solar vs utilities

There’s A Fight Brewing Over Who Profits From Solar Power

solar vs utilitiesIn the ongoing wars over solar energy, one power company is consistently painted as the archetypal, mustache-twirling nemesis of clean electricity: Arizona Public Service. So you might be surprised to learn that this same company is about to become a big new producer of rooftop solar power.

APS is an unlikely solar patron: In the summer of 2013, the Phoenix-area utility launched a campaign to weaken Arizona’s net metering rule, which requires utilities to buy the extra solar power their customers generate and provides a major incentive for homeowners to install rooftop panels. A few months later, APS admitted giving cash to two nonprofits that ran an anti-solar ad blitz in the state. Early this year, the Arizona Center for Investigative Reporting revealed that a letter criticizing the solar industry’s business practices, sent by members of Congress to federal regulators, was originally authored by an employee of APS. And a couple weeks ago, APS asked state regulators to let the company quadruple the fees it tacks on to the monthly bills of solar-equipped homeowners.

 

jeanine cotter

Luminalt’s Jeanine Cotter: How Solar Loses Without a Diverse Workforce

jeanine cotterJeanine Cotter, CEO of solar installation company Luminalt, has witnessed profound resiliency. She watched her mother transform her life from divorcée, single teenage mother of two children, and public-assistance recipient to college graduate with a degree in urban planning, and then co-founder of a nonprofit that provides renewable energy and water systems to alleviate poverty in the developing world.

“Being in poverty does not define what your capabilities are. It does not define your ability to perform or your ability succeed,” Cotter said.

What poverty does do, she said, is limit access to opportunities. That’s why Cotter has made it part of her professional work to open up doors for people who might not have thought of solar as source of livelihood, and a way to help their families and communities rise.

Cotter co-founded San Francisco-based Luminalt with her husband Noel Cotter in 2004, making the company the city’s first and still only woman-owned solar company. Before starting Luminalt, she practiced law at Fenwick and West and was an attorney for financial software maker Intuit.

In 2008, Cotter helped lead Luminalt to become the city’s first workforce-development certified solar company, which commits the business to hiring in part from communities that have high levels of unemployment. For Cotter, this means when Luminalt has an entry-level position to fill, she first goes looking for new hires at community-based organizations, like Asian Neighborhood Design, an architecture and planning nonprofit that provides work training to help disadvantaged individuals become self-sufficient.

Although Luminalt has helped charter new hiring efforts in San Francisco, the company is small, at least when compared to industry giants such as SolarCity, which is one of the country’s largest solar installers and has more than 6,000 employees. Luminalt has 23 employees.

Cotter doesn’t let the sheer size of companies like SolarCity shake her. She believes that solar customers need a diverse array of solar installers — both large and small — to choose from in order to keep the industry healthy, which might help explain why Luminalt has continued to see a rise in revenues. Last year Luminalt pulled in $5.5 million, up $1.2 million from the year before.

She also believes the solar industry needs to increase its efforts to diversify the gender and ethnic makeup of its workforce. Women accounted for almost 22 percent of the 2014 workforce, according to the latest research by The Solar Foundation. The foundation also found that Latinos comprised 16.3 percent, Asians or Pacific Islanders represented 7 percent, and African-Americans made up 6 percent of last year’s solar workforce.

In March, the California Solar Energy Industries Association (CALSEIA) announced that Cotter would co-chair the association’s initiative to help diversify the state’s growing solar workforce and access to the energy-making technology.

When you tap into gender, ethnic and economic diversity, “you are able to access folks that are not necessarily in the competitive workforce. And that means you can access talent that currently isn’t within any solar organization,” according to Cotter.

SolarEnergy.net spoke with Cotter about her drive to find new talent among underrepresented groups, why some companies find it hard to diversify their workforce, and how she is looking to change Luminalt to make sure the company provides stable work for families, which she says is key to diversifying solar.

Why is it important to hire employees from workforce-development programs?

The only way that you can transform the life of a family and of a community is to ensure that there are good jobs. I know from my own life that the only way that you get stability in your household is for the parents in that household to have the skill set necessary to command a wage that enables them to provide for a stable home for their children.

Working families are the backbone of a functioning society. The stronger and more resilient those families are — the less stressed out they are about money, and the more choices those families have about jobs and security — the better we are as a society.

