I wanted to follow up on my article, Bye, Bye Love: Leaving my Apple (AAPL) iPhone for Verizon's Droid. My main point of contention at the time I wrote the posting - AT&T (T) abysmal wireless coverage. And not just 3G coverage - I have never possessed a mobile phone that drops as many calls as my beloved iPhone (we are going back to 1991 and the OKI 900!). I wish I was kidding, but too many important dropped calls led me to experiment with another wireless device. As for the commentary, please hold all fire when it comes to Apple Fanatics - I am tapping this posting on an Airbook, I have the Apple TV, three iPhones, and multiple MacBooks and one iMac. I am with you, my peeps. But I also run a very service-intense sales and marketing business, where a dropped call can literally mean life or death for a large deal. So, how can I justify keeping as my main phone the single best device I have ever owned - outside of the fact I cannot complete 38% of my phone calls without either a drop, or a long moment of dead silence (I have been keeping careful track over the past month, hence the 38% figure)?
Well, I have tried the Droid. It is a fantastic device, and I have been pleasantly surprised by the Android operating system. It has a long ways to go in terms of the seamless feel the iPhone OS has, but it's a given Google is addressing that quickly. I can happily report I dropped 21% of my calls on the Droid - still a high figure, but as you can see, it heartily beats the iPhone. I do want to note I live in Los Angeles, and I did eliminate any dropped calls that are in obvious dead zones, like the canyon passes.
Here are some of my initial experiences with both phones:
1. I had used BlackBerry (RIMM) for years and years, and I could blow out huge emails on the physical keyboards. It took a while, but I can throw down on the iPhone - especially since the last upgrade to the OS allows my to utilize the larger horizontal touchscreen keyboard. To my disappointment, Droid's keyboard leaves much to be desired. The physical feedback feels clunky, the keyboard itself is bit crowded (even for my small fingers), and actually feels fairly fragile - not impressed with the fit and finish of the keyboard at all. That said, again I am an Apple fan, and not much beats their fit and finish, to be fair. However, Droid and Verizon have been touting their product as a direct competitor to the iPhone, so let's subtract points on the physical keyboard. Most BlackBerry models have far superior keyboards, and even the Palm Pre beats out the Droid when compared directly. In summary, the keyboard, while not horrid by any standard, nevertheless is lacking when compared to the competition. Final note: I have spoken to many who simply prefer a physical keyboard to the touchscreen keyboard iPhone employs. If you find yourself in that category, I would recommend either dealing with the Droid's keyboard until the next upgrade, or waiting for that upgrade, simply because the Android operating system is fantastic. Bypass RIM and Palm - they will be small potatoes in the mobile market share game.
2. No multi-touch makes a big difference in day-to-day usage. I have had this argument 100 times with even Google execs - bottom line, multi-touch on the iPhone makes the overall user experience much more seamless and fluid. Google and Android has a ways to go to match ease-of-use for the average user.
3. I have 95+ applications on my iPhone, and they all work wonderfully, and update fairly well, with only the occasional hiccup. Android really needs to focus on this part of the experience - I have had nothing but trouble with many applications on my Droid. Open Source is fantastic - but there is something to be said for the Apple model of melding hardware and software. Most average users don't have the technical ability to navigate the application issues. Add to that, I cannot get nearly as many Android application on my Droid - they simply don't have nearly the number of applications, and the incredible variety. This leads into my next, critical point for Droid and Android...
4. It is CRITICAL for Android to step up and create a much more cohesive, user-friendly mobile application procurement environment. Long term, their open strategy (which right now is all the vogue with pundits but, as I wrote in another posting, they are way off mark on this) will lead to a lot of applications that are sub-par in performance, or worse, are net-negative on the base operating system. This is a huge issue for Google and it needs to be addressed. I am not advocating Apple is 100% right - but as of right now, their strategy kills Androids. My Android application experience has been confusing and downright awful, to be frank. And if it is for me, many other users are even more frustrated. Their base set of applications are fantastic, but iPhone users smugly look down at their Android counterparts, with dozens and dozens of fantastic, user-friendly and stable applications, easily procured from one easy source.
