Run on Sun’s solar module maker of choice, LG Electronics, has announced that it will invest the equivalent of $435 million to triple its production of N-type solar modules, sold under the brand name NeON.
According to press reports (h/t PV-Tech), LG has entered into a memorandum of understanding with the South Korean city of Gumi to expand LG’s existing module production facility there (pictured at right).
LG’s roadmap would see it increase production from today’s ~1Gw to 1.8 GW by 2018 and a full 3 GW by 2020. If it can reach those targets, LG would become the largest producer of N-type solar modules in the world, overtaking present leader, SunPower.
Lee Sang-bong, President of LG’s energy business center was quoted as saying the expansion would place LG’s solar business in a “much stronger position” and allow it to be a “dynamic engine for growth” for LG.
“LG has been actively involved in the solar energy business for two decades and we believe that mainstream consumers are more than ready to give solar more serious consideration.”
This is great news for LG’s end customers - like the clients of Run on Sun. N-type panels, like the LG315 panels currently being installed by Run on Sun, have an enhanced performance warranty, produce more of their rated power when hot, and suffer significantly less Light-Induced Degradation over conventional solar modules. The significant increase in production offers the hope of lower prices for these premium modules over time, making top-of-the-line solar affordable for “mainstream consumers.”
But you don’t have to wait to get your hands on these best-in-class modules - we are installing them today! Just give us a call and let’s show you how with LG solar modules, Life is Good!
In the stage version of The Sound of Music, there is a song about the perils of romance among the affluent titled, “How Can Love Survive” – sadly it was cut for the movie. But I’ve always liked that song and I was reminded of it while reading a piece over at greentechsolar that debated the question: Will smaller solar installers survive? Lest you have any doubt where we come out in this debate, the answer is simple: heck yeah! But let’s see why…
The debate was held last week at the U.S. Solar Market Insight event in San Diego and was reported on by the always interesting Herman Trabish in a piece titled, “GTM Debate: Will Smaller Installers Survive in Tomorrow’s Solar Market?” (H/T solarwakeup.com) The debate featured Vivint Solar’s VP Thomas Plagemann squaring off against SunPower’s Residential Solar VP/General Manager Martin DeBono.
Plagemann’s comments reflect all of the arrogance and self-importance we have come to expect from such major players:
“In this business, we have to take three essential steps,” Plagemann said. “Find and acquire customers, design and install systems, and finance the systems.”
Financing has to come first, he explained. “A typical equity finance fund of $50 million, at $2.50 per watt and 5 kilowatts per system, means 4,000 systems. Using small installers to get that scale cedes control.”
Vivint has installed home security systems nationally for twenty years and keeps that control. “We acquire customers. That’s what we do. We took that customer acquisition engine and applied it to solar. Our success in the last twelve months is the answer to this debate.”
We note that Vivint has mostly done its work outside of the California market, so that $2.50/Watt number is not reflective of their presence in our fair state. Indeed, when we last looked at CSI data for the first half of 2013, Vivint did not even crack our list of the top 16 installers. Here’s that graph:
But even if they aren’t (yet) big in CA, is there any doubt that you could have gotten the same response from someone at SolarCity? Their goal is to make solar a commodity with a standard set of offerings - if your roof fits into that model (and your FICO score is high enough) - you are golden. Just don’t look for any real care and attention to detail.
Speaking for the little guy was DeBono from SunPower (with just a little irony given the size of SunPower). He noted that:
“Small business is the second most popular institution in the U.S., after the military,” he said. People want to buy from small businesses.” In the home building industry, 40 percent of new homes are built by large national builders, but 60 percent are built by small local builders. Solar installation will break out the same way, he said.
“Large solar installers can leverage the advantage of scale as long as everything is uniform,” he argued, “but variance is the rule in solar, and variance is anathema to scale. For customers that don’t fit into a box, local installers are the answer. Variance will cap the rise of national installers.”
DeBono went on to note that forming a partnership with SunPower provides installers with leverage and a national brand.
