understanding solar: january 2013

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Understanding Solar January 2013

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Page 1: Understanding Solar: January 2013

Understanding SolarJanuary 2013

Page 2: Understanding Solar: January 2013

“Solar is so cheap today, that unless you tell me that you did a

solar analysis yesterday, not last year or last month,

then your analysis is out of date.”

– David Crane, CEO of NRG Energy

3/2012

Page 3: Understanding Solar: January 2013

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

0

1

2

3

4

5

6

7

Dollars

/Watt

DC

Solar Panel Prices Have Dropped Tremendously

Module Pricing Trends 1989-2011

Q3 2012: Reported ASPs 61¢ to 76¢ per

Watt

Source: EIA: October 19, 2011 http://www.eia.gov/totalenergy/data/annual/showtext.cfm?t=ptb1008; 2011 data point from GTM PVNews, April 2012

Page 4: Understanding Solar: January 2013

Utility Solar Power Now Beats Nuclear Prices, Nears Coal

Sources: Nuclear & Coal Costs: Entergy Arkansas Testimony (Docket 12-038-U); Utility Scale Solar – EPIA, NM PRC

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

$-

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

Wholesale Electricity Pricing

Solar PPA

$/M

Wh El Paso Electric Co.

solar contract 57 $/MWh

Coal: 87 $/MWh

Nuclear: 144 $/MWhNuclear and

coal power

takes 9 – 10

years to build

Wholesale Electricity Pricing

Page 5: Understanding Solar: January 2013

Sources: Gas Plants - EIA AEO 2012er; CCNG data point: Entergy 2012 APSC Testimony; Utility Scale Solar – EPIA, NM PRC

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

$-

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

Solar PPA Combustion Turbine Combined Cycle NG

$/M

Wh

Utility Solar Now Beats Natural Gas Peak Power

CCNG: 9.1¢/kWh

Wholesale Electricity Pricing

New Mexico (SPS/EPE) solar contracts

California RAM solar bids

Page 6: Understanding Solar: January 2013

Source: EIA (actual 2010, forecasted 2011-20); EPIA mid solar residential cost forecast

Residential Solar Competes in Many States Today (with more on the way)

Residential Electricity Prices vs Solar Prices

With new finance models, Americans are installing solar at no or low upfront cost.

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

$(0.00)

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

Solar

NY: 19.1¢/kWh

CA: 15.05¢/kWh

HI: 28.7¢/kWh

Page 7: Understanding Solar: January 2013

Competitively-priced solar has created a

virtuous cycle of market expansion and further cost

reduction.

Page 8: Understanding Solar: January 2013

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Rest of World

China

US

Japan

Rest of Europe

Italy

Germany

Solar is Rapidly Scaling

27.7 GWSolar installed worldwide

in 2011By comparison: 4 GW

of nuclear went into operation in 2011

Page 9: Understanding Solar: January 2013

Source: DOE/EERE 2010 Data Book; 2011 data from SEIA/GTM Market Insight Report

Annual U.S. Solar Market Growth

US Market is Showing Healthy Growth

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

500

1000

1500

2000

2500

3000

3500

4000

4500

Cumulative MW Annual MW

MW

In

sta

lled

UP 77% First 3 Qs of

2012 over

2011

684 MWQ3 2012

installations

78% avg.

annual

growth

since 2006

The U.S. “is one of the most important (solar markets), because it is one of the few

places around the world where we are seeing market growth.”

– Steven Taub, GE Capital

Page 10: Understanding Solar: January 2013

Solar Adoption is on a High Tech Trajectory:

Source: CTIA – The Wireless AsscoiationUS Cell Phone Market

Page 11: Understanding Solar: January 2013

In a race to market maturity, there are always

winners and losers.

Page 12: Understanding Solar: January 2013

Consolidation is a Sign of Maturity: Early Automotive

# OF CARS PRODUCED

# OF CAR MANUFACTURERS

After 70 years of mergers and bankruptcies

Year 1984

11.5 million cars15 manufacturers

Adapted from: Howard H Baker Jr. Center for Public Policy, University of Tennessee, Assessment of Incentives and Employment Impacts of Solar Industry Development, May, 2012.

Year 1914

2 million cars350 manufacturers

Page 13: Understanding Solar: January 2013

Consolidation is a Sign of Maturity: Early Dot Com

Would you call the

INTERNET a failure?

NASDAQ closing prices from 1994 to 2008

~5,000

companies

acquired or

shutdown$5 trillion

of market

value

erased

Source: NADAQ Composite Index, Webmergers, Inc.

Page 14: Understanding Solar: January 2013

Mergers & Bankruptcies Are Nothing New . . .

OIL INDUSTRY

Page 15: Understanding Solar: January 2013

Behind tumultuous headlines,

solar is a true American success

story.

