Solar Power Battle Puts Hawaii at Forefront of Worldwide Changes

hawaii-solarAllan Akamine has looked all around the winding, palm tree-lined cul-de-sacs of his suburban neighborhood in Mililani here on Oahu and, with an equal mix of frustration and bemusement, seen roof after roof bearing solar panels.

Mr. Akamine, 61, a manager for a cable company, has wanted nothing more than to lower his $600 to $700 monthly electric bill with a solar system of his own. But for 18 months or so, the state’s biggest utility barred him and thousands of other customers from getting one, citing concerns that power generated by rooftop systems was overwhelming its ability to handle it.

Only under strict orders from state energy officials did the utility, the Hawaiian Electric Company, recently rush to approve the lengthy backlog of solar applications, including Mr. Akamine’s.

solar neighborhood

Solar Installations Are Performing Even Better than Promised

solar neighborhoodSolar is looking pretty resilient, according to research from the National Renewable Energy Lab. Now it’s time for international standardization to accelerate and protect investment and performance.

Crunching data from almost 50,000 PV systems pumping out 1.7 gigawatts from 2009 to 2012 — the infamous year of Hurricane Sandy — NREL’s report Reliability and Geographic Trends of 50,000 Photovoltaic Systems in the USA found that 85 percent of them performed 10 percent better than expected. The briefer version? Not even extreme weather events from America’s fearsomely changing climates can make solar panels seem like a dumb investment.

“Worldwide, trillions of dollars of capital are available for investing in photovoltaic systems, but technological and performance risks, among other barriers, remain limiting factors to investment in the PV asset class,” NREL’s study explained — during a market noticeably decoupling from fossil fuels. “Bankable PV that inspires investors’ confidence,” it added (using a three-legged stool as a symbol), requires internationally “consistent manufacturing, durable design, and system verification,” as well trackable durability and reliability in the field. No matter the superstorm.

In that respect, solar is a top performer in the field and the portfolio. NREL’s study found 90 percent of “normal” solar installations unaffected by lightning strikes, hail and wind storms, and even globally warmed events like Hurricane Sandy, still managed to outperform expectation. Divided by regional climates, solar systems in the desert Southwest and hot and humid Southeast United States slightly degraded over time, but of course that’s what usual happens to anything, like inverters, that soak up sun all day in the hottest parts of the nation. Similarly, so-called snowpocalypses like Sandy, blamed for a slim margin of underperforming systems studied by the NREL, can chill solar power down for a spell. But barely, and since underperforming modules comprised about 0.1 percent of all data, maybe not really.

“Considerable uncertainty exists due to the nature of the data,” the NREL concluded. “However, the loss in production is more likely to be associated with subsequent grid outages than with PV system damage.”

What needs to come next for solar to grow even more powerful are international standards and agreements.

“With manufacturers feeling pressure to lower prices, it is essential that quality be maintained and assured,” explained research fellow Sarah Kurtz, co-author of NREL’s Updated Proposal for a Guide for Quality Management Systems for PV Manufacturing (PDF). “The[se] new guidelines help to ensure that quality is not compromised for lower priced modules and make it easier for PV customers to assess the expected quality.”

With about $100 billion annual investment in solar on the table, NREL worked with American and international solar manufacturers to arrive at a global quality standard for PV module production for science and profit. The task force’s supplemental requirements for technical specification of testing, manufacturing and mounting — with respect to regional climate (change) — mandate that warranties for solar panels conform to their expected lifetimes, and that manufacturers are able to trace their products through their entire supply chains. The design product and process must consider potential failure modes, while product certification and reliability testing from China’s International Electrotechnical Commission is also a must.

Getting technical about it, these international standards are doubtlessly deemed important by Kurtz’s co-authors, some of whom hail from industry heavyweights like SunPower, Trina and First Solar. But more broadly speaking, streamlining global solar’s technical specifications will nevertheless greatly accelerate what is already a scorching market for Earth’s most resilient form of renewable energy. The more players we get to agree on the rules of the game, the greater the victories over 20th century energy system that is way past due for an upgrade.


grid defection

Defecting from the Power Grid? Unlikely, Analysts Say

grid defectionFormer Vice President Al Gore stood before a crowd of renewables investors, analysts and clean energy industry executives and declared the electric power grid in the U.S. as much of a technological dinosaur as landline telephones.

