The following three graphics (click on the images to enlarge) are from a recent “Levelized Cost of Energy” (LCOE) study by Lazard – one of the world’s leading financial advisory and asset management firms. I’m posting the graphics here because they demonstrate how competitive clean energy’s become (even with massive implicit and explicit subsidies to fossil fuels), and also how much cheaper renewable power is going to get over the next few years. No wonder why the International Energy Agency just explained how solar “could be the world’s largest source of electricity by 2050,” with coal just about extinct (see the slide “Solar’s share varies significantly by region”). Great stuff; now let’s get on with the transition from dirty, dangerous, fossil-fuel-based energy to clean, renewable power.
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Here are five recommended reads for today (9/30/14).
- Reuters reports, “Solar energy could be the top source of electricity by 2050, aided by plummeting costs of the equipment to generate it, a report from the International Energy Agency (IEA), the West’s energy watchdog, said on Monday.”
- According to Vox, “Solar power is growing so fast that older energy companies are trying to stop it.”
- RenewEconomy reports, “The highly conservative International Energy Agency predicts the cost of solar energy will fall to around 4c/kWh in coming decades as the sun becomes the dominant source of power generation across the world.”
- According to Greentech Media, “A groundbreaking agreement between Arizona Public Service (APS) and Arizona’s ratepayer advocate could create a surge of new storage deployment in the state over the next seven years.”
- The Guardian asks, “Can Narendra Modi bring the solar power revolution to India?”
The Solar Energy Industries Association (SEIA) is out with its Solar Market Insight Report for the 2nd quarter of 2014, and it’s overwhelmingly “sunny” news. Here are a few highlights:
- “The U.S. solar market had another strong quarter in Q2 2014. Photovoltaic (PV) installations reached 1,133 MWdc in Q2, up 21% over the same quarter in 2013.”
- Solar power accounted for 53% of new U.S. electric generation capacity in the first half of 2014. That put solar ahead of natural gas (30%) and wind power (14%).
- Utility PV procurement is surging, as “utility-scale solar project developers have amassed more than 3 gigawatts of new contracts over the past twelve months” This is a result of solar’s “increasing cost-competitiveness, along with a variety of new procurement mechanisms.”
- The “residential solar juggernaut continues,” and “its momentum shows no signs of slowing.”
- The top five states for solar PV installation in the 2nd quarter of 2014 were: California, Massachusetts, New Mexico, New Jersey and North Carolina.
- Solar power in the U.S. is increasingly becoming “mainstream,” as “solar PV has moved light years ahead of where it stood back in the first half of 2012″ (e.g., utility solar PV cumulative installations have quadrupled).
- Utilities are starting to jump into the residential solar power market: “the two major utilities in Arizona (Arizona Public Service and Tucson Electric Power) are now the first utilities in the U.S. to formally propose plans to own rooftop solar on residential customers’ homes.”
- As you can see in the graph above, U.S. PV installations will hit 6.5 GW in 2014, up 36% from 2013. PV installations are projected to surpass 8 GW in 2015 and 12 GW in 2016.
- One cloud in the otherwise bright outlook: “looking ahead, systemic challenges to growth loom both in the near term (e.g., the recent U.S.-China tariff decision) and medium term (e.g., the federal ITC’s scheduled dropdown at the end of 2016). Nevertheless, the first half of 2014 showcased innovative financing strategies, evolving utility business models, and solar’s increasing economic competitiveness with fossil fuels, all of which offer encouraging signs of the U.S. market’s ability to weather barriers to growth and further push solar PV into the mainstream.”
According to a new article in OilPrice.com, China is busy “cutting its dependence on coal, oil and natural gas and replacing it with solar at a breakneck pace.”
According to a 2014 report by Hanergy Holding Group, China installed 12 GW of new photovoltaic (PV) generation capacity in 2013, a massive 232 percent increase over the previous year. Compare that to Germany, whose new PV capacity dropped 56.5 percent, and Italy, where new solar power additions fell by 55 percent.
