by Todd Woody
Dropping my son off at school on Wednesday, I ran into Danny
Kennedy, a fellow parent and veteran Australian Greenpeace activist turned
solar entrepreneur. How’s business? I
asked. Pretty bloody good, as it turns out. Kennedy’s startup, Sungevity, took in more orders for rooftop
solar systems in March than in all of 2009.
That solar flare is being fueled in large part, according to
Kennedy, by a new lease option Sungevity recently began offering its customers.
The option is financed through a $24 million deal with U.S. Bank. Rather than
purchasing a solar array, customers can lease the system through Sungevity for
a monthly fee, thus avoiding the considerable capital costs of buying the
system outright. The popularity of lease options, which are also offered by
bigger installers such as SolarCity, is another indication that creative
financing is as key to getting people to go solar as the performance of the
hardware.
As it happened, the Solar
Energy Industries Association annual report landed in my inbox later that same
day. It showed that Sungevity isn’t the only solar company looking at a very
good 2010.
Although the United
States solar industry’s overall growth for
all types of solar energy slowed somewhat as the Great Recession reached its
nadir in 2009, residential rooftop installers had a record year. Companies like
Sungevity installed 156 megawatts of residential solar panels in 2009, up 101
percent from the previous year.
That’s an amazing number, considering one could reasonably
expect that putting a $25,000 solar array on one’s roof would fall to the
bottom of the home improvement list during the greatest economic downturn since
the Great Depression.
But there were other incentives. The Obama stimulus
package’s lifting of the $2,000 tax credit cap on home solar systems certainly
helped. As did solar panel makers’ price slashing due to the oversupply that
resulted from a ramp up in production. Solar module prices fell more than 40
percent in 2009, according to the SEIA report. That led to a 10 percent decline
in the cost of an installed solar array. (Installation costs typically account
for half the price of a solar array.)
As photovoltaic power has gotten cheaper, solar panels have
come off the roof and are being planted in the ground in huge solar farms. The
dramatic price declines in solar modules got the attention of California utilities in 2009. The utilities signed
power purchase agreements for hundreds of millions of megawatts’ worth of solar
power plants.
Utilities have also initiated huge solar distributed
generation programs. California’s
two biggest utilities, PG&E and Southern California Edison, last year
announced that, over the next five years, they would install a total of 1,000
megawatts on rooftops and in ground arrays near substations and cities.
(SunPower, the San Jose, Calif.-based solar module maker, recently won a
200-megawatt contract with Southern California Edison). When the Sacramento
Municipal Utility District put 100 megawatts of distributed solar up for bid,
the program sold out within a week.
All the activity attracted the attention of Chinese solar
module makers, whose California
market share more than doubled (to 46 percent) in 2009. One company, Yingli, arrived
in California
at the beginning of 2009 and ended the year with nearly a third of the market
share.
No surprise then that California
remains the solar capital of the country. In 2009, the state installed 200
megawatts of solar capacity, nearly four times the amount of New Jersey, the No. 2 solar state. (It’s no
coincidence that both states offer the nation’s most generous solar
incentives.) Altogether, California now boasts
a total solar capacity of 1,102 megawatts—10 times that of New Jersey. (That’s impressive, but still
less than about half of California’s
wind energy capacity.)
Once you get past California
and New Jersey,
however, the numbers drop dramatically. The third biggest solar state, Nevada, had just 100 megawatts of solar capacity
installed in 2009; No. 10, Massachusetts,
had 18 megawatts.
Still, the growth in the solar industry meant more green
jobs. Solar added 10,000 jobs plus 7,000 indirect jobs in 2009, even as the
overall unemployment rate soared. According to the SEIA, total solar employment
in the U.S.
stood at more than 45,000 last year, about evenly divided between direct and
indirect jobs.
The need to ramp up solar power is thrown into sharp relief when
you compare how much capacity the U.S. added in 2009 compared to
other countries. Germany,
the world’s biggest solar power thanks to years of generous subsidies,
installed 3,800 megawatts last year, according to the SEIA. That’s nearly twice
the total U.S. capacity and
eight times what the U.S.
installed in 2009. Germany
now generates 9,677 megawatts of solar electricity. (Even the Czech Republic
installed nearly as much as the U.S.
in 2009, putting 411 megawatts online.) Solar currently supplies less than 1
percent of America’s
electricity.
However, if you consider the huge numbers of massive
megawatt solar thermal power plants planned for the desert Southwest, the U.S. is poised
to become a solar superpower. (Solar thermal plants use arrays of mirrors to
focus sunlight on liquid-filled boilers that create steam to drive
electricity-generating turbines.)
The SEIA says there are 10,583 megawatts of solar thermal
power plants in the pipeline. Licensing those big solar farms—and securing
the billions of dollars needed to build each one—has proven to be a laborious
process. Only 81 megawatts in the pipeline are currently under construction.
But to put things in perspective, the solar thermal project
closest to being licensed—BrightSource Energy’s Ivanpah plan in Southern
California—will generate nearly as much electricity as all the photovoltaic
panels installed in 2009.
Given the trends in the solar industry, the SEIA says
prospects in 2010 are looking bright, with growth continuing. Expect a big bump
in rooftop solar thermal systems, which collect sunlight to heat water, as a
new California
subsidy program kicks into gear.
All of which is good news for Sungevity’s Danny Kennedy. The
boom in demand has him scrambling to secure supplies of solar panels. That’s a
nice problem to have in the Great Recession.
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