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Siva Power Lands $25M to Chase Giga-Scale Domestic Thin-Film Solar Production

It's extremely difficult to raise venture capital funding for solar hardware companies, but somehow Siva Power just raised $25 million for its thin-film solar manufacturing think-tank/retirement project for thin film technologists.

Siva closed this $25 million round to focus on building a pilot line and developing a solar module business -- with funding led by Jim Simons and Mark Heising, along with Jonathan Sheets.

Mark Heising is the managing director of Medley Partners. Jim Simons, a renowned mathematician, started the Medallion Fund, a wildly successful hedge fund. He's appeared on the Forbes top 100 richest people list and, until this investment at least, was called “the world’s smartest billionaire.”

Siva Power possesses an all-star team of thin-film solar technologists. This $25 million adds to the $15 million in financing from DBL Partners, Acero, Symmetry Group, Red House Capital that Siva closed in 2015 and the more than $60 million that Siva had raised in previous incarnations from Olympus Capital Partners, DBL Investors, Birchmere Ventures, Trident Capital, and Firelake Capital.

Siva began in 2006 as Solexant, a cadmium-telluride (CdTe) solar on roll-to-roll startup and was on the same build-a-factory-before-the-process-is-optimized death spin as the rest. But the board hired semiconductor equipment/process veteran and solar investor Brad Mattson in June 2011. Mattson was the CEO and founder of semiconductor equipment successes Mattson Technology and Novellus Systems.

At one point, the firm was investigating five materials systems. Solexant acquired the remains of Wakonda (GaAs), set world records in CZTS, and worked further with CdTe.

In March of 2013, Siva re-emerged from stealth with a new mission and a new name. Soon the company added CTO Markus Beck (bringing immense CIGS experience from Solyndra and First Solar) and recently added former First Solar executive Bruce Sohn as CEO.

Mattson's ultimate technology conclusion was monolithically integrated, co-evaporated CIGS on glass, because it is "higher efficiency than anything else." (Not sputtering, not electroplating, not roll-to-roll, not foil, no singulation, no MOCVD.) Mattson called co-evaporated CIGS one of those rare instances and a "gift of physics" where the highest efficiency solution is also the fastest. Co-evaporation doesn't require the selenization step needed in a sputtering process.

At one point the company was looking to build "a profitable path to sub-$0.40 per watt solar power, along with unprecedented production scale" until it had to update that number with the claim that it planned to build a 300-megawatt plant and eventually produce modules for 28 cents per watt.

The cost of silicon solar modules continues to drop. First Solar continues to improve its 2 gigawatts of thin film module production capacity. First Solar’s lead-line module efficiency is approaching 17 percent.

Mattson sees the solar industry as being in the "gigawatt era" -- but the idea with thin film is to build that gigawatt in a 10,000-square-meter factory, not a 200,000-square-meter factory.

Hopefully, the engineering and investment community has learned something from the $4 billion to $5 billion invested in the CIGS solar material over the last decade. We've watched a number of copper-indium-gallium-diselenide solar companies raise funding and collapse with varying degrees of drama -- including Solyndra, Nanosolar, SoloPower, and AQT.

Solar Frontier and MiaSolé are among the few firms still in production of CIGS thin film products.

Mattson has told GTM in previous interviews: "Silicon scaled, but the Chinese are not scaling -- they are replicating like a cookie cutter. This is not scaling. China cannot compete with us if we scale properly."

Storage Has Become the Darling of the Solar Industry [GTM Squared]

The World’s Top Energy Companies Look to Blockchain to ‘Fuse the Physical With the Virtual’

Earlier this month Shell, Statoil, Tepco, Centrica and a half-dozen other energy companies joined the Energy Web Foundation, an alliance devoted to bringing blockchain to the grid.

The companies donated $2.5 million to the organization.

The foundation was set up in February this year as a collaboration between Rocky Mountain Institute (RMI) and Australian blockchain developer Grid Singularity to “accelerate the commercial deployment of blockchain technology in the energy sector.”

The companies and organizations involved think blockchain will be a game-changer for energy, and are working together to provide the frameworks and standards to help ensure that outcome.

Jesse Morris, principal for electricity and transportation practices at RMI and co-founder of the Energy Web Foundation (EWF), said the foundation's immediate aim is to garner more affiliates and funding, while developing an open-source blockchain application for use in the energy sector. Initially, partner organizations will evaluate the software, and potentially release it to the public in 2019 or 2020, if all goes well.

Blockchain is best known as the platform for Bitcoin. It is an encrypted, distributed database that allows all users to track every transaction -- thus eliminating the need for an intermediary.

Blockchain enthusiasts believe the technology can also be used to seamlessly transact electrons between consumers on the grid, while keeping an accurate, incorruptible tally of where they came from and where they went. It could encourage greater peer-to-peer sales on the grid and lay the foundation for microgrids and distributed renewables.

“We have a strong hypothesis that blockchain will solve a lot of long-running problems in the energy sector,” said Morris. “Overcoming these challenges could make small, incremental changes to energy infrastructure and markets in the near term, while others would be more far-reaching and disruptive."

Certificates (also known as guarantees) of origin would assure the user that a particular megawatt-hour of electricity was produced from renewables. According to Morris, the U.S. alone has 10 different tracking systems, Asia-Pacific has several more, and each European country has its own system of certification. Blockchain could be used to transparently guarantee the origin of the electrons.

Longer-term, and more radically, RMI sees the future of electricity networks being driven by the billions of energy storage and HVAC units, EVs, solar roof panels and other devices and appliances at the grid edge.

Blockchains can allow any of them to set their own level of participation on the grid, without the need for an intermediary. And crucially, they can be configured so that if a grid operator needs guaranteed capacity, the grid-edge unit can communicate back to the grid whether or not it’s up to the task.

