PV Solar Report Contributor
Earth Month ended well for shared renewables in California. A few weeks ago we reported on the two shared renewables bills making their way through the California legislature, SB 43 and AB 1014. And last week, both bills made it past their first hurdle: committee votes that were crucial to keeping the bills going.
The first of these was AB 1014, which passed through the California Assembly Utility and Commerce Committee on April 29 with a vote of 9 - 0. There was no opposing testimony. In fact, support for the bill was expressed not only by organizations like Vote Solar and the Solar Energy Industries Association but also the US Department of Defense and utilities Southern California Edison and PG&E.
According to Tom Price, California Shared Renewables Policy and Market Strategies Director, the bill was significantly amended. (For details, see this AB 1014 analysis.) But he says its progress is still “tremendously positive news. While it’s not the bill we started with, it does help us advance the goal of broadening access to renewable energy.”
The next day brought more good news: the California Senate Energy Committee voted 6 - 4 to pass SB 43. This bill got some pushback, as utilities and other groups raised concerns that it would shift costs to non-participants. Senator Lois Wolk, the bill’s sponsor, has committed to ensuring that doesn’t happen. So we can expect to see more changes made to this bill.
What’s next for the bills? They need to get through their respective Appropriations Committees and through full chambers, and then continue through the opposite chamber. At that point, the bills are expected to be combined into a single proposal. We’ll keep you posted on their progress.
While many details remain to be worked out, the passage of both AB 1014 and SB 43 through their first committees represents a major milestone. And their eventual passage would have even greater significance. According to a recent report by Vote Solar, a 1000 MW shared renewables program created by these bills would bring these benefits to California:
12,700 local jobs
$130 million in tax revenues
$4.3 billion in total economic activity
That doesn’t even include benefits like improved public health, increased security, and climate change mitigation.
And there’s yet another benefit. Where California goes, so does the rest of the country. We don’t have enough shared renewables laws in the US. Passing these bills would set a great example and help spread renewables beyond just California -- to the majority of us throughout the country who can’t yet participate in generating clean power.
The future is here -- it’s just unevenly distributed. This old quote found a new application at the Pathways to 100% Renewable Energy conference in San Francisco last week. An international crowd of energy experts, financiers, clean energy advocates, elected officials, government employees, academics, and more gathered there to discuss how to bring the renewable energy future to all.
Even those in favor of renewable energy have been known to debate how much of our power it can provide. But at the conference, the question was not whether we can get to 100%. Instead, speakers asked, How do we get there? And how soon?
Answers vary, and multiple approaches are needed -- many of which were shared at this event. Out of all the details and perspectives, a few themes came to the fore.
Our thinking is out of date
What’s the biggest barrier to 100% renewables? According to keynote speaker Frances Moore Lappé, it’s all in our heads. That’s because it’s hard for us to see beyond our mental map and cultural filters. Instead of talking about scarcity and limits to growth, which are part of this mental map, she believes that to find solutions we need to reframe the issue.
An animated Frances Moore Lappé
Other speakers echoed this sentiment and urged us not to let what we see today cloud our vision of tomorrow. After all, the one given in the world of renewables is that a lot will change. We too need to change when it comes to how we approach the problems.
We need to look at things differently. For example, why not switch to driving electric vehicles? Is it just because we’ve internalized and accepted the reality of gas-powered cars?
The same principle can be applied to the power industry itself; the industry’s current reality isn’t the only one possible. It’s bound to change as renewables make more sense economically, climate change becomes harder to deny, and consumers gain more control of power generation. Some say the industry won’t be recognizable by 2050.
In moving beyond our set views, we may realize that more is possible than we think. People said it wasn’t technically possible to integrate as much renewable power into the grid as Germany has done -- and yet it was done, with no adverse effects.
Predictions underestimate the growth of renewables
That’s just one of many predictions gone awry when it comes to renewables. Keynote speaker Eric Martinot, after providing many examples of fast growth in renewables, noted that we’re already exceeding conservative scenarios. Projections from the World Bank and others have generally been a decade off or a factor of 10 lower than actual outcomes. That’s right: we’re heading down the path to 100% renewables more quickly than predicted.
Examples are plentiful of regions on this path. In Freiburg, Germany, the average household energy consumption has been reduced by about 80%. For 2050, Germany as a whole is aiming for 80% renewable electricity, Denmark for 100% renewables. San Francisco has an earlier target of 100% renewable electricity by 2020; Lancaster, California, has set a goal of 100% renewable energy for the same year.
Some areas have already reached 100%. Case in point: Rhein-Hunsrueck, Germany. Starting with energy efficiency and moving on to generating its own power, the region of 101,000 inhabitants now produces not 100% but 104% of its energy from renewable sources. The future is here.
Technology is not a barrier
So what’s holding us back? Speaker after speaker emphasized that despite many misconceptions, it’s not technology.