Why is China racing ahead when it comes to solar power growth, while certain other countries are falling behind? Simple: the way China incentivizes solar power. A few key points form the article explain what’s going on here:
- Policies aimed at boosting market demand for solar: “While Germany and the rest of Europe have scaled back government incentives to install solar, in China, increased targets for solar power generation have been backed by programs to boost market demand. A feed-in tariff passed last year amounts to a subsidy of between 14 and 16 U.S. cents per kilowatt hour, and applies to both ground-mounted and rooftop panels. Feed-in tariffs incent renewable energy producers by allowing them to charge a higher price for their electricity than the retail rate.”
- Financing and investment innovations: “The Chinese government is encouraging financial institutions to offer discounts on loans and is encouraging the formation of PV industry investment funds among insurance companies and trusts, Bloomberg reported this month.”
- A smart and highly motivated country: “There is no doubt that China’s push to increase solar power is being driven by an acute and pressing national problem – air pollution. Solar offers a way out of the competing pressures China is under to fuel economic growth and also arrest deteriorating air quality. But the Chinese government has also been smart in the way it has incented private industry to build out solar power capacity. As long as China’s solar competitors do not have the same environmental imperative, they will likely continue to lag behind China in new solar power additions. For that reason, the solar growth story is likely to be centred in China, at least for the foreseeable future.”
Earlier this afternoon, I attended a highly informative webinar for solar installers on “Selling Quality in a Price-Sensitive Market” by Enphase Energy (Judy Ash) and UnThink Solar (Tor “Solar Fred” Valenza). I thought a few key points were worth passing along.
- There’s a tremendous amount of price competition in solar power right now, and while some of that reflects positive trends like falling soft costs, another part of it reflects eroding margins. In this environment, the question is how to market a premium-quality product and not just get into a destructive “race to the bottom” that’s all about price?
- With more than 60% of residential solar customers getting only 2 quotes or fewer, it’s crucial that you be the first company the customer calls. The most important thing in that regard is good “word of mouth,” particularly by your customers to their friends, neighbors, etc. One way to encourage this is of course to provide a great product and service. In addition, you can offer referral incentives.
- The bottom line is that, while you need to be in the ballpark on price, quality of installation experience and product is crucial.
- According to Tor Valenza, the goal should be to build a “mountain of trust” about your company and/or brand. Customers want solar panels that will last a long time and work right, but also pay attention to your appearance online and offline, communications and interactions with them, and a “certain je ne sais quoi” – something unique about your company that makes you who you are.
- Trust can’t be built in 10 minutes, it takes continual effort over time. You should be conveying that you’re all about quality solar that will last a long time in all your marketing, online and offline. For instance, you should stress how long you’ve been in business, how many installations you’ve done, the quality brands you install, community certifications, etc.
- Valenza strongly recommends putting up a video about the installation process, the warranty, and other important information, as it makes the whole process “less scary” to potential customers. Valenza also recommends using social media in an honest, transparent way to interact with actual and potential customers and to help build trust.
- Your company definitely needs a good-looking, and of course technically up-to-date website that makes a good first impression. Same thing with your marketing materials, installer/sales uniforms, case study images and videos.
- Possibly most important, in Valenza’s view, is to always keep in mind that “people relate to people.” This means doing things like putting a bio and photo of all your company’s employees, having everyone do at least one blog post, being involved in your community (e.g., sponsoring a Little League team), etc.
- Finally, on the “Je ne sais quoi” quality, Valenza stresses that every company has its own personality, something unique or different about it, something that sets it apart, and should work to convey that in an authentic manner.
A few key takeaway messages from all this include the following: 1) use consistent messaging; 2) have others say it for you (e.g., third-party validators); 3) add “proof points” (e.g., Better Business Bureau endorsements); 4) convey professionalism and excellence in everything you do; 5) use social media effectively; 6) be involved in your community; 7) work over the long haul to establish trust and maintain relationships; and promote your “Je ne sais quoi” in a way that “humanizes your company, gives you an identity that people can relate to.” Do all that, and you may not guarantee success, but you’ll certainly increase your chances of success by a significant amount. Good luck!