This is an example of what Morris described as blockchain’s ability to “fuse the physical with the virtual” via machine-to-machine communication. 

However, these are still early days. Foundation members have a lot of work to do in order to ensure its credibility, prove the technology works for energy applications, and lay down the foundation for widespread adoption.

“Think of it like the App Store,” remarked David Peters, director of strategy and innovation at grid owner-operator Stedin B.V. “We at the EWF are building a shared infrastructure where we can build on top the developed code.”

Stedin joined EWF because it believes in blockchain’s potential. “It gives us access to the best blockchain people in the world,” Peters said.  

He hopes the widespread adoption of the technology will “lower the barriers of participation” for the grid. 

Engie, the French multinational electric utility, had already conducted its own blockchain research projects before joining EWF. Among them was a program to track smart meters in Burgundy, keeping detailed tabs on solar panel electricity production, and facilitating transactions of a small peer-to-peer community energy trading project in Belgium.

Engie's Director of Research and Technologies Raphael Schoentgen explained that blockchain is a promising technology to track smart meter data. “It contributes to better management of electrons over the grid,” he remarked.

The technology’s ability to automate transactions for peer-to-peer trading is of key interest to Dr. Hans-Heinrich Kleuker, the CEO of Technische Werke Ludwigshafen, whose company is now also part of EWF.

“We’ll see many more consumers with either an energy deficit or a surplus in the near future, and the desire to trade that energy,” he said. “Machine-to-machine communication, such as that offered via blockchain, will be essential to manage the vast number of transactions needed.”

Such trades would certainly be beyond the capabilities of a small, local utility such as TWL, said Kleuker. 

“We are looking at the convergence of different electricity markets, which are very different right now, but longer-term will be facing similar challenges,” Kleuker concluded, convinced that the application of blockchain can meet those challenges.

EWF will meet at the end of May to decide which use-case scenarios from around the world it will employ to take the project forward.

In the coming years, the foundation will decide on norms and standards that may allow blockchain to be used in a truly universal way and “move beyond the hype.”

More Corporations Are Turning to Utilities to Source Renewable Energy

Utilities are breaking away from traditional electricity products to offer customers access to large-scale renewable energy. Until very recently, utilities did not differentiate the sort of power they offered customers. With very few exceptions, everyone shared in the cost and used electricity from the same fleet of power generating stations.

But over the past four years, even regulated U.S. utilities have begun to offer new, large-scale renewable energy options to customers. World Resources Institute  (WRI) data shows that across 10 U.S. states, utilities now offer 13 green tariffs -- programs that let customers purchase large-scale renewable energy over the grid.

We take a closer look at the trends and motivations that have made utilities important players in the rapid scale-up of renewable energy to serve corporate buyers in the U.S.

Why are utilities stepping up?

In markets where wind and solar power have become cost-competitive, utilities have more economic incentives to add renewable energy. Renewable resources offer a great low price for the next 20 years -- without the risks of fossil-fuel price spikes.

Source: Bloomberg.com

Utility leaders overwhelmingly anticipate substantial solar and wind power growth in the next 10 years, according to Utility Dive's 2017 survey of the sector. Among utility executives, 71 percent say utility-scale wind will increase moderately or significantly over the next 10 years, and 82 percent predict the same for utility-scale solar.   

Recently, Pat Vincent-Collawn, CEO of PNM Resources, announced a plan to eliminate coal by 2031 and move toward renewables and natural gas, calling it “the best, most economical path to a strong energy future for New Mexico.” WEC Energy Group CEO Allen Leverett told shareholders in May 2017 that the company is exploring solar: “Probably the biggest change we’ve seen in last five years is solar and the cost of solar. The technology curve really has fallen fast in terms of improvement in cost.”

MidAmerican Energy, a Berkshire Hathaway Energy subsidiary, has talked about its extensive investments in wind in the same way -- as an effective way to keep prices low for customers. The company also used its wind investments to serve the renewable energy requirements of major data centers, such as Facebook and Google, in their service territory.

How big is the demand for renewable energy on the grid?

Through RE100, 90 companies have committed to 100 percent renewable power. Clean energy and greenhouse-gas reduction targets are now the norm for Fortune 500 and Fortune 100 companies. The World Wildlife Fund and Ceres’ Power Forward 3.0 report shows that almost half of the Fortune 500 and a majority of the Fortune 100 now have climate and energy targets.

Companies with renewable energy commitments can only go so far with on-site solar and efficiency. To meet the most ambitious targets, like a 100 percent renewable energy goal, companies have to tap into the grid and are turning to their utility to provide solutions.

Big businesses have communicated their needs to U.S. utilities. Sixty-five companies have signed on to the Renewable Energy Buyers’ Principles, which tell utilities and other suppliers what industry-leading, multinational companies are looking for when buying renewable energy from the grid.

And utilities are listening. Utilities without green tariffs or state mandates are still considering new renewable energy options to attract businesses. Describing a new wind project, Appalachian Power’s new president Chris Beam told the Charleston Gazette-Mail, “At the end of the day, West Virginia may not require us to be clean, but our customers are. […] We have to be mindful of what our customers want.”

How are utilities stepping up?

To meet customer demand for renewable energy, traditional utilities have now created 13 green tariff options across 10 states. In the six months since the last update to WRI’s issue brief, "Emerging Green Tariffs in U.S. Regulated Electricity Markets," utilities have added three more green tariff options -- including the first offered by a public power company, Nebraska’s Omaha Public Power District (OPPD).  

States with renewable energy options are more competitive when attracting high-growth corporate business. When Omaha Public Power District announced a new green tariff to supply a Facebook data center, Tim Burke, OPPD’s president and CEO, told the Omaha World-Herald, “We have several customers right now that are putting together potential expansion projects and will utilize that [new] rate to grow.”

