Yesterday, the final ruling on solar panel trade tariffs came down from the Department of Commerce.
Subject to ITC approval in November, the final determination kept the same scope, lowered the tariffs for some vendors and raised the tariff slightly for Suntech. Trina's number went down compared to the preliminary numbers. CASE did the math and shared the following table.
Barclays, an investment bank, agreeing with the findings of GTM Research, noted:
- "Overall, we view the broad affirmation of the preliminary ruling by the U.S. DOC as in-line with expectations."
- "Despite the fact that the DOC's ruling is now finalized, we believe the 'trade war' cloud will continue to linger over the sector as both the EU / China investigation as well as China's response (i.e., its own investigation into U.S. / EU polysilicon suppliers) have yet to be completed."
- "Given that rates stayed broadly in-line (adjusting for rate changes and cash deposit requirements, both Trina Solar and Yingli are expected to pay less than what was originally stipulated) and the DOC did not agree to broaden the scope of the investigation (i.e., the rates only apply to solar cells manufactured in China), we see limited changes to various company strategies. Specifically, most companies in our coverage universe have begun to accrue costs associated with AD/CVD tariffs as well pursued means to circumvent the tariffs (i.e., cell assembly outside of China). Thus we believe the lack of an incrementally negative outcome will likely be viewed as a near-term positive for Chinese Solar names."
The Coalition for American Solar Manufacturing (CASM) "welcomed" parts of the U.S. Department of Commerce announcement, "but was very disappointed with other parts." The disappointment stems from Commerce "not altering its preliminary determination on the product scope, which covered PV cells produced or assembled into panels in China but not panels made from cells produced in third countries. SolarWorld’s initial, broader scope had covered all cells and panels produced in China. This decision, according to CASM, leaves a significant loophole in the final ruling as it allows Chinese manufacturers to potentially avoid the duties by using non-Chinese cells in its solar panels." SolarWorld has signaled that it intends to block the "evasive" measures taken by the Chinese, according to Bloomberg.
According to Platts, "eight members of Congress on Thursday urged the U.S. Department of Commerce to close a loophole in its tariffs on Chinese solar panels that allows Chinese manufacturers to skirt the penalties by simply outsourcing the production of photovoltaic cells." Sen. Jeff Merkley, a Democrat from Oregon, where SolarWorld is based, said, "I fear that the action does not go far enough in addressing the loophole allowing Chinese companies to duck the tariff by moving a small part of the operation overseas," adding, "We need to close that loophole and ensure that American workers and businesses are playing on a level field," as quoted in the Portland Tribune.
Yingli Green Energy (NYSE: YGE) would be subject to an anti-dumping tariff of 15.42% (after the required reduction in the rate to avoid double counting of anti-subsidy tariffs), and an anti-subsidy tariff of 15.24%. These rates are lower than what was proposed in the preliminary decision. "Throughout this entire proceeding, we have defended ourselves and the U.S. solar industry and we are grateful to our loyal customers, suppliers, partners and their employees who have united in our defense," said Robert Petrina, Managing Director of Yingli Green Energy Americas. "We are looking forward to getting back to our daily business, focusing on innovation and outstanding customer support."
Tom Gutierrez, CEO of GT Advanced Technologies, said, "We are concerned this ruling will have a negative effect on the U.S. solar industry. In our view, the tariffs do nothing but threaten to spark a solar trade war with China, a key U.S. economic partner. These sanctions will only make it more difficult for U.S. entrepreneurial companies like GT to export solar products abroad and will ultimately result in a loss of American jobs."
Trina Solar Limited (NYSE: TSL) received a combined effective net rate tariff of 23.75 percent, comprised of AD duties of 18.32 percent and CVD duties of 15.97 percent, of which an export subsidy of 10.54 percent is subtracted from the AD duties calculation to avoid double application. Trina Solar continues to actively defend its position before the International Trade Commission ("ITC"), which in November of 2012 is expected to make separate determinations of economic injury as well as critical circumstances before the AD/CVD duties can be imposed. "While we disagree with the Department of Commerce's conclusions in this case, we will abide by their decision and look forward to the ITC's final ruling on this issue in November," said Jifan Gao, Chairman and Chief Executive Officer of Trina Solar.
Canadian Solar (Nasdaq: CSIQ), received a ruling of anti-dumping duties (AD) of 15.42% and countervailing duties (CVD) of 15.24% on c-Si PV cells made by Canadian Solar in China. The DOC also confirmed the scope of the trade investigation was limited to silicon photovoltaic cells made in China whether or not they are assembled into modules, and upheld its opinion on critical circumstances which imposes retroactive CVD/AD up to 90 days from the date of the preliminary determinations. "While we are disappointed with the DOC final determination, we will continue to defend our position with the ITC ahead of its final determination in November. We will also remain committed to the U.S. solar energy market, leveraging our global supply-chain to provide fairly priced solar energy solutions, to support our employees, partners and customer base," said Canadian Solar CEO Dr. Shawn Qu.
We've written on some of the collateral damage and unintended consequences caused by the ruling and critical circumstances to vendors building products such as small PV-powered lamps for the third world. It appears from the following passage that Commerce excepted those types of products:
"Also excluded from the scope of these investigations are crystalline silicon photovoltaic cells, not exceeding 10,000 mm2 in surface area, that are permanently integrated into a consumer good whose function is other than power generation and that consumes the electricity generated by the integrated crystalline silicon photovoltaic cell. Where more than one cell is permanently integrated into a consumer good, the surface area for purposes of this exclusion shall be the total combined surface area of all cells that are integrated into the consumer good."
And finally, Shayle Kann, the VP of Research at GTM Research, notes, "The ITC still has to make its final determination in November on the issue of injury. If the ITC determines that there was no injury, the whole case is thrown out. So whatever DOC determines today should still be considered somewhat preliminary until then."
The real question isn’t offshore wind’s potential.
A University of Delaware study estimated Eastern seaboard wind from Massachusetts to North Carolina to be big enough to build 330 gigawatts of installed generating capacity.
The U.S. may have, according to an NREL study, as much as 4,000 gigawatts. That would meet present U.S. electricity demand even if average capacity factor is only 25 percent -- and offshore wind’s average capacity factor is likely 40 percent.
The real question -- and it is being asked repeatedly at the American Wind Energy Association (AWEA) Offshore WindPower 2012 conference -- is how soon and how cost-competitively that potential can be developed.
Denmark built the first offshore project in 1991, and Europe now has a 4,000-plus-megawatt installed capacity, thirteen projects under construction (including the 1,000-megawatt London Array), and an estimated 150 gigawatts being planned. In 2010, Norway’s Statoil (NYSE:STO) launched its Hywind 2.3-megawatt floating turbine, and earlier this year Portugal christened a pair of two-megawatt floating turbines built by Seattle-based Principle Power.
China has 260 gigawatts of offshore capacity and wants to have 5,000 megawatts installed by 2015 and 30,000 megawatts by 2020. South Korea’s goal is to build a 2,500-megawatt installed offshore capacity by 2019. In the wake of the Fukushima disaster, Japan began making plans to ramp up its offshore capacity and recently launched a prototype floating turbine.
The U.S. has no offshore wind built and no official goal. There are about fifteen research, pilot and utility-scale projects planned or proposed, with a cumulative potential capacity of five to ten gigawatts.
Deepwater Wind may get the first turbines into Rhode Island’s seabed at its 30-megawatt Block Island Wind Farm. The first phases of the 468-megawatt Cape Wind project will not be far behind. But 500 megawatts by 2020 is a hollow achievement in light of what is possible.
Neither of those projects will have a practical levelized cost of electricity (LCOE). Only their benefits in meeting peak demand and state mandates justified state regulators’ approval of Block Island’s $0.24 per kilowatt-hour power purchase agreement (PPA) and Cape Wind’s $0.187 per kilowatt-hour PPA.
Creating a new industry is not quick, easy or inexpensive, said Offshore Wind Development Coalition President Jim Lanard. “But do policymakers want to create a new industry, support it initially with ratepayer subsidies, and create tens to hundreds of thousands of jobs?”
It would be a gamble, Lanard admitted. If policymakers choose to support offshore wind, the price could become competitive with economies of scale, and “if it doesn’t,” Lanard said, “shut it down. But if the price comes down, we have an industry.”
On display at the AWEA conclave are emerging innovations across the sector that, when given the opportunity to scale up, are expected to bring costs down.
Turbine manufacturers are building bigger turbines because that cuts installation costs by eliminating foundation and transmission infrastructure. Siemens (NYSE:SI) just put a six-megawatt turbine with the longest blades ever used into service. Vestas (CPH:VWS) recently announced it would scrap plans for a seven-megawatt turbine and focus instead on its eight-megawatt model.
Major turbine makers like GE (NYSE:GE) in the U.S. and Goldwind (HKG:2208) in China are streamlining their machines with more efficient drivetrains and better power electronics, because lower maintenance needs reduce O&M costs.
