evolving solar business models

Focused Energy Summit 2014 110 October 2014

FOCUSED ENERGY SUMMIT 2014

Charlie Gay

September 25, 2014

Perfect Timing: The Upcoming Wave of Opportunities for Residential PV Installers


Agenda / Overview

• Unprecedented U.S. Utility Changes

• Growth in Residential Rooftop PV

• Opportunities for Expanding Customer Engagement

• Collaborating to Win• Financing• Software Optimization • Hardware Optimization

• A New Product Approach: Continuously Customizable Optimization

1990 1995 2000 2005 2010 2015 2020

500 TWh / yr

The World is Using More and More Electricity

Source: US EIA, International Energy Outlook 2011

11,300

12,600

14,500

17,300

22,600

20,300

25,400 TWh

Global electricity demand doubling between 1995 and 2020 ~2-3% per year


The Old World Electric Utility

Generation Transmission DistributionEnd

Customers


The Utility WorldYesterday, Today & Tomorrow

In the mainland US (outside of California), no utility has had their financial integrity threatened by the amount of solar that their customers have installed.


California System


The “Duck”Curve


The Emerging Electric Utility


Customers

DemandResponse

Make money with your smart phone

$$$$


Agenda / Overview




• Collaborating to Win• Financing• Software Optimization• Hardware Optimization

• A New Product Approach : Continuously Customizable Optimization


2013 Average Prices for Residential Electricity

US Average Increase2013-2014 = 3.2%


By 2017 More Than ½ of Residential Rooftop PV Can be Less Than the Retail Price of Electricity

Source: UCSUSA.org/solarrevolution

The residential market is immense: In the U.S. there are more than 90 million single family homes and as many as 50 million more households in multi-family structures.

Now 1 -3 Years

4+Years

“value of solar,” based on a study conducted by Clean Power Research

http://www.energytrendsinsider.com/2013/10/22/the-solar-industry-is-red-hot-will-it-get-hotter-2/


How Much Distributed Solar Will Be Installed in 2016?

Source: GTM


Projected U.S. Residential PV Market Value


Agenda / Overview







Wide-ranging Demographic

Why lease, when you can own?


Emerging New “Utilities”


Customers

New Regulatory Tools

How to allocate costs between users?How to ensure Backup generation ?How to integrate new technologies ?


Telecom Examples

AT&T spent $20.6 billion on new plant and equipment in 2013, leading all non-financial corporations in U.S. capital spending for the third straight year.


The Wild Card

Energy Information

Energy Information Merge into New Businesses


Granular Information and Awareness

ZIPEnergyApp can also be used in customer demonstrations to illustrate products, services and energy use patterns in similar homes and zip codes.


The Smart Home

The Home Automation & Controls Market Will be Worth $48.02 Billion by 2018

AugustEcobeeEcoFactorHaierHoneywelliDevicesiHomeKwiksetLogitachLutronNetatmoPEQPhilipsSchlageSkybellSmartThingsSylvaniaYaleZuli


The Smart Home : Philips Lighting


Philips Hue Connected Bulbs



• Google nestAcquired 2014

Recent Entrants : Google



Recent Entrants : Apple



Recent Entrants :Samsung

ElectricWater Heater

Electric water heating is ~18% of U.S. residential electricity use and consumes ~12 kWh/day

Steffes uses Microsoft’s Azure cloud platform to aggregate, creating a “virtual power plant” out of networked heating units.



Recent Entrants : LG

Google Nest Apple HomeKit Samsung SmartThings LG HomNet


Added Value of PV


Google Nest Apple HomeKit Samsung SmartThings LG HomNet

DistributionEnd

Customers

Module Level Power Electronics

SmartPhone

A Lot More Than $50 Billion


Agenda / Overview




• Collaborating to Win

• Financing• Software Optimization• Hardware Optimization



Focused

Energy

Focused Energy

Partners

Collaborating to Win

Finance

$$$

Installation

OperationsSupport

Loans• Institutional• Intermediaries• Aggregation• Referrals

JIT Supply• Adaptive

Standardization• Quality• Certification

System Design• Permitting• Logistics• Benchmarking• Responsive BoM

Services• Trade Assoc.• Coop Marketing• Training• Accurate Costing


Referral

Lead Generation

Feasibility Assessment

Customer Engagement

Detailed Design

Proposal & Financing

Customer & AHJ

Approval

Optimizing Business Processes

CustomerFast

ResponseFeedback

Sign-Off &Demand Response

Sales

Unique Conditions

LOIStandardized

ContractsPermitted &

Energized

Cash Flow Analysis

Maintenance & Monitoring

Operations

Prelim. Design

Updated Design

Costing & Schedule

3G Remote Management

Code Req. Sourcing

$$$


Debt Sources$$$


HERO PACE Program Is a Solar Financing Hero in California

HERO works in partnership with municipalities to administer and manage lending capital provided by private sources, and payments are collected by the municipalities along with a resident's property taxes.

