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Some Utilities Embrace DG Solar

Utilities are no friend of rooftop solar. At least that’s the general impression one might get from recent media stories about utilities engaging in net metering disputes with their customers. But while Xcel Energy in Colorado and Arizona Public Service Co. continue their highly publicized disputes with solar customers over rates and fees, some industry onlookers say other utilities are quietly welcoming a future of distributed solar.

Last August, Citi Research, in its report “Rising Sun: Implications for U.S. Utilities,” indicated that the power struggle between solar and utilities will continue as solar grows. “Solar, more recently, has become one of the more polarizing topics in the power industry with some utilities joining the party, some doing just what is legislatively mandated, and others remaining reluctant and not being true believers,” the report says.

Citi called distributed generation (DG) the next driver of growth in the U.S. as utility-scale solar spending normalizes. The growth will depend on several factors, including how well the parties can agree on certain details. “Can solar providers and utilities reach a middle ground on adequate compensation for DG? We think so,” the report authors conclude.

For now, some utilities are focusing on other details besides net metering and are finding creative ways to help customers build DG solar. Bob Gibson, vice president, education and outreach for the Solar Electric Power Association (SEPA), says that’s the main purpose of the Washington, D.C.-based organization. “We are trying to help utilities use solar more effectively,” he says. “We are seeing tremendous interest, and everyone is looking for what is the answer for them.”

The answers are so different for each state and each utility that thus far, the efforts have been scattered. For example, Gibson says, in New York, Con Edison engineered a new technology for the network protectors when Jetro Cash and Carry’s Restaurant Depot installed 4,760 SunPower panels for a total of 1.56 MW. When the panels produce more power than the warehouse and store need, the system sells it to Con Edison. That was made possible by a change in the network protectors’ settings.

In a conventional setting, the protectors open and take electrical-delivery equipment out of service when they detect a fault. The trick was to make the network protector not open in response to a large amount of power flowing back into the grid from Jetro, but still make the protectors open if they detect an actual fault.

“If things like that are successful, other utilities will see it can be done,” Gibson says. “They have to set a precedent to get others onboard. There are examples all over the country of utilities doing things.”

Micah Myers, senior vice president of corporate development for San Francisco-based Clean Power Finance (CPF), says investment in DG will come from utilities’ holding companies, which have more flexibility than the utilities themselves. “With the regulated utilities, any money they invest they have to make a case to the commission,” he says. “The parent companies who own those utilities can invest in solar.”

Last year, CPF announced that Duke Energy, the Charlotte, N.C.-based holding company for utilities in six states, and Rosemead, Calif.-based Edison International, the holding company for Southern California Edison and other companies, became equity investors in CPF. The firm provides financial services and software to the distributed solar industry.

“You’re not seeing a lot of press about it, but they are all looking at distributed solar,” Myers says. “That’s where you see utilities or their holding companies look at new business models. They are not going to help customers go solar unless there is profit. We help them profit, and we think that will be continuing.”

Some utilities are creating new business models to profit from solar. PSE&G in New Jersey launched its Solar Loan Program in 2008. Since then, more than 1,000 residential and commercial customers have used the loan program to help finance solar projects on their sites. PSE&G launched the next phase of the program in 2013 and will support the financing of 97.5 MW of distributed solar built on landfills and brownfields, and also residential and commercial buildings.

Todd Hranicka, director of solar energy for PSE&G, says the program is part of the New Jersey Energy Master Plan that Gov. Chris Christie announced in 2011. Among the goals of that plan, according to a press release from the state, is “to make New Jersey the largest and fastest-growing solar energy market in the United States.”

In PSE&G’s Solar Loan Program, the loan amount can total 30% to 50% of the total project cost. The loans have a 10-year term with an interest rate of 11.179%. The customer repays the loans with cash or solar renewable energy certificates (SRECs). The SRECs have a minimum floor price.

“That market has been volatile,” says Mike Peters, solar loan program manager for PSE&G. “The borrower is allowed to pay down the loan priced at that floor value, so it brings certainty to the homeowner or business owner.”

Gibson, from SEPA, thinks there will be more of these programs in the future. “Smart utilities think, ‘Solar is going to happen whether we like it or not, and are we going to lose revenue or can we provide other services to make customers happy?’”

- Nora Caley

 

Texas Firm Building
Solar Powerhouse

Dallas-based Principal Solar Inc. (PSI) does not have an explicit goal to become the world’s largest provider of solar power, but it does not discourage the notion that the strategy it is following could produce that result.