The many roadmaps we already have -- such as IEA’s World Energy Outlook, recent NREL studies, the IIASA Global Energy Assessment, and the REN 21 Renewables Global Future Report -- all show that the barriers to 100% renewables are not technological.
That’s not to say that technology isn’t important. Solar and wind forecasting will play a role in moving us to 100% renewables, as will demand-response technologies, storage, and microgrids.
We already have viable means of storing energy, and they’re only getting better. But most storage is not yet on the grid, because the grid was built when it was thought energy couldn’t be stored -- another example of how we need to change our thinking.
And our thinking needs to include transportation and buildings. Going all electric would reduce global energy demand by 32%, and EVs can help support the grid by storing power and sending it back to the grid when it’s needed there. Buildings, representing 25% of global energy use, can be made more energy-efficient.
A study of conditions in 2005 and 2006 showed that in that period, California could have met its electricity needs for 99.8% of all hours from solar and wind -- without using demand-response, much storage, or oversizing. In Mexico, a combination of wind and solar can greatly reduce intermittency problems, with hydro or geothermal easily making up the remainder of electricity needs. Those who doubt these assessments need look no farther than the increasing number of areas that have already reached 100% or are close to doing so.
As more regions move to renewables, more people will see the value of making the switch. That increased public awareness and acceptance will help overcome the real challenges, which are social and political.
Renewables make financial sense
Costs can also be a challenge, but that too is changing quickly as renewables become more competitive.
The biggest cost of renewables is in the up-front investment; once they’re in place, they don’t need to be supported by infrastructure like pipelines. Many can be sited locally, reducing the need for costly transmission lines.
Nuclear power is not a good option when it comes to costs. Nuclear requires large subsidies and plants need upgrades and repairs, which always seem to cost much more than projected.
Meanwhile, fossil fuel costs are rising, even if you don’t count the many externalities like health care costs. We’re all paying for fossil fuels, in the form of $600 billion in subsidies in the last 60 years. What did we get for that? Increased power costs. When we subsidize renewables, on the other hand, our costs decline. So what’s the better investment?
Investors are catching on. For example, they’re beginning to understand solar as an asset class and are realizing it’s a great bet: It’s a proven technology, it harnesses an unlimited source of power, and the default rate on solar projects hovers around zero. Solar provides a hedge against volatile future power costs.
Investments in renewables are expected to double by 2020 or 2030. Given the way renewables tend to outperform predictions, perhaps we’ll see that even sooner.
And new business models are emerging to finance renewables as well as to lower their costs. That includes programs supported by the SunShot Initiative that help lower the soft costs of solar, which now account for about half the cost of solar systems in the US.
Local action is key
Given that we have the technology and the favorable economics, how do we get to 100% renewables?
We need strong, stable policies like Germany’s feed-in tariff, which has led to 40% of renewables there being owned by individuals. And that brings us to an important point. Power needs to be decentralized and controlled more by individuals and communities.
Hundreds of communities are getting into the action with policies and targets to support renewables. Some are taking up community choice energy, which allows local governments to pool residential, business, and municipal electricity loads and to purchase or generate on their behalf. It provides rate stability and savings and allows more consumer choice and local control.
Other communities are taking their own paths to renewables. Lancaster, California, for example, decided to become the solar capital of the world and is making progress toward that goal. This didn’t happen from the top down -- it happened because the community decided it was important. With the will to make the change in place, it wasn’t hard or costly to implement policies to support the community’s goal, such as streamlining the permitting process.
Greensburg, Kansas provides another great example of a community-driven move to renewables. In 2007, 95% of the town was destroyed by a tornado. The community decided to rebuild in a more sustainable way, and now Greensburg is living up to its name as a showcase for how a community can go green.
Part of the crowd of 180 conference attendees
Renewables are for everyone
As you can imagine, Greensburg is not a hotbed of radical environmentalism. But it’s a fine example that when it comes to renewables, there’s something in it for everyone. We need to remember this as we tackle the many misconceptions we face.
The people of Greensburg built on their farming ancestors’ heritage of conserving resources, reframed to fit their modern situation. Indeed, conservatism at its heart is compatible with protecting our planet. If that’s not compelling enough, most conservatives care about public safety and national security. And for most people, conservative or liberal, the strongest argument for moving to renewables is the economics.
Whatever the angle, it’s crucial to get the message out that renewables make sense. According to Kirsten Hasberg, that will be facilitated by the democratizer of communication, the digital revolution. She’s founded a new media outlet where she invites us all to participate in harnessing the power of that revolution, Energy Democracy TV. Another way to get involved and learn more is to join Go 100% Renewable Energy, a campaign just launched by a coalition of leading NGOs -- including the Renewables 100 Policy Institute, which organized the conference.
