Solar the Disruptor

Shayle KannSenior Vice President, ResearchGreentech Media

GTM Solar Summit April 2014Phoenix, AZ

Disruptive Innovation:Ten Things to Stop and Think About

-Citi, April 2013

Disruptive Challenges:Financial Implications and Strategic Responses to a Changing Retail Electric Business

-Edison Electric Institute, January 2013

The Disruptive Potential of Solar Power

-Mckinsey, April 2014

Solar is Not a Disruptive Technology

Wholesale Disruption

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

84 178 366 882 1,622 2,788 4,723 9,497

15,211

29,940

50,599

67,628

84,656

Cumulative EU PV Installations, 2001-2013

Germany Italy Spain UK Rest of Europe

Cu

mu

lati

ve

PV

In

sta

llati

on

s (M

W)

Germany Alone: 39 GW

Step 1: Install a Lot of Solar

Source: EnBW

Step 2: Drive Down Wholesale Electricity Prices

Source: EnBW

Forward Spot Price for Baseload Electricity (€/MWh)

Wholesale Prices Crash

Step 3: Strand Other Generators

Source: EnBW

Gross Margin – Gas Plant (€/MWh)

Negative Margins=Trouble

EDF GDF Suez

ENEL E.ON RWE-45%

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

-13%

-24%

-15%

-28%

-42%

Five-Year EU Utility Share Price Change

Sh

are

Pri

ce C

ha

ng

e,

3/0

9-3

/14

“How to lose half a trillion euros”10/13/13

Step 4: Power Producers Lose

In the U.S., It’s All About the Duck Chart

Source: CAISO

In the U.S., It’s All About the Duck Chart

Source: CAISO

In the U.S., It’s All About the Duck Chart

Source: CAISO

And California is Already Looking Pretty Duckish

Source: CAISO

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 16,000

18,000

20,000

22,000

24,000

26,000

28,000

30,000 CAISO Load, 3/18/2014

Net Load Total LoadHour

MW

Retail Disruption

Step 1: Install a Lot(?) of Distributed Solar

Source: GTM Research/SEIA U.S. Solar Market Insight 2013

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 -

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000 U.S. Distributed Solar PV Growth

Residential Non-Residential

Dis

trib

ute

d P

V I

nst

alla

tio

ns

(MW

) 2013: 1.9 GWExpected Production: 2.7 million MWh=0.04% of National Electricity Demand

But What About Top States?

Source: GTM Research/SEIA U.S. Solar Market Insight 2013

HawaiiCalifornia

New Jersey

Massachusetts

New York

ArizonaColorado

0

100

200

300

400

500

600

700

800

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

134

703

227 204

69

131

56

2.1%

0.4% 0.4%

0.4%

0.1%

0.3%0.2%

Top Seven Distributed PV Markets

2013 DG Installations 2013 DG Installations - Portion of Total Sales

20

13

Dis

trib

ute

d (

Cu

sto

me

r-S

ite

d)

PV

In

sta

lla-

tio

ns

(MW

)

DG

In

sta

llati

on

s, P

ort

ion

of

To

tal E

lect

rici

ty

Sa

les

(%)

Still not a big impact on overall load

How About Demand Growth?

Source: EIA Annual Energy Outlook 2013

Next 30 Years: 1% Annual Demand

Growth

Top Solar States: Mostly Average Load Growth

Source: EIA Annual Energy Outlook 2013

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

0.2%

0.9% 0.9%1.0%

0.5%

1.6%

2.3%

15-Year Average Electricity Sales Growth Rate

15

-Ye

ar

Ele

ctri

city

Sa

les

Gro

wth

Ra

te (

%)

National Average: 1.1%

Distributed Solar Is Already Having An Impact On Growth

-100%

-90%

-80%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%-1098% -47% -42% -47% -16% -19%

-7%

Distributed PV Impact on Electricity Demand Growth, 2013

Dis

trib

ute

d P

V Im

pact

on 2

013 L

oad G

row

th (

%)

Source: GTM Research

How Much Distributed Solar Will Be Installed in 2016?

Source: GTM Research

HawaiiCalifornia

New JerseyMassachusetts

New YorkArizona

Colorado

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

0%

10%

20%

30%

40%

50%

60%

70%

7%

32% 32%

20%

60%

33%

44%

Distributed PV Installations, 2013 vs. 2016

2013 2016E Annual Growth Rate (%)

An

nu

al D

istr

ibu

ted

PV

In

sta

llati

on

s (M

W)

Co

mp

ou

nd

An

nu

al G

row

th R

ate

2016 is Even More Stark

Hawaii California New Jersey Massa-chusetts

New York Arizona Colorado-100%

-90%

-80%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%-1326% -106% -93% -78% -63% -43% -19%

Distributed PV Impact on Electricity Demand Growth, 2016E

Dis

trib

ute

d P

V Im

pact

on 2

016 L

oad G

row

th (

%)

Source: GTM Research

Watch it Play Out in California

Source: GTM Research

2012 2013 2014 2015 20160.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%California Retail Electricity Sales, With and Without Distributed

Solar

History-based Electricity Sales Growth Sales including DG - History Based

Lo

ad

Gro

wth

Re

lati

ve

to

20

12

Lost Sales

Final Thoughts

Shayle KannSenior Vice President, Research

Greentech Mediakann@gtmresearch.com

@shaylekann