Gore, speaking in New York City at the Bloomberg New Energy Finance Future of Energy Summit, asked those in the crowd to raise their hands if they had gotten rid of their landline telephones in favor of a cell phone. Hands went up all over the room.

“We’re not far off from the day when I can ask you how many of you no longer have a grid connection,” Gore said, referring to the link between a home and the power lines outside.

The industry name for cutting the wire between homes and power lines is “grid defection,” and it’s controversial because there is broad disagreement about whether it’s both possible and sensible.


Microgrids and mobile tech bring solar power to rural Kenya

Steama.CoIn a dusty trading center at the foot of the Entasopia escarpment in Kenya’s Kajiado County, John Pambio is deeply engrossed in soldering together a customer’s phone at his electronics repair kiosk.

Until nine months ago, Pambio would have had to send the job to a repair shop in Kiserian township 95 km away, due to a lack of power.

But in July 2014, Kenyan renewable energy firm SteamaCo set up a solar microgrid in Entasopia, and Pambio was able to use electrical tools for the first time.

“Now I can handle any kind of repair work my customers require,” he said.

The 24-year-old is one of some 70 people in Entasopia benefiting from SteamaCo’s solar microgrid project, which aims to provide reliable power to residents of the remote area on the southern savannah.


Corporate Power Purchasing

Why Corporate Power Purchasing is Poised to be the Next Big Thing in Renewable Energy

Corporate Power PurchasingUtility-scale solar and wind power is the best source of cheap, large-scale renewable energy. If you’re just reading the 2015 headlines it can seem as though corporations are surging into that market. The first months of the year have seen a number of impressively large renewable-energy power purchase agreements (PPAs) signed by major corporations. General Motors signed one for 34 MW; Google, for 43 MW; Amazon, for 150 MW; and Apple, for 130 MW. “The Apple-First Solar deal in California was a renewable signal heard around the world,” says Lily Donge, a principal with RMI’s electricity practice and leader of the Business Renewables Center. “Then more recently, Kaiser Permanente signed 153 MW, and then Dow Chemical signed 200 MW—all in early 2015. We see the market growing in leaps and bounds.” So what’s the problem?

Success—so far—has been limited to a small number of very big players. “That growth is exciting and exactly what we want to see;” says Ian Kelly, a senior associate with RMI’s electricity practice. “What we haven’t seen though is a broadening of the market. The number of corporations that are doing these deals as a way to source renewable energy hasn’t increased in the way you might expect, given the way the market has started to take off.” Corporate renewable energy procurement is significant—it totaled about 1 GW last year—but it could and should be much larger. “We see less than two dozen of the Fortune 500 signing off-site PPAs,” says Donge. And RMI and its Business Renewables Center (BRC) is going to change that.

This week at the Bloomberg New Energy Finance (BNEF) Summit in New York, RMI Managing Director Hervé Touati is presenting about the BRC, the plan for which won RMI the prestigious FiRe award at last year’s summit. The BRC is a collaborative platform aimed at accelerating corporate renewable energy procurement. The BRC was announced in February of this year with 28 founding members and is set to revolutionize not only the way major corporations source renewable energy, but also the renewable energy market itself.

If the BRC can stimulate the corporate market for wind and solar power, it would completely change the face of the market. To almost double U.S. renewable capacity, Donge says, “requires roughly 60 GW of new renewable power.” Reaching the first 60 GW of installed capacity took many decades. Within the next 10–20 years, Kelly says, “our goal is to see 60 GW total of new installed solar and wind power capacity from off-site projects.”

Given the potential scale of corporate power purchases, it is within reach. For many large corporations, 100 MW of wind capacity represents about one quarter to one half of the power they require. If 600 companies purchased 100 MW of capacity each, the market would double. Just one company, Google, has already purchased wind power equivalent to 1.7 percent of the total capacity of the nation, and just four companies account for 2.5 percent of the total. The top ten Fortune 500 companies that report their purchases to the EPA buy nearly 11 TWh of green power per year, while the next ten (which include giants like Lockheed Martin and Citigroup) buy less than 14 percent of that amount. So few companies wielding such massive influence shows the enormous potential that could be unlocked. “As we get more companies doing these types of deals, it not only broadens the market but it causes the market to accelerate even more quickly,” says Kelly.