What is the impact of green tariffs on the grid?

Who is using these tariffs? To date, customers have contracted for approximately 900 megawatts of new renewable energy under five of the tariffs. This is approximately enough electricity to power 160,000 average American homes a year. This spring, utilities and customers are negotiating hundreds more megawatts of additional purchases.

 

In April 2017 alone, major announcements from Puget Sound Energy and OPPD confirm that buyers are ready and willing to act in partnership with their utility.  

How can customers keep up with these new options?

WRI's interactive U.S. Renewable Energy Map: A Guide for Corporate Buyers shows all of the green tariffs that utilities offer across the nation. The map also details one-on-one special contracts that customers have signed with utilities. These special contracts show a utility is willing to explore options, even if they haven’t gone as far as creating a new tariff. 

What’s next?

Today, green tariffs are a small part of the overall U.S. renewable energy market, reflecting their pilot status. But the programs create a runway for renewables at a time when demand is increasing, not just from businesses, but also cities, universities, hospitals and smaller companies.

Innovative partnerships will continue to emerge between utilities and their customers as both grapple with the rapidly changing electricity sector. Green tariffs are only three years old, but with increasing demand, interest in renewables by utilities and the continued fall in renewable energy prices, green tariffs look like they’re here to stay.

***

This post was republished with permission from the World Resources Institute. 

Why There’s No Such Thing As a Free Market for Electricity

The line between government and business is often blurred when it comes to regulating the electricity sector, Travis Kavulla, vice chairman of the Montana Public Service Commission, wrote in an essay for the Summer 2017 edition of American Affairs. There is no such thing as a free market for electricity, he argues, because even where there are competitive features, the marketplace is warped by government intervention.

Kavulla's essay offers a clear and detailed explanation of the often-nonsensical way in which electricity markets operate. "Understanding the sector is not just important because electricity is important; the market for electricity is really a window into the workings of the modern administrative state," he writes. 

Here we offer a brief summary of Kavulla's article, which is available on American Affairs in full

The government's all-encompassing relationship with electric power

Kavulla begins his essay by laying out several systemic flaws he sees in the electricity business, starting with the drawbacks of cost-of-service regulation.

Under this century-old model, a regulator reviews a utility's operating expenses and capital investments and enables the company to receive a return through the rate base. Perhaps most importantly, the regulator also allows for a percentage return on investment; "this is usually about 7 to 9 percent in the current environment, applied to the undepreciated amount of capital the utility’s debt and equity investors have contributed," according to Kavulla. A narrow band is also built in, allowing the utility to earn potentially more or less than its regulatory “revenue requirement” by providing more of its service or reducing costs. 

The problem with the cost-of-service model is that it can incentivize the utility to spend more than is necessary, Kavulla writes. The cost-of-service system isn't an abject failure; "However, this revenue model no doubt causes significant measures of deadweight in the system," said Kavulla. "Furthermore, it deprives customers of choice."

This system can cause utilities to assume a hostile stance toward older assets that are still productive, and so far they haven't steered new investments into innovation. That's because innovative products are often cheaper than traditional solutions, reducing a utility's capital spend and thus its regulated return. Innovation may also allow customers to circumvent the monopoly network, "something a utility has reason to fear on an existential level beyond the coming year’s earnings projection," Kavulla said.

The Montana regulator goes on to describe the flaws with today's electricity markets, pointing out that they, somewhat paradoxically, tend to attract more regulation, not less. These markets also promote rent-seeking behavior, where stakeholders devote lots of resources to the regulatory process, knowing that the regulator's decision will determine their revenue. 

Kavulla also describes how federal and state governments have manipulated the inputs and outcomes of competitive electricity markets. Federal tax credits for solar and wind and the state renewable energy standards -- met through the purchase of renewable energy credits (RECs) -- have had significant unintended consequences for the market in electric power, particularly in the sunny Southwest and the windy Great Plains. As Kavulla explains:

"Wind and solar facilities, unlike coal or gas, have no variable or fuel cost. So one would think that they would bid, or be willing to take a market price, of zero or slightly more. That supposition is wrong -- and not because they need a number larger than zero to make their projects pencil out. Since the IRS awards the tax credit on the basis of production, and since RECs likewise are created only when a wind farm or solar plant is producing energy, these renewable power plants have a negative marginal cost equal to the inverse of the value of the PTC plus whatever a REC is worth to a utility under state law. In other words, renewable power plants are willing to pay consumers to take their energy output, up to $23 per megawatt-hour, lest they lose out on the PTC and the piece of paper that is the REC. This is not an insignificant amount of money."

Renewable energy policies also exacerbate the issue of curtailment in the West, according to Kavulla. In California, when energy production from non-dispatchable resources, including nuclear and renewables, outstrips actual customer demand, electricity prices dive into negative territory. "Thereupon, an amusing game of arbitrage begins," he writes, where Californian renewable energy producers look to dump excess generation on someone else -- Arizona, in this case -- to ensure they can still produce a REC. Arizona may not need the power either, in which case solar production in Arizona has to be shut off to make room for imported solar at negative prices.

"One cannot blame the 'market' for this -- it is merely rationalizing irrational public policy," said Kavulla. "But this is a market warped by subsidies before its trading day even begins."

There are challenges on the nuclear power front, too. The zero emissions credit (ZEC) programs approved by governments in Illinois and New York last year represent "a return to the command-and-control, cost-of-service regulation described above, masquerading as innovative, progressive public policy," Kavulla writes. Market operators ISO-New England and PJM have also been introducing new features to their electricity markets. 

