Last year, the global solar industry surpassed 100 gigawatts of cumulative installed capacity, and it is quickly approaching 100 gigawatts of annual deployment. While solar has rapidly scaled up in the past ten years, there are several hurdles to clear before solar can make its way into the mainstream. One of the industry’s biggest impediments is that its technology is still perceived as “new” and therefore risky by the more conservative financial community.
“One of the reasons why the private market isn’t doing much with clean energy now is that it doesn’t understand the technology and its potential,” said Douglass Sims, Director of Energy Finance for the Natural Resources Defense Council, in a recent article on green banks.
The financial community treats solar as a potentially exciting new investment class, while at the same time factoring in relatively large costs due to the unknown risk. Financing rates are likely to remain high until long-term, detailed analyses of investment success and risks in the space bring large players, such as pension funds, off the solar sidelines.
These larger and more conservative entities require more detailed information upon which to base their investment decisions, whether it’s for funding a project or a technology. Analyzing this data helps finance professionals provide their funds with a greater level of certainty that the risks associated with the investments are reliably accurate and manageable. While we cannot create a longer history of solar data today, we can free up more of the data that’s already being collected.
Leveraging the vast knowledge hidden within massive data sets is currently transforming entire industries such as retail, pharmaceuticals, healthcare, and government operations. In the case of the financial services industry, entirely new business models were born out of utilizing big data, by analyzing data on a minute-by-minute basis and identifying opportunities to capture value almost instantly.
Solar can learn from these industries and make the same market-growth and technological strides. The first step is to reframe the way we view our data, moving from conceptualizing it as a cost center to be managed reluctantly to seeing our data streams as assets that can provide additional revenue, for both individual companies and the industry as a whole.
After installing 4.7 gigawatts in the U.S. last year alone, the industry as a whole is collecting countless terabytes of data. While that data can be analyzed in-house, it is not aggregated, analyzed, or even shareable at a large scale across company lines.
No single solar entity has enough of the total industry’s project performance data to definitively prove the risks. However, coalitions of companies, such as the newly created PV 2.0, along with collaborative research and solar data-sharing agreements between manufacturers, project owners, and developers, can bridge these silos of information and provide unparalleled insight across the industry.
By standardizing data and breaking it out of its existing information silos, the industry can build richer data sets, leverage the information gathered to lower the cost of capital, and grow the industry. While no one has two decades of production data for 1 gigawatt worth of solar projects, together we have two years' worth of data for 10 gigawatts of projects. Being able to access that information would significantly help the financial community when it comes to confidently investing in solar at a larger scale with lower rates.
Making solar data more accessible can dramatically accelerate the collective growth of the solar industry, while also significantly benefiting individual companies that are forward-thinking enough to take advantage of this newly accessible data. Additionally, empowering companies to better analyze the data streams they already have access to opens up new revenue streams to them as well. This holds the potential to generate value across the industry by simplifying fleet management, giving manufacturers greater insight into the real-world performance of their products, and assisting project developers in more accurately comparing solutions. All of this brings greater transparency into the successes of solar investments, and offers more markers of credibility for new, often more conservative investors, while giving seasoned investors more confidence to provide lower costs of capital.
It is clear solar is growing at a nearly exponential rate, yet the industry as a whole must continue to keep innovating in order to accelerate us to sustained profitable growth. While improving solutions and lowering soft costs are a strong start to this goal, ultimately, it is the vast oceans of information and analysis we can gain from tapping the power of solar data that will take us into a greater solar future.
James Bickford is a five-year veteran of Tigo Energy. At Tigo, James has served in executive roles including Director of Asia Pacific based in Shanghai. He is currently Director of Global OEM Channels.