Navigant Research Blog

The Future of U.S. Solar Energy Companies – Part 2

— July 6, 2015

Note:  This blog is the second in a four-part series examining the evolution of U.S. solar companies.

Continuing on my previous blog, outlining some of the most important trends that have shaped the U.S. solar PV landscape and offer a glimpse into the post-30% investment tax credit (ITC) future, this blog looks at how U.S. companies have made inroads overseas, with a particular focus on emerging markets, microgrids, and hybrid energy solutions.

Emerging Markets: Utility Scale

Developing countries are becoming a growing opportunity for U.S. solar companies looking to leverage their expertise in regions and applications with very high electricity costs or weak grid systems. In many ways, developing countries are the next frontier, but they offer unique challenges along the way. Markets such as South Africa, India, Chile, and China have rapidly been turning into high-growth markets that could drive sales in the latter half of this decade in utility-scale installations down through remote microgrids.

Notably, SunEdison has been operating in India for a number of years, but in 2015, the company has made numerous high-profile announcements, including reportedly signing agreements for up to 15 GW of solar and wind projects in the country. The company also announced a $4 billion deal to manufacture solar panels in India. Another company in this field, First Solar, has also made significant announcements for the Indian market, including a target of 5 GW by 2020. In addition, this company has installed the largest solar PV plant in South America in Chile at 141 MW.

At the utility scale, the leading country in Africa for renewable energy deployment is South Africa, where the government’s integrated resource plan may result in nearly 10 GW of solar PV installed by 2030.  With nearly 1.5 GW of solar PV and 2 GW of wind currently installed or in development, following four well-administered auctions, the country is making strong progress. SunPower has completed 33 MW of projects in South Africa in addition to being appointed as the preferred energy performance contractor (EPC) and operations and maintenance (O&M) contractor for an 86 MW project by the MULILO-TOTAL consortium. SunPower also announced at the end of 2014 that it is moving forward with at 160 MW module manufacturing plant in Cape Town, South Africa, to meet growing demand.

Emerging Markets: Microgrids/Hybrid Energy Solutions

Remote microgrids and hybrid solar-diesel or wind-diesel systems are already common with more than 600 identified  in Navigant Research’s Microgrid Deployment Tracker. To put that number in perspective, SunEdison has set a target of developing 5,000 microgrids in India by 2020, with many including storage. Since 2014, First Solar has been pursuing build operate and own (BOO) fuel-replacement projects, which include the prospect of displacing diesel in mining and other heavy industrial operations.  First Solar can provide a levelized cost of energy at between $0.07-$0.15/kWh, making it comparable, or cheaper, than conventional power plants – but also far less expensive than diesel, which generates electricity upwards of $.70/kWh.

In 2015, First Solar and CAT announced a strategic partnership to develop an integrated PV solar solution for microgrid applications. Under the agreement, First Solar will design and manufacture a pre-engineered turnkey package for use in remote microgrid applications, such as small communities and mine sites. The package will feature CAT-branded solar panels manufactured by First Solar and will include balance of system components. CAT will exclusively sell and support the integrated solution through its worldwide dealer network, along with its current offerings of generator sets and energy storage. Many other companies are expected to soon be offering similar solutions.

In the next installment of this four-part blog series, I’ll cover energy storage and the role of utilities in distributed solar.

 

Northern Power Opts for Elegance, Simplicity in Microgrid Controls Platform

— June 19, 2015

Founded in 1974, Northern Power Systems (NPS) of Barre, Vermont, is returning to its microgrid roots, strengthening its market-leading position as the wind turbine of choice for microgrids with recent partnership arrangements on systems controls and energy storage integration.

NPS designs, manufactures, and sells 60 kW and 100 kW wind turbines globally, a scale that appears to be ideally suited to microgrids, which often integrate other diverse generation sources ranging from traditional diesel generators to solar PV.  The company went public in April 2014 on the Toronto Stock Exchange. Since NPS has deployed over 500 of its wind turbines in the field, it is the market leader today in remote microgrids such as those deployed in Alaska.

