Leadership Forum

resuLts book 2011



02 // 03


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WITH SPECIAL THANkS TO OUR PARTNERS AND SPONSORS FORUM PARTNERS ////////////////////////////////////////////////////////////////////////////////////////////////////////// FORUM SPONSORS .


including investors. Norway. manufacturers. and the u. reinforce our belief that solar energy must have a seat at “the big energy table”. the continued reduction in solar costs. singapore. Japan. We were able to reflect on the technological. and the continued rise in the risks of conventional energy. the Forum provided rare opportunities for attendees – normally consumed with short-term problems – to think about long term prospects and solutions. financial and policy issues that must be addressed and overcome if we are to benefit from solar energy’s great promise.s. Germany.////////////////////////////////////////////////////////////////////////////////////////////////////////// NOTE FROM THE FORUM CHAIR bloomberg New energy Finance convened its 2011 solar Leadership Forum February 2-3 in sunny Napa. taiwan. Norman pearlstine. and users of solar energy from abu dhabi. the sooner the better. France. Chairman Chief Content officer bloomberg Lp . China. a crosssection of senior executives attended the Forum. California. i believe that solar energy will become predominant as the world comes to better understand the risks and costs associated with our existing fossil fuel energy system.


North american solar bloomberg New energy Finance . but leading policymakers. substitution . by design. CALIFORNIA 2-3 FEBRUARY 2011.those of today. solar at 50GW or 100GW per year will force the industry to address the drawbacks of intermittency and the benefits of dispatchable peak load generation. the solar Leadership Forum was an executive gathering. When markets are created by policy mechanisms and sustained through abovemarket energy payments. to optimize the balance of system. it will face a world of second-order effects beyond the growth concerns of today. they have proven prone to explosive growth as as well as to economy-driven implosion. With a 40% compound annual growth rate of new build since the 1970s. solar is not slowing down. europe. allowed Ceos and analysts to examine solar’s emergent issues and opportunities . into a maturing and expanding part of the world’s energy supply. When technology developers can earn 30% margins on pV panels while their established contract-manufacturer peers are satisfied with 5%. the solar Leadership Forum convened 50 industry thought leaders from photovoltaic and solar thermal electric technology.////////////////////////////////////////////////////////////////////////////////////////////////////////// FOREWORD WELCOME TO THIS SPECIAL PUBLICATION DOCUMENTING THE FIRST SOLAR LEADERSHIP FORUM. the unique perspectives of so many highly-placed decisionmakers in the sector.will become inevitable. and asia. and utilities. 60% of them were Chief-level executives within their organizations. project development. it is this very rapidity of growth that provides the industry’s greatest challenge. Nathaniel bullard Lead analyst. financiers. governments around the world are spending billions after billions of dollars in solar subsidies. as the solar industry continues to grow. and corporate managers will read our findings as guidance to the industry as it continues to grow and mature. but as a ubiquitous source of power in developed and developing countries. and those of coming years and decades. it saw a 140% growth spurt in 2010. the solar Leadership Forum was the fourth in the bloomberg New energy Finance Leadership Forum series of invitation-only. HELD AT THE CARNEROS INN IN NAPA. the solar industry is undergoing a seismic shift from a sector defined by technology development and deployment. and not just pV modules. materials science. thought leaders joined us from americas. compression. While the technology is decreasing in cost cent by cent. in publishing our results book. it is our ambition that not only the solar sector’s leaders. gathered for a common purpose.or consolidation . executive level think tanks to examine renewable energy sectors at key moments in their growth and maturation. and to consider solar not as a niche source of energy generation. venture capital and private equity.


