Venture capital (VC) investment in the wind sector for Q3 2012 was up more than threefold, from three deals and $17 million in Q2 to six deals and $57 million, according to the newest report from Mercom Capital Group LLC. But those numbers really only make sense when compared to the fact that Q1 2012 saw twelve VC deals for $240 million, Q3 2011 saw seven deals for $284 million, and no other quarters in the last three years came close to those two.
Merger and acquisition (M&A) activity in the wind sector dropped in Q3 2012, falling from Q2’s $93 million to $53 million. The Q3 number came from eleven deals, whereas the larger Q2 number came from only five deals. But that dropoff was of no real significance compared to this: Q2 2011 M&A activity was at five deals for $678 million, Q3 2011 saw four deals for $744 million and Q1 2012 saw eleven deals for $872 million. The point: The last two quarters were drastically unimpressive compared to three of the four quarters that preceded them.
Large-scale wind project funding in Q3 2012 was at $1.1 billion, covering eleven deals. The top five on the projects list were in Morocco, Turkey, India, Taiwan and Mongolia. The other six were in Mexico, the U.S., Croatia, Brazil, the U.K., and the U.S.
The numbers reveal the damage already done since the U.S. Congress failed to extend the wind industry’s vital 2.2 cents per kilowatt-hour production tax credit (PTC).
They show, first, the money is going to projects outside the U.S. because, without the PTC, developers are moving to foreign projects that come with subsidies from their host countries.
Congressional insiders have told GTM that there is a high level of confidence there will be legislative action on the PTC after the November election. But wind projects take one year to two years to plan, and wind turbine manufacturing requires twelve months to eighteen months to ramp up.
The decision of Congress not to extend the PTC’s December 31 expiration has already, in the judgment of wind industry watchers, made 2013 a lost year. Announced layoffs are already estimated at more than 10,000, plants are shuttered or idled across the country, and supply chain manufacturers have shifted to other sectors.
Congress instituted a three-year PTC in 2009 as part of the Recovery Act. VC investment in the sector rose with that certainty. After the 2010 midterm election, when conservatives captured the House of Representatives, many saw that further extension of the PTC would be compromised.
Developers reprioritized their activities to finish projects by the end of 2012 because installations in production before the deadline would continue earning the PTC for ten years. VCs, realizing that wind supported by the PTC had in many places become cost-competitive with the cheapest fossil fuels, reprioritized investments to back them while the subsidy was available. And while money was coming into the sector, M&A wheeling and dealing went on.
New installed capacity for 2012 will spike as a result of the frenetic activity. But even if Congress extends the PTC after the election, VCs likely will not come back into the U.S. market until the industry’s foundation can be rebuilt. There may be some U.S. M&A activity as the result of consolidation, but it probably won’t involve impressive numbers.
Most observers expect the bulk of the money that goes into wind in 2013 to be invested in emerging economies.
That’s what the numbers say.
BrightSource Energy, a concentrating solar thermal technology firm, just announced that it raised more than $80 million in equity financing, bringing its total equity financing to more than $615 million.
The funding was led by existing investors Alstom and VantagePoint Capital Partners, along with DFJ, CalSTRS, DBL Investors, Goldman Sachs, Chevron Technology Ventures and BP Ventures, et al. No new investors were added in this round.
In April of this year, BrightSource pulled its IPO registration statement with the SEC, almost a year after registering, claiming that "the continued market and economic volatility are not optimal conditions for an IPO." Rumors were rampant in the days before withdrawing the IPO that the company was having trouble making its book as it sought to raise up to $182.5 million in its initial public offering.
Existing investors are keeping the company going and construction at the flagship Ivanpah project is continuing full speed ahead.
A release from the company has the firm expanding "geographic partnerships to build solar thermal power plants in India and Australia."
Stephan Dolezalek, Managing Director at VantagePoint, wrote in a release,“With its Ivanpah plant nearing completion, BrightSource is demonstrating the important role that large-scale solar thermal power will play in providing clean, cost-effective and reliable power to the American grid."
BrightSource is in the process of building the 377-megawatt Ivanpah solar project in partnership with NRG Energy and Google. The next two projects on deck for BrightSource are the 500-megawatt Rio Mesa and 500-megawatt Hidden Hills projects, currently in the permitting process with the California Energy Commission.
Ivanpah is co-owned by NRG Energy, Google, Bechtel Corporation and BrightSource. The project was permitted by the Bureau of Land Management (BLM) for development on federal lands in Ivanpah Dry Lake, California, just adjacent to the Nevada border.
Looking out from the top of Ivanpah Unit One, past Unit Two to Unit Three, two miles away:
Ivanpah will be the biggest concentrating solar power facility in the world when it is fully on-line at the end of 2013. It will use a solar power tower technology designed by BrightSource founder Arnold Goldman, who was the driving force in the development of the first solar power plants in California in the late 1980s and early 1990s.
The tower top, lined with thin water pipes
Looking down on the air cooling structure from the top of the Unit One tower
Bechtel is heading up the engineering, procurement and construction (EPC) of three adjacent towers, which will send a total of 370 megawatts to the California grid for Pacific Gas and Electric (PG&E) and Southern California Edison (SCE).
The project is backed by a $1.63 billion DOE loan guarantee, but the per kilowatt-hour prices contracted in the PG&E and SCE PPAs are confidential. BSE estimates the global solar power plant market will exceed $200 billion by 2020.
The U.S. Solar Market Insight Conference is next week and looks likely to sell out, as it did last year. We're bringing you profiles of a few of the scores of solar industry executives speaking at the event in to be held in San Francisco October 29-30.
Raj Agrawal, Head of Infrastructure Business, North America, Kohlberg Kravis Roberts, will be speaking on the "Project Finance in a Post-1603 World" panel on day one of the event along with Brian Matthay, VP at Wells Fargo and Yuri Horwitz, the CEO of Sol Systems, with moderation by GTM Research Senior Analyst Shyam Mehta.
We spoke to Agrawal today and asked him to weigh in on KKR's viewpoint on solar projects and the future of financing solar and renewables in an uncertain U.S. market.
The infrastructure business at KKR was set up to allow the investment firm to pursue "terrific opportunities" that couldn't be pursued as a typical private equity investor. These "terrific" investments, such as regulated interstate pipelines (or solar farms), offer 11 percent or 12 percent return on equity and are "very low risk," but the returns are lower than typical private equity returns.
"We always wanted to invest in these lower-risk opportunities. It struck us that we ought to have a business to pursue these lower-risk projects that our investors find attractive."
"Now we have an appropriate pool of capital," said Agrawal.
Since the establishment of that pool of capital, KKR has made six infrastructure investments, three in renewable energy (of which one is in the U.S.). KKR, along with Google, purchased an 88-megawatt portfolio of solar projects developed by Recurrent Energy for the Sacramento Municipal Utility District (SMUD) with equity from SunTap Energy, a new venture formed by KKR to invest in solar projects in the U.S.
"The sun is highly predictable. Solar panels are predictable. And power production is predictable in a fixed-price contract," said Agrawal, adding, "This is the epitome of a low-risk, high-visibility investment."
As far as the future of solar investment, Agrawal is optimistic, but notes that "the absence of tax grants make the investments less economical" along with lower power prices and the "less pressing needs of utilities" as RPS numbers start to get met. He adds, "The scale of the industry doesn't yet exist for REITs or MLPs as a panacea" for the solar asset class.
Nevertheless, he adds, "We are long-term believers in the growth of this market."
Hear more from private equity investors like KKR's Agrawal next week at GTM's USSMI solar event.