As Stefan Schurig of the World Future Council reminded conference-goers, the path to 100% won’t be easy. Resistance tends to get stronger the more successful our efforts. But he left us with a well-known quote that’s worth repeating here:
First they ignore you,
then they laugh at you,
then they fight you,
then you win.
Solar leases are helping far more people go solar than before and are helping spread solar in a big way. In 2012, third-party-owned solar represented 74% of California’s home solar market. And much of that market’s growth was in low- and median-income areas.
That’s great news! Still, about 75% of us are still left out of the equation. We may have shaded roofs, rent our homes, or live in multi-unit buildings. Businesses can run into these issues as well.
Solar for the rest of us
So how do we get solar for the rest of us? One solution is shared renewables. And now there are two bills making their way through the California legislature that could bring the state a pilot program to try out this idea: SB 43 and AB 1014. They’re really twin bills -- almost but not quite identical -- that will eventually be combined into one. You can find details, including case studies on shared renewables and summaries of both bills, at the California Shared Renewables site.
What this legislation does is allow investor-owned utility customers to get a bill credit for solar or other renewables produced at a location other than their own property. This would be completely voluntary, and ratepayers would not be affected -- an important aspect of this legislation. Customers who sign up for this program would not experience any change in their service, and utilities would still get paid to make the grid safe and reliable.
Each bill would create a pilot program for shared renewable projects of up to 20 MW in size, for a total of either 500 MW (under SB 43) or 1000 MW (AB 1014). The goal is for this voluntary pilot program to spur more private investments and create a significant number of jobs.
The program would would bring access to renewable energy to a wider group of customers -- to those of us in the 75%. There are even carve-outs for residential customers, as well as for smaller projects (1 MW or smaller) in environmentally or economically disadvantaged communities. And the bills protect prime farmland from being displaced by the projects.
A few other states have passed or are considering similar bills, but Joy Hughes of the Solar Gardens Institute considers SB 43 and AB 1014 “probably the most thoroughly thought through legislative treatment of the subject to date.”
What you can do now
If you’re in California and would like to support these bills, help is needed now! Some important votes are coming up in key Senate and Assembly committees:
April 22 ( Earth Day): Vote on AB 1014, authored by Assembly Member Das Williams and Senator Lois Wolk, in the Assembly Utilities and Commerce Committee
April 30: Vote on SB 43, authored by Senator Lois Wolk and Assembly Member Das Williams, in the Senate Energy Committee
It’s crucial that the legislature receive letters of support -- and they need to be in by Wednesday April 17.
So after you get your taxes filed, be sure to send letters in support of SB 43 and AB 1014! Especially helpful are letters from your company, organization, or school district. It’s important to write one for each bill. And it’s easy -- you can simply fill out the templates here and then send the letters to
Why support these bills?
Shared renewables programs allow many more people and businesses to participate in and benefit from solar. They give people and communities more control over their energy generation. Moreover, they help fight climate change, create jobs, reduce utilities’ need to buy power at the costliest time of day, improve the reliability of the grid, and save taxpayers money.
With all these benefits, shared renewables really are a win-win-win.
There are a number of ways to help spread solar. We’re lucky to have shared renewables as a potential option in California. Let’s work together to make that a reality. Let’s work to get solar to the 75% who are now left out.
By Will Quinn
Originally published on Mosaic
See video on YouTube.
As we head into 2013, Mosaic is highlighting the exciting state of solar in this multi-part video blog series. Each video features employees discussing what Mosaic’s model brings to the solar and finance industries.
In 2013, for the first time in history, everyday people will be able to invest in solar power projects thanks to Mosaic’s innovative crowdfunding platform, even if the solar arrays are thousands of miles away from their homes. Not only is 2013 an incredibly exciting time for the future of solar and renewable energy, but it marks the beginning of a revolutionary new financing era where the 75% of people who cannot currently go solar are enabled to invest in a tangible emerging asset class. Ordinary people investing in solar provides a new capital source to the solar finance industry.
Solar as an asset class means banking on the sun. It means your investment has an impact. It means supplying thousands of communities and people who have the ability to go solar, but do not currently have the capital, with the financing needed to get their projects off the ground. Solar as an asset class means people, planet AND profit.
Through innovative new crowdfunding models, millions of people can help supply liquid capital to the rapidly growing renewable energy and solar industries. Crowdfunding connects investors who are looking for stable investments with project hosts who need additional capital. This model ultimately benefits groups on both sides of the equation, but it also helps innumerable others. Solar projects often have positive implications for the independence and strength of the surrounding communities. Solar projects can bring jobs, clean energy, healthier communities, and independence from the grid.
The implications of a renewable energy economy and a renewable energy future cannot be overstated. If we hope to combat the trend of rapidly escalating climate change, we must frankly change the way the world works. Creating solar as an asset class is ideal because of its revolutionary implications for the world’s energy and finance markets.