5. Web browsing speeds - here we give Droid and Verizon an important win, which goes back to AT&T - good old AT&T simply needs to step it up with their coverage. It's great that I am zipping faster than my Droid on Safari at times, but when I move seven paces to the left and the data stream wanes, what is the point of a faster browsing experience? The 3G coverage is frustrating, period, and it needs to be addressed or AT&T will lose iPhone in 2011.
6. I have been speaking with several Droid users having issues with their cameras in certain situations. I have not had the chance to really dive into the camera, but intend to over the Thanksgiving holiday, and post some results for comparative purposes. I WILL say iPhone's camera has never been my favorite, but actually works just fine for the casual well-lit snapshot. Even utilizing third-party apps, any iPhone pic taken in a dimly-lit setting is an act of redundancy - here's hoping what I hear is true, and 2010's update brings us not just a flash, but a fairly revolutionary upgrade to the camera (both hardware and rendering software - my sources say early tests are VERY exciting).
Summary: The iPhone remains first-in-class, but I see a tremendous future for the Android mobile operating system. And the factor that has driven me to carry two phones this month - Droid doesn't drop my calls nearly as much as the iPhone. I don't care about blaming hardware, the carrier, what geographic locale I happen to be in...consumers don't care. It is a phone after all, and my dropped-call percentage of 38% (almost four in every ten calls!) is unacceptable. AT&T and Apple need to address this issue, because if I am pitching a Fortune 100 client, I simply cannot have the phone blank on me if I move three steps top the left. My beloved iPhone is still in the lead over Android's latest and greatest offering, but AT&T and Apple must get the coverage problem solved and reassure their customer base (so incredibly loyal to begin with - as a former advertising executive, this should be an easy public relations fix once the actual coverage problem is addressed and rectified) that they can complete phone calls and have ready and stable access to their data streams without worry.
I will be checking back in with a further update after the holidays, and I would very much enjoy feedback on anyone's experiences with either device!
Disclosure: No holdings in any of the companies referenced in this article.
Tuesday, November 24, 2009
Monday, November 23, 2009
SunTech's Optimism - Is it Justified?
I have been knee-deep in research on SunTech's latest earnings release, and I wanted to share some of my findings, both macro and focused, in order to provide some guidance on SunTech, the solar vertical, and the near and long-term outlook for SunTech. I see a lot of positives, and if SunTech can navigate some of the upcoming challenges successfully, they are positioned to be a strong leader in over the next 3-5 years in the solar space.
1. I just had a long conversation today with the head of a leading Greentech distribution company, massive in size. 2010 orders are looking much stronger than 2009, and I think we will see an uptick (from ALL that data I am seeing) in Q1 that will result in a surprising YOY increase. BUT, let's take that optimistic view with caution. This is a vertical very similar to other technology verticals I have been deeply involved with my whole career - the technology is changing constantly, the main players are going through growing pains (an example would be SunPower's accounting difficulties and potential restatements - been through several larger startups, and earnings restatements are very common on the fast-moving tech sector), and I am not going out on a limb by saying the strongest players today could easily be eclipsed by emerging advances from other firms tomorrow. Tread carefully - the laws of Disruptive Innovation and Disruptive Technology rule the day in the GreenTech vertical.
2. We can all count on subsidies to remain, especially in the U.S. with the current Administration in power, but we can also count on those subsidies shrinking in all likelihood. Government fiscal policy will dictate cutbacks, as industrialized nations struggle with high percentage of government debt versus GDP. That said, we also cannot predict what types of legislation will be enacted to continue to force the private sector towards Renewable Energy implementation (e.g. California). It's a low-visibility environment when we look at government policy, but there is a momentum and political environment currently that trends positive for Renewable Energy and the GreenTech sector as a whole.
3. I get flack for this all the time, but to discount the cultural and societal push, both domestic and internationally, towards Green solutions and Renewable Energy is foolish. History has shown again and again, culture is a powerful dictating force in enacting macro-infrastructural and economic evolution. I don't agree or disagree with this trend - as a realist, and an analyst, you simply must factor in, and it's a strong part of my predictive modeling for short-term GreenTech projections.
