To the casual observer, the timing couldn’t be more perfect: solar panel prices sink as California’s three main power companies race against a deadline requiring them to generate a third of their energy from renewable sources.
Materials used to harness solar power are plentiful, use of the world’s most infinite energy source is growing, and the upside seems endless. California utilities — already at 20% renewable energy with the help of wind and geothermal sources — need more solar power to meet their 2020 deadline, just as the industry is taking off.
A bit of fortuitous serendipity? Not exactly.
People such as Marc Ulrich say there is no guarantee the 33% goal will be reached, even with eight years to go. Ulrich, a Southern California Edison executive who oversees its renewable and alternative power efforts, says much stands in the way of the Edison International EIX -0.23% unit.
“We are certainly heading toward 33% but it’s not easy,” he said. “It’s not a given.”
Missing halo
For decades, a halo emanated from solar power, an abundant energy source with a tiny environmental footprint but impractical cost-wise. Now, with the industry predicting a 40% jump in solar power use this year, there are signs it has finally come of age.
The roadblocks for the utilities’ deployment of solar are a blend of both internal and external difficulties, leaving what should be a smooth path uncertain and rocky.
Internal troubles for Edison and California’s two other leading utilities — PG&E Corp’s PCG -0.97% Pacific Gas & Electric and Sempra Energy Corp.’s SRE +0.30% San Diego Gas & Electric — are formidable.
For their part, PG&E and SDG&E each say they should meet the 33% deadline by 2020. A PG&E spokeswoman said the utility has 12 renewable energy projects — 10 of them solar — in the pipeline.
Jim Avery, senior vice president of the SDG&E’s power supply, says his utility should meet the deadline early. SDG&E managed to get to 20% renewables from less than 1% nine years ago and has contracts in place that should put it over the top.
“We have been in a glidepath to get us there,” he said.
It should be noted, though, that the utility serves one-fifth the customers PG&E and Edison do and isn’t relying as heavily on solar as the others. It’s also tapping into what Avery calls a “renewable-rich” zone in Imperial Valley, near San Diego, where an abundance of wind and geothermal power also is available.
‘Illusion of percentages’
But Edison’s Ulrich says while meeting the goal may seem easy enough, the math involved in getting from the current 20% to the 33% goal isn’t that simple. For starters, the main hang-up for solar energy is that it exists only as long as the sun is in the sky. At night, the “solar-coaster” sinks and other forms of energy have to kick in to provide power.
Projections also show power demand will keep increasing over the next eight years. That means if utilities didn’t add more solar, wind or geothermal sources to the grid over the next eight years, their share of power coming from renewables would shrink from 20% currently to as low as 16%.
Translation: They’ll have to nearly double renewable energy production to hit th 33% target. For Edison, that means ramping up renewables from today’s 15,000-gigawatt hours to 28,000-gigawatt hours, Ulrich says.
“It’s an illusion of percentages that’s often lost,” he said.
On top of that, utilities are handcuffed to a degree in that individual solar power systems serving homes and businesses can’t be counted in the 33% equation, according to state regulators. The reason: rooftop panels and solar farms use completely different metering systems.
The rule represents a cruel twist of sorts for the utilities since almost any property owner could get wired up for solar energy right now. Leasing companies have made the sticker shock of obtaining sun power for the average consumer almost a moot point.
These firms install rooftop panels for free and sign property owners to 20-year leasing pacts, and they are springing up nationwide. A monthly solar lease payment, combined with a sharply reduced power bill, typically cuts energy costs by 10% to 20% — all without an upfront outlay of as much as $25,000.
Rooftop solar systems still may benefit utilities indirectly, however. While they can’t help with nighttime consumption, they could reduce daytime demand on the power grid.
“All of a sudden, we’re starting to negate that usage,” said Ravi Thuraisingham, president of Santa Monica, Calif.-based American Solar Direct, a lessor of rooftop systems. The company has seen its sales grow fivefold in the last year.
Trouble down on the solar farm
Still, utilities must count on massive solar farms with ground-based panels and mirrors to get the credits needed to meet their 33% threshold. Fortunately for them, these farms are popping up throughout desert regions in California and adjacent areas to help fill the void. Edison has 50 deals in the works for solar energy farms.
That brings up more torment for the industry. The power source designed to help clean up the environment isn’t always clean enough for those concerned about the environmental impact of solar farms themselves.
