Solutions for Solar Energy

Which business models unlock value of solar energy as it grows?

With solar electricity generating more than one terawatt-hour (one billion kilowatt hours) of electricity in the United States in 2010 and continuing to expand rapidly, the key question is, "How can companies best capture value as the industry grows?", said Michael Rogol, global PV analyst and CEO of Boston-based PHOTON Consulting.

Solar opportunities in installation, financing and related services

"The U.S. solar power sector is very profitable, but value is migrating from companies that manufacture toward companies that provide installation, financing and other services. As profit migrates, solar companies and utilities have at least seven models to capture value," said Rogol, during his presentation at the 2010 Solar Terawatt-hours Conference Series  in San Francisco.

Models to capture value in solar energy

• Solar equipment and software engineering and manufacturing
• Related equipment manufacturing such as sensors, monitors and regulators
• Installation and maintenance of installed systems
  
• Regulatory auditing - zoning, codes, renewable credits, etc .
  
• Renewable Energy Credits
  
• Equity investment opportunities
  
• Sales, marketing and outreach about solar energy
• Research, management and strategic consulting services
• Financing of solar systems (residential, commercial and generation)
  

Value Creation with Solar Energy

Strong value creation, including being low cost suppliers, agile traders, value-added service providers, system developers and bundlers of solar power with other technologies. For traditional electricity companies, the biggest challenge, Rogol noted, is to adjust their traditional businesses to create value from solar electricity.

Rogol showed how lower module prices are enabling swift growth in the North American solar market and how, as this occurs, profit within the sector is shifting downstream. The key to success, according to Rogol, is a strong, profitable business model capable of "unlocking value." He provided several key examples of strategies for strong value creation, including being

• low-cost suppliers,
  
• agile traders,
  
• value-added service providers,
  
• system developers and
  
• bundlers of solar power with other technologies.
  

For traditional electricity companies, the biggest challenge, he noted, is to adjust their traditional businesses to create value from solar electricity.

Solar consultants model company, geographic and industry projections from the outside-in, cross checking company announcements with providers and buyers. Photon PV data consists of historical and five-year forward projections for price, volume, revenue, cost, operating profit, operating margin and demand for c-Si and thin film technologies.

"This is not the dot-com boom with easy access to capital. Alternative energy companies need to build profitable businesses largely on their own. To do this requires detailed understanding of changing solar power market dynamics and how the electricity sector is evolving across North America," said Rogol.

Electricity is becoming the energy source of choice for a greener economy because it is possible to generate and transport electricity without the greenhouse gas residuals of petroleum and coal based generation feedstocks.

To support companies as they assess strategic moves in solar power, PHOTON Consulting publishes three in-depth business research reports each year focused on

• company risks,
  
• market risks and
  
• sector risks.
  

PHOTON Consulting's research reports provide solar companies at every step of the supply chain with the tools to make fact-based decisions in terms of price, volume and strategy. 

PHOTON Consulting is the largest dedicated solar energy research consultancy and is a leading supplier of in-depth research, management and strategic consulting services specific to the PV sector. With the deepest, broadest integrated coverage, PHOTON Consulting tracks the solar energy sector from feedstock to factory gate to end customer in every active and emerging market.

PHOTON Consulting is a robust source for research and analysis in solar power based on extensive research and data in the sector. For more information on PHOTON Consulting, visit the Company's website: http://www.photonconsulting.com.

A rooftop solar panel converts sunlight to electricity. In a new study, an expert describes progress toward an efficient and inexpensive method for storing and distributing solar energy in the home. Credit: Wikimedia Commons

New scientific discoveries are moving society toward the era of "personalized solar energy," in which the focus of electricity production shifts from huge central generating stations to individuals in their own homes and communities.

Home-scale electricity generation is the topic of a report by an international expert on solar energy published in the ACS' Inorganic Chemistry: "Chemistry of Personalized Solar Energy" . It describes a long-awaited, inexpensive method for solar energy storage that could help power homes and plug-in cars in the future while helping keep the environment clean.

Daniel Nocera explains that the global energy need will double by mid-century and triple by 2100 due to rising standards of living and world population growth.

Personalized solar energy - the capture and storage of solar energy at the individual or home level - could meet that demand in a sustainable way, especially in poorer areas of the world.

The report describes development of a practical, inexpensive storage system for achieving personalized solar energy. 