THE SOLAR SECTOR MUST ACkNOWLEDGE THE CHALLENGES POSED BY INTERMITTENCY IN ENERGY GENERATION. but rather many markets – and not a technology. the debates and discussions of our Napa gathering inspired six principles for solar energy technologists. and policymakers. For solar thermal steam turbine technologies. NO ONE SOLAR TECHNOLOGY HAS YET EMERGED TO DOMINATE “solar” is not a market. TECHNOLOGICAL INNOVATION MUST CONTINUE in order to continue improving competitiveness.COMMUNIQUÉ TO GOVERNMENTS AND INVESTORS ////////////////////////////////////////////////////////////////////////////////////////////////////////// THE SOLAR INDUSTRY IS IN A STATE OF SEEMINGLY PERPETUAL GROWTH AND MATURATION. supply chain management will remain essential for successful enterprises. SOLAR IS STILL “WAITING FOR ITS SEAT AT THE BIG ENERGY TABLE”. and developers can convey this virtue – and bank upon it – in negotiations with grid operators and utilities. NOT GENEROSITY. not generosity. With costs continuing to fall. industry leaders will pursue consistent rigor and creativity in installation and integration. technological innovation is practically bred into the solar industry. if the solar market doubles in size to 30GW per annum. 2. IN THE WORDS OF ONE SOLAR LEADERSHIP FORUM DELEGATE. dedication. and. IS PARAMOUNT FOR SUPPORT POLICIES in most markets. financiers. and none may ever do so. and finance. solar cannot count simply on advancement as a given. in the words of one thought leader. solar will provide a greater and greater share of the global energy mix. 4. policy. and work to mitigate it. solar/ natural gas hybridization is a near-term. at the project level. even “niche application” technologies may have a market worth several gigawatts per year. solar industry analysis bloomberg New energy Finance . YET FOR ALL ITS GROWTH AND PROVEN COST REDUCTIONS. solar energy is still more costly than avoided power purchased from the grid. however. and disruption due to environmental conditions. TECHNOLOGICAL INNOVATION WILL CONTINUE as nearly every Forum thought leader stated. if there is a penny per Watt to be saved or shaved. STABILITY. market participants will need to remain nimble and dedicated to change. solar markets are born through policy. tax incentives. in pursuit of that seat at the “big energy table”: 1. but many technologies. if the sector grows to 100GW per year. With all renewable energy technologies on their own cost curves. each with specific attributes for specific applications. per se. and therefore exists as a creature of support mechanisms such as feed-in tariffs. companies have devoted entire research teams to wringing out every cost at the device level. Nathaniel Bullard Lead analyst. by its nature prone to quick ramping up and down. technology providers – and policymakers – must both see innovation as imperative and fundamental to the sector itself. in a dynamic. it is an unfortunate truth of policy-driven markets that today’s rich returns become tomorrow’s retroactive tariff cuts. they thrive through policy. dispatchable solutions. processes. and techniques to enhance today’s products. long-term storage options. 5. and solar augmentation of existing power plants offer low-cost. cost-effective option for solar thermal electricity as it continues to pursue costeffective. AND WILL BENEFIT FROM HYBRIDIzATION FOR DISPATACHABILITY AND CONTINUED PURSUIT OF COMPETITIVE ENERGY STORAGE photovoltaic energy remains an intermittent resource. For pV. smooth dispatch is an inherent virtue in performance. and persistently focused on identifying new opportunities and potential disruptions. but will only do so through innovation. no matter how small. or direct grants. in order for solar compete not just as a source of energy. No one technology has emerged to dominate in either pV or solar thermal electricity across applications. developers and technology providers must acknowledge the challenge of intermittency. North american solar bloomberg New energy Finance Bill Gallo Ceo areVa solar Gil Forer Global Leader. and persistent application of technology. 3. there is a team of experts already working to do so. competitive market where contracts can be decided on a fraction of a percent difference. storage solutions and energy management will become essential. but as a source of power. which is now paramount for solar markets to continue to grow and provide sufficient reassurance to investors and utilities that solar energy will be a robust energy source. STATIC BUSINESS MODELS WILL NOT DOMINATE A DYNAMIC MARkET No static approach can dominate a dynamic market. 6. photovoltaics and solar thermal electricity generation must continue to seek new materials. a handful of technologies may prove winners on a cost basis. Global Cleantech Center ernst & Young LLp Jenny Chase Global head. Forum participants agreed that it is policy stability. they die through policy.


THE VIEW FROM THE INDUSTRY /////////////////////////////////////////////////////////////////////////////////////////////////////////// .


1% Ontario France 0. Canada statistics. eurostat.5% 0 Germany Czech Republic Spain Electricity price Italy PV Fee Ontario France 0.THE VIEW FROM THE INDUSTRY ////////////////////////////////////////////////////////////////////////////////////////////////////////// POLICY: CHEAPER.0% 200 0. SIMPLER.5% 3. LONGER-TERM the solar industry has historically been promoted for its social benefits and attributes. . as the industry matures.5% 4.4% 5GW Czech Republic 250 5.0% 0.9% 3.0% 1. the industry must present itself and be treated as an energy concept. such as the creation of “green” jobs and impact on global climate change. it will need “a chair at the big energy table”.” with its very visible subsidies more susceptible to scrutiny than entrenched support for fossil fuels.8% Germany 150 7.0% 2.2% Spain Italy 50 0.0% 3.0% source: bloomberg New energy Finance. Note: Gdp for 2010 estimated by eurostat. this shows not only in Figure 1: share of pV fee on household electricity price 2011 estimate Figure 2: annual net cost of tariffs as share of Gdp.5% 2.0% 1. rather than the market. the solar industry is “the new kid on the block.4% 100 0. ontario energy board. versus pV electricity production as share of consumption 0.5% 0. ontario calculations using 2009 Gdp. eurostat source: bloomberg New energy Finance. the value of solar energy generation is set rather arbitrarily by incentive regimes. as one panelist pointed out.6% 1. assumes pV installations built before the end of 2010 and consumption from 2009 increased by 2%.3% 0. size of bubbles represents cumulative pV capacity at the end of 2010. in the energy industry. as a relative newcomer to the energy game.

because the incentive is in place until 2016. 16% Renewable energy credits (RECs) or Renewable portfolio standards (RPS).apply flexible standards for regional adoption (us) .supply-side support: build up manufacturing. a policy with built in volume and cost limitations.rps for eskom (south africa) . if. international module demand will crash. brazil. its technologies are increasingly able to compete against other renewable generation sources on cost.Competitive tenders/ reverse auctions: start with ideal sites and prearranged transmission and permission (China. 9% Supply-side supports. since they are precarious. such as the US investment tax credit (ITC). export assurance). debt guarantees). us) . where technology problems can vary a little. 20% Tax incentives.Nationwide renewable portfolio standard (rps) (us) . it is widely agreed that in ten years’ time. 7% Demand-side supports (debt guarantees. new policies need to create a more secure long-term environment for developers. saudi arabia. table 1: summary of panel and interactive discussions on smart buildings Cheap . so this does not add up to 100%. the industry must work more closely with governments and financiers as well as by reducing its internal costs. saudi arabia.National solar programme (brazil. feed-in tariff incentives are no longer seen as the best support mechanism for solar (see the chart of voting results. China. such as a national renewable energy credit (reC) or a renewable portfolio standard (rps) program.direct government procurement (China) 16 // 17 BLOOMBERG NEW ENERGY FINANCE . financing and development costs. and political and financial environments can vary drastically.Consumer purchasing of systems: offer residential “solar kits” (italy) .use solar water heaters until cost of pV goes down (south africa) . (manufacturer tax credits. at the same time. supply domestic capacity. 3% Note: Voters were asked to pick 3. in fact.////////////////////////////////////////////////////////////////////////////////////////////////////////// Figure 3: What policy would you like to see implemented or maintained in your key market? Feed-in tariffs. Future solar policies must be tailored to individual regions.Feed-in tariffs (italy. as the solar industry continues to mature.tie together utility and residential markets (brazil) . one developer noted that they only rely on the us federal 30% tax credit. create jobs (brazil. but costly. suited for a much larger and more competitive segment of the energy mix. in order for solar to become more competitive with conventional sources of energy. as one panelist suggested. 30% Grants. us) . above). all other incentives are just potential bonuses. it was generally agreed that the wildly effective. “the four markets that drive solar go poof”. 15% Other. incentive settings but also in planning regimes.make low interest rate financing available and investigate what works best from a technical perspective (saudi arabia) source: bloomberg New energy Finance Fast . italy. the policies that support the solar industry will be completely different. With current solar incentives focused on the short term. where a solar project may well have to pass more environmental hurdles than a housing project or fossil energy project of greater local impact. would enable developers to plan long term and therefore reduce technology. us) Good . south africa) .