Along the supply chain, from nacelle to interconnection, builders are taking steps to cut costs by making their materials and processes more robust, efficient and on-time. A new partnership between venerable EPC specialist Bechtel and premier European transmission and interconnection wet worker Subsea 7 (PINK:SUBCY) will, Bechtel Renewables President Jim Ivany said, leverage his company’s unparalleled ability to oversee the quality and timely delivery of Subsea’s supply chain. The partnership, Ivany added, will soon announce new offshore undertakings.
The Atlantic Wind Development (AWD)-proposed Atlantic Wind Connection backbone transmission system, funded by a Google (NASDAQ:GOOG), Marubeni Corporation (TYO:8002), Bregal Energy and Elisa System Operator partnership, will, acknowledged AWD CEO Markian Melnyk, reduce developers’ capex, estimated in Europe to be 3 to 3.5 million euros per megawatt, and shift the cost burden, estimated at 150 to 180 euros per megawatt-hour, to utilities and ratepayers. But, Melnyk noted, grid operators like PJM are also beginning to see the benefits to their ratepayers from planning the systematic integration of offshore wind.
Finally, federal agencies and research institutions are partnering to drive standard-setting and risk-reducing initiatives. The DOI is streamlining permitting, the DOE is funding pilot projects and NREL has proposed a comprehensive certification procedure.
It adds up to a more bankable industry, Melnyk said, based not on a rush to build an impressive number of megawatts in the short term, but rather to facilitate a steady installed capacity growth over the next decade. It is growth, he said, that will reinforce policymakers’ willingness to commit, as Lanard had phrased it, to “create an industry.”
Interestingly, in the conference’s first two days, GTM has yet to sit in on a session or an interview where there was no mention of floating turbines. These behemoth wonders which just two years ago seemed like science fiction are now discussed by industry engineers as the logical and foreseeable extension of offshore wind turbine development.
But will any of these innovations bring the price of power to competitiveness, much less parity? That might be the fiction still remaining in the discussion.
In August, we reported on Brazil’s decision to switch from a universal smart metering mandate to more of an optional model requiring utilities to give smart meters only to new buildings and customers who asked for them.
Now we’ve got a forecast on just what the new mandate will mean for smart meter deployments in the country, and it isn’t pretty. According to the new report from Innovation Observatory, Brazil’s meter deployment will add up to about 27 million meters between now and 2030, placing it 11th on its list of top smart-metering countries.
That’s a big drop from the 65 million smart meters by 2020 that were forecast under the old, universal scheme. For companies such as Itron, Landis+Gyr, Elster, Echelon, Sensus, Silver Spring Networks, Trilliant and General Electric that have been investing in what they thought was going to be a Brazilian bonanza, the news was disheartening, to say the least.
Indeed, prior to the August decision Brazil Electricity Regulation Agency (ANEEL) to make smart meter deployment voluntary for existing customers, Brazil ranked fourth on the list of countries with the biggest smart meter plans, behind China, the U.S. and India. Now it’s behind Japan, Russia, Germany, France, UK, Spain and Turkey as well.
We’ve already seen other forecasts on Brazil’s reduced smart meter expectation, and how it impacts the country’s broader smart grid goals. Bloomberg predicted the new rules will drive about $670 million per year in smart meter projects, with about 4.5 million deployed between 2014 and 2017. Northeast Group reduced its 2012-2022 country smart grid market forecast to $27.7 billion, down from an original $36.6 billion, as a result of ANEEL’s decision. The figure shows both a marked reduction for the metering side of Brazil’s plans, as well as plenty of spending on other smart grid imperatives that haven’t necessarily been affected by the smart meter decision.
Indeed, smart grid vendors have plenty of work ahead in beefing up Brazil’s power sector, which faces high levels of energy theft and reliability problems, as well as pressure to bring host cities up to world-class standards for the 2014 World Cup and 2016 Summer Olympics. Rio de Janeiro, Brazilia, Sao Paolo and other major cities are deploying smart meters today, and utilities are also working on broader smart grid networking projects that span the country’s rural territories as well.
It is no secret that the crux of India’s power problems lies in supply shortages.
Power plants, many of them aging and many of them fueled by coal, cannot keep up with the country's upwardly mobile population. Even with soaring demand for air conditioning and televisions, nearly a third of the country’s 1.2-billion-strong population lives without power.
“India is at a crossroads,” said Rupendra Bhatnagar, head of industry business solutions for SAP India, which recently hosted an international team of journalists to show various opportunities -- and challenges -- unfolding across the subcontinent.
The power supply will need to quadruple by 2030 to more than 800,000 megawatts to support the increasing needs of businesses and homes. But simply building more energy supply is not the answer. India suffers from crippling losses, both technical and non-technical (read: theft). The national average for losses is close to 30 percent -- although it can be as high as 50 percent, with even some of the better utilities still over 15 percent. The U.S., by comparison, is at about 7 percent.
The problem of loss is exacerbated by the fact that no one even knows how the patterns of loss break down. In India, the term is "aggregate technical and commercial losses," or ATC. The utilities are not required to report detailed loss percentages, and everything -- from transmission and distribution loss to old-fashioned stealing -- is lumped together into the ATC figure. Information technology that would allow the utilities to measure loss, to better be able to manage it, seems like a logical starting point. Unlike other economies that are using smart grid technologies like volt/VAR optimization to increase distribution efficiency, India just needs any visibility before it moves forward.
But as with many other facets of a booming Indian society, regulators and services are simply treading water. “We’re also facing a problem of transformer overloads,” said Uttam Mane, chief general manager of IT for Maharashtra State Electricity Distribution Company (MSEDCL), which serves nearly 20 million customers in Maharashtra state. In many areas of the utility’s area, there is 16 hours a day of load shed. There is a mandate to have zero load shedding by December 2012 -- a potentially impossible task.
Software and smart grid technologies could pitch in to reduce the need for regular blackouts, however. A more granular view of what is happening on the grid is sorely needed. MSEDCL is installing meters at the transformer level to be able to better measure losses down the line. Demand response does not exist in India, but it is on the agenda of the India Smart Grid Forum.
“There’s talk in the ministry of power to bring in some of these technologies to make the grid more reliable,” said Bhatnagar, a conversation that has likely accelerated after the massive blackout in August.
For utilities, the technologies will likely be items that most western utilities take for granted – like SCADA systems and upgraded customer platforms. MSEDCL, for instance, placed an order for a SCADA system with Siemens earlier this year. Some IT companies, like homegrown giant Infosys, are already working on solutions to help utilities collect money more efficiently. Infosys has launched a “customer self-service” product for utilities to link billing platforms and customer management to mobile applications.
But true smart grids, with two-way, digital smart meters and intelligence on the grid, are not even on the horizon for most utilities. “If you have no electricity, [smart grid] is the furthest thing,” said Rahul Tongia, Independent Consultant and Advisor to Ministry of Power for Smart Grid Pilot Projects. “A rooftop solar panel is not what most Indians are clamoring for.”
But Indians, who often keep diesel generators handy for use during the country's regular blackouts, could be prime customers to respond to pricing signals. “They already arrange their life around electricity,” said Tongia. “Saving $1 is a big deal to an Indian.” He noted that any new meters being installed across the country are digital and upgradeable. “[What] utilities are working on is what capabilities they want to plan for, even if they don’t want to turn it all on.”
Unlike China, which is investing heavily in smart grid and upgraded infrastructure to meet the needs of its expanding economy, India has 78 different utilities, where as China’s State Grid Corporation controls more than 80 percent of the country’s electricity supply. India is also a democracy where decisions are less likely to be formulated then handed down from a more authoritative government.
In many ways, India has some of the same challenges as the U.S. Even though reliability is far higher in America, there are many utilities in both countries instead of a few state-owned entities. Regulations can barely keep up with the changing needs of the power sectors and are often not robust enough to encourage the investment and change needed. There is barely any real retail competition, according to Tongia, although generation and distribution has been decoupled in many states.
Even though smart grid technologies cannot solve, or even put a dent in, India’s power problems, it will be one part of the solution. An even more appealing market is energy efficiency, which would cost far less. Microgrids are also being tossed around as a solution for remote villages. Renewables will likely be only a small part of the solution in the near term, since India’s peak is in the evening and not during the day. Like the U.S., there are reports that India could dip its toes into offshore wind, although no projects have been announced.
“Everything will be on the table,” said Tongia. “Holistic views are what India will embark on.”
As smart metering deployments continue to grow, one of the distinguishing characteristics of projects has been the choice of AMI communications provider. Shipment information from the Q1 GTM Scott AMI Market Tracker shows Silver Spring Networks, Itron and Sensus dominating the AMI communications market. From the perspective of meter hardware, the market is controlled primarily by Landis+Gyr, GE, Itron, Sensus and Elster.
As noted in our previous report, The Smart Grid in Europe: 2012-2016, the radial structure of the North American electrical grid, as well as less stringent wireless communications standards, have made radio frequency (RF) communications the preferred choice in North America, in contrast to Europe, where power line carrier (PLC) is more ubiquitous. It comes as no surprise that the three vendors that have shipped the greatest number of communication cards, both cumulatively and in Q1 2012, have relied on wireless RF technology, with Silver Spring and Itron utilizing a mesh topology over public spectrum and Sensus employing a point-to-multipoint architecture on a licensed spectrum. PLC-based solutions have gained limited traction in the United States, with Aclara and Landis+Gyr accounting for the majority of the limited market, though Duke Energy had maintained a contract with Echelon until October 2011.
