Last week, Greentech Media held our third annual conference attached to Intersolar North America. This year's topic was Growth Opportunities in Utility-Scale Solar: Projects, Finance and Policy. Thanks to the intrepid Shanna Hoversten, we now have a recap of the conference highlights:
Keynote Address
Steve Malnight, Vice President, Renewable Energy, Energy Procurement Team, Pacific Gas & Electric
- Almost 60% of PG&E's contracted RPS capacity to date is either solar thermal or solar PV. Even with this progress, solar remains less than 1% of PG&E's energy mix.
- 2007 witnessed an explosion of solar bids, about two-thirds of which were CSP and one-third of which were PV. In recent years, PV has overwhelmingly ascended to the leadership position over CSP -- highlighting the fact that portfolios change significantly over time and that both technologies are critical for overall solar development. Ultimately, both technologies need to be in the mix.
- Of all the proposed renewable energy projects in the state, fewer than 10% have come online. Fifty percent of them have been delayed or canceled due primarily to one of three factors: transmission, financing, or permitting.
- Eleven new major transmission lines costing $16 billion would be needed to reach the 30% RPS goal, but only three lines are currently under construction.
Assessing the Future of the Utility-Scale Solar Market in the U.S.
Mike Montoya, Director of Engineering Advancement, SCE
Tom Starrs, Managing Director, North America Utility Business Unit, SunPower
Jayesh Goyal, Vice President of North America Sales, AREVA Solar
- Jayesh Goyal: Financial credibility is one of the greatest challenges to deployment in the near term. Although there have been announcements of very large projects, there is a propensity for developers to engage in forward pricing and then fail to deliver. There is a need for large industrial players such as Siemens, AREVA, and GE to get behind utility-scale projects and ensure that they are executed.
- The panelists all questioned the value of a federal RPS in stimulating growth of utility-scale solar. Starrs commented that there is already a supportive policy framework in most states, and an extension of current standards would be just as helpful as an adoption of a federal RPS. Goyal believes that more value would be created by speeding up DOE loan guarantees.
U.S. Market Growth -- Government & Utility
Roger G. Little, Spire Solar
- The U.S. is becoming the primary demand center for utility-scale solar, yet there has been very little scale up in U.S. manufacturing capacity; total capacity for making x-Si is less than half of what demand is and many big players are not participating.
- Significant gains in lowering costs can come from making modules on site at solar farms; this would also be a boon to domestic manufacturing, creating many local jobs.
- Lower costs can also come from super-sizing the modules themselves, thereby saving on materials, labor, BOS, and shipping. Spire is developing 1 kW modules -- four times the size of a normal module -- cutting balance of system costs from $937.86 to $411.34 for the same generating capacity.
Investing in Solar in the Era of Utility-Scale
Nathan Campbell, Director, Good Energies
Dan Rubin, General Partner, Alloy Ventures
Peter Shannon, Partner, Firelake Capital
Ben Kortlang, Partner, Kleiner Perkins Caufield & Byers
- Peter Shannon: Capital availability for solar start-ups has declined significantly in recent times, and large investments such as Firelake's into MiaSole are unlikely to reoccur. The expectation now is that a company should be able to do more with less capital.
- Panelists commented on the fact that there has been enormous VC investment in solar with only limited success. Ben Kortlang noted that solar startups are not a good fit for VC because their time line for success is too long - for First Solar it took 15 years. Rubin cited the high volume of compounded risks associated with the clean-tech industry - a combination of high volume manufacturing risk, policy risk, market risk, and technical risk - which make it very difficult for these companies to succeed. Kortlang also commented that a peculiarity of VC investment in solar is the failure to kill bad solar companies; VCs have allowed a number of them to survive and continue to suck up money.
- Buzzword of the day: bankability, in this case as a prerequisite for VC funding; according to Kortlang, a lack of bankability wipes out ¾ of the solar space.
