Over the last two days, dozens of seniorsolarprofessionals served as panelists at the GTM Research Solar Market Insight event and offered a snapshot of today's solar industry and some hints of what the solar industry will look like in 2013 and 2014. The panelists weighed in on soft costs, balance-of-system costs, product quality, and a new era in financing solar projects. Here are some viewpoints from the experts on this week's panels.
First Solar, AE, and Belectric on Lowering System Costs
First Solar's Engineering Director John Schroeder said, "Finance cost is more expensive than module cost" outside the U.S.
First Solar (Nasdaq:FSLR) has between two and three gigawatts of utility-scale solar currently in construction and "five gigawatts in the ground." As part of driving energy yield, Schroeder seemed keen on trackers -- noting that tracker technology and cost are "really hitting their sweet spots." He said that trackers were one of the best ways to reduce levelized cost of energy (LCOE), because although they might raise O&M by 10 percent, in Dubai trackers result in "a 25 percent yield increase."
"We need more bankable trackers in the market," said Schroeder. First Solar has its own tracker product from its acquisition of RayTracker in late 2010.
Schroeder is also looking to get the best out of inverters with a wish-list of controls including reactive power capabilities, dynamic voltage regulation, and frequency response features. He'd like to see a system voltage raised to 1,500 volts from its current 600- or 1,000-volt level with inverters that can handle that potential. He said that a higher voltage and fewer inverters could mean solar at $0.08 per kilowatt-hour and that "PV can't get to $.07 without a higher voltage," adding that that figure was without an ITC.
Advanced Energy's Sr. Marketing Manager, Matt Denninger, listed a number of ways that PV costs can be lowered through the inverter:
- Reduce the length of the home run conductor.
- Don't replace the inverter in year ten; instead, work with an extended warranty and annual preventative maintenance.
- Consolidate content; incorporate more into one inverter cabinet.
- Reduce O&M costs by strengthening warranty T&Cs.
- Increase production to improve LCOE, maximize availability and inverter efficiency
Dave Taggart, the CEO of Belectric, an EPC and the first firm to surpass one gigawatt of installed PV, is looking "to break the scale relationship" of solar plants. Can a one-megawatt build have the same cost per watt as a 25-megawatt build?
Utility Impressions of Solar
Emily Felt serves as Renewable Strategy and Policy Director at Duke Energy, a regulated utility and one of the largest power providers in the country. Felt's job "is to put together renewable roadmaps" at a utility which generates fifty gigawatts of power from nuclear power and coal. She's had to explain to her colleagues by saying, "Not all solar is the same; not all solar is bad." She is also seeking to deploy solar that is "not just reliable" but "controllable" as well.
Lowering Soft Costs
Barry Cinnamon, founder of Westinghouse Solar, pointed out the parallel between today's solar industry and yesterday's satellite dish industry. Satellite dishes have become cheap, standardized, and easy to install because of a concerted effort by industry on the hardware and policy fronts. Cinnamon suggests that scenario could be solar's future.
Danny Kennedy, the founder of Sungevity, on solar soft costs: "All of these soft costs can be addressed. The cost of customer acquisition is addressable and will come with scale."
Investing in Solar Power
Raj Agrawal, the head of the North American infrastructure business at private equity investor KKR, said, "We feel that solar provides one of the most attractive risk returns in the infrastructure space," adding, "We're actively looking for more renewable projects." But, Agrawal cautioned, "Anything novel about a panel is a detriment. Novel is not a great thing to have in your project."
Brian Matthay, VP Environmental Finance at Wells Fargo, noted that the bank's investments in solar tax equity have "crossed $1 billion." Of the 250 solar projects that Wells Fargo has invested in, seven are over 10 megawatts in output. Matthay said, "We have a lot of Evergreen and Satcon in our portfolio," adding, "Modules are definitely not a commodity." Amidst recalls and safety concerns, "it's incumbent [on investors] to pay attention and test these modules to negotiate a tough warranty."
Panel Makers Differentiating
"Materials matter," said Conrad Burke, GM of DuPont Innovalight, adding that DuPont's pastes, backsheet films, and encapsulants have logged "over five trillion panel hours." Of the roughly 300 million panels installed globally, 150 million of those panels include DuPont materials, according to Burke.
"If you take silicon out of the equation, DuPont is the largest materials supplier." Burke urged the audience to realize that solar is a $100 billion industry at a very important juncture -- and quality is critical. "We cannot afford any more black eyes in this industry," said Burke.
"In a race for survival amongst falling prices ... commoditization should not be at the expense of quality," said the DuPont GM, adding, "We think the industry can grow 20 percent per year, and that the firm had a unique 'inside perspective.'"
He said that DuPont was "seeing a rise in defect rates" at solar sites with encapsulant discoloration, backsheet failure, glass delamination and backsheet delamination. Burke's data showed IRR dropping sharply with just a small reduction in power produced annually.
Dan Alcombright of Solon, now part of Microsol, has installed 100 megawatts of solar in the U.S. and 310 megawatts worldwide. Solon, as we recently reported, has designed a solar system meant to trim labor, material, and handling. Modules are frameless, easily interconnected, and on a mounting platform made of lightweight composite material manufactured in partnership with Andersen. Alcombright, with a post-ITC world in mind, said, "This makes solar systems work in more states."
Jonathan Pickering, the President of JA Solar Americas said, "We are at a critical stage -- moving out of the technology-driven phase and transitioning from 100 gigawatts to 1000 gigawatts of installed capacity by 2020. Despite purchasing decisions made primarily on price, the solar industry has to "Stop selling vanilla ice cream. You'll want to check the label if you're going to eat the stuff for the next 25 years."