Navigant Research Blog

Brutal Solar Market Benefits Consumers

— March 28, 2013

The imminent bankruptcy of Suntech, based in Wuxi, China and formerly the No. 1 manufacturer of solar PV modules in the world, may please many Western manufacturers that suffered from the company’s below-cost selling strategy.  But schadenfreude offers scant comfort for the dozens of solar PV manufacturers, Chinese and Western, that have been driven into failure in the past few years by China’s 5-year strategic plan to dominate solar PV manufacturing.  Suntech was one of the largest of the army of unprofitable Chinese manufacturers that have topped rankings of annual production for the past 3 years.

Despite ambitious domestic installation targets for solar PV, more failures are yet to come in China as the country becomes a victim of its own success and the Chinese market continues to consolidate.  As with European and American companies, Chinese manufacturers will likely enter into a number of “strategic partnerships” that result in more vertically integrated providers, including some with project development operations.  This is a strategy that has enabled FirstSolar and SunPower to ensure markets for their own modules.

The brutal fact is that no individual solar (or battery, or any other) manufacturer can compete with Chinese state capitalism.   Many policy makers and analysts would love to see an expansion of solar manufacturing in this country.  Yet, we are in this situation today because consumers, as always, have spoken with their dollars.  There is a reason that DVD players, digital cameras, and cell phones are not manufactured in the United States.  Solar PV cells and modules are now also rapidly commoditizing.

Still, even though the below-cost Chinese market flood has contributed to manufacturing job losses in the United States and Europe, the number of solar PV installation jobs has increased considerably.  Ultimately, the result is better value for consumers and a growing overall market.  The Chinese government is effectively subsidizing the cost of solar PV for consumers in the United States and around the world – and that’s not a bad deal, unless you’re a failing solar PV maker.

 

V3 Gives Solar PV a New Spin

— February 10, 2013

Source: V3 SolarV3Solar has made waves in the cleantech press over the last few weeks with its Spin Cell prototype.  With claims of levelized cost of energy (LCOE) around $0.08 per watt (as reported by CleanTechnica), this system would shatter current records for solar power cost effectiveness, prompting the question: does the Spin Cell actually work as well as advertised?

First, a brief primer on the technology.  The Spin Cell bucks the traditional flat solar panel design: it’s a conical device that spins.  The cone shape, which resembles an Apollo-era space capsule, allows for greater exposure to the sun, without active tracking.  The self-contained unit, based on traditional concentrated photovoltaic (CPV) cells, also has magnifying lenses on its exterior surface that increase the light to each of the individual solar panels.  However, in conventional solar arrays, increased solar radiation raises the temperature of the cells themselves, decreasing efficiency or, ultimately, destroying the unit.  V3Solar claims that the spinning unit’s motion keeps the surface of the PV cells cool (only slightly above ambient temperature), thus maintaining efficiency.

V3Solar hired Bill Rever, a solar industry veteran, to perform a technical review of the device.  While Rever thoroughly explains the concepts of the technology, as well as the economic implications, the term “technical review” is a bit of misnomer.  Essentially, Rever restates the tests that were run by Nectar Design on the prototype, without offering any new information.  The results of the tests indicate that the temperature on the Spin Cell remains lower than the flat panel control, but they don’t detail its power production.  Most importantly, the CPV yields have not been empirically proven in this design.

Hyping the Spin

Still, the hype that the Spin Cell has created is justified.  The technology is interesting, but the business case for the Spin Cell is the real draw.  An $0.08 per watt LCOE would make it one of the cheapest forms of electricity, even compared to coal and natural gas.  Like most things in the energy industry, if the economics work out, the technology will prevail.  Programs like feed-in tariffs (FITs) and renewable portfolio standards (RPSs) help support nascent green technologies, but the ideal goal is for those technologies to thrive without government intervention.  If the Spin Cell works as V3Solar says it does, V3Solar will have accomplished what no other photovoltaic company has: creating a carbon-free, economically competitive means of energy production.

If proven, the technology would not only permit inexpensive and clean generation, but would also free up significant governmental funds dedicated to making solar more economically attractive.  For example, the solar Residential Renewable Energy and Business Energy Investment tax credits, in the United States, would be rendered obsolete, increasing available government funds for more advanced energy technologies such as bioenergy and marine hydrokinetic technology.  Similarly, Germany’s FIT would be able to ramp down quicker than planned, while Japan’s new FIT would become unnecessary.

The Spin Cell eventually will have to prove itself in the only testing environment that matters: the open market.

 

Seeking Funding, Solar Projects Look to the Crowd

— January 16, 2013

Source: Thatrockblog/TumblrKickstarter has become a popular means for ambitious, underfunded entrepreneurs to test their ideas in the open market.  Kickstarter raised more than $319 million for 18,109 projects in 2012 alone.  This success raises the question: what else can be done with this business model?