Fuel Cell Solar Energy

At its heart is an innovative catalyst that splits water molecules into oxygen and hydrogen that become fuel for producing electricity in a fuel cell. The new oxygen-evolving catalyst works like photosynthesis, the method plants use to make energy, producing clean energy from sunlight and water.

"Because energy use scales with wealth, point-of-use solar energy will put individuals, in the smallest village in the nonlegacy world and in the largest city of the legacy world, on a more level playing field," the report states.

SOURCE:

"Chemistry of Personalized Solar Energy"
Inorganic Chemistry

IBM developed a unique, eco-friendly way to recycle scrap silicon "wafers" -- the base material used for chips in everything from computers to consumer electronics. The process has dual advantages for the environment, as it will help reduce the estimated 3 million silicon wafers discarded each year across the computer industry, while also providing new supplies of raw materials to the supply-constrained solar energy industry.

Community solar continues to attract a lot of attention as a means to expand participation in distributed solar energy generation.

Massachusetts New Metering

In the past year, Massachusetts has implemented a statewide neighborhood net metering program approved in 2008 legislation.

• Under the final rules, all net metered systems, including neighborhood net metered systems, may over-generate relative to on-site load.
• Regular net metered customers may either rollover credits in perpetuity or allocate excess generation credits to other customers of the same distribution utility.
• Neighborhood net metered customers must have a minimum of ten residential customers identified for distribution of excess generation credits and all customers served must be within the same municipality, ISO-New England's load zone, and service territory of one distribution utility.
• Regular net metered system credits are based on a fully bundled retail rate, excluding customer charges and a public goods charge.
• Neighborhood net metered system credits are based on the fully bundled rate minus the distribution portion and also exclude the customer charge and public goods charge.
• Excess generation credits are allocated as a dollar amount and are based on the rate class for which a host customer takes service.

A number of states continue to discuss community net metering programs in various contexts including California, Colorado, New Jersey and Washington.

Given the potential promise community solar programs offer in expanding solar markets and the intersection of community solar policies with net metering, IREC anticipates being involved in these states as they move forward with implementation. As part of those efforts, IREC has begun development of a community net metering model designed to incorporate the best practices of net metering within the larger framework of community solar.

SOURCE:  IREC 2009 Annual Report

Solar Growth Trends

Regulation of Solar Services Agreements (SSAs) has emerged as an important issue in supporting solar growth.

Confusingly, Power Purchase Agreement "PPA" is often used in reference to SSAs, however, PPA has long been the term for an wholesale sales agreement between a generator and a utility, but a SSA is actually a retail sales agreement between a solar array owner and the utility customer hosting a solar array.

This arrangement has become the norm, as SSA providers are able to use the available federal tax credits and depreciation, and free the host from tying up capital and taking on the risks of ownership.

By overcoming a number of barriers to customer uptake of solar, SSAs have become the preferred means for the financing solar by commercial customers and the use of solar SSAs is beginning to be seen in residential markets.

Because the use of solar SSAs is so beneficial to the growth of solar markets, IREC has been actively involved in state proceedings addressing participation of solar SSA providers in net metering and regulation of solar SSA providers as public utilities.

State Policies for SSAs

Over the past year, IREC has participated in proceedings in Colorado, Nevada, Arizona, New Mexico, Massachusetts and Michigan that addressed the legal and policy issues surrounding regulation of solar SSAs. 

As part of Michigan's adoption of net metering rules, the Michigan PSC clarified the definition of customer-generator to ensure that SSA providers would be allowed to participate in net metering.

Likewise, Massachusetts clarified in its net metering regulations that net metered systems may be owned by third-parties.

IREC continues to be involved in Arizona and New Mexico's consideration of the matter and anticipates being active in Washington as well.

According to the IREC, many issues continue to emerge in net metering and interconnection as renewables increase the depth and scope of their penetration on the grid and across the states, including:

(1) regulation of solar services agreements;
(2) community solar proposals and meter aggregation;
(3) addressing issues surrounding the implementation of smart grid technologies and high penetration of PV on the grid; and,
(4) leveraging the opportunity electrification of transportation offers to renewable resources.

Some of these issues are increasingly familiar while others are just emerging. In 2010, IREC expects to continue to be engaged on each of these issues by working for greater solar energy growth.
 
SOURCE:  IREC 2009 Annual Report

The IREC declared that the most significant trend during the September 2008 - September 2009 period is a continued emphasis on solar energy in recent RPS adoptions and changes. Eleven states enacted or significantly modified standards; of those, seven states and DC included new provisions specific to solar energy.