The U.S. Solar Market Insight Conference presents data, analysis and expert forecasting on the state of the solar market in the U.S. This is the only event exclusively underpinned by the Solar Market Insight report series produced by GTM Research and the Solar Energy Industries Association.
Here's the full speaker list.
Hope to see you next week in San Francisco.
For most administrators of low-income housing programs in large cities, sustainability goals are not always on the top of the priority list.
But every dollar matters, and the appeal of energy savings cannot be overstated. For housing authorities, which manage millions of square feet of space, there is a critical need to slash energy costs without spending a lot upfront for retrofits that may not offer a fast enough payback.
The public housing authority market has been a rich source of clients for the six-year-old company, which has been selling its software for two years. There are about 2 million multi-family buildings in the U.S., which comprise about 30 million units. Many of those, especially in the Northeast, are old building stock that is often performing particularly poorly. Although WegoWise works with many housing authorities, it also works with the private and institutional sectors.
Massachusetts’ Low-Income Energy Affordability Network, or LEAN, has been using WegoWise to monitor and benchmark water and energy use at more than 45,000 apartment units. By comparing usage, WegoWise has identified which buildings would benefit the most from retrofits.
“WegoWise has been instrumental to how we operate,” John Wells, co-chair of LEAN, said in a statement. “Now that we can capture total energy/water usage for multifamily properties, we can be far more strategic about our energy-efficiency retrofits and generate cost reductions. By identifying large energy users, we are able to allocate our resources to have the greatest overall impact for low-income residents who need it the most.”
Most of the retrofits involve lighting upgrades and appliance upgrades, mostly new refrigerators. Some of the deeper savings come from buildings that can justify an HVAC upgrade or air ceiling insulation retrofit, according to Dan Teague of WegoWise.
“Since our platform has helped to identify more than $137 million in savings over the past year alone, they could confidently invest more,” said Barun Singh, founder and CTO of WegoWise, in a statement.
The potential for millions in savings is also just the beginning. Mass Save’s Low-Income Multifamily Program anticipates $500 million in lifetime savings and will use reporting from WegoWise to inform the energy efficiency plan for the state for 2013-2015.
The savings being delivered are the largest to date for WegoWise. The company is mostly in the multi-family space, but it knows its results could be broadly applicable. Earlier this year, WegoWise started working with USGBC to develop a way for homes to earn LEED points, and there could be partnerships with large building management systems in the future.
A123 and Altairnano
If anybody understands what really happened to A123 (NASDAQ:AONE), the once heralded and now bankrupt advanced lithium-ion battery maker, it is the energy mavens at the third annual Advanced Energy Solutions symposium put on by energy storage consultant FullPower, Inc.
"They got way ahead of the market they needed to sell into,” Howard Battery Consulting’s W.F. Howard, an authority on lithium-ion batteries, said. “It was not the lithium-ion technology, it was the business part.”
There may have been another factor working against A123, a dean of energy storage who asked not to be named observed to GTM on the conference sidelines. “The American auto industry chose energy density over safety and lifecycle capacity.” Companies with bigger backing and bigger names won contracts, he said, despite the fact that their batteries are not as safe or as durable.
Energy storage is always, he explained, a choice between power, energy, lifecycle capacity and cost. New companies like A123 and Altairnano (FRA:AWVN) target qualities that will raise brand bankability. Battery industry majors like LG Chem (PINK:LGCLF) and Panasonic (NYSE:PC) produce batteries that store more energy, even at the expense of safety and durability, this widely respected academic and battery expert insisted. But they were chosen over A123 and Altairnano by the world’s vehicle makers because they are already considered bankable.
“A123 was killed off by their own success,” said FullPower Principal Richard Smith. “Being the most successful supplier of batteries for electric vehicles at the wrong economic time cost them.”
Manufacturing, Smith explained, is a capital-intensive business, and ongoing work ties it up, Smith said, speaking from his own experience with Maxwell Technologies and other automotive suppliers.
“A123 had about twice the forecast order from the automotive industry than what was finally purchased. To get those orders, you have to show them you have factory capacity and supplier contracts to produce that volume.” But, Smith said, “all their contracts contain clauses which allow them to shape their order up or down, depending on the actual run rate of their factory. A123 probably would have had a substantial amount of factory capacity and work in progress. And then the orders were cut back, maybe as much as 30 percent to 50 percent.”
As an energy storage industry consultant with an ample roster of clients, Smith said, he hears things. “I have no indication A123 had any technical issues.”
There may have been cost issues, Smith noted. “Their cost curve would have been based on a volume of production. The automotive industry tells you they will buy 50,000 units. If it turns out to be 25,000, they very seldom back up their cost curve very much. So the chances of having any cost relief are slim. Without that volume, A123 could not achieve a positive cash flow.” And it would have become a vicious cycle if A123’s suppliers raised their prices because they were purchasing smaller volumes, he added.
Johnson Controls, Inc. (JCI) purchased the auto assets of A123 for $125 million. “JCI got a twenty cents on the dollar deal,” Smith said. “It is the largest battery manufacturer in the world. Nobody hears much about them because they just pump out 30 million to 40 million lead acid batteries a year and put them in cars all over the world. They really understand the battery business.”
It's not often that energy storage and liquid metal batteries get airtime on Comedy Central.
But here's MIT professor Don Sadoway holding his own with conservative firebrand Stephen Colbert of The Colbert Report on the potential of grid-scale batteries to balance out intermittent renewables and lower our dependence on foreign oil.
We've covered Sadoway's liquid metal battery technology and interviewed the professor about the potential of his invention. The technology has been spun out of MIT and received venture funding from Bill Gates, Khosla Ventures, and French energy giant Total.
The firm's battery uses molten antimony and molten magnesium separated by an electrolyte. Sadoway claims that the all-liquid configuration is self-assembling and is expected to be scalable at low cost.
Energy storage at grid scale remains a challenging target. In addition to cost, technology, and reliability hurdles, there are regulatory and utility structures which are not yet open to the concept of large-scale energy storage. But a little publicity can't hurt. Here's the video:
For the past few years, consumer education and consumer engagement has been a rallying cry of forward-looking utilities and the smart grid industry.
The rallying cry so far has not been answered.
A new report by the Smart Grid Consumer Collaborative has found many of the same answers to questions about smart grid that it found a year ago. Primarily, just over half of all consumers had never heard of smart grid. For the 20 percent who have heard of the term, they don’t really know what it means.
The average person can hardly be faulted, since even industry insiders have varying "smart grid" definitions, and many hate the term all together.
The survey from SGCC and a recent report from Accenture offer some valuable insights, however, on how to garner some good will and engage with customers. It’s called the internet.
For most utility customers, there has been a “dramatic move” toward low-touch, high-tech channels of interaction such as e-mail or web portals, according to Accenture’s report, Actionable Insights for the New Energy Consumer.
“Some of this is just about fundamentals,” said Greg Guthridge, global managing director for Accenture Retail and Business Services for Utilities. He noted that more than 65 percent of customers would rather use mobile or online services for the bulk of basic services. The onus is on utilities to create sophisticated yet easy-to-use interfaces to deliver those services.
- Receiving and paying bills were the most popular services customers wanted online (70 percent).
- About 52 percent also wanted to learn about new home energy services and new energy packages online.
- Just over 50 percent would like to get outage information or make changes to an address via email, social media or mobile apps.
- When it comes to high-touch channels, defined as in-person, telephone or online chat, only the problem of resolving billing issues was a service people actually want a real person for (60 percent). Signing up for new services saw 41 percent of people saying they’d rather engage with a person.
