment in the company which makes solar systems for corporate rooftops.
Soliant Energy's solar concentrators designed for corporate rooftops.
(Credit: Soliant Energy)Soliant Energy's devices concentrate sunlight with several Fresnel lenses onto high-performance solar cells to maximize electricity output. Each lens, which magnifies the light 500 times, is mounted on a tracker so that it follows the sun over the course of the day.
Unlike many specialized concentrating photovoltaic systems, Soliant Energy makes devices that are the same size as traditional solar panels, which makes them suitable for rooftops and relatively easy to install, according to the company.
GE estimates that commercial and industrial buildings comprise 60 percent of building roof area in the U.S. Soliant Energy estimates that corporate rooftops will represent $13.2 billion in revenue by 2010.
Earlier investors RockPort Capital Partners, Nth Power, Trinity Ventures, and Rincon Venture Partners also participated in the funding.
• 3Tier on Monday published a map of the solar resource in the Western hemisphere based on satellite day, which it says is more detailed than existing maps.
3Tier's solar map gives detailed information on solar resources.
(Credit: 3Tier)With the map, financiers, developers, and policy makers can rapidly get an idea of the availability of sun, particularly in South and Central America, according to 3Tier. The company released a global wind resource map earlier this year.
• Sharp Solar said that it will have thin-film solar cells available to utility customers next year. The move is significant because it further validates the viability of thin-film solar cells for large-scale solar projects.
Sharp is one of the largest suppliers of polysilicon cells and modules--the incumbent technology. Thin-film cells, made from alternate materials, are less efficient in converting light to electricity but are cheaper because less material is used.
The company said that it will modify its liquid-crystal display manufacturing lines to ramp up production of thin-film cells, starting in March 2010 with a factory capable of producing 480 megawatts a year.
• In another sign of thin-film cells' growing influence, Menlo Park, Calif.-based Signet Solar said that it has begun volume manufacturing of its thin-film cell panels in Mochau, Germany after receiving the proper certification.
Having completed its pilot production, it expects to produce at a rate of 20 megawatts a year and ramp up to 130 megawatts by the end of next year. The modules and films are expected to be sold to utilities for solar power plants, large commercial installations, and building-integrated photovoltaics.
SAN DIEGO--Calif. Gov. Arnold Schwarzenegger delivered a surprise speech at the Solar Power International conference here Monday night, saying that a sustained commitment to clean technologies can aid the country's economic recovery.
After touring the conference floor, Schwarzenegger spoke to solar industry professionals at what organizers are calling a "historic" solar power conference, which has shot in attendance from 6,000 people last year to an expected 20,000 this year.
Calif. Gov. Arnold Schwarzenegger speaking at the Solar Power International Conference.
(Credit: Martin LaMonica/CNET Networks)The governor touted his state's environmental policies, which in many cases, have become models for other states and even for national policy, such as the low-carbon fuel standard and caps on greenhouse gas emissions.
But he warned that the may lead some policymakers to seek to scale back environmental measures. Instead, he said that states and countries should redouble their commitments to green technologies because these new industries create jobs.
"We must not give in to those that say that environmental goals should take a back seat until our economy comes back," Schwarzenegger said. "It's backwards thinking and just plain wrong."
He said that in many cases, "what's clean for the environment can be green (as in money) for the economy."
Schwarzenegger is a frequent promoter of the "green economy" and spoke at the Solar Power conference two years ago. Last week, he dedicated a 2-megawatt solar installation over a parking lot at the Sunnyvale, Calif., headquarters of Applied Materials, in conjunction with the announcement of an anti-sprawl policy.
Despite economic and financial problems, the solar industry is charged up from recently passed federal renewable tax credits, which were extended for eight years.
"I'm seeing some great action. More action than some of the action movies this year," Schwarzenegger joked.
"I can envision going on a helicopter and seeing no more warehouses without solar panels," he said, drawing applause from conference attendees. Then the governor and former actor promised "I'll be back," next time driving a solar-powered Hummer.
SAN DIEGO--With so many large organizations putting solar panels on their roofs, you would think that it's because solar power is cheaper than the grid. But a closer look shows that it's not that simple.
The California Center for Sustainable Energy organized a corporate solar tour on Monday, as part of the Solar Power International conference taking place here this week.
A part of the one megawatt at the Alvarado Water Treatment Plant in San Diego.
