Navigant Research Blog

Solar Market for Base of Pyramid Not So Pico

— April 14, 2014

In an upcoming report on pico solar lighting products (<10W) and solar home systems (<200W) sold primarily to rural communities in Africa and Asia, I cover the unit sales, revenue, and capacity of these small solar photovoltaic systems globally.  One of the most important trends covered in the report is that pico solar has transitioned from a humanitarian aspiration to big business – more than $100 million in 2014.  Corporate involvement in rural electrification has traditionally come in the form of corporate social responsibility initiatives, but real money is now flowing to solar companies serving the base of the pyramid market.  The success of a number of off-grid solar lighting companies and social enterprises has attracted interest from major corporations such as Panasonic, Schneider Electric, and Philips, as well as funding from investors.  Some of the more notable investments include:

  • In early 2014, d.light raised $11 million in Series C funding from DFJ, Omidyar Network, Nexus India Capital, Gray Ghost Ventures, Acumen Fund, and Garage Technology Ventures.  The company is one of the leading pico solar manufacturers, and has now raised $40 million and sold an estimated 6 million pico solar systems reaching 30 million people.
  • In early 2014, Persistent Energy Partners acquired Impact Energies, a pay-as-you-go, off-grid solar service provider working in West Africa that has reached 30,000 customers since 2011.  The renamed company, Persistent Energy Ghana, installs village solar microgrids and solar home systems.
  • In late 2013, Khosla Impact invested $1.8 million in a Series A round with BBOXX, a U.K.-based company that sells portable solar kits ranging from 7W to 185W and plug-and-play solar systems that range between 2 kW and 4 kW.  The company also provides a mobile pay-as-you-go service enabled by remote battery monitoring, which was the primary interest of Khosla.
  • In 2012, Greenlight Planet, one of the leading designers and distributors of solar light-emitting diode home lights, raised $4 million from Bamboo Finance and Dr. P.K. Sinha, co-founder of ZS Associates.  The investment followed previous financing by Dr. Sinha.  Greenlight Planet has sold more than 1.8 million solar lamps since the company was founded in 2008.
  • In 2012, Barefoot Power, one of the largest pico solar manufacturers, raised $5.3 million from three social investment funds (d.o.b. Foundation, ennovent, and Insitor Fund), existing shareholders (The Grace Foundation and Oikocredit Ecumenical Development Cooperative), and a number of private angel investors.

The full report will be released in the next few weeks.  It will discuss industry market drivers and challenges, and includes more than 20 company profiles and country-specific forecasts from 2014 to 2024.

 

Advanced Energy Is $1.13 Trillion Market

— April 11, 2014

The publication of the Fifth Assessment Report by the Intergovernmental Panel on Climate Change (IPCC), Climate Change 2014: Impacts, Adaptation, and Vulnerability, made headlines recently with a familiar message: the climate is warming, people are causing it, and we are ill prepared to deal with the direct and indirect effects of climate change.

Indeed, it is a grim outlook, but when looking at one indicator not covered in the IPCC report – revenue from deployment of smart energy technologies – there are signs that things are moving in the right direction to reduce emissions.

One group, the Advanced Energy Economy (AEE), is a national association of businesses and business leaders who seek to make the global energy system more secure, clean, and affordable.  The group takes a big tent approach to clean energy.  It is bankrolled by one of the leading advocates and funders for the United States taking a leadership position in deploying clean energy, Tom Steyer.  AEE has identified seven core segments that make up the advanced energy industry: Transportation, Electricity Generation, Fuel Production, Electricity Delivery and Management, Fuel Delivery, Buildings, and Industry.

For the past 2 years, AEE has commissioned Navigant Research to quantify the advanced energy industry market sizes for the United States and globally.  We have identified 41 categories and 80-plus subcategories that meet the AEE definition and put the detailed findings and key trends in the recently released report, Advanced Energy Now 2014 Market Report.  Below are some key findings from the report that illustrate the breadth and depth of technologies that are capable of reducing emissions and U.S. activity in those markets.

Key Findings

  • The global advanced energy market reached an estimated $1.13 trillion in 2013
  • In the United States, the advanced energy market was an estimated $168.9 billion in 2013 – 15% of the global advanced energy market, up from 11% in 2011
  • Advanced transportation is booming: Navigant Research forecasts annual plug-in electric vehicle sales will reach approximately 467,000 vehicles in the United States and 80,000 in Canada by 2022 – slightly faster than hybrid electric vehicles sales grew in their first decade.
  • The United States accounted for an estimated 18% of the global solar PV market that approached $100 billion annually in 2013 and far surpassed 100 GW of cumulative installations in 2013
  • LEDs are expected to be the leading lighting technology over the next decade, with LED lighting products (including lamps and luminaires) in commercial building markets forecast to grow from $2.7 billion in 2013 to more than $25 billion in 2021
 

In 2014, Utilities Must Adapt or Retreat

— January 8, 2014

In 2013, the majority of utilities could still afford to keep their head in the sand, ignoring the crisis presented by distributed renewable generation to their bottom line now and in the future.  In 2014, this will not be the case.  Electricity sales of centralized utilities will continue to decline because of continued investment in energy efficiency and onsite distributed renewable energy generation from both residential and commercial and industrial customers.  This erosion of electricity sales will cause utilities to recover their costs by adding fees and/or increasing rates, which will increase the cost of utility-delivered power.  As a result, the economics of distributed generation will potentially be even more attractive to end users, further accelerating the deployment of renewables.  This is the utility death spiral.

