Will solar power disrupt regulated utilities?

Applications_ResidentialOne of the business megatrends of my lifetime has been decentralization. Mainframe computers gave way to laptops and PCs. The AT&T monopoly exploded, and landlines led to a proliferation of cell phones. Airlines were deregulated, creating space for startups like Southwest  and JetBlue. Newspapers have been rattled by the Internet, where anyone and everyone has a voice.

Could distributed power–specifically, rooftop solar–nowbe poised to disrupt regulated utilities?

That’s the topic of my latest contribution to the YaleEnvironment360 website. Some utilities evidently feel threatened, so they are pushing back against subsidies for solar.

Here’s how the story begins:

Issues of electricity regulation typically play out in drab government hearing rooms. That has not been the case this summer in Arizona, where a noisy argument – featuring TV attack ads and dueling websites – has broken out between regulated utilities and the rooftop solar industry.

An Internet web video attacks the California startup companies that sell rooftop solar systems as the “new Solyndras,” which are spending “hard-earned tax dollars to subsidize their wealthy customers.” Meantime, solar companies accuse Arizona Public Service, the state’s biggest utility, of wanting to “extinguish the independent rooftop solar market in Arizona to protect its monopoly.”

Similar battles about how rooftop solar should be regulated have flared in California, Colorado, Idaho, and Louisana. And the outcome of these power struggles could have a major impact on the future of solar in the U.S.

The politics of this debate are unusual, as the story goes on to explain. Please read the rest here.

A couple of thoughts. First, it’s important to keep some perspective here. Solar is growing fast but off a very, very small base. It generates less than 1 percent of the electricity in the US. Some coverage of this issue–notably a long story in Business Week with the absurd headline, Why the U.S. Power Grid’s Days are Numbered — conveniently overlooks that context. Regulated utilities are not going away anytime soon and if the grid’s days are, in fact, numbered, it’s a really really big number.

Having said that, a regulatory system that tilts heavily towards solar–by allowing solar customers to sell their excess power back into the grid at inflated rates, for example–will create problems for the utilities, as well as inequities for other customers. While the regulatory debate has become politicized in places like Arizona–the Koch brothers make a cameo appearance at the end of my story–what’s needed is fair treatment for solar customers and the utilities.

What’s fair, you ask? That’s why we have regulators.

Mosaic: Solar power, people power

Solar panels on the roof of the Wildwoods Convention Center
Solar panels on the roof of the Wildwoods Convention Center

I’ve never been to Wildwood, New Jersey. Most likely, I’ll never go. But with a click or two on my laptop, I just invested $100 in a 487 kw solar project on the roof of the Wildwoods Convention Center in Wildwood, on the Jersey shore, thanks to Mosaic.

Like Kickstarter, which enables ordinary people to support a variety of projects that grab their attention, Mosaic is an Internet crowdfunding platform.  But Mosaic for now focuses exclusively on solar energy and, unlike Kickstarter, it promises its investors a return–in my case, a 4.5 percent annual yield over the next 110 months.  That’s a lot better than 10-year US Treasury bonds that currently return just 1.66 percent a year, and a whole lot better than my money market fund at Vanguard which current returns 0.01 percent. [Of course, investing in solar is also more risky than buying a money market fund–see the addendum below.]

What’s more, I get to support solar power–which won’t work on the roof of my own home in Bethesda, Md., because it is surrounded by tall trees.

I’ve been keeping an eye on Mosaic since last September when I met one of its founders, Billy Parish, in Washington, D.C.  Billy subsequently came to Fortune Brainstorm Green this month, and we caught up the other day by phone. Since Mosaic began offering solar investments to a broad public in January, the company has raised about $2.1 million from about 1,500 investors. That’s impressive.

“The idea is that people should be able to invest in, and own clean energy,” Billy told me. “We need trillions of dollars in the coming decades to invest in clean energy. We just substitute the crowd for the bank.”

Think about it–Mosaic is financing distributed energy, using distributed funders, collected over the Internet, the ultimate distributed platform. This is decentralized power at its best. [click to continue…]

Can a solar-powered plane help curb climate change?


