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A debate emerges: are solar panels a commodity yet?

Ucilia Wang — Wed, 31 Oct 2012 20:55:14 +0000

Solar factories around the world are rolling out over a billion solar panels each year and the price of solar panels is at one of the lowest points in history. So naturally the term “commodity” is being used to describe them, meaning they’re now a product that can be mass-produced and are mostly undifferentiated. But is that description correct at this point in the solar life cycle and, if not, what does that mean for services that have been built on top of solar becoming a commodity (like banks investing in low-risk solar projects)?

“(Solar) modules are not a commodity. We have seen a lot of problems — but we have a lot of modules that perform great, too,” said Brian Matthay, vice president in Well Fargo’s environmental finance group, during a panel discussion at Greentech Media’s solar conference just south of San Francisco this week. “You need to negotiate tough warranties with module suppliers … especially in this environment where people are cutting corners.”

Matthay wasn’t alone at the conference in expressing concerns about solar panel quality and therefore the risk of investing in solar projects, especially since the term “commodity” can imply a standardization of quality. Many solar power plants are now under construction to help utilities meet their state mandates to sell more renewable energy, and those power plants are supposed to perform well for 20-25 years. However, since the solar market is so new, there are very few solar energy projects that have been around for decades.

There has also been an emergence of new companies that finance solar panel projects — selling or leasing panels to consumers, or through crowd-sourcing — and these companies have been assuring their customers and investors that the panels will generate a certain return on the investment over time.

“Even within the same brand, there is a significant differentiation in quality, depending on whether they are from Malaysia, Thailand or China. There are differences in where the modules are built,” said Yuri Horwitz, CEO of Sol Systems, which brokers the sales of renewable energy credits for financing solar energy projects, at the Greentech Media event.

An oversupply of solar panels in the past two years is partly to blame for this worry about quality. Prices have plummeted as a result of a glut that began in early 2011. Dozens of solar manufacturers have shuttered factories of filed for bankruptcies. Maintaining good quality control can be challenging during these hard times.

Many solar panel makers have stepped up their publicity and sales efforts to try to set themselves apart. But with the falling prices -– and they are still dropping -– manufacturers might find their customers more interested in getting a good deal than hearing about technological advancements.

Meanwhile, many startups that have spent billions developing novel technologies have gone out of business or been sold for little money because they had a tough time raising enough money to build large-scale factories and compete on price.

“The number of discussions I’ve had with buyers in the last six months is it’s all about price. Price is the No. 1 thing for us,” said Jonathan Pickering, president of JA Solar’s business in Americas, at the Greentech Media conference. JA Solar makes cells and assemble them into panels.

“I’m worried about all the decisions that are made based on price. Surely when you are at a supermarket, you want to check the label, especially if you are going to eat this for the next 25 years. Is it organic? Does it have high quality?” Pickering said.

So what are some ways to cut the risk of using faulty solar equipment? The solar industry hasn’t yet come up with a good way to test the reliability of solar panels, Matthay said. So developing those tests would be helpful. Doing spot checks of a large shipment of panels for a project also will help, said Jenya Meydbray, CEO of PV Evolution Labs, which does safety and performance testing of solar panels.

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Defining the mobile wallet: what it is, why it matters

Ryan Kim — Thu, 23 Feb 2012 19:34:20 +0000

The upcoming showdown between Google Wallet and soon-to-be competitor Isis is just one of many interesting story lines that will take hold this year as companies ratchet up their mobile wallet offerings. But with all the new products from a variety of players comes a potentially confusing year as the term “mobile wallet” gets thrown around repeatedly. What exactly is the “mobile wallet”? Here are some important definitions for those looking to make a move in the space.

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After Solyndra: analyzing the solar industry

Ucilia Wang — Fri, 03 Feb 2012 20:44:10 +0000

Solar companies worldwide will remember 2011 as a dark time in their history. The failing of Solyndra symbolizes that market volatility, and 2012 no doubt started with trepidation. But as we have mentioned before on GigaOM Pro, the industry has survived nonetheless. This report analyzes the current state and future concerns of the solar industry, with a particular focus on the photovoltaic industry and the U.S. market. From the silicon companies to inverter manufacturers to government venture money, here is what to expect as the industry marches toward its uncertain future. Additional companies mentioned in this report include First Solar, Intel, NRG Energy and SunEdison. For a full list of companies, and to read the full report, sign up for a free trial.

