Understanding Future Uses of Roofspace and Defining An Early Path to Profitable Roof Estate Investing
March 17th, 2011
Two interesting articles that discuss various aspect of solar power. The first, while referencing the growth of the solar market in the U.S., makes the adroit point that the U.S. solar industry needs to look more like an energy market rather than a solar market. While they suggest that solar developers consider hybrid technology deployments that combine PV with wind, gas or other technologies that complement their profile, we would suggest that they consider it a rooftop market or a rooftop economy. The second article offers a glimpse at the acrimonious debate between rooftop and ground-mounted solar. Enjoy!
“…The U.S. solar market doubled from 2009 to 2010 and looks like it will double again to reach close to two gigawatts in 2011.
Where does it go from here?
Does it remain “a grassroots, niche, 100-percent-subsidized market,” in the words of PG&E’s Helen Priest — or can the industry grow up, stand on its own, and learn to work with utilities and provide truly utility-grade solar assets?
Shayle Kann, Greentech Media Research’s Managing Director, has provided an upside forecast of 6.5 gigawatts of demand by 2015, a 2009 to 2015 CAGR of 109 percent and a total market value of $13.0 billion. In 2009, the entire U.S. PV market received an estimated $2.4 billion in total project investment, a number that will be exceeded as early as 2011 in the utility market alone, according to Kann.
But that growth won’t happen automatically — and risks remain that might prevent that growth.
In the view of Simon Watson, Director of Utility Market Strategy at SunEdison, the U.S. solar industry needs to look more like an energy market rather than a solar market. Watson suggested that solar developers consider hybrid technologywind, gas or other technologies that complement their profile. He added that solar firms must get the price right or address the variability issue and consider combining solar with energy storage and acting as an Independent Power Producer. deployments that combine PV with
Ben Cook, Vice President of Project Finance, SolarCity, spoke of the potential for integrating variable pricing into the structure of a leasing agreement, as well adding energy efficiency to SolarCity’s offering — a service they’ve already started to provide. Cook also emphasized the need for harmonizing permitting costs across the thousands of utility districts in the U.S. According to a recent study, permitting inefficiencies can cost up to $0.50 per watt in the deployment of solar — which seems like an enormous piece of low-hanging fruit.
Helen Priest, Director of Emerging Markets at PG&E, one of America’s top deployers of solar and renewables, had these predictions about energy markets:
- Dynamic pricing is coming — this will shift the way consumers relate to utilities
- The supply-demand gap will start to close; we will start to need more plants
- We need faster-acting demand response
- We need sustainable business models for the adoption of solar assets
Priest noted that interconnect costs are going to become more visible. She also noted that with the California Solar Initiative ending soon, that flood of CSI data and transparency will no longer be available. Priest observed that with the end of incentives, California looks like a short-term market, and utilities need to see 10 to 20 years ahead.
Priest also stressed PG&E’s support for solar and noted that the market opportunity is large if the industry and utilities can work together to build a sustainable network.
The second article:
“…After a bruising battle over feed-in tariffs, our second fight of the day, in the smoke-filled Solar Summit arena, was between Danny Kennedy of Sungevity and Tim Keating of Skyline Solar.
This skirmish, in the upper weight classes, pitted supporters of rooftop solar against fans of ground-mounted distributed solar.
Here’s the highlight reel:
In support of rooftop solar
Danny Kennedy, the Sungevity CEO, charged out of his antipodean corner and asked, “Do we want to scale?”
“Ground mount tends towards central generation and that looks like inheriting the legacy of bad fuel choices like nuclear and coal.”
Kennedy reduced it to two words: “Net [expletive deleted] metering.” Technically, three words.
“This is why rooftops are so attractive,” insisted Kennedy. “Instead of going out to the desert and competing with wholesale costs and competing with coal and nuke, you poor buggers, you put it on a roof, you get thanked, and you don’t have to pay a Mojave dirt farmer for some patch of desert.” He went on: “You don’t get exposed to the billions of [dollars of] underinvestment” in transmission resources, according to the potty-mouthed CEO.
“I pity you poor people who have to get through BLM or the suits at the Sierra Club — that’s why ‘braggawatts’ never happen.”
“Don’t replicate the mistakes of the last two centuries,” urged Kennedy.
He then went for the knockout, saying, “Sungevity has 5 megawatts on the roof — we’re going to address a 40-million-unit addressable market which has only addressed 120,000 units so far.”
In support of ground-mounted solar
Tim Keating, VP of Marketing and Field Operations at Skyline Solar, broke it down:
“It’s a matter of cost. Let’s say you need ten kilowatts on the roof. It’s going to cost $5.00 per watt and it’s going to cost $50,000. In the field, it costs $30,000.”
Keating’s point: “Someone has lost $20,000.”
The flurry continued. “On a roof, you’ll produce 10,000 kilowatt-hours annually; in the field, about 20,000 kilowatt-hours.”
So — a roof gets half as much power at almost twice the cost.
“It works only because of our policy,” said Keating, adding, “This is real economics versus giving rich people a feel-good sensation.”
“The roof faces the wrong way — or the roof needs a new roof,” while ground mount “doesn’t mean centralized solar.” It means “high capacity solar” that doubles the capacity of Kennedy’s roof.
Keating urged the industry to “strip away all the policy shenanigans,” explaining, “We have to install terawatts, not megawatts. We will not get to gigawatts of solar on people’s roofs, especially when those houses get demand charges.”
The industry is “going to grow on the ground and connect to the distribution grid,” because “the lowest cost of capital and the lowest O&M is not on the home.”
Kennedy countered, accusing Keating of being “stuck in the mainframe mindset” and noting that solar roofs actually protect residential roofs. Kennedy then went for the heart: “We don’t want to be like Altamont, a big industrial disaster [like nuclear]. We can touch people’s lives” so they can be part of the solar revolution.
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Educated at Yale University (Bachelor of Arts - History) and Harvard (Master in Public Policy - International Development), Monty Simus has held a lifelong interest in environmental and conservation issues, primarily as they relate to freshwater scarcity, renewable energy, and national park policy. Working from a water-scarce base in Las Vegas with his wife and son, he is the founder of Water Politics, an organization dedicated to the identification and analysis of geopolitical water issues arising from the world’s growing and vast water deficits, and is also a co-founder of SmartMarkets, an eco-preneurial venture that applies web 2.0 technology and online social networking innovations to motivate energy & water conservation. He previously worked for an independent power producer in Central Asia; co-authored an article appearing in the Summer 2010 issue of the Tulane Environmental Law Journal, titled: “The Water Ethic: The Inexorable Birth Of A Certain Alienable Right”; and authored an article appearing in the inaugural issue of Johns Hopkins University's Global Water Magazine in July 2010 titled: “H2Own: The Water Ethic and an Equitable Market for the Exchange of Individual Water Efficiency Credits.”