As part of its coming of age, solar brokers are finding themselves subject to the same bureaucratic quagmire that’s hindered companies in other walks of life.
A $1 billion, 250-megawatt solar farm under construction to serve PG&E, the Genesis Solar Energy Project just west of the Arizona border, is a case in point.
Grading desert land for the banks of mirrors that will harness sunlight to run the plant’s steam generators has raised concerns the project may be disturbing an ancient Native American cremation site and could be behind a distemper outbreak among kit foxes in the region.
Officials from the company building the plant, NextEra Energy Resources, a division of NextEra Energy Inc. NEE +0.54% , have been quoted as saying these on-site snags could make the project uneconomical.
NextEra spokesman Steven Stengel said, however, that the plant should still be up and running on time.
“On [the] distemper [issue], construction doesn’t cause distemper,” Stengel said in an email. “We have no kit foxes currently on site and haven’t for some time. Further, the kit fox issue has not impacted construction activity.”
External issues
Externally, the marketplace has expanded rapidly but it has brought uncertainty with it as well, leaving utilities to wonder just how volatile their suppliers may be.
Despite the fact that solar power is booming, some companies are retreating. First Solar Inc. FSLR -3.41% said in a recent earnings call that it is cutting back on a number of its projects because a different kind of subsidy — one that rewards those who install the systems — is drying up for one of the world’s biggest consumers of solar energy, Germany.
First Solar decided to idle four lines in its German plant, hold off on building a facility at its home base in Mesa, Ariz., and stop work on a proposed plant in Vietnam. After the Feb. 28 disclosure, shares fell from the mid-$30 range to the mid-$20 range before recovering somewhat. First Solar shares have steadily declined from a peak of $175 reached in February 2011.
Elsewhere, the scandal surrounding a $535 million federal loan guarantee issued to solar-panel maker Solyndra Corp. shortly before it went bankrupt put a blemish on the administration of President Barack Obama and tainted the industry.
“We were unimpacted by that,” said Kevin Kilkelly, president of SolarWorld USA, the nation’s largest solar panel maker and subsidiary of German-based SolarWorld AG. DE:SWV -1.76% “But like the rest of the industry, we got a black eye.”
Regardless of the public relations hit, what’s more worrisome for the industry is what led to Solyndra’s downfall.
Solyndra was developing a new technology using cylindrical panels designed to capture the sun’s rays regardless of their position. But while it was busy developing a system aimed at pushing solar technology from adolescence into adulthood, the industry quickly turned cutthroat.
Trade war
Though a minor player a few years ago, China’s position in the solar power industry surged on heavy government subsidies. It now commands about half the world’s market, leaving high-end companies like Solyndra in the dust.
“I don’t know about pulling even with them anymore,” said SolarWorld’s Kilkelly.
Production spikes in China have slashed the price of wholesale panels by half and led to a trade war with U.S. manufacturers. Led by SolarWorld, a several panel makers are pushing for tariffs that would slow falling prices or force Chinese manufacturers to consider setting up shop here.
“Everyone has been impacted,” Kilkelly said. SolarWorld has convinced the U.S. Commerce Department and the International Trade Commission to impose tariffs it claims will level the playing field. Commerce officials ruled Tuesday that Chinese manufacturers will have to pay tariffs ranging from 2.9% to 4.7% for all panels exported to the U.S.
SolarWorld is worried that China could monopolize the market if its production is left unchecked, giving it the clout to lift prices unilaterally. Either way, it seems clear China has affected panel-making in the U.S.
“The manufacturing side is not growing,” said Stephen Torres, managing director at PV Solar Report, though he and other analysts say panel-making in the U.S. wasn't much to begin with.
Overall, though, developments in both China and Germany are making the shares of panel-makers and suppliers volatile. Caught up in the tussle are several major Chinese suppliers, including Suntech Power Holdings STP -3.58% , Trina Solar Ltd. TSL -0.65% , Kyocera Corp. KYO +0.15% and Yingli Green Energy Holding Co. YGE -0.58%
All are well off their 52-week highs. Philip Shen, analyst at Roth Capital Partners, says whichever way regulators rule, its effects could ripple through the industry.
“This is a big deal for the U.S. solar industry,” he said.