beating batchbased crystalline silicon to form a “second First solar”. thin-film leader First solar has its own experience curve.60-1. you need a lot of capital and a lot of time”. Crystalline silicon photovoltaic modules have already had forty years of time and tens of billions in capital. one executive opened remarks with “to get to the point where a technology can change the world. and manufacture inverter parts.000 historic prices experience curve Chinese c-Si module prices First Solar thin-film module cost source: paul maycock. and any company could realize a breakthrough allowing it to dramatically increase the width of the substrate used and therefore increasing the speed of production . at the same time. and the room was nearly unanimous in expecting average module prices in the $0.00/W range in 2015. Crystalline pV benefits from a predictable forward cost curve. crystalline silicon pV module manufacturing processes are far from completely standardized. soon. thus. panelists debated the role and potential prevalence of contract manufacturers in the value chain. the crystalline silicon learning curve is not the only cost forecast for the pV industry. shallower but starting at a lower point. there is a team working” to force improvements. but one panelist noted that “any place where we can shave off a penny per Watt of module costs.000. a theme which was echoed and elaborated upon throughout the session. With ebit margins below 6% enabled by very high capacity utilization across several industries – contract manufacturers can speedily and cheaply make cells and assemble modules.1 1 10 100 1. the hundreds of other companies developing thin film are nearly all working on innovations in one of five deposition processes. and efficiencies higher.000 1. and these improvements are continuously reflected in the experience curve. bloomberg New energy Finance . from today’s $1. LONGER-TERM Four thought leaders examined the role of technology development in driving photovoltaic costs lower. SIMPLER. a thin-film company could stabilise a process to deposit an Figure 4: the pV module experience curve 100 1976 10 1985 2003 2006 2010 2010 1 0.////////////////////////////////////////////////////////////////////////////////////////////////////////// POLICY: CHEAPER.000 10.000 100. however.80. which are making their mark on bringing down costs.

commercial lenders are willing or able to back a $2bn project which has not been guaranteed by the government. however. this similarity and affinity to fossil fuel generation has advantages for developers. all participants agreed that in the us. dish & stirling engine) will be… Figure 6: in 2020. we should have listened to him. the number of unique technologies available for pV (eg crystalline silicon. a promise which first emerged with satellite power decades ago. it is possible that advances in battery technology will enable cheaper intermittent active solar semiconductor of consistent efficiency on a flexible substrate – a holy grail of the industry. utilities prefer to rely on large amounts of steG to cover their renewable power needs than on a portfolio of photovoltaics. however. bloomberg New energy Finance 18 // 19 BLOOMBERG NEW ENERGY FINANCE . Few.” While this attitude is capital efficient. organic) will be… 90% 29% 21% 21% 20% 20% 34% 10% 10% 25% 5% 11% 0% 14% 7% 0% 0% 9 0% 1 2 3 4 5 6 7 8 0% 9 10 0% 10 1 2 3 4 5 6 7 8 source: paul maycock. one participant remarked. or with a high penetration of intermittent renewable energy. a positive outlook is required.rather than device-based. Fresnel. with an established energy conversion mechanism familiar from fossil fuel generation coupled with long lead times and daunting financial requirements. patiently told us the twelve ways we’d screw up [developing concentrator Figure 5: in 2020. Concentrator pV also shows promise. and power quality. the government’s role as project financier of first resort is essential to enable the first commercial plants to prove their technologies at 100500mW scale. if any. and then we’d end up back with 1x concentration. CpV can reduce costs either by improving concentration architecture or by improving cell conversion efficiency. and can also move much of the balance of plant work from the field to the factory. tower & heliostat. storage. steG companies should find that utilities properly value the technology’s operational advantages of dispatchability. thin film silicon. this gives it a number of interacting possibilities for beating the crystalline silicon experience curve. the number of unique technologies available for steG (eg parabolic trough. bloomberg New energy Finance source: paul maycock. CiGs. Cdte. it is unlikely to lead to successful disruptive innovation! it is also unlikely that any one technology will push out all the others in the next ten years. SOLAR THERMAL ELECTRICITY GENERATION (STEG): WORTH THE WAIT steG technologies experience inherently different industry dynamics from pV: utility-scale in nature. in sunny markets with high penetration of intermittent renewable energy. opening up new niches and moving away from the limitations of expensive glass. in other words. of course. We then went and screwed it up at least twelve ways and then ended up back at 1x. project. dick swanson. steG executives were optimistic about their ability to compete on price in suitable markets with weak electricity grids.////////////////////////////////////////////////////////////////////////////////////////////////////////// photovoltaics]. even at a lower per-kWh price. “a technical advisor. at least according to the Forum participants (see Figure 5 and 6).

