how to turn the usa into the world's biggest pv market

How to Turn the USA into the World's Biggest PV Market

Jigar ShahSolar Industry Veteran

Attacking Conventional Wisdom

Path to Changing the Electricity Mix

Business Model Implications for Energy Providers

Political Will as the Necessary Catalyst

• Attacking Conventional Wisdom

– Solar Energy is only around because of subsidies – no it is around because people hate their utility company and want energy Independence

• Path to Creating 100,000 jobs per year through 2020

– Short term: Universal Access, interconnection & net metering

– Mid term: Change rate tariffs, combine energy efficiency

• Business Model Implications for Energy Providers

– When the individual is cheaper than the collective, the electric utility model has to change

• Political Will: Converting consistent positive public opinion into a potent political force

Challenge ScenarioChallenge Scenario

• Weak global economy, need growth engine

• Energy prices shave 1-3% off Global GDP growth

• Geopolitical concerns lead to growing view of fossil fuel supplies – “Unacceptable Risk”

Political Willfor

Infrastructure

Set up Scenario:

Challenge ScenarioChallenge Scenario

• Loss of Local Jobs – town/city

• Small Towns sending $Billions out of the local economy for electricity/fuels at a time that local jobs are desperately needed

• Local Solutions have gone from Infancy into their Teenage Years (solar and energy efficiency)

Political Willfor

Local Development

through Government Facilitation

Set up Scenario:

Which is better: Environmental Arguments (Moral) or Economic Arguments (Jobs, Pocketbook)

Which is better: Environmental Arguments (Moral) or Economic Arguments (Jobs, Pocketbook)

• Whereas environmental concerns provoke only modest immediate concern and change scenarios

• Economic security create perception of acute nature of risk – providing significantly accelerated change

• Electric Utility rate increases and reliability present a big problem in local communities

Why does this accelerate change?

Political Will

Third Industrial RevolutionThird Industrial Revolution

Democratization of Energy

Distributed Generation

Positive Power Buildings

Next Generation Grid

Smart Grid / Electric Vehicles

Job CreationJob Creation

Solar PV has the largest political support across the board. Solar does not have NIMBY problems. Solar can specifically alleviate congestion on local distribution grids and create the maximum local jobs/economic development

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

Local Job-Years 2,000,000 2,000,000 50,000 100,000

Manufacturing Jobs 100,000 500,000 800,000 1,100,000

Annual Customer Savings $10B $21B $2.3B $2.3B

What about Coal and Natural Gas?What about Coal and Natural Gas?

• Neither fuel will lead to sustainable job creation

• Natural Gas is a volatile fuel that will continue to be volatile – particularly if used for electricity

• Coal is under siege and will be destroyed by EPA and Natural Gas

• Both technologies use significant water resources – identified by the CIA as the biggest risk to the Western United States

SolarSolar

New MandatesNew Mandates

So…

New Mandates are Created

We must choose a timeframe: 2016

For Mass Adoption of

Attacking Conventional Wisdom

Path to Changing the Electricity Mix

Business Model Implications for Energy Providers

Political Will as the Necessary Catalyst

Theory of the PossibleTheory of the Possible

What would it take to

significantly advance

the take up of Solar Electricity

to have a major impact on

US electricity supply?

Global Investment in New Renewables ($B)Global Investment in New Renewables ($B)

Global Investment in New Renewables ($B)Global Investment in New Renewables ($B)

Who is the largest at attracting Clean Energy Investment?

Who is the largest at attracting Clean Energy Investment?