We agree that establishing partnerships is essential, though we might question the degree to which SunPower is a national brand in the way that matters most - consumer consciousness. Toward that end, we believe that partnering with a company like LG Electronics - which truly is a national brand and has the ad budget to prove it - makes more sense for small installers. But how do you get access to the other essentials of the business?
Run on Sun has been exceptionally fortunate to have partnered with Focused Energy, who is much more than a premier distributor. They have not only been our primary supplier since we first connected a few years ago, but they have offered us support, flexibility and insight that has made them an essential part of our success. If you run a small solar business and you haven’t connected with them yet, we would encourage you to check them out.
As we have said many times, solar has to be more than just another business. We have to be better. At the end of the day, that is why the small installers will survive: because we care more, and that translates into greater value for our clients.
Bonus for sticking around to the end:
As SolarCity prepares to release its financial statement for the first quarter of 2013 next Monday, we came across a couple of interesting items - actually one is interesting the other is more sickening - about litigation involving SolarCity. The first of these was discussed in their last filing - it will be interesting to see how the second is treated in Monday’s.
We wrote back in February 2012 about a lawsuit filed against SolarCity by SunPower. In that suit SunPower alleged that a number of its former employees were hired by SolarCity and that they took SunPower’s trade secrets to their new employer. In addition to naming SolarCity as a Defendant, SunPower also sued the former employees, including Tom Leyden. According to the Complaint:
35. LEYDEN connected at least three personal USB storage devices within days of leaving SUNPOWER. At least one of these devices was a portable external hard drive with 2 terabytes of storage capacity.
36. The forensic evidence indicated that LEYDEN copied at least thousands of files containing SUNPOWER confidential information and non-confidential proprietary information to these devices. These files included hundreds of quotes, proposals, and contracts, as well as files containing market analysis, forecast analysis, and business analysis.
37. LEYDEN also copied highly confidential data from the SUNPOWER database on www.salesforce.com. This data included information about major SUNPOWER customers accounting for over $100 million of sales throughout 201 I. The data also contained the name of the SUNPOWER employee that was responsible for these major sales. SUNPOWER is informed and believes, and thereon alleges, that this information allowed LEYDEN to recruit SunPower employees, including [others].
We wrote at the time that this sounded like pretty damning evidence against the individual defendants, but far less clear the degree to which SolarCity was liable, if at all.
SolarCity’s 10K, filed in March, in the section concerning Legal Proceedings, provides the conclusion to this saga:
On February 13, 2012, SunPower Corporation filed an action in the United States District Court for the Northern District of California (Civil Action No. 12-00694). The complaint asserts 12 causes of action against six defendants: SolarCity, Thomas Leyden, [others], although only the following six causes of action are asserted against SolarCity: trade secret misappropriation; conversion; trespass to chattels; interference with prospective business advantage; unfair competition; and statutory unfair competition.
Each of Messrs. Leyden, [others], or the Individual Defendants, are former SunPower employees, and at the time SunPower filed the complaint, each was a SolarCity employee…
In September 2011, we hired Mr. Leyden as our vice president of commercial sales; subsequently, his title was changed to vice president, project development. Mr. Leyden’s employment with us ceased on March 2, 2012.
The parties reached a confidential agreement to settle the action on December 31, 2012, and the lawsuit was dismissed with prejudice on January 28, 2013. The terms and amount of the settlement are not material to the Company’s financial position or results of operation.
(SolarCity 10K, filed March 27, 2013 at 36-37; emphasis added.)
Interestingly, while it is easy to find a SolarCity press release announcing Mr. Leyden’s hiring in September 2011, his subseqent departure - less than three weeks after the SunPower suit was filed - appears to have gone unreported. As for the lawsuit itself, it dragged on for nine more months - until shortly after SolarCity’s IPO on December 13, 2012.
So much for the interesting update. The far more troubling story appears in today’s Wall Street Journal under the title: Solar Installer Sues for U.S. Grant Funds. While we had written before about how the U.S. Treasury was investigating SolarCity’s accounting practices - particularly as to how it was valuing its leased systems for purpose of claiming federal tax benefits - this was the first that we had heard that SolarCity had filed a suit of its own, claiming that the grant payments that it had received were not big enough!
