Industry Tipping Point
The NYEW Solar Breakfast emphasized an industry in transition. The solar industry looks to continue its progress from a burgeoning niche market to a stand-alone provider of cost-competitive renewable energy, and the tipping point may be arriving very soon. The panel featured Jigar Shah, Founder & Former CEO, SunEdison, Laurence Mackler, Founder & CEO, Solaire Generation; Karen Hamilton, Director of Residential Energy Services, NYSERDA, LLC; Elias Hinckley, Clean Energy Lawyer & Partner, Sullivan & Worcester LLP.
Solar Taps into the Grid
Solar is an essential part of a new clean and efficient energy movement that will incorporate multiple renewable, distributed energy resources and combined heat and power projects. This movement is being led in part by New York’s innovative Reforming the Energy Vision (REV) initiative, which aims to transform the fundamental basics of how the grid operates. New models and guidelines are needed to accommodate energy resources, such as solar PV, that have begun providing reliable electricity far sooner than anybody had estimated. Only a decade ago, Eli Hinckley notes, investment in solar projects was just beginning, or was scoffed at and refused. A new generation of solar technology will be market-ready within the next decade. Utilities and grid operators will need to adjust their practices in order to incorporate renewables and a decentralized, distributed, interoperable smart grid.
A Sound Investment
Solar is a safe-yield investment, according to Eli Hinckley – PV has no moving parts and the contracts are all low-risk and long-term. Jigar Shah added that solar projects consistently outperform industry projections for failed projects. Investment firms assume a 4% loss across the board due to project failures, but SunEdison has not recorded a single failure in 1,200 financed projects. Connecting conservative investment firms with solar firms, however, remains a challenge. 90% of solar firms are small companies founded in the past decade. As Laurence Mackler observed, “Solar financing should be simpler – finding a qualified off-taker is challenging.”
Improved financing methods will enable greater market penetration. The technology has become less expensive, but the physical PV cells are virtually identical to models from the 70s. Investment firms are beginning to sort out the solar market, however. The lesson of Germany’s feed-in tariffs might be that government interference restricted the German investment industry’s ability to interpret market signs and develop financing models. The U.S. has forged a growing solar market by learning while doing, and the solar industry is stronger as a result.
The Future of Solar
Solar power is responding to the market’s failure to price carbon by providing a clean energy source. The failure to price carbon puts renewables such as solar at a competitive disadvantage, but the industry is sustained by subsidies. As solar power matures into a self-sufficient industry, these subsidies will diminish. NSERDA, for instance, hopes to be out of the incentive business soon – the solar industry shares that goal of self-sufficiency. Solar leaders see local and state markets as the best way to grow and compete with traditional generation. States manage electric rates and set Renewable Portfolio Standards, and local communities regulate often-restrictive permitting codes. Collective action from the bottom-up will see the solar industry past the tipping point. View the full event recording here.
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