Even now, at a relatively undeveloped stage of the utility-scale wind and solar market, offsite renewable power is an attractive option for corporations. “Competitive power prices can be locked in for 20 years or more,” says Donge. Forgoing such favorable rates represents a large opportunity cost, even for the half of Fortune 500 companies that haven‘t committed to shifting to renewable power.

So what’s holding them back? First and foremost, many companies are simply not aware of the potential benefits, says Kelly. “Obviously the companies that are doing these deals are finding them to be pretty desirable, because they’re going back and doing those deals again, and again, and again,” he points out. The key for the BRC, he says, is to “show all of the companies that haven’t put their toe in the water yet that there’s a deal to be had on favorable terms—they can source renewable energy successfully and economically.”

Many barriers still exist for those that are aware of the benefits. These include the complexity of large-scale, off-site renewable transactions, high transaction costs, and a lack of necessary information and tools. Failure rates of potential deals are high: we estimate that there are five to ten failed attempts or significant delays for every successful deal. This slows market growth and evolution. “Our developers indicate there’s a lot of opportunity,” says Donge. And the RMI-convened BRC, in collaboration with industry, will directly work against those barriers to unlock that opportunity.

The founding members of the BRC are corporate renewable energy buyers, renewable energy project developers, and transaction service providers. Together with RMI, says Donge, “they represent a critical mass of market power and expertise.” The founding corporate buyers bring in more than $500 billion in revenue and consume more than 25,000 GWh of electricity annually. They include Bloomberg, eBay, GM, HP, Kaiser Permanente, Nestlé Waters North America, Owens Corning, Salesforce, and Sprint. By committing to share their experience in these complex deals, all the founding stakeholders of the BRC are opening up for public use the hard-earned expertise they gained by pioneering these transactions. By doing so they mean to drive the market forward and do much more than just help other companies replicate their success. As the market accelerates, all players will benefit from economies of scale and emergent solutions. “RMI’s role in all this is to move directly against the barriers to these complex and vital transactions, in concert with the BRC membership,” says Donge. By guiding corporate teams, helping them navigate the market and the steps of each deal, defining transactional standards, and exploring new market opportunities, RMI and BRC will serve as an accelerator and a catalyst, smoothing the path for all who follow. “We think we can help accelerate the deployment of wind and solar off-site capacity,” says Kelly. “Really we’re there to try to facilitate the different players in moving along that path.”

Musk and Rive

Elon Musk’s Cousins Battle Utilities to Make Solar Rooftops Cheap

Musk and RiveIn September 2013, Hawaiian Electric Co. told thousands of customers they couldn’t connect their new solar panels to its distribution grid. In some neighborhoods, HECO said, its system couldn’t absorb any more unused energy from home solar arrays. The moratorium, which lasted 13 months, made Hawaii a central battleground in the effort by utilities to control the rapid growth of independent solar companies across the U.S. And it was a big deal to people such as Robert Gould, a retired Northwest Airlines pilot living near Honolulu. He’d just paid $53,000 to have solar panels installed.

Gould and other customers protested loudly to state officials. They finally got help from Lyndon Rive, the CEO of SolarCity. The San Mateo, California, company is the biggest installer of rooftop solar panels in the U.S. and has 10,000 Hawaiian customers, Bloomberg Markets magazine reports in its May issue. Rive studied the situation and zeroed in on a key fact: HECO had never directly measured how much solar its grid could handle, relying on computer simulations instead. “Because the technology is brand-new, no one had ever done this in the field before,” says Colton Ching, HECO’s vice president for energy delivery.


The bright side of California’s drought: More solar power

520-drought-silver-lining-solarAs the four-year-long California drought goes from terrible to catastrophic, it’s hard to find any good news.

Love almonds? I’m so sorry for your loss. Water-hungry almond growers have begun to abandon hope, as evidenced by stacks of almond firewood on sale at Whole Foods. Farmers have started to sell water to cities rather than use it to grow crops. Many migrant laborers are out of work because there are fewer crops to plant or harvest. Fish are threatened by record-low runoff, possibly spelling the end of the Delta smelt. The all-important Sierra Nevada snowpack, which doles out water through the dry season as it melts, is at 6 percent of typical levels. Well diggers have become water miners, chasing an ever-declining water table in pursuit of water last seen in the Pleistocene.

