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Archive for the ‘PG&E’ Category

Solar jobs head south

Posted in alternative energy, climate change, energy, First Solar, green collar jobs, OptiSolar, PG&E, renewable energy, solar energy, solar power plants, SolarWorld, Solyndra, SunPower, tagged , , , , , on December 11, 2008| 6 Comments »

Amid the daily drumbeat of mass layoffs, here’s some sunny news: Solar startup Suniva cut the ribbon Thursday on a photovoltaic cell factory outside Atlanta.

As solar factories go, Suniva’s plant – the first such facility in the Southeast – is relatively small, making 32 megawatts of solar cells annually until  production is fully ramped up to 175 megawatts in 2010. But the factory will create 100 green collar jobs and it follows the opening of  SolarWorld’s new solar cell fab outside Portland, Ore., that will  produce 500 megawatts’ worth of solar cells, and thin-film solar startup HelioVolt’s factory in Austin. Meanwhile, Solyndra, a Silicon Valley thin-film solar startup, is expanding its production facilities while Bay Area rival OptiSolar is building a Sacramento factory that will employ 1,000 workers to produce solar cells for the power plant the company is building for utility PG&E (PCG). (Leading thin-film solar company First Solar (FSLR) operates a factory in Ohio as well as plants in Malaysia.) But Chinese solar giant Suntech (STP) last week said it has put plans for U.S. factories on hold due to the credit crunch.

The Suniva grand opening comes on a good news-bad news day for the solar industry. On one hand, President-elect Barack Obama is expected to nominate alternative energy proponent and Nobel laureate Steven Chu, director of the Lawrence Berkeley National Laboratory, as Secretary of Energy. But the solar industry faces a tough year ahead. On Thursday, research firm New Energy Finance, echoing other analysts, predicted prices for polysilicon – the base material of conventional solar cells – would fall 30% in 2009. That’s bad news for conventional solar cell makers like SunPower (SPWRA) and Suntech if they’ve locked in silicon supplies at higher prices but provides an opening for further growth for thin-film solar companies that make solar cells that use little or no polysilicon.

“We expect to see significant drops in the price of modules next year,” wrote New Energy Finance CEO Michael Liebreich.  “Any manufacturer who does not have access to cheap silicon and who has not focused on manufacturing costs is going to be in trouble. The big shake-out is about to begin. The next two years will change the economics of PV electricity out of recognition.”

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No happy new year for the solar industry

Posted in alternative energy, climate change, energy, environment, First Solar, global warming, PG&E, renewable energy, solar energy, solar power plants, Southern California Edison, Sungevity, SunPower, Suntech, tagged , , , , , , on December 8, 2008| 9 Comments »

solarcells

photo: Southern California Edison

While demand for solar panels is expected to continue to grow by double-digits in the years ahead, 2009 could be a make-or-break year for some companies, according to an analysis from HSBC Global Research.

After grappling with a shortage of polysilicon – the base material of conventional solar cells – for the past couple years, the industry now faces falling prices. The spot market for polysilicon has plummeted 35% since October, writes HSBC alternative energy analyst Christine Wang, who predicts prices will fall 30% next year.

That’s bad news for solar module makers who locked in long-term contracts at higher prices – which looked like a smart move when polysilicon was in short supply and prices rising rapidly. “The winners will likely be the companies with competitive cost structures, scale, good product  quality, strong balance sheets, and strong customer relationships,” according to Wang. “We believe that new entrants and small players will suffer the most as they lack brand recognition.”

The culprits are the usual suspects – the global financial crisis as well as some cutbacks in subsidies from countries like Spain. Solar cell companies that have rapidly ramped up production over the past two years now may be saddled with too many high-priced products.

Wang downgraded Chinese solar giant Suntech (STP) and set a price target of $4.50 – down sharply from HSBC’s earlier target of $55. Suntech was trading at near $10 Monday afternoon but still nearly 90% off its 2008 high.  (SunPower (SPWRA), First Solar (FSLR) and other solar cell makers have also seen their share prices nose-dive.) “High portion of polysilicon based on contract prices will hurt Suntech,” writes Wang, who estimated that 80% of Suntech’s polysilicon supply is locked into contracts “on less favorable fixed prices.”

Falling panel prices is good news for solar system installers like Sungevity and Akeena Solar (AKNS) and their residential and commercial customers. When Green Wombat ran into Akeena CEO Barry Cinnamon in San Francisco at the announcement of Better Place’s Bay Area electric car project, he said he was in no rush to enter into long-term contracts with solar cell suppliers as he expects prices will continue to fall in 2009.