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Chinese Solar Project Developers Tackling U.S.

Ucilia Wang — Mon, 08 Nov 2010 21:00:21 +0000

The U.S. market isn’t just attractive to solar energy equipment makers from China, it is also drawing solar project developers from the country. Wells Fargo on Monday said it will fund “over $100 million” worth of projects to be developed by GCL Solar Energy, a subsidiary of the Hong Kong-based GCL-Poly Energy Holdings.

GCL-Poly produces silicon and turns it into wafers for making solar cells. It claims to be China’s largest silicon producer and expects to have 21,000 metric tons of factory capacity by the end of this year (3.5 gigawatts of wafer production capacity). It also owns a 20-megawatt solar power plant in the Jiangsu Province of China.

Wells Fargo has been an active financier of solar power projects in order to reap tax benefits in recent years, and seemed to have funded mostly American project developers. Last year, the bank committed $100 million to projects built by SunPower. Wells Fargo also forked over $250 million to SunEdison and MMA Renewable Ventures. As the project owner, Wells Fargo can claim a 30 percent investment tax credit or an equivalent amount in cash from the federal government.

Solar companies and analysts have pegged the U.S. as the next big market. Europe remains the largest thanks to the generous government incentives, but these incentives are set to decline, sometimes sooner than expected. Germany, the largest solar market, plans to cut its feed-in tariff by 13 percent come January. First Solar, which has counted Germany as its biggest market, expects to see the country making up 25-30 percent of its business in 2011 instead of nearly 50 percent in 2010, First Solar executives said last month. Sharp recently bought San Francisco-based project developer, Recurrent Energy, for $305 million in cash.

China is home to some of the world’s largest solar energy equipment makers, from silicon to solar panels. These companies historically have expanded their reach mostly through vertical integration – owning factories that build raw materials, components and then final products. Some, such as silicon producer LDK Solar, also are moving into the project development business domestically and abroad. Suntech Power tried to build a project development business in the U.S., but decided that venture wasn’t worth its while.

Founded only last year, San Francisco-based GCL Solar plans to use Wells Fargo’s money to build and operate power projects and sell the electricity to customers. Businesses, schools, public agencies and utilities are the target customers. Power purchase agreements have been a popular way for those who want to use solar electricity without having to pay the hefty upfront costs of installing the equipment. Wells Fargo will own the projects.

GCL Solar plans to complete the Wells Fargo-funded projects by the end of 2011. Neither company disclosed how many project or how much solar power generation could be had for about $100 million. The average price for a solar energy system reached about $5.85 per watt earlier this year (from residential to utility-scale), according to GTM Research. So Wells Fargo’s funding could fund over 17 megawatts projects.

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Photo courtesy of Jeremy Levine Design

Apple’s Enterprise Inroads

Andy Boothe — Fri, 09 Jul 2010 16:30:20 +0000

2009 was the worst year in IT spending. Ever.

I’ll let that sink in for a minute.

Now, 2009 was a bad year for many aspects of business — sales, capital management, making a profit — but IT departments had it especially bad. Because IT is a support organization, everyone wants to use it but no one wants to pay for it, which means that IT almost always gets the budget leftovers. It’s hardly a surprise that IT got the seriously short end of the stick in 2009. According to a report by Gartner, spending on IT declined 5.2 percent overall last year among all verticals, and the fall was even worse in enterprise businesses, where spending fell 6.9 percent.

Naturally, that kind of drop in funding completely changes how IT departments prioritize their spending. For one thing, in the face of such spending cuts, standard hardware upgrades go right out the window. According to the same Gartner report, hardware spending dropped 16.9 percent in 2009. To make matters worse, IT departments also reduce headcount to save money — in 2009, fully 62 percent of companies cut IT headcount — which makes matters worse because there are now fewer people to support more work on the same hardware.

This is not a recipe for success.

[inline-ad align="right"]Fortunately, now that it’s July 2010 and most companies are fully embracing the second half of this new fiscal year, IT budgets are slowly improving. IT budgets across the board are expected to gain 3.3 percent by year’s end. This leaves IT departments in the interesting position of having a reason to change their operations, and a little bit of money to make it happen. This is unusual.

