By Josh Garrett on behalf of Sol Systems
Ahead of MDV SEIA’s conference “Solar Energy Focus 2012: Developing and Financing Solar on the East Coast,” Sol Systems asked a sampling of conference speakers for previews of their thoughts and remarks. Topics of discussion ranged from the state of tax equity investing to the implications of a second Obama term. Below are highlights from discussions with three of the conference speakers.
Jigar Shah is calling for all-out solar evangelism. “The people working in the U.S. solar industry, from installers to financiers, need to educate their friends and family members,” he says. “Remember that cartoon character Hank Hill? He sold propane, and loved talking about propane with anyone who would listen. The solar industry needs more Hank Hills.”
It’s a good bet that Shah’s exhortation to spread the gospel of solar will come up in his remarks at the conference. Jigar Shah’s impressive resume in the solar industry stretches back to his founding SunEdison in 2003 when Shah pioneered the use of power purchase agreements (PPAs) to cut up-front costs of solar energy systems to zero. He is currently a partner at clean energy investment fund Inerjys, CEO of Jigar Shah Consulting, and a board member at Richard Branson’s Carbon War Room.
According to Shah, the single largest barrier to the solar industry’s success in the next five years is a lack of awareness. He believes that the American public just doesn’t know enough about the rapid expansion of the solar industry and all the benefits it can bring to local communities, from job creation to lowering residential utility bills. “Until the 115,000 people in the solar industry and their spouses start evangelizing solar on social media and at dinner parties, we won’t lose the negative publicity that we saw during the presidential campaign,” he declares.
Despite his emphasis on a need for more aggressive outreach and promotion from the grassroots of the American solar industry, Shah is quick to tout its successes in recent years. He points out that solar is the only generation source that offers locked-in prices over the long term, and that solar power is now cost-competitive with conventional power in over half of the country.
Looking forward, Shah says that he sees PPA-supported commercial projects having the highest potential for growth and profit over the next few years, considering the tough competition for utility-scale projects and high soft costs associated with residential installations.
But for Shah, it all comes back to spreading the good word. “After Hurricane Sandy and the damage it did to power grids, there were calls for more local energy sources. People need to know that the solar industry is bringing local energy to communities around the country right now.” With the conviction of a true believer, Shah lays down his bottom line: “We’re no longer emerging. We’re here.”
Stefan Linder, a Clean Energy Analyst at Bloomberg New Energy Finance, agrees that the U.S. solar industry needs to get its message out. But Linder believes that the message should be focused on cost savings for consumers. “A solar lease or PPA payment 15% or more below retail electricity rates is what entices people to go solar,” he says. “And solar can offer those prices in many parts of the country.” According to Linder, that’s the message solar retailers need to send to potential customers. But what about all the bad press the solar industry received during election season? “Now that it’s over, no one will waste money advertising against solar,” he predicts. “By the time the next election comes around, most people will have completely forgotten about Solyndra.”
Linder expects growth in each segment of the industry. For utility-scale projects, “falling system costs make large-scale solar an increasingly attractive option for utilities to meet renewable mandates.” Residential deals benefit from standardized contracts, he says, and when bundled, these leases or PPAs may be able to attract lower-cost financing. The leases and PPAs associated with commercial projects require more customization, making it difficult to bundle and fund projects.
But there is another, bigger trend that Linder sees on the horizon of the U.S. solar industry: consolidation. Tax equity is fast becoming a necessity in the solar market, he posits, and the market is currently shifting to favor large players capable of raising money from tax equity investors. Linder acknowledges that the expected uptick in mergers and acquisitions won’t benefit everyone in the industry, but, he adds, “Consolidation makes for a more efficient market.”
For Andrew Krulewitz, Solar Analyst at GTM Research and editor of PVNews, the trend to watch is third party ownership of solar assets. “In the first quarter of 2009, third party ownership was part of about 10 percent of residential projects in California,” Krulewitz says. “Today, that share has jumped to 75 percent, and in some other markets it’s more than 90 percent,” he explains. What does the swing toward third-party projects mean for the future of the industry? That’s a question that deserves serious attention and discussion at the MDV-SEIA conference, he says. “Are third party entities just competition for direct installers,” he asks, “or is this a new market segment that will help expand the solar market?”
More broadly, Krulewitz sees a robust and diverse American solar industry. He notes that there is a healthy mix of different business models, ranging from the vertically integrated Solar City to Vivint Solar’s tapping into its existing base of home security and home technology customers. According to Krulewitz, innovative business models combined with the support of the federal investor tax credit (ITC) leave no doubt that the solar industry in the U.S. will continue to grow through 2017. “Equipment prices are falling, efficiency is increasing, and service companies have streamlined processes,” Krulewitz says. “That’s made for solar competing with conventional electric rates in some states.” Here Krulewitz seems to be posing the same rhetorical question put forth by Mr. Linder: who can say “no” to cheaper electricity?
About the Solar Energy Focus 2012 Conference
Sol Systems is proud to be sponsoring the Solar Energy Focus 2012 conference which will host 50+ speakers, 12 breakout sessions, 350+ business leaders, investors, legal experts, developers and policy-makers. The conference will take place on November 28, 2012 at the Marriott at Metro Center in Washington, DC. To register for the conference, please visit www.solarenergyfocusconference.com.
About Sol Systems
Sol Systems is a solar finance firm and a leader in financial innovation in the renewable energy industry. Since its inception in 2008, Sol Systems has partnered with 350 solar installers and developers to bring over 3,000 solar projects from conception to completion by offering innovative financing solutions for residential, commercial, and utility-scale projects.
Sol Systems’ financing programs catalyze investments for a broad set of solar projects by simplifying their origination, diligence, and financing processes. Developers seeking financing for solar projects can access over $2.5 billion in capital through the Sol Systems investor network.
In addition to providing financing, Sol Systems also offers project due diligence, deal structuring, and asset management services – all designed to reduce overhead and transaction costs and quicken project development timelines.