4. I am going to diverge with the consensus on China. There are some fundamental factors that both bolster the viewpoint that China is going to eclipse the United States and other European countries in Renewable Energy and GreenTech technology advancements and production capacity, to be sure. But China is taking a different approach than, say, Germany, a nation that has invested billions and billions not to power their nation with solar power (at an average of four sunlight hours per day, it's just not a practical environment for large-scale deployment yet - until leaps in energy storage make it so). Germany made that strategic investment as an intellectual property investment, and it is paying off. China is taking a different approach, an approach far more in line with their overall economic model - production capacity, production capacity, and then more production capacity. As a side note, this is a strategy that is frankly a forced policy - they simply do not have the engineering brain trust yet that the G10 nations do (no disrespect to China - they will get there for sure!!). The revolutionary technology advancements will, in my opinion, come from the U.S. and Europe, and China will be a major player in building the production capacity infrastructure necessary to deploy solar on a widespread, positive return-on-capital basis that will help make Q3-Q4 a real tipping point in solar - look at that time frame for the global, and domestic U.S., to reach critical mass, making solar absolutely viable from a Levelized Cost of Energy standpoint (likely without government and utility subsidies). Many variables, but my finger on the pulse for 2010 skews towards the positive projections.
Now, to quickly address SunTech specifically:
1. At this point in their startup evolution, their balance sheet is above average. Keep a close eye on how currency fluctuations are both benefiting and/or having a negative impact on their earnings. Forward -looking, I am 100% convinced that the dollar with strengthen, and I watch as an investor for SunTech to be prepared with strategies in place for this inevitable eventuality. Examples would include distribution models, tactical global production facilities (e.g. Phoenix was a positive development) and currency hedges.
2. There are many players in their particular vertical, again typical of a nascent technology environment in an accelerated growth phase. Keen eyes will be on their research and development revenue allotments. Are they continuing a firm commitment to advancing their technology, as opposed to allowing their current technology to carry quarterlies for the time being? Also, they are fairly deep in terms on their R&D talent base - look to see if they are able to hold onto this talent. R&D will be a big factor in determining the long-term viability and success of SunTech in this environment. Innovation, innovation, innovation! Key to this vertical, as it is with most technology verticals. Investment in R&D, even at the expense of lowering guidance for the next few quarters, may sound like career suicide, but is key to SunTech's long-term industry leadership positioning.
3. They are talking the talk on diversification in their sales channels - let's keep on eye over the next 6-12 months if the walk the walk. With feed-in tariffs and other government subsidies getting squeezed due to budget constraints as the need for further economic stimulus continues, an aggressive, intelligent diversivication strategy will be a critical factor to maintain top-line revenue growth. Eastern Europe is starting to appear ripe for a market share grab. And the sleeping giant called the United States is slowly awakening - maintaining a large piece of the market share in the U.S. should be a critical component to SunTech's sales-mix modeling.
4. The Chinese solar market has gotten a lot of coverage as of late, and rightfully so. But I am stressing caution in the longer-term, 3-5 year time frame - China will absolutely not be able to maintain their current torrid GDP growth rates, and as we see globally, it's much easier to delay or shelve Renewable Energy projects to slow the rate of government spending. Coal is cheaper, and coal in plentiful in China. Despite the protestations to the contrary, the Chinese government's absolute priority is maintaining power, and when their economic growth rate inevitably slow, a lot of systemic troubles within both their government and banking system will be revealed. The Chinese are currently constructing one new coal-powered generation plant a week. The media coverage is fantastic, and it's absolute a positive to those of us in GreenTech. But the reality on the ground is China is committed to ensure their energy needs are met at all costs, and coal is still a cheaper alternative for the Chinese generation plans than solar or wind. So as we see their growth rates slow in the middle of the coming decade, and the turbulence that will go with that slowdown, expect a lot of these Renewable Energy projects announced with such fanfare to be delayed or shelved completely. SunTech needs to recognize this reality and diversify accordingly.
5. I am impressed thus far with SunTech's level of transparency and fiscal discipline. If this continues, and I have no reason at this time not to believe it won't, this makes them a far stronger player globally than much of their competitive set.