Wow! Proof of the old adage that the best defense is a good offense. Let it never be said that the folks running SolarCity - and their lawyers - are timid. Confronted with an existential threat to their business model - a well deserved threat in the eyes of some observers - SolarCity is turning the tables and suing to get even more money from the Treasury.
Curiously, there is no press release regarding this lawsuit to be found on the SolarCity website. But there can be no dispute that the outcome of this suit - as opposed to the hushed-up settlement with SunPower - is material to the Company’s ongoing operations. As we reported last October, in its IPO filing SolarCity acknowledged as much, saying:
If it [i.e., the U.S. Treasury] were successful in asserting this action [i.e., that SolarCity was overstating the value of its systems], we could then be required to pay damages and penalties for any funds received based on such misrepresentations (which, in turn, could require us to make indemnity payments to certain of our fund investors). Such consequences could have a material adverse effect on our business, liquidity, financial condition and prospects.
This means that Monday’s filing of quarterly financial results will have to comment on this litigation and it will be interesting to see if the subsequent investor conference call extracts more information from management. Should make for an interesting news day.
A company controlled by Warren Buffett’s Berkshire Hathaway - MidAmerican Energy Holdings - has announced that it will pay SunPower between $2.0 and $2.5 billion for the 579 MW Antelope Valley solar projects.
Shares of publicly-traded SunPower (SPWR) jumped on the news and closed the week at $8.73, up 2.6 times over its 52-week low.
MidAmerican had previously purchased a 49% stake in a 290 MW solar project in Arizona and the FirstSolar Topaz Solar Farm (590 MW) in California. The Antelope Valley project will sell power to SCE under two long-term contracts.
The announcement was certainly good news for SunPower which, like other manufacturers of solar power modules, has struggled in the last year as modules prices have continued to fall.
Of course, falling module prices - while extremely painful for module makers - is good news for installers and their clients. That said, we do not anticipate significant drops in system prices during 2013 and with rebates continuing to decline, waiting to buy is not likely to be a rewarding strategy.
Or at least so Mr. Buffett seems to think.
In the highly competitive solar marketplace, some companies are thriving while others are withering on the vine. It’s the age old question: Who’s Hot and Who’s Not? In Part 2 of our series on the State of SoCal Solar, we will answer that question, and more!
In Part 1 of this Series we explained our methodology and looked at some overall trends in the data. To identify the players in the SoCal solar marketplace, we extracted the solar panel and inverter data from our CSI data set. (Unfortunately, the CSI data does not include any information regarding racking equipment used on a project.) While the CSI data allows for multiple different panels and inverters to be identified with each project, in reality the overwhelming majority of projects report only one panel or inverter choice. As a result, we will continue our practice from last year and only look at the first choice reported for both solar panels and inverters.
There are two statistics that are meaningful - the total number of panels utilized and the number of projects on which those panels were employed. We excluded “delisted” projects from our analysis and we will further divide the universe of projects by residential or commercial.
In the residential space, there are 97 different panel manufacturers listed, but only 15 of them accounted for more than 1% of the total sales volume of 228,372 panels.
Here are our results for the residential market:
From this analysis it is clear that SunPower and Yingli rule the residential marketplace, combining for 37% of all sales and a comparable share of all projects. New kid on the block, South Korea’s LG Electronics, has jumped out to a very strong start, coming in fifth place behind venerable contenders, Suntech Power and Sharp. Also notable is that Sanyo - a long-time leader thanks to its great efficiency and thermal properties - has nearly fallen off this chart altogether. (Sanyo accounted for just barely 1% of total sales on just 0.8% of all projects.)
Those are the results for the residential market overall, but does it make a difference if you distinguish leased projects from cash purchase? Indeed it does, with only three companies having more than 5% market share in both market segments: SunPower (22.8% purchased, 18% leased), Sharp (16% and 5.3%) and Canadian Solar (9.5% and 6%). LG Electronics sold almost all of its product into the leased systems segment with a market share of 10.7% compared to less than one-half a percent in the purchased segment. Altogether, the purchased market segment accounted for 65,841 panels sold whereas the leased segment dwarfed its older sister with 162,531 panels sold.