No longer will renewable energy lack the capital it needs to grow, flourish, and support our economy into the 21st century. And no longer will the world of finance be a zero-sum game where people either achieve security through paltry returns, or invest their money in the often volatile traditional asset classes. Furthermore, when investing in traditional asset classes, it can be difficult to know what your investment is supporting, and an investment in the stock market can frequently mean an investment in fossil fuels. This is why a growing movement of people are pushing for divestment from fossil fuels. Solar investments ensure a positive impact on the planet rather than an uncertain one.
When considering new asset classes for investment, investors typically seek low-risk, competitive returns, and returns which are uncorrelated with the stock market. A well-balanced investment portfolio is diversified among different asset classes that represent the appropriate risk/return profile for different investors. Solar investments can potentially lower overall portfolio risk by providing long-term fixed income with lower volatility.
In addition to being an emerging asset class, solar is also an impact investment which achieves social and environmental good while earning a competitive return. In fact, a report by J.P. Morgan and the Rockefeller Foundation highlights the momentum of impact investing and the potential for “multiple bottom-line returns and social good... with financial returns, ranging from concessionary to market-beating.”
Solar is also an investment in infrastructure. Bridges, highways, and solar panels are examples infrastructure and tangible forms of investment. Infrastructure currently appeals to investors due to its predictable and steady cash flows, low volatility, long-term assets that provide essential services, and minimal correlation with other asset classes (if the stock market tanks infrastructure is less likely to go down with it).
Solar is positioned to become an exciting new asset class for all of the reasons above. In addition, Goldman Sachs called renewable energy sectors “one of the biggest profit opportunities since its economists got excited about emerging markets in 2001.” Renewable energy investments are also gaining the attention of famous billionaires such as Warren Buffett, and powerful national economies like Germany, China and India. This asset class has very exciting implications for the future.
When you sit down and consider your different options for personal investment, you are rarely presented with such an inspiring balance of people, planet and profit. Solar as an asset class embodies all three of these pillars and ensures that anyone who supports solar can own solar.
Video by: Peter DiPrinzio and Mark Romanov
PV Solar Report Contributor
Negative media coverage has a lot of people thinking solar and other renewable energy sources are not yet ready for prime time. But nothing could be farther from the truth. In fact, we have the technology to get 100% of our energy from renewable sources.
So what’s stopping us, and how do we get to 100% renewables?
That question is being answered everywhere I look these days. A recent study claims that by 2030, we could power a large electrical grid with renewable energy 99% of the time -- without spending more than we do on electricity today. The key, given the intermittency of wind and solar, is to generate power in a distributed manner. But why stop at 99%? We have many tools at our disposal, including demand response programs, to get to 100%.
Local energy advocate Greg Pahl provides detailed ideas and case studies in his book Power from the People. He suggests generating a mixture of renewables in addition to wind and solar, including hydropower, biogas, biomass, liquid biofuels, and geothermal energy. Which sources are used should depend on what’s most readily available and easy to implement in each community.
All these plans deal with the issue of intermittency and reduce the need for expensive storage. Even where storage is needed, we can expect technological advances to make it more affordable and effective.
These are all great ideas, but what’s really exciting is that we’re no longer in the idea phase. A number of cities, countries, and businesses have started on the path to 100% renewables. Corporations, schools, and even the Department of Defense are jumping on the solar bandwagon, with some businesses committing to using 100% renewable technologies. The French think tank negaWatt claims that France, known for its dependence on heavily subsidized nuclear power, can get close to 100% renewables by 2050. And other cities and countries are more ambitious. Now an impressive list of regions are either well on their way to generating 100% renewable energy, or are already there.
On April 16 in San Francisco, we’ll have an exciting opportunity to learn more at the Pathways to 100% Renewable Energy Conference, organized by Renewables 100 Policy Institute and its Partners. This will be the first time that international experts meet in the US to discuss a complete switch to renewables. People from finance, academia, government, policy, labor, and technology will join in an intensive discussion about what’s working and the best ways to overcome the challenges to achieving 100% renewable energy targets in all sectors and regions.
There couldn’t be a better time for this conference. We’re at the point where renewables are popular in the US and abroad -- and the Economist is predicting that renewables, especially solar, will become the new normal. There’s no time like the present to make this a reality.
Momentum, transformation, diversification: these words describe today’s dynamic solar industry. That’s according to Rhone Resch of Solar Energy Industries Association, Arno Harris of Recurrent Energy, and Shayle Kann of Greentech Media, who reviewed the state of the industry at a recent Google Hangout presented by SEIA and GTM.
Executive summary: Solar experienced strong growth in 2012. And despite the significant challenges that remain, solar is becoming mainstream.