which is achievable only via steG with thermal energy storage. Need for flexible joints on pipes containing heat transfer fluid (htF). flat mirrors are cheap and joints in pipes do not need to allow movement “Newest designs have the same temperatures as parabolic trough and 60% of the area” Very high temperatures possible.////////////////////////////////////////////////////////////////////////////////////////////////////////// table 2: solar technology summary Cheap applications Crystalline silicon PV everywhere Parabolic trough STEG With storage.probably. plus concentrator designs improving uses less space than parabolic trough.” there are major barriers to steG deployment in the planning process. augmentation for coal and gas plants. some markets. morocco. particularly in the developing world. Water requirements greater than for pV even with dry cooling. they need to pass air quality review. Can move balance of plant work “from field to factory” “Concentration separate from conversion” – triple junction cell efficiency always improving. tender organizer masen specifies that power output must meet peak demand. Water requirements greater than for pV even with dry cooling. are intrinsically suitable for steG investments. this will change soon. solar developers seeking approval to build on public lands in the us need to satisfy at least as many conditions as fossil fuel plants. grid issues may ultimately limit universality may have missed the boat. and dry cooled steG systems use about a tenth as much water as a gas plant”). often high temperatures Low space requirements. “resulting from the current lack of proven. tracking an advantage anyway. peak electricity demand is driven by lighting. but gambling on the emergence of transformative technology is not an option for a utility making 30-year resource plans. technology of today Thin film PV as buildingintegrated pV. Water requirements greater than for pV even with dry cooling. or where shoulder generation ideal. industrial process heat may have “missed the boat” – per-kWh costs no longer compete with pV. masen has preselected four parabolic trough consortia. deserts with water where pV is at saturation or where grid is weak. may have missed the boat now c-si is cheap Linear Fresnel STEG a range of temperature applications. although both solarreserve and torresol made tower and heliostat bids with molten salt storage . dramatic learning effects possible in all integration areas breakthrough Likely to be continuous but potential incremental Likely to be continuous but incremental ability to deposit on flexible substrate. potential to be significantly cheaper Challenges as with all pV. . however. Tower & heliostat STEG as for parabolic trough. and extensively document their projected water usage (one participant noted. “nobody suggests retrofitting gas and coal power plants with dry cooling. or substrate cheaper than glass renewable generation to be balanced effectively and weaken the case for steG as power generation. up to superheated steam for power generation may have missed the boat on costs now pV is cheap. since morocco has no underused capacity elsewhere on the grid (like most developing economies). for example. with two panelists noting that the time required to permit the second large California project was approximately one-third of the time required for the first. and there is no fuel easily available at the site. one participant noted that in ouarzazate. the cycle time for planning and permission is decreasing rapidly. ground mounted projects Few suppliers yet competitive with crystalline silicon. low efficiency Concentrator PV Ground-mounted high-insolation areas where space is at a premium. as the participant noted. in addition. achieving scale and bankability. many countries have hazardous material restrictions on htFs. central receiver design avoids need for miles of pipe First few large scale plants being built. where a solar tender for 125mW is underway. commercial molten-salt tower technologies. with multiplier effects for CpV. and often more. advantages technology of today Good performance in low light.

brightsource-bechtel-alstom) which can provide these guarantees.////////////////////////////////////////////////////////////////////////////////////////////////////////// Figure 7: perceived challenges for the steG industry in 2020 Technology applicability. in the words of one participant. particularly in europe. operational issues will emerge. and also for steam generation for enhanced oil recovery and industrial process heat. there was a broad concern in the room that regulated utilities and the residential consumers they serve will lose out most from the roll-out of pV. and developers will need to work with utilities to share and minimize the costs of intermittency. as regulated entities. which bring expertise and credibility from the traditional energy and engineering industries to new solar Figure 8: the solar thermal electricity landscape 2011-2020: industry consortia. utilities “have to source: bloomberg New energy Finance solar Leadership Forum voting the steG industry is rapidly organizing into a handful of global consortia. in the words of one panelist “as-generated electricity is low value electricity”. solar thermal designs will likely be deployed as augmentation to fossil fuel power plants in much of the world. 6% Levelised cost competition. 24% Consistent policy support. and local and international expertise source: bloomberg New energy Finance 20 // 21 BLOOMBERG NEW ENERGY FINANCE . have now achieved considerable progress at low penetration levels. areva. 12% Planning and permission. 20% collector designs (see Figure 8). UTILITIES AND THE GRID: NOT THE ENEMY the solar industry has historically focused on more on generating energy at a low cost per kilowatt-hour than on avoiding intermittent generation and delivery. there are now a number of groups (siemens. 9% Water availability. although. a number of markets. as pV becomes a meaningful portion of energy portfolios. however. investors in turnkey steG plants are currently requiring more watertight performance guarantees than are usual for fossil fuel power plants. 12% Adequate project sites. 6% Project finance. multinational power generators. 11% Infrastructure.