Your mother has been an important figure in your life. How has her experience as a young struggling mother who rose above the odds influenced the way you run your business?

If it wasn’t for programs that extended opportunities to me, I would not be sitting where I am. It’s not that I didn’t work hard. I worked hard. It’s just that if predictive demographics determined my mother’s and my life I would be a single mother on public assistance.

Now my mother is remarried to a very wonderful man, and they have gone on and done amazing things. One of those amazing things is that they started the nonprofit Green Empowerment, which has a mission of social justice, environmental justice and economic justice. It is the same mission that has inspired aspects of my company except in an urban environment.

Are there challenges that come with hiring from workforce-development programs?

Yes. We have underinvested in the inner city and in rural America. We have underinvested in the education of communities of color and poor white communities, and that carries through in terms of some of the skill sets that folks bring to the workplace. But that doesn’t mean that given the opportunity to build those skill sets and perform that you aren’t going to have an amazing performer.

Some solar companies have been vocal about wanting to diversify their workforce but have struggled to do so. Why do you think that is?

It is a struggle for all of us in part because we’re not always getting resumes that reflect the depth and the diversity of our communities. We’re often getting resumes from folks interested in solar that are very similar to the existing workforce.

How do you think your work with CALSEIA to diversify the solar industry will help companies tap into new talent pools?

One of the reasons why I’m super excited by CALSEIA, as well as why I’m super excited about organizations like Women in Solar Energy and Grid Alternatives that push for women and also for disadvantaged communities to get into solar, is that it gives a platform and a megaphone to say, “People hey, look at solar. Apply for these jobs.” That helps expand the pool of individuals who are working in solar.

What’s CALSEIA’s plan to further diversify the solar workforce and marketplace?

We know where we want to go, which is a more diverse workforce and a more diverse market, but we do not have a specific launch plan that is detailed and ready to go.

We are still working on expanding the table right now so that we have who we need to build inclusion of different viewpoints so we can drive both of those objectives, both being the workforce objective and the market aspect.

Providing stable work for families is a theme that underlies much of your work to diversify the solar industry. With so much uncertainty surrounding whether the federal solar tax credit — which is a huge driver of solar sales — will expire at the end of 2016, how are you preparing Luminalt for a future that could mean industry retraction and layoffs?

I see us getting more involved in the operations and maintenance of existing systems. A lot of folks moved into the solar industry and then hopped out over the course of the last several years. So we get a lot of calls for troubleshooting systems that were installed by folks who aren’t around anymore. This is good work and it requires an incredibly talented workforce of people that really need to understand how solar works and how it is installed, because troubleshooting requires a different skill set. Also, it’s critical to keep all of the systems that the solar industry has installed up and running and doing what they were intended to do.

Ensuring that Luminalt is relevant, that we are doing really good work, and that we are expanding in a responsible way to ensure that my colleagues and I continue to have our weekly paychecks beginning in 2017 is something I am working hard on. We never had layoffs, and it’s important to me that we don’t.

 

What yieldco finance can do for the solar industry

YieldCoFor years, the big news in solar has been coming out of research and development, from technical innovation. But in what appears to be a sign of the maturing of the industry, this year it seems that the bigger news is coming from the development of new methods of project finance that hold the promise of cutting financing costs.

The biggest of these driving forces in cutting financing costs is the yieldco. Yieldcos are essentially publicly traded holding companies which bundle assets that produce a steady and predictable flow of income, such as energy plants, that have long-term distribution agreements. The cash flow is distributed among investors in the vehicle as dividends.

Perfect for utility-scale solar PPAs

Yieldcos are almost perfectly suited to capturing the value of renewable projects. While they can face many uncertainties during bidding, permitting and development, once they are connected to the grid their cash flows are low-risk, because they typically generate a steady income from 20 or 25-year PPAs or tariffs, once in operation.

time of use pricing

A California Utility Explores Time-Sensitive Electricity Pricing

time of use pricingThe Sacramento Municipal Utility District (SMUD), a utility that serves approximately 540,000 customers in and around Sacramento, California, has a summer peaking problem. SMUD’s peak load is around 3,000 MW, but 400 MW of that total is needed only about 40 hours a year (less than one half of one percent of the time), during summer afternoons. Those 40 hours drive significant costs for SMUD and in turn, its customers. e-Lab’s Rate Design for the Distribution Edge advocated more sophisticated rate structures along time, location, and attribute continuums. Some progressive utilities around the country have been exploring such rates. SMUD is one of them, conducting a two-year pilot experimenting with time-of-use (TOU) options to cut its peak load.