If you are among those who believe that the environmental movement needs more upbeat and inspiring stories, and less gloom and doom, you will want to hear about Bertrand Piccard, Andre Borschberg and their solar-powered airplane, Solar Impulse.

Solar Impulse is an engineering marvel. Its has the wingspan of an Airbus A340 — it’s 208 feet across — yet weighs only about 3,500 pounds, about the same as mid-sized family car. Powered only by the light of the sun, which is captured in nearly 12,000 solar cells (built by US manufacturer SunPower) arrayed on the wings, it can reach an altitude of more than 27,000 feet and stay aloft for more than 24 hours, day and night. In May, Piccard and Borschberg, the Swiss adventurers who founded and built Solar Impulse will fly the plane from California to Virginia.

Piccard, left, and Borschberg
Piccard, left, and Borschberg

This is very cool. I’m not a tech geek, but I was intrigued enough to take the opportunity to meet Andre Borschberg when he visited Washington early this week. Piccard, who is the better known of the duo, comes from a family of explorers; his grandfather August was the first person to pilot a balloon into the stratosphere, and see the curvature of the earth with his own eyes. He’s a psychiatrist by profession. Borschberg, by contrast, is a 60-year-old MIT-trained engineer and entrepreneur, who led the team of engineers, physicists, software designers and who have spent nearly a decade (and about $120 million) designing and building several versions of the aircraft. A round-the-world trip is planned for 2015. [click to continue…]

Here comes the sun….not

Germany, once the world’s leading market for solar power, is pulling back its subsidies.

Q Cells, once the world’s largest solar company, just went bankrupt.

This isn’t happy news. If the country that birthed the Green Party cannot sustain its support for solar, what does that tell the rest of us?

It should tell us that it’s time (actually way past time) to get serious about energy and climate policy.

This week, as I followed the news from Germany, I talked with a couple of energy-policy experts who I respect–Jesse Jenkins of the Breakthrough Institute and Gernot Wagner of the Environmental Defense Fund. I also watched an interview (below) with Bill Gates from the Wall Street Journal’s Eco-nomics conference. They disagree about some specifics, but they all agree that the US needs to get a lot smarter about how to drive a transition to low-carbon energy. So let’s try to see what we can learn from Germany, and the rest of Europe.

Perhaps the most obvious takeaway is that we should not place expensive bets on any one solution. That’s what the Germans did, with generous subsidies in the form of a feed-in tariff for solar. Even though the costs of solar have dropped dramatically, the subsidies were not sustainable. Remember when people said nuclear was too cheap to meter. Solar PV is too costly to subsidize on a scale that matters. [click to continue…]

(Solar) power to the people

A Grid Alternatives installation in Kerman, CA

Like many environmentally-friendly products, rooftop solar power is a luxury that most Americans can’t afford: Before subsidies, it costs tens of thousands of dollars to power a typical house.*

GRID Alternatives, an Oakland, CA-based nonprofit, is trying to change that–and making headway.

Launched in 2004, GRID Alternatives has grown along with the solar industry. This year, it expects to install solar on the rooftops of about 1,000 California homes owned by low-income people. It has seven offices, a staff of about 100 people and a budget of about $25 million. The organization will soon expand to Colorado and beyond. [click to continue…]

An NFL rivalry…over solar

Dan Snyder, the owner of The Washington Redskins, is not exactly a tree-hugger. To the contrary, he once offered to pay the National Park Service $25,000 to cut down trees on federal land near his estate overlooking the Potomac River. So when Snyder embraces solar power, by installing more than 8,000 solar panels at FedEx Field, well, that tells you something.

It tells you that the economics of solar make sense–because Snyder is known for extracting every dollar he can from the business of the Redskins.

It also tells you that he’s a competitor.  The Redskins deal with NRG Energy, a Princeton, N.J.-based independent power producer,  took root at last year’s Super Bowl, after the NFL East rival Philadelphia Eagles announced that they were installing solar, wind and biofuel energy at Lincoln Financial Field. [See my 2010 blogpost, Climate leaders: Chevy, NRG Energy and the Eagles].