Opportunities in Utility-Scale Distributed Generation
Mark Nelson, Director of Generation Planning and Strategy, SCE
Arno Harris, CEO Recurrent Energy
Bob Powell, President and GEO, Solar Power Partners
Craig Lewis, Founding Principal, RightCycle and Executive Director, FIT Coalition
- Utility-scale distributed generation offers unique advantages, particularly in the short term. Arno Harris cited the shorter development timeframe required; projects can get online in less than 2 years due to more rapid access to transmission and shorter environmental review processes. Bob Powell asserted the distinct locational value of DG, which allows you to place installations at places to avoid congestion in the grid. Ultimately, DG serves as an important stepping stone to utility-scale; Craig Lewis stated that the wholesale DG segment is the only solar segment for which we can get high volumes online in the next ten years to reach the 33% California RPS standard.
- The panel was divided on the issue of implementing a FIT in the U.S. Lewis championed FITs, claiming that they are the only way to create a level playing field for solar. Powell argued that the solar industry needs to look more long-term and achieve grid-parity without the aid of a FIT which will eventually expire. Harris agreed that FITs can be blunt instruments, as has been demonstrated in Europe. He suggested that we should ultimately be able to marry the RPS with a market approach to get results.
Utility-Scale Solar Project Developers Roundtable
Tim Derrick, CEO, Axio Power
Colleen Campbell, Business Development Manager, CH2M Hill
Glen Davis, CEO, Agile Energy
Keith Latham, P.E., Vice President, Development, NRG Solar LLC
- Panelists offered their perspectives on the issue of PPA under-bidding: Campbell noted that failed PPAs are not unique to solar - biofuels and natural gas suffer from this also. Latham opined that projects with viable price structures eventually win out and get built; even if projects with superficially low price structures win up front, eventually they will fail and developers will redistribute the projects to developers that can execute. Glen Davis of Agile Energy described an element of his company's strategy in partnering with flailing projects, helping them implement a rebound strategy to ultimately fulfill the PPA.
- There is a short list of technologies and companies considered to be bankable; Tim Derrick commented that time and education will eventually get financiers comfortable with the second tier and beyond.
Financing Utility-scale Solar
Marie Schnitzer, Director of Solar Services, AWS Truewind
William Lee, Vice President, Project Finance & Corporate Development, SunEdison
Sheldon Kimber, Senior Vice President Development, Recurrent Energy
Matt Cheney, CEO CleanPath Ventures
- Panelists generally agreed that the climate for project finance has improved. Marie Schnitzer noted a slight shift in money from wind to solar. Sheldon Kimber commented on an increased emphasis on cash-efficient decisions versus NPV-efficient decisions.
- What happens if the Treasury Grant Program isn't extended? Kimber said that Recurrent is likely to go overseas, focusing particularly on Ontario. William Lee maintained that SunEdison's biggest stake will remain in the U.S. market, which he believes will see grid parity the fastest. Ultimately, Lee, Schnitzer, and Matt Cheney all agreed that solar developers need to be able to operate without incentives. Cheney noted that the solar industry has had to contend with irregular policy in the U.S. for a long time, and ultimately it may be better to have nothing at all than to have the uncertainty and unpredictability of patchy policies.
- Solar projects are, in some cases, being held back by an inefficiency in the perception of project risks. Lee notes that banks are asking for very large premiums in relation to the amount of risk they are actually taking. Kimber believes that the accuracy of perception is improving, but still banks may not recognize that as a risk profile, solar is likely better than wind.
PV, Concentrating Photovoltaics (CPV), Concentrating Solar Thermal/Solar Thermal Power Plants (CSP)
Bob MacDonald, PhD, Co-Founder and CEO, Skyline Solar (CPV)
Cynthia Christensen, Director of Strategic Corporate Development, Stirling Energy Systems (CSP)
Laks Sampath, Senior Project Technical Manager, Trina Solar (PV)
Charles Ricker, Senior Vice President, Business Development, Brightsource Energy (CSP)
- Panelists suggested the need to look beyond just the module cost to determine the best technology for utility-scale projects. Although First Solar can offer a thin film product for much cheaper than any of these new technologies, developers should still look at LCOE analysis, power quality, and capital costs. Charles Ricker commented that there is a need to further develop our tools for comparative analysis and streamline our methodologies.
- Bob MacDonald estimated that over the next five years CPV will witness 20% annual cost reductions, and reaching $0.50 per watt is doable. Most of these reductions will come from bringing down BOS costs by leveraging efficiency gains.