To solve the disappearing nuclear power dilemma, the Minimum Offer Price Rule (MOPR) was conceived -- a topic discussed at length at a recent Federal Energy Regulatory Commission technical conference. "The MOPR establishes an administrative price floor to which everyone’s bids are subject, so that subsidized power generators cannot underbid and warp the market," according to Kavulla. The problem is that it "merely swaps bureaucrats in the form of a state utility commission, fixing prices based on costs, for a technocrat market operator effectively doing the same," he said.

"Nowhere, then, is there truly a free market in electricity," Kavulla states, having run through numerous scenarios.

And so, what now?

A list of proposed utility reforms

Amid all of the complexity, Kavulla outlines seven paths he believes should be followed:

  • Putting utilities on a budget. "Where the regulation of prices is inevitable, both federal and state regulators should put utilities on a budget, tied to something other than regulators’ own discretion, such as GDP growth or an index of inflation net of productivity."
  • Making utilities nimble. "Stop the pernicious trend of a utility requesting permission for virtually everything it does and, at the same time, withdraw some of the protections of their exclusive franchise. Does a customer or a neighborhood want to withdraw from the utility? Perhaps it is time to let them exit, but also to give the utility the right to cut a deal with those defectors and offer something better (whether cheaper or of greater value) than the price-regulated service ordained by utility commissions."
  • Competitive project selection. "FERC should reduce the authorized rate of return for incumbents [that] operate in areas not subject to competitive solicitations, and boost the returns for those projects which were competitively selected -- so long as those projects agree to construct the project under a cost cap."
  • Supporting competitive auctions. "Yet supporting competitive auctions -- even if they are just 'sort of' competitive -- is an important tool to rationalize the way power plants are built and operated."
  • Energy in the executive. "A regulator should not be mistaken: the parties appearing before him are not the public, and the interests of stakeholders together do not constitute the public interest. A greater reliance on those positioned to be self-skeptical about the perverse incentives that regulation all too often engenders is essential."
  • Achieving environmental goals. "The only plausible way to regulate GHG emissions is to do it straightforwardly, by taxing emissions directly, or by capping emissions and letting allowances for them be traded between emitters. If sufficient political support for such policies does not exist, the answer to this problem is simply to do nothing."
  • Facilitating energy infrastructure. "There is, finally, one interventionist role that government can play in a way that could benefit consumers and the national interest: permitting energy infrastructure without needless delays."

Several of these steps rely on action from the Trump administration, like approving new infrastructure projects and working toward removing subsidies as a part of tax code reform. President Obama saw the power of the administrative state when it came to energy matters. The EPA's Clean Power Plan is proof of that. Kavulla concludes: "Trump would do well to acknowledge the same: not for the sake of the administrative state’s apotheosis, but for the unraveling of its intimate relationship with this monopoly industry."

Suniva Trade Case, Now Approaching Farce, Was Bankrolled by Creditor to Recoup Debt

Why would a bankrupt, majority Chinese-owned, U.S.-based solar module producer file a trade complaint to limit cheap imports -- especially when its Chinese majority owner opposed the effort?

Because Suniva's major creditor, SQN Capital Management, was bankrolling the trade claim in a Byzantine plan to recover the $51 million it is owed for manufacturing equipment, according to reports.

Got that?

Bloomberg reports that SQN said: "The case would disappear if Chinese companies bought $55 million in manufacturing equipment."

So, by pushing a trade claim with the International Trade Commission (ITC) that could decimate the downstream solar market, SQN is threatening the industry in order to recoup its bad investment.

SQN was looking to sell Suniva’s module-building equipment for $55 million, stating, "And if that happened, the company’s assets would be liquidated -- leaving no one left to pursue the trade complaint."

If the Chinese chamber of commerce paid the investor $55 million, "SQN would have no interest in providing additional funding to Suniva," wrote SQN president Jeremiah Silkowski, according to Bloomberg.

SQN has reportedly stopped pursuing the sale.   

PV Magazine's Frank Andorka asks whether the ITC "will look kindly on a trade complaint that might be a thinly veiled attempt to cover up extortion." PV Magazine embedded the SQN letter, which included SQN's deal demands and terms.

Without SQN's support, Suniva would no longer be a representative domestic industry participant, nor could it afford to pursue the case. That "representative" label is an important part of the language of the case and its absence could undermine Suniva's claim.

"Suniva’s petition appears to be less of an effort to protect a U.S. industry and jobs than a desire by speculators to recoup their failed investment," submitted solar contractor Swinerton Renewable Energy in a filing to the commission, as reported by PV Tech.

George Hershman, the GM of Swinerton's solar group, said in an interview with E&E News: "It feels like a gross abuse of trade laws that are established to try to support U.S. industry." E&E News also reports on the fight for the scraps of what was Suniva between Lion Point Capital, a hedge fund, and SQN.

Nancy Fischer, a partner at law firm Pillsbury Winthrop Shaw Pittman, interviewed by E&E, also suggests that SQN's motives could play a role in the ITC's upcoming decision.

GTM's Julia Pyper breaks down the price implications and the timeline ahead.

  • Suniva asked the ITC to impose duties of 40 cents per watt on imported cells and set a floor price of 78 cents per watt on modules.
  • The ITC will soon announce whether it will consider Suniva's request. If it does, the commission will have four months to decide if there's "injury." If injury is found, the ITC will have another two months to suggest a remedy to the president.
  • President Trump will have an additional two months to determine what the remedy might be -- he can accept the commission's proposal, alter it, or determine the proposal is not appropriate.

Abigail Ross Hopper, CEO of the Solar Energy Industries Association, said in a recent call that the petition "poses an existential threat to the broad solar industry and its 260,000 American jobs."

The motives of the claimant in this case and the non-representative nature of Suniva would seem to hurt SQN's chances with the trade commission. But trade and jobs are hot-button items in this administration, and if that applies to the ITC, then this could be a highly politicized decision.