Momentum and transformation
Drawing from the SEIA/GTM 2012 report, Resch noted that last year we installed 3,313 MW of solar in the US, a 76% growth over 2011. That represents 40% of all solar capacity in the US today, and led to the US becoming one of the most important markets in the world. American workers installed 2 panels per second, adding up to 16 billion panels -- enough to power 1.2 million households.
It goes without saying -- but I’ll say it anyway -- that as the solar industry grows, it creates jobs, many of which can’t be outsourced. Over 120,000 people are currently employed by the US solar industry, and that doesn’t count the hundreds of thousands of others who work with them.
What’s driven this growth? Resch stressed that policy stability has been a key factor. Since the ITC extension in 2009, solar has taken off -- consistent with what’s happened in other energy industries with stable policies. It’s typical for an energy resource to go through a 30-year period of early adoption and innovation before experiencing rapid growth, and that’s where solar has been. Consistent policies that support solar can help it move through the current transitional phase and continue to play an increasingly significant role.
Of course, another crucial factor in the industry’s growth has been solar’s increased affordability. Average panel costs have plummeted 60% since the beginning of 2011, with the average cost of a completed system decreasing 27% in 2012 alone. In fact, in the past few years solar has leapfrogged from being the most expensive energy form to second or third place in affordability.
Solar’s affordability is not just about panel prices but has also been aided by new financing options. Solar leases have been a huge driver for the residential market. And the industry has proven itself as an attractive asset class. New investment vehicles that could lower the costs of capital, such as Real Estate Investment Trusts and Master Limited Partnerships, are appearing on the scene. PACE programs are taking root in some states. And 2012 was a big year for crowdfunding -- as seen in organizations like Mosaic, which provide financing for smaller to medium projects by letting individuals invest in solar.
The soft costs of permitting, financing, and customer acquisition continue to be an issue, but the SunShot initiative is starting to help reduce those. We’ll see further benefits from this program in the future.
Solar has matured and diversified in the past two years -- both in terms of business models and geographically. In 2012, twelve states installed over 50 MW of solar, compared to just five states in 2011. A few years ago, California accounted for 80% of US installations; now, it represents 30%.
Diversification is also evidenced by strength in all segments of the solar market: residential, non-residential (commercial, governmental, nonprofit, schools), and utility.
The market has diversified, too, in terms of who’s installing solar. That’s no longer confined to early adopters or pilot projects. The fact that solar makes economic sense is shown by its popularity with companies like Apple, FedEx, GM, Google, Macy’s, and Walmart -- not to mention the Department of Defense.
And the widespread appeal of solar extends to the general population. In polls throughout the last five years, Americans have expressed support for greater development of solar energy -- across party lines.
Projections for the near future see the industry continuing to grow. In 2013, solar could become the number 2 source of new-build energy after gas -- and by 2015 or 2016, it could even reach number 1.
This robust growth is tempered by tensions, many in the policy area. As solar becomes a significant part of new energy generation, fossil fuel interests see it as a threat and are challenging policies like net metering and RPS. But SEIA is helping to challenge these attacks, and they have a solid foundation for doing so. Not only are voters supportive of solar, but the distributed generation that solar allows can help stabilize the grid, protecting against power outages and cyber attacks.
Advancements in storage technology will provide a crucial opportunity to address some of these policy issues. After all, with onsite storage, net metering would no longer be needed. And while grid penetration is currently low enough not to require large amounts of storage, in the long term it will become more critical.
The upshot? We need to continue pushing for strong policies that level the playing field for solar. With the right policy climate and advances in storage technology, solar power is set to transform electricity in the United States.
There’s a lot of debate these days about the future of solar power. Certain news media outlets who must not be named have brought renewed attention to the issue, likely confusing the public further. I’m here to tell you that solar IS our future. Why? In addition to being an important part of fighting climate change, solar makes financial sense, creates jobs, is abundant, and enjoys widespread popular support.Solar makes financial sense“Wait,” I hear you say, “Isn’t solar just too expensive?” There are so many ways to answer with that, but they all lead to “No, get with the times.” The perception that solar is too expensive is outdated. The current reality:
Energy Secretary Steven Chu agrees -- in fact, he believes solar is close to being as cheap as any other power source: “This is not something that’s going to happen 20-30 years from today. This is going to happen 10 years from today. Maybe sooner.”Solar benefits all utility customersUtilities still aren’t convinced, and a major conflict is brewing with them. They’re saying that solar customers tied to the grid are driving up costs for everyone, because they buy much less power from the utilities than other customers and therefore pay less for the utility's fixed costs. In effect, they claim that non-solar customers are subsidizing solar.However, it’s likely that the utilities are reacting out of fear of losing profits. Their math just doesn’t add up. In fact, two recent studies have shown that net metering not only benefits all electric customers but can also help a state’s economy. We haven’t heard the last of this hot topic -- the California Public Utilities Commission is due to weigh in with their own study in October 2013.