Still, not all the news is gloomy for the industry. Wang expects that the financial crisis won’t derail government support for solar, given climate change pressures and state mandates to increase the use of renewable energy. The move by utilities like PG&E (PCG) and Southern California Edison (EIX) to sign long-term contracts for electricity from photovoltaic power plants will also keep demand high in coming years.

Wang projects solar cell demand will grow 45% between 2008 and 2012. “Developed countries are increasingly focused on environmental protection and curtailing the causes of climate change, and we do not believe this trend will shift just because of a (hopefully) short-term financial crisis,” she wrote.

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A smart energy grid inside your home

Posted in climate change, corporate green, energy, energy efficiency, enviro startups, environment, global warming, green buildings, green startups, green tech, PG&E, tagged , , , , on November 25, 2008| Leave a Comment »

tendril

In case you missed it, this Green Wombat story appears in the current issue of Fortune.

A house that thinks

The high-tech networks that Reliant Energy is installing in the homes of its 1.8 million customers will help them save electricity.

By Todd Woody, senior editor

(Fortune Magazine) — Inside a white-brick house nestled in Houston’s leafy Montrose neighborhood, a gray handheld video display sits on the living room coffee table. But this is no ordinary remote control. Called the Insight and made by Tendril, a Boulder startup, the device communicates wirelessly with the home’s utility meter, letting you track real-time information about the cost of the electricity you consume.

The house is actually a demonstration project set up by Reliant Energy (RRI), a reseller of electricity with $12 billion a year in sales. Glen Stancil, Reliant’s vice president for smart energy R&D, taps the Insight’s screen. “Right now we’re spending $1.40 per hour,” he says, noting that the electricity prices and usage are updated every ten seconds. (Customers can also access the same data on the web or their iPhones.)

Stancil presses another button. “The bill so far is $86, and for the month it looks like it’s headed to $367,” he says. The Insight system also warns that you’ll fork over another $100 this month if you crank up the air conditioner a couple of notches. So keep your hands off the thermostat.

That’s just the kind of behavior that Reliant Energy CEO Mark Jacobs would like to see. Until now, Reliant has made its money by entering contracts with utilities for a fixed amount of power at a fixed price and then reselling it to its 1.8 million customers. If demand unexpectedly soars on a hot afternoon as everyone turns up the air conditioning, Reliant often must buy extra power on the spot market, where prices can spike as much as 60%.

That cuts into profits. “It’s like running a beachfront hotel, charging the same room rate all year round, and then building more rooms to guarantee that everyone has a room on the busiest weekends,” says Jacobs.

In November, Reliant started installing the Insight in homes, which means it will be able to pass along those high spot prices to its customers, or better yet, in sweltering Texas, let customers buy a month’s worth of cool at a set price – say, 72 degrees for $200 or 74 degrees for $160.

The Insight offers another advantage – Jacobs believes it will encourage his customers to cut back on electric use and save money. “What if you knew you could run your clothes dryer at five o’clock, and it would cost $3,” says Jacobs, “or you could wait until eight o’clock at night, and it would be only a dollar?”

PG&E (PCG), Southern Edison International (EIX) and other utilities are rolling out smart meters but have yet to to integrate them with smart energy systems for the home. But Reliant operates in a competitive, deregulated electricity market. If homeowners get cool technology that helps them avoid the unpleasant surprise of a big electric bill, Jacobs believes Reliant will retain more customers. And then there’s the green angle. “We as an industry are the single largest emitter of greenhouse gas, and our goal is to help our customers use less, spend less, and emit less,” says Jacobs.

For Jacobs, a 46-year-old Goldman Sachs (GS) veteran, smart energy technology is just the wedge to shake up what he calls “an industry in the Dark Ages” while opening new markets for his company, whose stock has been walloped by the one-two punch of Houston’s Hurricane Ike and the credit crunch.

Hurdles, however, remain. Will consumers already suffering from information overload want to obsessively monitor their electricity habit? Will a sweating Houstonite on a 104-degree day say to hell with the cost and crank up the AC anyway? Jacobs isn’t worried. He believes nothing influences behavior better than knowing the true price of what you’re buying.

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The electric car economy

Posted in Better Place, electric cars, energy, environment, green cars, green policy, PG&E, solar energy, Southern California Edison, tagged , , , , on November 24, 2008| 47 Comments »

betterplaceplugElectric cars are as good for the economy as the environment and could put $80 billion in consumers’ pockets by 2030, according to a new study from the University of California.

Not surprisingly, the oil industry would take a $175 billion hit under the scenario sketched by UC Berkeley’s Global Venture Lab, while a booming battery business would gain $130 billion as the internal combustion engine sputters out. “There will also be significant changes in the balance of payments among nations as petroleum imports decline,” the authors wrote. “We find the net imports of the U.S. will decline by $20 billion.”