As covered in Navigant Research’s report, Distributed Solar Energy Generation, distributed solar PV deployments in particular will continue to accelerate, including in nontraditional markets such as the southeastern United States.  The low cost of electricity in the Southeast has hampered wider adoption compared to the West Coast and Northeast, where high-cost retail electricity rates have made renewables more attractive.  In conjunction with falling renewable technology costs and incentives reduction on the horizon, many customers are making their moves, presenting a great opportunity for forward-thinking utilities in both the residential and commercial markets.

Adaptive Action

Meanwhile, financing has made solar PV available for little to no money down.  Advanced module-level power electronics – as covered in Navigant Research’s report, Microinverters and DC Optimizers – are bringing more rooftops into the fold and increasing the overall energy harvest.

Those utilities that have grasped this threat are taking action to adapt to the changing market environment in the following ways:

  • Taking their case to the public utility commission and requesting fees on those customers with onsite renewables
  • Limiting net energy metering (the ability to send power back to the grid and be compensated at retail rates)
  • Getting into the distributed generation business themselves

Some utilities are doing these things in conjunction.  Utilities have many of the most important components that are required to make the latter option feasible, including a captive customer base, generally high trust among their customers, access to low-cost capital, and solid expertise in operations and maintenance and customer service.  Taking this plunge is no easy decision for companies that are traditionally slow-moving.  But there are few other options.  Utilities may have noticed the writing on the wall during the past few years, but 2014 is the year they will have to do something about it – or it will be too late.

 

Concentrating Solar Thermal Market Losing Steam?

— September 9, 2013

Many in the cleantech industry 5 years ago (myself included) believed that concentrating solar thermal electric (CSTE) technologies represented the only way to get to competitive solar electricity pricing in the near term.

Very smart people saw the same opportunity in 2008:

“With the current plants, those in construction, those under consideration, and the pace of development, it is clear that some tens of gigawatts (GW) of cumulative production over the next decade – possibly as much as 50 GW – of concentrated solar power (CSP) capacity will be installed by 2020.”

By the end of 2013, only roughly 3 GW of CSTE will be installed worldwide, and only 1-2 GW is expected to be added annually through 2018.  Meanwhile, in 2018, more than 60 GW of solar PV will be installed in that year alone, according to Navigant Research’s recently released Solar PV Market Forecast report.

Drying Up in the Desert

Visions of mega-projects in the Mojave Desert, which at one point reached 24 GW on U.S. Federal Bureau of Land Management property alone, have seemingly evaporated.  Plans for similarly ambitious installations throughout North Africa and the Middle East have progressed slowly.  The first phase of a targeted 500 MW CSP plant is expected to come online in 2014 in Morocco.

To be sure, some impressive projects have moved forward in the United States, including a 377 MW project being built in partnership with Brightsource, NRG, and Google in the Mojave Desert that will be the largest solar thermal facility in the world when completed at the end of the year.  However, the industry is clearly not reaching its full potential.  There are a number of reasons for this.

The economic crisis crippled project financing in leading markets such as Spain and the United States, and environmental concerns over transmission lines and water usage have cast a shadow over promising projects in the U.S. Southwest.  Political turmoil has delayed project planning in the Middle East.  Natural gas prices have fallen precipitously in the United States (although, they’ve rebounded somewhat in the last year), while, at the same time, the rapid price decline of solar PV modules has enabled both utility-scale and distributed solar projects to come online more quickly and affordable than anticipated.

Focus on Value

This has forced many CSTE developers to focus on the key value that the technology brings to the table, namely hybrid and storage applications.  Utilities, including Florida Power & Light and Tuscon Electric Power, have experimented with integrating solar thermal technology into existing (or co-located with) natural gas-fired plants.  In 2011, GE announced a hybrid natural gas solar thermal plant in Turkey with target for completion in 2015.  But the market for these applications has not taken off as expected either.

The benefits of storage are more appealing since the use of molten salt and other thermal storage technologies enables greater flexibility in dispatching power to the grid.  A recent NREL study found that the value of CSTE with storage is $32/megawatt-hour (MWh) to $40/MWh higher than the value of a solar PV plant.

Brightsource expects the global market for CSP to be approximately 30 GW by 2020, with growth from the Americas, China, Middle East, North Africa, and South Africa.  That’s highly optimistic.  Even though the two are not mutually exclusive, CSTE is expected to remain only a fraction of the solar PV market for the foreseeable future.

 

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