The top-five most popular residential solar panel models were: Yingli YL235P (21,098 units), LG Electronics 255S1C (15,970), SunPower 327NE (12,273), Suntech Power 190S (11,488) and SunPower 230E (9,069).
On the commercial side, there are 60 manufacturers listed, of which only 13 accounted for more than 1% of the total sales volume of 350,360 panels. Here are our results from the commercial side:
Suntech has taken over from SunPower the top spot in the rankings, accounting for nearly 21% of the panels installed and it did it with only 7% of the total projects. In contrast, second place finisher, Yingli, had more than twice as many projects - 14.4% of the total - but its market share was only 16.2%. While this select group were the only manufacturers to crack 1% of sales, the remaining manufacturers captured a whopping 28% of all projects.
The top-five most popular commercial solar panel models were: Yingli 230P (43,064 units), Suntech Power 280-24/Vd and /Vb-1 (65,475 - two variants), SunPower 327NE, Trina Solar 230PA05 (21,590) and Trina Solar 225PA05 (17,950).
Analyzing inverter sales is a bit different since many projects have more than one inverter, and in the case of micro-inverters installations, there is one inverter for each solar panel. For our analysis, we will just look at the number of projects with the manufacturer’s product listed as inverter number one.
The CSI data reveals 24 different inverter manufacturers in the residential space, but only 8 of them cracked the 1% market share threshold. Here are our results for the residential market:
SMA is still the leader, with 31% market share but it is losing ground to our favorite inverter manufacturer, Enphase Energy which now finds itself at 21% of the overall residential market. When just leased systems are considered, Enphase falls to number four with just 12.7%, trailing SMA (32.4%), Power-One (21.7%) and SunPower (16.3%).
Buried amidst the 1% that is “other” are some very well known names that appear to have fallen out of favor, such as: Outback Power Systems and Xantrex, as well as newcomers SolarBridge and Enecsys.
When we shift our focus to the commercial segment the number of players drops to just 13, with only 11 cracking the 1% barrier. Here are those results:
This is a very different graph. SatCon Technology has a clear market lead, despite being dogged by rumors of its imminent demise. SMA is second, but most of that is driven by sales of the same, small-scale string inverters that constitute its products in the residential sector. Enphase weighs in at 3.5%, not a bad number considering that large-scale commercial sales are not its forte (although that may be changing).
While our CSI data set potentially allows for more than 2,300 different pairings of inverter and solar panel manufacturers, in reality the number of actual pairings is far smaller, with just five pairings accounting for nearly 48% of all projects. Here are the top five pairs:
SunPower - with its 19% market share pairings - clearly demonstrates the joy of vertical integration and a strong improvement over last year when that combination accounted for just 12.4%. The Enphase-Sharp combination comes in at number 2, but at 8.5% the combination has fallen from 10.3% last year. (Given that the overall market share for Enphase improved from last year, this “decline” really reflects a broader base of installation combinations.) Yingli is well represented as is SMA (which, of course, is the dominant driver behind “SunPower” inverters which are mostly SMA inverters re-branded). Nowhere to be seen in the top five is inverter manufacturer Fronius which last year accounted for two of the top five entries but this year did not exceed 4% in any pairing. Likewise, last year’s panel leader, Suntech, failed to reach the top five this year and Kyocera was also pushed off stage with no pairing exceeding 2%.
Next, as we did last year, we decided to take a look at what pairings are the most, and least, costly, efficient, and ultimately, cost effective. As we noted last year, choosing a second-tier (or third-tier for that matter) solar panel by no means assures you of getting the lowest system cost. In fact, when we looked at the top ten solar panel manufacturers by average cost per CSI AC watt, the results are a bit startling:
None of these are top-tier panels, but they surely are commanding top prices! Keep in mind that our overall average price across all systems (excluding delisted) is just $6.23/Watt and you can see that some seriously overpriced systems were built using these panels.
