A key to the growth of solar, particularly commercial solar, is the availability of affordable storage solutions. Two recent developments suggest that we are about to see dramatic growth in this vital market sector.
One week ago the California Public Utilities Commission (CPUC) voted five to nothing approving a plan to require the three investor-owned utilities (SCE, PG&E, and SDG&E) to procure 1,325 MW of energy storage by 2020, with installation completed by no later than the end of 2024. Both SCE and PG&E are required to procure 580 MW each, with the remaining 165 MW allocated to SDG&E. 200 MW of that 1,325 MW total is to be interconnected at the customer’s site. In addition, the decision provides a timeline for this to happen with the first 200 MW to be procured by the end of next year.
Other electric service providers, like the munis, will have to procure energy storage equal to 1 percent of their annual peak load by 2020. Those storage systems can also include customer sited and/or customer-owned storage devices as long as they were installed after January 1, 2010.
Large scale pumped hydro storage (greater than 50 MW) is excluded from the program, but storage obtained from plug-in electric vehicles can be counted.
This is a tremendously significant decision as the mandate will surely drive R&D as well as deployment investment and help provide a ready market for these emerging technologies.
An announcement this week during Solar Power International shows how that investment is already starting to happen.
Stem - the company with the clever technology for using storage to “smooth out” the demand peaks that drive commercial energy costs - just announced a $5 million project finance fund with Clean Feet Investors (CFI). From the parties’ press release:
The new financing model, which Stem developed in collaboration with CFI, is designed to open access to a wider pool of customers by removing barriers to adoption, enabling up to 15 MW of energy storage to be deployed. With this financing capability, Stem hopes to follow the dramatic growth trajectory pioneered by the third party ownership model in the solar industry. Stem and CFI plan other innovative financing offers for customers including performance-based and shared savings financing solutions with the capital from this financing.
“In addition to breakthroughs in technology, Stem is focused on driving business model innovation,” said Prakesh Patel, Stem’s vice president of capital markets and strategy. “By working closely with CFI, I believe we have created a unique offering to help accelerate customer adoption of Stem systems. This transaction paves the way for Stem to become one of the first efficiency technologies to achieve bankability.”
“Deployment capital is essential for Stem to get their technology in the hands of their customers – many of whom prefer a “pay as you save” offering,” added Jigar Shah, a principal at Clean Feet, and founder of the largest solar services company, SunEdison.
Allowing companies to install Stem’s technology with little or nothing down will help those companies save money at the same time it allows Stem to ramp up. This is great news for the solar industry since it is posed to provide the energy that Stem’s system later distributes as needed to offset those costly demand peaks.
Of course, this isn’t exactly great news for the utilities who, if this technology were widely adopted, would see a huge revenue hit as more and more commercial customers were able to lop-off the most expensive energy they now have to procure. Whether it is the continuation of net-metering on the residential side or the ability to eliminate the worst of demand charges on the commercial side, the pressure on the utilities will only continue to grow. But for their customers, things have never looked brighter.
We have written about the faux populism of electric utilities decrying solar generally - and net metering in particular - as unfair to poorer utility customers. But is that true? Are solar incentives really a question of robbing the poor to give to the rich? (H/T greentechsolar.)
Attacks on the solar industry as being unfair have been on the rise and getting nasty - and not just in California where folks like Ms. Burt from PG&E have been accusing the industry of being a Robin Hood in reverse. For example, over in Arizona, APS - the state’s largest utility - was just discovered as having spent thousands of dollars supporting attack ads against the solar industry. “We are in a political battle,” said APS Spokesman Jim McDonald. “We didn’t ask for it. But we are not going to lie down and get our heads kicked in. We are just not. We are obligated to fight. It is irresponsible to our customers not to fight back.”
And how are they fighting back? With ads like this one:
There’s so many things wrong with that ad - for example, I love the irony of the ad attacking “out of state solar companies” when the ad was produced by a DC-based lobbying group!
But the real message is the class warfare meme: “Out of state billionaires using your hard-earned dollars to subsidize their wealthy customers.”
Which begs the question - are solar customer really wealthy?
To be sure some are, and back in the day, perhaps most were. But as solar costs have plummeted, solar has become more affordable for more people. We see that in our own business - we have had our share of wealthy clients, but certainly the majority of our residential clients appear to be of far more modest means.
Now a study is out from the non-partisan Center For American Progress titled, Solar Power to the People: The Rise of Rooftop Solar Among the Middle Class, that seeks to answer that question more generally. The study looked at solar installations in the three biggest solar markets in the US - California, Arizona and New Jersey - and correlated census zip-code median income data against the locations for solar installs. What they discovered will surprise many and directly undercuts the faux populists at Big Energy.
Check out this chart - click for larger - it shows the distribution of solar installations across income range for these three markets over time. Interestingly, in each state, the distribution follows a similar patter with more than 60% of all installations occurring in zip codes with a median income of between $40,00-$90,000. In Arizona, where allegedly all those hard-earned dollars are going to wealthy customers, just under 80% of the installs were in middle-income zip codes! Here in California, two-thirds of installations are in middle-income zip codes. That tracks with our experience: we’ve done lots of installs in Pasadena, South Pasadena and Altadena - but none in San Marino.