The findings highlight that customers want to do most things online, but when it comes to learning or actually pulling the trigger and making a purchase, people want to talk to someone.
Although some people, primarily the older generation, prefer paper bills and picking up the phone, the SGCC survey found that 82 percent have a wireless network in the home, and half have at least one social media account. One of the most critical findings is that about one-third of the respondents to the SGCC survey found that they will use social media in the future to look for new ways to manage energy or get energy efficiency tips.
Some utilities and vendors are already responding to this trend. Reliant has a dedicated social media team (and we’re not just talking about the office intern). Opower has a Facebook app that anyone can use, but it works best if your utility is a client of Opower’s. Lucid has long tied its energy management dashboard to social media platforms. Increasingly, utilities are using Twitter and Facebook to update customers during outages.
Social media use will have to become commonplace, rather than reactionary, for utilities -- especially if they want to build customer interest for smart grid projects. “These technologies continue to be off the public’s radar screen to a surprising degree,” the SGCC said in its findings.
Now is the time to get on board with serious, focused social media projects. In 2010, Accenture found just 1 percent of customers opted to use social media to get customized advice on energy management programs. Now that figure is up to 30 percent, and it doubles for emerging economies, such as Brazil, China, South Korea and South Africa.
If utilities don’t craft programs now, customers will go elsewhere, which they have already started to do in the U.S., where customers can go to Best Buy, Lowe’s or a home security company to get energy management options for the home.
“There continues to be a real need for consumer education around smart grid,” Patty Durand, executive director of SGCC, said in a statement. “The current low levels of public awareness on this issue represent both a challenge and an opportunity, but they must be acted upon.”
Consumers (mostly) love bundled services, and about half of customers said they would be interested in home repair services or telecommunications services from their utility. For premium services, such as more renewables or personalized energy information, customers said they would pay more.
The battle is that it is also telecom providers who are beginning to offer those value-add energy services. For utilities, streamlining offerings and gaining trust will be key if they want to be a player in bundled services (this mostly pertains to deregulated markets, but could change with regulatory shifts in regulated markets). In the U.K., department stores are even getting into the power business.
“Trust is low,” said Guthridge, “but even so, customers still instinctively want to turn to their energy provider. But now they’re also turning to others.”
Someday, every lighting fixture, LED driver and fluorescent ballast will come with a ZigBee-interoperable radio inside it, if Daintree Networks has its way.
The Mountain View, Calif.-based networked lighting startup announced Tuesday that it’s open-sourcing its firmware designs, with the goal of getting LED driver and ballast manufacturers to embed its wireless controls in their off-the-shelf equipment. While the company didn’t name any partners in that effort, Jason Choong, vice president of product management, said in an interview that it includes major lighting suppliers in North America, as well as in Asia.
Daintree, which has a pretty impressive list of partners, including Philips and Sylvania Lighting Services, also announced two new partners on Tuesday: California Eastern Labs (CEL) and Silicon Labs, the company that bought ZigBee chipset maker Ember earlier this year.
As Daintree’s first “ControlScope Connected Enabler” members, the two wireless semiconductor companies will supply their chipsets and radios to Daintree partners interested in designing wireless connectivity into their devices, Choong said. Consider it an opening shot in expanding the smart lighting landscape from its current crop of one-off technology integrations by getting more and more lights to come with radios included, so to speak.
“Our drive here is to drive lower the cost of wireless luminaires,” Choong said, using the lighting industry term of art for lighting fixtures. “That’s going to happen when radios are built directly into drivers and ballasts.”
By contrast, the vast majority of “smart,” wirelessly networked lights today consist of two items, he said -- the driver or ballast that controls the light, and the wireless communications module that hooks it up to the network.
That’s how Daintree, along with networked lighting rivals like Adura, Redwood Systems, Digital Lumens, Enlighted and many others, have hooked up their projects so far. The results have been good -- projects have shown lighting efficiency gains from 50 percent or so for most buildings, and to up to 90 percent in buildings where energy is really being wasted.
But cutting the cost of an extra comms module out of the equation should cut about two-thirds of the cost of the extra gear lights that need to be networked, Choong said -- though he wouldn’t provide specific dollar figures on the price-per-driver or ballast that Daintree might be targeting with its would-be manufacturing partners. Other smart lighting startups, including Adura, have told me that they’re working on similar arrangements with manufacturers, though once again, specific partnership announcements are hard to come by.
What about open standards? Daintree’s system is compatible with ZigBee’s home and commercial building specifications. That means that, theoretically, lighting modules designed with Daintree, Silicon Labs and CEL’s combination of technology should be able to support other vendors that have also built to the ZigBee specification, he added.
At the same time, Daintree’s ControlScope platform includes a lot of support for the complicated task of installing, commissioning and managing thousands of individual lights (nodes) in a network that can span multiple buildings, he noted. That’s an important differentiator from the simple “screw it in and turn it on,” Wi-Fi-enabled residential smart lighting systems being rolled out by the likes of GreenWave Reality and NXP, or Google and Lighting Sciences.
The big question, of course, is whether or not driver and ballast manufacturers pick up on Daintree’s offer -- or the offers that can be presumed to be on hand from its various competitors. The market for networked lighting is still very small, with only about one in ten buildings having anything like it installed today.
That means that there’s a lot of room for growth -- but also for change -- in the technologies chosen to supply the market. Stay tuned, and if you’ve got networked lights in your building, I’d be curious to know what network they’re running on.
The U.S. Navy has a new 13.78-megawatt solar power plant in the high desert of California -- the service’s biggest solar project yet -- and it didn’t even have to pay for it.
Like tens of thousands of California homeowners, the Navy went the power purchase agreement route in bringing solar to the Naval Air Weapons Station at China Lake, 120 miles northeast of Los Angeles. The system, which was dedicated last week, is the first federal agency project to be financed through a 20-year term solar PPA, according to developer SunPower.
Being able to do a 20-year PPA instead of one lasting ten years, can apparently make a big difference, allowing the Navy to buy the solar power produced on its land at “up to 30 percent below the rate available through shorter duration” arrangements. The array is expected to meet 30 percent of China Lake’s annual energy load, reducing the Navy’s energy costs -- that’s your cost, Mr. and Ms. Taxpayer -- by a projected $13 million over the full 20-year span. (Of course, some of that savings will likely be lost to the government as the system developers take advantage of incentives for solar.)
“This 20-year PPA will significantly lower long-term electricity costs at China Lake, and can be used as a template for additional large-scale federal solar projects,” SunPower executive Howard Wenger said in a statement.
The Army is embracing similarly lengthy power purchase agreements. This past summer, it put out a “Multiple-Award Task Order Request for Proposal,” dangling up to $7 billion to purchase 2.1 million megawatt-hours of power sourced from solar and other alternative-energy technologies.
Meanwhile, back in January, the U.S. Defense Department’s Office of Installations and Environment concluded that some 25,000 acres on military land were “suitable” for solar development, and all told, the study reported that 7,000 megawatts of solar energy capacity was technically and economically feasible. China Lake was pegged for 6,777 acres of possible development. That report was followed in August by an agreement between the Interior and Defense departments to work together to target “significant proven or potential solar, wind, geothermal and biomass resources on or in the vicinity of DOD installations throughout the West.”
The China Lake system now up and running uses SunPower’s Oasis Power Plant product, which integrates the SunPower T0 Tracker with SunPower’s high-efficiency panels. In a Sept. 30, 2011 announcement of new military contracts, the Department of Defense put the 20-year cost to the Navy at slightly more than $100 million. An affiliate of Metropolitan Life, the insurance company, actually owns the power plant, although SunPower will operate and maintain it.
