Solar Power International: Moving into Second Gear?

It’s a challenge to summarize what transpired over four days at an event with 600 exhibits, 70 concurrent sessions (forcing choice between 6 at a time), 15 manufacturer-sponsored hands-on training sessions, 10 workshops, plenary sessions, parties and, oh, did I mention solar-supportive keynote remarks by Vice President Joe Biden to an enthusiastic audience.  With participants from over 75 countries, it’s easy to see why Solar Power International (SPI) claims to be the largest and fastest growing solar conference in North America.  But let me try to extract a few themes from this mid-September event sprawled across all four Exhibit Halls at the Anaheim Convention Center.

Clearly the industry is growing.  In advance of the conference, the Solar Energy Industry Association and GTM Research released their quarterly update.  With 1,393 Megawatts of PV capacity installed in the second quarter, the US Solar industry remains on track for an annual forecast total of 7,700 MW.   Of this, 840 MW (60%) was installed in California.  (A brief reminder that the capacity of a typical nuclear powerplant is 1,000 MW.)  The fact that the California Senate and Assembly passed SB350 increasing the state’s current Renewable Energy target of 30% by 2020 to 50% by 2030 days before SPI added to the conference’s buoyancy.  Repeatedly cited was the statistic that California has over 55,000 employees working in the industry (more employees than the state’s top 5 utilities combined).

Clearly the industry faces challenges.  The major one is the currently scheduled expiration of the 30% residential tax credit and reduction of the commercial investment tax credit (ITC) from 30% to 10% fifteen months from now, the Administration’s request for a permanent extension of the ITC not withstanding. A Bloomberg forecast released at the conference anticipates that without an extension, 2017 will see installation activity dropping to its 2012 level.  The loss of the tax credit would hit California’s businesses as hard as elsewhere.  In addition, the fact that California’s Public Utility Commission (CPUC) is in the process of redesigning the utility rate structure, including deciding on an appropriate level of compensation for customers who generate their own solar energy, has the industry on edge.  Utilities have requested the compensation (or credits) allowed solar customers be reduced by 40%, and that fixed fees be added to solar users’ bills.  (If this sounds completely contrary to the legislative action on SB350 cited above, welcome to the world of Government.)

But beneath these Good News / Bad News headlines, several themes emerged that cut across the gazillion specific new product and service announcements.

Energy Storage developments are booming with a variety of technologies and products. Over 50 firms provided products or services related to Storage.  Those in California are as diverse as 90-year old Trojan Battery Company of Santa Fe Springs and Milpitas-based JuiceBox Energy, a start-up barely out of the garage.  Many clustered together on the exhibit floor in a zone known as the “Energy Storage Pavilion.” The CPUC mandate to the state’s three largest Utilities and other energy service providers to procure 1.3 GW of energy storage by 2020 creates an immediate market in California.  And the recognition that commercial electric customers can utilize storage to reduce their bills through reductions in their peak demand charges creates a market rationale for growing storage demand beyond the utility mandate.

Finance is another area experiencing dramatic change.   While the discussion only a couple years ago focused on lease or buy, a plethora of new financial instruments and capital sources have emerged.  Sessions and exhibits provided information on new approaches to debt financing for non-residential projects (which appears to focus on financial support for Commercial and Industrial (C&I) customers, a growing solar niche), Tax equity markets, and the pooling of solar project cash flows (in what’s become known as a YieldCo).  The good news is that investors (not just system owners) are seeing value (!) in PV installations.

And of course there were new panel developments, racking system improvements, Inverter advances and the like.

So what’s the take-away?  The Solar industry is growing through its increased cost-competitiveness as a result of new product and service innovation. This dynamic was well captured by Vice President Biden’s comment, “Anyone who thinks it (Solar) is not happening just take a look at the market.  It’s a competitive choice for consumers. …  Look, this isn’t a government mandate, this is the market working.”  Yes, but the uncertain future of tax credits and utility pushback (in California and elsewhere) continue the uphill slog.

Comments are closed.

Post Navigation