Some utilities are getting behind solar, though, as they see the benefits not only to customers but also to themselves. Most of the power grids in the U.S. are old, under stress, and in need of upgrades. In some cases, utilities are finding they can incorporate customers’ solar generation into the planning for these stressed networks and defer upgrades -- not to mention avoiding the costs of new distribution lines -- which results in savings to their customers. It’s a win-win-win!Solar has lower externalities and indirect costs than fossil fuelsSo let’s assume you’re convinced so far: solar is in fact cost-effective compared to fossil fuels. What happens if you add the costs of fossil fuels beyond what it costs to generate them? These include externalities, or hidden costs, such as pollution and resulting illnesses. Fossil fuel-related health costs in the U.S. alone are estimated at $120 billion a year. Some of the costs are unexpected. A recent study by the World Future Council provides a new take on the costs of fossil fuels -- the costs of using them instead of renewables. All the fossil fuels we burn for energy, the study notes, are fuels we are taking out of circulation for other purposes. Given the petrochemical industry’s reliance on these substances, the study estimates that using conservative measures, the future use loss amounts to $3.2 - $3.4 trillion dollars a year.Suppose, though, that in the future we figure out ways to make our stuff without fossil fuels. We’re still left with other externalities and indirect costs, such as the costs of extreme weather events.Superstorm Sandy is estimated to have cost as much as $71 billion in damages -- and we’re seeing many more major storms resulting from climate change. A recent study estimated that U.S. storms between 2011 and 2012 have cost us $188 billion.We’ll continue to see the costs of extreme weather not only in damages but also in damage prevention, something cities like New York will have to invest in further. A major coal company has already invested significant shareholder dollars to protect their coal export infrastructure from these increasing superstorms. There’s another aspect to calculating costs: we must consider costs of the entire life cycle of generating any form of electricity. Just about everything we make on this planet comes with some waste, and even solar is not immune. But the waste caused by producing solar systems is much less than that from fossil fuels, and solar’s actual power generation is very clean.Solar is looking more appealing all the time, isn’t it?Solar makes sense even without subsidiesWhether solar can thrive without subsidies depends on a number of factors, including location. Solar is coming closer to holding its own thanks to falling costs, but what about subsidies being cut in many places? Will that make solar unsustainable economically?Let’s start by asking the same question about fossil fuels. What would happen if we cut all the subsidies for coal, oil, and gas?For one thing, we’d have a lot more money to spend on other things. During the time they’ve been getting subsidies in the U.S., according to a DBL Investors study, oil and gas have received $4.86 billion a year. That’s over 13 times more than the $0.37 billion a year in subsidies for renewables. Coal also gets more subsidies than renewables. It can be hard to calculate the actual amounts coal and other fossil fuels benefit from when you consider all the tax credits, tax breaks, and indirect subsidies -- not to mention externalities. When you add those, a 2011 Harvard study estimated the real cost of U.S. coal subsidies at $345 billion up to that time.The U.S. trend is mirrored globally: in 2008, according to the U.S. Energy Information Administration, fossil fuels received $557 billion in global subsidies, compared to $43 billion for renewable energy.And if solar got the same treatment? Keeping in mind that One Block Off the Grid created this graphic in 2010 and by now more of the U.S. can support solar without subsidies, this is still a nice illustration of what we’d be looking at:So why are we even asking if solar can thrive without subsidies? The fossil-fuel industry has been around for a long time and is still benefiting from that help. The newer renewables industries should be getting more of a boost, shouldn’t they? Whatever your opinion on that, they’re not. In fact, during the first 15 years of subsidies for the respective industries, oil and gas subsidies represented half a percent of the federal budget, about $1.8 billion a year, and all renewables only about a tenth of a percent, or $0.5 billion.It’s especially odd that there would be such a fuss about this when a majority of Americans support subsidies and incentives for solar. But when you have such entrenched financial interests as the fossil fuel industry has, it’s hard to let go.The good news for solar is that it’s becoming more cost-effective even without subsidies. The grid parity it’s reaching in more areas is in relation to existing fossil fuel generation. When it comes to new power plants, many places around the world are finding that solar and other renewables are cheaper than coal and gas even without subsidies. Global investment banking analysts at UBS recently predicted a boom in unsubsidized solar in Europe. And a new analysis by Deutsche Bank predicts that by the end of 2014, the global solar market will be sustainable without subsidies.We can still benefit from subsidizing clean power. Some countries are still putting feed-in tariffs and other programs in place to accelerate solar adoption. To see what can be done with smart subsidy policies, just check out Wildpoldsried, Germany, a town generating so much clean power that they’re making money selling the excess. And to put the icing on the cake, you need look no further than Gainesville, Florida, whose feed-in tariff has helped it become a world leader in solar.Solar creates jobsOne benefit of subsidizing solar is the jobs it creates. In fact, that comes to many more jobs per dollar invested than is true of fossil fuels, according to a University of Massachusetts study:
