Posts Tagged ‘Bloomberg New Energy Finance’

Google Goes Green

Wednesday, July 6th, 2011

Google and SolarCity,  a rooftop solar-panel company announced a $280 million investment deal,  the largest such deal for home-based solar power systems in the United States.  The investment gives San Mateo, CA-based SolarCity the funding to build and lease solar power systems to as many as 7,000 to 9,000 homeowners in the 10 states in which it operates.

Established in 2006, SolarCity currently has 15,000 solar projects around the nation completed or under way.  Customers who want to have the firm’s solar system installed at their homes can pay for it up front; however, the majority let SolarCity retain ownership of the equipment and rent back the use of it through monthly solar lease payments.  By financing SolarCity, Google will recoup its investment through those lease payments.  “We hope to be seen as a model,”said Rick Needham, Google’s director of green business operations.  Needham didn’t discuss the deal’s terms, but said “these investments are designed to earn us a good return on our capital.”

“It allows us to put our capital to work in a way that is very important to the founders and to Google, and we found a good business model to support,” said Google’s Joel Conkling.  Google CEO Larry Page wants the firm’s operations to eventually produce no-net greenhouse gas emissions.  To achieve this, Google has invested in wind farms in North Dakota, California and Oregon, solar projects in California and Germany, and the beginning stages of a transmission system off the East coast to encourage the construction of offshore wind farms.  The SolarCity deal is Google’s seventh green energy investment, totaling more than $680 million.

Typically, a rooftop solar system costs $25,000 to $30,000, which is beyond the means of many homeowners.  Instead, solar providers like SolarCity, SunRun and Sungevity pay for the system with money borrowed from a bank or a specially-designed fund similar to the one that Google has created.  The resident then pays a set rate for the power generated which is lower than or approximately the same as local electricity.  Typically, s 5-kilowatt system will generate 7,000 kilowatt-hours of power annually, or about 60 percent of the household’s annual use.  The homeowner buys remaining electric power from the local utility, typically enjoys lower overall power bills and has some protection against potentially higher traditional electricity prices.  Electricity prices have not risen in recent months, but are expected to rise in coming years as the cost of increasingly stringent clean-air regulations are passed on to customers.  If the solar company is to make money and the homeowner save money, there must be a combination of high local electric rates, state and local subsidies, as well as low installation costs.  Then there is the matter of sunshine.  A house with solar panels should have a roof that faces South that is not shaded by trees or other buildings.

You have full flexibility in what you want to pay on a monthly basis,” said SolarCity CEO Lyndon Rive, who pointed out that homeowners are charged only for the electricity the company’s solar panels generate at or below market rates.  If the panels produce more power than the home uses, the consumer gets a credit.  “It’s actually a win-win,” Rive said.  “This industry is going gangbusters despite the economy,” said Danny Kennedy, founder of Oakland-based Sungevity.  According to Kennedy, the lease option his company started offering in March 2010 has pushed sales “through the roof.”  He expects to complete 30,000 leases in 2011, up from 10,000 in 2010.

California and Colorado accounted for more than a third of the residential solar market leases in the 1st quarter of 2011, according to a report from the Solar Energy Industries Association (SEIA).  The growth reflects that of the overall solar panel market, which expanded at an average annual rate of 69 percent since 2000, including 100 percent in 2010, according to SEIA, which expects the market to double this year.

Google has chosen to invest in clean energy projects because of the potential returns and the potential to impact the industry.   “We hope that Google’s leadership in the space will encourage other corporate investors,” Rive said.  There definitely is room for other investors to get involved: Fewer than 0.1 percent of American homes currently have rooftop solar panels, but that number is expected to grow to 2.4 percent by 2020, according to Bloomberg New Energy Finance. It’s highly likely that Google-financed companies like SolarCity will have a role in that growth.

The SolarCity project is not Google’s first venture into the clean energy market.  The firm has invested $168 million in California’s Ivanpah solar farm and another $100 million in the world’s biggest wind farm.  That is the $2 billion Shepherds Flat project,  near Arlington, OR, that will stretch over 77 square kilometers of north-central Oregon and generate enough energy for 235,000 homes.  The project, which will go into operation in 2012, is being developed by Caithness Energy.

GE Enters the Solar Power Business

Wednesday, June 29th, 2011

The nation’s largest conglomerate – General Electric – is getting into the solar business in a big way with the firm’s announcement that it is investing $600 million to build a new solar-panel manufacturing plant as it pursues what it thinks could be a $3 billion business by 2015.  The firm, already a leader in renewable energy, has designed a thin-film solar panel that converts sunlight to electricity more efficiently than any other product currently on the market.  The firm, a leading manufacturer of wind- and natural gas-powered electric turbines, plans to open a factory in an as-yet unknown location by 2013.  The facility will employ 400 workers and produce enough solar panels annually to power 80,000 homes.

“The biggest challenge today for the mainstream adoption of solar is cost, and the way you move cost is efficiency,” said Victor Abate, vice president of GE’s renewable energy unit.  “We see ourselves continuing to push that and continuing to move efficiency and as a result the costs of solar continue to come down.”  According to Abate, a decision on where to locate the factory will be made within the next three months.  The decision will be based on criteria including proximity to GE’s research centers, available space, and state and local government incentives, Abate said.  GE expects to make a decision before the end of the year at the latest.