the island of Lanai has a 1. examples from hawai’i suggest that high renewable energy penetration is possible.2%. utilities voiced a disconnect between their very long financial and operational timeframes. a 20-year ppa is required. and the overall market changes. without technology-specific capacity requirements or technology-specific energy payments. and those of their customers. and solar thermal electricity generation (steG) with and without thermal energy storage. the result was mixed portfolio of technologies. the solar Leadership Forum featured a war game expressly designed for the solar sector: a simulation of renewable energy procurement in a competitive energy market from 2010-2020. are a trademark of the bloomberg New energy Finance Leadership Forum series. the game created a dynamic idea of procurement strategies for utilities which had a requirement to purchase clean energy to meet their needs. by the final years. Figure 7: utility procurement of solar capacity by technology. developers could choose from commercial-scale pV. an experienced California developer described the games as a “highlight of the event which felt quite a bit like reality”. this market is different from the feed-in tariff markets of europe. which could buy either buy power from developers.Commercial STEG STEG with storage source: bloomberg New energy Finance developers sought to maximize return on investment. 9% lower than the second-place utility. but even large commercial customers prefer not to lock in their electricity prices so far in the future. 2010-2010 (mW) 1. this is.000 800 600 400 200 0 2010 2011 2012 2013 2014 PV . pV dominated.////////////////////////////////////////////////////////////////////////////////////////////////////////// WAR GAME strategic simulations. • it required several rounds of re-assessment of the value proposition of given technologies as their own cost curves change. however. because the local diesel generators cannot keep up with the variability. the war game featured two groups of teams: project developers. but it very much resembled the energy market in California. to developers consisting of “two men. the island of maui has 72mW of wind and 5-6mW of distributed solar. utilities. fairly expensive. do what they are told” and cannot take a visionary approach. to minimize payments for energy. or build power storage facilities. but was otherwise free to select technologies and applications according to their electrical load profiles and growth expectations. the winning strategy among the developers resulted in a return on equity of 18. the attributes of thermal energy storage and penalties for intermittency resulted in procurement only of central station steG with storage. the game posed key challenges to participants: • it asked evaluate each technology and application on its strengths and weaknesses and will price those attributes or drawbacks accordingly. transmission was not a priority. and future ability to deliver power.6mW pV project which can only feed 600kW onto the grid at a time. • it forced participants to compromise on building and procurement plans. utility-scale pV. the winning strategy among the utilities resulted in a weighted average power cost of $79/mWh. this disconnect leads to . which could select from a suite of technologies and applications in order to build power generation. but it emerged as an essential investment for utilities in later years. with no solar thermal technology. and not universally effective. and utilities. or “war games”. in the early years. they are also understandably cautious about entrusting their renewable portfolio standard compliance.Utility 2015 2016 2017 2018 2019 2020 PV . and 38% of the regulated penalty cost for not purchasing renewable energy. in early years. a van and a dog in a garage”. or to prioritize investment in one subsector at the expense of another. to incent a developer to build a project. out of a total 180mW peak demand.200 1. “consumer protection and a low price guarantee makes utilities always choose the lesser evil” when it comes to fossil or renewable energy power purchase agreements.

to .////////////////////////////////////////////////////////////////////////////////////////////////////////// table 3: possible milestones to 2020 2011 First major bankruptcy of venture-backed solar company policy Finance technology energy markets 2012 Saudi Arabia adopts major PV incentive program Massive upstream consolidation in PV cell and wafer manufacturing 2013 China has a major internal solar market China supplies 70% of world PV module demand 2014 First “Solar Asset Investment Trust” established Thin-film PV widely deployed in vehicles New solar build exceeds new coal build in US 2015 US institutes a carbon price PV is more than 50% of new energy capacity installed in Africa Utilities require energy storage with all gridconnected 1MW+ PV projects Chinese solar company sponsors Super Bowl 2016 Solar at grid parity in US “Green bank” introduced in US 2017 Time of day electricity pricing in every market First 1GW solar power plant PV installed at every major electrical substation in US Desertec Phase I initiated in Morocco and Tunisia 2018 Natural gas exceeds coal for power generation in the US First Solar’s market cap exceeds that of Conoco Phillips 50% of all new water heating is solar thermal Local grids routinely operate with 50% renewable energy 2019 Building code requires PV in all new buildings Installed PV cost below $1/W Electric vehicles 20% of new car market in Europe 2020 1% of global energy comes from solar North Africa .EU undersea transmission enabled Solar employs 1m workers in US 20202050 Sunspots lead to overloading of grid Last coal-fired power plant retired 22 // 23 BLOOMBERG NEW ENERGY FINANCE .