SOURCE: http://www.marketwatch.com/story/solars-cruel-twist-for-california-power-firms-2012-03-21
 |
| Power companies are increasingly turning to solar farms like |
| this one in Boulder City, Nev., as they raise their renewable-energy profile. |
Materials used to harness solar power are plentiful, use of the world’s most infinite energy source is growing, and the upside seems endless. California utilities — already at 20% renewable energy with the help of wind and geothermal sources — need more solar power to meet their 2020 deadline, just as the industry is taking off.
A bit of fortuitous serendipity? Not exactly.
People such as Marc Ulrich say there is no guarantee the 33% goal will be reached, even with eight years to go. Ulrich, a Southern California Edison executive who oversees its renewable and alternative power efforts, says much stands in the way of the Edison International EIX -0.23% unit.
“We are certainly heading toward 33% but it’s not easy,” he said. “It’s not a given.”
Missing halo
For decades, a halo emanated from solar power, an abundant energy source with a tiny environmental footprint but impractical cost-wise. Now, with the industry predicting a 40% jump in solar power use this year, there are signs it has finally come of age.
The roadblocks for the utilities’ deployment of solar are a blend of both internal and external difficulties, leaving what should be a smooth path uncertain and rocky.
Internal troubles for Edison and California’s two other leading utilities — PG&E Corp’s PCG -0.97% Pacific Gas & Electric and Sempra Energy Corp.’s SRE +0.30% San Diego Gas & Electric — are formidable.
For their part, PG&E and SDG&E each say they should meet the 33% deadline by 2020. A PG&E spokeswoman said the utility has 12 renewable energy projects — 10 of them solar — in the pipeline.
Jim Avery, senior vice president of the SDG&E’s power supply, says his utility should meet the deadline early. SDG&E managed to get to 20% renewables from less than 1% nine years ago and has contracts in place that should put it over the top.
“We have been in a glidepath to get us there,” he said.
It should be noted, though, that the utility serves one-fifth the customers PG&E and Edison do and isn’t relying as heavily on solar as the others. It’s also tapping into what Avery calls a “renewable-rich” zone in Imperial Valley, near San Diego, where an abundance of wind and geothermal power also is available.
‘Illusion of percentages’
But Edison’s Ulrich says while meeting the goal may seem easy enough, the math involved in getting from the current 20% to the 33% goal isn’t that simple. For starters, the main hang-up for solar energy is that it exists only as long as the sun is in the sky. At night, the “solar-coaster” sinks and other forms of energy have to kick in to provide power.
Projections also show power demand will keep increasing over the next eight years. That means if utilities didn’t add more solar, wind or geothermal sources to the grid over the next eight years, their share of power coming from renewables would shrink from 20% currently to as low as 16%.
Translation: They’ll have to nearly double renewable energy production to hit th 33% target. For Edison, that means ramping up renewables from today’s 15,000-gigawatt hours to 28,000-gigawatt hours, Ulrich says.
“It’s an illusion of percentages that’s often lost,” he said.
On top of that, utilities are handcuffed to a degree in that individual solar power systems serving homes and businesses can’t be counted in the 33% equation, according to state regulators. The reason: rooftop panels and solar farms use completely different metering systems.
The rule represents a cruel twist of sorts for the utilities since almost any property owner could get wired up for solar energy right now. Leasing companies have made the sticker shock of obtaining sun power for the average consumer almost a moot point.
These firms install rooftop panels for free and sign property owners to 20-year leasing pacts, and they are springing up nationwide. A monthly solar lease payment, combined with a sharply reduced power bill, typically cuts energy costs by 10% to 20% — all without an upfront outlay of as much as $25,000.
Rooftop solar systems still may benefit utilities indirectly, however. While they can’t help with nighttime consumption, they could reduce daytime demand on the power grid.
“All of a sudden, we’re starting to negate that usage,” said Ravi Thuraisingham, president of Santa Monica, Calif.-based American Solar Direct, a lessor of rooftop systems. The company has seen its sales grow fivefold in the last year.
Trouble down on the solar farm
Still, utilities must count on massive solar farms with ground-based panels and mirrors to get the credits needed to meet their 33% threshold. Fortunately for them, these farms are popping up throughout desert regions in California and adjacent areas to help fill the void. Edison has 50 deals in the works for solar energy farms.
That brings up more torment for the industry. The power source designed to help clean up the environment isn’t always clean enough for those concerned about the environmental impact of solar farms themselves.