Cellular: A Supplement, Not Necessarily a Substitute
In January, Silver Spring announced its Gen-4 chipset would be capable of integrating both cellular and RF mesh communications. Just one month later, Itron announced plans to acquire cellular communication provider SmartSynch for $100 million. The strategic moves of both companies, along with decreased carrier rates, indicate that cellular is already becoming a viable supplement to RF, particularly for utilities with a combination of urban and rural service territories.
Look for Sensus to potentially expand its cellular offering to AMI, given that cellular currently serves as a communications medium for its distribution automation network. There shouldn’t be too much pressure, considering the company just announced it would be increasing the available spectrum on its private FlexNet AMI network. Don’t count out Trilliant either -- the Redwood City, California-based company has had a cellular offering for polyphase meters since 2007 and more recently won a contract with British Gas in 2010.
Shifting Capex to Opex
While moving to a hosted cellular network eliminates or displaces upfront capital investment for utilities, public utility commissions are generally more hesitant to approve rate increases designed to recover operating costs vs. infrastructure costs. As long as these trends persist, it will be difficult for a managed cellular network to totally replace utility-owned RF networks.
End-to-End Solutions vs. Communications Only
Itron’s large share of the communications market comes as no surprise, given that it is one of the few companies with an end-to-end smart meter offering. Aside from producing meter hardware and communications cards, Itron also offers one of the most widely used meter data management platforms. Although Landis+Gyr’s share of the communication market is smaller than Itron’s, the company is poised to compete with its recent acquisition of meter data management company Ecologic Analytics. Landis+Gyr has also partnered with communications providers including Silver Spring, Aclara, and Trilliant as a hardware provider, so the success of these AMI communications vendors directly contributes to that of Landis+Gyr (as well as Silver Spring’s other majority meter supplier, GE).
Conversely, Silver Spring is the only vendor with a sizeable market share whose primary products do not extend beyond communications. While still operating at a net loss, the company has decreased losses year-over-year since 2009. Q1 2012 revenue is up about $9 million from the previous year. GTM Research has recorded just under 12 million shipments shipments throughout North America, though the company only picked up one new major North American customer in 2012 (Progress Energy).
VCs, IPOs and Acquisitions
Given a recent slew of acquisitions by power grid giants Siemens, ABB, Schneider Electric and GE, it is likely that we’ll see consolidation extend to AMI as well. Both GE and ABB already have a stake in Trilliant from a $106 million round of financing in 2010 which also included VC firms VantagePoint Capital Partners and Investor Growth Capital. Earlier this year, reports indicated Sensus had retained Credit Suisse to help look for potential buyers, while more recently, Elster has been in talks with London buyout firm Melrose PLC. Meanwhile, Siemens' recent acquisition of Brazilian meter maker Senergy will give the company a foothold in Brazil, which will be essential in avoiding the country’s costly import tariffs. (This isn’t the first time Siemens has entered the metering game -- the company owned a stake in Landis+Gyr prior to its acquisition by Australia’s Bayard Capital in 2004 and subsequent acquisition by Toshiba in 2011.) Amidst all of the M&A activity, Silver Spring is still awaiting a public offering. After Ambient Corporation’s reverse stock split in 2011, Silver Spring would be the second communications provider to be publicly traded on one of the major exchanges in the past two years.
Here’s a roundup of some of the top stories in smart grid this week, starting with a deepening partnership for technology to fine-tune grid voltages to save energy, also known as volt/VAR optimization (VVO).
The partners in this case are multi-state utility AEP and Providence, R.I.-based company UtiliData, which announced Wednesday that they’ve formed a research and development agreement to better match UtiliData’s technology to AEP’s grid.
UtiliData, which raised an undisclosed investment from Braemar Ventures in February. has been running its AdaptiVolt conservation voltage reduction (CVR) technology since 2003 in pilots for utility customers, as well as big power users like lumber mills and universities.
AEP is a longtime partner; it has deployed the AdaptiVolt technology on six circuits in Ohio and is in the process of adding it to nine more in Indiana, said Tom Weaver, manager of distribution system planning. (A circuit can serve anywhere from 800 to 1,200 homes and businesses, and AEP has about 5,500 of them for its 5.2 million customers across eleven states.) UtiliData is working with Silver Spring Networks on its AEP pilot, and interoperates with the smart grid networking startup’s wireless mesh system, as well as via standard SCADA networks.
Wednesday’s announcement deepens that partnership by tying AEP’s operational expertise with UtiliData’s ongoing technology development work, Weaver said. In other words, “As we put projects in place, we can have a test-bed where they can further refine the results, and further improve their product,” he said.
That sounds a bit like the deep vendor-utility collaboration that’s gone into Dominion Power’s Edge technology, which it developed with Lockheed but is rolling out as a product on its own. But AEP’s not taking that kind of ownership stake in UtiliData’s product, Weaver said.
UtiliData is a smaller player in the VVO/CVR realm, and competes against giants like ABB, General Electric, Siemens and Schneider Electric, as well as a host of other mid-tier and up-and-coming companies.
The decade-old company does distinguish itself in the use of digital signal processing (DSP), rather than script or model-based architectures, for doing its VVO work. Competitors like ABB and Schweitzer use DPS for its substation protective relays and other larger-scale automation projects, and Cisco’s smart grid architect Jeffrey Taft has written that DSP is the key to a truly smart grid -- although it does require heftier IT to run its real-time analytics.
Another smart grid partnership that’s going to require a lot of hefty real-time analytics is getting underway in Irvine, Calif. right now. Led by utility Southern California Edison with a huge list of partners (big ones include Boeing, General Electric and SunPower), the $80 million, Department of Energy grant-funded project will test the interplay of energy-smart homes, solar panels, grid batteries, plug-in car chargers, CVR and self-healing circuits and communications and controls networks in a single neighborhood.
Last week, SoCal Edison added up-and-coming geospatial and visual analytics startup Space-Time Insight to its roster of Irvine project partners. The Fremont, Calif.-based startup, which raised $14 million in a Series B round last month, is already working with customers like Florida Power & Light, San Diego Gas & Electric and the California ISO, and is one of Cisco’s new smart grid developer platform partners.
In Irvine, Space-Time Insight will be correlating the flood of data coming in from all those systems and presenting it in a number of formats for grid operators to use, Steve Ehrlich, vice president of marketing, said in an interview this week. The startup’s special sauce is in normalizing and cross-referencing in-memory data to provide mapping and analytics tools that can run at high speeds with high accuracy, he added.
Mark Irwin, director of technology development at SCE, told me this week that the utility and its partners have finalized the design of the Irvine project and have most of the equipment involved in manufacturing to date, with a plan to have all the gear in place by mid-2013.
The project includes smart appliances, rooftop PV-to-EV charger systems, and four different configurations of batteries, ranging from a 2-megawatt substation battery to smaller residential energy storage units, or RESUs, he said -- though he didn’t provide names of the various vendor partners the utility was working with on each front.
Today, about one year after the process was initiated, the Department of Commerce issued its final determinations on the extent of the countervailing duties and anti-dumping duties against imports of billions of dollars of solar cells from China.
The Department of Commerce just ruled:
- There will be no change of scope (The DoC did not agree to SolarWorld's petition to include China module assembly) However, small consumer goods are now excluded.
- The effective rate on Suntech has gone up a few percentage points,down four percent for Yingli and Canadian Solar with Trina down 12 percentage points from the preliminary numbers.
- Commerce recommended anti-subsidy duty percentages of 14.78 percent for imports made by Suntech, 15.97 percent Trina Solar and 15.24 percent for all other Chinese manufacturers
- Critical circumstances are in effect save for Suntech's anti-dumping tariffs.
Chart courtesy of CASE
The preliminary ruling issued in May hit major Chinese solar manufacturers with anti-dumping duties of about 31 percent. Countervailing duties were in the range of three to four percent at that point.
The petitioner for these investigations is SolarWorld Industries America, part of a German firm with operations in Oregon.
Greentech Media has covered this case from the anti-dumping spin of the petitoner, SolarWorld and CASM, its small consortium of American solar panel manufacturers as well as the protestations of CASE, the consortium of installers and polysilicon vendors such as MEMC. CASE believes that tariffs on Chinese solar panels will stunt solar's growth in the U.S. and that PV panel price drops stem from economies of scale and demand-side forces, not from dumping.
The U.S. solar industry is forecast at 3.2 gigawatts in 2012 as per GTM Research -- up from 1.8 gigawatts in 2011. Barclays issued a research note today with solar module spot prices at $0.69 per watt.
After all the press conferences, grandstanding, and column inches, the bottom line according to an analysis by GTM Research, is that the tariffs will have minimal imact on the price of solar in the U.S. It is also unlikely that SolarWorld's tenuous competitive position wil be improved by the tariffs imposed on Chinese companies. SolarWorld's most recent earnings call indicated high costs, low margins, and difficult losses and debt. Another outcome is a trade war in the other direction with China putting a tariff on polysilicon from the U.S. along with the EU imposing tariffs on Chinese solar panels.