Solar PV Pathway to 2014 GoalSolar PV Pathway to 2014 Goal

* All advances have already been discovered to achieve above benefits, implementation and optimization through scale is required

Cen

ts p

er R

etai

l kW

h

Total ownership

cost

Balance of System (BOS)

Reliability

2012 goal

O&M

SolarPanels

Balance of System/Installation

Labor

Avg. Retail Electricity

Price

CellEfficiency

17% to 19%

Mfg.Yield

90%95%

Mfg. Scale(MWs)

1 2 GW

Silicon Material 50%

InstallationEfficiency

Scale/Speed

Solar System Cost Reduction Impacts

O&M

SolarPanels

BOS/Install

BOS/Install

17

Why SunEdison Succeeded in the USAWhy SunEdison Succeeded in the USA

Commercial electricity prices have, on average, increased 4.76% each year for the last 8 years. McKinsey another 4%+ for ten more years raising rates from $0.105/kWh to over $0.15/kWh

Source Electric Power Monthly, DOE/EIA-0226; and Electric Power Annual, DOE/EIA-0348.

Source: US EIA

What is RealisticWhat is Realistic

By 2013 Solar PV will reach grid parity for 330+ utilities across 30+ States, representing 22% of total electricity sold. Over $80B of solar PV can be installed without local incentives in 2013.

201220152020

Area of solar competitiveness

Electricity Price Rising

Government ChallengeGovernment Challenge

• Technology is Mature But…

– Need Securitization to ensure more low cost capital

– Have to phase out our solar tax credit earlier than 2016

– Need Universal Customer Access

– Need to Figure out Utility 2.0 Business Model

Biggest Challenge – Achieving Momentum

Public WillPublic Will

• Familiarity comes from knowing someone that has put solar on their home, business, school, church, etc.

• Cost breakthrough on the installation side is a function of local experience/learning curve – need training!

• Technology deployment is a function of perceived return on investment by Regulators – Solar is still not considered mainstream by our Political Champions!

• Need to focus on Soft Costs – friction with the permitting, utility, regulators, etc.

What will it take to drive acceptance?

Will it Work? Are we Winning?Will it Work? Are we Winning?

Net new capacity additions in the EU

Will it Work? Are we Winning?Will it Work? Are we Winning?

Net new capacity additions in the USA

Advantaged CostAdvantaged Cost

How do we

Deliver

Customers

Cost Advantage?

We can get to parity in electricity costs…

Attacking Conventional Wisdom

Path to Changing the Energy Mix

Business Model Implications for Energy Providers

Political Will as the Necessary Catalyst

What about other Renewables?What about other Renewables?

• Solar captures the imagination

• Wholesale renewables are driven by RPS, not tax incentives

• Transmission is a bottleneck to high penetration – after 2016

• Customers want a technology that helps them control their energy future – solar and energy efficiency

• People want local renewables, not just in the overall state or country

Implications for Renewables Broadly

Electric Power BusinessElectric Power Business

• Solar is taking most profitable customers

• Not paying for their “profit centers”

• Stealing money from them by delaying or eliminating required utility investment in increased generation, T&D expansion/maintenance

• Creating a “real” alternative

• Utility does not have the software to handle Utility 2.0

Implications for Power Business

Solar SuppliersSolar Suppliers

• Large well-capitalized companies have already entered into this new space

• New companies are also well capitalized

• Huge opportunity to create local jobs/local economic development for Rural America and Electrical Unions

Summary

RisksRisks

• Fight between renewable energy technologies over tax equity

• Continued Reduction of Installed Cost– Improving labor productivity– Sustaining the current cost reduction curve on equipment of

5% per annum through R&D support

Biggest Risks to Scenario:

Attacking Conventional Wisdom

Path to Changing the Energy Mix

Business Model Implications for Energy Providers

Political Will as the Necessary Catalyst

Likelihood of Political WillLikelihood of Political Will

Weak Global Economy

Energy Inflation Risks

Geopolitical Risks

Drivers of Political Will

Add to this:

Opportunities forPolitical and Economic Upside

UpsideUpside

• What investment could achieve this level of impact?– America invented solar power, they now perfect solar power– Large capital investment in our Service Economy– Union support for this program (IBEW)– Predictable productivity enhancement matching the gains

Germany and Japan have already made– Potential for significant emissions reductions

Opportunities for Upside

If you were a US Political LeaderTrying to Inspire your Electorate…

Putting it into PerspectivePutting it into Perspective

Putting it into PerspectivePutting it into Perspective