On Dec. 23 of last year, PSI filed its S-1 registration statement with the U.S. Securities and Exchange Commission - the same day it inked a deal with Carlyle Capital Markets Inc. to help it develop a strategy for the acquisition and development of solar photovoltaic projects. Michael Gorton, chairman and CEO of PSI, says the two events have put the company into acquisition mode.

“We now have capital,” Gorton says. “If you have a solar asset to sell and we want to buy it, we can.”

The company flickered into existence in March 2011. Since then, PSI has worked to attract investors, build up engineering expertise and credibility in the solar sector, and engineer the occasional acquisition of a solar project.

Perhaps the most significant accomplishment of the company’s early years is the establishment of the Principal Solar Institute, an online reference center and resource guide for the commercial and utility-scale solar market. The outfit’s principal function is to evaluate and rate solar photovoltaic modules. The research organization publishes its results for anyone to access. However, the work also serves to inform the business side about the products that go into the projects it considers buying.

“The institute enables us to evaluate potential projects from a strong engineering perspective,” Gorton says.

The future of the power industry, as Gorton sees it, belongs to companies that can put together a diversity of generating resources. He agrees with the view, voiced by many, that public utilities today are in the same boat that the Regional Bell Operating Companies (RBOCs) found themselves in after the breakup of AT&T in the 1980s. While the RBOCs functioned for awhile as de facto regional monopolies, competition from a new generation of communications firms forced them to adapt or succumb.

“We played in an area that belonged to the telcos,” Gorton says of himself and his contemporaries. Gorton was active in the reorganization of the telecom industry, pioneering the development of voice-over-IP and DSL networks with his company Internet Global. “We saw that world and told ourselves, ‘Now we are going to own it.’ The same things are going to happen in the power industry.”

PSI styles itself as the world’s first distributed solar utility. The literal accuracy of this moniker is arguable; however, it clearly shows the identity the company is striving to build for itself.

PSI acquired its first solar asset in September 2012 when it bought a 3.5 MW solar project under development in Andover, Mass., from SunGen and R&D Solar.

Last June, PSI purchased the 3 MW Powerhouse One LLC (PH1) solar power farm, which consists of four 750 kW ground-mounted PV systems, located in Fayetteville, Tenn. PH1 was built by vis solis Inc. and commissioned in November 2011. The plant has a 20-year agreement with Fayetteville Public Utilities.

These relatively modest acquisitions functioned as practical tutorials for the company’s business model. Gorton and his partners are banking that the solar sector is moving irrevocably into the mainstream, backed by well-understood technology, solid business plans and increasingly inexpensive access to capital. He believes solar’s future is assured even in parts of the country not usually thought of as solar-friendly.

“It’s a shame that solar power is so politicized,” Gorton says. “The one benefit of the federal government’s getting out of solar grants is that it takes some of the politics out of it - although I would have preferred another year of government support.”

Nevertheless, Gorton sees solar power as standing on its own due to the inherent merits of the technology. He says solar power is a “peaker” in that it generates electricity when you need it most - when people fire up their air conditioners.

West Texas, Gorton says, is a natural solar country. It has the same solar irradiance benefits as the Southwest and California, along with what he says is a better regulatory and business environment. In many ways, the big oil, big business legacy of Texas has produced business market opportunities that are extremely favorable to the solar sector.

For example, utilities in Texas are planning almost $9 billion worth of electric transmission improvements in the coming years, according to a report by Electric Reliability Council of Texas, the state’s grid operator and manager of the wholesale electric market. The planned projects are expected to improve or add nearly 7,000 circuit miles of transmission lines and more than 17,000 megavolt amperes of autotransformer capacity to the grid. Gorton says the expansion of transmission capacity will give power companies in Texas similar reach to those in California.

Another interesting aspect of the state’s hydrocarbon heritage is the way land rights are managed. Surface rights are separate from mineral rights, so if you buy a plot of land to build on, you do not automatically own what is underneath.

“If you own the surface rights of some land and find a diamond, you have to give it back,” he says. “However, you can buy acreage for a solar farm for a fraction of the cost of land in other states.”

Gorton is hopeful that the combination of natural solar resources, infrastructure and state policies will enable a growing solar sector to thrive in Texas, and that distributed generation solar utilities like PSI will help make it happen and make money in the process. - Michael Puttré

 

Calif. Doubled Rooftop Solar In 2013

Last year, California more than doubled its entire rooftop solar installations from 1,000 MW to over 2,000 MW.