Trina expects its global blended ASP to decline by around 15 percent in Q2 2012, which would imply a figure of around $0.78 per watt. For U.S. shipments, we expect that 100 percent of Trina’s U.S.-bound cells will be obtained via tolling from Taiwan and will not be subject to the tariff. We estimate the wafer-to-cell conversion cost in Taiwan to be $0.22 per watt (compared to $0.16 per watt in China), and based on a 5 percent tolling margin, we estimate an additional $0.03 per watt cost increase for third-party sourcing. This equates to the overall tolling cost difference of around $0.08 per watt and a cost impact of 11 percent. In the worst-case scenario for customers, let us assume that the entire $0.08 per watt amount is passed onto the customer. This implies a U.S. ASP of $0.86 per watt, which is still 6 percent below the Q1 ASP.
Source: GTM Research
Though tolling cells through Taiwan does impose a slight cost increase on manufacturers, it does not prohibit them from pricing modules well below their domestic competitors. Coupled with further conversion cost reductions (Trina, Hanwha, Yingli, and Jinko are all calling for poly-to-module costs of $0.50 per watt by year end) and the continuing decline in ASPs, we expect pricing to continue falling over the course of the year, both globally and in the U.S.
Mehta says,"Based on this analysis, the AD/CVD tariff will not materially affect pricing in the U.S. market."
Next month the ITC will announce its final decision on whether to lock the tariffs into place.
Jigar Shah of CASE commented that the ITC could reverse the retroactive tariffs and that CASE would look to "contain the damage."
San Diego Gas & Electric has scrapped plans to build a high-speed private WiMAX network to support its smart grid applications.
The utility revealed the shift in strategy in a recent filing with the California PUC. SDG&E does not expect a delay in any of its smart grid plans as a result of the change, and expects to be able to repurpose some of the deployed equipment.
The shift is notable, however, because SDG&E was one of just a handful of North American utilities investing in private WiMAX networks for its smart grid activities, a group that also includes CenterPoint Energy and Hydro One. Private WiMAX networks enable utilities to have high-performance communications without being tied to a specific network carrier, as with 3G and 4G LTE cellular communications.
Utilities choosing WiMAX instead of public carrier cellular typically do so because of the lack of control and high data costs of cellular networks. However, the once-promising market for WiMAX has somewhat dropped off in the past eighteen months in favor of 4G LTE cellular, which is being widely deployed in the U.S. by public carriers including Verizon and Sprint.
SDG&E originally revealed its intent to build a WiMAX network for its smart grid activities in 2009, and announced it switched vendors late last year when it acquired a license to 10 MHz of its own spectrum from the FCC. The utility planned for the high performance, private wireless network to be complete in late 2013, to be used as a general-purpose smart grid network for greater operations integrity, direct control, security, and cost efficiencies.
SDG&E soon found that its new spectrum was also of interest to AT&T and Sirius radio, driven by the lack of available spectrum in the U.S. and increasing demand by carriers to meet the needs of consumer broadband. Seeking more capacity to build 4G LTE for consumer broadband, AT&T and Sirius asked the FCC for a rule change that would allow it to use SDG&E’s newly acquired spectrum as a buffer zone for wireless signals.
Instead of fighting the request, SDG&E worked on an agreement that saw the utility withdraw its protest to the FCC, and AT&T acquire the spectrum from SDG&E.
“It can be risky for sure,” said Josh Gerber, lead architect for SDG&E's smart grid program, about utilities purchasing private spectrum. “Telcos spend billions and billions of dollars on this, and local regional utilities don’t have the appetite to make that sort of investment.”
SDG&E had deployed some pilot sites for the WiMAX network this year, but the change in strategy doesn’t mean that money was wasted. SDG&E learned some lessons from the pilots that will help them elsewhere, and some of the equipment can be reused in other frequency bands.
SDG&E’s change in communications strategy could end up being the best thing for their long-term communications strategy. Communications technologies are evolving rapidly, and SDG&E is now in a position to take advantage of the more advanced solutions available today.
Gerber noted that SDG&E was always operating with a backup plan for its communications. SDG&E’s backup plans include a mix of public and private networks, and various frequencies and technologies. The utility recently completed a trial of On-Ramp Wireless’s long-range, low-power, high-penetration wireless technology.
“We didn’t anticipate this spectrum outcome as much as we were aware of other risks,” he said. “But we were prepared for contingencies.”
One reason SDG&E originally picked private WiMAX was because public carrier networks have limited backup power, which could be risky for SDG&E in emergency situations, especially because it operates in fire-prone areas. Gerber said SDG&E is reluctant to be completely dependent on that infrastructure because the utility doesn’t have priority for reconnections, as public safety agencies do.
Going forward, Gerber said, SDG&E is going to work closely with carriers, who are more open to jointly developing solutions for utilities than they were a few years ago.
Public carriers are being much more aggressive in courting utilities with attractive data rates and promises of reliability service-level agreements than they were just a few years ago. With the availability of 4G LTE on the horizon for utility applications -- and all the benefits that technology offers -- public carrier networks have the potential to solve many of the backhaul and network prioritization challenges utilities are facing today.
The Pennsylvania utility will continue its rollout of smart meters, but without Sensus meters. PECO had installed about 186,000 Sensus meters as part of its AMI plan (29 of which overheated). It also had a deal with Landis+Gyr and Elster to provide meters as part of the full deployment.
Landis+Gyr meters have replaced about half of the Sensus meters in the field as part of an independent investigation into meter performance issues. PECO was careful not to speak out against Sensus but said, “In general, the firms found that Landis+Gyr performed better in the field,” according to Cathy Engel Menendez, manager of communications at PECO. She would not elaborate on what “performed better” meant in terms of the report. Sensus was unable to comment on the report because PECO has not shared it with the company.
“While they have decided to suspend use of our meters at this time, be assured that there are no safety issues with Sensus electric meters that support this decision,” Sensus said in a statement. “The results of investigations have confirmed the meters are not the problem and our patent-pending technology actually helps to mitigate issues that occur outside the meter.”
PECO said that the upgrades Sensus provided where the meter automatically shuts off if it approaches overheating “did make some improvements,” although Menendez again declined to elaborate.
Sensus is not out of the picture for PECO. The company will continue to be the communications network provider for metering and distribution automation. Also, since PECO is mandated to use a variety of meters for its smart meter deployment in each customer class, Sensus could throw its hat back into the ring when PECO evaluates additional meter technologies for the rest of the 1.6-million-meter project.
Elster has been chosen as one of the technologies for the commercial customers, although Menendez said there will be additional brands chosen in that group too.
When asked why the utility had not submitted meters to independent testing in the first place, Menendez said that they trusted the testing results provided by the vendors and consulted with other utilities about safety and performance issues, which is standard in the industry. Sensus has 10 million meters deployed in North America, of which it noted “2 million of the exact same model used in the PECO installation continue to operate safely and reliably in communities across the U.S.”
In the future, Exelon likely will not be the only one to call on independent experts. With public utility commissions demanding more from utilities in their smart grid business cases, ensuring that each technology has undergone rigorous independent testing could become the new norm.
It is clear, from the talk at the American Wind Energy Association (AWEA) Offshore Windpower 2012 in Virginia Beach, Virginia, that an offshore wind energy revolution is in the offing.
Europe has over 4,000 megawatts of installed offshore wind capacity, 150 gigawatts in planning and is expected to build at least 1,000 megawatts per year through 2020. The U.S. has none built but has some fifteen pilot, research and utility-scale projects of about ten gigawatts planned.
AWEA Public Policy Senior Vice President Rob Gramlich summarized the many ways U.S. offshore wind is nearly ready to step up.
First, Cape Wind, the U.S. banner carrier, having passed all its regulatory hurdles, just announced the buy of a Falmouth, MA, O&M facility as it readies for planting Siemens (NYSE:SI) turbines in the Nantucket Sound seabed. It even, finally, got the approval of a Kennedy when Congressional candidate Joseph Kennedy III broke with the Hyannis Port elders and endorsed the 468-megawatt project off Cape Cod.
Fishermen’s Energy, a consortium of actual fishing industry veterans committed to the future of ocean commerce and a much bigger catch, got over its federal and state regulatory hurdles and began readying a pilot project for construction off Atlantic City.
Deepwater Wind is very near going into the water with its small Block Island Wind Farm off the coast of Rhode Island, a proof-of-product project for a company that is planning thousands of ocean-wind megawatts.
The U.S. Department of the Interior (DOI) issued Findings of No Significant Impact (FONSIs) for much of the Mid-Atlantic Wind Energy Area (WEA), opening the New Jersey, Delaware, Maryland, and Virginia coasts to streamlined permitting.
DOI also issued Determinations of No Competitive Interest (DONCIs) for the Google (NASDAQ:GOOG)-backed Atlantic Wind Connection (AWC) and the Deepwater Wind Block Island offshore transmission systems, streamlining the building of the infrastructure needed to deliver the power to population centers along the Eastern seaboard.
