[Palo Alto, California USA]
|From How Bright is the Future for Solar Power?|
Bright Solar panel “Quotable Quotes” highlights.
Concerns about US Stimulus program progress for Photovoltaics (PV).
Last week ended with a trio of dismal 1Q 2009 solar earnings reports from Oerlikon Solar, MEMC Electronic Materials, Inc., and SunPower Corporation covering the solar value chain from equipment to polysilicon and solar modules and systems:
- “SunPower Posts Q1 Net Loss, Delays Factory Plans” and
“Oerlikon Solar Lays Off 60, Sees Q1 Sales Dropped by 32%” by Ucilia Wang at Greentech Media
- “MEMC Q1 Top Line Misses; EPS Beats; No Guidance” by Eric Savitz for Barron’s Tech Trader Daily
The prior week, GABA (German American Business Association) and SVASE (Silicon Valley Association of Startup Entrepreneurs) organized the panel discussion, “How Bright is the Future for Solar Power?”
Solar Grant status
In the Stimulus package (please see Of Solar Grants, Green Jobs, and Buy American), we did get an equivalent of refundability of that Investment Tax Credit in the terms of Treasury grants.
The terms of how those will be distributed are still yet to be clarified, but we will see subsequent, in the next couple months or so, I think an idea of just how loose that stimulus will actually make credit markets going forward in the commercial and utility scale sectors.
Evaluating photovoltaic technologies based on Capex $/Watt
Dr. Paul Basore, Managing Director, REC (Renewable Energy Corporation ASA), said:
When we compare different technologies for investment purposes even within our own company, traditionally everyone used primarily $/Watt (dollars per Watt) as the most important criteria.
This credit crunch has raised significantly the visibility of an alternate way of evaluating these different technologies. And it unfortunately has the same units usually expressed as $/Watt.
What they really mean is dollars of investment per annual Watt of capacity for the different technologies. It sounds the same but it’s a very different thing.
It has to do with how much Capital you have to raise in order to expand business. All of sudden this is becoming almost as important in our eyes for comparing different technologies as the $/Watt production cost.
First Solar, Inc. and Arizona Feed-in Tariffs
As we speak right now, First Solar, which is probably the leader in terms of module production cost, is arguing very, very strongly with the legislature in Arizona. Arguing against Feed-in Tariffs (FiTs).
They are going to the Arizona legislature and saying, no, we don’t need FiTs.
We are close enough to grid parity, don’t bother. Keep your dollars, we don’t need FiTs.
Look If I were them, I would do exactly the same thing. I’ll keep all the riffraff; I’ll keep all these VC (Venture Capital) backed companies from getting into the market with help from the Fit.
Obviously, they loved the FiT in Germany. That helped them set themselves.
It’s Capitalism at work here. You have the dominant position. You have the price advantage. You have the mass; you have the volume. So therefore you keep the competitive advantage. There is no such thing as an unfair advantage, so to me this is also a very strong indication that solar is very close to being at grid parity.
PG&E Utility Parity in Northern California
David Arfin, Vice President, Customer Finance, SolarCity said:
The challenge to the industry is right now we need to have whatever incentives that there are now and a stable environment so that we can build out the infrastructure and the ecosystem. And we better be at the same time prepared for those subsidies going away.
So right now, as I mentioned before, we can deliver, if you live in the PG&E territory, your solar electricity at less than what you are paying to PG&E for that kWh (kilowatt-hour).
So we are below utility parity, that’s not to be confused with below grid parity which is what we need to be.
US Solar Stimulus program status
David Arfin said:
The second area is the ITC grant program. The president signed the stimulus bill I think February 17. We are now two months later; we don’t know really how the grant is going to be done, but we think it’s a very straight forward process.
Paul Basore said:
I’m actually seriously concerned that the Department of Energy is going to try to take this all upon themselves, and my view is that they have been largely stripped of most of the experience they have in this area at least as far as technology is concerned.
The rapid growth of the industry worldwide has hired away most of the people that used to work there including at the National Renewable Energy Laboratory (NREL), leaving them seriously understaffed. And now they’re suddenly being asked to do ten times what they were doing before.
Panel Moderator Elias Blawie, Partner, Cooley Godward Kronish LLP said:
Many of the departments underneath here in the Federal Government; these programs are being amped up by 10 to 100 times in some cases. And in many cases the people who are supposed to administer these programs are not in place at all. This has an eighteen (18) month window for spending the dollars.
Loan Guarantee Program advice
Alain Harrus said:
This is going to be way beyond the 18 months in my opinion. Our recommendation to our portfolio companies is that they should not be including this in their business plan. Going through the application is a very long process; typically it is 1000 pages today.
Elias Blawie said:
These are really much more like the process of companies going public.
California Feed-in Tariffs
Adam Browning said:
It’s already happening on the regulatory level. California Public Utilities Commission has issued a proposed decision for upwards of a GigaWatt and a half worth of solar over the next couple of years under standard offer contracts on the wholesale level as well. I do predict success with that.
Solar Technology Market Opportunities
Chris Eberspacher, Chief Technology Officer, Technology Development, Solar Business Group, Applied Materials, Inc., said:
The advantage of rooftops be they commercial or residential, is that you are able to install your solar product on the customer side of the meter. So you are competing against the retail price of power, not the wholesale price of power. And that makes a huge difference.
And a lot of the traditional technologies in solar are not very well suited for that application. Largely because of their weight, rigidity, appearance, cost of installation, and cost of up keep.
If I was starting a new venture today, I would look carefully at that residential and commercial rooftop market as a place where you could target your products and be first order immune from the ups and downs of various governmental incentive programs.
When the audience was polled for solar adoption, only about ten (10) had solar installed on their homes. In fact, there were more hybrid car then solar owners. With less than one-tenth of one percent of US electricity generated by photovoltaics, the solar market is just beginning here.
The new and complex US Stimulus solar programs have not progressed much since February 2009. Unless the Obama Administration can correct this situation before summer, the stimulus won’t have a major impact on the PV Industry until 2010.