The drought, either induced or exacerbated by climate change, is in turn making climate change worse. As California’s reservoirs dry up, hydroelectric power production is dropping. The Pacific Institute recently calculated that the loss of hydropower from 2012 to 2014 drove up power sector carbon emissions 8 percentand cost consumers $1.4 billion, as utilities replaced it with more expensive, and more polluting, natural gas.


solar-powered boat

Solar-powered boat cruises to raise energy awareness

solar-powered boatA few years after mechanical engineer Carter Quillen bought the 50-foot concrete sailboat Ketch du Jour, he changed the vessel’s name to the Archimedes.

For one thing, Quillen had replaced the masts with solar panels, so the Ketch was no longer a ketch (a two-masted fore-and-aft-rigged sailboat).

“I was looking for a name that had some symbolism,” Quillen said. “Archimedes was an innovator. He was the first engineer and a thought leader of his time. He mixed technology with intellectualism. I wanted to follow his path of innovation. We’re due for some change.”

That change is toward energy independence, and the tool is solar power.

NREL updates proposal to standardize PV Manufacturer quality assurance

nrelThe Energy Department’s National Renewable Energy Laboratory (NREL) has released an updated proposal that will establish an international quality standard for photovoltaic (PV) module manufacturing. The document is intended for immediate use by PV manufacturers when producing modules on an industrial scale so they can increase investor, utility, and consumer confidence in PV system performance.

“Our recent research on 50,000 systems found that, during the time period we studied, just 0.1% of all PV systems were affected by damaged or underperforming modules and less than 1% experienced hardware problems each year,” said Sarah Kurtz, one of eight authors of the technical report and a research fellow at NREL who manages the PV Reliability and Systems Engineering Group. “Even so, with manufacturers feeling pressure to lower prices, it is essential that quality be maintained and assured. The new guidelines help to ensure that quality is not compromised for lower priced modules and make it easier for PV customers to assess the expected quality.”


NREL has worked with industry partners in the United States, such as SunPower and First Solar, and international colleagues in Japan, Europe, and China to develop PV-specific quality management standards to supplement the existing ISO-9001 in the application of International Electrotechnical Commission (IEC) standard 61215.

The new technical report, titled Updated Proposal for a Guide for Quality Management Systems for PV Manufacturing: Supplemental Requirements to ISO 9001-2008PDF, provides PV manufacturers the opportunity to begin to use the specification proposed for release in Technical Specification IEC/TS 62941, “Guideline for increased confidence in PV module design qualification and type approval.” Technical Specification IEC/TS 62941, which is to be finalized in late 2015, will describe aspects of the quality management system that need to be in place when producing modules on an industrial scale.

With PV customers worldwide now investing in PV to the tune of about $100 billion annually, the international solar community is driven to maintain the quality of that investment. To this end, NREL, along with other international groups, has spearheaded the International PV Module Quality Assurance Task Force (PVQAT) to establish guidelines dealing with:

  • How to test PV modules for adequate durability for the chosen climate zone and mounting configuration
  • How to ensure consistent manufacturing of the durable design, and
  • How to ensure that the final system is fully functional.

The PVQAT effort is closely coordinated with the IEC, which uses an international consensus process to refine and define the final documents. PVQAT’s Task Group 1 developed the first draft of the proposed PV manufacturing specification, which was published in 2013. The technical report announced today represents an update to the previous version, and includes progress made between 2013 and early 2015. Key requirements for manufacturers in the new specification include:

  • Focus on the manufacturer’s control of the PV module’s design to align the expected lifetime with its relationship to the manufacturer’s warranty.
  • A requirement to improve product traceability through the entire supply chain to enact positive control of the product for recalls and warranty claims.
  • A requirement to maintain calibration of the instruments needed to assign the PV module power rating within the stated uncertainty.

The community is encouraged to use this approach to verify the robustness of their and their vendors’ quality management systems and to provide feedback to PVQAT and to IEC before the international standards process is completed. For more information, see the NREL News feature, Assuring Solar Modules Will Last for Decades.


solar and utilities

NRG Energy Exec Questions Why Solar Is the ‘Bad Boy’

solar and utilitiesIs there a way to integrate increasing amounts of rooftop solar, enabling customer choice and a cleaner grid, while ensuring that utilities are compensated for lost revenue?