Bottom line: I think SunTech is a fantastic 3-5 year play. If you are looking for immediate returns, look elsewhere - volatility is the name of the game in Technology sectors such as GreenTech, still very early in their evolution. But I see a lot of positives in SunTech's fundamentals, and as a five-year strategy, I think they are a safe, strong investment in the GreenTech sector.
Disclosure: No holdings in any of the companies referenced in this article.
1. I just had a long conversation today with the head of a leading Greentech distribution company, massive in size. 2010 orders are looking much stronger than 2009, and I think we will see an uptick (from ALL that data I am seeing) in Q1 that will result in a surprising YOY increase. BUT, let's take that optimistic view with caution. This is a vertical very similar to other technology verticals I have been deeply involved with my whole career - the technology is changing constantly, the main players are going through growing pains (an example would be SunPower's accounting difficulties and potential restatements - been through several larger startups, and earnings restatements are very common on the fast-moving tech sector), and I am not going out on a limb by saying the strongest players today could easily be eclipsed by emerging advances from other firms tomorrow. Tread carefully - the laws of Disruptive Innovation and Disruptive Technology rule the day in the GreenTech vertical.
2. We can all count on subsidies to remain, especially in the U.S. with the current Administration in power, but we can also count on those subsidies shrinking in all likelihood. Government fiscal policy will dictate cutbacks, as industrialized nations struggle with high percentage of government debt versus GDP. That said, we also cannot predict what types of legislation will be enacted to continue to force the private sector towards Renewable Energy implementation (e.g. California). It's a low-visibility environment when we look at government policy, but there is a momentum and political environment currently that trends positive for Renewable Energy and the GreenTech sector as a whole.
3. I get flack for this all the time, but to discount the cultural and societal push, both domestic and internationally, towards Green solutions and Renewable Energy is foolish. History has shown again and again, culture is a powerful dictating force in enacting macro-infrastructural and economic evolution. I don't agree or disagree with this trend - as a realist, and an analyst, you simply must factor in, and it's a strong part of my predictive modeling for short-term GreenTech projections.
4. I am going to diverge with the consensus on China. There are some fundamental factors that both bolster the viewpoint that China is going to eclipse the United States and other European countries in Renewable Energy and GreenTech technology advancements and production capacity, to be sure. But China is taking a different approach than, say, Germany, a nation that has invested billions and billions not to power their nation with solar power (at an average of four sunlight hours per day, it's just not a practical environment for large-scale deployment yet - until leaps in energy storage make it so). Germany made that strategic investment as an intellectual property investment, and it is paying off. China is taking a different approach, an approach far more in line with their overall economic model - production capacity, production capacity, and then more production capacity. As a side note, this is a strategy that is frankly a forced policy - they simply do not have the engineering brain trust yet that the G10 nations do (no disrespect to China - they will get there for sure!!). The revolutionary technology advancements will, in my opinion, come from the U.S. and Europe, and China will be a major player in building the production capacity infrastructure necessary to deploy solar on a widespread, positive return-on-capital basis that will help make Q3-Q4 a real tipping point in solar - look at that time frame for the global, and domestic U.S., to reach critical mass, making solar absolutely viable from a Levelized Cost of Energy standpoint (likely without government and utility subsidies). Many variables, but my finger on the pulse for 2010 skews towards the positive projections.
Now, to quickly address SunTech specifically:
1. At this point in their startup evolution, their balance sheet is above average. Keep a close eye on how currency fluctuations are both benefiting and/or having a negative impact on their earnings. Forward -looking, I am 100% convinced that the dollar with strengthen, and I watch as an investor for SunTech to be prepared with strategies in place for this inevitable eventuality. Examples would include distribution models, tactical global production facilities (e.g. Phoenix was a positive development) and currency hedges.
2. There are many players in their particular vertical, again typical of a nascent technology environment in an accelerated growth phase. Keen eyes will be on their research and development revenue allotments. Are they continuing a firm commitment to advancing their technology, as opposed to allowing their current technology to carry quarterlies for the time being? Also, they are fairly deep in terms on their R&D talent base - look to see if they are able to hold onto this talent. R&D will be a big factor in determining the long-term viability and success of SunTech in this environment. Innovation, innovation, innovation! Key to this vertical, as it is with most technology verticals. Investment in R&D, even at the expense of lowering guidance for the next few quarters, may sound like career suicide, but is key to SunTech's long-term industry leadership positioning.
