Friday, October 27, 2006

The Dawn of a New Edison

Google’s big announcement last week that they were installing 1.6 megawatts of solar modules on their California headquarters is the most recent addition to an ever-growing list of corporations making the investment in solar energy. Staples, Whole Foods, and General Motors are some of the players that have already gone solar.

This is a great development for the solar industry, and it’s beneficial enough for the companies involved that they’d be stupid not to do it. Take Google for example. Aside from the great publicity this will give them, they’ll receive financial incentives from California’s solar program, and they’ll qualify for a 30% federal tax credit. The system will pay for itself in energy savings in less than 8 years, and will be productive for over 25 years, saving them millions of dollars on their electricity bill.

Obviously, solar on this grand of a scale is much more lucrative than the 5 kilo-watt system on the roof of your neighbor’s house. Certain third party financers are realizing this, and making a living off of these large companies by doing the financing for them.

The most successful and well known to date is Sun Edison. They’re using a financing model called Power Purchase Agreements (PPA). The New York Times just featured these PPA’s on the front page of the Business Section last weekend

Here’s how it works: Sun Edison installs, owns, and maintains the solar system on the roof of Company A. Instead of Company A paying the power utility $0.15/kilo-watt hour, Company A signs a 25 year PPA with Sun Edison to pay $0.14/kWh, that way their electricity is cheaper, cleaner, and they’re not responsible for the solar panels. Sun Edison takes care of all that.

(I just pulled those prices out of thin air, by the way. The actual PPA’s vary from contract to contract and region to region.)

The model works for Sun Edison because now instead of Company A getting the rebate incentives and tax credits, they get them. And instead of Company A making up the system costs in 8 years, Sun Edison recoups their initial investment, and laughs all the way to the bank for the next 25 years. And Sun Edison does this enough times for enough different clients that they make a fortune.

Not bad.

And the customers love the trouble it saves them. A big corporation might know that solar can save them a lot of money, but they don’t feel like going through the hassle. They don’t want to have to put the capital costs up front, and they don’t want to have to maintain a gigantic power plant on their roof that they know nothing about. Companies like Staples and Whole Foods have more important things to worry about.

Solar systems like these cost a lot of money, and to make it work Sun Edison is always luring in third party investors. If you’re skeptical of the financial viability of all, consider that their investor portfolio includes over $20 million from Goldman Sachs.

Don't Take My Word For It

Click these links for the Sun Edison web site, the New York Times article, and here is the Press Release for the Staples Project in California

Friday, October 20, 2006

Solar Power Conference 2006 - Part 3 - Google and Schwarzeneger

The conference wrapped up today with Governor Schwarzeneger making an appearance to address the packed house. The speech was typical Ah-nold, but he got a huge standing ovation from the crowd, thanks to his signing of the California Solar Initiative last month to put $3.2 billion into the solar industry in California over the next ten years.

I was joking with some of the solar guys who have been with the industry through thick and thin over the years: "If someone came to you in 1990, and told you that someday the solar industry was going to be saved and championed by Arnold Schwarzeneger, would you have believed it?"

No, they wouldn't.

But nonetheless, here we are, looking at a great model for how to develop the solar industry worldwide, and a Hollywood body-builder-turned-Governor is to thank. Go figure.

The other big story of the week was Google. On Monday Google announced plans to put 1.6 Megawatts on their Bay Area headquarters - over 9,000 solar panels, enough to power 500 average California homes. Their headquarters is a 6-building facility, and they consume a ton of electricity, so even a system this big is only going to cover about a third of their overall demand. Still, a system on this kind of scale will pay for itself in energy savings in about 8 years, and the system will be warranted for 25, so it's a great financial investment for them.

Here's the Wall Street Journal write up.

This is the kind of stuff the industry needs. Staples has already put over 500 kw on their California Distribution Headquarters, and Whole Foods recently put 121 kw on their distribution center in Connecticut. The more we see high profile projects like these, the better.

In any case, lots of great stuff from the conference. But I decided I can write about all of it one idea at a time and string it out over a month, so why shoehorn it all in now? So whoever's out there reading this little blog, check back soon.

Thursday, October 19, 2006

Solar Power Conference 2006 - Part 2 - Sharks in the Water

Let me start by plugging Sun Power... These guys are the class act of the solar industry, and yes, I'm saying that mostly because they've sponsored some great networking events this week and provided tons of free drinks and food, but also because they're really reaching out to the rest of the industry folks here. They have the most efficient solar cells on the market, and they're probably the most successful solar manufacturers in the world to date. Check them out.

This conference has been fascinating. Granted it's only my first one, but from what I hear, this seems like the beginning of something big. 5 years ago when this conference was first launched there were 50 people. Last year there were over 1,000, this year there are 6,000. As Martin Green, who conducts thin film solar cell research at the University of New South Wales in New Zealand said at the beginning of his speech this morning, "I have always described the solar industry in the United States as a slumbering giant... it's quite exciting to be here and witness the giant awakening."


The theme for the conference is "Sharks in the water." The overall scene features the environmentalists and technology geeks it's always had. But the consensus seems to be that the jump to 6,000 people is largely attributable to the big banks and investors who are here scoping out financial opportunities. It's a bit uncomfortable, and I'm glad I'm not a small solar business owner who has to worry about getting swallowed up by these sharks, but honestly, it's not a bad thing. The industry needs these folks to really grow.

Man, I'm so tired. More tomorrow, unless Sun Power keeps me out on the town again.

Tuesday, October 17, 2006

Solar Power Conference 2006 - Part 1

This week I'm out at the Solar Power 2006 Conference in San Jose. I'm going to do my best to keep some kind of running commentary.

Day 1 - After a whole lotta travling, capped off by the fools at the Travelodge botching up my reservation, I finally got a place to dump my stuff and rest my head before heading to the opening reception. Plenty of folks talking german, plenty of geeky solar wonks with cool exhibits, and plenty of showroom girls with bikinis made out of little solar panels... okay, I made that last one up, but you get my point. It's a solar guru's wet dream.

Here's one of the cooler things I saw tonight - a company in California that's found a way to maximize the output of silicon solar cells by using these magnifying glass-type crystals (didn't talk to him long enough to get a more technical description just yet)

...Still adjusting to the time difference... need to get some sleep... more tomorrow.

A few other good photos:

Top- Solar Cells manufactured by Q-Cells in Thalheim, Germany - the second largest solar cell manufacturer in the world (Sharp is #1).

Bottom - A solar thermal heating module