It’s a question on the minds of many experts in the power sector. For Steve Corneli, senior vice president of sustainability, policy and strategy at NRG Energy, the answer is not to put up barriers for solar adoption by adding grid charges, in hopes that incentives might run out and rooftop solar will eventually go away.

“Our fundamental motivation is to think through a variance on [solar and utility] policies that will actually satisfy the regulators’ obligation to make sure the utilities get their cost back and rates are just and reasonable without acting like a tire-slasher or a roadblock,” said Corneli, in an interview on the sidelines of a Public Utility Fortnightly event last week in Washington, D.C.

Is "range anxiety" only perception?

Report: EV “range anxiety” is only perception

Is "range anxiety" only perception?Electric vehicles (EV) may be the future, but until the “range anxiety” is taken care of, they may not be able to achieve widespread adoption. Tesla CEO Elon Musk drilled this point home last month with the announcement of “range assurance” and trip planner tools.

But is range anxiety all in the heads of perspective EV owners? A new study, by the Department of Energy’s (DOE) Lawrence Berkeley National Laboratory (LBNL), found that the perception of range anxiety may not match up with reality.

The researchers found that most daily travel needs of drivers can be met by EVs. So what is causing the concern over range?


HECO solar

How HECO is Using Enphase’s Data to Open its Grid to More Solar

HECO solarOn the island of Oahu, Hawaiian Electric Co. is opening a backlog of about 4,000 customer solar systems it once feared could destabilize its distribution circuits. That move is being helped along by Enphase microinverter data that can provide a much clearer view of what’s really happening on the edges of HECO’s grid.

On Tuesday, Enphase revealed details on a months-long collaboration with HECO to map out how customer-owned rooftop solar affects its distribution grid on a circuit-by-circuit basis. The results have allowed HECO “to clear nearly all of the backlog of customers awaiting approval to interconnect their rooftop solar systems in a safe and reliable manner,” Jim Alberts, the utility’s senior vice president of customer service, said in a prepared statement.

Solar Q2 2014 Funding: $6.3 Billion

Corporate solar funding comes in at USD 6.4 billion in Q1

Solar Q2 2014 Funding: $6.3 BillionMercom Capital Group, llc, a global clean energy communications and consulting firm, released its report today on second quarter funding and mergers and acquisitions (M&A) activity for the solar sector in 2014.

Total global corporate funding in the solar sector, including venture capital (VC), private equity (PE), debt financing, and public market financing raised by public companies, came in at $6.3 billion, compared to $7 billion in Q1 2014. This quarter also saw two IPO’s including one yieldco and a securitization deal.

Raj Prabhu, CEO of Mercom Capital Group, commented, “It was a solid quarter for the solar sector in terms of fundraising. VC funding was up, public markets remained strong and we are seeing new and innovative financial structures. Residential/commercial solar funds continue to raise record amounts.”


Global VC funding, including PE and corporate VC, in Q2 2014 totaled $432 million in 21 deals, up from $251 million in 26 deals in Q1 2014, mostly due to three large deals. Solar downstream companies attracted most of the VC funding this quarter, with $388 million in 10 deals.

The largest VC/PE deal in Q2 2014 was the $150 million raise by Sunrun, a provider of residential solar-power systems. Investors included Foundation Capital, Accel Partners, Sequoia Capital, Madrone Capital, and others. Sunnova Energy, a provider of residential solar services, raised $145 million. Other Top 5 deals included the $72.5 million raised by residential solar installer Sungevity, followed by Siva Power (formerly Solexant), a manufacturer of CIGS solar modules, which raised $15 million. Brite Energy Solar, a provider of residential and commercial solar services, raised $14.2 million.

Project Funding

There were 33 large-scale project funding deals totaling $3.5 billion announced in Q2 2014. The Top 5 large-scale project funding deals in Q2 2014 included the $820 million raised by Megalim Solar Power for a 121 MW CSP project in Israel, Tenaska’s $450 million raise for the development of the 150 MW Tenaska Imperial Center West solar project in California, the $290 million raise by First Solar for its 141 MW Luz del Norte solar project in Chile, the $190 million raise by SunEdison for the 72.8 MW Maria Elena solar project in Chile, and the $142 million raise by Abengoa for its 100 MW XiNa Solar One CSP project in South Africa.