Consulting firm IHS Global Insight (NYSE:IHS) just released a study of the economic benefits that would accrue from the AWC, a 7,000-megawatt capacity backbone transmission system being built by Atlantic Wind Development, a partnership between Google, Inc., Bregal Energy, Marubeni Corporation (TYO:8002) and Elisa System Operator.
The AWC will run some 300 miles, from New Jersey to Virginia, twelve to fifteen miles off the Atlantic coast, and will connect projects capable of harvesting roughly 7,700 megawatts of the region’s University of Delaware-estimated 330 gigawatts of potential.
During AWC’s ten-year build-out, according to the report, the region can expect 173,000+ job years (77,000+ direct offshore wind industry job years, 44,000+ supply chain worker job years, and 51,000+ induced job years). It would create a $19-billion-plus increase in the region’s Gross State Products and increase federal, state, and local revenues by $4.6 billion.
U.S. Department of Energy (DOE) Wind and Water Power Program Manager Jose Zayas reported that DOE has committed $180 million to an Advanced Technology Demonstration Projects Initiative that will support the construction of the first generation of offshore projects.
Representatives for the Governors of Virginia and New Jersey described their states’ ocean wind resources, transmission systems, harbor infrastructures and eager blue-collar workforces, adding their bids to the one made last year by Maryland, when the conference was in Baltimore, to be the Eastern seaboard’s offshore wind development center.
Offshore Wind Development Coalition President Jim Lanard noted a poll done by Republican New Jersey Governor Chris Christie’s pollsters that found “landslide numbers” of support from both Democrats and Republicans for offshore wind. Construction of the first U.S. offshore projects is, Lanard predicted, “right around the corner.” The regulatory advances allowing leases to go forward in the Mid-Atlantic WEA “is the first step in driving down price,” Lanard said, “by opening development to competition.”
Price, he acknowledged, is a sticking point. Cape Wind’s power purchase agreement (PPA) price of almost 19 cents per kilowatt-hour would be acceptable in few other states and only got approved in Massachusetts because the Department of Public Utilities ruled the benefits of meeting peak demand and the state’s renewables mandate outweigh that high cost.
Economies of scale, Lanard said, will bring the cost of offshore wind down, just as it brought down the cost of computers, cell phones and solar panels. But, he added, that will take time and federal and state policy support. In Europe, he admitted, the price has gone up even as the sector has scaled because, he explained, demand for everything in the supply chain from cables to vessels has increased.
Both Gramlich and Lanard are hopeful that after November 6, when the politics of passion simmer down, an extenders bill like the one recently passed by the Senate Finance Committee that includes extension of onshore wind’s production tax credit and offshore wind’s investment tax credit will find its way through Congress.
Longer term, Lanard said, floating wind will bring aboard states on the Pacific coast, where the continental shelf is too deep to build into the seabed. California Governor Jerry Brown, Lanard added, is especially anxious to seize that economic opportunity.
The world's largest PV solar farm is the the massive Agua Caliente deployment in Yuma County, Arizona.
First Solar (Nasdaq: FSLR), the developer and panel supplier at Agua Caliente, just announced that the project has hit a peak generating capacity of 250 megawatts AC and is on-line and connected to the electrical grid. The project will boast a generating capacity of 290 megawatts AC when done.
Construction started in the fall of 2010 and solar module installation began in June of 2011. Construction is still in progress, with completion expected in 2014. Agua Caliente is owned by NRG Energy (NYSE:NRG) and MidAmerican Solar. First Solar will build, operate and maintain the site. PG&E has a power purchase agreement in place for the electricity generated by the project. According to an earlier press release, the project’s construction phase is creating an average of 400 jobs, with over 80 percent of the workforce coming from Arizona.
The Agua Caliente plant will eventually deploy 400 units of SMA's Sunny Central inverters. The project will deploy fault ride-through and dynamic voltage regulation, technologies that are new to solar power plants in the United States. The project has received a $967 million loan guarantee from the U.S. Department of Energy.
And this project will hold the title of world's largest PV project -- until a few other behemoths go live.
Upcoming but not-yet-energized projects include the 250-megawatt California Valley Solar Ranch, the 230-megawatt Antelope Valley Solar Ranch, the 550-megawatt Desert Sunlight Solar Farm and the 550-megawatt Topaz solar farm in San Luis Obispo County. That's 1.5 gigawatts of utility-scale solar that's soon to be on-line.
The second quarter of 2012 was a record quarter for the utility solar market segment with 477 megawatts deployed out of the total 742 megawatts installed in the quarter, according to the most recent U.S. Solar Market Insight. The U.S. Solar Market Insight: 2nd Quarter 2012 forecasts the utility photovoltaic market to remain strong through the last two quarters of 2012.
Here's a table of operational PV power plants in the U.S., courtesy of GTM Research. One noticeable aspect of this table is its dynamic nature -- in just a few months since we last charted this information, this table has seen a number of new entrants and a continuing growth in project size. Note that the 30-megawatt Alamosa CPV plant in Colorado, now owned by the Carlyle Group, is not included in this list, as CPV is grouped separately by GTM Research.
Meet the analysts who put together these reports and data sets at the U.S. Solar Market Insight in San Francisco later this month.Project Developer State Size (DC) PV Tech Owner Agua Caliente Phase First Solar AZ 333 MW
NRG MidAmericanMesquite Solar One Sempra Generation AZ 110 MW c-Si (STP) Sempra Generation Silver State North First Solar AZ 60 MW CdTe (FSLR) Enbridge Sempra Copper Mountain Sempra Generation NV 55 MW CdTe (FSLR) Sempra Generation San Luis Valley Solar Ranch Iberdrola CO 38 MW c-Si (SPWR) Iberdrola Long Island Solar Farm BP Solar NY 37 MW
c-Si (BP)BP Solar, MetLife Cimarron 1 Solar First Solar NM 35 MW CdTe (FSLR) Southern Company, Turner Renewables Webberville Solar SunEdison TX 34 MW c-Si (TSL) MetLife, Longsol Holdings McHenry Solar Farm SunPower CA 31 MW c-Si (SPWR) K Road Power Imperial Valley Solar Center SunPeak Solar CA 29 MW c-Si (STP) SunPeak Solar
(Megawatt values are in DC and we assume an 87 percent DC-to-AC derate factor for projects that are quoted in AC. Data from GTM Research.)
Read the full press release here.
Last week the solar industry gathered in Orlando, FL for Solar Power International 2012. Companies released news on products, partnerships, and capacity, including findings from GTM Research that solar installations grew 116 percent from Q2 2011. This week, GTM Research announces the U.S. Solar Market Insight Conference, an executive-level event covering national and state-specific analysis and forecasting of the U.S. solar market.
The U.S. Solar Market Insight Conference is designed to demystify the U.S. solar industry by leveraging the exclusive data, insights, and trends from the U.S. Solar Market Insight Reports. The reports are the product of a GTM Research and Solar Energy Industries Association (SEIA) partnership. The event will take place Oct. 29-30, 2012 at The Westin Millbrae, near San Francisco, CA.
Conference attendees will learn how industry leaders are navigating complex market dynamics and local policies to reduce installation costs and increase project returns. Register to connect with leading financiers, policymakers, developers and technology providers to ensure project success.
"The U.S. market continues to be a promising growth story with more than 3.2 gigawatts of annual PV installations expected in 2012," said Shayle Kann, Vice President, GTM Research. "However, the shifting project finance landscape, increasing competition from new entrants and often frustrating disarray of local policies makes navigating the U.S. market a challenge, even for incumbent players. The U.S. Solar Market Insight Conference leverages our partnership with SEIA and our U.S. research coverage to provide actionable intelligence to companies exploring or actively involved in the U.S. solar market."
Registration discounts are available for SEIA members. The full agenda, speaker list, and registration information are available on the conference website -- visit www.solarmarketinsight.com.
Green technology VC investment lingered in the doldrums and green IPOs all but dried up in the third quarter of 2012. So says the Cleantech Group in its latest installment of global investment figures for green industries.
But amidst an investment climate that remains cloudy to stormy, there are some bright spots, including a potential IPO for SolarCity, a leading startup in the solar project financing field that’s benefited from falling solar prices that have decimated solar manufacturers.
Green VC investment stood at $1.6 billion in the third quarter, which is level with the second quarter’s tally. That isn’t much consolation, however, given that $1.6 billion represents a 30 percent decline from the $2.23 billion invested in the same quarter last year. Deal count also fell to 148, compared to 169 in the same quarter last year.
Overall, Cleantech Group is projecting 2012 will end up seeing only $6.8 billion in green VC, a 28-percent decline from $9.4 billion last year, CEO Sheeraz Haji said in a Tuesday conference call.
Third-quarter green mergers and acquisitions also declined to $35 billion, compared to $77 billion in the same quarter of last year, Haji said. As for IPOs, four more companies -- Elevance, Genomatica, Coskata and Smith Electric Vehicles -- pulled their public offerings in the third quarter, although Elevance and Genomatica also raised investments to make up for it.
