Wednesday, March 21, 2012

Solyndra in 30 Seconds

I've never cared much for Solyndra. They always seemed terribly over-hyped but I would say this about most solar companies. The video made me laugh.

Say What?

“Right now it would be cheaper to put 40-inch TVs on your roof than solar panels, which are much less complicated,” said Conrad Burke, general manager of the Wilmington, Delaware-based chemical company’s DuPont Innovalight unit...

This is a great quote but it's not true. The cheapest 42" TV I could find was $400. At 5.23 square feet a pop you'd need 13 units to cover the 69 square feet required for a kilowatt (spec sheet). This adds up to a little over $5000 which is five times higher than current factory gate panel pricing.

Vee Vill Get You Mein Pretties!

Hey, Look at Me! I'm a Sun on Stilts!

Seriously, I want you to take me theoriously. I'm a STAR Goddammit!

Tuesday, March 20, 2012

A Letter to Santa

Dear Santa

I'm a junkie Santa. My fix is photoelectricity. I just can't get enough of it. I guess some people really get into their hobbies. For example, there are train people that read about trains and photograph them and chase them and do that hand motion to make them toot. Yeah... I'm like those people except I don't like trains, I like photoelectrics. So Santa... I've been a good boy. I've had no sick days and no hit and runs this last year. Here's my photoelectric policy wishlist.

1. Tax policy: Take away the ITC
2. Tax policy: Make photoelectrics tax free.
3. Tax policy: Make it so that people who install photoelectrics don't get new property appraisals.
4. Finance policy: Bring back PACE.
5. Finance policy: Stop giving out loan guarantees to big corporations.
6. Finance policy: Allow regular people to depreciate their photoelectric systems.
7. Utility policy: Replace Net-metering with a policy that credits photoelectric back-feed based on value.

This is my wish list Santa... See what you can do. Again, I've been a good boy. I've called my mom every week and I haven't stabbed any hobos recently.


It's Rabbit Season, It's Duck Season, It's Circus Season.

Today the Department of Commerce (DOC) came out with their preliminary decision in a trade case against China. This trade case was filed by a group of Bozos who were so out of touch they named their organization the Coalition for American Solar Manufacturing (CASM). First off... I have nothing against American manufacturing but this acronym is hilarious. You'd think that during the brainstorming stages of this organization there would have been one guy at the table with the balls and/or sense to point out this name made them look like an evil organization from a James Bond movie. What do you think happened to this guy? Rumor has it he fell through a trapdoor that led to a shark tank.

Anyways, CASM accused China of cheating and today the DOC kinda-sorta agreed with them. To fix things the DOC set tariffs against the import of Chinese photoelectric modules:

Trina, 4.73 percent
Suntech, 2.9 percent
All others, 3.59 percent

When I saw these tariffs it was a huge relief. These tariffs are much lower than anything anyone expected. Finally, the Obama administration has done something good for solar.

Here's what I think happens next.

May 17 DOC preliminary anti-dumping decision
June DOC final countervailing duty decision
July 19 ITC final decision

Here's what also happens. The Republicans are going to say Obama is soft on China. And they're going to start saying we shouldn't be supporting solar if all the tax dollars end up going to China. After that they're going to focus in on the biggest incentive that solar currently gets - the Investment Tax Credit (ITC). The usual suspects should get their talking points shortly.

Romney: The ITC sends American Tax dollars to China.
Rush: The ITC sends American Tax dollars to China.
Fox News: The ITC sends American Tax dollars to China.
WSJ: The ITC sends American Tax dollars to China.
Heritage Foundation: The ITC sends American Tax dollars to China.

The ITC will become a Pinata for the Right. They'll stick and stone it during this election cycle. The Left will defend the ITC with farcical studies from the Center for American Progress.

What's strange here is that both the Left and the Right are wrong. If the Left were smart they'd realize the ITC is indeed a poor policy mechanism. If the Right were smart they'd realize that rescinding the ITC will fix the perverse incentives in the market which will in turn lead to lower costs which will drive up demand. So in the end if the Republicans get their way there will be more demand for the Chinese products the Rebulicans say they don't want to support. Both sides are effectively fighting for what the other side should want. This is an absurd state of affairs which is terribly funny and sickeningly sad.

Screw sad... Today is a happy day so here's a happy thought: Imagine trying to choreograph the show Cats with actual cats. OK Whiskers, now I want you to stand here and look surprised - remember, use your jazz hands for effect. OK Felix and Mitzy, you guys are... wait... Stop that! Your costume is not a toy!

Friday, March 16, 2012

A Couple Quotes

March 11, One Year On: The Struggle for Renewable Energy

“A good attitude is to be ruthlessly cynical when it comes to understanding the scene, the present, but you should be unlimitedly optimistic about developing the future.”

Powerway announces construction on 30 MW rooftop PV project in China

This is the largest rooftop system ever built - it costs $2/Watt.