First Solar CEO on Running a Profitable Solar Business in Uncertain Times

First Solar has always done things differently compared to the silicon solar industry at large. From wild technical success with its cadmium telluride thin-film platform to actually delivering profits and not following a growth-at-all-costs strategy, First Solar has cut its own path.

While solar module companies come and go, ending up insolvent like Germany's SolarWorld or China's Suntech, First Solar is still here and still achieving. The company just logged a strong Q1, ahead of expectations on revenue while modestly raising its guidance for 2017. That's just not that common of an occurrence in the 2017 solar industry.

Mark Widmar, First Solar's CEO, spoke to GTM Research head Shayle Kann at last week's Solar Summit and revealed some of his thinking on running a profitable solar business in uncertain times (video archive of the entire event available to GTM Squared members). Here are some of the highlights.

"Let's be capacity-constrained"

During the talk, Widmar shared some insights on First Solar's business strategy, particularly in light of an oversupply of panels in the market.

"I'm not in the mode where I'm adding tremendous amounts of capacity that hold me hostage, where I have to find ways to settle through that volume," he said. "What that allows me to do is to be very disciplined [so] we can anticipate and find markets where we can capture the best value."

Widmar cited a recent bid in Abu Dhabi as an example where signing a $29 megawatt-hour power-purchase agreement might have closed the deal or set a record, but his firm opted out: "There's not a real big profit pool for anyone to capture there. We made a decision not to participate."

"One of the things that we've done since day one is, we've chosen not to leverage up our balance sheet," he added. "We have $2.5 billion in cash right now; we have no corporate-level debt. The only debt we have is project-level debt. I refer to that more as working-capital debt."

Widmar said his management team had foreseen oversupply and ASP challenges ahead in 2017. Their response? "Well, let's be capacity-constrained. Let's make that shift now to be capacity-constrained," he said. "I only have 2 gigawatts of production right now. I've got more than enough resiliency to sell through that. I can sell that product without any issues, but now I can be selective." 

Utilities want to own and rate-base solar assets

GTM has covered the boom in utility-scale solar and its likely dominance and continued growth in the coming years.

Widmar added some color: "In the U.S. in particular, we're seeing more and more movement toward utility-owned generation. The most logical owner of these assets will be utilities, and they would prefer to rate-base these assets and...to have a turnkey solution."

What can a utility do that a third party can't?

According to Widmar, it's all about the cost of capital. Widmar cited an instance in which First Solar told a utility in the Southeast that the price difference in a rate-based project versus a non-rate-based utility solar project is the difference between a $30 PPA and a $35 PPA.

Source: GTM Research

"Seeing the industry from our customers' eyes"

Another strategy First Solar employs is to "see the business and the industry from our customers' eyes," Widmar said. "One of the things that you'll hear a lot is [that] PV results in reliability and stability issues around the grid. There is an unmet need to ensure that we can actually have very high solar penetration and that it doesn't adversely impact the reliability and stability of the grid."

To address that, the company enhanced its power plant controls and software optimization. First Solar also worked with the California Independent System Operator and the National Renewable Energy Laboratory. "We took one of our large 300-megawatt power plants in the desert, integrated the controls into that power plant, and we basically demonstrated that that power plant can be managed as any other thermal asset can," said Widmar.

"The response rate's even better" compared to a natural-gas generator, he added. The signals come every 4 seconds, and the "response rate to those signals were 20 to 30 basis points higher than thermal assets and 20 to 30 basis points higher than hydro assets."

"You can actually improve reliability and stability of the grid through the proper power plant controls," said Widmar. "That's an example of where a utility sees that, understands that, and they're willing to make sure that that's spec'd into the design of a power plant."

GTM's Jeff St. John recently took a careful look at this first-ever grid-responsive solar farm, and how it could help meet federal calls for grid stability.

"The closest thing we have in PV to Moore's law"

When it comes to First Solar's product roadmap, the company's Series 6 solar modules hold the promise of lower module costs and lower balance-of-system costs in trackers and cabling -- but first the company has to seamlessly ramp down its existing production and ramp up the new 400-watt-plus form factor. It's this new product that will keep First Solar relevant in the face of continued cost reductions from China Inc.'s solar modules.

"We've always had the most efficient manufacturing process from a capex and environmental perspective -- but we've been hampered by the small physical size of our product, which is itself a limitation of our legacy manufacturing platform," Raffi Garabedian, First Solar's CTO, told GTM. "The 600 millimeter by 1200 millimeter form factor has inhibited our efforts to reduce balance-of-systems costs and has been a limiter in our ability to achieve the full manufacturing cost entitlement of the technology."

"This is all changing with our Series 6 manufacturing platform," he said. "Each [Model 6] factory will be about 1 gigawatt in scale (with the exception of our 500-megawatt Ohio plant) and will deliver 2.4-square-meter framed modules from a highly automated inline production process. The resulting S6 module will eliminate (and in some cases even reverse) balance-of-system penalties associated with our smaller unframed S4 module, while simultaneously delivering improved efficiency."

Garabedian added: "Most importantly, from a corporate sustainability perspective, we expect that the [Model 6] manufacturing platform will allow us to compete profitably in the otherwise unsustainable pricing environment we're experiencing as a result of rampant oversupply from Asia. Thin-film technology is unique in the PV world in that costs scale favorably with processed glass size. This is the closest thing we have in PV to Moore's law."

GTM Solar Summit Keynote: ‘We Could Install 3,000 GW of Solar Power by 2035’

These are volatile, exciting and frustrating times in solar.

Shayle Kann, senior VP at GTM, kicked off last week's Solar Summit by confronting the realities of the solar industry today. But he also gave some compelling arguments for optimism in this maturing marketplace.

In Part 1, Kann looked back in solar history and focused on the market today. Here in Part 2, he forecasts the ways this market can, in the long term, reach thousands of gigawatts installed and trillions of dollars invested.