3. They are talking the talk on diversification in their sales channels - let's keep on eye over the next 6-12 months if the walk the walk. With feed-in tariffs and other government subsidies getting squeezed due to budget constraints as the need for further economic stimulus continues, an aggressive, intelligent diversivication strategy will be a critical factor to maintain top-line revenue growth. Eastern Europe is starting to appear ripe for a market share grab. And the sleeping giant called the United States is slowly awakening - maintaining a large piece of the market share in the U.S. should be a critical component to SunTech's sales-mix modeling.
4. The Chinese solar market has gotten a lot of coverage as of late, and rightfully so. But I am stressing caution in the longer-term, 3-5 year time frame - China will absolutely not be able to maintain their current torrid GDP growth rates, and as we see globally, it's much easier to delay or shelve Renewable Energy projects to slow the rate of government spending. Coal is cheaper, and coal in plentiful in China. Despite the protestations to the contrary, the Chinese government's absolute priority is maintaining power, and when their economic growth rate inevitably slow, a lot of systemic troubles within both their government and banking system will be revealed. The Chinese are currently constructing one new coal-powered generation plant a week. The media coverage is fantastic, and it's absolute a positive to those of us in GreenTech. But the reality on the ground is China is committed to ensure their energy needs are met at all costs, and coal is still a cheaper alternative for the Chinese generation plans than solar or wind. So as we see their growth rates slow in the middle of the coming decade, and the turbulence that will go with that slowdown, expect a lot of these Renewable Energy projects announced with such fanfare to be delayed or shelved completely. SunTech needs to recognize this reality and diversify accordingly.
5. I am impressed thus far with SunTech's level of transparency and fiscal discipline. If this continues, and I have no reason at this time not to believe it won't, this makes them a far stronger player globally than much of their competitive set.
Bottom line: I think SunTech is a fantastic 3-5 year play. If you are looking for immediate returns, look elsewhere - volatility is the name of the game in Technology sectors such as GreenTech, still very early in their evolution. But I see a lot of positives in SunTech's fundamentals, and as a five-year strategy, I think they are a safe, strong investment in the GreenTech sector.
Disclosure: No holdings in any of the companies referenced in this article.
Wednesday, November 18, 2009
Rooftop Solar Generation - Ready for Primetime?
California’s ambitious goal of obtaining a third of its electricity from renewable sources by 2020 has spawned a green energy boom with thousands of megawatts of solar, wind, and biomass power plants planned for ... the middle of nowhere.
And therein lies the elephant in the green room: transmission. Connecting solar farms and geothermal plants in the Mojave Desert and wind farms in the Tehachapis to coastal metropolises means building a massive new transmission system. The cost for 13 major new power lines would top $15.7 billion, according to a report released in August by the state’s Renewable Energy Transmission Initiative.
The initiative, called RETI, is an attempt to build a statewide green grid in an environmentally sensitive way that will avoid the years-long legal battles that have short-circuited past transmission projects.
But the rapidly evolving solar photovoltaic market may moot the need for some of those expensive and contentious transmission lines, requiring transmission planners to rethink their long-term plans, according to Black & Veatch, the giant consulting and engineering firm that does economic analysis for RETI.
In short, solar panel prices have plummeted so much as to make viable the prospect of generating gigawatts of electricity from rooftops and photovoltaic farms built near cities.
“This has pretty significant implications in terms of transmission planning,” Ryan Pletka, Black & Veatch’s renewable energy project manager, told me last week. “What we thought would happen in a five-year time frame has happened in one year.”
That’s prompted Pletka to radically revise the potential for so-called distributed generation—solar systems that can plug into the existing grid without the construction of new transmission lines—to contribute to California’s need for 60,000 gigawatt hours of renewable electricity by 2020.
