What's Needed for US Solar Energy Market Growth?
Here is a continuation of my notes from the Solar Energy Conference.
The next session was a roundtable of various participants from the solar industry. The topic of this roundtable was what is needed to grow the US market for solar energy.
The following people were on the roundtable:
Christopher O'Brien, VP of Sharp Solar (Manufacturer)
Tom Dyer, VP of Kyocera Solar (Manufacturer)
Barry Cinnamon, President of Akeena Solar (Installer)
Jeffery Wolfe, CEO of Global Resource Options (Wholesale Distributer)
Joseph Henri, Director of Pacific Gas and Electric (Utility)
John Ralston, VP of Premier Homes (Homebuilder)
William Garnett, Sr. VP of National City Energy Capital (Banker)
The moderator of the roundtable was Dr. Jan Hamrin from the Center of Resource Solutions.
This session was primarily a ralling cry to get development going into the solar industry. The global market for solar has been doubling every 30 months and the US is currently third in utilization of solar. Beyond increased governmental incentives, what does the solar industry need to do to grow this market in the US?
First question: Where do you think your market segment and your company is going to be 10 years from now?
Chris from Sharp Solar: 10 years ago the world market for solar power was only 74 megawatts of output per year. Today the industry is producing 1,000 of megawatts per year. He envisions that 10 years from now we should see 20 gigawatts of power. However this would require enormous capital and growth. Sharp is committed to the PV business and they are currently leading the manufacturing of silicon based PV panels. The company is also committed to moving toward a 100% zero emissions policy for its manufacturing facilities. The solar business is a key to making this goal a reality.
Barry from Akeena: The customer perspective on installing solar equipment is the installed equipment cost. The tax incentives help to generate interest, but the cost of installation is still a barrier. The cost has been creeping down over the years, but the current backlog and solar panel shortages have caused the equipment to increase in price recently. There is a common misconception from customers that solar is not cost effective for residential applications. However, most manufactures are now offering 25-30 year guarantees on the equipment, and the large upfront costs can easily pay for themselves when you consider the useful lifetime of the equipment. The way they confront this argument is the rent vs. own argument. Would you rather buy 30 years worth of cheap energy up front, or do you want to rent your energy from the utility company for the next 30 years.
Joseph for PG&E: The public policy of the state of California has been very positive for solar energy. The California Public Utility Commission (PUC) has been working on its vision of how California will meet its future energy needs. Solar is a part of that vision.
Tom from Kyocera: In 10 years he feels that we will see ten times the current output when measured by megawatts. The key to future development for the PV industry is improvements in the aesthetics. But he warned that in 10 years, the solar power generated will still only be 1% of the countries total power generation. Without major reforms and incentives, we will not see huge growth in the industry.
William from National City Capital: The bankers and financial industry are typically the last guys to get onboard with new technology. Their company has been trying to turn that around and they value the clean power that solar (and other forms of alternative energy) can bring to their financial portfolio. The finaicial community is starting to understand that green products can both benefit the market and the bank. Another key aspect to writing these types of loans for large solar installation projects are the guarnatees. They have started to do large solar transactions to fund major projects for commerical property. In 10 years he sees renewables are going to be a much larger part of the loan portfolio. Solar currently sits at 2% and he see's growth into the teens in the next 10 years.
Next Question: There is currently a demand for solar now that we can't meet. There is a shortage of panels and a shortage of installers. What would happen to the industry if the demand for PV really increased and was competitive with retail rates for typical power generation? What do we need to do to the infrastrucure to meet this demand?
Kyocera: It is not practical to double production every year. There is a finite rate at which the industry can grow. They are already growing at maximum capacity. The only way to get more growth is to commit more capital. We will not see capital committed until there is a firm commitment and public policy to back up the demand. We need assurance from the policy makers and public to ensure that the current demand and growth for PV is not a short term phenomenon. If there is a long term commitment, then the money will come.
PG&E: The utilities are often viewed that they want alternative energy to stop or slow down. They don't. PG&E has been working for sometime to create plans for the future and how to handle renewables. They have built interconnection service teams to help streamline the customer interactions to enable grid tie-backs. They are also actively purchasing renewables as mandated by many states. They feel that they can be the customer advocates and help the entire industry.
Sharp: They are in a capital intensive business and it requires good business planning. He also expressed an interest in greater transparcny in the long term public policy decisions with regard to solar. He feels that California does a good job of this and he wishes that other states and the Feds would provide longer term views of the future plans.
Akeena: The market needs to drive this growth. The supply chain is very complicated and its not realistic to expect greater than 30% growth in equipment. The incentives really do help drive market share and is a key to future growth. Both Germany and Japan have had incentives for over 10 years and that is one reason why they are number 1 and 2 in solar usage.
Next Question: Why has there been a great increase in non-residential PV installation?
National Capital: In California the vast majority of the installations have been in the education and agricultural industry. Due to the public policy, it has been very easy to get funding approved for education.The economics of the new Energy Bill also work better for commercial ventures since the incentive has increased to 30% from 10%. He does fear that this current boom may be short lived since the incentives expire at the end of 2007. Many of these large projects take a great deal of time to get approved, funded, and built. The nature of the incentives are that the install needs to be completed by the end of '07 so as we move along we may see a decrease in commercial installations.
The following questions were from the audience to specific panel members.
How do we move beyond the Southwest? How do we take this National?
Sharp: The passage of Federal tax credits will be a major reason to see growth nationally.
Next Question: Some have said there needs to be a uniform metering system that incorporates peak time of day and year allowances. These reforms would require a reform in the tarrif structures for residential systems. How would you make these types of changes?.
PG&E: "Net metering is a fascinating subject" (plenty of laughs from the crowd) The biggest problem he sees is in the public perception and public policy. Everyone wants stable prices. Changes to the tariffs and net metering would cause spikes and big changes to the customers. From a broad consumer standpoint, people don't understand net metering.
What is being done to deal with the silicon shortage?
Sharp: In reality this is a business planning question. Many of the silicon companies were burned by the internet boom and had excess capticty. The solar industry now seems to be growing faster than the semiconductor industry so the investment is happening now. However, it typically takes 2-3 years to build new plants. We are still a year or so away till we see the end of the current shortage.