Big Bet On Solar PV


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Describing the political will needed to make solar PV a reality

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  • Big Bet On Solar PV

    1. How Solar Energy creates Jobs and frees America from foreign oil Jigar Shah Solar Industry Veteran
    2. <ul><li>Attacking Conventional Wisdom </li></ul><ul><li>Path to Changing the Electricity Mix </li></ul><ul><li>Business Model Implications for Energy Providers </li></ul><ul><li>Political Will as the Necessary Catalyst </li></ul>
    3. <ul><li>Attacking Conventional Wisdom </li></ul><ul><ul><li>Energy Independence is important but not as important as local economic job creation </li></ul></ul><ul><li>Path to Creating 5 million Green Jobs </li></ul><ul><ul><li>Short term: Customer technologies (solar and energy efficiency) </li></ul></ul><ul><ul><li>Mid term: Central station renewables (wind, geothermal, biomass) </li></ul></ul><ul><ul><li>Long term: Next generation grid, Plug-in Hybrids </li></ul></ul><ul><li>Business Model Implications for Energy Providers </li></ul><ul><ul><li>Electric utility companies have low power plant capacity factors (less than 35%). This raises electricity rates due to low utilization </li></ul></ul><ul><ul><li>Electric utility companies are financially weak, the ones that have invested in alternative energy have done better </li></ul></ul><ul><li>Political Will: Converting consistent positive public opinion into a potent political force </li></ul>
    4. Challenge Scenario <ul><li>Weak global economy, need growth engine </li></ul><ul><li>Energy prices shave 1-3% off Global GDP growth </li></ul><ul><li>Geopolitical concerns lead to growing view of fossil fuel supplies – “Unacceptable Risk” </li></ul>Political Will for Infrastructure Set up Scenario:
    5. Challenge Scenario <ul><li>Loss of Local Jobs – town/city </li></ul><ul><li>Small Towns sending $Billions out of the local economy for Electricity/fuels at a time that local jobs are desperately needed </li></ul><ul><li>Distributed Generation Technology has gone from Infancy into their Teenage Years </li></ul>Political Will for Local Development through Government Mandates Set up Scenario:
    6. Global Warming vs. National Security <ul><li>Whereas environmental concerns provoke only modest immediate concern and change scenarios </li></ul><ul><li>Economic security motives create perception of acute nature of risk – providing significantly accelerated change </li></ul><ul><li>Electric Utility rate increases and reliability present a big problem in local communities </li></ul>Why does this accelerate change? Political Will
    7. Third Industrial Revolution <ul><li>Democratization of Energy </li></ul>Distributed Generation Positive Power Buildings Next Generation Grid Smart Grid / Plug-in Hybrid Vehicles
    8. Job Creation <ul><li>Solar PV has the largest political support across the board. Solar does not have NIMBY problems. Solar can specifically replace the need for new natural gas peaking plants, and create the maximum local jobs/economic development </li></ul>Investment and Job Creation through 2016 Solar PV Buildings (Energy Efficiency) Next Generation Grid Smart Grid / Plug-in Hybrids Private Sector Investment $200B $200B $200B $200B Public Sector Investment $54B $10B $54B $54B Local Job-Years 400,000 3,000,000 50,000 100,000 Manufacturing / Centrally Located 800,000 500,000 800,000 1,100,000 National Infrastructure Bank $50B $10B $50B $50B Annual Customer Savings $2.3B $21B $2.3B $2.3B
    9. What about Coal and Natural Gas? <ul><li>Neither fuel will lead to job creation </li></ul><ul><li>Natural Gas is used by millions of homes, its use for electricity and vehicles raises costs for everyone </li></ul><ul><li>Coal has tripled in price to over $60/ton today. At this price Coal is more expensive than other central generation sources like wind, geothermal, biomass power </li></ul><ul><li>Both technologies use significant water resources – identified by the CIA as the biggest risk to the Western United States </li></ul>
    10. New Mandates Renewables <ul><ul><li>So… </li></ul></ul><ul><ul><li>New Mandates are Created </li></ul></ul><ul><ul><li>We must choose a timeframe: 2016 </li></ul></ul><ul><ul><li>For Mass Adoption of </li></ul></ul>
    11. <ul><li>Attacking Conventional Wisdom </li></ul><ul><li>Path to Changing the Electricity Mix </li></ul><ul><li>Business Model Implications for Energy Providers </li></ul><ul><li>Political Will as the Necessary Catalyst </li></ul>
    12. Democratization of Energy <ul><li>Consumer Choice </li></ul><ul><li>Local job creation, skill set exists within 750,000 people laid off by the Construction Industry </li></ul><ul><li>No NIMBY problems </li></ul><ul><li>Meet 100% of our Nation’s incremental electricity needs from zero-emission technologies by 2012 </li></ul>Why Solar?