The report makes several assumptions to arrive at its optimistic conclusions: The Cal researchers are counting on 39% of cars on the road to be electric by 2030 and powered by electricity generated from renewable sources like wind and solar.

Electric car owners would save an estimated $7,203 in operating costs, mainly because with no engines to maintain, battery-powered vehicles rarely see the inside of mechanic’s garage.

Left unexplored in the report was the impact of electric cars on the United States auto industry. If General Motors (GM), Ford (F) and Chrysler survive – and that’s a big if these days – they stand to benefit assuming they retool for the electric age and produce cars consumers want to buy before rivals like Toyota (TM), Honda (HMC) and Renault-Nissan beat them to the punch. But their dealer networks are sure to suffer once their lucrative repair and maintenance business evaporates.

Another winner in the electric car economy will be solar and wind companies and utilities, particularly those like PG&E (PCG) and Southern California Edison (EIX) that are making multi billion-dollar investments in renewable energy.

One of the biggest assumption the Cal report makes involves the rise of a U.S. battery industry. “We don’t have a battery industry today,” said Shai Agassi, CEO of electric car infrastructure startup Better Place, on Friday at a panel Green Wombat moderated for the University of California’s Global Technology Leaders Conference. “Either we make them here or they’re going to be made in China.”

Agassi and the mayors of San Francisco, San Jose and Oakland on Friday announced that Better Place would build a $1 billion network of charging stations throughout the Bay Area. Renault-Nissan has agreen to provide Better Place with the hundreds of thousands of electric cars it’ll need to put on the road make its business model profitable.

photo: Better Place

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Forget the recession, California goes for the green

Posted in alternative energy, BrightSource Energy, climate change, endangered species, enviro startups, environment, global warming, green policy, green startups, green tech, Natural Resources Defense Council, OptiSolar, PG&E, renewable energy, San Diego Gas & Electric, solar energy, solar power plants, Southern California Edison, the green economy, tagged , , , , on November 18, 2008| 2 Comments »

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photo: California Governor’s Office

California Governor Arnold Schwarzenegger on Monday terminated talk that the recession will crimp California’s fight against global warming when he ordered every utility in the state to obtain a third of its electricity from renewable sources by 2020. And in a move that will shake up the land rush to build solar power plants in the desert, Schwarzenegger signed an executive order to streamline and prioritize the licensing of such projects.

“One of the great things about California, of course, is that we always push the envelope,” said Schwarzenegger at startup OptiSolar’s solar cell factory in Sacramento, surrounded by a triptych of solar panels, utility executives and environmentalists. “That is why today I’m proposing that we set our sights even higher. This will be the most aggressive target in the nation.”

California currently requires the state’s Big Three investor-owned utilities – PG&E (PCG), Southern California Edison (EIX) and San Diego Gas & Electric (SRE) – to secure 20% of their electricity from green energy sources like wind, solar and geothermal by 2010. Monday’s move turns what had been a 33% renewables goal into a mandate and extends responsibility for meeting it to every electricity retailer in California.

Utilities, however, have struggled to reach even the 20% target as renewable energy projects become bogged down in California’s extensive environmental review and licensing process that involves a host of state and federal agencies.

Many proposed massive megawatt solar power plants will be built on environmentally sensitive land in the Mojave and Colorado deserts in California, threatening to trigger years-long battles over endangered species and water.

Take, for instance, the Ivanpah Solar Electric Generating System, 400-megawatt solar thermal power plant  to be built by Bay Area startup BrightSource Energy on U.S. Bureau of Land Management property. BrightSource, which has a 20-year contract to sell the power plant’s electricity to PG&E, is dealing with the California Energy Commission, the California Department of Fish and Game, the BLM and the U.S. Fish and Wildlife Service as well as the agencies that control access to the transmission grid.

Then there’s environmental fights over extending power lines to connect such projects to coastal metropolises. Late last month, state regulators rejected San Diego Gas & Electric’s plan to build $1.3 billion transmission line called the Sunrise Powerlink due to the environmental impact of routing it through sensitive desert lands.  A final decision on the project to bring green energy from the Imperial Valley to coastal metropolises will be made next month.

Schwarzenegger’s executive order requires various state agencies to collaborate to create a one-stop shopping permit process to cut in half the time it takes to license a renewable energy project – which now can be a two-year slog. The U.S. Fish and Wildlife Service and BLM also agreed to participate in a Renewable Energy Action Team to expedite the licensing of solar power plants and other green energy projects.

“We will streamline the permitting process and the siting of new plants and transmission lines,” Schwarzenegger said. “We will complete the environmental work up front, dramatically reducing the time and the uncertainty normally associated with any of those projects.”