As a service organization, IT’s performance is measured on things like uptime, cost and so on. As a result, IT departments tend to be very risk-averse and resistant to change. Whereas IT organizations typically resist change to avoid breaking things — if it ain’t broke, don’t fix it — now there are some interesting pressures in play that make the way things are look broken already. Because IT headcount is depressed, IT corporations need to be focusing on reducing the need for support because there are fewer people around to do it. And, because of the clog in the hardware upgrade pipeline, there are more upgrades vying for the same dollars, which means that CIOs will be looking for upgrades that are either cheaper or serve multiple purposes. In short, IT departments are in the uncommon position of reevaluating their long-term direction in earnest.

Apple, being the savvy company that it is, has positioned itself well to capitalize on IT departments looking to make a change. Some of the largest organizations in the world are taking another look at Apple products, and with good reason. There’s good data indicating that Apple computers cost significantly less to support than Windows PCs, both in terms of TCO and simple ease of support. And this is no theoretical result. According to another report from Gartner, Apple is gaining market share in laptops and desktops faster than anyone else, beating out competitors like Hewlett-Packard, Lenovo and Dell. And companies are adopting Apple’s devices, especially the iPad, for positions like sales because they have the flash and panache to seal a deal, but are simple enough that workers can use them with minimal training and robust enough that fairly little technical support is required. And if an iPad does break, it’s simple and straightforward to fix: just send a replacement. All of these factors are making Apple products look more and more attractive to struggling IT departments.

That’s why large enterprises like Wells Fargo and SAP are adopting the iPad for jobs ranging from sales to simple paper replacement. Mercedes-Benz is so pleased with the results of using iPads in 40 of its U.S. dealerships to handle credit applications that it’s considering using iPads in all 350 of them.

However, Apple’s latest foray into corporate America is ostensibly only the inroad of a much grander scheme. Gartner makes the excellent point that, as virtualization and cloud technology matures and companies gain experience with them, such services will gain adoption very quickly because of the dramatic cost savings they offer organizations. Among the technology providers in this space, it will be the companies that develop these technologies into the most robust and easiest-to-use products that will win the day, and Apple’s track record combined with its new $1 billion data center show that Apple is positioning itself well to accept the mantle of leader in this burgeoning new field.

There has been much speculation about Apple’s new toy, but it’s fair to say that it’s building server capacity for something. Popular theories include a music streaming service because of Apple’s acquisition of Lala, and theories that the facility is for video hosting seem a lot more credible with the introduction of FaceTime and the iPad’s apparently impending camera. Data heads see a different picture, though: one that has Apple positioning itself for a strong enterprise presence. And ultimately, with Apple gaining such traction in the enterprise market, it would be foolish not to build cloud offerings for those customers, like simple file hosting or a virtual hosted Mac, to be delivered via its devices, like the iPad. And Apple’s no fool.

So, with Apple making solid gains in the corporate and enterprise markets, what’s next for technology’s golden child? You should expect to see more big-name customers adopting the iPad, and more iPad development shops springing up to fill the resulting need for corporate applications. However, ultimately, the real surprise will come when Apple reveals the purpose of its new data center.

For now, I like to think it holds the ghost of Newton.

Daily Sprout

Josie Garthwaite — Tue, 30 Jun 2009 02:16:37 +0000

Developing Countries Eye Efficiency: “Emerging markets are waking up to the fact that using energy more wisely puts money in consumer wallets, can help smooth out trade deficits and is better for the planet in terms of reducing carbon emissions.” — WSJ’s Environmental Capital

Nitrogen Dioxide Crackdown: The EPA has just proposed the first adjustment to nitrogen dioxide air quality standards since 1971, reflecting research on health problems caused by exposure to the gas, which is formed by emissions from vehicles, power plants and industrial facilities. — Green Car Congress

GM Sizes Up Volt Competition: The time has come GM’s Chevy Volt team to hammer out details that will directly affect ride and handling. For the chassis, they’re trying to go “much more sporty” than the Toyota Prius or Honda Insight. — AutoblogGreen

Step Forward for Solar on Public Lands: Interior Secretary Ken Salazar announced plans Monday to assess 24 tracts of land in six Western states to see if they can support large solar arrays. By the end of next year, he expects 13 commercial-scale solar projects to be under construction on public lands. — NYT’s Green Inc.

Wells Fargo to Invest $100M in SunPower Projects: Wells Fargo has agreed to finance up to $100 million for solar projects to be built and maintained by SunPower, entitling the bank to a 30 percent tax credit or the equivalent in federal grants. — Greentech Media

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