some of our transmission lines are already carrying 20% solar at times. and is having to learn how to invest project finance from the start. law firms. 13% Regulated utility. and is being deployed for technical feasibility testing prior to further investment. moving away from the inevitable focus on the direct role of government. engineering firms. to date. has a plan on how to deal with large volumes of solar. in China and the middle east.STEG designs are doomed to obsolescence 6% Steam generation for non-power applications 8% Better and more reliable power quality 9% Potential for hybridisation with fossil fuels 26% New STEG designs will generate energy at lower costs than PV 4% Potential for energy storage. however. “it has a conflicting mandate to foster new technologies. Future demand response mechanisms will be more sophisticated. turn off air conditioning or take other measures. this has been managed in a very low-technology way. allowing high capacity factors and dispatchable or baseload generation 47% Figure 10: Who stands to lose the most from the roll-out of solar onto the grid? Residential consumer. it does not have an institutional understanding of risk management. 12% Energy service company / other service providers.533 0 2004 2006 2008 2010 2012 2014 2016 2018 2020 source: aNre/meti Note: milestones based on Japan ministry of economy. but the financial market does not yet have the mechanisms in place to back billion-dollar projects using unproven technology. the problem with the us department of energy as a lender is that it is the most conservative on the market. private lending is seen as the only long-term option for solar energy projects. the us department of energy was quickly tagged as an essential player in the project finance game. which has already been effective in preventing blackouts in texas when wind energy production was significantly below hour-ahead forecasts.” only Japan. one noted that “we have a very congested system… each Western state takes a parochial attitude to transmission and renewables. to date. 8% Renewable generator. 17% New technology vendors. as one panelist noted. hence values do not sum to 100% disparate incentives. 16% Commercial / industrial consumer. one low-cost solution for a high-cost problem is demand response. and to have zero default rate” – and it certainly brings complication to the process. 3% Thermal generator. with a utility employee phoning major customers with shiftable load and simply offering them money to temporarily halt production. 4% source: bloomberg New energy Finance solar Leadership Forum voting source: bloomberg New energy Finance solar Leadership Forum voting Note: participants were asked to pick three. . or a preexisting project financing team. transmission remains a huge issue for utilities.////////////////////////////////////////////////////////////////////////////////////////////////////////// Figure 9: most compelling arguments in favour of solar thermal designs gaining ground against pV in suitable regions Other 0% None . direct government funding for large scale projects carries much less stigma. with one utility noting that “it is a crime how little we invest in storage”. and insurers all agreed that in the West. especially when they want to buy large blocks of steG. trade and industry (meti) targets. 6% Incumbent technology vendors. a complaint about government financing the world over.000 30 DYNAMIC PV CONTROL 20 PROJECT FINANCE: WILL NEVER BE EASY the group of thought leaders from project developers. DEMAND CONTROL PV OUTPUT CONTROL 10 SMART METERS 2. it was suggested that solar asset backed Figure 11: Japan’s pV integration roadmap REAL-TIME BALANCING (2030) 28. 21% Competitive energy supplier. large-scale project finance suffers the challenges previously mentioned in the steG session. so for our rps we are not waiting for transmission – we’re building pV.

panelists recommended getting insurers and legal advisors involved in project development early. it may also need an executive policy coverage. local installers 40% Large. ALWAYS traditionally. VENTURE CAPITAL AND PRIVATE EQUITY: OPPORTUNITIES. project developers may also want to consider insuring marine cargos for loss during transit. a problem particularly relevant to many of the markets where solar makes most sense. have disruptive technologies. real estate investment trusts (reits) would allow unspecialized corporations to do likewise. independent. there remains little than can be done about political risk. insurance providers naturally have an important role to play in pricing the inherent risks of investing in the solar market. rather. one problem for us-based project finance is that the patchwork of local incentives and the tax appetite Figure 12: Which scenario best describes the likely structure of the small pV and solar water heating installation industry in 2020? Figure 13: if you were a venture capital investor with a general clean energy focus. the solar industry as a whole cannot be grouped together as a single investment opportunity. compared with below $0.20/W in Germany.90/W in the states. manufacturers may well benefit from warranty insurance. investors should be focused on the individual product. there was no point in investing in a superb typewriter technology in 1985. independent specialized solar installers 25% Solar manufacturers 5% Fully integrated systems from IKEA or Wal-Mart. which of the following business plans would you find most exciting at first glance? A module with built-in control chip. which can be shut down if stolen 14% Software to manage molten heat storage output 19% Large construction companies or utilities 5% Small. and those under strict non-disclosure agreement. to make their products bankable. assembled at home 25% Other 0% A new quantum dot architecture nanostructed PV technology 9% A compact racking system for residential PV 25% A high-efficiency solar water heater with several patents 18% PV distributor and microfinancier active in Ghana 6% Residential PV installation in Italy 9% source: bloomberg New energy Finance solar Leadership Forum voting source: bloomberg New energy Finance solar Leadership Forum voting Note: participants were asked to pick 3. and will need environmental coverage and business interruption coverage. with a wary eye on what the market is doing and what parts of the value chain are likely to win and lose from it. very quickly.////////////////////////////////////////////////////////////////////////////////////////////////////////// requirements of the federal government make standardizing deals impossible. similar vehicles have already been used in Germany. particularly commercial rooftop pV. if a project is not organized as a special purpose vehicle. securities (abss) could be launched to allow individuals to participate in financing the solar market. but at present just a few proprietary warranty insurance products have been sold. or can grow very large. so the totals will not add up to 100% 24 // 25 BLOOMBERG NEW ENERGY FINANCE . one participant noted finance arrangement costs of $0. with considerable success in mobilizing pools of unsophisticated capital with relatively low return requirements. as the panelists pointed out. investors have backed companies that are either active in very large markets. in the future. and significantly drive up transaction costs.

the panelists see secondary investment opportunities arising. however. the panelists believed that correct timing was essential for the investment’s success. many iterations and tuning will be needed to support product launch. regardless.com was not a direct part of the initial investment in creating the internet. as one panelist suggested. building upon past experiences. during the growth stage. and that “spending other people’s money” (for example by having export-import bank loan guarantees) is a vital component of achieving universal bankability. investment in websites such as Facebook. such as storage and grid investments. these secondary investments will have less to do with producing solar energy or pV modules.////////////////////////////////////////////////////////////////////////////////////////////////////////// as the industry matures and solar experiences wide-scale rollout. and more to do with the deployment and integration of the technologies. . while others practiced developing and releasing new iterations of their product. but the existence of the internet created a previously unimaginable infrastructure for investments like Facebook. there was divergence amongst the panelists on the research and development phase of new products: some argued for researching new technologies for a game-changing release.


AREVA SOLAR ERNST & YOUNG /////////////////////////////////////////////////////////////////////////////////////////////////////////// .


