Update: Tom Doyle of NRG: Reasons to Be Cheerful in Solar in 2012

“We are changing the energy industry—and we’re changing the world.” (Updated with news from NRG Q1 earnings report)

Eric Wesoff May 03, 2012

Eric Wesoff

Editor-at-Large
Greentech Media

Eric Wesoff is Editor-at-Large at Greentech Media. Prior to joining GTM, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields.

His expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley's premier venture capitalists.

Earlier this week, Tom Doyle, the CEO of NRG Solar, kicked off an upbeat and successful GTM Solar Summit in Phoenix, Arizona. NRG Energy, the immense parent company of NRG Solar reported its Q1 results today, and we've taken this opportunity to log its alternative energy milestones in Q1:

NRG completed the sale of 49 percent of the Agua Caliente solar facility to MidAmerican Energy at a premium to NRG’s invested and committed equity capital.
Agua Caliente block one and two were set into commercial operation. That 100-megawatt facility is now the largest operating solar photovoltaic project in North America.
NRG completed the first draw of $138 million against the $1,200 million DOE loan to the California Valley Solar Ranch (CVSR) project.
NRG's Alternative Energy division had gross margins of $20 million, up from $9 million in 2011.
In March, NRG closed on a $271 million credit agreement for the Alpine site, a-66 megawatt facility utilizing First Solar modules in Lancaster, CA.

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Reporting from Greentech Media's Solar Summit in Phoenix, Arizona

After the buzzkill that was Shyam Mehta, GTM Research Solar analyst's market outlook, Tom Doyle, the President and CEO of NRG Solar presented at the GTM Solar Summit and provided a number of reasons to be cheerful if not downright enthusiastic about being in the solar industry in 2012.

Doyle remarked that Shyam Mehta's solar presentation made it sound as if NRG is coming from an entirely separate industry.

From NRG's perspective, what's happening in the PV module industry is a positive thing, because "what we focus on is levelized cost of energy."

In other words -- things are fine if you're not a solar module manufacturer.

Doyle reminded the solar crowd, "We are changing the energy industry -- and we're changing the world." He repeated a Chinese proverb which states, "As long as the direction is correct -- the goal doesn't have to be specific," and emphasized "We're headed in the right direction."

"The electric power industry is headed for some amazing changes," according to Doyle, impacted by solar module pricing below $1.00 per watt from bankable suppliers. Soon, residential roofs will have recovery times of a few years. He added, "Every new home built will demand solar [and solar] will be as commonplace as a sink in a kitchen. Soon it won't be driven by a desire to be green -- it will just make sense."

NRG's Portfolio, DOE Success Story, BoS, and Natural Gas Prices

NRG's "Tier 1" portfolio is over one gigawatt. NRG has invested in the 392-megawatt concentrated solar (CSP) plant at Ivanpah, the 250-megawatt California Solar Valley Ranch, and the 290-megawatt Agua Caliente plant, and has a total of nine utility and 54 distributed solar projects. NRG also has a "development pipeline north of one gigawatt" looking out in a time frame of six months to two years. The CEO saw 20-megawatt to 50-megawatt projects as the sweet spot in the U.S. solar space.

Doyle said that the Agua Caliente project with its $967 million loan guarantee is a "DOE success story," with 400 construction workers on a site that is a year ahead of schedule and on budget.

In the past, Doyle said, gas prices haven't done many good things for NRG -- but "$2 [per mmbtu natural] gas has forced us to find ways to drive down costs and to continue to be creative," adding "When I step back and think about the industry -- we can be at below grid costs while chasing $2 gas."

"We're not going to be at $2 gas forever and when prices come back -- things will be great. We want to be the low-cost energy provider."

The only thing not in NRG's control at a solar project was PV module pricing, so NRG took the other cost components in-house. "We took balance-of-system (BoS) in-house to drive down BoS cost," said the CEO. The firm looked at ways to reduce the overall cost of debt as well.

The NRG Solar CEO cited three new applications where solar was a great fit and served to broadcast the message of low-cost, effective solar installations.

Doyle sees great opportunities in emerging nations where oil sets the marginal price and cited the recent effort in Haiti with the Clinton Foundation. Solar panels were donated to fish farms, irrigation projects, and schools.
He also cited Tempe's Arizona State University campus as an example. The school has 15 megawatts in operation or under construction -- more than any university in the U.S. with creative usage of shade, advertising, and parking structures.
He noted that the NFL was looking to go solar with not only energy production in mind but also the fact that it could be deployed in aesthetically pleasing ways.

The only negative perception about solar is that it is its too expensive, according to Doyle. "We, as a group need to send a message" that places like Arizona are starting to see solar priced cheaper than retail electricity.

He signed off by saying, "What's happening in Washington today will never get us where we need to be."