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Thursday, August 26, 2010

Temporary pause in policy schizophrenia

On Wednesday, the California Energy Commission approved the 250MW Beacon solar plant . This 2000 acre project about 17 miles north of Edwards Air Force base is in Kern County, at the West edge of the Mojave Desert.

The plan is the first utility-scale solar thermal project approved in California since 1990, and when complete would nearly double the 350 MW of solar thermal capacity near Kramer Junction.

On the one hand, I’d like to be encouraged. The CEC claims to care about greenhouse gasses, renewable energy, keeping generating capacity (and operating jobs) in state, etc. etc.

On the other hand, it’s far easier for a government agency to say “no” in our litigious, regulation-driven society. Whether it be the impact of wind generation on luxury home views or migrating birds, competing values often are used to sabotage reasonable efforts to create long-term green energy infrastructure.

The CEC is hardly done, as there are many other projects planned for the Mojave, with ideal insolation due to low humidity and low latitudes, and located near the demand (and transmission facilities) of the LA metropolis.

Even if the CEC is reasonable, there is still the threat of federal regulators (or politicians) making land use decisions to rule out these ideal locations for what should become gigawatts of RE capacity.

So this week's outcome is a step in the right direction. But it’s only one step of many.

Sunday, August 8, 2010

Making money without relying on politicians

Rob Day of Cleantech Investing raises the exact point that I’ve been making for years:
Now that Harry "Lucy" Reid has pulled the climate legislation football away at the last minute, cleantech investors can be forgiven for taking a big sigh and forgetting about climate policy for a while. After all, until a couple of years ago most cleantech VCs were adamant about purposefully ignoring policy efforts and effects, because of the randomness factor it would imply for their investments.
With Obama’s election, I think some cleantech investors and entrepreneurs assumed that Cap-N-Trade, a carbon tax or some other policy change would come along that would make their businesses more profitable.

Like any other special interest, these businesses are certainly free (at least for now) in advocating policies that support their special interest. But then they’re special interests and not real businesses.

I think it’s rational to plan a business based on existing policies that are unlikely to change. In California, RPS is the law of the land and even a Republican governor is unlikely to roll them back.

On the other hand, AB 32 (or the Prop 23 that would repeal it) is a measure that has passionate supporters, passionate opponents and a fairly large middle group that could go either way. So while I don’t agree with Rob Day that Prop 23 passing would be a disaster, I certainly agree firms for the next 90 days have to make long-term investing decisions based on the possibility that it might.

Tuesday, August 3, 2010

Who needs inefficient solar panels?

The IPO of thin-film solar module maker Trony Solar has been cancelled in the light of a lousy IPO climate that also claimed Solyndra’s IPO hopes. The Chinese firm had hoped to raise $200m.

In her story on the cancelled IPO, Camille Ricketts of VentureBeat notes this is in the context of other declines in the thin-film market, including Applied Materials discontinuing its SunFab thin-film integrated equipment line.

Buried near the bottom of her story is the heart of the matter:
Thin-film cells are generally less efficient than their crystalline silicon peers. Their main saving grace — which motivated a lot of investment in the market two years ago — is that they use less silicon. Back when the material was expensive, this made thin-film a compelling proposition. But silicon prices have since dropped, allowing crystalline silicon panels and the companies who specialize in them, namely SunPower, to remain on top.
This raises the question: if crystalline silicon prices continue to fall — as they have for decades — why would we think that thin film companies have any sort of future?

Low efficiency means greater spending per kWh on balance of system — including installation labor and permitting costs that seem more stubbornly resistant to experience curve efficiencies. There’s also the real estate question — due to the space limitations of a rooftop environment, behind-the-meter applications often have trouble generating enough power to meet local demand as it is.

Yes, solar remains an industry of a thousand niches. Flexible thin-film substrates will have a future in building-integrated photovoltaic and other niche applications where it is competing with no PV — rather than silicon PV.

Still, we’ve known that a shakeout is coming in PV, due not only to the high level of investment in solar startups but also the importance of scale economies to overcome increasing cost pressures. The shakeout is going to be brutal to makers of low-efficiency components and modules.