When Black & Veatch did its initial analysis last year, it predicted that photovoltaic solar could contribute 2,000 gigawatt hours, given the high cost of conventional solar modules and the fact that a next-generation technology, thin-film solar, had yet to make a big commercial breakthrough.
Pletka’s new number is a bit of a shocker: Distributed generation could potentially provide up to 40,000 gigawatt hours of electricity, or two-thirds of projected demand.
“Certainly some of the new transmission lines will be needed but not as many as before,” he says.
That analysis also calls into question the need for as many large-scale solar power plants. Currently there are about 35 Big Solar projects planned for California that would generate more than 12,000 megawatts of electricity.
A game-changer has been the rapid rise of thin-film solar. Thin-film solar modules are essentially printed on glass or other materials. Although such solar panels are less efficient at converting sunlight into electricity than traditional crystalline modules—which are made from silicon wafers—they can be produced more cheaply.
In the past year, utilities like Southern California Edison have signed deals with First Solar, the thin-film powerhouse, to buy electricity from four massive megawatt thin-film solar farms. And in September, China inked an agreement with the Tempe, Ariz., company to build a 2,000-megawatt power plant, the world’s largest.
The next day, Nanosolar, a Silicon Valley startup, announced it had secured $4.1 billion in orders for its thin-film modules, which it claims will be even more efficient and cost less to produce than those made by First Solar.
Meanwhile, California’s two biggest utilities, PG&E and Southern California Edison, this year each unveiled initiatives to collectively install 1,000 megawatts of distributed solar generation. SoCal Edison will put solar arrays on warehouse roofs throughout the Southland - First Solar snagged the first big contracts - while PG&E is focusing on ground-mounted solar systems near its existing substations.
So what’s behind this rooftop revolution in solar?
Partly it’s due to a glut in the solar panel market. The global economy collapsed last year just as solar module makers ramped up production. But it’s also a result of technological innovation and economies of scale that have made thin-film solar, for instance, competitive. Strides have also been made in cutting installation costs, which typically account for half the price of photovoltaic systems. And finally, a giant key in gaining traction towards critical mass in rooftop solar systems is financing. California-based SolarCity has emerged as an industry leader in providing financing that makes fiscal sense for homeowners and commercial building owners through their SolarLease program.
The solar market, of course, is heavily dependent on government incentives—in the United States and overseas—and thus vulnerable to disruption. But the trajectory remains one of falling prices and thus Black & Veatch’s projections pose a conundrum for transmission planners.
Given that transmission projects can take a decade to complete, power bureaucrats make their plans based on 10-year projections of energy costs according to Pletka. That wasn’t much of a problem when planning transmission for, say, a grid supplied by natural gas-fired power plants as the technology or the market was not likely to change radically.
Not so for solar, where technological advances and fast-changing market conditions are shaking long-held views that photovoltaic power, or PV, is not ready for prime time.
“I’ve worked in renewables since the ‘90s and I myself had written off solar PV for years and years and years,” Pletka says. “That’s a firmly rooted mindset among everyone who works from a traditional utility planning perspective.”
“We present this new information on photovoltaics to people and it’s still not sinking in,” he adds. “It would cause a major shift in how we plan.”
While fewer massive transmission projects would be needed if California generates gigawatts of electricity from rooftops, the distribution network will need to be upgraded and a smart grid created to manage tens of thousands of pint-sized solar power plants.
Cities, Pletka notes, could become generators of electricity rather than consumers of power.
“It brings up questions people haven’t had to talk about before,” says Pletka.
And therein lies the elephant in the green room: transmission. Connecting solar farms and geothermal plants in the Mojave Desert and wind farms in the Tehachapis to coastal metropolises means building a massive new transmission system. The cost for 13 major new power lines would top $15.7 billion, according to a report released in August by the state’s Renewable Energy Transmission Initiative.
The initiative, called RETI, is an attempt to build a statewide green grid in an environmentally sensitive way that will avoid the years-long legal battles that have short-circuited past transmission projects.
But the rapidly evolving solar photovoltaic market may moot the need for some of those expensive and contentious transmission lines, requiring transmission planners to rethink their long-term plans, according to Black & Veatch, the giant consulting and engineering firm that does economic analysis for RETI.