By March 1, the action team will identify and prioritize those areas of the desert that should be developed first for renewable energy projects based on environmental impacts and access to transmission. The group will also work with another task force that is identifying where power lines should be extended into the desert.

That will affect the fortunes of dozens of solar startups, financiers and speculators — everyone from Goldman Sachs (GS) to Chevron (CVX) — that have filed lease claims on nearly a million areas of desert land that the BLM is opening up for solar power plants. Those with land claims in areas at the top of the list for renewable energy development will find it easier to obtain financing – currently in short supply – to build billion-dollar projects. Those at the bottom of the list may rue the six-figure application fees they paid to stake claims on thousands of acres of desert land.

Behind the optimistic talk and smiles at Monday’s press conference, utility execs and environmentalists who praised the governor’s latest green initiative also signaled that political fights over how to achieve the state’ ambitious renewable energy goals are not over.

“Transmission is absolutely critical to get those renewables from the Imperial Valley,” San Diego Gas & Electric CEO Deborah Reed told the audience. “Assuming a positive decision on Sunrise Powerlink next month, we’ll get to 33% by 2020.”

But when the Nature Conservancy’s Rebecca Shaw took the microphone, she offered a cautionary note. “In our urgency to create a more sustainable future, we must be careful not to destroy the very environment that we are trying to protect,” said Shaw, associate state director for the environmental group.

California’s aggressive renewable energy policies already have had one desired consequence: spurring the creation of green collar jobs. OptiSolar, which earlier this year signed a long-term contract to supply PG&E with 550 megawatts of electricity from a massive photovoltaic solar farm, employs 500 people at its Bay Area headquarters and factory. CEO Randy Goldstein said his company will hire another 1,000 for its new Sacramento factory.

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Credit crisis shakes up solar land rush

Posted in alternative energy, Ausra, BrightSource Energy, energy, enviro startups, environment, First Solar, PG&E, renewable energy, solar energy, solar power plants, Solel, tagged , , , , , on November 13, 2008| 5 Comments »

Photo: Todd Woody

The land rush to stake prime sites in the Mojave Desert for solar power plants has moved east from California to a state that knows a thing or two about desert dreaming and scheming — Nevada.

When Green Wombat’s story on the solar land rush was published in the July 21 issue of Fortune (see “The Southwest desert’s real estate boom”), solar energy developers, financiers and speculators had filed lease claims on 226,000 acres of federal land in Nevada. Today, 702,000 acres are in play, largely thanks to Goldman Sachs’ aggressive moves to lock up land. The New York investment giant has put claims on about 300,000 acres of Bureau of Land Management dirt in the Silver State — in one week alone, it filed claims on some 187,000 acres.

Given its financial firepower, Goldman’s designs on the desert have been a matter of intense interest. (The firm also has filed claims on 125,000 acres in California.) Goldman (GS) declined to discuss its solar strategy, but a review of BLM documents and interviews with green energy executives sheds some light on its power plans as the financial crisis triggers a shakeout in the solar land rush.

Over the past two years, scores of companies — from Silicon Valley startups to Chevron (CVX) to utility FPL (FPL) — have scrambled to put lease claims on the nation’s best solar real estate to build massive megawatt solar power plants. In California, where utilities face a state mandate to obtain 20% of their electricity from renewable sources by 2010 with a 33% target by 2020, claims have been filed on nearly 1 million acres. If all those solar stations were built, they would generate a staggering 60,000 megawatts of electricity, or nearly twice the power that California currently consumes.

With most of the prime solar hot spots taken in California, the action is moving to sun-drenched states like Nevada where there’s plenty of wide-open desert land. The BLM has yet to issue any leases and is currently evaluating the applications on a first come, served basis. A key consideration: whether the applicant can deploy a viable solar technology.

But with the credit crunch threatening to derail many of those projects, companies are jockeying to score the best sites – those near transmission lines and water – when the weak are weeded out by a failure to obtain financing or a proven solar technology. Some sites have two or three companies queued up in case the first company in line falters.

For its part, Goldman Sachs has brought in its Cogentrix Energy subsidiary to develop its solar projects, according to BLM records.  Cogentrix is a Charlotte, N.C.-based owner and operator of coal and natural gas-fired power plants that Goldman acquired for $2.4 billion in 2003.

“Cogentrix doesn’t have a solar technology,” says Rob Morgan, executive vice president and chief development officer for Silicon Valley solar startup Ausra. He says Ausra, which is building a solar power plant for utility PG&E and itself has staked claims in Arizona and Nevada, has held discussions with Goldman about its solar technology.