Though the company launched a PowerRouter microgrid testbed in 2002 and was involved with the pioneering concept of droop frequency that fell under the umbrella of the Consortium for Electric Reliability Technology (CERTS), it steered away from microgrids when its parent corporation Distributed Energy Systems declared bankruptcy in 2008. A newly independent NPS returned to the market that year with fresh investors and a focus on its wind turbine product line. It is now refocusing on microgrids as a business opportunity and offering its next-generation bidirectional FlexPhase power converters for a variety of microgrid and other energy storage applications.

With sophisticated controls provided via its power conversion technology (PCS), which helps relieve stress on the microgrid, NPS’s small wind turbines are ideally suited for remote microgrid applications.  In addition, the NPS 60/100’s ability to control reactive power independent of wind speed is also a plus.  Among other unique features is a simplified turbine architecture that utilizes a unique combination of a permanent magnet generator and a direct-drive design.

Partnering for Success

Two new partnerships enhance its microgrid offer. The most important was announced this month: a non-exclusive strategic partnership with MCM Energy Labs srl (MSM), a company that is part of the Italian industrial group ELVI. By integrating its FlexPhase converters with MCM’s hybrid power controls, integration and project deployment expertise, Northern Power is shining a spotlight on a fascinating debate within the microgrid community: What is the best approach to optimizing distributed energy resources (DER) within a microgrid?

Larger technology companies tend to shrink down what they do on the macrogrid down to a microgrid, with sophisticated metering and sensors and complex communication IT systems often requiring substantial customized engineering. The approach now being embraced by Northern Power— as well as other smaller market entrants—is an elegant solution that typically relies upon droop frequency, a concept that is a longstanding principle embedded in generation controls of the macrogrid, but which has profound implications for microgrids. In essence, it is a self-regulating, peer-to-peer approach revolving around simple physics: that frequency modulates (ever so slightly) when different DER are integrated into a single system (i.e., a microgrid.) There is no need for resources to talk to each other; they naturally adjust to keep the required 60 Hz (or 50 Hz) necessary for grid stabilization.

Just last month, Northern Power also announced a partnership with FIAMM Energy Storage Solutions, which manufactures a sodium nickel chloride battery. When linked to Northern’s PCS, FIAMM’s batteries are able to provide load shifting and seamless islanding services, as well as voltage and frequency controls for either direct current (DC) or alternating current (AC) microgrid or utility grid applications. With the incorporation of MCM’s microgrid controller and FIAMM’s battery solutions, NPS has positioned itself as offering a lower cost controls platform for microgrids than many of its competitors.

 

Tesla Announcement Highlights Importance of Energy Storage Partnerships

— June 9, 2015

Boatbuilder_webTesla Motor’s April announcement of stationary energy storage solutions brought an unprecedented level of attention to the burgeoning energy storage industry, benefiting all stakeholders.  Competing products providing storage for residential, commercial, and industrial customers are already on the market, however.

These systems are designed for a variety of distributed energy storage applications—currently some of the fastest growing areas of the global storage market.  Navigant Research estimates that the global installed capacity of residential and commercial energy storage systems will grow from around 246 MW in 2015 to over 10,484 MW by 2024, with lithium ion (Li-ion) expected to account for 58% of total capacity.

The new product launches from Tesla highlight the growing importance of partnerships within the industry.  While Tesla provides a sleek battery module, the company does not offer bidirectional inverters or installation services.  The energy storage ecosystem is comprised primarily of companies like Tesla, with specialized offerings that must seek out partners to offer the complete solutions that customers demand.  (Navigant Research’s recent report Energy Storage Enabling Technologies analyzes the value chain within this industry.)

Tesla has established partnerships to complete their offering and provide storage systems for a range of end-users through channel partners.  The systems will be available through solar PV provider SolarCity, demand response aggregator EnerNOC, and engineering/construction specialist Black & Veatch, among others.  These partnerships each target different market segments, each requiring varying business models and product specifications.  With Tesla’s plans, competition has intensified in the distributed storage market, as several leading companies have recently announced new partnerships to offer similar integrated solutions.

Competition Heating Up

Partnerships are essential for most storage market players: battery manufacturers need supply agreements for their products and system integrators need component suppliers, while software and power electronics providers look for integrators and developers to get their products into complete solutions.

Electrical solutions provider Gexpro recently announced an agreement with battery manufacturer LG Chem, the power conversion provider for Ideal Power, and energy management software vendor Geli to offer a fully integrated battery energy storage systems (BESS) for commercial and industrial (C&I) customers.  This follows similar announcements from LG Chem to provide Li-ion batteries in the Northeast United States through an agreement with energy services company OneEnergy for C&I customers and Eguana for residential customers.