Page 16: Understanding Solar: January 2013

7x more jobs per energy unit

than coal

Solar Creates U.S. Jobs

Sources: Kammen, David M et al, 2004, Report of the Renewable and Appropriate Energy Lab, Putting Renewables to Work: How Many Jobs Can the Clean Energy Industry Create?, Energy Resources Group, Goldman School of Public Policy, University of California, Berkeley.Wei, Max et al, 2010, Putting

Renewables to Work: How Many Jobs Can the Clean Energy Industry Create?, Energy Resources Group, Goldman School of Public Policy and the Haas School of Business, University of California, Berkeley, in Energy Policy, vol 38, issue 2, February 2010.

Solar Foundation 2011 National Jobs CensusU.S. Bureau of Labor Statistics: May 2010 National Industry-Specific Occupational Employment and Wage Estimates

120,000 Americans work in solar today

High growth despite recession

Solar employment grew 10x faster than the general economy

Page 17: Understanding Solar: January 2013

Completed US PV Projects

US Military Is Going Big on SolarCompleted US PV Projects

DoD committed to 1200 MW on +50 domestic basesSolarCity to install 300 MW on 120,000 military residences

“This is about the bottom line of the United States Army: it is about military effectiveness.”

- Dennis McGuinn, US Navy Vice Admiral (ret.)

Page 18: Understanding Solar: January 2013

American Businesses Are Going Big on Solar

Top 20 Companies Total:

1.2 million solar panels

700 systems in 25 states

$47.3 million in annual

utility bill savings

Page 19: Understanding Solar: January 2013

Major Financial Players Are Going Big on Solar

Berkshire Hathaway

US Bank & East West Bank

Capital Dynamics

Dupont

GE

Google

Kohlberg Kravis Roberts

MetLife

US Bancorp

Credit Suisse

$-

$20

0

$40

0

$60

0

$80

0

$1,

000

$1,

200

$1,

400

$1,

600

$1,

800

$2,

000

$2,

200

$2,

400

$2,

600

$2,

800

$3,

000

$3,

200

Dollars Invested ($millions)

Recent Investments

$5.7BRecently

announced

investments

$109BSaudi Arabia’s

20-year solar

investment

plan

Page 20: Understanding Solar: January 2013

Operating Contracted (PPA Signed)

Announced0

5000

10000

15000

20000

25000

30000

35000

MW

Cap

acit

y

5-fold increas

e

20-fold increas

e

U.S. Utilities Are Investing in Solar

Utility PV Pipeline

Series10

100020003000400050006000700080009000

10000

2012

2013

2014

2015

2016

Expected Completion Date

MW

Cap

aci

ty

1.5 GW

9.3 GW

32.3 GW

Source: GreenTech Media, PV News, July 2012

“My number one fear is we’ll be pushed to build natural gas at the expense of solar and wind . . . Ben Franklin said there are two certainties in life: death and taxes. To that I would add the price of natural gas.”

- Jim Rogers, CEO of Duke Energy

Page 21: Understanding Solar: January 2013

The playing field and the rules of the game are still designed to support fossil power.

It’s time for a new

game.

Page 22: Understanding Solar: January 2013

Solar Subsidies Pale in Comparison to Fossil Fuels

Fossil Fuel and Solar

[ELI, SEIA]

[SEIA, Blumenauer, Treasury]

$72.4 billion

$2 billion

$40 billion

$7-10 billion

Estimating U.S. Government Subsidies to Energy Sources: 2002-2008Environmental Law Institute, September 2009SEIA (Solar Energy Industries Association) Federal Energy Subsidies in the United States: A Comparison of Energy Technologies, February 24, 2011“Ending Oil Industry Tax Breaks”Congressman Earl Blumenauer, Third District of Oregon, www.blumenauer.house.gov, April 2011

Estimating U.S. Government Subsidies to Energy Sources: 2002-2008 Environmental Law Institute, September 2009SEIA Federal Energy Subsidies in the United States: A Comparison of Energy Technologies, February 2011

“Ending Oil Industry Tax Breaks” Congressman Earl Blumenauer, Third District of Oregon, www.blumenauer.house.gov, April 2011

Subsidies Pale in Comparison to Fossil Fuels

Page 23: Understanding Solar: January 2013

U.S. Lobbying Dollars

http://www.opensecrets.org/lobby/

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

$-

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

Energy Spending 1998 - 2011

Utilities Oil & Gas

TOP 6 INDUSTRIES IN SPENDING

Lobbying $ (1998 – 2012)

1. Pharmaceuticals $2.39 Billion

2. Insurance $1.70 Billion

3. Electric Utilities $1.60 Billion

4. Business Associations

$1.39 Billion

5. Computers/Internet

$1.33 Billion

6. Oil & Gas $1.30 Billion

Solar lobby spending in 2011 = $14M

Page 24: Understanding Solar: January 2013

Bipartisan Public Support for Clean Energy

91 percent of Americans say developing sources of clean energy should be a priority for the President and Congress

85% of Republicans

89% of Independents

97% of Democrats

Sources: Public Support for Climate & Energy Policies in May 2011, Yale Project on Climate Change.

Page 25: Understanding Solar: January 2013

Understanding Solar

Solar is . .

Delivering record cost reductions

Achieving record market growth

Putting Americans to work in all 50 states

Transforming the U.S. energy economy

Not in 20 years. Not tomorrow. Today.