European renewable energy companies are also taking advantage of the market turmoil. State and federal records show that Iberdrola Renewables, a spinoff of Spanish energy giant Iberdrola, has quietly acquired a year-old Henderson, Nev., startup called Pacific Solar Investments — and its claims on about 180,000 acres of desert land in Arizona, California and Nevada. Iberdrola Renewables is the world’s largest wind developer.

The saga of Pacific Solar shows how cutthroat the competition for solar real estate has become. Just ask Avi Brenmiller, CEO of Israeli solar power plant company Solel, which last year inked a 553-megawatt deal with PG&E (PCG). Brenmiller now finds himself up against his former COO, David Saul, who set up Pacific Solar and began filing land claims while still working for Solel, according to BLM  records and Brenmiller. During this time, Saul also was making land claims on behalf of a second solar company, IDIT, where he serves as CEO, according to filings with the Arizona Secretary of State’s office.

Five days after leaving Solel in August 2007, Saul filed a claim on a California site, getting second in line behind Goldman but beating his former employer to the punch by a week. Solel is now behind Pacific Solar and IDIT on two other sites. “So he’s now a competitor in the land rush, which is one of the problems we face,” Brenmiller told me ruefully when we met in San Francisco earlier this year.

Saul did not respond to requests for comment. Iberdrola Renewables also did not return requests for comment.

French energy company EDF’s U.S. subsidiary, enXco, meanwhile has been joined in the land rush by Portuguese utility company EDP and Germany’s Solar Millennium. Spanish renewable energy heavyweight Acciona’s name doesn’t appear on any land claims. But the CEO of Acciona’s U.S. solar operations, Dan Kabel, started a company called Bull Frog Green Energy that has filed claims on 56,000 acres in California and Nevada. Kabel did not respond to a request for comment.

Other new players in the desert solar game include U.S. energy giant Sempra (SRE), which wants to lease 11,000 acres in California’s Imperial County for a 500-megawatt photovoltaic power plant. That could be good news for solar cell maker First Solar (FSLR), which is currently building a smaller solar power plant for Sempra in Nevada. Johnson Controls (JCI), the Fortune 100 automotive and power systems conglomerate, has put in a solar land claim in Nevada. Even former hotel magnate Barry Sternlicht, founder of Starwood Hotels & Resorts, wants a piece of the action through his Starwood Energy Group, which has filed claims in Arizona and Nevada to build solar power plants.

SolarReserve, a Santa Monica, Calif-based solar startup backed by Citigroup and Credit Suisse, has BLM land claims in California and Nevada and is also negotiating with smaller companies that staked claims on prime solar power plants with access to the transmission grid.

“We have done deals with three or four applicants in the BLM queue,” SolarReserve chief operating officer Kevin Smith tells Green Wombat. “The smaller companies with land claims are typically speculators who don’t have their own technology.”

Industry insiders say a shakeout in the land rush is inevitable, given the credit crunch and too many companies in the chase for the best solar power plant sites.

“A drawn-out financial crisis will reshape the renewable sector, most likely forcing a wave of consolidation,” says Reese Tisdale, research director for Emerging Energy Research, a Cambridge, Mass., consultant. “If someone holds land and someone holds a technology, maybe there’s a deal out there.”

That’s Ausra’s thinking. With the financial crisis putting the billions of dollars needed to build big solar projects out of reach, the company is repositioning itself as a supplier of solar technology as well as a builder of solar power plants.

“We see our future as being a technology provider,” says Ausra’s Morgan, who says the company has had discussions with various power plant developers. “And hopefully a lot of these developers in the BLM queue will use Ausra technology.”

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Generating electricity from a balloon

Posted in alternative energy, Cool Earth Solar, enviro startups, green startups, green tech, PG&E, renewable energy, San Diego Gas & Electric, solar energy, solar power plants, Southern California Edison, Uncategorized, tagged , , on November 5, 2008| 16 Comments »

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Image: Cool Earth

LIVERMORE, Calif. – It sounds like something out of one of those do-it-your-self magazines: Stitch together two buck’s worth of thin-film plastic – the stuff potato chip bags are made of – stick in a photovoltaic cell, inflate with air and, voilà, you’ve got yourself a “solar balloon” that will generate a kilowatt of electricity. String together 10,000 balloons and you’ve got a solar power plant that can power a town.

California startup Cool Earth Solar believes this high-low tech approach is what will make its solar power plants competitive with fossil fuels. Green Wombat visited Cool Earth’s Livermore headquarters recently for a Fortune Magazine story and got a look at the technology.  “We wanted to do solar in a very different way,” says Cool Earth CEO Rob Lamkin.