    13. Theory of the Possible <ul><li>What would it take to significantly advance the take up of Solar Electricity to have a major impact on US electricity supply? </li></ul>
    14. Near-term Solar Potential <ul><li>Wholesale electricity is priced based on the last MWh sold </li></ul><ul><li>Solar will reduce wholesale energy costs by 5% overall -- 33% during peak times </li></ul><ul><li>Customer rates would rise by 1% to pay for the program and fall by 5% from its benefits </li></ul><ul><li>Would work immediately in NEPOOL, PJM, CAISO, ERCOT (19 States) </li></ul>
    15. What is Realistic The United States has over 1,400 utility companies. Over $200B of solar PV can be installed by 2016 creating over 2,000,000 job-years of employment and Billions in tax revenue 2010 2015 2020 Area of solar competitiveness Electricity Price Rising
    16. Government Challenge <ul><li>Technology is Mature but needs to be scaled </li></ul><ul><ul><li>Manufacturing costs </li></ul></ul><ul><ul><li>Supply Chain Efficiency </li></ul></ul><ul><ul><li>$34B in investment in Manufacturing facilities </li></ul></ul><ul><ul><li>200,000 jobs </li></ul></ul><ul><li>US benefiting from Japanese and European leadership to drive economies of scale on solar modules, but falling behind on labor and economic development benefits </li></ul>Biggest Challenge – Utility Resistance and Political Will
    17. Solar PV Pathway to 2012 Goal * All advances have already been discovered to achieve above benefits, implementation and optimization through scale is required Cents per Retail kWh Total ownership cost Balance of System (BOS) Reliability 2012 goal O&M Solar Panels Balance of System/ Installation Labor Avg. Retail Electricity Price Cell Efficiency 15% to 19% Mfg. Yield 85%  95% Mfg. Scale (MWs) 100  900 Silicon Material  50% Installation Efficiency Scale/Speed Solar System Cost Reduction Impacts O&M Solar Panels BOS/ Install BOS/ Install
    18. Solar Program Justification Sources of Benefits from Solar Power Installations Employment/Fees – income tax, sales tax, local fees Includes mfg, engineering, design, installation, and overhead jobs. Emissions – secondary using cap & trade values NO x , SO x , Mercury, and CO 2 Electric Grid Reliability Benefits Reliability, Loss Savings, Substation, Transmission, Peak Load Availability – 5% reduction is wholesale/peak power prices Health Care Reduced deaths from particulate pollution and asthma related heath care costs Water Power is the #1 user of water in the country, 1.8L per kWh
    19. Japanese Solar Program Historical Solar Subsidy and Benefits 10 year program – Breakeven 2003/4 (Billions Yen)
    20. Public Will <ul><li>Module costs are coming down fast, due to economies of scale and investments since 2000 – educate decision makers </li></ul><ul><li>Cost breakthrough on the installation side is a function of local experience/learning curve – need training! </li></ul><ul><li>Technology deployment is a function of perceived return on investment by Regulators – Solar is still not considered mainstream by our Political Champions! </li></ul><ul><li>Create sustainable near-term incentives designed to be tied to tangible value created through jobs, pollution reduction, and electricity grid reliability benefits </li></ul>What will it take to drive acceptance?
    21. Advantaged Cost <ul><li>How do we </li></ul><ul><li>Deliver </li></ul><ul><li>Customers </li></ul><ul><li>Cost Advantage? </li></ul>We can get to parity in electricity costs…
    22. <ul><li>Attacking Conventional Wisdom </li></ul><ul><li>Path to Changing the Energy Mix </li></ul><ul><li>Business Model Implications for Energy Providers </li></ul><ul><li>Political Will as the Necessary Catalyst </li></ul>
    23. Existing Buildings <ul><li>Largest near-term potential </li></ul><ul><ul><li>Local interconnection with Utility </li></ul></ul><ul><ul><li>Equalized tax treatment with fossil energy </li></ul></ul><ul><ul><li>Local permitting and regulations for construction </li></ul></ul><ul><ul><li>Already solved for 30% of population </li></ul></ul><ul><li>Market growth for solar with existing buildings has thus far been at 50% per annum, expected through 2016 </li></ul><ul><li>Federal buildings are the best target </li></ul>Existing Stock
    24. New Construction <ul><li>Easiest market to drive down installed costs </li></ul><ul><ul><li>Need to add Solar to National Building Code </li></ul></ul><ul><ul><li>Green buildings are growing at 50%+ per year </li></ul></ul><ul><ul><li>Residential mandate has been the main driver for the Japanese market – Zero Energy Home </li></ul></ul><ul><li>Market growth in the US market has been difficult, pilot projects abound. Stable state subsidy programs through 2016, but no unifying vision to aggressively promote standardization </li></ul><ul><ul><li>Roof weight </li></ul></ul><ul><ul><li>Building integration </li></ul></ul>New Stock
