Solyndra Discusses "Solar Shakeout"
As the US solar manufacturing industry faces its second major shakeout in the last half-decade due to rapidly falling system prices, former Vice President of Channel Sales at Solyndra, Inc. Scott Starr comments on the current environment in a webcast hosted by GLG Research today.
Why did the solar industry get hit so hard?
Solyndra's bankruptcy, after receiving a federal loan of half a billion dollars, has dominated media headlines across the industry for the last four months. But “with all the sensationalism, it's hard to tell fact from fiction,” says Starr. “There's a lot of publicity, but no electricity.”
With a glut of PV modules in the market and ramped up Chinese manufacturing, prices have dropped so rapidly that many solar panel makers are struggling to avoid a similar fate. Though Solyndra took the biggest public hit, the problem is bigger than just one firm. Evergreen, SpectraWatt, BP Solar, Beacon Power and Solon are some other major players to go bankrupt with notable divestitures coming from SPWR, RayTracker, Alteris, SolarCity, groSolar, MEMC wafer biz and others.
But despite all the hype, Starr says these are all expected trends for a rapidly maturing market. He explains that the industry was well aware that prices would be going down, but they “clearly went down faster than we had forecasted.” It's been a tremendously difficult market to predict and its complexities make picking “winners” very difficult. While the market experienced a significant drop in prices in 2010, it more recently experienced a drop of as great as 40 percent, Starr adds. And while every doubling of capacity of modules on the market is expected to bring down prices, those are usually somewhere around 15 percent. The plummet from around $1.80 per watt to about $1.05 per watt today was much more dramatic.
Achieving grid parity
Pulling through the next few years, some companies will gain the upper hand, some will lower the quality of modules, while developers get caught somewhere in the middle. Ultimately, demand will remain the strongest driver. Despite a few more bumps in the road, however, Starr sees a very positive future for the industry beginning around 2015 as solar moves closer to grid parity. After solar hits retail parity around that time, solar will be well on its way to competing at the wholesale level.
As electricity rates of utilities across the US increase, “I have little doubt that, with the evidence of cost-out in the industry, that solar will get to a place of parity,” Starr says.
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What are the top risks that could hinder the solar market moving forward?
The two major risks Starr alludes to in his presentation are mainly the fate of the 1603 cash grant, which has been extremely successful in reducing companies' dependences on tax equity, and monitoring potential tariffs place on Chinese panels. Subsidies and regulations will still remain a crucial component of keeping the industry afloat and pushing it forward. Tariffs on Chinese companies selling modules into the US market will also be critical, which could result in as much as a 30 percent cost structure difference. Watching what happens with that trade case in the March hearings under the Department of Commerce will help determine the future of the domestic solar market.
Less worried about a continued drop in the price of solar as more panels come onto the market, Starr says it will mostly come down to monitoring the regulatory policies and accessing capital over the next few years that will act as the biggest drivers for the survival of most companies. Expect to see a few more setbacks, but be prepared for an exciting revival of the industry as 2015 rolls around.
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.