China, which has been holding most of the green IPOs of late, also saw a dearth of public offerings in the third quarter, Haji said. China’s solar sector, which has been suffering the fruits of its own price-slashing business approach, has seen 10 IPOs withdrawn so far this year, he noted.
Indeed, solar has fallen from grace with investors across the globe, with publicly traded companies at near all-time lows and VC-backed firms like MiaSolé selling for fire-sale prices. Third-quarter solar investment added up to only $70 million, compared to $1.3 billion in the third quarter of 2008 -- a stark measure of how far the sector has fallen.
Across industry sectors, Cleantech Group found a decline both in deal totals and numbers of deals, for both early-stage and later-stage investment. Average deal size fell to $11.6 million in the third quarter, compared to $12.9 million in the same quarter last year and more than halfway below their third-quarter 2008 peak of $32 million.
Early-stage deals were particularly hard to come by, Haji noted. Average size for entry-level investments dropped to $2.5 million in the third quarter, compared to $5.5 million last year and $9 million back in the third quarter of 2008.
Top VC deals for the quarter included $136 million for Alarm.com, $104 million for Elevance, $104 million for Fisker Automotive, $84 million for Protean, $60 million for Blu Homes, $41 million for Genomatica, $40 million for Lilliputian Systems, $33 million for EcoMotors and $31 million for Solix.
Meanwhile, everyone’s looking to the healthy solar project financing sector to help revive greentech’s IPO doldrums -- and more specifically, to SolarCity, which released details of its $201 million IPO plans last week. The Redwood City, Calif.-based residential solar aggregator reported revenues of $71.4 million for the first six months of 2012 compared to $20.3 million in the same period last year.
But it also reported a loss of $23.1 million so far this year, compared to a year-earlier profit of $11.9 million. Whether investors are willing to accept losses in exchange for revenue growth potential will doubtless be a key factor in SolarCity’s prospects in the public markets, Haji said.
Haji also took time on Tuesday’s conference call to note Cleantech Group’s recent merger with GreenOrder, a corporate sustainability consultancy that’s well known for leading General Electric’s Ecomagination effort, and also works with the likes of Veolia, Électricité de France (EDF), HP and DOE. Terms of the deal weren’t disclosed.
Demonstrating there are two sides to the solar sector coin, SolarCity has filed to go public. It might sound crazy given all the headlines about failing solar companies, but as an installer, Solar City has benefited from the same low module prices that have made life so difficult for manufacturers.
In its filing with the Securities and Exchange Commission, the San Mateo, Calif.-based company -- nearly one-third owned by Tesla founder Elon Musk -- said it could raise as much as $201 million with the IPO.
Founded in 2006, SolarCity in its early days sold solar power systems, but in recent years has moved toward a business model in which customers typically enter into a 20-year contract to buy the power produced by rooftop systems. The company also has expanded into energy efficiency evaluations and services.
The company, now operating in 14 states, has been on a steep growth curve in the last three years. According to the SEC filing, the total number of buildings where it has done work or is under contract to do work “increased 83% from 5,767 as of December 31, 2009 to 10,546 as of December 31, 2010, 89% to 19,975 as of December 31, 2011, and 69% to 33,792 as of June 30, 2012.” Data from the company indicates it deployed 71 megawatts of solar in 2011 and then 72 megawatts in the first six months of this year.
At utility scale, solar (like wind) doesn’t yet compete with the cheapest fuel going: natural gas. But put solar on individual rooftops and it’s a whole different matter. The current cost, subsidy and regulatory structure allows the companies who own those systems to sell power to homeowners and businesses at rates that beat the retail price of electricity -- especially in high-cost electricity markets like California.
This business model has made SolarCity (and others) an attractive investment for big financiers. In July, for example, Credit Suisse put $100 million into the company, following up on an earlier $100 million investment.
The lower panel prices that have devastated companies from Solyndra to Suntech work to SolarCity’s advantage, reducing its costs and allowing it to make systems more attractive to customers.
Still, the company is a startup, and despite its growth is far from a profitable enterprise: It lost $73.7 million in 2011 on revenue of $59.5 million, and had losses in all five years for which it presented financial information.
The federal government’s a key buyer of energy efficient solid-state lighting, and so are the big box stores.
Swedish housewares giant Ikea made waves last week with its announcement that it will phase out all incandescent and fluorescent lights on its shelves by 2016 to go LED-only. It’s the latest in a series of challenges that major retailers (think Ikea, Home Depot, Lowe’s, Best Buy, etc.) and their lighting technology suppliers (GE, Philips, Osram, etc.) have set for themselves on LEDs, which have been poised to take over the commercial and industrial lighting sectors for years now.
With LED prices falling pretty dramatically, it’s a good bet that big-box stores like Ikea will also be slashing the prices on their consumer LED bulbs, which are still pricey compared to their CFL counterparts. That, in turn, is driving investment across the LED technology chain, from advanced power management and thermal components to integrating LEDs with household dimmer switches and office smart-lighting controls. Customers will want their new $20 (or even $5) LED bulbs to work as promised, after all.
In the meantime, the U.S. government is one of the biggest buyers of LED products in the world as part of its broader, multi-billion-dollar push for energy efficiency. The Department of Energy says solid-state lighting (SSL) could cut the U.S. lighting bill in half, and it is investing tax dollars into R&D and business adoption programs to push it into the mainstream.
The General Services Administration (GSA) manages the country’s federal properties, which makes it a good partner for LED companies. Last week, the GSA gave a nod to lighting control networking startup Lumenergi, announcing it had turned down energy consumption at 11 buildings by a whopping 63 percent.
That’s a pretty big number, though rival “smart lighting” companies like Adura, Daintree Networks, Digital Lumens, Enlighted and others say they can also achieve those kinds of savings in buildings that are egregious light-wasters. Simply turning off the lights you used to leave on all night can cut your bill in half, though few buildings are that wasteful. More typical energy savings are in the 20 percent to 30 percent range, out of a lighting budget that’s roughly one-quarter of a building’s total load.
Lumenergi, which raised a $12.7 million Series B round in 2010, also got a nod from the GSA’s Pacific Rim regional administrator, Ruth Cox, who said the platform was useful in identifying where efficiency investment made the most sense. That’s a big new trend in the industry, with startups like FirstFuel and Retroficiency promising hands-off data analytics that can pick out key buildings and classes of real estate to target for the biggest and fastest paybacks. Simple “burnout” sensors that can direct maintenance workers to faulty lights, while avoiding rote replacement of still-useful bulbs and tubes, can also save a bundle.
In the meantime, once you’ve got a network deployed in your building to manage lights, why not do other things with it? On Monday, 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.
Once again, this is a common theme in the smart lighting space. Lights are ubiquitous in buildings, making them great places to locate wireless nodes as well. Those can support all kinds of sensor data collection and control platforms, as well as integrate into master building management systems and the like. Just how all these tools will integrate and partner with building controls giants like Siemens, GE, Schneider Electric, Honeywell, Johnson Controls and the like remains to be seen, of course.
Wireless controls are growing in the industrial realm, with some acquisition activity along the way. Dust Networks, which makes low-power wireless networks using the WirelessHART standard, was acquired by Linear Technology in December.
In the meantime, the residential market remains limited to wealthy early adopters. Google says its Android@Home platform will include IPv6-compatible wireless networking based on the 6LoWPAN standard, though so far it’s only announced one partner, LED maker Lighting Science.
Calxeda just a closed a $55 million funding round for its ARM technology to cut data center power. The Austin, TX-based company will not only help the company scale up, but will also expand to new markets.
“In the time since we first met Calxeda, they have executed exceptionally well, and the market has begun to embrace disruptively power-efficient data center architectures,” Clark Jernigan, venture partner at Austin Ventures, one of the new investors, said in a statement.
In the past few years, the market for data center efficiency has gained momentum, as companies look for ways to slash energy costs while meeting their IT needs. Calxeda’s technology is centered on ARM chips, which are best known for their dominant role in the cell phone market.
ARM chips consume far less power than Intel chips and use nearly zero power when they’re in a sleep state. Of course, large chipmakers aren’t just sitting back as others get into the market. In March, Intel announced its latest green server, which is meant to be 50 percent more efficient than the previous line. Calxeda says it delivers as much as a ten-fold improvement on energy efficiency compared to today’s X86-based servers. Back in 2010, Calxeda also told Greentech Media that the chips cost about half as much to make compared to standard Intel-based servers.
But it’s about more than just the chip, said Vulcan Capital, a new investor along with Austin Ventures. “I am very impressed with the innovative approach and completeness of Calxeda’s vision,” said Steve Hall, managing director at Vulcan Capital, the other new investor in this round. “Calxeda thinks like a solutions company, aligning their technology to solve the bigger challenges."
The company is hardly alone in solving the problems of data center power consumption, which accounts for about 2 percent of the electricity used in the U.S. annually. There is a race for smaller, more efficient servers and chips, but there are also companies that are looking at how to cool the centers more efficiently, switch to DC power, achieve better power conversion or weather mapping inside data centers. Essentially, there’s more than one way to skin this cat. And there are a lot of different types of cats.