    25. How do we sell it? <ul><li>Best way to find customers is to focus on: </li></ul><ul><ul><li>Public Institutions: Have existing buildings with high quality rooftops and emissions mandate </li></ul></ul><ul><ul><li>Infrastructure: With today’s fuel, concrete and steel prices, traditional electricity generation has become very expensive – solar and energy efficiency creates more jobs and is cheaper </li></ul></ul><ul><ul><li>Grid Enhancement: Work with the Utility company to alleviate load pockets through strategic placement of assets </li></ul></ul>Implications for Channel
    26. What about other Renewables? <ul><li>Solar captures the imagination better than any other renewable energy technology </li></ul><ul><li>The wholesale nature of Wind, Geothermal, Biomass is receiving support through green power programs, renewable portfolio standards, federal tax benefits, and electricity supply diversification initiatives </li></ul><ul><li>Next generation grid is needed before central renewables can achieve high penetration – after 2016 </li></ul><ul><li>Customers want a technology that helps them control their energy future – solar and energy efficiency </li></ul><ul><li>Solar provides local jobs in the community installing the solar, not just in the overall state or country </li></ul>Implications for Renewables Broadly
    27. Electric Power Business <ul><li>Non-threatening: small ~3% of total supply </li></ul><ul><li>Material: 100% of incremental generation by 2012 </li></ul><ul><li>Viewed more like Demand Side Management, delaying or eliminating required utility investment in increased generation, T&D expansion/maintenance </li></ul><ul><li>Provides the impetus to move to time-of-day pricing essential to improving utility profitability and consumer energy efficiency </li></ul><ul><li>Switch from building and operating peaking plants to connecting and managing distributed “Power Parks” </li></ul>Implications for Power Business
    28. Solar Suppliers <ul><li>Large well-capitalized companies have already entered into this new space </li></ul><ul><li>New companies are also well capitalized (Qcells, Suntech, First Solar, etc) </li></ul><ul><li>Huge opportunity to create local jobs/local economic development for Rural America and Electrical Unions </li></ul>Summary
    29. Review <ul><li>Kick-start 2,000 MW Federal program. Peg future solar incentives directly to: </li></ul><ul><ul><li>Job Creation </li></ul></ul><ul><ul><li>Health Care/Emissions Value </li></ul></ul><ul><ul><li>National Security/Economic Security </li></ul></ul><ul><ul><li>Electricity Grid Reliability </li></ul></ul><ul><li>Free up Natural Gas to meet higher value needs such as fertilizer, manufacturing, and hydrogen </li></ul><ul><li>Re-establish US dominance as the leader of the clean energy sector </li></ul>Scenario Review:
    30. Risks <ul><li>Ability to structure the subsidies to reduce profit taking by the channel partners, i.e. ethanol </li></ul><ul><li>Quality in the systems deployed, i.e. wind in 1980s </li></ul><ul><li>Reduction of Installed Cost </li></ul><ul><ul><li>Improving labor productivity </li></ul></ul><ul><ul><li>Sustaining the current cost reduction curve on equipment of 5% per annum through R&D support </li></ul></ul><ul><li>Fighting between the Renewable Technologies to receive a share of a perceived “fixed pie” instead of supporting “grow the pie” </li></ul>Biggest Risks to Scenario:
    31. <ul><li>Attacking Conventional Wisdom </li></ul><ul><li>Path to Changing the Energy Mix </li></ul><ul><li>Business Model Implications for Energy Providers </li></ul><ul><li>Political Will as the Necessary Catalyst </li></ul>
    32. Likelihood of Political Will <ul><li>Weak Global Economy </li></ul><ul><li>Energy Inflation Risks </li></ul><ul><li>Geopolitical Risks </li></ul>Drivers of Political Will Add to this: Opportunities for Political and Economic Upside
    33. Upside <ul><li>What investment could achieve this level of impact? </li></ul><ul><ul><li>America invented solar power, they now perfect solar power </li></ul></ul><ul><ul><li>Large capital investment in our Service Economy </li></ul></ul><ul><ul><li>Union support for this program (IBEW) </li></ul></ul><ul><ul><li>Predictable productivity enhancement matching the gains Germany and Japan have already made </li></ul></ul><ul><ul><li>Potential for significant emissions reductions </li></ul></ul>Opportunities for Upside If you were a US Political Leader Trying to Inspire your Electorate…
    34. Subsidy & Spending Examples <ul><li>$30 Billion Tax breaks in the House and Senate version of the 2005 Energy Bill, including </li></ul><ul><ul><li>$12 billion for Nuclear Industry </li></ul></ul><ul><ul><li>$9.0 billion for Coal Industry </li></ul></ul><ul><ul><li>$6.0 billion in Oil and Gas subsidies </li></ul></ul><ul><ul><li>$1.7 billion for Electric Transmission Companies </li></ul></ul><ul><li>$1.5 Billion Renewable Energy Budget in the Department of Energy expected over next 5 yrs </li></ul><ul><li>$1.5 Billion Cumulative Solar PV Subsidies being funded by over 14 U.S. States through 2012 </li></ul>The $6.3 Billion incremental incentive this requires over 8 years is small relative to the size of other programs Source: Public Citizen
    35. Putting it into Perspective