Photoelectric Shops

US - Sunelec

US - Costco - Is it just me or do they seem overpriced?

Germany - TST Photovoltaik Shop

Italy - GreenEconomy

Italy - Tuttotetto

China - Sino Solar Exchange

Thursday, March 15, 2012

Getting the Band Back Together

This isn't a perfect apples to apples comparison but it's close enough. From the graph we can see that prices in Italy carry a significant premium over prices in Germany. On top of the higher initial prices Italians, who have no KfW bank, also pay significantly higher interest rates (7% vs. 3%). I don't think Italy's higher prices are because of a less developed market, expensive labor or cumbersome Italian bureaucracy. I think the Italian market has this large premium because of a cruel market imperfection. The Italian photoelectric market understands the profitability of photoelectric systems better than the customer. This allows the wholesalers and installers to charge inflated prices. My thinking is simple. If Germany can install for 2 Euro/Watt so can Italy. Italy is currently controlled by a technocratic administration that is extremely budget conscious. It's safe to assume the next Conto Energia will have steeper cuts than are currently projected. The Italian installers will cry Mama Mia! They'll scream bloody murder and whine and bitch and piss and moan about how the industry is being destroyed. THEY TOOK OUR JOBS. It's all a show for the cameras.

FiTs are designed to support a specific technology. One rate for wind, another for small hydro etc. We do this because we want to encourage renewables but not over-subsidize them. What happens when one of the renewables becomes competitive? Some have argued we'll still need a FiT. I say no. Technically it's not a FiT if the price setting procedure is based on the market. It's something new and different. Some other acronym perhaps. Maybe, just maybe, no acronym at all. Question is, how are we going to set the price?

The industry doesn't want to bring forward this conversation because they want to milk FiTs for as long as they can. This is a dangerous and unhealthy game they're playing. 1. It's unnecessarily expensive. 2. It sets a bad example for the rest of the world. Take Japan for example. They're having a hard time economically. They want to set up a FiT but they don't want to handicap their economy. But the Japanese are smart and technical. MITI has been known to recognize and copy good German economic policy in the past. From this it follows that the FiTsters in Japan would have more political leverage if they could point to Germany as an example that shows how FiTs lead to sustainable market-based prices.

ZING!!! It just occurred to me that Germany is likely to set up market based prices in the next few weeks as part of their overall FiT overhaul. To me it makes no sense to cap the FiT payments at 90% without offering some sort of guaranteed price for the remaining 10%. I'm sure others must be thinking this too. The German thing to do would be assign a market based rate to the production over 10%. Italy and Japan are watching. Oh yes, they're watching.

Thursday, March 8, 2012

Frogs, Facts and Fiction

We've all heard the poplore anecdote about the frog and the boiling pot of water. Basic version tells of how a frog placed in a pot of boiling water will immediately jump out but the same frog placed in a pot of cool water that is slowly being heated will foolishly allow itself to be cooked. Yum, frog legs. My cousin Jimmy's version has the frog placed in a cool pot of water which is itself placed in a microwave. He was always doing weird shit like that - all the cats and dogs in the neighborhood despised the kid. Good or bad, we did not medicate children when I was growing up... but I digress.

Turns out frogs aren't as dumb as people say they are. People on the other hand remain as dumb as ever. It occurs to me that maybe, just maybe, the Boiling Frog story has been about people all along? Maybe I was supposed to know that all along.

This above chart shows the monthly installations in Germany. The spikes on the chart (End of 2009, Middle 2010, End of 2010 and End of 2011) all proceed FiT adjustments. Note also how the minor FiT adjustment at the end of September 2010 doesn't jump off the page - wonk, wonk, wonk.

If the historical relationship between FiT reductions and installations holds true, Germany will see a lot of installs in February and March. SWAG guess is for over 750 MW in February and over 1.5 GW in March. There's should also be a spike in June before the solar farm FiT rates get adjusted. DIHK (never heard of them) are projecting an amazing 8 GW for the year - wish I had their balls. DIHK must stand for: Damn I have knackers!!!.

What's the lesson here? Sensei say... For calm market use lesson of boiled froggy to set FiT degressions.

Monday, March 5, 2012

SMA Shocks the Market

Peter Gabriel used to have a lot of hair. SMA still does but it looks like they're going to get a wicked hair cut in 2012. You have to give credit to SMA for being brutally honest regarding their guidance. Part of me thinks this shockingly poor guidance is timed to be used as ammunition against the FiT reorganization currently underway in Germany. Another part of me thinks SMA has had an incredible run at high margin and it's about time they joined their polysilicon, wafer and module brethren in the galleys slaving away like everybody else. It's not that I want to see SMA go down but I do want to see more competition in the inverter market.

SMA has promised to invest in R&D and focus on new areas - they've targeted energy management and energy storage. I believe SMA should concentrate on energy management first and storage fifth. I'd like to see them integrate their EMS solution (Sunny Home - Sunny Business - Sunny Whatever) directly into their inverters.