As part of its coming of age, solar brokers are finding themselves subject to the same bureaucratic quagmire that’s hindered companies in other walks of life.
A $1 billion, 250-megawatt solar farm under construction to serve PG&E, the Genesis Solar Energy Project just west of the Arizona border, is a case in point.
Grading desert land for the banks of mirrors that will harness sunlight to run the plant’s steam generators has raised concerns the project may be disturbing an ancient Native American cremation site and could be behind a distemper outbreak among kit foxes in the region.
Officials from the company building the plant, NextEra Energy Resources, a division of NextEra Energy Inc. NEE +0.54% , have been quoted as saying these on-site snags could make the project uneconomical.
NextEra spokesman Steven Stengel said, however, that the plant should still be up and running on time.
“On [the] distemper [issue], construction doesn’t cause distemper,” Stengel said in an email. “We have no kit foxes currently on site and haven’t for some time. Further, the kit fox issue has not impacted construction activity.”
External issues
Externally, the marketplace has expanded rapidly but it has brought uncertainty with it as well, leaving utilities to wonder just how volatile their suppliers may be.
Despite the fact that solar power is booming, some companies are retreating. First Solar Inc. FSLR -3.41% said in a recent earnings call that it is cutting back on a number of its projects because a different kind of subsidy — one that rewards those who install the systems — is drying up for one of the world’s biggest consumers of solar energy, Germany.
First Solar decided to idle four lines in its German plant, hold off on building a facility at its home base in Mesa, Ariz., and stop work on a proposed plant in Vietnam. After the Feb. 28 disclosure, shares fell from the mid-$30 range to the mid-$20 range before recovering somewhat. First Solar shares have steadily declined from a peak of $175 reached in February 2011.
Elsewhere, the scandal surrounding a $535 million federal loan guarantee issued to solar-panel maker Solyndra Corp. shortly before it went bankrupt put a blemish on the administration of President Barack Obama and tainted the industry.
“We were unimpacted by that,” said Kevin Kilkelly, president of SolarWorld USA, the nation’s largest solar panel maker and subsidiary of German-based SolarWorld AG. DE:SWV -1.76% “But like the rest of the industry, we got a black eye.”
Regardless of the public relations hit, what’s more worrisome for the industry is what led to Solyndra’s downfall.
Solyndra was developing a new technology using cylindrical panels designed to capture the sun’s rays regardless of their position. But while it was busy developing a system aimed at pushing solar technology from adolescence into adulthood, the industry quickly turned cutthroat.
Trade war
Though a minor player a few years ago, China’s position in the solar power industry surged on heavy government subsidies. It now commands about half the world’s market, leaving high-end companies like Solyndra in the dust.
“I don’t know about pulling even with them anymore,” said SolarWorld’s Kilkelly.
Production spikes in China have slashed the price of wholesale panels by half and led to a trade war with U.S. manufacturers. Led by SolarWorld, a several panel makers are pushing for tariffs that would slow falling prices or force Chinese manufacturers to consider setting up shop here.
“Everyone has been impacted,” Kilkelly said. SolarWorld has convinced the U.S. Commerce Department and the International Trade Commission to impose tariffs it claims will level the playing field. Commerce officials ruled Tuesday that Chinese manufacturers will have to pay tariffs ranging from 2.9% to 4.7% for all panels exported to the U.S.
SolarWorld is worried that China could monopolize the market if its production is left unchecked, giving it the clout to lift prices unilaterally. Either way, it seems clear China has affected panel-making in the U.S.
“The manufacturing side is not growing,” said Stephen Torres, managing director at PV Solar Report, though he and other analysts say panel-making in the U.S. wasn't much to begin with.
Overall, though, developments in both China and Germany are making the shares of panel-makers and suppliers volatile. Caught up in the tussle are several major Chinese suppliers, including Suntech Power Holdings STP -3.58% , Trina Solar Ltd. TSL -0.65% , Kyocera Corp. KYO +0.15% and Yingli Green Energy Holding Co. YGE -0.58%
All are well off their 52-week highs. Philip Shen, analyst at Roth Capital Partners, says whichever way regulators rule, its effects could ripple through the industry.
“This is a big deal for the U.S. solar industry,” he said.
SOURCE: http://www.marketwatch.com/story/solars-cruel-twist-for-california-power-firms-2012-03-21
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