In short, solar panel prices have plummeted so much as to make viable the prospect of generating gigawatts of electricity from rooftops and photovoltaic farms built near cities.
“This has pretty significant implications in terms of transmission planning,” Ryan Pletka, Black & Veatch’s renewable energy project manager, told me last week. “What we thought would happen in a five-year time frame has happened in one year.”
That’s prompted Pletka to radically revise the potential for so-called distributed generation—solar systems that can plug into the existing grid without the construction of new transmission lines—to contribute to California’s need for 60,000 gigawatt hours of renewable electricity by 2020.
When Black & Veatch did its initial analysis last year, it predicted that photovoltaic solar could contribute 2,000 gigawatt hours, given the high cost of conventional solar modules and the fact that a next-generation technology, thin-film solar, had yet to make a big commercial breakthrough.
Pletka’s new number is a bit of a shocker: Distributed generation could potentially provide up to 40,000 gigawatt hours of electricity, or two-thirds of projected demand.
“Certainly some of the new transmission lines will be needed but not as many as before,” he says.
That analysis also calls into question the need for as many large-scale solar power plants. Currently there are about 35 Big Solar projects planned for California that would generate more than 12,000 megawatts of electricity.
A game-changer has been the rapid rise of thin-film solar. Thin-film solar modules are essentially printed on glass or other materials. Although such solar panels are less efficient at converting sunlight into electricity than traditional crystalline modules—which are made from silicon wafers—they can be produced more cheaply.
In the past year, utilities like Southern California Edison have signed deals with First Solar, the thin-film powerhouse, to buy electricity from four massive megawatt thin-film solar farms. And in September, China inked an agreement with the Tempe, Ariz., company to build a 2,000-megawatt power plant, the world’s largest.
The next day, Nanosolar, a Silicon Valley startup, announced it had secured $4.1 billion in orders for its thin-film modules, which it claims will be even more efficient and cost less to produce than those made by First Solar.
Meanwhile, California’s two biggest utilities, PG&E and Southern California Edison, this year each unveiled initiatives to collectively install 1,000 megawatts of distributed solar generation. SoCal Edison will put solar arrays on warehouse roofs throughout the Southland - First Solar snagged the first big contracts - while PG&E is focusing on ground-mounted solar systems near its existing substations.
So what’s behind this rooftop revolution in solar?
Partly it’s due to a glut in the solar panel market. The global economy collapsed last year just as solar module makers ramped up production. But it’s also a result of technological innovation and economies of scale that have made thin-film solar, for instance, competitive. Strides have also been made in cutting installation costs, which typically account for half the price of photovoltaic systems. And finally, a giant key in gaining traction towards critical mass in rooftop solar systems is financing. California-based SolarCity has emerged as an industry leader in providing financing that makes fiscal sense for homeowners and commercial building owners through their SolarLease program.
The solar market, of course, is heavily dependent on government incentives—in the United States and overseas—and thus vulnerable to disruption. But the trajectory remains one of falling prices and thus Black & Veatch’s projections pose a conundrum for transmission planners.
Given that transmission projects can take a decade to complete, power bureaucrats make their plans based on 10-year projections of energy costs according to Pletka. That wasn’t much of a problem when planning transmission for, say, a grid supplied by natural gas-fired power plants as the technology or the market was not likely to change radically.
Not so for solar, where technological advances and fast-changing market conditions are shaking long-held views that photovoltaic power, or PV, is not ready for prime time.
“I’ve worked in renewables since the ‘90s and I myself had written off solar PV for years and years and years,” Pletka says. “That’s a firmly rooted mindset among everyone who works from a traditional utility planning perspective.”
“We present this new information on photovoltaics to people and it’s still not sinking in,” he adds. “It would cause a major shift in how we plan.”
While fewer massive transmission projects would be needed if California generates gigawatts of electricity from rooftops, the distribution network will need to be upgraded and a smart grid created to manage tens of thousands of pint-sized solar power plants.
Cities, Pletka notes, could become generators of electricity rather than consumers of power.
“It brings up questions people haven’t had to talk about before,” says Pletka.
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