Different it is. We’re standing in Cool Earth’s back shop in front of an eight-foot-high solar balloon. Two pounds of plastic are pumped with a third of a pound of air per square inch to make the balloon taut. The curved top two-thirds of the balloon is transparent and the bottom is made of the silvery reflective plastic you’d find lining a bag of junk food. A steel strut inside will hold a tiny but highly efficient solar cell, which is the most high-tech component of the balloon.

Here’s the ingenious part of the technology, developed by scientists at Caltech: Instead of using expensive optics to concentrate sunlight on the solar cell, Cool Earth manipulates the air pressure inside the balloon to change the shape of the mirrored surface so that it focuses the maximum amount of sunlight on the solar cell, boosting electricity generation 300 to 400 times.

By replacing expensive materials like steel with cheap-as-chips plastic and air, Cool Earth aims to dramatically lower the price of solar electricity. “We strongly believe it’s all about cost,” says Lamkin, “not how clever the technology is or if it is 1% more efficient.”  For instance, the amount of aluminum in a can of Coke would provide enough reflective material for 750 balloons, he notes.

The company, founded in 2007, has raised $21 million so far. It plans to build solar power stations in the 10-megawatt to 30-megawatt range. Two to six balloons will be suspended on wood poles and anchored with cables about 10 feet off the ground. That means the earth won’t have to be graded, reducing the environmental impact of Cool Earth’s power plants – a growing issue given that most solar thermal power stations will be built in the desert, home to a plethora of protected wildlife. The relatively compact size of Cool Earth’s power stations also means they can be located close to existing transmission lines.

A prototype power plant is being built in a field across the street from Cool Earth’s offices and Lamkin says a 1.5 megawatt plant will be constructed early next year in the Central Valley town of Tracy. The electricity probably will be sold to utility PG&E (PCG) under a state renewable energy program.

Unlike big solar thermal plants, photovoltaic power stations do not need to obtain a license from the California Energy Commission, which can be an expensive two-year ordeal. Lamkin estimates that a Cool Earth power plant can be up and running in six months, which should appeal to utilities like PG&E, Southern California Edison (EIX) and San Diego Gas & Electric (SRE), which are under the gun to meet state mandates to obtain 20% of their electricity from renewable sources by 2010.

Now Cool Earth just needs to make the technology work in the field. It has yet to produce electricity from its balloons, as the solar cells are still being produced. Also unknown is how the balloons will operate in real-world conditions. Lamkin says they can withstand 125-mile-an-hour winds. They have a lifespan of just five years, but Cool Earth expects to replace the balloons every year, given their low cost.

“Our major structural element is air, which so far is free,” Lamkin says. “And the sun isn’t taxed either.”

Yet.

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Credit crunch darkens solar’s prospects

Posted in alternative energy, Ausra, BrightSource Energy, climate change, energy, enviro startups, environment, GE Energy Financial Services, global warming, green startups, investment tax credit, PG&E, renewable energy, solar energy, solar power plants, tagged , , , , , , on October 24, 2008| 7 Comments »

photo: Ausra

The promise and peril of large-scale renewable energy was on display Thursday as California’s first solar power plant of the 21st century went online near Bakersfield. Under blue skies, Governor Arnold Schwarzenegger and other politicians heralded the five-megawatt Ausra solar station as the vanguard of a new era of alternative energy that would combat the effects of climate change while building a green economy.

Then the CEO of one of the nation’s largest utilities stepped up to the podium and delivered a reality check. “As we all know the capital markets are in disarray,” said PG&E chief Peter Darbee, whose utility has a contract to buy 177 megawatts of electricity from Ausra. “They’re down 40%. The capital markets are going to distinguish between high-risk projects and low-risk projects and the high-risk projects are not going to get financed in the future.”

But he added, “PG&E stands ready to take on the challenge of financing renewables.”

The utility may just have to.

At the solar industry’s big annual conference in San Diego last week, renewable energy executives were euphoric over Congress’ 11th-hour passage this month of an eight-year investment tax credit that would allow big solar power plants to get up and running, eventually allowing for economies of scale crucial to driving down the price of green electricity. Then a dark clouded drifted over the sun-splashed proceedings in the form of three somber-suited men bearing ominous PowerPoint presentations.

The message from Wall Street: The credit crunch will wallop big solar plant projects that need billions of dollars in financing to get built.

Here’s why. It gets a bit arcane but bear with the wombat. The renewable energy legislation passed as part of the financial bailout package allows solar companies to take a 30% tax credit on the cost of building a power plant. Now most of these companies are startups and have no way to monetize, as they say on the Street and in Silicon Valley, those tax credits as they’re not profitable. Instead, a solar company must essentially trade the tax credits to a firm that can use them in exchange for cash to finance construction.