Third-party Funds

Third-party residential and commercial solar funds continued to attract significant attention, with more than $1.3 billion raised in Q2 2014. SunPower topped the list, raising $492 million in three different funds; investors included Google, Admirals Bank and Hannon Armstrong Sustainable Infrastructure Capital.

Corporate M&A

There were 25 corporate M&A transactions in the solar sector in Q2, down from 38 transactions in Q1 2014.  Solar downstream companies were involved in most of the M&A transactions with 11.

The largest disclosed M&A transaction by dollar amount was the $350 million acquisition of Silevo, a solar cell and PV module manufacturer, by SolarCity. This was followed by the $29 million acquisition of Zhejiang Ruixu Investment Company, a solar project development company and wholly-owned unit of ReneSola, by Jiangsu Akcome Solar Science & Technology Company. Jun Yang Solar Power Investments, an independent power producer, acquired the remaining 32.1 percent of Jun Yang Holdings, from Sun Reliant International, a wholly owned subsidiary of Hanergy Solar, for $14 million. RBI Solar, a provider of solar mounting systems, acquired Renusol, a subsidiary of CENTROSOLAR Group, for $3.5 million. Rounding out the Top 5 was the acquisition by Jinzhou Yangguang Energy, a wholly-owned unit of Solargiga Energy, of an additional 10 percent stake in PV module manufacturer Jinzhou Jinmao Photovoltaic Technology from Kinmac Holding, raising its stake to 96 percent, for $2.2 million.

Project Acquisitions

Project acquisitions in Q2 2014 totaled $229 million in 34 transactions with 1.1 GW changing hands. The top disclosed project acquisition by dollar amount was Foresight Solar Fund Limited’s acquisition of SunEdison’s 17.8 MW Castle Eaton solar project in Castle Eaton, UK, for $37.6 million. This was followed by the sale of the 19.5 MW Great Glemham solar project in Suffolk, UK, by BayWa to Allianz Renewable Energy Fund, an Allianz Capital Partners fund, for $35.7 million. Bluefield Solar Income Fund, an investment company focusing on large scale agricultural and industrial solar assets, acquired the 17.5 MW Hertfordshire solar projects from Solarcentury for $32.5 million, and ContourGlobal, an independent power producer, acquired a 5 MW solar portfolio in Italy from Sorgenia Solar for $27.5 million. Rounding out the Top 5 was another transaction from Foresight Solar Fund Limited, which acquired the 12.2 MW Highfields solar project in Essex, UK, for $26.3 million from SunEdison.

Mercom also tracked 150 large-scale project announcements worldwide in Q2 2014 representing 7.6 GW.


clean energy investment

Accelerating the clean energy revolution

clean energy investmentCitigroup Inc. recently pledged $100 billion for lending, investing, and facilitating deals related to sustainability, renewable energy,  and climate change mitigation. This is yet another sign that global capital markets are enormously interested in delivering capital into clean, renewable sources of energy. But you don’t have to be Citigroup to invest in the clean energy future.

The industry’s rapid growth presents an interesting diversity of  long-term opportunities for individuals like you and me who might be looking to make investments in a low carbon economy.

Fueled by an increased demand for solar and wind energy, clean energy investment last year beat expectations, rising 16 percent to $310 billion worldwide, according to Bloomberg New Energy Finance (BNEF). Fortunately, this robust growth is representative of a general upward trend in clean energy investment over the past decade.

Although the vast majority of this money is coming from governments, corporations, and private equity and venture capital firms, people of all income levels can consider whether it is right for them to add clean energy to their investment portfolios. And, you don’t need millions in the bank to make these types of investments – any investor can consider whether to put their money to use  through the four financial instruments described below.

  1. Climate/Green Bonds

bond allows entities looking to finance projects to borrow money from investors for a defined period of time at a fixed interest rate. Climate/green bonds are used exclusively to finance new or existing climate/green initiatives, which are defined by the International Capital Markets Association as “projects and activities that promote climate or other environmental sustainability.”