(Credit: Martin LaMonica/CNET Networks)The tour made clear that there are a lot of good reasons to go solar, namely hedging against fossil fuels prices or good community relations. But it's not just about lowering the electricity bill. In fact, in some cases, customers pay nearly as much as they did before they went through all the trouble of installing the panels.
Consider the city of San Diego which is in the process of procuring as much as five megawatts of solar electricity in municipal sites over the next five years.
The first to go online is the Alvarado Water Treatment Plant, a one-megawatt installation that produces about 20 percent of the power the plant uses. The second planned array, also for a water treatment facility, could be finalized in weeks.
The Alvarado solar array is spread across three different locations at the plant where rows and rows of solar panels are placed on top of concrete water storage tanks.
An installation of this size costs about $6.5 million--beyond what most municipalities can afford. So they arrange what is called a power purchase agreement (PPA), where another company called a systems integrator finances, installs, and then owns the facility.
The water treatment plant just buys the electricity, at only half a cent less than the retail rate of 12.5 cents per kilowatt-hour. A half-cent discount doesn't sound like much but the plant estimates that it will save $177,300 a year by installing the panels.
Perhaps more importantly, the city's contract with its systems integrator, SunEdison, stipulates the the price it will pay for the solar panels' electricity will go up slower than the retail price of electricity. So while other customers are exposed to the vagaries of price increases, the plant will know how much its electricity will cost for the 20 years of the contract.
"We anticipate that with the systems in the future that we'll get better pricing because the price of solar panels is going down all the time," said John Helminski, a systems engineer for San Diego's energy program in its environmental services department.
Meeting the city's renewable energy goals and hedging against rising electricity prices was so important that the city considered big solar installations even when it was unclear that a sizable renewable energy tax credit would be renewed. (It was).
Solar trees sprout in San Diego
The University of California at San Diego had similar motivations when it embarked on a series of solar installations on campus.
A "solar tree," or solar powered canopy at the University of California at San Diego.
(Credit: Martin LaMonica/CNET Networks)Rather than a strictly financial decision, renewable energy purchases are part of bigger sustainability initiative, said David Weil, who works with the university's facilities management division.
Within about two weeks, it will connect a 164-kilowatt installation of "solar trees," or solar-powered canopies in one of its parking lots.
The solar parking lot will allow them to purchase electricity at just under the market rate as well. But its primary reasons were to demonstrate its commitment to sustainability and make progress on its goals to be "climate neutral," Weil said.
The city and university's attitudes are similar to many corporate solar installation decisions, said Dave Thompson, a senior energy consultant at Borrego Solar's Commercial Projects Group.
Solar panels are a visible way of saying that a company is doing something about environmental protection and lowering a business' carbon footprint--all of which can lead to good public relations.
"I cannot say I ever sold a solar system on finance alone," said Thompson. "You get a lot of nonmonetary benefits. So if a project will break even, they'll do it."
Cash is better
For organizations that actually have the cash on hand to purchase a solar installation, the financial benefits are a lot more direct.
Corporations can get a federal tax credit of 30 percent of purchase price as well as state-level rebates. They can also amortize the equipment as a capital expenditure.
And they know that the source of fuel for their power generator--the sun--will always be free. (Panels are typically guaranteed to work for 20 years and then they start to degrade in performance.)
The solar array at the New Children's Museum in San Diego which produces about half of the building's electricity.
(Credit: Martin LaMonica/CNET Networks)The New Children's Museum in downtown San Diego, which is a certified green building, was able to purchase its 90-kilowatt solar panel outright, rather than go with a power purchase agreement.
Although the purchase price before rebates and tax credits was steep--on the order of $700,000--the system will pay for itself in 12 to 15 years and make their energy costs more predictable, said Troy Strand, executive vice president of Independent Energy Solutions, a solar integrator.
Strand predicted that corporate purchases of solar power will continue to go up for a number of reasons.
"What's driving the corporate model? For nonprofits, it's budgetary relief and trying to fix their costs," he said. "A corporation is going to do it for myriad of reasons--being good to the environment, freezing costs--again for budget effects--and they may have a tax liability."
The price of solar electric gear and installations continues to go down and many experts expect that solar power within a few years will be at "grid parity," or the same cost per watt as fossil fuel-generated electricity.
But organizations that invest in solar are putting a value on things other than purchase price--some of which benefit their bottom line, others that benefit society as a whole.
- prev
- 1
- next