Eric Wesoff, Editor-in-Chief of Greentech Media’s flagship website, www.greentechmedia.com, was named the top-ranking U.S. influencer within the energy industry among journalists by Text100, a communications agency. Along with guiding the editorial vision for Greentech Media, Wesoff covers a range of energy topics including solar energy, the smart grid, energy efficiency, and other emerging green technologies.
“His coverage of the Solyndra bankruptcy, one of the most impactful events in the industry, along with his broad range of coverage on renewable energy sources and electric vehicles, made him the most prominent journalist for energy issues,” Text100 explained. According to the report, "The 2012 Energy Digital Index was designed to help us to better understand the circle of influence within the energy sector."
Other journalists on the influencer list included:
- Jonathan Fahey, The Associated Press
- Andrew Restuccia, Politico
- Wendy Koch, USA Today
- David Roberts, Grist
- Thomas Friedman, The New York Times
- Cassandra Sweet, Dow Jones Newswires and The Wall Street Journal
- Dina Capiello, The Associated Press
- Marc Gunther, Fortune
- Ryan Tracy, Dow Jones Newswires and The Wall Street Journal
“I’m flattered to be part of this group of journalists, and I’m proud that the coverage that I’ve provided has been influential in the online conversation about energy,” said Wesoff. “Greentech Media’s driving goal is to be the go-to source for the best information about the renewable energy industry, and this is a great indicator that we’ve done that.”
Wesoff will be covering Greentech Media's U.S. Solar Market Insight Conference next week in San Francisco, CA. More information is available here: www.solarmarketinsight.com.
To download the full report, visit Text100 Digital Index.
Read the full press release here.
This piece is from the author of GTM Research's new smart grid report, Distribution Automation Communication Networks: Strategies and Market Outlook, 2012-2016, offering insights and perspectives on the U.S. market for the communications networks that enable distribution automation.
Utilities now looking to automate their distribution grids ought not repeat the mistakes made by some AMI deployments by designing it as just one more hardware overlay. Instead, future programs and especially communications should be designed within the context of a network using state-of-the-art information and data management technologies. That’s one of the key messages in the recent GTM Research report Distribution Automation Communication Networks: Strategies and Market Outlook, 2012-2016. In fact, the report finds that ”mplementing and obtaining the benefits of DA programs requires access to new communications networks that do not now exist within most distribution grids. In addition, the design, engineering, implementation and operation of these systems require intellectual resources and competencies that are usually associated with IT operations, not electric utilities.”
Thus far, we’ve seen a number of situations where AMI systems have been installed by utilities using purpose-built communications systems, systems that are not going to be adequate to support DA and other more sophisticated technologies over the long term.
Last week, a LinkedIn discussion group had a topic listed as “The Case Against the ‘Smart Grid’.” What had been posted for comment was a YouTube presentation by Bruce Nordman at Lawrence Berkeley Laboratory. Although three years old, the presentation makes a number of points that build upon the findings in the GTM Research report. One of Bruce’s arguments is that semantics are important because they frame the thinking behind system design. Defining the “smart grid” as encompassing everything from power plants to end-use devices drives thinking to a mix of networking concepts with hardware concepts.
Without a clear separation between the two, such thinking can distort network design and allow ancient control paradigms to flourish. This hardware-centric focus distracts attention from the real grid and limits the understanding of its broad potential. The focus ultimately was on building systems, but its observations were quite prescient when we look at what happened to AMI.
In many AMI systems deployed to date, the meter was regarded as the end-use device, which was sometimes connected to a home area network. AMI-unique communications were installed to periodically talk to the meter and deployed to meet the requirements of that metering system, most likely using the least-cost option. What the GTM report identifies -- and which Nordman amplifies -- is the fact that the distribution system constitutes one domain, the home network another domain and the meter the interface between them. Further upstream in the grid, the distribution domain interfaces with a number of other domains that include substations, transmission, business operations, customer data and the overall enterprise network. Unfortunately, this longer-term perspective has been the exception rather than the rule in many programs.
It’s not hard to understand why we ended up with meter-centric “smart grid” programs. Meters are easy to describe, customers can see them and billions were paid out to implement meter programs. Presumably that’s one of the reasons why the Department of Energy chose to invest billions in meter programs, rather than to gain the larger and more immediate returns from invisible distribution and transmission infrastructure automation investments. Nonetheless, this hardware focus distorted the transformation of the grid to a network and, because of its difficult business case, has made it harder in some regulatory jurisdictions to gain rate recognition of DA programs.
Regardless of whether or not a utility has an AMI network, the opportunity exists to design its next steps within the proper context and with the longer-term view. At present, that’s an IP-based networking system that connects the application and physical layers in a distributed, universally interoperable network. The GTM report noted as much in its recommendation that utilities adopt the OSI Layer model in network design. Key to the flow among layers and interoperability is the common layer: Internet Protocol, as shown in the figure below.
FIGURE: DA Communication Article Figure
Source: Distribution Automation Communication Networks (GTM Research)
As the report notes: “Internet Protocol (IP) networking frameworks are becoming the baseline for smart grid communication networks and are likely to be the only realistic path to achieving interoperability within the system.”
Generally, articles that go by the title “solar myths” are pro-solar polemics that seek to assuage the concerns of the layperson about the perceived disadvantages of adopting PV (see here and here for examples). Separate from these, but equally deserving of this unflattering moniker, are a number of oft-repeated claims that have proliferated through the solar industry over the years and whose truth is taken to be self-evident. A few of these require a reasonably nuanced explanation to unravel their illusory veracity, while others are just blatantly untrue. Below, we examine some prime offenders.
The Oil-Solar Myth
“With oil at $100/$20 per barrel, solar is headed for explosive growth/doomed.” How many times have we heard something of the sort from the mouths or keyboards of otherwise rational human beings? Yet, for all but a fraction of the world, oil is largely a transportation fuel, while solar is an electricity generation source. They don’t compete. Comparing crude oil prices to solar equities yields no correlation whatsoever outside that related to the overall market (so a positive relationship rather than a negative one). And as of 2010, oil-powered generation made up 1.1 percent of America’s electricity consumption.
The Myth of Grid Parity
The myth of grid parity goes thusly: one day, the cost of producing electricity from solar generation will fall to levels commensurate with that of fossil fuels. This moment will be a historical inflection point for solar demand. From then onward, deployment will proceed at an explosive, exponential pace for many years.
Forget the difficulty of defining the notion of parity with the grid, which makes it problematic enough to talk about meaningfully without providing a laundry list of assumptions (subsidized or unsubsidized? Wholesale or retail grid prices? Levelized cost or payback period?). The real problem with this neat, monolithic narrative lies with two embedded premises. The first is that the onset of grid parity is a relatively singular moment in time across the history of the world. In truth, the determining variables for any calculation of this sort -- insolation levels, subsidies, grid prices, financing structures -- vary so widely across geographies that convergence between solar energy costs and grid prices is likely to be decades apart in different regions of the world.
The second problematic premise is that levelized cost is the only barrier to widespread adoption. It doesn’t matter what the LCOE of a $1/W system in rural India is if there is no means to provide financing for the upfront system cost. It doesn’t matter how high grid prices are in Hawaii if there are major transmission bottlenecks preventing deployment.