No surprise, then, that the Redskins/NRG announcement made a point of calling the solar project “the largest installation at an NFL stadium.” It’s also the largest solar installation in the Washington, D.C., metro area.

While I prefer baseball to football, and the New York Giants to the Redskins (despite last Sunday’s game), I made the trek  to FedEx field by Metro today to see the solar panels and hear what Snyder and David Crane, the CEO of NRG, had to say about them. [click to continue…]

Military housing: It’s red, white and green


Solar powered homes at Davis Monthan AFB in Tucson

Unless you serve in the military, you have probably never heard of Lend Lease. A global, publicly-traded property development and management firm headquartered in Australia, Lend Lease is best known in the U.S. as a provider of military housing, on big Army and Navy bases including Fort Drum in upstate New York, Fort Hood in Texas and Camp Lejeune in North Carolina.

Lend Lease and its military partners together are developing some of the “greenest” communities in the U.S., including two of the two largest solar-powered communities in the nation, at Island Palm Communities in Hawaii and Davis-Monthan Air Force Base in Tuscon; New York State’s largest energy-efficient community development at Fort Drum Mountain Community Homes and Fort Hood Family Housing, the largest LEED Silver-certified community in Texas.

Lend Lease also operates in the private sector; the company says it built the first LEED-certified McDonald’s and it’s building the athlete’s village for the 2012 London Olympics.. But when I met recently with two U.S.-based Lend Lease executives–Krista Sprenger, vice president of sustainability, and Cindy Gersch, vice president of marketing and global affairs–we focused on the military work, which is extensive: 40,000 homes at 19 installations in 12 states.

The Department of Defense has been privatizing military housing since 1996, they told me. The DOD gives Lend Lease the land under a long-term lease. The company builds, owns and maintains the homes. It then  rents them to military families, most of whom have the option of using the basic housing allowance to stay on base or rent nearby.

There’s no requirement from the Pentagon that homes be solar-powered or energy-efficient. But because Lend Lease is a long-term owner with deep pockets and access to low-cost capital, and because the company typically pays for utilities for the military families, investing in solar and efficiency make business sense.

“When we are going to be able to operate a property for 50 years, we may be able to push out the payback times,” Krista said. “It becomes an attractive deal. And it is part of who we are and how we do business.”

While the solar communities are bigger than most, if not all others, in the nation, they are still small in the grand scheme of things–6 MW in Hawaii and another 6MW in Tucson. At a The Air Force says that the  Soaring Heights development in Tuscon, which includes ground and roof-mounted arrays, supplies 75 percent of electric usage to more than 200 new homes for base housing.

In fact, Lend Lease’s founder, Dick Dusseldorf, who was clearly a man ahead of his time, said back in 1973:

The time is not far off when companies will have to justify their worth to society, with greater emphasis places on envirommental and social impacts than straight economics.

While the solar communities are bigger than most, if not all others, in the nation, they are still small in the grand scheme of things–6 MW in Hawaii and another 6MW in Tucson. At a The Air Force says that the  Soaring Heights development in Tuscon, which includes ground and roof-mounted arrays, supplies 75 percent of electric usage to more than 200 new homes for base housing.

Lend Lease also works with its tenants to show they how to conserve energy. (Remember, as the owner, the company generally pays the bills.) Military families at Fort Drum can earn reward points by cutting their consumption and if they go above a baseline number, they pay for the extra costs. “Some of our homes consumed three times the energy of others,” Krista said. The firm offers free energy assessments, showing tenants where they can save. The company in July said it was committed to a 20% energy-reduction goal for its entire portfolio of military homes.

None of this, by itself, will make a meaningful contribution to curbing global greenhouse gas emissions. But small steps like these matter, if only because they can help change the conversation about climate change and clean energy. Military bases embracing solar-powered homes will help solar go mainstream, and the sooner, the better.

U.S. solar power: doubling in 2010!

