Solar to Eclipse the Renewable Energy Market?
The high costs of solar energy have for years made it an impractical source of energy, but that's starting to change as the price of solar cells plummet. Major utilities, real estate companies and homeowners are racing to install solar panels as costs allow solar to finally go mainstream. It's a turning point in the renewable energy market with more projects planned for solar than any other source of power.
In the last year alone, solar power installations doubled in the US and are expected to double again. In September, Exelon and NextEra Energy, two of the US's biggest utility companies, acquired a solar power farm in California. NRG Energy has also confirmed it will spend $1.4 billion to install solar panels on 750 commercial rooftops. Across the country, solar installations have grown by 102 percent from 2009 to 2010.
Due to the lower costs of polycrystaline silicone, the main material that makes up most solar panels, and large scale manufacturing, there has been a surplus of solar panels on the market. These trends have made it difficult on the companies that make the panels, including Solyndra, a solar panel maker that received a controversial half million dollar loan only to go bankrupt. The bigger companies getting involved make it even more difficult for smaller companies to compete. General Electric, for one, just announced it would build the largest panel factory in the U.S. The good news is, an increase in supply will bring costs down even further. The bad news is that could mean more Solyndras to come.
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“Solar is still a very young industry, it’s in enormous turmoil,” said Frank van Mierlo to Bloomberg, chief executive officer of 1366 Technologies, a manufacturer of silicon photovoltaics. “The largest solar company has been different every year for the last six years. This is a young market where things are getting flushed out. Fundamentally—for us as a country—this is really good news. You want solar to be cheap.”
Solar's share of the energy market, though small now, holds greater potential than any other form of energy. The power of the sun is about ten thousand times the average power consumption of all of mankind, beaming more energy onto the planet in one hour than the amount used in a year. With built-in smart grid capability, solar panels can be installed where they're used, reducing the costs of moving the power through a grid whereas wind turbines, for instance, require expensive power line infrastructure.
Subsidies and tax breaks are still an important component of keeping solar power competitive until it's cheap enough to compete with fossil fuels. Luckily the prices of solar panels are falling so quickly that many believe solar will become compatible by the time the federal subsidy shrinks by two thirds in 2016. As of now, the government covers 30 percent of the cost of a residential system, but with state and other subsidies, up to as much as 75 percent can be covered. The falling prices make solar systems appealing to homeowners for economic benefits rather than just their environmental impact.
Although many solar start ups are expected to get left behind, the industry is moving in the right direction for consumers. There are 30,000 megawatts worth of projects waiting approval in the US (ten times what is already installed), according to the American Public Power Association. If just a fraction are approved, the country will start to see solar dominate in renewable energy. For society, the falling price of solar is a good thing. It means the industry is consolidating, demand is growing, technology is rapidly improving and solar power is only a few years away from being truly competitive with coal or gas.
Octopus Renewables buys Eclipse Power
The deal, which was completed with funds managed by Octopus, furthers Octopus’ involvement in the electricity distribution sector, having worked with Eclipse since 2018. It will allow Eclipse to continue the expansion of its team, while also investing in its systems, technology, and pipeline, with the ambition of making it one of UK’s leading IDNOs.
Eclipse has secured a portfolio of more than 10,000 connections across residential, industrial, commercial, battery storage and electric vehicle charging customers. Given the focus on electrification of heat, transport and industry in the UK, Eclipse is expected to play an important role in facilitating the UK’s energy transition.
Octopus Renewables is the largest investor of utility scale solar power in Europe, as well as a leading investor in onshore wind and biomass, managing a global portfolio valued at more than £3.5 billion. Institutional investor Nest partnered with the company in March.
Peter Dias, Investment Director, Octopus Renewables, said: “Having worked with Eclipse since 2018 and seeing their exciting growth, we’re thrilled to be able to make this acquisition and support the team to maintain this momentum.
“The acquisition of Eclipse is part of our strategy to identify and back great management teams that are supporting the energy transition. With ongoing support and investment, our investee businesses will have access to the expertise, business networks and financing to be able to scale faster and help contribute towards the UK’s net-zero goals.
“High-quality management of the distribution networks is going to be critical for the UK, and we are very pleased to be directly supporting the decarbonisation of heat, transport, and industry through this acquisition of Eclipse.”
Gary Gay, Managing Director, Eclipse, added Octopus shares a clear understanding of the important role that electricity distribution networks will play in the UK’s drive towards net-zero, and importance of a customer-focussed approach for building future smart distribution networks.
“With that, we are excited to now be part of the Octopus Group, with this investment helping us to reach the next stage of our growth journey and contribute to a greener, more efficient electricity network in the UK.”
Global renewables updates
ReNew Power recently won a 200MW/ac Interstate Transmission System (ISTS) solar generation project in an auction conducted by the Maharashtra State Electricity Distribution Company. ReNew Power expects to sign a 25-Year Power Purchase Agreement with the utility by the third fiscal quarter of 2022 to supply clean energy to Maharashtra at a tariff of Rs 2.43/ kWh (~US$0.033).
Natel Energy, a supplier of sustainable hydropower solutions, has announced a $20M funding round led by Breakthrough Energy Ventures and supported by Chevron Technology Ventures.
The company will use the funding to deploy its Restoration Hydro Turbine (RHT), which enables cost-effective production of distributed reliable renewable energy.
Duke Energy Florida plans to invest an estimated $1 billion in 10 new solar power plants across Florida, including the construction of four new sites, which will begin in early 2022 and will take approximately 9 to 12 months to complete. Construction of all 10 sites is projected to be finished by late 2024.
LG Electronics has made public its commitment to transition completely to renewable energy by 2050 as a key component of its sustainability strategy.