For both these reasons, anyone expecting the standard “hockey stick” conception of grid parity to bear out is likely to be very disappointed. Instead, the long-term solar deployment curve will probably have more twists in it than a Christopher Nolan film. Simply put, “grid parity” isn’t an event in time; it is a concept, one that is sometimes useful, but mostly misleading.
The Myth of Co-Located Manufacturing
Imagine, if you will, a place where manufacturing and generation exist side by side. Where modules are deployed but a few miles from where they are produced, hot off the laminator and straight into the ground, and where shipping costs cease to exist. This is the concept of co-located manufacturing, and it has been touted time and time again.
Undeniably, it is a wonderful idea in theory. It has simplicity and a certain sentimental appeal, and allows for the creation of high-tech and construction jobs within the same zip code. No wonder, then, that as many politicians as businessmen have succumbed to its charm down the years.
But step back for a moment and ask yourself whether, local content requirements aside, it really makes sense. Solar module manufacturing ideally requires availability of high-tech workers and proximity to supply of key consumables (glass, encapsulant, etc). Solar generation requires abundant insolation and access to transmission. They have nothing in common. Optimizing the equation for one set of concerns will almost always mean compromising on the other.
The trouble doesn’t end there. From the perspective of the installation, why would you want to restrict yourself to a single supplier, when less expensive and equally robust products might be available from the market? Conversely, from the module plant’s point of view, the benefits of the installation as a captive sales channel cease to exist after the plant has been built, which in the case of a 50-megawatt facility built to serve a 50-megawatt installation, is one year and change.
None of this is rocket science. And yet we have seen several announcements of co-located manufacturing projects in recent years. Examples include Isofotón’s 50-megawatt plant in Ohio for Agile Energy’s 49.9-megawatt Turning Point farm, ENN’s tandem-junction plant to go along with a planned 700-megawatt project in Nevada and Nexolon’s $100 million facility as part of OCI Solar Power’s 410-megawatt project in Texas. It’s likely that the creation of permanent jobs was necessary to garner political support for these projects, which is where manufacturing comes into play.
My guess is that these firms are secretly hoping that when push comes to shove, they won’t have to build these plants. If there is one thing our recent report on the PV supply chain makes clear, the world definitely doesn’t need more manufacturing capacity right now.
Myth Until Proven Otherwise: Modules as a Commodity
Since 2009, we have heard in ever-growing volumes the words “modules” and “commodity” spoken of in the same breath. It seems a matter of consensus now, so often it is repeated: performance and reliability do not differ significantly from one producer to another, at least in the case of crystalline silicon modules. Consequently, all that matters when choosing between different vendors is price. Sales managers at module firms talk about the dreaded “booty call,” the time when a developer calls them for an eleventh-hour quote, interested only in whether they can beat a competing supplier’s price.
Certainly, there is certainly a growing perception in the market that modules are a commodity, and this has been reflected in recent module pricing dynamics. But perception is not reality, and I certainly don’t think it’s wise to look to the developer-installer community’s behavior as an indication of the truth of this matter. Prices have to be paid right now, while the risk of under-performance or failure may not become a reality until several years down the line. As the subprime mortgage crisis showed, it is human nature to prioritize short-term gain over longer-term risk. Most module buyers understand very little about the manufacturing process or the limitations of the standard certifications. Most bankability reports are paid for by the manufacturer, which raises questions as to their objectivity, and the correlation between a firm’s bankability “tier” and product quality is questionable as it is (see this GTM webinar for more on this). Finally, warranties provide little security in the case of a pure-play firm, whose continuing existence, especially in the current environment, cannot be taken for granted.
Only data on long-term warranty claim rates for different manufacturers will reveal a conclusive answer to this question, and that will take time. But for now, I think it’s wise to treat the solar commodity mantra as an unproven assertion. Until the verdict is in, assuming that product quality across the more than 300 active suppliers in the module space is more or less equal is at best naive. At worst, it is sheer folly.
Shyam Mehta is a Senior Analyst at GTM Research and the author of the just-published report Global PV Module Manufacturers 2013: Competitive Positioning, Consolidation and the China Factor.
The stark numbers in GTM Research’s Global PV Module Manufacturing 2013 report explain a trend in the power conversion and power electronics sectors that support PV.
The estimated 35 gigawatts per year of module oversupply forecast through 2015 means continued falling prices. Original equipment manufacturers (OEMs) that can find a way to compensate for the plummeting margins associated with that supply-demand imbalance may be able to escape the fate of the estimated 180 panel makers predicted to go broke or be acquired.
One way for manufacturers to compensate for falling margins is to incorporate more of the PV system into the modules they are making and selling.
“Every major module manufacturer is in some stage of contemplating or developing an AC module,” explained SolarBridge’s Craig Lawrence. “With more of the system, they can increase their revenues and increase their margins.”
An AC module is one that has power conversion electronics built into it to convert the direct current (DC) electricity coming from the panel into alternating current (AC) ready for transmission to consumers. The alternative is the standard solar system model which sends the panel’s DC current to a central inverter for conversion to AC current.
Lawrence said the SolarBridge microinverter business model is entirely based on partnerships with OEMs and began with SunPower (NASDAQ: SPWR) and VenQ Solar partnerships. SolarBridge now has agreements for its second generation technology with ET Solar, Mage Solar, Talesun, NESL, EOPLLY, SolarTec (TPE:3561) and AMD.
Non-disclosure agreements and pending negotiations prevented Lawrence from mentioning “tens of other OEMs” that are in “various stages of evaluation, certification or qualification” of SolarBridge technology. “We have a pipeline on the order of 40 to 50 module-makers at any given time,” Lawrence said.
“Our partnerships with module OEMs are an important part of our strategy,” leading microinverter maker Enphase Energy (NASDAQ:ENPH)’s Heather Kernahan said. Announced partners in Enphase’s AC Solutions Marketplace, she reported, are Phono Solar, Sharp (TYO:6753), Kyocera (NYSE:KYO), Hanwha SolarOne (NASDAQ:HSOL), and Schuco.
Tigo Energy’s Lisette Rauwendaal said her company has announced agreements with “a small, exclusive list of high-quality panel partners” that includes Trina Solar (NTSE:TSL), Hanwha Solar One, Upsolar, Astronergy, DelSolar (TPE:3599), Sunergy (PINK:SNEY), and Inventec. “We cannot provide additional information on partners who have not formally announced our collaboration yet,” Rauwendaal added. Tigo has, however, announced partnerships with junction box and combiner box manufacturers Shoals, Onamba, Bentek, and Amphenol, Rauwendaal said, and has also developed partnerships with KACO and Fronius, manufacturers of standard central inverters.
“We currently have a technology partnership in place with Canadian Solar (NASDAQ: CSIQ),” reported Enecsys’s Annie Wilson, to use the Enecsys Single Micro Inverter in Canadian Solar’s residential AC module. “We are also in discussions with numerous other panel manufacturers but unfortunately I’m not at liberty to release their names at the moment,” she added.
Module manufacturers are pursuing other power conversion technologies. DC optimizer SolarEdge recently added a partnership with utility-scale PV inverter manufacturer Woodward, Inc. (NASDAQ: WWD) to its growing list of OEM partnerships.
SolarEdge optimizers are built into modules’ junction boxes to efficiently prepare the DC for a central inverter. Solar module manufacturer and developer SOLON (ENTR:SOO1) is now marketing a Smart Module with the SolarEdge technology in Europe, and Upsolar is expected to bring that type of module to the U.S. market in early 2013.