To put this in perspective, it took California over 30 years to build 1,000 MW of rooftop solar, hitting that landmark in early 2013. Now, California closed out 2013 with more than 2,000 MW of rooftop solar systems installed statewide. The California Public Utilities Commission’s (CPUC) latest figures report 1,917 MW of rooftop solar, but those numbers exclude basically all of Pacific Gas and Electric’s 2013 installations, by far the largest market in the state, as well as a significant number of installations in other utility territories.

By comparison, California added 500 MW of distributed solar in 2012 - also a banner year. If California continues to grow its rooftop solar market at its 2013 pace, the state may very well top 5,000 MW in 2014 - far exceeding the goals of the Million Solar Roofs Initiative, which aimed to install 3,000 MW of rooftop solar by the end of 2016.

When utility-scale solar projects are added in, California’s total solar power picture well-exceeds 4,000 MW - nearly twice as much installed capacity as exists at California’s last remaining nuclear power plant, Diablo Canyon.

These numbers aside, California won’t have a clear picture of 2013 - or 2014 for that matter - until all of the utilities’ data on rooftop solar installations is released to the public - something resisted by the utilities and still pending at the CPUC.

Meanwhile, rooftop solar continues to face battles on multiple fronts with regards to net metering, incentives for solar heating and cooling systems, the future of tax credits, and the reining in of permitting and interconnection costs and obstacles. Whether California continues this historic growth depends largely on policy decisions to be made this year.

As reports of 2013 being the driest year in California history roll in, California’s solar power growth is long overdue by many accounts. But no matter how you slice and dice the numbers, 2013 was a good year for solar power and another example of California’s leading the country toward a clean energy future.

- Bernadette Del Chiaro

 

Solar PV To Hit 49 GW
In 2014

Solar photovoltaic demand is forecast to reach 49 GW this year, up from 36 GW in 2013, according to findings in the latest quarterly report from NPD Solarbuzz.

According to the report, the fourth quarter of 2013 (Q4’13) will be another record quarter for the solar PV industry, exceeding the 12 GW threshold for the first time. Furthermore, demand in the first quarter of 2014 (Q1’14) will also set records.

Over the six-month period from October 2013 to March 2014, the solar PV industry will install almost 22 GW, which is greater than all PV installations between 2005 and 2009, during the previous high-growth phase of the industry driven by the European market.

NPD Solarbuzz says record solar PV demand in Q4’13 is heavily weighted toward the three leading countries for end-market - China, Japan and the U.S. Two-thirds of all solar panels installed in Q4 will be located in these three countries.

By the end of 2014, many of the leading Chinese crystalline silicon module suppliers will be reporting silicon and non-silicon costs below $0.50/W, NPD Solarbuzz predicts. The resulting growth in operating margins will then provide a solid foundation upon which to guide new capacity additions that have been on hold now for 18 months.

 

Polysilicon Market
Oversupply Looms

After a short recovery in 2013, the polysilicon industry is once again steering toward oversupply, according to a new report from Germany-based Bernreuter Research.

According to preliminary estimates, the global output in 2013 decreased to approximately 228,000 metric tons (MT), down 4% from the 238,000 MT produced in 2012. The decline was mainly due to low utilization rates in the first quarter, the report says. In contrast, newly installed photovoltaic capacity increased at a double-digit rate to about 36 GW in 2013, significantly consuming the large polysilicon inventories resulting from oversupply in 2011 and 2012.

As a result, polysilicon prices on the spot market will fall from $18/kg at the end of 2013 to $16/kg by the end of 2014, Bernreuter forecasts. However, strong growth in the PV industry, which makes up approximately 90% of the total demand for polysilicon, will initially drive up the spot price.

Bernreuter Research projects PV installation forecasts with three scenarios - 43 GW (low case), 46 GW (base case) and 49 GW (high case). In the high-case scenario, the price of polysilicon would rise to as much as $21/kg-$24/kg in the first half of the year. In all three scenarios, however, the report says the spot price will drop to $16/kg by year’s end.

According to the report, up to 66,000 MT of low-cost capacity is soon coming online that will push expensive producers out of the market and will consequently reduce the spot price. Roughly one-third of the new capacity will be based on fluidized bed reactor technology using monosilane as feed gas, Bernreuter Research says. While maintaining high silicon purity, this technology entails manufacturing costs that are substantially lower compared to the established process. Therefore, the report concludes, a sustainable price upswing is not in sight.

 

IHS Says Grid-Energy Storage To ‘Explode’

IHS estimates that only 340 MW of commercial grid-connected energy storage systems (ESS) were installed across 2012 and 2013, with these installations generally demonstration projects. However, the market research firm forecasts annual installations will reach over 6 GW in 2017.