GE’s entry into the solar business comes at an excellent time.  Solar panel installations are expected to surge in the next two years as the cost of generating electricity from the sun approaches that of coal-fueled plants. Large photovoltaic projects would cost $1.45 a watt to build by 2020, half the current price, according to Bloomberg New Energy Finance estimates.  Solar is feasible against fossil fuels on the electric grid in sunny regions such as the Middle East.  “We are already in this phase change and are close to grid parity,” said Canadian Solar chief executive Shawn Qu.  “In many markets, solar is already competitive with peak electricity prices, such as in California and Japan.”

Solar photovoltaic system installation has the potential to nearly double to 32.6 gigawatts by 2013 from 18.6GW last year, according to New Energy Finance.  Manufacturing capacity worldwide has quadrupled since 2008 to 27.5GW annually; 12GW of production will be added in 2011.  Canadian Solar had about 1.3GW of capacity and is expected to reach 2GW in 2012, Qu said.

Writing in Time’s “Ecocentric” column, Bryan Walsh says that the new plant is “Good news for solar advocates and bad news for competitors — General Electric is ready to break into the solar cell business in a major way.  The $218 billion company announced today that it had built a solar module with the highest-ever efficiency rate for cadmium-telluride thin film — the most popular low-cost solar technology — at 12.8 percent, according to independent testers at the National Renewable Energy Laboratory.  That announcement came as GE told reporters that it intends to manufacture those solar modules at a 400-MW factory — in what would be the biggest such facility in the U.S. — that is set to open in 2013.  GE also completed the acquisition of PrimeStar Solar, the Colorado-based thin-film manufacturer, which will complement its recent acquisition of the power conversion company Converteam.”

United States in Third Place in Developing Clean Energy Sources

Wednesday, April 20th, 2011

The United States has fallen to third place – behind China and Germany – in the development of clean energy sources, according to a new report from the Pew Charitable Trusts. Investment in global clean energy expanded significantly in 2010 to $243 billion, a 30 percent increase over 2009.  China, Germany, Italy and India were among the nations that were most successful at attracting private investments.  China solidified its position as the world’s clean energy leader.  Its 2010 investment record of $54.4 billion in 2010 represents a 39 percent increase over 2009.  Germany ranked second in the

G-20, up from third last year, after experiencing a 100 percent increase in investment to $41.2 billion.  The United States’ 2010 investment totaled just $34 billion, a 51 percent increase over the previous year.

“The United States’ position as a leading destination for clean energy investment is declining because its policy framework is weak and uncertain,” said Phyllis Cuttino, director of Pew’s Clean Energy Program.  She said that the U.S. could lag behind even more as competitors adopt renewable energy standards and incentives for investing in solar, wind and other forms of clean energy.  “We are at risk of losing even more financing to countries like China, Germany and India, which have adopted strong policies such as renewable energy standards, carbon reduction targets and/or incentives for investment and production,” Cuttino said.

“The United States remains the global leader in clean energy innovation, receiving 75 percent of all venture capital investment in the sector, a total of $6 billion in 2010, but the U.S. has not been creating demand for deployment of clean energy.  As a result it is losing out on opportunities to attract investment, create manufacturing capabilities and spur job growth.  For example, worldwide, China is now the leading manufacturer of wind turbines and solar panels,” says Michael Liebreich, CEO of Bloomberg New Energy Finance.

China’s goal is to install 20,000 megawatts of solar energy by 2020; the European Union intends to generate 20 percent of its power from renewable sources over the same timeframe.  In the United States, 30 states have policies requiring utilities to buy more electricity from renewable sources.  Although the federal government has incentives in place to cut project costs, there’s no nationwide mandate for clean energy.

The website believes it doesn’t really matter who leads the world in alternative energy creation – as long as global effort continue.  According to Douglas McIntyre, “Most of the data does not matter much.  The fact that China invests such a large amount in clean energy does not mean it will not sell products based on that technology to U.S. firms.  China will export manufactured wind and solar infrastructure just as it does everything else.  Green technology is hardly a strategic asset.  The Chinese are as anxious to make money from their investment as U.S. companies.  If any proof is needed, many Chinese and US alternative energy firms are listed on stock exchanges.  Green is a business as much as it is a movement.”

Unfortunately, McIntyre says, solar and wind energy are not as powerful a source as many believe.  Solar energy doesn’t work at night unless the user has a storage device such as a battery; cloudy weather can make the technology unreliable.  Solar technologies are also quite costly and need significant land to collect the sun’s energy at useful rates.  Wind energy is intermittent in most areas.  Additionally, wind turbines typically are not connected to the American power grid, making the energy it produces difficult to deliver effectively to places where it could replace coal-powered electricity.

McIntyre notes that “America has a nearly inexhaustible supply of coal.  Nuclear energy projects may be delayed by the effects of the Japan earthquake, but its growth in the U.S. is inevitable because the country needs to produce more energy within its borders.  Investment in solar and wind energy may be up, particularly in China.  That does not matter much if the two sources do not work as well as others that are currently available.”

Click here to read a discussion about nuclear power by Amy Goodman of Democracy Now.