In addition, LDK (NYSE:LDK), JA Solar (NASDAQ:JASO), and Phono, SolarEdge reported, “are at various stages of qualification” and “Trina, Yingli (NYSE:YGE), Hanwha (NASDAQ:HSOL), and Tianwei (SHA:600550) are conducting engineering studies” of modules with SolarEdge optimizers.
SolarEdge also makes an optimizer for Zep (NYSE:ZEP) framed modules that can be factory- or field-installed, making it available to the rapidly growing list of Zep partners (Trina, Hanwha, Eco-Kinetics, Sharp (TYO:6753), ATSolar (ETR:SFX), centrosolar (ETR:C3O), Upsolar and Yingli).
Power conversion device manufacturer Ampt recently announced a High Definition (HD) PV Alliance that includes Inverter manufacturers KACO New Energy, REFUsol and LTI REEnergy, junction box makers Shoals Technologies and Amphenol (NYSE: APH), solar module vendors Suniva, ZNShine, Upsolar and Eoplly, and monitoring service providers meteocontrol, Next Generation Energy, AlsoEnergy, and DECK Monitoring.
The Alliance members get access to Ampt’s proprietary power conversion technology. Ampt gets a place in the system architecture, and solar system builders can achieve potentially impressive cost savings.
“By ourselves, Ampt would be challenged to provide these cost savings,” acknowledged Ampt Sales and Marketing VP Evan Vogel.
Some of the pros and cons of AC modules with built-in microinverters and Smart Modules with built-in power conversion technology used with standard inverters are discussed here.
Smart grid VC investment took a big jump in the third quarter of 2012, reversing some pretty meager figures for the past few years. But the lion’s share of that jump in investment -- as well as a big chunk of the merger and acquisition activity in the third quarter -- was directed at startups with technology that goes in the home, rather than on the grid.
Those are some of the takeaways from Mercom Capital Group’s third-quarter smart grid funding report released Monday. Overall investment grew to $238 million in the third quarter of 2012, an impressive rise from the previous quarter’s $66 million and $62 million in the first quarter of this year. In fact, it comes close to matching the good old days of 2010, when smart grid startups brought in $305 million in the second quarter of 2010.
But more than half of that third-quarter boost was made up of Alarm.com’s $136 million round in July, aimed at expanding the startup’s whole-home connectivity technology suite, now installed in 1 million homes and counting. Alarm.com has a partnership with Verizon Wireless to link security cameras, remote-controlled door locks, motion-sensor lights and other such home devices in a wireless network connected to Verizon’s home automation management platform -- one of several telecommunications-driven efforts to colonize the home with smart devices.
Likewise, the vast majority of the third quarter’s $2.2 billion in M&A activity consisted of one deal: Blackstone Group’s $2 billion purchase of Vivint. The Provo, Utah-based home security and automation vendor has been branching into third-party-financed residential solar as well, and counted about 675,000 customers as of this summer.
These aren’t precisely smart grid businesses, although it’s possible for utilities to leverage home area networks like these for smart grid purposes in the future. Still, investments like these are no doubt welcome by the dozens of startups struggling to grow a market for home energy management and automation technologies, which still exist in only a tiny fraction of the homes out there. Residential solar in particular is something utilities would like to connect to, since it can either destabilize or support the grid, depending on how its intermittent power flows are managed.
Other smart grid fundings of note in the third quarter include $23.3 million for GridPoint, a startup we haven’t heard from for awhile. The Arlington, Va.-based company has raised about $270 million from investors and bought a string of companies in the vehicle-to-grid, home energy management and commercial energy efficiency lines. Then, in 2010, it replaced its founding CEO Peter Corsell and laid off staff amidst reports that the company hadn’t managed to capitalize on its sprawling portfolio.
Now, GridPoint CEO John Spirtos tells The Washington Post that the company has now focused squarely on building energy efficiency, which is believed to be its main source of ongoing business via its 2009 acquisition of ADMMicro. Last year, the company announced it was doing a 436-kilowatt solar installation in Texas as well.
Other third-quarter smart grid investments include $15 million for Viridity Energy from Mitsui; $14 million for Space-Time Insight from EnerTech, Novus Energy Partners and others; and €10 million ($12.6 million) for French wireless technology startup SIGFOX from Intel Capital, Partech Ventures and iXO Private Equity. The other major M&A deal reported by Mercom was the €150 million ($183 million) acquisition of smart grid and automation solutions provider ZIV Group by electrical equipment company Crompton Greaves.
There are big differences between the energy and environmental policies of President Obama and Mitt Romney, but one thing they both say they support is federally backed cleantech research.
We can only hope that whichever man wins on Nov. 6 will stick to that vow and be able to galvanize Congress to come through with the funding in the face of intense pressure to slash budgets, because in a a couple of years, the Solar Energy Research Center (SERC) at the Lawrence Berkeley National Laboratory (Berkeley Lab) will be ready to rock and roll.
Officials on Friday broke ground on the center, which will house research laboratories and the offices of the Joint Center for Artificial Photosynthesis (JCAP), a U.S. Department of Energy backed partnership between the Berkeley Lab and project lead Caltech.
The JCAP was announced back in 2010 as one of three “Energy Innovation Hubs” -- the other two are focused on energy efficient building design and nuclear energy modeling and simulation.
JCAP’s ambition is to figure out a way to leverage the energy of the sun to produce transportation fuels. Or, as the center itself puts it: “(T)o develop a manufacturable solar-fuels generator, made of earth abundant elements, that will use only sunlight, water, and carbon as inputs and robustly produce fuel from the sun ten times more efficiently than current crops.”
The $54 million SERC, which is expected to be completed by late 2014, is on the Berkeley Lab’s campus in the hills above UC Berkeley, but researchers from the university will also be housed there.
“Shoulder-to-shoulder interaction between scientists discovering new components and engineers developing prototypes is the key for accelerating the pace towards a solar fuel technology,” Berkeley Lab’s JCAP director, Heinz Frei, said in a statement.
Belectric, a Germany-based solar developer, financier, and construction firm with more than one gigawatt deployed has acquired the assets of bankrupt organic solar cell firm Konarka's German operations, Konarka Technologies GmbH.
The company would not disclose information on the price, terms of the deal, or IP involved. This deal involves a headcount of 16 people according to a company spokesperson. The new Belectric OPV group will be led by Konarka's former Director of European Operations and current CEO Dr. Ralph Pätzold.
Michael Belschak, CFO of Belectric, said in a statement, “We will use Power Plastic wherever conventional modules aren’t a suitable solution. Particularly in facade construction and in the automotive sector, the highly flexible and pliable material can be used in a variety of ways to save energy cost-effectively." In the same optimistic vein, Belschak said he is expecting the first revenue to be generated as early as the second half of 2013.
Organic solar cells (OSCs), sometimes referred to as third-generation solar after crystalline silicon and thin-film solar technology, can be divided into two categories: polymer-based (large molecules) and oligomer-based (small molecules). Konarka prints large molecule polymers.
Organic solar cells hold the promise of low-cost production, but their efficiencies tend to be very low. Heliatek had a recent world record for organic solar cells -- a champion cell on a small area with 10.7 percent efficiency. Long-term reliability and degradation issues remain with the technology, however. In 2009, GTM Research estimated worldwide capacity of OSCs to be just 5 megawatts.
Konarka's main business for the last decade has been fundraising: the firm has won more than $150M from Chevron, Good Energies, Draper Fisher Jurvetson, Konica Minolta, Total, NEA, The Massachusetts Green Energy Fund, Vanguard Ventures, Mackenzie Financial, Partech, and many more since 2001. Throw in at least $10 million more in DARPA, DOE, NSF, the U.S. Army, bank loans and credit lines in the last ten years.