And the actual job numbers for 2012 were good. According to the Solar Foundation’s National Solar Jobs Census 2012:
As Danny Kennedy, co-founder of Sungevity, points out, this doesn’t even account for all solar jobs. The census focuses on jobs related to installing, but the industry also employs thousands in solar-related financing, as well as software and information technology services.Solar is abundant and popularSome are quick to point out that even in places with increased solar adoption, it’s still a small part of all power generation. But this is not an argument for not doing more. It doesn’t need to be this way. The sun is our most abundant resource, shining enough rays on the United States every day to more than power us for 10 years. Coal, oil, and gas combined can’t come close to matching that.Support for solar, while not as abundant as sunshine itself, is widespread. A September poll of likely U.S. voters showed that 92% of Americans support developing more solar, and a majority want the government to support solar with tax credits and other financial incentives. And despite claims that Germans are fed up with solar, a recent poll found that most favor renewable energy and many even think its progress in Germany is too slow.Why are so many people in favor of solar? When you look at the benefits of solar -- plus the costs of fossil fuels, both direct and indirect -- it just makes sense. Isn’t an ounce of prevention worth a pound of cure? We have to ask ourselves if we care more about our planet, and all the life on it, or about the financial interests of a few people who already have more money than they need. Isn’t the answer obvious? Isn’t the answer solar?
Why reach for the moon, when we can go for the sun? That’s what Energy Secretary Steven Chu aimed for in 2011, when he launched the SunShot Initiative to improve solar technologies and reduce costs. The program’s goal: to make solar competitive with any other power source -- without subsidies.
So far, it seems the sun was not too lofty a target. Chu may be stepping down as Energy Secretary, but he’s leaving on a high note with great hopes for the future. At a recent Google Hangout on the solar industry, he expressed his excitement about the present and future of solar and his conviction that solar is close to being as cheap as any other power source: “This is not something that’s going to happen twenty to thirty years from today. This is going to happen ten years from today, maybe sooner.”
At the Hangout, Chu and panelists from the solar industry provided plenty of reasons to feel good about solar’s future. They pointed to improvements on the technological front, such as increases in the efficiency, reliability, and longevity of systems -- similar to what we’ve seen happen with computers. What to expect for the future: at least a decade of continued improvements. And within that decade, Chu aims for the U.S. to be a world leader in R&D, deployment, and manufacture of solar products.
But there’s a lot more to what’s happening than just technological improvements. An important part of the SunShot Initiative is tackling “soft costs,” such as financing and permitting -- or as Chu puts it, the “red tape and hassle factor.” Because of drops in hardware prices, those soft costs now make up more than half the cost of installing solar.
We’re already seeing progress.
In 2004, the fully installed cost of utility-scale solar (which includes all hardware and installation costs) came to about $8 per watt -- now it’s below $3, in some cases even as low as $2. ShunShot’s ambitious $1 goal is looking within reach!
SunShot programs like the one in Broward County, Florida, are part of that effort. Panelists from the program shared how helpful it’s been to implement a single portal for permit applications, and ensure inspectors receive consistent training. Other counties are expressing interest, so they hope the program will spread throughout the state.
That points to an important trend: each success that proves the viability of solar paves the way for more solar. A great example is that solar has become more “bankable,” even Warren Buffett and Berkshire Hathaway are seeing they can make money -- so naturally, they’re getting in on the action. MLPs and crowdfunding are other important parts of the financial picture and are allowing many more people to help fund -- and benefit from -- solar. These options are popular: Mosaic’s first publicly crowdfunded projects sold out in less than 24 hours.
Many of these financing vehicles are relative newcomers, and that’s key when it comes to solar. As we deal with new situations like distributed power generation and increases in our ability to store power, we need to think in new ways. Secretary Chu urged the Hangout audience, as we look to spread solar power, to come up with new models.
And he’s been doing his part. It’s a shame to see such a strong proponent of solar step down from his position, but he’s already done a lot to lead the solar industry to a bright future. So let’s carry on the great work, and keep reaching for the sun!
This post was originally published on Mosaic.
By Phil Narodick
Originally published on Mosaic
In the past few years, the solar industry has been suffering from a lack of capital on both the equity and debt fronts. Despite remarkably high rates of return, tax equity investment still only amounts to around $4 billion per year -- roughly 0.2% of its potential in the United States based on total individual and corporate tax appetite. Similarly, while lenders have provided capital for utility scale solar, debt financing for residential PV remains at very low levels. Bloomberg New Energy finance predicts that maintaining US solar deployment growth will require substantially more investment: roughly $6.9 billion annually through 2020.