So investors form something called a tax equity partnership, in which they agree to finance, say, a solar power plant in exchange for the tax credits generated by the project. The problem, according Tim Howell, managing director of renewable energy for GE (GE) Energy Financial Services, is that investors’ appetite for tax equity partnerships has taken a nose dive just as the market will be flooded with solar tax credits from a growing number of projects currently being licensed. For instance, he said, 1,000 megawatts of solar projects would generate $1.5 billion in tax credits.

That means there has to be enough investment dollars – or “capacity” in Wall Street lingo – available to buy those tax credits from the solar power companies.  “Competition for tax capacity, which is a scarce resource in tough financial times, is a problem we have to solve,” Howell told a packed ballroom in San Diego.

John Eber, managing director of JPMorgan Capital (JPM), flashed a PowerPoint that showed the total value of the tax equity market at $15 billion last year with 40% going to renewable energy projects, mainly wind. Now that investment banks-which put together the partnerships and sometimes invested their own capital-are all but an extinct species on Wall Street, only an estimated $875 million will be available for all solar projects in 2008. In contrast, he noted, just the solar power plant projects already announced  would need between $6 billion and $8.5 billion in tax equity funding.

“Tax equity is becoming increasingly hard to raise for renewable energy projects,” said Keith Martin, a project finance attorney at the Washington firm Chadbourne & Parke. “Several large institutional investors who put money into renewable energy deals in the last three years have dropped out of the market.”

That, they said, means untried technologies from startups will face higher hurdles to attract investors.

In conversations Green Wombat has had with solar power plant executives over the past couple of weeks, they acknowledge that financing will be much harder to come by but they’re hardly ready to throw in the towel.

“There’s probably a gigawatt of press releases and 200 megawatt of plants that acutally will go live in 2010,” says John Woolard, CEO of Oakland-based BrightSource Energy, which has a contract with PG&E to deliver up to 900 megawatts of electricity.

His point: Despite gigawatts of signed utility deals, only a few power plants will actually be built in the next couple of years when financing is expected to be the toughest to obtain. “In 2011, it’s reasonable that 500 to 600 megawatts could happen,” he says. “Those aren’t big numbers for the tax equity market, but if you believe everything that’s been announced is going to be built, then it is a big market.”

California utilities, however, are counting on that big market to meet a state mandate to obtain 20% of their electricity from renewable sources by 2010 with a 33% target for 2020. PG&E (PCG), for instance, has signed 20-year power purchase agreements for more than 2.5 gigawatts of solar electricity.

When Congress extended the solar investment tax credit it also lifted a ban on utilities claiming the tax subsidy. Hence PG&E chief Peter Darbee’s statement Thursday that his utility would be willing to make sure its projects get funded by using the company’s considerable capital clout.

“We certainly could look at potentially funding or investing in renewable projects,” PG&E senior vice president Greg Pruett told Green Wombat Thursday. While he said PG&E has no specific projects in mind, it might consider financing construction of solar power plants through a tax equity partnership or a direct investment.

“Say we have a solar thermal company and they have a proven technology and they have done a demonstration plant, but because of the markets they can’t get financing,” says Pruett. “We might consider investing so they can build the plant and get it online.”

He says it’s less likely that PG&E would get into the solar construction business itself.

While it’s anyone’s guess how the markets will shake out by the time solar companies start making the rounds in New York, it’s clear that a shakeup in the nascent solar power plant business is in the offing.

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Congress sets stage for solar boom

Posted in alternative energy, Ausra, BrightSource Energy, energy, environment, First Solar, geothermal, PG&E, renewable energy, solar energy, solar power plants, Southern California Edison, wind power, tagged , , , , , , , , on October 3, 2008| 25 Comments »

photo: eSolar

After months of failed attempts in Congress to extend crucial renewable energy tax credits, the end-game came with lightning speed Friday afternoon: The House of Representatives passed the green incentives attached to the financial bailout package approved by the Senate Wednesday night and President Bush promptly signed the legislation into law.

There were goodies for wind, geothermal and alternative fuels, but the big winner by far was the solar industry.

“It feels like we should be popping the champagne,” said a Silicon Valley solar exec Green Wombat met for lunch minutes after Bush put pen to paper.

That it took the biggest financial crisis since the Great Depression to save billions of dollars of renewable projects in the pipeline for the sake of political expediency does not bode well for a national alternative energy policy. But the bottom line is that the legislation passed Friday sets the stage for a potential solar boom.

