September 25, 2015 | No comments yet
Mid September brought most of the solar industry’s movers and shakers to an unpleasantly tropical Anaheim, California for Solar Power International (SPI). Arguably the largest solar conference in the U.S., SPI offers educational opportunities, a huge expo hall, and more networking opportunities than you could possibly take advantage of (after back to back 18 hour days my vocal cords and feet couldn’t take any more and I barely scratch the surface)
This article aims to highlight what we at Wiser Capital see as key industry trends in the coming year. Keep in mind Wiser focuses specifically on the small and medium scale distributed commercial solar market so there will be trends that we “missed,” but that’s just a sign of a growing solar industry. Here are the top three trends:
- Solar plus storage is hugeEveryone is itching to get into the solar plus storage market. Historically, storage hasn’t made a lot of sense economically when the solar user can tie into the grid and utilize net energy metering. Right now, the primary use of storage is for off-grid users. SunEdison was highlighting their outdoor microstations that provide electricity to rural and off grid regions. These solutions make huge differences in the developing world and can be more cost effective than creating a centralized grid system.Economics are starting to change even where grid access is available. The growing number of storage players driving down costs and increasing options, coupled with high demand charges and awareness of resiliency benefits, is piquing customer interest. Costs of storage are decreasing enough so that off-takers or users of solar electricity realize cost-effective monetary benefits from peak shaving and have the ability to deploy electricity when energy is most expensive. We are also starting to see storage as risk mitigation to preclude inventory or production downtimes due to grid failure. Across the U.S., utility companies are changing net energy metering laws. By keeping all solar energy on-site, the off-taker can ensure they are taking advantage of all the benefits of solar.
- Medium scale C&I space is getting hotLast year everyone there was discussing if the medium scale commercial and industrial market was going to be the next big thing for the solar industry. This year, the discussion has changed to how to tap into that market.The major players in the solar space: manufacturers, utility scale developers, and residential originators all have enormous visibility on pipeline ranging from 50kW-1MW, but don’t know what to do with it. It doesn’t fit into their existing business plans and their financial partners aren’t comfortable with third party ownership.
The smaller solar installation companies are witnessing heavy competition, diversifying to stay alive, and see C&I as their next target market.
Financiers are also seeing the writing on the wall and are looking to companies like Wiser Capital to assess the risk on these unrated projects. The greater comfort they have in the space, the more the cost of capital will come down. Project assessment, bundling projects, and insurance and credit wraps are all coming into play as this new segment grows.
- Asset Management is becoming a legitimate businessIn the beginning, the industry talked about solar being “maintenance free”. In the last year, it feels like we’re ready to admit that is simply not the case. While a few individuals and companies have been pushing this for quite some time, SPI showcased many high quality asset management, and operations and maintenance solutions.These companies are going beyond basic monitoring. Software is becoming customizable and user friendly. They are offering full suites of services from construction contract management to investor reporting and PPA billing. Importantly, the value of preventative maintenance is becoming clear; we need to ensure what we built years ago will continue to perform past expectations. Asset management, O&M, and data integrity are key to the longevity of the solar industry.
SPI reflected a thriving industry. While the ITC is slated for a significant decrease in the commercial sector, and elimination in residential, at the end of 2016 it’s clear this industry isn’t sitting idle waiting to see how the cards will fall. By nature, the industry is nimble, yet rooted in its capacity to anticipate what is next and redefine the status quo.
Megan Birney is the Director of Strategic Affairs for Wiser Capital. She handles account management, business development, partnership initiatives and outreach.