GLOBAL SCALE DEPLOYMENT For the Csp industry to truly realize its potential.and long-term. the Csp industry must demonstrate its value proposition in both the near. the industry can leverage local content. and steam for industrial process applications and helping to promote new Csp development. creating jobs and building local economies. WITH UTILITIES AND GOVERNMENTS PLANNING CSP ADDITIONS TO THEIR ENERGY PORTFOLIOS. as the industry commercializes on a large-scale. enhanced oil recovery and food processing. that is where technical evolution comes into play. the industry must ramp up construction of the full range of Csp plants and in doing so create local jobs and boost local economies. standalone power generation. they can reliably offer the full package of necessary services and guarantees — from technology leadership and epC services to o&m expertise — and all backed by solid balance sheets. thermal storage and solar hybrid plants to offer full Finally. in areVa solar’s view.////////////////////////////////////////////////////////////////////////////////////////////////////////// FULFILLING THE PROMISE OF CONCENTRATING SOLAR POWER THE AREVA SOLAR PERSPECTIVE: THE CONCENTRATED SOLAR POWER INDUSTRY IS AT A CRITICAL JUNCTURE. further driving the market in many countries that mandate and reward localization. the industry must now seize this moment to expand its role in the global energy mix and fulfill the promise of Csp. these dynamics have opened the door for Csp’s largescale. COLLECTIVELY CONTINUING TO LOWER POWER COSTS AND ENHANCE PERFORMANCE. particularly overseas as progressive government programs are 4. together. not only to generate electricity or to augment production at existing fossilfired power plants. dispatchability. innovation and commercialization must be coupled with the ability to deploy on a global scale quickly. alstom. second is solar thermal’s ability to match and optimize existing power infrastructure. such as desalination. With the growing number of large. water and emissions. and with more than 1GW of installed capacity. this is now possible. these global energy leaders bring the bankability to deploy on a global scale. global ramp-up. the industry continues to lower costs toward grid parity. . which the energy industry must define in the fullest sense of the term. global energy players entering the industry. solar steam to augment power generation at existing fossil-fired power plants without added power block costs or emissions. solar thermal has proven it can deliver. MARkET DRIVERS. Global deployment is also opening market opportunities for the Csp industry. INNOVATION & COMMERCIALIzATION First. STRATEGIC VISION Lastly. abb. Consider recent. bechtel and mitsubishi. desalination. in fact. solar thermal produces steam. this includes four key solutions: 1. A NUMBER OF MARkET DRIVERS AND OTHER FACTORS WILL ULTIMATELY DETERMINE WHETHER THE SOLAR THERMAL INDUSTRY REACHES ITS FULL POTENTIAL IN THE UNITED STATES AND GLOBALLY. by capturing the true cost of land. to fully leverage these market opportunities. there is the driver of strong public policy support for Csp. these factors and market drivers combined make Csp a serious participant in the global energy dialogue. innovation must continually drive technological advancements to capture additional cost reductions and performance enhancements. siemens. 2. 3. strategic investments in Csp by areVa. but also for industrial applications. innovation and commercialization are tied together.

as a result. there has been a lot of debate about the proposal to create a green investment bank. despite recent investment growth. at the same time. government policy support in the us and europe is likely to become less generous as objectives shift from stimulus to austerity and debt reduction. with the minimum capital requirements of baseL iii coming into play. along with the benefit they receive from transparent long-term feed-in tariffs or other forms of government backing. SUCH AS THE US AND EUROPE. much of the intellectual property-driven technology developed in europe or the us is likely to be transferred over the longer-term to developing markets for commercial deployment or industrial scale manufacturing. whose role could be to consolidate and repackage existing project finance debt. capital flows will become truly global with donor organizations and multilaterals deploying funds from developed countries in developing ones. at the same time. banks. policy is now focused on energy security and delivering de-carbonized energy at the lowest possible cost. such as defined benefits pension schemes. state-owned banks and multilateral financial institutions are also becoming more active players in cleantech. and if such an institution had the ability to issue bonds it could enable pension funds. in some of the more mature renewable energy markets. the sector needs new investors and new conduits for their capital—there are some encouraging signs that these will emerge. the asset class appears well-suited to attract annuity funds. STRATEGIC POSITIONS AROUND CERTAIN TECHNOLOGIES AND ECONOMIC DIVERSIFICATION. policy setters in the east are focused on driving economic growth to seize advantage in this increasingly important sector. With these traditional sources of capital likely to remain constrained for the foreseeable future. Western government policy has pursued the same strategic objectives but with the realization that manufacturing jobs might not be sustainable in the longer run. Chinese state-owned banks have stepped up lending to renewable energy companies. Ben Warren environment and energy infrastructure advisory Leader. both the european investment bank and the european bank for reconstruction and development are focused on stimulating clean energy markets and are actively lending to the sector. for example. corporations and utility companies no longer have the deep balance sheets that they can bring to bear. spurred by government policy objectives. life and insurance funds and fixed income to invest in the sector. this would free up bank balance sheets.////////////////////////////////////////////////////////////////////////////////////////////////////////// PERSPECTIVE ON RENEWABLE ENERGY INVESTMENT THE RENEWABLE ENERGY SECTOR IS MASSIVELY CAPITAL HUNGRY. Following the recession. OVER THE LAST 12-24 MONTHS. in the uk. are also busily rebuilding their balance sheets. Given the very long-term and low-risk nature of renewable energy infrastructure investments. WE’RE SEEING A GLOBAL RACE FOR CAPITAL. providing an energy policy framework designed to stimulate investment—together with closely aligned economic and industrial policies to generate manufacturing jobs—to capture intellectual property or cost reductions as a source of long-term competitive advantage. TAIWAN AND SOUTH kOREA—AND THE MATURE WESTERN MARkETS. For example. WITH A LARGE NUMBER OF JURISDICTIONS AROUND THE WORLD COMPETING FOR GREEN JOBS. DIVERGENT POLICY APPROACHES HAVE EMERGED IN THE RAPIDLY GROWING RENEWABLE ENERGY MARkETS OF THE EAST—MAINLAND CHINA. ernst & Young 30 // 31 BLOOMBERG NEW ENERGY FINANCE . capital scarcity remains the biggest inhibitor to renewable energy infrastructure deals.