The U.S. will be the largest region for grid-connected ESS installations between 2012 and 2017, IHS says, accounting for 43% of MW capacity installed during that period. Other regions that will see significant deployment of grid-connected ESS will be Germany and Japan, where the installation of energy storage will be promoted by increasing renewable penetration, growing peak demand and the increasing financial attractiveness of self-consumption of renewable energy.

According to the report, lithium-ion batteries will account for 64% of energy storage installations between 2012 and 2017. However, opportunities also exist for other storage technologies, including sodium sulfur, sodium nickel chloride, flywheels, flow batteries and alternative compressed-air energy storage systems in the long term.

At present, IHS says, commercial deployment of grid-connected ESS has been inhibited by the high upfront costs of storage technologies and by the limited proof of the advantages of storage. However, annual installations are forecast to rapidly accelerate, promoted by the availability of financial incentives to reduce the upfront cost of an ESS, by the introduction of energy storage procurement/installation targets and by changes in electricity grid regulations that create business case opportunities for an ESS in the grid.

Longer term, the report says, growth will be driven by legislation and by the increasing need for flexible capacity as a result of growing levels of renewable penetration. In general, IHS concludes, grid-connected ESS will be critical in upgrading electricity grids to manage the increasing levels of renewable penetration, and in balancing increasingly complex supply-and-demand requirements.

 

Handbook For
Community Solar Released

The Solar Electric Power Association (SEPA) has released the “Utility Community Solar Handbook: Understanding and Supporting Utility Program Development.”

SEPA says the handbook provides the utility’s perspective on leading community solar program development and can be used as a resource for government officials, regulators, community organizers, solar energy advocates, nonprofits and interested citizens who want to support their local utility in implementing a project.

According to SEPA, the handbook details legal, financial and project design considerations utilities need to address during project development and provides suggestions for how communities should engage with utilities and support the program implementation effort constructively. Effective implementation covers areas such as stakeholder engagement, infrastructure and supply procurement, and program marketing.

In addition to SEPA, partners of the study include ICELI-USA, International City/County Management Association, Interstate Renewable Energy Council Inc., North Carolina Solar Center, Meister Consultants Group Inc., The Solar Foundation, American Planning Association, and National Association of Regional Councils.

SEPA says the material is based upon work supported by the U.S. Department of Energy.

 

Report Shows Solar Funding Up In 2013

A new report from Mercom Capital Group LLC says global venture capital (VC) investments in the solar sector dropped 40% in 2013 to $600 million compared to $992 million in 2012. Nevertheless, total corporate funding for solar - encompassing VC, debt and public market financing - was up 25% in 2013 to almost $10 billion compared to about $8 billion in 2012.

According to Raj Prabhu, CEO of Mercom Capital Group, since mid-2012, the new normal for VC funding has been smaller funding quarters and smaller deal sizes.

Downstream solar companies saw the largest amount of VC funding in 2013, with $262 million in 34 deals, accounting for 45% of venture funding.

Investments in concentrating solar power (CSP) reached $109 million in 12 deals, and photovoltaic companies were close behind with $104 million in 17 deals.

Thin-film PV saw a 77% drop in funding from 2012, with $72 million in 2013 compared to $314 million a year earlier.

 

Ascent To Build Thin-Film PV Plant In China

Ascent Solar Technologies Inc. has signed a definitive agreement to establish a joint venture with the municipal government of Suqian, China, to build a factory to manufacture thin-film copper indium gallium di-selenide (CIGS) photovoltaic modules.

Under the terms of the agreement, Suqian will provide approximately $32.5 million in funding, as well as five-year rent-free use of approximately 331,000 square feet of factory and office space in the Suqian Economic and Industrial Development Science Park. Ascent has agreed to purchase the factory within five years at the initial construction cost and will also hold the right to purchase Suqian’s ownership interest in the joint venture at 150% of Suqian’s cash investment.

Ascent will also contribute its proprietary technology and intellectual property, as well as certain equipment from its Colorado facility. By the first quarter of 2016, the joint venture is expected to be producing 25 MW of its EnerPlex CIGS modules and related consumer products per year. Within six years, Ascent expects its manufacturing operations in Suqian to have a capacity of 100 MW per year.

 

JinkoSolar May Spin Off PV Project Business

JinkoSolar Holding Co. Ltd. says its board of directors is considering options for separating out the company’s downstream solar photovoltaic project development business. The company says it intends to consider a range of alternatives including, but not limited to, an initial public offering (IPO), a pre-IPO financing deal, or finding a merger and acquisition opportunity for the business.

The company notes that the board of directors’ authorization for such a separation does not imply that such a transaction will be realized. S