The Intersolar conference, being held in downtown San Francisco this week and which will see over 15,000 solar execs meeting, mingling and doing business across 120,000 square feet of space, comes at a unique point in the development of the U.S. solar market: one of major hurdles and massive opportunities. It’s only the conference’s second year — it’s the North American version of the massive German solar show, which delivers major news from the solar industry every year — and was launched last year to take advantage of the emergent nature and importance of the U.S. solar market.
Here’s the issue: The U.S. solar market (both as a supplier and as a consumer) has the potential to be one of the largest in the world, and has a wealth of startups, many born out of the labs of U.S. universities and pumped full of venture capital dollars, that are trying to scale new technologies to bring down the price of solar to grid parity (so it’s equal to the cost of fossil fuels). But until more recently, the U.S. solar industry hasn’t had the types of incentives that have encouraged other international solar markets to grow (Germany, Spain). But with the passage of the stimulus package, the extension of the clean energy tax credits, and the climate bill that’s winding its way through the Senate, the U.S. is starting to offer important government support. At the same time, the U.S. industry has to face the international economic slump that has delivered less demand for solar projects, in addition to dropping silicon prices (the key ingredient in solar panels), and, of course, international competition. It’s a difficult landscape to navigate, but here are seven trends to look for:
1. How to Maneuver U.S. Federal Policy: On the top of everyone’s discussion list is how to tap into the new funds and opportunities from the U.S. federal government. First, as part of last year’s bailout, the renewable energy tax credits (which provide a 30 percent tax credit for investing in clean power projects) were extended significantly, and allocated $18 billion, including an eight-year extension for the tax credits for solar. At the time that the extensions passed, Roger Efird, Solar Energy Industries Association chairman, said that the incentives would deliver “policy certainty that will attract investment, expand manufacturing, and lower the cost of solar energy to consumers.”
Then there’s the stimulus package, which President Obama signed into law at the solar-powered Denver Museum of Nature & Science back in February. It allocates around $43 billion in various funding forms to clean energy and energy efficiency. That includes billions in clean energy grants for solar projects — the guidelines for which are just starting to be detailed — as well as funds for renewable energy manufacturing tax credits, and building out transmission lines, which will make way for plugging in more solar projects.
Finally, there’s the the climate bill, which won’t be looked at in the Senate until September, but if passed would create two important federal policies for solar. It would create a cap and trade system that would deliver a decidedly friendlier solar climate, using market mechanisms to level the cost of clean power generation. In addition, the House-passed climate bill includes a national renewable portfolio standard, which says utilities must deliver a certain percentage of their electricity from clean power by a certain year. How the solar industry will access recently released funds and how it will help get the climate bill passed, will be a big topic at the show.
2. Oversupply Up; Silicon Prices Down: There can be a big problem with subsidies, however, if when combined with a poor economy, they help create a market with more supply than there is demand. Researchers say that solar module capacity will reach 10.4 GW this year, outpacing demand nearly twofold, and the overall solar market will shrink to $29 billion and 5.3 GW, down from $36 billion and 5.5 GW in 2008. In addition, some reports suggest that the price for silicon, the key ingredient in solar panels, will drop this year, which on one hand is good for the industry as a whole to make it more competitive with fossil fuel power, but means solar panel makers have to sell their products for less.
All of this creates a difficult market for solar companies. Expect a lot of the talk at the show to be centered around how to overcome tough margins for solar manufacturers (cut production costs) and how to deal with potential consolidation in the industry. Already this year, we’ve seen renewable energy project financier Recurrent Energy buy up the solar project assets of Chicago-based UPC Solar; Spanish solar power developer Fotowatio is looking to purchase some of the assets of San Francisco’s MMA Renewable Ventures; and rooftop solar installer Borrego Solar Systems is selling off its residential solar power installation business to groSolar.
3. Will China Achieve its Solar Potential Soon?: China is the awakening giant for many industries, and as the world’s largest solar panel producer for the last two years, the country already is a major solar player. But now, some industry experts say, it’s expanding from being mainly a solar panel supplier to also becoming a substantial customer. That’s thanks to aggressive government policies like a subsidy for building-mounted photovoltaic systems which could pay up to 20 Chinese yuan (about $2.93) per watt for systems larger than 50 kilowatts, and one of the most aggressive renewable portfolio standards in the world. The country’s emergence as a solar consumer will effect the international solar industry, creating a massive market for solar products, as well as help China, which is soon expected to overtake the U.S. as the largest energy consumer in the world, find a cleaner solution for energy growth.
4. Next-Gen Thin Film Makers Still Ramping Up: While all eyes are on how U.S. thin film solar leader First Solar will fare under the current difficult market conditions, many are also closely watching how companies using next-generation thin film solar technologies are doing after many have been trying to move into or scale up production for the last year. Unusually quiet Nanosolar says it will have some news out in September (we’re hoping its production metrics), HelioVolt has yet again delayed commercial scale production, and SoloPower recently lost its CEO and won’t start high volume production until next year. A few panels at the show will be focused on thin film technologies, and we’ll be looking for some good — as well as more negative — news coming from the industries players.
5. Chip Companies Making Solar Friends: Will the chip companies have a strong showing at the show? No doubt Applied Materials will have a lot to say about its thin film solar production machines, but what about some of the newer entrants that are looking to tackle the emergence of the market for chips to optimize solar systems? The barrier for chip companies to enter the solar arena has recently started dropping as optimization has become a hot topic, and according to some reports, could be a $6 billion market this year.
6. Utilities Owning Solar: Northern California utility PG&E had talked about owning its own solar distribution a great deal over 2008, and this year finally got around to launching a project to make it happen. We’ll be listening to see if this is an emerging trend that many utilities at the show plan to follow.
7. Solar Thermal’s Permitting and NIMBY Woes: Massive solar thermal plants that need large areas of dedicated land — and permits and approval from state and federal regulatory bodies — have long been frustrated over the long time tables and opposition from environmentalists to building the projects. But recently, the Bureau of Land Management decided to fast track studies for 24 areas of BLM land for solar projects, which could help speed up the approval process. Solar thermal companies will be looking to discuss how to overcome hurdles in the permitting process, how to access these lands, and how to work with the BLM in a more productive way.