Climate/green bonds have experienced significant success recently and constitute a large chunk of financing for clean energy investment. According to BNEF, “These have been one of the great success stories of the past two years, increasing from a paltry $3 to 5 billion per year between 2007 and 2012, then suddenly jumping to $14 billion in 2013 and $39 billion last year.”

And future prospects are bright. BNEF expects to see further rapid growth in 2015, saying, “We see the volume of green bonds doubling again this year to around $80 billion.”

  1. Equities

Equity is stock or any other security representing ownership in a company. An investor who believes a company’s value will increase in the future might purchase equity, or shares of ownership, in that company via a stock exchange. This is a riskier option than a bond because if the company’s value decreases, the investor loses money.

There are plenty of publicly-traded companies operating in the clean energy space, such as solar panel manufacturers or battery storage developers. While there are a number of market risks (embedded in any investment) that need to be carefully evaluating when making an equity investment, selecting  the right technology or venture to back can be very rewarding. For example, Tesla is a publicly traded clean energy company whose stock price grew more than 40 percent to $222.41 on December 31, 2014. If an investor had purchased 100 shares on January 1st last year for about $15,000 and sold them on December 31st, she would have earned a hefty return of more than $7,000. For those who have no idea where to start, has compiled a “watch list” for green stocks and even has subcategories like solar and wind.

  1. Index Funds

In the case of financial markets, an index is an imaginary portfolio of securities representing a particular market or a portion of it. Indices are often the basis of mutual funds and exchange-traded funds (ETFs). These index funds enable investors who want to get behind an industry, but lack confidence in their abilities to identify specific winning companies, to bet on the industry at large.

Clean energy index funds might include a broad spectrum of technologies and/or geographies, or they might focus on one technology and/or geography. Below are some examples of clean energy index funds:

  • PowerShares Global Clean Energy Portfolio: This ETF is based on the Wilder Hill New Energy Global Innovation Index (^NEX), which comprises 107 companies around the world for a broad spectrum of clean technologies. This index fund “seeks to deliver capital appreciation and is composed of companies that focus on greener and generally renewable sources of energy and technologies facilitating cleaner energy.” The fund, as well as the group of companies included in the index, are rebalanced and reconstituted on a quarterly basis.
  • Guggenheim Solar ETF: This ETF, based on the MAC Global Solar Energy Index, includes companies distributed across the solar energy value chain, including the manufacturing of solar equipment and the financing, development, and operation of projects.
  1. Yieldcos

BNEF defines a yieldco as a “publicly traded company whose main purpose is to buy and hold operational assets and pass the majority of its cash flows to investors in the form of dividends.”  In other words, individuals can buy shares in yieldcos, which are investments in specific assets that are already constructed (e.g. a solar power plant owned by another company). An attractive feature of yieldcos is they do not typically take on development or construction risk, which is born either by the parent company or a third-party developer. Those who invest in yieldcos are paid back via dividends that derive from the profits of the asset.

A number of companies have recently created yieldcos for clean energy assets, including NRG Energy, Pattern Energy Group, NextEra Energy, Abengoa SA, and TransAlta Renewables. Global solar energy company SunEdison’s new yieldco, TerraForm Power, raised $350 million in an initial public offering (IPO) in July and is planning to release an IPO for a second yieldco focusing on clean energy assets in Africa and Asia this year. And recently, the two largest U.S. solar-panel manufacturers, First Solar and SunPower, created waves when they announced plans to create a joint-venture yieldco.

An added bonus to clean energy yieldcos: those that own renewable resources can use the tax benefits associated with clean energy investment to lower their taxes.

A lot of money has been made (and a fair amount has been lost) through the clean energy industry over the past decade, and the surplus doesn’t need to be limited to major conglomerates like Citigroup. Making any investment can be a very risky proposition. Anyone considering an investment in any of the alternatives described here should first speak with a registered financial/investment advisor to make certain all risks are fully understood and that an investment is appropriate to the investor. Green bonds, equities, index funds, and yieldcos are just a few instruments that empower people to capitalize on this trend, while helping to fund the clean energy future.

EDF is not a registered financial advisor and as such cannot provide professional investment advice. We recommend you consult with a professional financial advisor for the most tailored, up-to-date advice about how to engage in the clean energy finance market.