But first: A trade war?

The entire industry is very worried about Suniva's trade petition that could dramatically increase the price of imported cells and modules. Kann gave some reasons to be nervous.

"We estimate that about 13 percent of the solar modules that were installed in the U.S. last year were manufactured in the U.S. That means that about 87 percent of the market could potentially be subject to whatever remedies are imposed, if indeed they are imposed. So, it could have a big impact on module supply in the U.S. And indeed, it could have a big impact on pricing. And Suniva is requesting a 78-cent-per-watt minimum price in addition to a 40 cent-per-watt tariff. So imagine that pricing just goes straight to that minimum, the bare minimum price. That would be pricing levels we have not seen in the U.S. since 2012. That obviously could have a big impact on the economics of solar in the U.S."

"It's entirely possible that the numbers could be different or that nothing could happen. So let's set that aside and assume that solar does continue to get cheaper and cheaper, and that it becomes the least-cost resource for kilowatt-hours in much of this country and much of the world," he said.

Why a duck?

The duck curve in California is becoming more pronounced, said Kann. It's a sign of things to come in other states as solar grows.

"Most of the time, you're used to seeing a theoretical version of the duck curve that the California ISO put out a few years ago. This is real data from an average April day -- and it's a real duck curve. And I think the reason we're talking about it is that it represents a coming set of challenges that we're going to have to figure out how to deal with as solar penetration increases as a result of solar becoming the most talked-about resource."

"It's worth noting that we talk about the duck curve a lot, and it is largely a California phenomenon, because California has the highest penetration of solar anywhere under the sun. A decent benchmark for when you have to start thinking about this kind of challenge is, roughly speaking, when solar gets to about 10 percent of electricity load. Then you start to see the duck curve phenomenon.

"Our forecast calls for solar penetration nationally of a little over 2 percent last year to about 5.5 percent -- so that's a dramatic increase in the year 2022. But it's going to be relatively concentrated among the major solar states, which means you still aren't going to have a ton of states that are facing a duck-curve challenge," he said.

 

 

Flexibility is the key

With Energy Secretary Rick Perry targeting solar and other distributed resources as a potential threat to the grid, flexibility and reliability are becoming increasingly important.

Kann said, "'Flexibility' is a word that has started to proliferate in electricity circles, and I think it's going to become a buzzword for the next few years."

Competitive solar over the next 10, 20, 30 years

Kann pushed back against the notion that "once we hit grid parity, we're done." He argued that the more solar you put on the grid, the less value it's going to have on its own as it saturates the wholesale markets -- and that means that it has to continually get cheaper. So solar has to keep coming down in cost in order to counter the value deflation effect. 

"How do you that?" he asked.

According to the DOE, the way you get there is by reducing panel costs down to 30 cents a watt (without import tariffs), reducing balance-of-system costs by 30 cents a watt over that period, and by deploying 50-year lifetime solar content with 0.2 percent per year degradation.

But the duck-curve problem still has to be solved. Kann said this can be done with:

  • Expanded grids: "This is one of the solutions that the Southwest has been looking at, the West in general -- the energy balance market. Basically, the wider your geographic array through which you are trading electricity, the better off you are. The more resources you have within your trading area, the better off you are. The more diversity of your resources, the easier it is to manage the peaks and valleys of your given resources, including solar and even wind."
  • Traditional flexibility: "I think there's one bucket of solutions for the flexibility challenge that you might call traditional resource flexibility capacity. Natural gas is currently our most flexible natural resource that can ramp up and down really quickly." Other traditional flexible resources would include coal or carbon capture.

Kann spoke of the emerging suite of next-generation flexibility solutions such as energy storage, EVs, V2G and demand response.

Storage Down Under

Kann used Australia as an example of how a bit of grid flexibility (in the form of energy storage) could go a long way.

"South Australia has added a lot of wind to the grid. A fair amount of solar as well, but really a ton of wind, and earlier this year they had some really painful blackouts on the grid, in part because they had so much wind, but also, there was a storm that shut down some of the lines -- and for some people in South Australia, it was 13-day blackout.

"So that made news in Australia, but of course it hit the broader public eye when Elon Musk tweeted it out, which is how we know things are important. So Elon Musk tweets about it and said, 'We need storage to solve this problem,' and now all of a sudden, there's a bunch of energy storage hitting South Australia.

"What if you wanted to use energy storage to replace the gas peakers and the imports? What would that take? It's actually not all that much. Because you have over-generation of wind during the day, you charge your energy storage with the curtailed wind, feed that into the grid in the evening -- and all it would take to completely displace the peakers and the imports is about 400 megawatts of energy storage, 4-hour duration mostly. Just by way of context, 400 megawatts of energy storage is not that much. There's already 100 megawatts getting built in South Australia now. To imagine that you get to 400 megawatts by 2025 is not crazy at all.

"And so as a result, you have no imports at all, and there's no need for peak generators. This is one of the reasons why I don't think it's crazy to imagine that gas peakers or peakers in general are not going to be a major resource on the grid before too long. Energy storage, and to a lesser extent demand response, can replace that need in many cases," he said.

More carefully valuing distributed resources

Kann said, "Ultimately, you need to get to point where you're asking what the location of that resource is. This is where utilities can say, 'All right, I expect that I'm going to need to upgrade these substations at a cost of a million dollars. Can your portfolio of distributed resources defer the upgrade or make it so that the upgrade is not needed at all? Can we do it cheaper?'"

"This is the notion of non-wires alternatives for utilities. We've seen more of that this year already proposed to utilities in the U.S. than all previous years combined. This is starting to happen, but it does require more sophisticated methods of understanding how the grid should function in a role that is highly distributed," he added.

The prize: 3 terawatts of solar by 2035?

"There is still a fair bit of tumult amongst many solar companies, but I hope that we can all just step back and recognize what the prize is."

