Last week’s POW talked about the recent trend of U.S. retailers that have been adopting solar power systems on their stores and distribution centers, primarily using the PPA model offered by companies like SunEdison and MMA Renewable Ventures. That’s a trend I think is going to continue.
This week, I’d like to talk about another project trend that I foresee expanding rapidly around the world, one that is just starting to take off in the US. The common name for this type of project is the large scale, grid-connected solar power plant. For short, I like to call these Invested Solar Parks (ISP).
An ISP is a commercial investment; it’s a business venture. Generally, you’ll have a group of investors enter a market with a feed-in tariff (FIT), such as Germany, Spain, Italy, France, or Ontario (podcast description here). The reason that ISP’s occur most often in FIT regions is because it provides the investor with a predictable return-on-investment. When a FIT is implemented in a region it means that the government will pay a subsidy for every kWh of solar energy produced. With this guarantee in place, investors line up to plop down they’re tens and hundreds of millions of dollars to build ISP’s.
UTILITY SOLUTIONS: Most recently, and most interestingly, is that utilities have begun developing these ISP’s. This is a clear sign that the technology has developed enough for utilities to consider solar parks against wind, coal, nuclear and others when deciding how to expand power generation capacity. Remember, utilities only build capacity to accommodate for increases in PEAK demand. ISP’s perform at their most efficient levels during peak electricity demand hours. So ISP’s are a great solution for utilities.
EDUCATION: Consider a residential installer. Every time they meet with a prospect, they are faced with a varying level of education about solar power and how it works. They must educate the buyer about the solution, convince them that the investment they are making is a good one, design a custom system, retrofit the wiring for the home, build it out, and apply for any tax rebates or incentives. All for that 2-6 kW project.
How much easier is it to approach a group of professional investors or energy executives, present the business case for an ISP, present clear models for predictable energy production based on real world conditions monitoring, design one optimal and cost efficient structure and wiring, grid-connect it, and apply for those same rebates, incentives, etc. It may be a longer sale, but recent projects are ranging in the 10-40 MW range. That’s enough to power thousands of homes. Smart companies, with the right resources are going to make this a highly competitive market space. This is another part of the channel where economies of scale will play a big role.
From a rapid deployment point of view, ISP's make even more sense than targeting large corporations where even major installations, like the Google HQ, rarely exceed 2 MW.
LOCATION, location, location: Finally, ISP’s can be located near where the power is needed most. Everyone talks about how wind is such a cheap renewable, and I agree, wind has great upside. The problem is that the major wind centers where wind power is most profitable are not located near major population centers where the energy demand occurs. Infrastructure is incredibly expensive and inefficient. I believe that in the coming years, the benefits of solar will allow ISP’s to overtake the current popularity of the large wind farm.
Not only does solar outshine wind. Think of the other major power generation technologies. No one wants a coal or nuclear plant located near their home or business. Many people still take issue with wind’s aesthetics, noise, or impact to aviary (though I find these arguments as trivial). Near their home or business is where the utility needs to locate them. No one can complain about solar, with its panels, resting quietly. They don’t pollute the air, cause a safety concern, make noise, lower property values. They just sit there, producing the energy for you to live your comfortable upper middle class lifestyle with your Toyota Sequoia and your big screen TV.
Yep, it’s a great country we live in. With a lot more ISP’s and a whole lot more PHEV’s, the US could be the global leader in the Cleantech lifestyle. What do you think?
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