Banking on forthcoming legislation from the Jumpstart Our Business Startups Act (JOBS Act), Oakland-based Mosaic thinks it has the answer: renewable energy.  Launching its publicly facing platform last week, the company funded four projects submitted by third-party companies, at a value of more than $313,000, in less than 24 hours.  Mosaic’s minimum investment is $25. The promised payback terms range between 60 and 109 months.  Mosaic says the loans come with interest on investments in the 4% to 6% range, which is better than nearly any current bank rate.

This most recent development has brought funding for all of Mosaic’s solar projects to approximately $1.1 million.  Mosiac previously funded five beta projects, which carried no yield but proved the feasibility of the technology.

Investing in such projects does not promise any return and carries inherent risk since venture funding for companies using Mosaic is not insured by the FDIC, unlike bank accounts.  Mosaic says it select projects with minimal risk and currently has a 100% on-time payback rate.  If the experience of other crowdfunding companies like Kiva is an indication, Mosaic should have a lower default risk than the majority of mortgages.

Prior to the JOBS Act of 2012, investments in projects of this size were hard to come by, and regulations by the Securities Exchange Commission (SEC) still have not been finalized.  In general, though, these regulations will likely allow smaller investors to participate in such projects by altering or dropping the accreditation requirement.  Because of other SEC rules, Mosaic can currently operate in California and New York, but the JOBS Act may create a set of national rules and simplify crowdsource funding.

Mosaic is neither the first nor the only company using crowdsource funding for green and renewable energy projects.  SunFunder operates crowdsourced loans with an emphasis in solar installations in the developing world.   Firms like Greenfunder and Green Unite have broader goals than Mosaic but still operate under the green/crowdsource banner.  Even social-impact funding giant Ashoka has launched a beta version of a crowdsource funding platform, called Innovations for the Public, with a $10 minimum investment.  While Innovations for the Public does not focus entirely on renewable energy projects, it shares a business model with Kickstarter and Mosiac.

It’s too early to say whether the crowdsourcing model is the future for small renewable energy projects, but if Mosaic continues to be successful, expect to see other companies competing for the space.  More importantly, expect to see a boom in small solar and other clean energy projects.

 

Community-Based Solar Models Take Root

— January 3, 2013

The solar photovoltaic (PV) market has expanded rapidly over the last year, largely thanks to new business models emerging at both ends of the market, small and large.  Power purchase agreements (PPAs) have allowed residents who don’t wish to (or can’t) pay for solar systems upfront to lease the systems from third-party vendors, and still save money if their current costs are compared to previous utility bills.

For utilities, the steep drop in the commodity price of solar PV has led to utility-scale projects that can generate the same amount of power as coal or small nuclear plants.

In 2013, I believe we will see a greater emphasis on solar PV projects that will fit between these two extremes.  A case in point is the concept of community solar, which includes projects known as “solar gardens.” “Virtual” solar power purchase programs are spreading throughout the country, and showing up for the first time within investor-owned utilities (IOUs) under the category of solar gardens in Colorado and other states.

While feed-in tariffs made headlines in the solar PV industry in 2012, the emphasis now seems to be shifting to the concept of virtual net metering, which enables communities, and those without good solar access, to still benefit from distributed renewable resources by crediting power flows to specific customers volunteering to pay a small premium, even if the renewable generating source is not located on-site.

Municipal utilities in the Pacific Northwest have been leaders in this regard, launching some of the nation’s first community solar programs.

Planting Gardens

Since 60% or more of urban residents rent, and thus have no incentive to invest in rooftop solar PV systems, these new models of solar PV deployment take advantage of the best centralized sites, and then virtually allocate this power to customers located throughout a utility service territory or across an entire state.

A new law introduced in California in 2011 would have made virtual net metering available throughout the state.  The bill was killed in 2012, due to opposition from California’s two largest private utilities, but it was supported by San Diego Gas & Electric. It’s only a matter of time before this, or a similar law, is enacted in California.

Colorado has already expanded the solar gardens model to investor-owned utilities, and just this past month, brought on line the largest community solar project in the nation. Other solar garden projects for municipal utilities also popping up in Minnesota, New York and Pennsylvania, among other states.  Nevertheless, the United Kingdom has bragging rights to the largest community solar project in the world, which totals 5 megwatts in peak capacity.

Perhaps the most interesting twist to community solar comes from Oakland-based Mosaic, which is began applying the Internet-based crowd funding model to projects ranging from a Navajo Native American reservation in Arizona to the Asian Resource Center on its own East Bay California turf just in time for Christmas.  For as little as $25, anyone can earn 6.38% in interest annually for the next five years.  The company is not only attracting small investors, but also has already nabbed $2.7 million in venture capital and a $2 million grant from the federal Department of Energy.

 

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