Organic and dye-sensitized solar cell (DSSC) developers include Dyesol, Heliatek, Solarmer, Plextronics, EPFL, Mitsubishi, Peccell, and G24i. Dyesol, a publicly traded firm, builds equipment to manufacture DSSCs. Eight19 Limited raised $7 million from the Carbon Trust and Rhodia to develop plastic organic solar cells. Ireland's SolarPrint has eliminated the liquid part of DSSC and replaced it with nanomaterials and printing. This means that all of the active elements of SolarPrint's cells are applied through printing. Intel has done some research into OSCs, as well.
Image from NREL
These low efficiencies leave OSCs to niche applications such as portable electronics, automotive, and the promised-land market of building-integrated photovoltaics (BIPV), which includes windows and facades, as well as concrete and other building materials. There is no real BIPV market today in the true sense of BIPV. (See "The Realities of Building-Integrated PV.") There are also military applications.
One of the appeals of third-generation thin-film solar cells is that they can be manufactured using solution-based, low-temperature, roll-to-roll manufacturing methods, using conventional printing techniques on flexible substrates. That is the sirens' song that has kept the VC money flowing.
The solar market's consolidation is taking its toll on the PV inverter sector as well. Last week we reported on Satcon's bankruptcy -- but this challenging market is also hitting SMA, the global market leader in PV inverters. The company said in a statement that it anticipates a "severe decline in sales" and might post a loss in 2013, owing to subsidy cuts in solar and the weakness in the EU market. SMA will cut 450 employees and 600 temporary employees from the 5,500-employee firm. SMA had sales of $2.2 billion in 2011.
MJ Shiao of GTM Research notes, "The recent cuts by SMA and Power-One (Nasdaq:PWER) and bankruptcy filing for Satcon are an unfortunate consequence of an increasingly competitive inverter market, where the majority of growth is in large-scale power plants in low cost regions. While absolute installed capacity for the industry is up, selling prices and revenues are down, in part due to a swarm of new entrants willing to cut margins for market share. In the coming months, we expect similar news from other, otherwise bankable, inverter suppliers."
SMA added Lydia Sommer, previously with Siemens, as its new CFO.
Stem, a VC-funded energy optimization and energy storage firm, named Salim Khan as CEO. Most recently, Khan was was President and COO of Trilliant, a smart grid firm, and before that, Senior VP and GM of ABB’s Network Management business in the Americas. Former CEO and founder Brian Thompson is now EVP. Stem is a "cloud-based energy optimization solution that reduces peak electrical usage, lowers electrical bills, and eliminates the need for new generation facilities," according to the company. The 30-employee firm is armed with more than $10 million in VC funding from the Angeleno Group and Greener Capital. Thompson, Stem's founder, said that the company has created a storage system that can save the consumer energy and money without any behavioral changes or compromises for the business.
RockPort Capital, a VC firm investing in energy, mobility, and sustainability promoted Kevin Kopczynski to Partner. Kopczynski is on the board of RockPort’s solar portfolio company Enki Technologies.
Novatec named Andreas Wittke as CEO. Novatec's Fresnel collector uses parallel rows of flat mirrors and a linear receiver to superheat water above 500°C for power and industrial applications. Last year ABB acquired a 35 percent stake in the Germany-based firm.
Here's a take on green jobs from EPI, the Economic Policy Institute. (Click image to enlarge.)
Here's another take on green jobs from Diana Furchtgott-Roth of the Manhattan Institute, a former Chief Economist at the U.S. Department of Labor. She's the author of Regulating to Disaster: How Green Jobs Policies Are Damaging America's Economy.
Furchtgott-Roth takes issue with the way green jobs are defined. For example, a farmer growing corn for ethanol is a green job, but a farmer growing corn for food is just a farmer. She writes, "Green jobs are the most recent reappearance of a perennial bad idea -- government regulation of certain industries, designed to anoint winners and losers in the marketplace."
Ikea announced earlier this month that it will switch to selling only LED bulbs and lamps by 2016, becoming the first U.S. home furnishing retailer to do so.
The announcement is fitting, as LED lighting technology celebrates its 50th anniversary. In October 1962, a scientist at General Electric, Nick Holonyak, invented the first practical visible-spectrum light-emitting diode, commonly known as LED.
“Boy, those were the golden years,” Holonyak, now 83 years old, said in a statement. “When I went in, I didn’t realize all that we were going to do. As far as I am concerned, the modern LED starts at GE.”
But the real golden years for LED are just getting started. The past half-century has been a long, slow march for the lighting, which can consume up to 85 percent less energy than incandescent bulbs and can last twenty times longer.
“It’s been a long period of time but the acceleration of LED has really taken shape in the last five to eight years,” said John Strainic, head of consumer lighting business at GE Lighting. “We’ve moved from basic lighting systems like traffic signals to signage applications to refrigeration displays then into outdoor lighting.”
Currently, indoor lighting is still primarily commercial applications, rather than residential lighting. Strainic said, however, that the commercial indoor space, rather than parking lot or warehouse lighting, is moving even faster than many in the industry would have thought even one or two years ago. He credits the expanding market to efficiencies and dropping prices, as well as “application-ready systems."
It is the next five years, however, where things could really get interesting. Groom Energy and GTM Research predict that the LED enterprise lighting market will surpass $1 billion in annual revenue by 2014.
In his own office, Strainic said that an LED retrofit gave the room a more evenly distributed light and controllability that were not possible with fluorescents. Although controls are one of the inherent benefits of LEDs, “I think there’s a long way to go in terms of controllability,” said Strainic.
There is no word from Ikea if the move to all-LEDs will also come with selling wireless controls platforms for the LEDs, like the one just announced by GreenWave Reality.
Even without controls, when a large global retailer like Ikea commits to LEDs, it will help drive down the price to a point where consumers are more apt to make the switch. “LED is a light revolution. With household electricity bills continuing to rise rapidly and global energy consumption increasing, a small LED bulb can have a very big impact. It uses much less energy than a traditional bulb and brings a lot of home furnishing potential to the home. Building on our belief that everyone should be able to afford to live more sustainably at home, we will make sure our LED prices are the lowest on the market,” Steve Howard, Chief Sustainability Officer, Ikea Group, said in a statement. There was no detail of just how low those prices would be.
Groom Energy and GTM Research found that LED fixture prices have fallen 24 percent in the past two years, and the prices will continue to come down. For Ikea, it was price but also the maturation of the technology that sealed the deal to go all-LED. “It’s not just about energy-efficiency; it’s the whole functionality from color temperature through to strength and durability,” Howard said during a teleconference earlier this month. The company will also go all-LED in its stores, factories and distribution centers, according to Bloomberg.
It is the value-add of LEDs that is harder to quantify but could become an important driver in the commercial and residential market once people get to know them. “There’s real value in terms of employee morale,” Strainic said of LEDs that can be dimmed based on daylight harvesting or tailored to personal preferences.
For stores like Ikea, LEDs can change color to alter the look or feel of the entire store or certain displays. GE recently announced a partnership with USG Logix ceiling system to build LEDs directly into the ceiling. Redwood Systems, a startup that networks LEDs and other lighting systems, said that by year’s end it would deliver a “Room Tracker” tool to manage conference rooms, all running over the same network and control platform that it uses to manage the lights. For startups and lighting incumbents, new partnerships will become key to deliver LEDs to the masses.
