Benefits, Barriers, and Chances
Time is the primary difference between a fad and a trend. Fads
are fleeting. Trends develop over time altering behavior in some
relatively permanent fashion. The adverb relatively is used as
permanence has become, over time, far less permanent. Fads ebb and
flow more quickly than trends. The best way to tell the
difference, unfortunately, is in hindsight.
For example, the European feed-in tariff (FIT) model is
responsible for jump starting the utility scale (or
multi-megawatt) application for solar technologies. The
initial highly profitable FITs attracted investors who, forever in
pursuit of the holy grail of safe investments, encouraged demand
and supply side solar participants to build ever larger
installations. Initially, many long time solar participants
believed that demand for multi-megawatt installations
(particularly for PV) would reach a peak and decline, likely along
with the profitable FITs. Instead this trend appears to be here to
stay – for better or worse, or, for profit or
not-so-profitable. Another example, turnkey equipment sales,
appears to have been a fad that faded away relatively quickly –
that is, in solar years. Just as dog years are longer than
human years and often used as a metaphor for the slow passing of
time, solar years are also longer than human years. To gauge
the length of a solar year observe announcements and the
accompanying timeline creep from announcement, re-announcement and
Turn the page to see five potential trends and the likelihood of
continuation or cessation:
Potential Trend 1: Merchant systems: These
systems may or may not be multi-megawatt and are sold without a
PPA or tender and potentially without an incentive.
Why this may not become a trend: The high
upfront cost of installation, no matter how low component prices
go, is a roadblock to many potential system buyers.
Moreover, in many countries it is illegal to set up an independent
utility from which electricity is sold. For merchant systems
to become a trend, laws would have to change and/or deep pocket
customers must be found and cultivated.
Why this may become a trend: Utilities
understand the efficiency of owning the means of production. Once
they become more comfortable with solar in terms of the
variability of its resource it will make sense to control it
because of a) its free fuel b) low maintenance c) positive PR
afforded the utility and d) return of control over profit.
Mining concerns are often remote and require reliable power; solar
is a long-term investment that when combined with storage (yes too
expensive still) or another power source (hybrid) offers a
long-term answer to energy requirements. Finally, should
laws change the lure of becoming an independent utility; though
this is in-and-of-itself probably a fad should encourage system
Benefits of this trend: Solar (PV, CSP, CPV) is
ideal for this potential trend as once installed it is low
maintenance (though not zero maintenance), reliable and works well
as part of a hybrid installation.
Odds of this becomming a full-fledged trend: 40% this
potential trend will get a lot of press in 2014, but to become a
true trend (something that brings with it relatively permanent
change) more than announcements are needed. The laws of some
countries will need to change and the initial gold rush atmosphere
(which will bring with it saviors and shysters) must subside. The
likely timeframe for development of this trend is five years, but
ten years to mature.
Potential Trend 2: Residential Lease Model:
Removes the onus of educating energy consumers about owning the
means of production and encourages more rapid adoption of PV.
Why this may not become a trend: Currently
a U.S. phenomenon, there is no standardization of lease vehicles,
little understanding of solar among energy consumers, not everyone
owns his or her roof. Its also possible that even when potential
solar lessees do own a roof that is young enough in its lifetime
to support solar that they will find that once the math is done, a
low interest loan that supports buying the system outright makes
better economic sense. Other drawbacks include what happens should
the lessee want the system removed, or sells the house, or
abandons the house. Should there be expensive and well
publicized roadblocks to system removal this potential trend would
Why this may become a trend: Particularly
in the U.S., independence (from practically any interference in
anything) is a closely held value. Many energy consumers
would like to control energy costs but cannot afford to buy a PV
system, plus, the lure of free solar (a promise in many ads for
solar leases) is compelling to many. The lease concept is
familiar, even though many may find the details confusing.
Finally, the concept of owning the means of electricity production
has proven stubbornly difficult to get across or to encourage
excitement about – the solar lease hops over the need to educate
and still may lead to more residential PV system ownership.
Benefits of this trend: More solar is the
obvious benefit of the solar lease. The assumption is that seeing
more solar in neighborhoods will encourage people to explore
owning or leasing a system. There is also the potential of
expanding this trend to apartment complexes, wherein (similar to
the merchant system) the apartment house owner would sell
electricity from the solar installation to apartment dwellers (a
group is pursuing this model in France).
Odds of this becomming a full-fledged trend: 67%
for better or worse and love it or hate it, the solar
lease trend is likely real and will hopefully mature into a
vehicle with costs (including escalation) that more closely
resemble the true costs of owning a solar system. Escalation
charges based on assumed utility rate increases need to be
Potential Trend 3: Community solar, solar gardens or
group-owned solar: Call it whatever you like,
typically this model allows people to buy shares in solar
installations that serve the community. The installations
can be ground-mounted or on roofs on or near community centers or
schools and also on reclaimed land (among other areas).