Other notable relationships recently announced include solar PV provider SunPower partnering with storage system vendors Stem and Sunverge to offer BESSs for their C&I solar customers.  Additionally leading Li-ion battery vendor Samsung SDI recently announced supply agreements with GreenCharge Networks, as well as with microgrid developer ABB.

Aside from battery vendors, other companies in the market are establishing similar relationships to solidify their offerings.  Notably, microinverter manufacturer Enphase, which is developing energy storage solutions utilizing their products, recent announced an agreement with battery vendor ELIIY.

Coming into Focus

While supply agreements and distribution partnerships have been developing in the stationary storage market for some time, more recent announcements targeting C&I customers are increasingly important.  In this segment it is crucial for companies to offer integrated solutions that are easy to operate and quick to install.  As a result, leading companies are joining forces to combine their specialties into the most effective offering.  We explore these relationships within the energy storage ecosystem through various reports including the recently published Navigant Research Leaderboard Report: Energy Storage System Integrators and an upcoming Leaderboard Report on lithium ion grid storage.

 

Novel Microgrid Architectures Face Regulatory Hurdles – Even in New York and California

— June 4, 2015

If I had to pick two states that are leading the charge on reinventing electric utilities, they would be New York and California. Yet, even in these state laboratories of regulatory reform, novel forms of distribution networks (often referred to as microgrids) that rely upon the inherent advantages of direct current (DC) are facing obstacles.

The core challenge facing DC distribution networks lies with the need for standards and open grid architectures that can help integrate the increasing diversity of resources being plugged into retail power grids. This, among other issues, is the focus of the first major conference sponsored by the Institute of Electrical and Electronics Engineers (IEEE) on DC distribution networks. The conference will take place in Atlanta, Georgia, from June 7 through June 10.

In New York, Pareto Energy of Washington, D.C. obtained preliminary engineering approval from Consolidated Edison (and a $2 million grant from the New York State Energy Research and Development Authority [NYSERDA]) to install its patented GridLink microgrid controller at the 12.8 MW combined heat and power (CHP) plant that serves Kings Plaza Shopping Center on the Brooklyn waterfront.  GridLink converts power from each generation source (including grid power) from alternating current (AC) to DC, collects all the power on a common DC bus, converts that DC power back to AC, and distributes power to any load (including those on the utility grid).  All the while, each power source is electrically isolated. In short, GridLink creates a non-synchronous plug-and-play microgrid.

Although Kings Plaza has never been connected to Consolidated Edison’s grid, it provides electric and thermal energy to the center at costs less than half of equivalent utility services. Under the plan, 8 MW of low-cost power from Kings Plaza’s CHP unit will be exported to the utility grid, which may be utilized to serve nearby low-income communities during a major power outage. Despite these potential benefits, some regulatory snags have delayed the project. Pareto has also filed a petition with the New York Public Service Commission, claiming discrimination against its lower cost option to traditional power delivery infrastructure to meet contingency requirements for reliability within the Consolidated Edison service territory.

The View from the Other Coast

In California, the issues are different, but they also involve DC. One case involves Bosch, which was awarded a California Energy Commission grant of $2.8 million grant to develop a high-penetration solar PV DC microgrid at an American Honda Motor Co. parts distribution center in Southern California. The project is designed to validate the efficiency performance benefits of a patented system allowing it to directly connect DC power flowing from solar PV to LED lighting and DC ventilation systems located within the building, as well as a DC energy storage device. The benefits of DC attached to this project include lower installation and operating costs. In addition, this project is pioneering the application of a DC distribution network within existing building codes in order to boost reliability.

While Bosch observes it has not run into any problems with building codes or other such potential obstacles to its DC building grid business model, it has identified an interesting dilemma. Since state subsidies for both solar PV and energy storage are linked to the size of the inverter interconnecting with the AC grid, it appears DC technologies are being discriminated against, despite the fact they are more efficient and reliable.

In both cases, the status quo is being challenged by new technology revolving around a nonsynchronous microgrid incorporating the advantages of DC.  This is the subject of my next report, Direct Current Distribution Networks, expected to publish later this month.

 

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