For servers that just pull up websites or handle simple queries, ultra-low-power processors from Calxeda or SeaMicro (which was purchased by Advanced Micro Devices) can do the job. Although that’s not all of the server market, it’s enough that there will be winners for those that can get a piece of the market. Intel estimates that there will be a 33 percent annual growth rate for the “internet of things” in coming years.
“This significant infusion of capital will accelerate the exciting trajectory we’ve been on for the past four years,” Calxeda co-founder and CEO Barry Evans said in a statement. “Businesses require a more efficient solution for the web, cloud, and big data. That is what Calxeda is now delivering, and this funding will enable us to go bigger and faster.”
The company has raised about $100 million since its inception in 2008 and will continue to grow its product line and partnerships this year. Besides the two new investors, Calxeda is also backed by ARM Holdings, Advanced Technology Investment Company, Battery Ventures, Flybridge Capital Partners, and Highland Capital Partners.
Silicor Materials, a Redwood City, Calif.-based solar startup, just closed on $4 million of a $10 million VC debt round.
It sounds like good news: a solar newcomer picking up an early round.
But the fact is that Silicor is the renamed Calisolar -- and that firm has already spent more than $200 million in VC funding since its founding in 2006 to produce upgraded metallurgical (UMG) silicon. Previous investors included Globespan Capital Partners, Ventures West, Yaletown Venture Partners, SDTC, Hudson Clean Energy and ATV.
Silicor Materials' current board and its most recent debt round is dominated by Hudson Clean Energy. ATV and Globespan no longer list the firm as part of their cleantech portfolio.
Metallurgical silicon normally has too many impurities for making solar cells and is traditionally used for making aluminum alloys. Purifying metallurgical silicon into "upgraded metallurgical silicon," or UMG, creates a cheaper alternative. The challenge, though, is to refine it enough for it to be made into cells that rival conventional solar cells in conversion efficiency.
Calisolar once focused on building multi-crystalline silicon solar cells from the lower-purity polysilicon, but then pivoted to produce polysilicon as an (arguable) response to the plunging price of polysilicon and solar panels. The firm auctioned off cell-making equipment in July of this year. The firm also bought a Canadian silicon purifying firm, 6N Silicon, in 2010, and recently passed on a DOE loan guarantee.
The UMG value proposition might have made sense in 2008 when Calisolar closed its largest funding round and polysilicon cost $500 per kilogram. It makes less sense with polysilicon at its now-rationalized price of $20 per kilogram. A VC at Tallwood Ventures once remarked to GTM that it was a bad idea to invest in the high price of a commodity like silicon staying high.
In January of this year, the firm laid off more than 30 employees and halted its expansion plans. One of Silicor Materials' largest customers was Suntech, a module manufacturer with its own set of survival challenges.
An industry insider told GTM, "I am not as pessimistic about the long-term viability of UMG as many others are. I think the big issue right now is whether any sort of PV startup, regardless of technology choice, could shoehorn into the market with reasonable investment. It would take a really big advantage to overcome the scale of the majors, coupled with the current low gross margins in the industry. But hey, that doesn't seem to stop people from trying."
One could wonder if this small round of funding is to grow the company or keep the company afloat until more capital is raised.
Silicor Materials' CFO John Beaver commented to GTM today. He claimed that Silicor expects to be the "lowest cost producer of solar silicon" with "a cost structure much lower than GCL or OCI." He noted that their Ontario facility with an annual capacity of 1,300 metric tons has been moved to "R&D mode" as it is "too small to be cost competitive." The firm expects to break ground at its Mississippi facility in the second quarter of 2013 with a first phase capacity of 5,300 metric tons, eventually expanding to 16,000 metric tons per year.
Shyam Mehta, GTM Research Solar Analyst, said, "There is a price point at which UMG makes sense, but it is probably prohibitively low given where prices for Siemens are ($20 per kilogram blended by EOY 2012) and where costs for UMG are likely to be at this point in time."
"Aside from this is the issue of risk-reward. Given that UMG is lower quality and still relatively unproven, there is some risk associated with using it (even if it is heavily blended with Siemens as one would expect it to be). Given how low Siemens prices are, the risk is not worth the reward -- and we expect this to be the case over at least the next few years," added Mehta.
Hear more from solar industry experts and GTM Analysts at U.S. Solar Market Insight in San Francisco, Calif. later this month.
A new partnership between Clean Power Finance (CPF) and Paramount Solar, a business partner of world-leading infomercial marketer Guthy-Renker, could turn residential rooftop solar into a star of late night television.
Paramount Solar, explained CEO Hayes Barnard, evolved just over three years ago out of the successful Paramount Equity mortgage and insurance businesses. Using a client list built over nine years that has created a cumulative $10 billion in loans and 70,000 financial transactions in those financial services businesses, Paramount Solar is now selling 300 residential rooftop solar systems per month, Barnard said.
CPF began as a business-to-business sales management software platform and now has a network of 1,350 independent installers. With some 100 channel partners taking advantage of its hundreds of millions of dollars in institutional funds, it has now become, along with SunPower, Sunrun, and SolarCity, a leading administrator in the $2-billion-plus and rapidly growing third-party ownership (TPO) space.
Each of the leading players has a slightly different approach. SunPower (NASDAQ:SPWR) focuses on selling its own products; Sunrun specializes in leases and PPAs; and SolarCity has developed a full-service brand. Through CPF’s software platform and network, Paramount Solar will expand its ability to quote, sell, and design residential solar systems.
“A residential homeowner calls us,” Barnard explained. “We identify a number of things about that consumer, what their utility bill is, what their roof face is; a number of different parameters. CPF gives us the ability to look at a number of different financing options that they have configured through the funds they have. We can evaluate which tax equity fund is best for that consumer.”
Along with plummeting solar module prices, TPO financing has driven dramatic U.S. solar industry growth over the last two years. Through it, institutional funds pay for users’ solar systems through lease or power purchase agreement (PPA) contracts in return for tax equity and, potentially, a portion of the cash flow. Users get reduced electricity bills. Administrators get a fee and/or another part of the cash flow and channel the rooftop work to installers.
Paramount Solar presently operates in California, Oregon, Arizona and Colorado, states where “we had predictable, stable utility companies that supported rebates,” Barnard said, conditions that allow Paramount “to save residential homeowners money on their electricity.”
Solar, he said, was “a natural play for us because we focus on saving residential homeowners money on the largest bills in their lives.” It was “an opportunity to create a positive impact.”
Paramount customers, he added, “typically refinance or get a home loan to purchase a home seven times in their life. We look at the lifetime value of a consumer.” With solar, “we can be in a partnership with them for twenty years.”
The partnership with CPF came, he said, because “we needed competitive financing to put us on par with other players in the industry.” It “offers an astounding breadth of tax equity financing solutions and gives us the ability to offer our customers the most compelling financing solutions.”
Paramount currently mainly uses four installation providers, including CPF competitor SolarCity. “We will continue working with SolarCity,” Barnard said. “The value it brings to Paramount is, one, a great installation network in, I believe, eighteen states throughout the country. And, two, they bring to the table some competitive financing.”
With the addition of CPF’s backing, Paramount Solar is preparing a marketing push. “Currently, we’re acquiring customers at a rate we’re happy with and we think we can do that at scale,” Barnard said. In addition, he believes he can do it cost-effectively. “It’s my understanding the average cost to acquire a customer in the industry right now is about 17 percent of revenues, and we’re far less than that.”
Presently, they are testing seven media marketing channels, Barnard said, including digital channels, radio, canvassing, direct mail, email, exploiting the Paramount database and building a new database.
As for making an infomercial, he said, “we’ve definitely looked at it. But you have to earn the right to do it.” In solar, he explained, margins are thin. “If you don’t know how to put together the right media cocktail to acquire customers at scale, you are never going to make it in this space.” And, he added, “You have to earn the right to spend big dollars on an infomercial by doing some of the boring basic things right.”
Barnard said there are three pieces to the selling of solar: cost to acquire a customer, financing, and “the engineering, procurement and construction (EPC) side. We feel very confident we’ve nailed the customer acquisition piece. Now we need companies like CPF and others to help us with the tax equity and the financing side.”
As to the EPC piece, he said, “that will be the part most companies will stumble with. How to get economies of scale there, and how to give customers great service and get their systems installed as simply and quickly as possible.”
GTM Research recently released a smart grid report, The Smart Grid in Asia, 2012-2016: Markets, Technologies and Strategies. This article is the part of a series of perspectives from the report's author on the tremendous smart grid opportunity in Asia.
In 2009, China embarked on a three-stage journey to become a world leader in smart grid technologies with its aptly named "Strong and Smart Grid" 11-year plan. The plan encompasses all aspects of the grid, including increasing generation and transmission capacity, a nationwide smart meter deployment, large-scale renewable energy integration, and a large substation build-out. Four years later, State Grid Corporation of China, the largest utility in the world and the brains behind China's smart grid plans, is in full swing with phase two of its ambitious smart grid deployment plans -- the Construction Phase, running from 2011 to 2015.