In addition, five states made minor adjustments to their policies, of which two involved solar provisions.

• Missouri replaced (via ballot initiative) an existing renewables goal of 11% by 2020 with a standard of 15% by 2021, and included a provision mandating that at least 2% of the requirement come from solar energy (equivalent to 0.3% of retail sales in 2021).
• Illinois expanded its RPS to cover competitive sales and adopted a solar carve-out of 6% of the annual requirement from 2015 - 2025.
• And, in September 2009, California extended its RPS to 33% by 2020, via executive order.
• Both Oregon and Rhode Island adopted provisions relating to long-term contracts for solar energy resources, coupled with targets for solar that are outside the scope of each state's existing RPS.
  
• New Jersey approved long-awaited utility-administered solar renewable energy credit (SREC) contracting programs in connection with its existing solar carve-out.
  

SOURCE:  2009 IREC Annual Report

The Solar Electric Vehicle Company is using an innovative business strategy and partnering with corporations committed to combating climate change and dependence on foreign oil.

The Solar Electric Vehicle Company is using an innovative business strategy and partnering with corporations committed to combating climate change and dependence on foreign oil.

The event will take place in San Diego, CA, September 14-16, 2009 at the Marriott Del Mar.  As a sponsor of this event, I am pleased to be able to invite you to attend the summit at a 33% discount.

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About the Utility Scale Solar Summit

Utility Scale Solar 2009 is the business hub where decision-makers--from project developers, technology providers, utilities, investors, lenders, EPC contractors and other industry players--who are rapidly expanding the utility scale project pipeline come to work out how to move these projects over the finish line.

This is a great chance to Network with over 150 Dealmakers from these organizations:

• 8minutenergy Renewables, LLC
• Abound Solar
• Acciona Solar Power Inc.
• Advanced Green Power Solutions
• Albiasa Corporation
• Black & Veatch
• Boeing
• Borrego Solar
• Borrego Solar Systems Inc.
• Bright Source Energy Inc.
• BrightSource
• Bureau of Land Management
• Chadbourne & Parke LLP
• Chico Electric
• CoBank
• Confoe
• CP Energy Group, LLC
• DAI Management Consultants
• Dewey & LeBoeuf, LLP
• Dexia Credit Local
• Duke Energy
• Edgewood Management, LLC
• Edison Misssion Energy
• EMCORE
• Energy 5.0 LLC
• Enfinity Corp
• enXco Development Corp.
• Esolar
• Eurus Energy Japan
• Fidelity National Title
• Foley & Lardner LLP
• GE Energy
• Gemini Solar Development Co.
• groSolar
• Helio Micro Utilities
• Helio Power
• Hunt Construction Group
• Hunton & Williams LLP
• Iberdrola Renewables
• K&L Gates, LLP
• Keenan Development Associates
• Landesbank Hessen Thuringen (Helaba)
• Maco Tech, Inc.
• Marathon Capital
• Mortenson Construction
• New Energy Finance
• NextEnergy
• NRG Energy, Inc.
• O2Energies, Inc.
• Orrick
• Pacific Gas & Electric
• Pacific Valley, LLC
• Rabobank
• Rabobank International
• Renewable Energy Week
• RMT, Inc.
• RMT, Inc.
• Robert W. Baird & Co.
• Rowths Soare
• Ryan Russell Ogden & Seltzer PC
• Sempra
• Senior Vice presiden of North American Markets eSOLAR
• Signet Solar Inc.
• Siliken Renewable Energy, Corp.
• Simple Solar
• Skadden, Arps, Slate, Meagher & Flom, LLP
• Skyfuel
• SMA America, Inc.
• SMUD
• Solar Energy Initiatives
• Solar Millennium, LLC
• Solar Power Partners, Inc.
• Solar Reserve LLC
• Solar Turbines
• Solar Turbines Incorporated
• SPG Solar
• Starpoint Solar
• Starwoof Energy Group Global, LLC
• Stewart Title Guaranty
• Stirling Energy Systems (SES)
• Stoel Rives LLP
• Sunergy Systems
• Sunpower
• Suntech America
• Suntech America, Inc.
• Swinerton Green
• TD Banknorth Project Finance
• The Boeing Company
• Trina Solar
• Triple M Development
• Turner Industries
• Unirac, Inc
• United Rural Development Organisation
• United Solar Ovonic
• Wanzek Construction
• White Construction Inc
• Wilson Sonsini Goodrich & Rosati
• Xantrex Technology Inc