  • The 30% solar investment tax credit has been extended to 2016, giving solar startups, utilities and financiers the certainty they need for the years’ long slog it takes to get large-scale power plants and other projects online. The extension is particularly important to those Big Solar projects that need to arrange project financing in the next year or so.
  • The $2,000 tax credit limit for residential solar systems has been lifted, meaning that homeowners can get a 30% tax credit on the solar panels they install after Dec. 31. That will save a bundle – especially for those who live in states with generous state rebates – and goose demand for solar panel makers and installers like SunPower (SPWRA) and First Solar (FSLR). (If you buy a $24,000 3-kilowatt solar array in California – big enough to power the average home –  you can claim a $7,200 federal tax credit. Add in the state solar rebate and the cost of the system is cut in half.)
  • Utilities like PG&E (PCG), Southern California Edison (EIX) and FPL (FPL) can now themselves claim the 30% investment tax credit for large-scale solar power projects. That should encourage those well-capitalized utilities to build their own solar power plants rather than just sign power purchase agreements with startups like Ausra and BrightSource Energy.

“The brakes are off,” says Danny Kennedy, co-founder of Sungevity, a Berkeley, Calif., solar installer that uses imaging technology to remotely size and design solar arrays. “In just six months since our launch we’ve sold about a hundred systems. With an uncapped tax credit for homeowners going solar, we expect business to boom.”

While elated sound bites from solar executives have been flooding the inbox all afternoon – along with invites to celebratory after-work drinks – solar stocks took a drubbing (along with the rest of the still-spooked market) after initially soaring on the news.

SunPower ended the trading day down 5% while First Solar shares dropped 8%. The bright spot was China’s Suntech (STP), which on Thursday announced a joint venture with financier MMA Renewable Ventures to build solar power plants as well as the acquisition of California-based solar panel installer EI Solutions.

Congress didn’t treat the wind industry so generously. The production tax credit for generating renewable energy was extended by just one year, guaranteeing the industry’s will continue to live year by year (at least through 2009). But given that 30% of all new power generation built in the United States in 2007 was wind, and that the amount of wind power installed by the end of 2008 is expected to rise 60% over the record set last year, the wind biz should do just fine.

But Congress did give a break to those who buy small-scale wind turbines. Systems under 100 kilowatts qualify for a 30% tax credit up to $4,000. Homeowners get a $1,000 tax credit for each kilowatt of wind they install, though the credit is capped at $4,000.

“This is a huge breakthrough for small wind,” says Scott Weinbrandt, president of Helix Wind, a San Diego-based manufacturer of 2-and-4-kilowatt turbines.

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China’s solar giant makes U.S. move

Posted in energy, environment, First Solar, Google, OptiSolar, PG&E, renewable energy, solar energy, solar power plants, Southern California Edison, SunPower, Suntech, tagged , , , , , , , on October 2, 2008| 12 Comments »

In another sign that the financial crisis is not slowing the solar industry, Suntech, the giant Chinese solar module maker, made a big move into the United States market on Thursday. The company announced a joint venure with green energy financier MMA Renewable Ventures to build solar power plants and said it would acquire California-based solar installer EI Solutions.

Founded in 2001, Suntech (STP) recently overtook its Japanese and German rivals to become the world’s largest solar cell producer. The company has focused on the lucrative European market and only opened a U.S. outpost, in San Francisco, last year.  The joint venture with MMA Renewable Ventures (MMA) – called Gemini Solar – will build photovoltaic power plants bigger than 10 megawatts.

Most solar panels are produced for commercial and residential rooftops, but in recent months utilities have been signing deals for massive megawatt photovoltaic power plants. Silicon Valley’s SunPower (SPWRA) is building a 250-megawatt PV power station for PG&E (PCG) while Bay Area startup OptiSolar inked a contract with the San Francisco-based utility for a 550-megawatt thin-film solar power plant. First Solar (FSLR), a Tempe, Ariz.-based thin-film company, has contracts with Southern California Edision (EIX) and Sempre to build smaller-scale solar power plants.

Suntech’s purchase of EI Solutions gives it entree into the growing market for commercial rooftop solar systems. EI has installed large solar arrays for Google, Disney, Sony and other corporations.

“Suntech views the long-term prospects for the U.S. solar market as excellent and growing,” said Suntech CEO  Zhengrong Shi in a statement.

Other overseas investors seem to share that sentiment, credit crunch or not.  On Wednesday, Canadian, Australian and British investors lead a $60.6 million round of funding for Silicon Valley solar power plant builder Ausra. “So far the equity market for renewable energy has not been affected by the financial crisis,” Ausra CEO Bob Fishman told Green Wombat.

The solar industry got more good news Wednesday night when the U.S. Senate passed a bailout bill that included extensions of crucial renewable energy investment and production tax credits that were set to expire at the end of the year.

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