New transmission lines are a major focus for State Grid in the Construction Phase, which is struggling to meet the growing energy demands of the rising middle class in the East and South. Most coal, hydro, wind, and solar load sources are over 1,000 kilometers away from the populous east and south. High voltage (HV, under 300 kilovolts), extra-high voltage (EHV, 300 kilovolts to 765 kilovolts), and ultra-high voltage (UHV, 765 kilovolts and up) lines are being installed currently, with at least one 1,000-kilovolt UHV AC or DC line installed annually until 2015. Overall transmission line investments for 2015 are approximately $269 billion, equivalent to the combined market cap of ABB, GE, and Schneider Electric as of May 21, 2012. China is adding so much new transmission capacity and so many power lines that it could build three quarters the length of a new American transmission grid in just five years. When the dust settles, there will be over 200,000 kilometers of new 330-kilovolts-and-up transmission lines built, for a total of 900,000 kilometers of transmission lines, compared to 257,500 kilometers of transmission lines presently in the U.S.
Figure: Current and Future Transmission Line Length in China
At a cost of $1.05 million per mile for UHV transmission line and equipment, each UHV line requires billions of dollars to build, and State Grid put in a staggering $80 billion investment into 40,000 kilometer of UHV lines for the 2011 to 2015 Construction Phase. The business case is readily apparent: a 2,000-kilometer, 800-kilovolt UHV DC line has an incredibly low 3.5 percent line loss rate per 1,000 kilometer and a high 6.4-gigawatt transmission capacity, all the while being 30 percent cheaper than a 500-kilovolt EHV DC or 800-kilovolt UHV AC line of the same length. By 2020, UHV lines will have 300 gigawatts of transmission capacity, roughly split 60 percent AC and 40 percent DC.
The competitive business environment seen in the transmission grid build-out is indicative of the rest of the smart grid market in China -- high-quality goods, competitive costs, and a well-built relationship with State Grid all go a long way toward winning a contract. Fierce vendor competition exists, due in part to State Grid’s competitive construction procurement process. All projects costing over $300,000 to build are required to go through an open bidding process that aims to enforce fairness and transparency, but State Grid still holds the reigns tightly on choosing project developers. In the process, State Grid has the final say and does a rough 45/45/10 split when evaluating meters, based on quality, cost, and bankability of the company.
With the promise of power shortages disappearing and a stable energy supply base, the build-out of the transmission grid is ushering in the next era of smart grid opportunities in China. Smart meters and renewable integration are already big businesses, and new substation infrastructure has brought with it a vibrant and growing substation automation market. The need for better monitoring equipment has risen as China is keen on decreasing its system average interruption duration index (SAIDI) and improving power quality to its customers. State Grid has earmarked over $40 billion toward these smart grid technologies between 2011 and 2016, with smart meters alone being a $2.5 billion to $3 billion annual market.
State Grid has paid special attention to substation automation technologies, and plans on installing 74 new digital substations for 63 kilovolts to 500 kilovolts by 2015. While this number is small compared to the existing 40,000+ substation base, State Grid has stated it intends to include digital technology in all new substations built. Companies such as BPL Global have been expanding their substation operations in China, which has been met with stiff domestic competition. The substation market offers promising growth over the next ten years.
Figure: Digital Substation Investments From 2011 to 2015
The transmission grid build-out also has an impact on technologies at the distribution level and downward. China is building 36 million new urban homes between 2011 and 2015, and modern building automation and smart meter technologies will be utilized. The coming years promise to create a new and vibrant building automation market, but for the time being, the market continues to focus on meeting demand shortfalls and other key infrastructure challenges. Expect to see an exciting shift toward technologies at the distribution level and downward in the next five to ten years, as China’s grid solidifies its transmission grid and generation sources. If the past three years have been any indication of future progress, expect to see China become a leading smart grid market for the next five to ten years. The distribution grid build-out and digitization will be the next major indicator of China’s smart grid prowess.
For more information on China's grid build-out and The Smart Grid in Asia, 2012-2016: Markets, Technologies and Strategies, visit www.greentechmedia.com/research/report/smart-grid-in-asia-2012-2016.
Last month we broke the news that GreenVolts, the CPV systems vendor was closing its doors. Yesterday, VentureWire reported that GreenVolts has hired Comerica Bank to sell off its assets. The same article quoted co-founder Eric Romo as saying, “We’ve created a lot of value and are trying to see if we can find a good home for the assets."
Here's our coverage from last month:
GreenVolts, a a concentrating photovoltaic (CPV) systems vendor, talked a good game and raised sizable amounts of VC and strategic funding since its founding.
In spite of a $20 million funding round from ABB late last year, sources close to the firm have informed GTM that the company is closing its doors and letting most of its employees go as early as this Friday. Emails and calls to the CEO of the firm, several staff members, as well as the firm's investors have not been returned.
Update 2 p.m. PT: Katie Fehrenbacher of GigaOm was able to reach the CEO of GreenVolts, David Gudmundson. She learned that GreenVolts has laid off more than 60 of its 80-person staff after investor ABB withdrew its support of the firm.
GreenVolts came to the solar market with a lot of promise a few years ago -- only to recede soon afterward. The startup had signed a multi-megawatt power purchase agreement (PPA) with PG&E in 2008, one of the more sizable CPV projects at the time. But GreenVolts had some troubles and a bit of a boardroom shift: Founder Bob Cart was replaced as CEO by JDSU executive Dave Gudmundson. Gudmundson had no experience in the solar industry and brought several of his JDSU colleagues along with him. The new management had little solar or utility expertise. The same held true for the board of directors of the company. Here's ABB Ventures' comment on why it decided not to continue with the investment in the firm in this statement to GigaOm.
Gudmundson took the firm quiet and the company reworked its product and its strategy. The product went through a major redesign because of issues with accuracy, tracking and scalability, according to our sources.
As far as we could tell, Gudmundson's contribution was outlined in a press release calling the product "the industry’s first complete and fully integrated solar system, including modules, trackers, inverters, and energy management software." Although not willing to go on record, a competitor in the tightly knit CPV space told GTM that this was hardly a CPV industry first and that most CPV vendors provide complete systems.
What that "systems" claim was was an attempt to find some or any differentiation for the GreenVolts product in a brutal, commodity electron market.
GreenVolts returned, armed with its new lipstick and a new $35 million VC round, which included $20 million from ABB Technology Ventures, the VC arm of ABB (NYSE: ABB), the power and automation technology giant. The GreenVolts CPV technology looked like a good match for ABB's recent equity stake in Novatec Solar, a provider of linear fresnel lenses. ABB was to sell the system for GreenVolts, providing a turnkey CPV system to its customers.
While GreenVolts was re-inventing itself, Amonix, Soitec, and SolFocus became the dominant leaders in the CPV sub-sector, with hundreds of megawatts in their PPA pipelines. But Amonix recently closed its Nevada factory and SolFocus is trolling for more funding with the help of Advanced Equities.
In an interview late last year, Eric Romo, a VP and founder at the firm, said he didn't see CPV vendors as the competition. He told Greentech Media, "The competition isn't CPV; it's PV. How we measure and think about ourselves is as a solar company, not a CPV company." He said that GreenVolts had won a dozen projects (about three megawatts total) in competitive bids against flat-panel photovoltaics. GreenVolts had installed a one-megawatt CPV system in Yuma, Arizona at Arizona Western College.
Maintaining the aspirational language of startups, Romo claimed that CPV had "the potential to be the next leg in the curve," adding, "The next phase is showing CPV is not just as good, but better than PV."
If you're competing head-to-head with PV panels below $1.00 per watt or solar farms with an all-in cost of $3.50 $2.50 $2.00 per watt, GreenVolts should have been able to furnish a dollar-per-watt or LCOE number that shows why it could win business against flat-panel PV. That's where Romo was less than completely communicative with this reporter. He said that because it was a full systems company, the dollar-per-watt value was not comparable to the PV module dollar-per-watt price and that there was a "nomenclature" mismatch because of the apples-to-oranges nature of the comparison of a CPV system to a PV installation.
In a 3.2-gigawatt U.S. PV market and a 25-gigawatt global solar market, scale is vital -- and GreenVolts had to scale, scrub out cost, and genuinely outperform and out-compete against PV and its CPV brethren, even as solar pricing continues to drop. And it was never able to do that.
The Cleantech Open heralded GreenVolts as one of its successes -- defining "success" as raising a lot of venture capital.
Here's a partial list of VC-funded CPV firms, including system and component vendors:
- Ahura Energy
- Banyan Energy
- Circadian Solar
- Concentrator Optics
- Cool Earth Solar
- Covalent Solar
- Energy Innovations
- Extreme Energetics
- Greenfield Solar
- MegaWatt Solar
- Microlink Devices
- Morgan Solar
- Phostor Solar
- Prism Solar
- Pyron Solar
- Pythagoras Solar
- QuantaSol (acquired by JDSU)
- Scaled Solar
- Skyline Solar
- Solar Junction
- Solar Systems
- Soliant (acquired in fire sale by Emcore)
- Sun Phocus
- SV Solar
- Zenith Solar
- Whitfield Solar
GreenVolts' CPV units photographed by Ed Gunther's candid solar camera