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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