"Right now, we're at about 2 percent solar penetration globally; just imagine modeling this out, imagine solar getting to about 17 percent by 2035. That's not an unreasonable number, given the cost trajectory and opportunity and need for electricity generation globally. If that is true, we're going to go from a market that is...about $87 billion a year to about $250 billion a year. And over that period, we would install 3 terawatts, or 3,000 gigawatts, of solar energy -- that's about $2.8 trillion.

"The prize is enormous, and it's not crazy to imagine that this is how this market is going to play out," he concluded.

What We Still Don’t Know About Tesla’s Solar Roof

On May 10, Tesla announced it has begun taking orders for the company's highly anticipated Solar Roof systems. The Tesla website now provides more details about the cost and durability of the tiles and allows interested homeowners to place a $1,000 deposit for the system.

For those who understand solar, however, the announcement of the new solar roof has prompted more questions than answers. On Pick My Solar’s blog, we briefly discussed the economics of Tesla’s solar tiles and found them to be significantly overpriced. A number of questions have subsequently been raised that Tesla has left ambiguous or unanswered:

  • How can we accurately compare the cost of the Solar Roof to standard solar panel systems?
  • How will Solar Roofs work with the federal Investment Tax Credit?
  • What’s the efficiency of the Solar Roof tiles? How does this compare to conventional solar panels?
  • How much do the tiles weigh?
  • What about flat roofs?
  • How does the durability of the solar tiles compare to conventional solar panels?
  • Who should get a Solar Roof?

In this comprehensive review, we’ll investigate each of these important questions to reveal what’s known and still unknown about this new solar product. The Tesla Solar Roof follows a long line of largely unsuccessful building-integrated photovoltaic (BIPV) products. Despite all the excitement it has generated, the jury is still out on whether or not this product will meet a similar fate.

How can we accurately compare the cost of the Solar Roof to standard solar panel systems?

The cost and lifetime value of the Solar Roof depends on the size of your roof and electricity bill. A higher utility bill means greater electricity consumption, which means you will need more solar-generating tiles compared to non-solar tiles. Generally, the higher your utility bill, the more attractive the economics of the Solar Roof become.

Tesla has stated that it “believe[s] in transparency and putting the customer in control.” As such, the company created a Solar Roof Calculator to show upfront estimates for the system. It’s a fun tool, but it does lack certain key pieces of information that would enable a consumer to accurately compare the system cost to a standard solar PV system.

The calculator will display the total system cost and percent blend of solar tiles to non-solar tiles, but it doesn’t show you the power rating of the system. An easy workaround for this is to input the home address in Pick My Solar's solar calculator, which will provide upfront the needed system size for a given location and bill amount.

Once you know the system production size in kilowatts for the Solar Roof, you can determine the key metric for comparing solar system costs: price per watt. Multiply the roof square footage by the percentage of solar tiles, multiply by $42 per square foot (what Tesla has disclosed as the solar tile cost), then divide the amount by the number of watts. With this methodology, we’ve determined that the solar-only portion of the Solar Roof costs $6.30 per watt, give or take $0.50 per watt because the solar coverage slider on the Tesla calculator only moves in 10 percent increments.

A cost of $6.30 per watt is essentially double some of the solar prices available today, and translates to a $25,000-$35,000 premium on standard solar panel systems for the solar-only aspect of Solar Roofs. Is that premium worth it for superior aesthetics? Do you need a new roof, and are you in the market for something high-end? If you answered yes to both of those questions, you may want to consider putting down $1,000.

How will Solar Roofs work with the federal Investment Tax Credit?

On the Solar Roof calculator, Tesla says that the 30 percent federal Investment Tax Credit (ITC) applies to both the entire roof and the Powerwall energy storage product. But this isn’t as clear-cut as the Tesla website would lead you to believe.

BIPV doesn’t fit into the mold of the ITC structure and would need a special appeal process in order to determine which components of the system apply for the credit on a case-by-case basis. For example, solar shingles will qualify for the ITC, while the non-solar ones may not. This will depend on whether the IRS determines that the non-solar components of the Solar Roof are “so specifically engineered that it is in essence part of the machinery or equipment with which it functions.”

It will likely be a lengthy process for the IRS to clarify the ITC code. Hopefully Tesla will take care of this entire process for homeowners or educate them completely on the process of claiming the tax credit. Time is short, however -- this incentive is phasing down beginning in January 2020 and concludes in 2022. Considering the long timeline Tesla will need to fully scale Solar Roof production, many homeowners may not even be able to benefit from the entire credit.

Despite what’s shown on Tesla’s calculator, customers shouldn’t expect the full ITC benefits. The delay to receive a Solar Roof is likely to be even longer for customers outside of California. In the meantime, potential Solar Roof customers won't be buying solar products that are already on the market today.

“Taking preorders for this unproven technology will undeniably have a negative impact on the adoption of solar,” said Pick My Solar CEO Max Aram. “By leveraging Tesla’s sexy brand, Elon Musk can lure a few thousand homeowners off the solar market. Many of these homeowners may never get their system turned on before the expiration of the federal tax credit."

"The difference between the Solar Roof and the Model 3 is that Tesla has already proven they can manufacture great cars and that the Model 3 is coming at an affordable price point," he added. "With solar roofs, [the company] hasn’t proven either." 

What’s the efficiency of the Solar Roof tiles, and how does this compare to conventional solar panels?

Tesla plans to manufacture the entire product in Buffalo, New York, with cells made from its partner, Panasonic. Peter Rive, former CTO at SolarCity and now head of solar tech at Tesla, said the efficiency of the solar tile is equivalent to a standard solar module.

However, SolarCity’s website breaks down the anatomy of the solar tiles, including how the colored louver film “allows the cells to blend into the roof while minimizing solar efficiency loss.” This implies that some efficiency is sacrificed for the system’s aesthetics. 