Why the new strategy?

The new strategy is due to a shift in the market. The larger ground mounted photoelectric projects which feed all their production into the grid are losing ground to smaller projects that feed a portion of their production into the grid and use the remainder on site. This is a sharp reversal of the trend we've seen over several years where we had larger projects gaining market share. I say sharp reversal because over the last few years large projects have only slowly gained market share from 10 to 15 to 20 to 25 percent year by year. In 2012, Germany is likely to see the share of large projects drop from 20 - 25% down to 5 - 10%. This means all those large project focused inverters SMA has gotten good at building over the last several years are going to see significantly less sales. This has been a long time coming so they can't claim they've been blindsided by current events.

The proposal currently on the table in Germany has many interesting aspects. 1. No more self-consumption bonus. Germany has discontinued the SC bonus because you don't need a bonus when the retail price of electricity is 6 to 8 cents higher than the FIT. 2. You only get the FiT for 85 to 90% of your production. This new requirement is structured to ensure production is coordinated with on-site consumption. These two aspects encourage self-consumption with a stick approach as opposed to the carrot method used over the last few years.

The new FiT doesn't go far enough to encourage self-consumption but you can only package so much into a single proposal. Soon enough we'll see additional regulatory movement in the direction of encouraging self-consumption.

Here's me talking to SMA

Me:Hey SMA, check out that wall.
SMA:Yeah, neat wall.
Me:Take a couple steps back.
SMA:OK... Is that a letter on the wall.
Me:Take a couple more steps back.
SMA:Ahh... yes... it's writing.
Me:Yeah... What kinda writing.
Me:You get a star.

The writing on the wall says the future (at least the next several years) is going to see a heavy investment of research into self-consumption. If SMA focuses on this trend they can position themselves to take maximum advantage. How do you take advantage of this trend? The passive participant rides the wave and builds products according to market demand. The active participant tries to steer the market in coordination with building products to meet demand.

If SMA is smart they'll lobby for smart. One thing they could do would be to lobby for smarter appliances that have communication abilities that mesh with their smart inverters. A corollary second best strategy would be to lobby for updated appliance testing and reporting standards so that more information is provided to the market concerning how appliances work. In either approach the basic idea is to force appliance makers to provide more info about their appliances work so that SMA's energy management systems have better info to work with. If SMA can get more info they can deliver more savings to the consumer. The more savings they can deliver to the consumer the more profit that can shave off the top for themselves - capitalism works.

There's a common saying that moms teach their children: Necessity is the mother of invention. As it turns out I learned the less common version from my dad: Struggle is the father of all things. I am neither a momma or a papa's boy. I have my own take on this. The best thing worth fighting for is love... So if we must struggle for invention let it be for what we love. Saddle up.

Friday, March 2, 2012

Solar Racks.... bahahahahahaha

See Also: Renewable Girls

How many Monkeys does it take to Fuck a Football?

My first impression was: Shit! Is that a tape measure? Why aren't those guys wearing floaties to go with their sissy fall gear. Hard hats on a roof? GAY!!! No wonder our system costs in the US are outrageous.

Turns out this is a picture of the hands on portion of a training course. err... ummm... My bad. Keep up the good work guys!

Odds and Ends

Economics of Photoelectricity - March 2012

Let your representative know how you feel about PACE. Takes one minute. Vote here.

I like coming up with new words to describe solar. One place I think there's a shortage of appropriate terminology is in the area of rooftop solar. Sometimes I say rooftop solar but what I really mean is end-user behind the meter sited solar - could be ground mounted, facade mounted or rooftop but the important thing is that the solar is behind the meter. How about independent photoelectrics (iPE)? The Hipsters would gogaga over this pitch. Fuck Apple and their trademarks. Alternatively, you could capture the idea of independence with the term Indy solar... Is it just me or does indy solar not have a nice ring to it?

Phunny Photoshop Phail

David Crane is the Funkin Man

NRG Energy's CEO Discusses Q4 2011 Results - Earnings Call Transcript

"We think over time, I mean, the way we think that the solar space is going to evolve in terms of going from big to small, absolutely everything that's happening in terms of solar economics is supporting that idea. We still have a good portfolio, as I mentioned, of utility scale, solar projects. The size solar projects that we started in the second half of 2011, the 200, 300 megawatts sizes, that's not going to be a part of the future. It's going to get smaller, and the cost of delivering distributed solar, we feel is working its way towards quite quickly $2.50 a watt, which again, it's impossible for anything from a grid parity perspective to compete with gas-fired generation when gas is $2.50 per million BTU. But competing in terms of retail grid parity, which distribute solar, that's the metric for it to compete against, we see solar being able to compete on a basis of retail grid parity in over 20 states within 2 years. So that's why we have to learn to go small with our individual solar project."