PARTICIPANTS /////////////////////////////////////////////////////////////////////////////////////////////////////////// .


Government and regulatory affairs. american Council on renewable energy Christoph Fark managing director. inc. solar trust of america Paul Deninger senior managing director. eolfi Julien Bailliet Chief of staff and director of Corporate affairs. CalCeF John Andersen. recurrent energy Darrell Hayslip Chief development officer. transaction advisory service. Group Coo & eVp.PARTICIPANTS ////////////////////////////////////////////////////////////////////////////////////////////////////////// FORUM CHAIR: Norman Pearlstine Chief Content officer. bLoomberG Jack Lai eVp & Ceo. evercore partners Martha Duggan Vice president. bloomberg New energy Finance Alexandre Chavarot head of Clean energy Finance & Clinton Global initiative. Covington & burling Sami khoreibi Ceo. Covington & burling Vahan Garboushian Cto. Jr. ernst & Young George Frampton senior of Counsel. steyer-taylor Center for energy policy and Finance Dan Adler president. Richard Gruber president. Ldk solar usa . solar trust of america Thomas Bartolomei senior Vice president. business development . areVa solar Joseph Fontana partner. Xtreme power Andrew Jack partner. schott solar Csp Arno Harris Ceo. enviromena power systems John king executive Vice president. suntech Paul Breslow head of us project and Corporate development. reC Group Guy Auger Coo. solar program Coordinator Jenny Chase manager. amonix. Cross media initiatives. Founder. areVa solar Andrew Beebe Chief Commercial officer. LLC Susan kish head. bloomberg kEYNOTE SPEAkER: Dan Reicher executive director. sChott solar Bob Fishman Ceo. solar North america. uni-solar Mike Eckhart president. bLoomberG NeW eNerGY FiNaNCe Jimmy Chuang head of structured Finance. GCL solar John Clapp executive Vice president & CFo. au optronics Nathaniel Bullard Lead analyst. Ls power development.

National Center of photovoltaics.////////////////////////////////////////////////////////////////////////////////////////////////////////// Jeff Lang ernst & Young Angiolo Laviziano Ceo. suniva Paul Nahi Ceo. NreL Heather Sibley assurance partner. Paul MacGregor senior Vice president. karsten Otte Ceo. kleiner perkins Caufield & byers Dr. Christoph Wolff Ceo. brightsource 34 // 35 BLOOMBERG NEW ENERGY FINANCE . Johnson Controls Dr. Q-Cells North america David Wenstrup program manager. solar millennium John Woolard Ceo. Clinton Global initiative Ellen White Global marketing manager . 3m red Dr. Anish Tolia head of market development. mainstream energy Dr. ernst & Young kevin Smith Ceo. pNm resources Daniel Oros partner. proLogis Marc van Gerven Ceo.renewable energy.renewable energy . marsh Doug May president & Ceo. Nexant Mike Marelli director. enphase energy Greg Nelson executive director . solarion Cédric Philibert senior analyst renewable energy division. iea Philippe Poux General manager . southern California edison Peter Mavraganis renewable energy practive Leader. areVa solar Derek Price program manager . unirac Jim Modak CFo. Flextronics industrials Dr. Ryne Raffaelle director.C. Linde electronics Drew Torbin Vice president . solarreserve E. Sykes president.

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We do not guarantee the accuracy or completeness of this information.” “sell” or “hold” an investment. bloomberg L. publicly displayed or used as the basis of derivative works without the prior written consent of bloomberg Finance L. bLoomberG NeWs. bLoomberG boNdtrader.p. the statements in this publication reflect the current judgment of the authors of the relevant articles or features. bLoomberG teLeVisioN. No portion of this document may be reproduced. or as investment advice or recommendations by bloomberg of an investment strategy or whether or not to “buy. bLoomberG markets. bLoomberG tradebook. or any of their affiliates (“bloomberg”). © bloomberg Finance L. bLoomberG press. bLoomberG proFessioNaL. distributed. bLoomberG radio.////////////////////////////////////////////////////////////////////////////////////////////////////////// DISCLAIMER the information contained in this publication is derived from selected public sources we believe to be reasonable.Com. bLoomberG. Nothing herein shall constitute or be construed as an offering of financial instruments.p. and nothing in this document shall be construed as such a guarantee. or its subsidiaries. bLoomberG NeW eNerGY FiNaNCe and NeW eNerGY FiNaNCe are trademarks and service marks of bloomberg Finance L. .p.. 2011. bLoomberG aNYWhere.p. and do not necessarily reflect the opinion of bloomberg Finance L. bLoomberG.p. scanned into an electronic system. which is subject to change without notice. bloomberg disclaims any liability arising from use of this document or its contents.


New York t: +1 212 617 5955 e: jslusarz2@bloomberg.For Further iNFormatioN pLease CoNtaCt: Joshua Slusarz.net .net Nathaniel Bullard t: +1 415 617 7289 e: nbullard@bloomberg.

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