Why this may not become a trend: The
initial installation remains costly and community buy-in must be
encouraged in order for this to make economic sense. That is,
enough people need to buy shares and agree to whatever the terms
are or the cost would likely appear prohibitive even though the
benefits such as cleaner air and controlled costs in the long term
Why this may become a trend: The
off-grid solar community has much to teach the grid-connected
solar community in terms of educating populations, gaining
enthusiastic buy-in and finally deployment of a concept that is
decades old. In the developing world this concept is not a
trend, it is established. Communities with group owned
installations are enthusiastic about being a part of an energy
generating asset, their participation in ameliorating climate
change as well as the educational aspects.
Benefits of this trend: Educating the community
about solar technologies, climate change and energy independence
is one of the most significant benefits of this trend.
Participation in community solar projects and plans also
encourages utilities (in the U.S. there is slowly growing utility
participation in this model) and energy consumers to work more
closely together as well as share ideas and, well,
Odds of this becomming a full-fledged trend: 63%
this trend is building slowly in the U.S. and the model
can be co-opted by other countries and regions around the
world. Studying village grid (micro grid) models in the
developing world would offer insight as to how community members
learn to work together towards the success of these installations.
Potential Trend 4: Storage: Storage
technology is, on its own, not a trend (its R&D is decades
old), nor is it necessarily crucial to future grid connected solar
deployment. Interest in storage technology for grid-connected
deployment is currently high, but interest alone does not a trend
make. Storage is crucial for successful off-grid solar deployment
and is mature in this regard through the use of lead acid battery
Why this may not become a trend: Storage
is expensive and its value, essentially independence from the
utility grid, has not been established. The true costs of storage
are currently obscured, that is, current prices do not reflect
costs. Unfortunately, it may not be possible to increase the
price to one that provides enough cushion in the margin for
quality control, R&D and profit. As with other
technologies, unfortunately, many may enter with potentially
viable technologies and many may fail because they could not price
product appropriately. Finally, disconnecting from the grid
and becoming self-sufficient requires a willingness to conserve,
which is rarely popular.
Why this may become a trend: Utilities
are showing concern about the growing size of residential and
small to medium commercial installations that are sized to cover
100% of the energy needs of the building and its inhabitants. This
cuts into utility profits. The only way for utilities to control
this is to a) own more solar installations (the means of
production) and sell the electricity from these utility-owned
assets; b) develop utility solar lease models for their rate
payers where the utility installs solar on the roof and charges
the roof owner a set rate; and finally c) charge a monthly fee for
grid access as back up, among other reasons.
Benefits of this trend: Self consumption and
the use of solar encourage a more pragmatic attitude towards
energy also encouraging conservation. Storage could allow for true
energy independence from escalating energy costs.
Odds of this becomming a full-fledged trend: 31%
Storage is still too expensive and a sudden miraculous
technological breakthrough is unlikely. Instead, options
that do not reflect the true cost and thus teach nothing about the
true value of the technology are currently being deployed.
This potential trend likely needs ten years and a lot of
investment to begin approaching viability.
Potential Trend 5: Solar Deployment in Latin America:
Solar technologies are not new to the countries in Latin America.
Deployment of off-grid applications in the region is well
established. Tender bidding is the preferred vehicle for
large commercial installations and there is potential among mining
concerns for merchant system sales.
Why this may not become a trend: High
import duties in many countries, unstable economies, significant
reserves of oil, potential reserves of natural gas (fracking),
unwelcoming topographies and low tenders are a few of the risks in
the region that indicate the hoped for level of deployment may not
come to pass.
Why this may become a trend: The need for
reliable energy generating options is strong among the countries
in this region and though affordability is not strong, there are
entities willing to invest in merchant installations (mining
concerns) as well as almost monthly tenders for energy generation
in the countries of Central America, South America and the
Caribbean. Deployment has begun on a fraction of the
multi-gigawatts of potential.
Benefits of this trend: As solar deployment
increases and should it begin to tiptoe near the promised
multi-gigawatt level, this region is likely to invest in domestic
manufacturing, which hopefully would mean cell technology
development as well as module assembly. Given the high cost of
Greenfield manufacturing, module assembly appears more
likely. Nonetheless, the construction (demand) sector would
provide necessary jobs and the supply (cell, thin film and module
assemble) would provide necessary jobs. Deployment of reliable,
clean solar energy technologies could be a stabilizing factor of
future energy costs.
Odds of this becomming a full-fledged trend: 44%
Though deployment has begun and queues of solar projects
in many countries are long, taxes are high and actual deployment
is moving at a snail’s pace. A regional economic shock could
derail many projects. Tenders are, in most cases, too low to
support profitable installations. The highest likelihood is that
deployment will continue resulting in a percentage of the expected
gigawatts but certainly above past levels of annual installations.
Paula Mints is founder of SPV
Market Research, a global solar market research practice:
All Solar All of the Time.
This article was originally
published on RenewableEnergyWorld.com, and is republished