One measure of panel performance (and the only one that can be teased out of the CSI data) is the ratio of PTC panel rating (meant to more closely reflect real-world conditions) divided by the nameplate panel rating (in STC watts), the higher the ratio the better.
The Sun Energy Engineering panels have a dismal 79.25% rating and the average across all of the panels listed here is under 85%. By contrast, Sanyo panels have an average ratio greater than 89%, ten percent higher than third-tier panels from Sun Energy, yet the systems installed with Sanyo panels averaged $6.84/Watt! (We note with dismay that the entry for Sun Energy panels represents only one system, installed in Malibu - perhaps this was an example of zip-code pricing?)
How do our top pairings rank in terms of dollar per watt? Their numbers are all lower than what we see here, ranging from a high of $8.79/Watt for the average of combinations using REC panels to a low of $6.84/Watt for systems using Yingli panels.
What about efficiency? Which equipment pairings produced the highest and lowest efficiency ratings (as measured by the ratio of CSI Rating divided by Nameplate)? This is a more involved number, since it is not simply a function of efficient equipment (although panel PTC/STC rating and inverter conversion efficiency are both included) but also the specifics of the site - azimuth, tilt, shading and geographic location. Nevertheless, good equipment certainly helps so let’s see where the numbers fall. One additional restriction is required - we will limit this to the residential sector. Why? Because larger commercial projects often using tracking mounts that can have efficiencies greater than 100% and would skew our results away from the panel-inverter pairing.
So with that limitation in mind,the highest combination of panels and inverters in terms of efficiency is First Solar panels (thin film) combined with a Fronius inverter for a 90.51% efficiency score (thanks in part to the thin film panels great PTC to STC rating) while the lowest end is a depressingly low of 68.45% derived from MAGE Solar panels and inverters from SolarEdge. (Not clear if even “power optimizers” can rescue a site with such dismal design characteristics.)
What about our most popular panel-inverter combinations - how did they fare on the efficiency scale? Not surprisingly, the SunPower-SunPower combination is the winner at 84.38%, but four of our five favorite pairs are closely bunched: Yingli-SMA (83.28%), Sharp-Enphase (82.43%), and Yingli-Power-One (82.35%). The lone outlier was REC-SMA which came in at a relatively low 80.11%.
Finally, as we pivot from a pure equipment analysis to one more focused on the practices of the solar installation companies, we wanted to see what the biggest players are using and how does that affect their pricing? Last year we looked at the top five players, but to give us a broader picture this time around we are looking at everyone with 100 or more projects (excluding projects that are delisted). Here are our results:
First a comment or two on who made the top five in this list - SolarCity and Verengo have swapped places, Galkos remains at number three (despite our observations about them last year) but REC Solar and Real Goods have been driven down the chart (to numbers six and twelve respectively) to be replaced by previously uncharted Elite Electric and American Solar Direct. (We will have more to say about all of these folks in Part 3.)
Last year Kyocera was the panel of choice for two of the top five; this year Kyocera did not crack the top fifteen, although it was the second choice for SolarCity. LG Electronics found a niche with Petersen-Dean (and was the second choice for Verengo), while Chinese panel manufacturers dominated the list, capturing five of the fifteen slots. Indeed, the big winner on this list would have to be Yingli, increasing its share of SolarCity’s business from 48% last year to 66% now and pushing aside its countrymate, Suntech, to become the number one choice at Verengo. It will be interesting to see how the ongoing trade dispute and imposed tariffs change these rankings next year.
Power-One gets the big boost this year in terms of inverter choices - elbowing past SMA for the top spot with overall leader, Verengo. But if you want to talk brand loyalty, Enphase is the clear winner - when it cracks the list it is used more than 97% of the time!
Collectively, these fifteen installation companies accounted for two thirds of all the solar projects in our CSI data set - but did that translate into lower prices for their customers? To answer that question - and a whole bunch more - in Part 3 we will turn our attention to Outliers and Oddities to discover the good, the bad and the ugly amongst solar companies. You won’t want to miss it!
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