In the next ten years, rethinking lighting design will also start to trickle down to the residential market, Strainic hypothesized. ”It’s a challenge to change traditional design approaches,” he said. Strainic envisioned a channel of light, rather than individual cans, in a great room of a home, that could allow architects to hide the lighting source while still providing ambient illumination. Networked lights at home can also serve as part of a home security system with timer settings that could be tweaked from a smart phone.
“We’re just getting started,” said Strainic. “There’s still a long way to go.”
The U.S. Solar Market Insight Conference is at the end of this month and looks likely to sell out, as it did last year. We're bringing you profiles of a few of the scores of solar industry executives speaking at the event in to be held in San Francisco October 29-30.
With the investment tax credit (ITC) diminishing, the U.S. solar market must innovate in financing structures. Today’s buzzwords range from REITs to MLPs, from crowdfunding to securitization. Arfin's session will examine and compare the possibilities for financing tomorrow’s PV projects.
We spoke to Arfin on Friday -- he's looking carefully at "the world beyond the ITC." He's also "looking at financial structures, incentives, and core economics and how we can weave these together to get to greater adoption and lower kilowatt-hour solar pricing."
It comes down to cost of capital. In Arfin's words, "There is a mismatch between the required returns by those who can invest and what the asset class provides. We want to broaden the base of people who can invest in solar projects."
"The ITC catalyzed an industry -- but it has its own issues." It can only attract a small pool of investors.
Arfin adds, "The idea is to expand the scope from just an oligarchy -- usually investment banks -- going down the scale to regional banks, pension funds, and eventually retail investors that would like this asset class, but right now, there's no easy way to invest."
David Arfin is a Special Advisor to the U.S. Department of Energy and CEO of First Energy Finance, LLC. Arfin invented SolarCity's SolarLease, the first-of-its-kind solar financing program that enabled over 25,000 homeowners, commercial and government customers to adopt solar power, save money, and not have to make a large upfront payment. In November 2009, SolarLease was named by Scientific America as the first of twenty world-changing ideas to build a cleaner, healthier and smarter world. Arfin also received the first-ever Innovation in PV Financing Award from the SEIA. Prior to SolarCity, David was co-founder and CEO of GlooLabs, (acquired by Cisco Systems), and was founder and CEO of CLE Group (acquired by Practising Law Institute).
Arfin serves on the Board of Directors of an energy efficiency software company (WattzOn) and a progressive payment platform for bringing clean energy to under-electrified communities in India (Simpa Networks).
The U.S. Solar Market Insight Conference presents data, analysis and expert forecasting on the state of the solar market in the U.S. This is the only event exclusively underpinned by the Solar Market Insight report series produced by GTM Research and the Solar Energy Industries Association.
Here's the full speaker list.
Hope to see you next week in San Francisco.
What can you do with an LED light bulb that has its own internet address? And how much would you pay for it?
Those are some of the questions that GreenWave Reality and NXP Semiconductor are asking the $100 billion lighting market. On Monday, the two launched a new line of Wi-Fi-networked LED light bulbs, along with the Connected Lighting Solutions platform to run them.
GreenWave, a startup founded by ex-Cisco execs, has already started shipping the bulbs to European utility customers, including Seas-NVE in Denmark, Nuon in the Netherlands, and Fortum in Sweden. The new bulbs are also certified for sale in the United States, where a basic kit, containing a gateway device and four bulbs, along with a handheld remote, will cost about $200, GreenWave CEO Greg Memo said in a phone interview.
Individual bulbs run in the $20 to $30 range, Memo said -- a reasonable price, compared to the Energy Star-rated, fully dimmable LEDs that might be seen as competition on the market. In Europe, on the other hand, utilities have already been supplying NXP networking-embedded LEDs to key customers as part of their energy efficiency initiatives, he said. Monday’s announcement means they can now add GreenWave’s energy management platform to support them as well.
Before you dismiss this idea of a $30 networked light bulb as an expensive experiment, bear in mind two factors. First, the rise of the “Internet of Things” is pushing basic IP connectivity down to pacemakers, security webcams, smart thermostats and other devices at a pace that should cut costs dramatically in the years to come.
Second, there’s a new breed of IPv6-enabled mesh networking technology that’s allowing these devices to receive and pass along data to one another, which beefs up the topological factors (i.e., walls) that can cause trouble for low-power wireless networks. Standards involved in this new IPv6 mesh networking include 6LoWPAN, which is part of Cisco’s new smart grid wireless networking technology being adopted by partners like Itron, Elster and Alstom. Most of North America’s smart meters deployed to-date run on mesh networks that have essentially proprietary technologies for the physical communications layer -- that is, radios -- that carry their data. Another standard under development, IEEE 802.15.4g, is meant to standardize those technologies, with big participants including Silver Spring Networks, Elster, Itron and Toshiba’s Landis+Gyr.
Inside homes and buildings, on the other hand, low-power mesh technologies ZigBee and Z-Wave are now vying for dominance, though it’s hard to call the competition definitive at this point -- after all, the market is still in its infancy. But Wi-Fi is certainly part of that competition as well, with plenty of smart thermostat and home energy control devices offering Wi-Fi along with ZigBee, Z-Wave or other communications options. The Smart Energy 2.0 standard being developed in conjunction with the U.S. National Institute of Standards and Technology (NIST) will support Wi-Fi, ZigBee and powerline carrier HomePlug when it’s released next year -- if it comes in on schedule.
Of course, lights are great places to add wireless mesh nodes, since they’re likely to reach every part of the home or business they’re deployed in, Memo noted. There are a host of smart lighting networking startups like Adura, Daintree Networks, Redwood Systems, Digital Lumens and Enlighted, to name a few, that are seeking to take advantage of that fact as well.
Behind all the technology options, however, there’s the critical component of the user experience, he added. The holy grail of smart lighting is to build a light bulb that screws in, turns itself on, finds its local network and signs itself up for duty with GreenWave’s cloud-based software management platform.
But as any “smart home” technician will tell you, today’s in-home networking technologies are far from that simple to install and initialize. Reports of so-called “interoperable” devices that can’t find each other on the network, or can’t communicate once they're hooked up, are legion.
GreenWave and NXP aren’t the first to come up with the idea of a house full of IP-addressable smart light bulbs. Google and Lighting Sciences Group announced plans for a Wi-Fi-connected LED bulb to run over Google’s Android@Home platform, though we’ve seen little from the partners since then. NXP is believed to be the preferred supplier for that partnership as well.
But Memo said that he’s not aware of any other commercial offerings of the scale and scope of GreenWave and NXP’s new lighting solution. Controls options range from presets and schedules, to motion sensor and security card-triggered lighting, to daylight dimming, or dimming lights to respond to peak price emergencies, Memo said.
In fact, GreenWave has been testing its technology with such partners as Dong Energy and IBM in smart-grid-to-smart-home projects like Denmark’s Bornholm Island project, which links wind turbines, plug-in vehicles and smart home heating controls to balance power supply and demand. Last month, Sweden’s Fortum announced it was rolling out GreenWave’s home monitoring and energy management platform to its customers. Sweden’s deregulated market allows utilities to vie for customers, and adding nifty in-home energy controls could be a way to win over more of them, as well as to save energy.
The next test, of course, will come in the marketplace, as customers do or don’t buy in to the IP-addressable light bulb vision -- and as they start to prove out the savings that smart LEDs promise. In the meantime, NXP and GreenWave support ZigBee and Z-Wave as well as Wi-Fi, and are looking at high-efficiency fluorescent lights as well as LEDs as targets for control, Memo said. Let the smart lighting network propagate across a thousand ceilings.