To date, Panasonic’s most efficient solar cells in production are the N330 HIT modules, which have an efficiency of 19.7 percent. The highest efficiency cells they’ve developed in lab are 23.5 percent. The market average efficiency of solar modules is around 16 percent, while the average for modules installers use on the Pick My Solar marketplace is around 19.5 percent.

Assuming that the colored louver film only reduces efficiency buy a few percentage points and that Tesla would be including the highest efficiency Panasonic technology in the tiles, that would validate Peter Rive’s claim that the solar tiles have more or less equal efficiency to standard PV panels.

At the end of the day, efficiency is not a deal breaker unless a home has limited roof space, in which case high-efficiency standard modules would be the better option. For homes with constrained roof space, it’s helpful to compare efficiency in terms of kilowatt per square foot. We’ve determined that Tesla Solar Roofs produce about 6 watts per square foot, whereas a high-efficiency module would produce 19 watts per square foot.

Simply put, if you do not have a lot of roof space in an area with the appropriate conditions for solar, a high-efficiency module system is a much better option.

How much do the tiles weigh?

According to Tesla, Solar Roof tiles are half the weight of a standard tile. However, the company has never defined what tile material it considers to be “standard.” Concrete tiles weigh between 9.5 and 12 pounds per square foot, while asphalt shingles only weigh 2.5 to 4 pounds per square foot. Spanish tile can weigh up to 19 pounds per square foot, but lightweight versions are only 6 pounds. Slate tiles weigh between 7 and 10 pounds per square foot.

We would guess that, when factoring in all of the solar tile electronic components, the tiles will weigh between 15 and 20 pounds per square foot, but it’s hard to say considering how vague Tesla has been in its statements.

It’s unclear whether more supporting components  will be needed in the sheathing of the roof to support the solar tiles. If so, that would significantly drive up the net cost of the system. Regardless, it seems clear that installing the shingles will be an extremely complicated process.

“Aesthetically, the Solar Roof is beautiful, but we’ll need to wait and see how Tesla will resolve taking it to market,” said Trevor Leeds, president of Chandler’s Roofing, one of Pick My Solar's roofing partners. “Roofing is a different animal than solar. There are different variables that have to be considered like waterproofing and the roof-attachment method. Compliance codes for roofing are also much different than those for solar. Will Tesla figure out how to be a national roofing contractor? Is Tesla looking to assume this liability and overhead? All of these unknowns will need to be worked out.”

What about flat roofs?

In sales training seminars, Tesla revealed that homes with flat roofs are not eligible for the Solar Roof. Solar Roofs can only be installed on roofs with a pitch of 3:12 (14 degrees) and more. This is a clear disadvantage versus standard solar systems, which can utilize a tilted racking system for flat surfaces.

Tiled roofing in general isn’t typically recommended for flat roofs due to waterproofing constraints, which is an understandably greater risk considering the intricate electrical wiring in the Solar Roof. Another restriction for flat Solar Roofs may also be that the colored louvers from the solar tiles significantly inhibit production from a flat angle.

How does the durability of the solar tiles compare to conventional solar panels?

The Solar Roof has a warranty of “infinity, or the lifetime of your house, whichever come first.” Tesla clearly is confident in the durability of the tempered glass tiles. These claims, obviously unproven at this time, are supported by the company's entertaining videos of the tiles being pummeled by hail cannons in slow motion.

How does this compare to conventional solar panels? Standard solar modules are usually warranted by the manufacturer for 25 years, and will typically last much longer. Panels consist of a glass layer on top, a protective backsheet on the bottom, and an aluminum frame to protect the individual solar cells inside.

Tempered glass is up to six times stronger than regular plate glass. In fact, the material is already used in most, but not all, solar panel brands. Some cheaper panel manufacturers will use regular plate glass instead to cut costs. However, LG, SunPower, Canadian Solar, Hyundai and other large manufacturers all use tempered glass.

A comparison video of a Solar Roof tile and a tempered-glass solar panel being shot at by hail cannons and other heavy objects would quickly reveal the winner in this category. Until then, we’ll never know which one is actually more durable, because they are made of the exact same material and there aren’t any more details available at this time.

One factor that has not been discussed enough is how the solar components of the Solar Roofs will be replaced after the production degrades too much. Useful solar production is guaranteed by Tesla to last 30 years. Whereas regular panels could be easily replaced after this time, it’s likely going to be an expensive and labor-intensive process to retrofit Solar Roofs.

Who should get a​ Solar Roof?

By and large, Tesla’s Solar Roof will appeal to wealthy, tech-savvy homeowners with a passion for the environment but a disdain for the aesthetics of standard solar panel systems. These homeowners will also understand the relative risk of being an early adopter of these systems, but are still excited to be the first to experience the technology. Details like the ITC and final system cost are still unknown, so these homeowners will need a significant surplus of spending money. They’ll also -- most importantly -- need to possess a healthy level of patience, as it could be years before the system will be installed.

Overall, Tesla’s Solar Roof has and will continue to inject excitement into the solar industry, which has had its fair share of bad news these past couple of months (American module manufacturing, in particular, has been hard hit). The fact that so many media outlets and interested consumers are talking about BIPV again means that this technology is moving in the right direction.

Elon Musk himself has admitted that the Solar Roof will have significant challenges in the coming years, particularly in ramping up production to bring prices down and service more territory. Building a vertically integrated national roofing company is a huge challenge by itself, and he recognizes the Solar Roofs won’t be widely available for five or maybe even 10 years to come.

If you’re one of the lucky first few to have a Solar Roof installed on your home, invite us over!

***

Max Aram is the co-founder and CEO of Pick My Solar, an online platform for comparing solar companies.

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