PACE (Property Assessed Clean Energy) just keeps on growing.

$$$


System Design Optimization

Start with Site Map and Climate Data

• Module Orientation • Tilt / Azimuth

• Module Configuration • Portrait/Landscape

• Spacing

• Shadowing

• Inverter Topology

• Module Level Power Electronics

• Wiring Direction

• Source Circuit Conductors

• Inverter Load Ratio

• Combiner Size

• Combiner Layout

• Home Run Conductor

Supplier Options Have Expanded

• 7341 Module Types

• 691 Inverter Options

• 556 Structure Suppliers


System Design Optimization

Proposal Ready Design (plus options)

• Delivers Bill of Materials and Drawings

• Bankable Model (e.g. PVSYST)

• Cloud-based accessibility

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Permitting

September 21, 2014: Governor Jerry Brown signed Assembly Bill 2188, making California one of the first states in the U.S. to streamline permitting and inspection for small residential solar systems.

Treasure customer participation and feedback. Nudge people to take a home audit. • One was marketed to the environmentally minded and

featured "green" iconography.• The other was marketed to "energy-efficiency skeptics" and

focused on making sure that the home was not wasteful. "The call to action” is the same.

The most valuable asset is experience and relationships.

Aim for a long-term relationship – including the AHJ


Module Manufacturing Trends

Vertically Integrated : so, module cost reduction benefits stay with producer

⅓ of module assembly is OEM

Solar City + SilevoUpstream


Source: GTM; Solvida Energy Group

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

2012 2013F 2014E 2015E 2016E

Misc.

EBOS

Labor

SBOS

Structure

Inverter

2012 2013F 2014E 2015E 2016E

Inverter $0.33 $0.30 $0.27 $0.25 $0.23

Structure $0.47 $0.43 $0.40 $0.36 $0.34

SBOS $0.04 $0.04 $0.04 $0.04 $0.04

Labor $0.50 $0.44 $0.42 $0.39 $0.36

EBOS $0.55 $0.53 $0.52 $0.50 $0.49

Misc. $0.65 $0.63 $0.61 $0.59 $0.58

Total, $/W $2.54 $2.37 $2.26 $2.13 $2.04

BOS Cost Roadmap, 5kW Residential Rooftop

SunPower Full 2014 Residential Price : ~ $4.15/W

Electrical BOS•DC optimizer (if any)•Wire•Monitoring•Combiner Boxes•Wire Mgmt•Disconnects

$/W


Residential PV System : Sensitivity Analysis


Shade Happens….

Example of variable shading and orientation


Shade Happens….

Trees


Shade Happens….

Inter-row shading


Overview of Module Level Electronics

High Value

Low Value

Expensive InexpensiveControl

Distributed MaxPower Point Trackers

µInverters


Global PV Electronics Supplier Taxonomy : 2014


Commercial Rooftop DC-DC Optimizer Cost/Benefit


Residential Rooftop Microinverter Cost/Benefit

$0.55

$0.27

$0.05

$0.04

$0.02

$0.06

$0.08

$0.04

$0.02


Complex Arrangements


Surface Mount Panelization

WAFERSILICON INGOT SYSTEMCELL MODULESURFACE MOUNT

PANEL


FlexStrap

End View

Bonded Straps

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~1.1 m~1

.6 m

End View

Adhesive

Module allowed to flex –eliminating high stresses

Module WithFront Side Loading

FlexStrap

Module

FlexStrap carries load in tension, while allowing module to Flex


Vertical Mounting RailAdditional Cost Savings

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FlexStrapClamps

Module Module

Vertical rails reduced from 2/module

to 1/module




PANEL

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Total Cost Savings Module: $10.82/ea

Rail: $8.54TOTAL: $0.21/W




PANEL

Now We Install the Brains

MLPE

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Site Specific BoM Delivered by Pod

p


Agenda / Overview







Surface Mount Product Strategy

HUBCO : Customized Standardization

• Distributed BoM Packaging for Each Job Site• Fulfillment Centers:

– e.g. Foxconn (Ciudad Juárez), Flextronics (Fremont, CA) or Jabil

• Module producer to ship unframed laminates without J-Boxes• Higher packing density = lower transportation costs

• Optimize Module Level Power Electronics and Inverter for each site• Truck a pod with an installation-ready system to the job site

• Evolve upstream to buying cells and extract additional cost benefits• Annealed glass• Meet new UL 2703 standard ahead of the industry for maximum insurability• Anti-soiling AR Coated Glass

• Integrate Uniquely Branded Utility Interactive Metering and Controls


"A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty."-- Winston Churchill

evolving solar business models

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