As alternative financing mechanisms combine with lower prices, this is a trend that will surely continue. (Indeed, intelligent solar loan programs are the best development yet - and we will have more to say about that later this week.)
Which makes it hard to argue that solar is a rich man’s toy when two thirds of the installs are occurring outside of rich person enclaves. And yes, we realize that zip code median income is not a perfect proxy for wealth of the person installing, but it is a better proxy than any being used by the other side of this debate.
A fascinating piece over at Bloomberg Businessweek Technology turns our question into a declaration: Why the U.S. Power Grid’s Days are Numbered in a piece by three authors, Chris Martin, Mark Chediak and Ken Wells. But it isn’t the grid so much as the 3,200 utilities scattered across the landscape that are headed for extinction. (H/t SolarWakeup.com)
The article traces the story, familiar to readers of this blog, about the downward spiral facing utilities - as their prices rise, more customers get to the point where solar makes economic sense. But that switch further erodes the revenue base for the utilities so they must raise their rates yet again, driving away yet more customers and on it goes. Clearly not a sustainable future - for the monopolistic utilities. (Perhaps that is why some - and here we mean you, SCE - have so little sense of humor these days?)
Here is one of the many insightful quotes compiled by the authors:
“The technology and energy sectors will no longer simply be one another’s suppliers and customers,” the report says. “They will be competing directly. For the technology sector, the first rule is: Costs always go down. For the energy sector and for all extractive industries, costs almost always go up. Given those trajectories, counterintuitively, the coming tussle between solar and conventional energy is not going to be a fair fight.”
(Quoting from the Bernstein energy industry black book.)
Hmmm… solar beating up on the utilities so badly that it isn’t a “fair fight” is a future that many of us would pay to see.
While that future might seem inevitable to reporters viewing this from a distance, those of us in the solar industry know that we have a major fight on our hands. Today we have a sympathetic legislature in Sacramento, but that could change and our allies replaced by adversaries almost overnight. Surely the utility industry has the bucks to lobby legislators in ways that the solar industry will never be able to match.
As I said, the article makes for great Friday reading and I commend it to you.
We just came across this great video (h/t VoteSolar) and we just had to share. While this is about the struggle over net-metering in Arizona, you could readily insert the name of the utility of your choice - PG&E immediately comes to mind - and it would apply with just as much force. Check this out:
The line about the utility being a shark is pretty good, too!
The good folks over at the Solar Energy Industry Association (SEIA) are all too aware of the threat facing the solar industry from utility attacks and they are fighting back - with facts about the industry and its importance. Here’s our take.
Nowhere is the solar industry more vital than right here in California. Indeed, if California were its own country, it would rank 7th in installed solar capacity worldwide, higher than our overall economic rank of ninth in the world.
To help mobilize our supporters, SEIA sent out a press release with some important facts and with some useful action items. (If you are in a hurry, just skip to the Action Items!)
First, here’s the presser:
It’s official: for the third year in a row, solar is the fastest growing energy source in America. Released today, the SEIA and GTM Research report U.S. Solar Market Insight: 2012 Year-in-Review reveals that the U.S. solar market grew by 76% in 2012.
But what does that mean for California?
California continues to lead the U.S. in solar energy installations thanks to declining system prices and the state’s “net metering” policy that gives customers fair credit on their bills for the electricity they generate. California was responsible for nearly one-third of the nation’s solar installations last year. More than 1,000 megawatts (MW) of solar was added to the state’s power grid in 2012, a 44 percent increase over 2011. This is the first time any state eclipsed the 1,000 MW mark.
More than 40,000 Californians are currently employed in the solar industry, many in positions related to the installation and maintenance of net-metered residential and commercial solar systems.
The good news doesn’t end there:
- Solar creates jobs: Every second of the work day, more than two solar panels are installed by a solar worker on American soil. Today, solar employs 119,000 total workers in the U.S.
- Solar powers homes: There is now more than 7.7 gigawatts of cumulative solar electric capacity installed in the U.S., enough to power more than 1.2 million American households.
- Solar drives our economy: In 2012, new U.S. solar installations were valued at $11.5 billion – more than double the $5.5 billion value of installations in 2010.
This is the effect of smart policy, innovation, and competition.
So what can we expect from solar in California in 2013? The industry can continue its rapid growth if policies like net metering are protected, allowing new developments to flourish in the state. Unfortunately, as solar gets cheaper and more accessible, many utility companies see it as a threat to their 100-year old business model. Some California utilities claim that distributed solar generation shifts costs to other customers, when in reality a recent study showed that it provides net benefits to lower all customers’ costs by more than $92 million.
We’re fighting back. Allowing customers to net meter is critical to making solar an economically-viable option for most homeowners.
So here are two things to do RIGHT NOW:
Join our Thunderclap, so that we can all say with one voice that we Fight for #SolarInsight!
Sign this petition today and call on the California Public Utility Commission to protect California’s 40,000 solar jobs and leading solar energy industry.
More will be needed over time to preserve the industry we have all worked so hard to build - but please, add your voice to the mix. Thanks!
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