Solar: Certain and Steady Growth Despite Challenges
By David Hodes
Today’s steady development of the solar industry has taken some hits from the economic downturn, that, along with the rise of more available and cheaper natural gas due to advances in hydraulic fracturing, or fracking, technology, have added more fodder to the discussion of not if but when solar energy will break out as a preferred energy source.
Discussion continues, with the consensus being that solar energy should become part of the mix of energy usage, a transitional alternative, led more by residential usage and individual corporations who have developed their own solar farms to power their operations and are not waiting for utilities to build out this alternative energy source they want and need to use.
To be sure, large energy utility operations have jumped in, cautiously, effectively throwing their collective hats in the ring while they assess the process of generating, storing and using solar energy. In essence, the beginning has begun and there’s no turning back. And that’s the good news.
The latest report to come out of the Solar Energy Industries Association (SEIA), “U.S. Solar Market Insight 2013,” indicates that while there have been some slowdowns in growth — specifically in commercial non-residential and some large utilities — the U.S. share of global solar installations will reach a high of 13 percent this year.
That’s up from 5 percent in 2008. A solar project will be installed every four minutes in the U.S. in 2013, according to findings in the report. “Continued growth is the most important thing coming out of that report,” says John Smirnow, vice president of trade and competitiveness for the SEIA. “And we are on course to have another record-shattering year.”
He says that they are not seeing any flattening of growth. Based on end of 2013 expectation of 4.3 gigawatts of photovoltaic installation, up over a gigawatt from last year, the SEIA predicts 7 gigawatts of photovoltaic installations by 2015. “So looking into the future, we are going to have a 30 percent growth rate,” Smirnow says. “And that is a big number.”
He points to some big users increasingly getting engaged in solar, such as Walmart Stores, Honda and General Motors, along with a handful of very high profile companies that are adopting solar.
Walmart is working towards their goal of using 100 percent renewable energy, with their corporate-wide solar initiative, working in partnership with San Mateo-based SolarCity, funding the installation of solar panels on 75 percent of its stores in California by the end of the year.
Large utilities see the work that these iconic corporations are doing, and they want to contribute more to the development of solar. But there are other issues for them to consider.
One large utility that is circling its options in solar technology is NorthWestern Energy. NorthWestern is a midsized utility serving 404,000 electric power users and 270,000 natural gas users in Montana, South Dakota and Nebraska.
Says Rick Edwards, director of key accounts and customer education for NorthWestern Energy, the utility company doesn’t have a large solar project in the works right now. Instead, the utility is spending approximately $1.5 million to help fund small scale solar projects as well as some research and development.
The Emma Park Neighborhood Center now in development in Butte, Mont., a $2.4 million center for the local human resources development council that is partly financed by a grant from NorthWestern, is an effort to study uses of alternative energy and the smart grid. “What we decided to do with this project as an organization is, rather than jump in feet first, go slow, get into essentially a regional type project and evaluate it,” he says. “And then if that makes sense, then move forward.
“But other than that, most of the stuff we have is really small scale commercial or residential,” Edwards continues. “In Montana, just because of the size and rural nature of the state, a lot of those alternative energy technologies haven’t migrated here quite as quickly as maybe other states with larger urban populations.”
It’s about assessing impact for now, he says, especially when talking about reliability of electricity. That’s an issue that frequently comes up when talking about solar technology, which means that NorthWestern for now has to offer a mix of energy sources. “It’s about impact on customer bills,” Edwards says. “Solar prices are going down, but at this point they are still more expensive than the traditional fuels. And if you try to incorporate too much solar energy into the mix of other energy sources, than that puts upward pressure on rates. And it becomes a question of how much of the customer’s dollar are they willing to pay towards solar energy.”
John Whisman, CEO of VeriSol based in Windsor, Calif., an international solar energy consulting firm, says that the factors of policy and price vary in the different states, and create an uneven market due mainly to policy change. “There are always going to be policy changes where the incentives change,” he says. “And they are always going to create these windows where development is palatable for a certain period of time.”
There was a big boom in the reduction of costs for solar panels over the last few years, he says, that created some spikes of growth. Recent price increases have softened the commercial market in California, Whisman says, but that could be attributed to the general downturn in the commercial real estate market in general. The main issue for slowdown in the commercial market, he says, is that utilities are shifting their cost structure and their income structure.
Whisman explains: “The way that utilities charge customers is by generation charges and demand charges. Demand charges are distribution transmission costs, and have nothing to do with generating the energy. Solar systems give a customer credit against their bill for the generation portion of the bill and not the demand or transmission or distribution. So they are shifting their rate structures to more heavily on the demand side so that solar is valuable because it doesn’t touch that part of the bill. That is affecting commercial solar energy.”
Other examples of solar energy use and adoption include sort of “off the grid” developments — companies building photovoltaic farms on the ground and smaller roof-mounted setups.
One example of a large solar farm development for a corporation is Apple, now working with Nevada utility NV Energy to build a 137-acre, 20-megawatt solar farm to power their new data center in Reno. This will be their third such facility — they are currently building two SunPower solar panel/solar energy generating facilities adjacent to their Maiden, N.C. data center that will create a total of 40 megawatts of solar energy by the end of 2013.
That’s the kind of development that proves solar energy is here to stay. “We are seeing increasing adoption by companies because it makes sense for them to go into solar with the current environment,” Smirnow says. “They are not waiting for the future. They think it’s here today.”
As far as the last remaining sticky issue hampering the wide adoption of solar energy — storage — Smirnow says that is not as critical an issue as some would believe. “When solar is at its peak energy production is when you have the most electricity consumption – roughly a third of the electricity consumed is tied to air conditioning,” he says. “And in the middle of the day is when you have that peak need, when solar is producing.”
Later in the evening, natural gas can play a more important role, Smirnow says. “But the storage industry will get their costs to the point where they have a home system or have a standalone system making big progress. But there is some distance to cover for storage to really take off for larger energy producers. I think we are fast approaching that day.”
Whisman agrees, calling battery storage a “bit of a technology problem” when it comes to solar energy on the grid. “Typical generation by utilities is fairly even in terms of load flow from a big generator. Solar is not like that. As clouds pass over, there are spikes and peaks. So if you have a tiny bit of storage, a capacity buffer hooked to an inverter that can smooth those peaks and valleys out to a degree, that is of great value as a solar distributed generation contribution to the utility.”
But there is no denying that the solar industry has found solid ground as both an energy supplier and economic developer.
The solar industry has been the highest growth industry in the United States, period, Smirnow says. “As far as sheer jobs, there are today 120,000 people employed by the solar industry.” The SEIA anticipates that over the next few years, the United States is going to see a doubling of growth and installations, and that is going to lead to continued growth in solar industry jobs. “There is no doubt that solar is now an important mix in the U.S. energy supply as well as our economic base,” Smirnow says.
But does the solar industry need government to come to the aid of the industry, creating new programs or adding more incentives? “I have a little bit of a different take on that,” Whisman says, adding that he actually welcomes the prospect of incentives going away. “I think that will be the great impetus to spur this market where it needs to be and grow it up. I think it needs to grow up and be on its own without subsidies. I think people would be amazed at what would happen in the industry if it were weaned away from subsidy, and how innovation would come in and how fast the prices would come down.”
Take off the training wheels? “Exactly,” Whisman says.
For more information about developments in the solar industry and the companies mentioned in this article, contact:
Illustration by nattavut at Free Digital Photos.net