Here at Solar Power International, a conference and trade show that has attracted about 27,000 people to the Los Angeles Convention Center, the exhibit halls and meeting rooms are buzzing.

Big global companies–Sanyo, Sharp, LG, DuPont, 3M and others–are among 1,100 exhibitors clamoring for attention. New products and deals are being announced. Interior Secretary Ken Salazar arrives tomorrow (Oct. 13) to talk about the Obama administration’s efforts to generate large-scale production of renewable energy on public lands.

There’s good reason for all the excitement. The U.S. solar electric industry, including both photovoltaic (PV) and concentrating solar power (CSP) installations, could achieve a milestone by installing a gigawatt of new capacity in 2010. That’s enough to power 200,000 homes, and it’s double the capacity installed in 2009.

Rhone Resch, the president and CEO of the Solar Energy Industries Association (SEIA), which organizes the event with the Solar Electric Power Association (SEPA), told the gathering this morning:

We now live in a world where you can be born in a solar hospital, get educated in a solar school, go to a solar college and while there drink beer brewed at a solar brewery.

Get married in a solar church, go to work in a solar office building, watch your favorite baseball team in a solar stadium and live in a country protected by the world’s best armed forces powered by solar. And I’m hopeful that when I get to that magic age, my kids have the opportunity to put me in a solar-powered nursing home.

The breadth and depth of solar in our lives is amazing.

The numbers back up his claim. Solar is the fastest growing form of electric generation in the U.S.,  albeit off a very small base: Less than 1 percent of the electricity in the U.S. is solar powered. But a new report from the SEIA and GTM Research projects that despite the sluggish economy, 944 megawatts of solar electric capacity (composed of 866 MW of PV and 79 MW of CSP) will be installed in the U.S. this year. That’s its baseline scenario. A higher-end forecast puts the number at 1.13 gigawatts.

Either way, that’s an increase of more than 100% over the 441 megawatts of solar electric capacity added in 2009. What other business do you know that’s growing by 100% this year?

[Disclosure: I’m here at SPI to moderate a CEO panel on the future of the solar business and being paid by the industry to do so.]

Why the growth? Two reasons, fundamentally.

First, the costs of generating electricity from the sun are coming down–whether by using photovoltaic panels, which convert sunlight to electricity, or CSP/solar thermal, which uses heat. Solar is still a more expensive form of electricity generation than wind or natural gas, but the gap is narrowing and some industry advocates say it is about to disappear.

Second, U.S. public policy is solar-friendly and stable. While Congress opted not to enact climate legislation, it has put into place an investment tax credit for renewable energy that will stay in place through 2016. Twenty-eight states have enacted renewable electricity standards.

The SEIA/GTM report says California led states for solar electric capacity installed in the first six months of 2010, followed by New Jersey, Arizona and Florida. (New Jersey’s on that list because of generous state subsidies for solar.) In total, 341 megawatts were installed in the first half of the year. The report projects a stronger second half for 2010 because a 75-megawatt solar thermal plant in Florida is coming online, as are several large PV projects.

The Solar Electric Industries Association has set a goal of installing 10 gigawatts a year.

“That’s enough solar to power 2,000,000 new homes,” Resch said. “Or shut down 10 polluting coal plants each and every year.”

Growing opposition to new coal plants, as it happens, is another driver of the solar business.

So what’s worrying the solar CEOs that I’ve talked to on my first day here? In a word: China.

They told me that China’s undervalued currency and the fact that a government-run bank provides billions of dollars in below-market financing  for big  solar companies–Suntech, Trina Solar, Yingli and and others–makes it hard for U.S., Japanese and European solar firms to compete in the PV business. The subsidies may drive the adoption of clean energy in China, but they are a problem for manufacturers elsewhere.

In the long run, because of the way they distort markets and potentially cut off innovation, they’re probably not good for the environment either. More on that soon–a top exec of Trina Solar is on my panel, and I’ll ask him about the perception that China has an unfair edge in this high-growth business.

Meanwhile, a few more scenes from the exhibit floor: