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First Solar And SunPower Yieldco Breaks The Mold

First Solar Inc. and SunPower Corp. are working out the details on forming a joint yieldco vehicle to which they each expect to contribute a portfolio of selected solar generation assets from their existing projects.

Upon the execution of a master formation agreement, the parties intend to file a registration statement with the U.S. Securities and Exchange Commission for an initial public offering (IPO). Formation of the yieldco and completion of the IPO are subject to each party’s board approval and regulatory approval.

Both companies specialize in large-scale power plant projects. A unique aspect of the proposed yieldco is that its holdings would consist of a mix of photovoltaic technologies: SunPower’s silicon PV power plants and First Solar’s thin-film PV projects.

Andrew Redinger, managing director and head of KeyBanc Capital Markets’ utilities, power and renewables group, has long championed the benefits of the yieldco as a vehicle for monetizing solar energy projects. He says the First Solar and SunPower partnership represents an example of an investment vehicle that is diversifying its technology and geographic footprint and, thus, minimizing risk.

“The majority of investors are indifferent to the technology as long as there is consistent cash flow,” Redinger says. “It can come from silicon or thin film. It can come from gas. It can come from hydro. It can come from any number of sources. Investors invest in yieldcos because they appear to offer stable, consistent growing cash flow.”

Redinger points out that solar sector yieldcos in existence today usually have a strong parent that was really big in the development business. This standard model, where a developer passes projects to a yieldco subsidiary, perhaps best exemplified by the SunEdison-TerraForm Power relationship, has been the prevalent model.

Although the proposed First Solar and SunPower yieldco would also have strong developers as parents, the diversification of projects is the more important point. “I think they both recognize that the more avenues you can create to build growth, the better you are going to trade,” he says. “Both realize that more is better.”

Going forward, Redinger expects to see the yieldco element becoming the driver in a lot of solar project transactions. He is watching a dozen or so yieldcos that could go public this year, and a lot of these are more of a “channel partner” model, wherein an entity with money but no development arm signs up developers to feed the yieldco.

Although the yieldco contemplated by First Solar and SunPower doesn’t exactly fit this channel partner model, Redinger says it shows how yieldcos of the future are likely to have multiple developers and diverse technologies feeding them projects. - Michael Puttré

 

Developer Sees Drones As Labor-Saving Devices

CalCom Solar, a Visalia, Calif.-based engineering, procurement and construction firm for solar photovoltaic installations, is testing the waters of unmanned aerial vehicles (UAVs) and, in the process, seeing a slew of future applications.

Nic Stover, the company’s CEO, is no stranger to the technology: The final project of his master’s degree program last year involved the applications of UAVs in agriculture, where there is a “tremendous need” for unmanned aircraft.

CalCom Solar, which specializes in developing solar projects on agricultural land, is in a nascent stage of using UAVs, he says. Operating a DJI Phantom 2, the company has captured - through both photo and video - aerial views of several completed solar projects, including a 1 MW ground-mounted array on a tomato farm in Firebaugh, Calif.

Solar racking systems company GameChange Racking recently shared a video of this installation - offering what it calls a “stunning” view of the project, featuring the company’s Pour-in-Place ballasted ground system.

According to Stover, using a drone to provide a view of a finished array is beneficial for clients - who are able to “appreciate the scale and the scope” of a project - and the company.

Before it began implementing drones - an “absolutely” cheaper and safer method of aerial photography, he notes - the company had to sometimes bring in manned aircraft or stand atop tall structures to get the shot.

Although CalCom Solar has not yet used the drone during other phases of projects, such as construction and pre-construction, Stover says plans are in the works to deploy it for what he calls “site scouting.” Ideally, he explains, after a client selects a site, CalCom Solar would then take the UAV there to survey the land, such as the neighboring areas and the utility connections.

The company currently uses a number of methods to assess sites, including Google Earth, local county assessor maps and local surveys. “That’s one of the issues,” he says. “It’s a combination of a lot of different information to put our data and plans together.”

However, he points out, a drone would eliminate the company’s reliance on other sources of data and, instead, allow it to collect the information on its own through one device.

Stover envisions using a UAV for project inspections, as well. In particular, he’d like to equip the aircraft with LiDAR and thermal imaging.

“Theoretically, we could eliminate the need for a survey.” For example, he says, if there are 3,800 modules on a 1 MW site, individually inspecting each panel “would be a very, very time-consuming process, even if you had a hand-held sensor.”

His hope is that the UAV would, instead, get the job done much more quickly. During an inspection process, the aircraft would fly down each row of panels and search for any thermal hotspots or electrical issues - essentially, anything that needs to be checked but that cannot be seen by the naked eye, he says.

How soon more solar companies will bring on board unmanned aircraft remains to be determined. Under the Federal Aviation Administration’s recently issued proposed rules for commercial UAVs, operators would be required to keep the aircraft within a visual line of sight, operate only during daylight hours, and not fly over 500 feet in altitude or over any people not involved in the operation (among other rules).

“For us, it’s not restrictive,” Stover says of the proposed rules. He notes that because the company’s projects are sited on land around six acres in size, the visual line of sight rule would not be an issue. Also, because the projects are in rural locations, he does not foresee the company being hindered by the requirement to keep the aircraft away from people.

He adds that the potential of drone inspections reaches a multitude of project types: small- and large-scale, rooftop and ground-mounted, and commercial and residential. Rather than sending an inspector up on the roof to look at the panels, he says, a company can send a UAV up and eliminate human risk.

“I think all [these] companies will eventually have a UAV,” he says. “I can definitely see it becoming more and more standard.” - Betsy Lillian

 

Storage To Join 9% Of PV Systems In North America

New analysis from IHS says that 9% of solar photovoltaic systems in North America will include attached storage in 2018.

Led by commercial systems, IHS expects 700 MW of PV systems with energy storage will be installed by 2018, compared to just 30 MW in 2014.

According to the IHS “Energy Storage in PV Report - 2014,” commercial buildings are subject to peak demand charges, which are based on the maximum power drawn from the grid during the billing period. These charges can make up a significant portion of a business’s electricity bill; however, using a battery and PV to reduce peaks in grid power consumption can reduce these costs significantly.

“The commercial PV energy storage market in the United States has gained huge momentum in recent months,” says Sam Wilkinson, research manager for solar and energy storage for IHS Technology. “Incentives such as the Self Generation Incentive Program offered in California are also making the economics of such systems extremely attractive; but, there is no guarantee that electricity tariff structures won’t be adjusted, which could affect the economics of existing systems.”

According to the report, the North American residential market for PV systems with attached storage will be limited, as the only real incentive for homeowners to install these systems is to provide backup for power blackouts. However, the high cost of a battery system acts as a barrier to widespread adoption.

In addition to current market leaders STEM and Green Charge Networks, IHS anticipates that SolarCity will also be increasingly active in the attached storage market. The company is already offering Tesla batteries with its PV systems.

 

Utilities Focused On
Solar And Storage

A new report shows utility companies in North America are intensifying their focus on advanced energy storage and solar.

Analysts at research firm Bloomberg New Energy Finance (BNEF) tracked 52 clean energy requests for proposals (RFPs) in 2014. According to the report, solar dominated the market, both in capacity (1.8 GW) and quantity (27 RFPs). There was also a significant amount of interest - at least 12 RFPs - in other cleantech technologies, particularly energy storage.

Western states represented the biggest region for RFPs, the report says, with 1 GW being requested. The Southeast was the second-largest region in terms of capacity requested, almost all of it solar.

Wisconsin-based Alliant sought the greatest capacity with a single RFP.

Collectively, the U.S. armed forces issued seven RFPs.

“The data reveals particularly strong interest in energy storage,” says Will Nelson, head of analysis for BNEF in North America. “Interestingly, most storage RFPs are looking for a relatively small amount of capacity - evidence that these may be initial experimental forays into a rapidly changing sector.”

BNEF says RFPs are a leading indicator for trends in the utility industry because they are solicitations issued by companies to potential vendors. The issuers of RFPs specify the products or services they are seeking; in response, bidders submit proposals, competing against each other on the basis of pricing, capabilities and other factors.

In the world of clean energy, RFPs could involve procurement for renewable electricity-generating capacity or for technologies to make the grid more flexible or resilient.

“For project sponsors and equipment vendors, RFPs are the lifeblood of their business development efforts,” says Mark Taylor, product manager for BNEF. “They also give an early but concrete glimpse into which sectors are catching the eye of the market and about the strategic direction of utilities and other energy-consuming organizations.”

 

U.S. Installs 6.2 GW
Of PV In 2014

According to a new report from GTM Research and the Solar Energy Industries Association, newly installed U.S. solar photovoltaic capacity for 2014 reached a record 6,201 MW, growing 30% over 2013’s total. An additional 767 MW of concentrating solar power (CSP) came online in the same period.

Solar accounted for 32% of the nation’s new generating capacity in 2014, the report says, beating out both wind energy and coal for the second year in a row. Only natural gas constituted a greater share of new generating capacity.

In 2014, the three major U.S. market segments - utility, commercial and residential - each installed more than a gigawatt of PV. This is the first time all three have done so in the same year.

According to the report, the U.S. utility-scale segment broke the gigawatt mark in 2011 and has since grown by nearly 1 GW annually. In 2014, 3.9 GW of utility-scale PV projects came online, with another 14 GW of projects currently under contract.

In 2014, the commercial segment installed just over 1 GW, down 6% from 2013, the report notes.

The U.S. residential segment has now passed the gigawatt mark for the first time, with 1.2 GW installed. Residential continues to be the fastest-growing market segment in the U.S., the report says, with 2014 marking three consecutive years of greater than 50% annual growth.

Additional key findings of the report include the following:

• By the end of 2014, 20 states passed the 100 MW mark for cumulative operating solar PV installations - California alone has an installed capacity of 8.7 GW;
• More than 500 MW of residential solar installations came online without any state incentive;
• Growth remains driven primarily by the utility solar PV market, which installed 1.5 GW in the fourth quarter of 2014, the largest quarterly total ever for any market segment;
• PV installations are forecast to reach 8.1 GW in 2015, up 59% over 2014;
• CSP had a record year in 2014, with 767 MW brought online; and
• As of the end of 2014, cumulative operating PV in the U.S. totaled 18.3 GW and cumulative operating CSP totaled 1.7 GW.

 

SunEdison Acquires
Solar Grid Storage

California-based SunEdison Inc. has acquired Philadelphia-based Solar Grid Storage LLC.

Under the terms of the transaction, SunEdison will take on the energy storage project origination team, project pipeline and four operating storage projects from Solar Grid Storage, which are subject to customary approvals.

The acquisition will enable SunEdison to offer battery storage systems for solar and wind projects on a global basis.

“Storage is a perfect complement to our business model and to our wind and solar expertise,” says Tim Derrick, general manager of SunEdison Advanced Solutions. “Our strategy is to increase the value of the solar and wind projects that we finance, develop, own and operate by improving their availability and ability to interact with the grid.”

 

Vivint Recruits Veterans For Solar

Vivint Solar says it has extended job offers to all of the graduates of the U.S. Department of Energy’s (DOE) “Reach for the Sun” pilot program at U.S. Marine Corps Base Camp Pendleton, just north of San Diego.

Reach for the Sun is an intensive workforce training program designed to help place military personnel who are transitioning out of active duty into jobs within the solar industry.

This program, offered to 20 transitioning marines, included four weeks of comprehensive photovoltaic coursework. According to Vivint, each graduate learned how to size and install solar panels, safely connect electricity to the grid, and interpret and comply with local building code requirements.

“We are honored to recruit from the [DOE’s] ‘Reach for the Sun’ program and are thoroughly impressed with the skillsets of its graduates,” says Greg Butterfield, CEO of Vivint Solar. “As exiting military personnel pursue civilian jobs, we hope they will choose careers in the fast-growing solar industry.”

 

Solar Leaders Look Ahead At Solar Power Colorado

The theme of the Colorado Solar Energy Industries Association’s Solar Power Colorado 2015 conference in February ostensibly was celebrating the last-quarter century and looking forward to the next one.

Most of the industry experts seemed to agree that the outlook extending to 2040 is positive. There was a lot of discussion, however, on how to first make it through the next few years.

“We need to have a bigger vision of the future,” said Hank Price, chief technology officer of Abengoa Solar and a member of the opening session panel for solar CEOs and executives. “We need to move the discussion to the long-term vision for energy for Colorado, for the country and for the world. What is the path to achieve that? Is solar the right technology, and does it have a key role to play?”

Price added that the developer is already looking beyond 2016 and the end of the federal investment tax credit (ITC). “It takes us longer than two years to build a plant,” he said. “So, we are in the post-ITC world.”

Panel moderator K.K. DuVivier, a University of Denver law professor, started the session by asking what it will take for solar to become the primary energy source.

Glen Davis, CEO of RES Americas, said cost and system reliability give solar an advantage. Other factors that can help solar include battery companies developing better storage technologies and a shift from centralized to decentralized decision-making in energy generation.

“One of the things about PV is modularity,” Davis said. “Whether you build on a roof or you have hundreds of modules in a field, you are not losing economies of scale by going smaller.”

There are still some challenges, said Paul Spencer, founder and CEO of the community solar developer Clean Energy Collective. “Equipment is down in price and up in efficiency,” he said. “That’s a great trend but a smaller piece of the pie in terms of the overall cost of solar. The other costs, such as design, interconnection, permitting, legal fees and finance costs, still need to decrease.”

One factor that Spencer said is not a threat - although it has gained some attention - is falling oil prices. Most states do not burn oil for electricity, so the only effect oil prices will have will be in shipping costs.

Carbon pricing is important though, said Lou Villaire, co-owner of the installer Atlasta Solar Center. “We need to stop fossil fuel companies from polluting for free,” he said.

Customers of the installer often say they want solar because they want to reduce carbon emissions.

“Whatever reason you want to do solar is fine with us,” Villaire said. “People want a radically different energy portfolio than they have today.”

People also want solar installations on their homes to positively affect resale values. Villaire noted that it helps that real estate appraisers are gaining knowledge of how to value a residential solar instal-
lation.

 

Community effort

Of course, not everyone wants solar on their home, so community solar gardens were a major topic at the conference. During one community solar panel, J.W. Postal, senior vice president of the community solar company SunShare, said he expects the Colorado Community Solar Gardens program, which was created by legislation in 2010, to be expanded. “Community solar has an opportunity to be a game-changer,” he said. “All citizens can participate. Consumers will choose the better fuel. That’s the future. It may be disruptive to some businesses, but that’s where the world is headed.”

Community solar programs are an example of states taking an increasingly important role in solar development opportunities, either through regulation or legislation.

“I don’t trust the federal Congress to get anything done, so it comes down to the states,” said Jared Schoch, principal at Turning Point Energy, a development, investment and advisory firm. “We can look at rates, from commercial, residential and community solar, and how to make the rate structure work so customers want to do solar. If not, I think we will have a shakeup in 2017. I don’t see us getting around it.”

The states’ efforts can be a positive force, said Mark Safty, a partner with the law firm Holland and Hart. “There is tremendous justification for hope in this area,” he said. “We have a federal government that has certain powers, then 50 states that are generally free, which means at least 50 laboratories for rollout and deployment of this change.”

Colorado is doing its part with rolling out changes. At another session on solar financing models, speakers covered topics such as power purchase agreements for residential customers, property assessed clean energy (PACE) financing, green banks, credit unions and other methods to finance projects. Moderator Ryan Arney, a partner with the law firm Davis Graham & Stubbs, invited panelists to look at the future of finance.

One tool might be a new version of PACE financing, which helps building owners pay for energy improvements. PACE for residential solar installations ended in 2010 with the Federal Housing Finance Agency’s rule against the program, although residential PACE has been coming back to life, led by efforts in California.

Paul Sharfenberger, director of finance and operations for the Colorado Energy Office, said Colorado is getting ready to roll out a commercial real estate version of PACE financing this spring. Connecticut has a commercial version called C-PACE, and New York has the Energize Commercial New York program.

“You have building owners who are paying utility bills, but the tenants are enjoying the benefits,” Sharfenberger said. “Commercial PACE offers benefits that commercial property owners can pursue. It stays with the property; it’s 20-year financing at six or seven percent interest, which is fairly commensurate with other commercial lending products.”

There are other alternatives, such as credit unions and green banks, said Blake Jones, president of Namaste Solar. But one finance issue must be settled first and foremost:

“The number one thing I want is defending net metering,” Jones said. “Plain and simple.” - Nora Caley