This shortage has affected both the liquidity and cost of capital in the solar industry, which in turn raises the cost of photovoltaic systems. Some sources estimate that financing costs drive up the cost of a solar project’s electricity by as much as 50%. Additionally, lack of access to financing has caused bottlenecks for the deployment of residential systems -- SolarCity states in their S-1 that in 2008 and 2009 their customers encountered a substantial waiting list for financing.
One way of facilitating the flow of capital to the residential solar industry would be to increase the number of investors. Currently around a 16 financial institutions -- and seven in particular -- make up the majority of investment in the residential solar industry. In order for the United States to truly transition away from a fossil fuel economy, this number needs to increase by at least an order of magnitude.
This transition will not happen without making it easier for individuals to invest in systems. Individual investment is straightforward in many European markets, but not in the U.S. As I wrote in my post on Master-Limited Partnerships, United States tax structure actually makes individual investment in fossil fuels energy projects much easier than renewable ones. Adjusting the tax code to allow for solar Master-Limited Partnerships would dramatically level the playing field -- some forecasts predict the increase in capital available to be several billion by 2020. There is already a bill in congress, called the Master Limited Partnership Parity Act, that aims to make this adjustment.
In the meantime, Mosaic is launching an innovative model that uses crowdfunding to finance solar projects, opening up new capital from everyday Americans and greatly increasing the number of potential investors for a PV system. Mosaic pairs rooftop solar projects with a portfolio of investors, creating the opportunity for individual, long-term investments in U.S. clean energy infrastructure.
About Phil Narodick
Phil Narodick is a cleantech enthusiast and former founder of Solar Pathway, a startup working on creating a market for community supported solar arrays. He has worked as a project finance analyst for Solar Trust of America and has a background in energy consulting. In addition to being an evangelist of innovative solar finance and impact investing, he holds both a Master’s and a Bachelor’s degree from Stanford University.
Disclaimer: Any opinions expressed herein by persons not affiliated with Mosaic reflect the judgment of the author and not necessarily that of Mosaic. Nothing herein shall constitute or be construed as an offering of securities, or as investment advice or recommendations by Mosaic. Mosaic's investments are limited to investors who meet applicable suitability standards based on income, net assets and state of residence. Please click here to learn more.
By Carter Lavin
Originally published on Solar Power World
We all understand how tight margins are in the intensely competitive solar installation market, and reaching consumers is not easy. But just because you don’t have the budget for a canvassing team, ad campaign, or big sponsorships doesn’t mean that there aren’t effective and affordable marketing campaigns you can launch. Here are five ways to market effectively to your community — and they won’t cost you a dime.
1. Social Media
Your customers and local media members are on Twitter and Facebook, so you should be, too. Use these channels to show off past and current projects, update your audience on developments at your company and engage with your elected officials. By maintaining an active presence on Twitter and Facebook, you can engage in broader community discussions and present your message conversationally. But always remember this cardinal rule: Social media is supposed to be social. If you just talk about yourself or post infrequently, you are wasting your time.
2. Letters To The Editors
As a professional solar installer, you have the ability to comment on a host of stories that appear in your local papers/websites — energy, utilities, government involvement in the private sector, local businesses, new industries in the area — or even extreme weather. You should have someone in your office who dedicates an hour or so a day scanning local newspapers and websites. When you see stories on any of those issues, it’s time to spring into action.
Write a few sentences about what you and your company have to offer on the subject and then send it in to your local paper as a letter to the editor. Just make sure it is not too sales-y or they won’t print it. Letters to the editor are typically around 150-300 words and the guidelines usually appear on the page itself. If they aren’t listed- call and ask). Be sure to include your name, company name and, most importantly, your phone number. Most reputable news outlets won’t print a letter-to-the-editor without confirming who wrote it, so the phone number may be the most important part of what you send them.
This kind of involvement will raise your company’s visibility in the local press, but it will also help your rankings in online search results if it’s posted online.
3. Open Houses
Just as going out into the community can help raise the profile of your company, inviting them to a project site, or the home of a satisfied customer is an excellent way to educate potential customers in a low-pressure environment. This is also a great photo op for a local politician so make sure you invite them. And if the local press know a politician will be making an appearance, there is a good chance they’ll send a reporter. So now your event is educating attendees and is in the papers.
4. Turn Referrals Into A Competition
People love competing and getting rewarded for completing an objective. Many solar installers already have a referral program set up which is a good way to speed up the word of mouth about your company. Kick it into high gear by allowing people to opt in to a gamified referral program. Come up with non-monetary prizes to give to referrers and rank the top ones publicly. The more fun you make your referral program, the more likely people are to use it — and the more business it will bring your way.
Carter Lavin is The Solar Marketing Group’s Business Development Manager and helps renewable energy companies analyze the market, articulate their message, and connect with their targeted audience to achieve their marketing/communications goals.
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