PUTTING A PRICE ON TIME

TOU rates pay heed to predictable, but significant, differences in the cost of producing and delivering electricity throughout the day, charging a higher price during peak hours (usually a handful occurring at the same time each weekday) and less at all other times. A critical-peak pricing (CPP) rate is used during the most expensive hours per year—in essence the highest-peak hours on the highest-peak days. SMUD operated a two-year SmartPricing Options (SPO) pilot program in which it tested three time-of-use options. In one scenario it charged an on-peak rate from 4:00 to 7:00 p.m. on weekdays; in another scenario it charged a critical peak rate from 4:00 to 7:00 p.m. on up to 12 days per summer; and in the third scenario it charged both an on-peak rate and critical peak rate. One set of customers were defaulted into these pilot scenarios; other customers voluntarily opted in.

SMUD discovered that time-of-use pricing works. Customers turned off appliances and lights and were less likely to crank up their air conditioners during peak pricing times. SPO’s TOU rates reduced demand by nearly 12 percent during the peak period. Consistent with the larger price differential, CPP was able to shave around 25 percent of load during peak hours on peak days.

SATISFACTION, NOT SACRIFICE

So how were customers affected? There is no evidence that comfort was sacrificed; indeed, SPO participants did not differ from regular SMUD customers in how frequently they reported feeling too warm in their homes because of a reluctance to pay to run their air conditioners

In contrast, SPO customers did differ markedly from standard customers when it came to believing that their pricing plans enabled them to save money.

Approximately one-third of the study participants qualified for SMUD’s low-income tariff, the Energy Assistance Program Rate. These participants received discounted SPO rates as well, and results were similar, proving that low-income customers can also benefit from time-of-use rate designs. “We’re seeing that well-constructed rate designs can and do work for a broad array of customers, including low-income customers,” according to Owen Smith, a principal in RMI’s electricity practice.

VOLUNTEERS WELCOME, BUT NOT ESSENTIAL

SPO employed both opt-in and opt-out recruitment approaches. Opt-in customers had to take action to be part of the program. In contrast, those selected for the opt-out treatment were defaulted by SMUD onto the SPO rates without a prior customer request; opt-out “recruits” stayed on SPO rates unless they demanded a return to standard pricing.

SMUD devoted considerable resources to its marketing for opt-in customers, utilizing various channels, including direct mail, mass media, door hangers, and outbound calling. And the results were impressive, with enrollment rates between 16 and 19 percent. But compare those recruitment outcomes with the acceptance levels for the defaulted, where such a small percentage of people opted out that enrollment rates were between 93 and 98 percent. For anyone inclined to assume that customers will balk en masse if defaulted away from traditional flat volumetric rates onto innovative pricing structures, SPO should be an eye opener.

CUSTOMERS WANT CLEAR SIGNALS, NOT CONSTANT FEEDBACK

Some customers received an in-home display so they could in theory know how much energy they were consuming at what time and at what price.  But forget paying attention to that info. Most customers never even bothered connecting the in-home displays. And yet TOU pricing still made a difference. It seems that simple customer knowledge of TOU pricing with big enough price differences was sufficient to change behavior.

LOAD IMPACTS

Of all the plans in the pilot project, the people who opted in to the critical-peak pricing plan showed the largest load impacts, cutting the peak load during CPP events by 25 percent. Yet although the customers who opted in to the programs had twice as much impact as the default customers, that effect was outweighed by the customer “acceptance” rates. This is because the defaulted customers accepted time-sensitive pricing in overwhelming numbers. In other words, opt-in customers on the critical-peak plan had a bigger load difference, but there were fewer of them. Conversely, defaulted customers had smaller load differences, but there far more of them, so their aggregate impact was bigger.

Per customer, the defaulted demonstrated smaller load impacts than those who actively sought inclusion in the pilot, but as it turned out there was value inherent in the low-intensity nature of their engagement: lower recruitment costs, greater penetration rates, and lower dropout rates combined to outweigh reduced individual impacts. By SMUD’s estimate, deploying the CPP plan on an opt-out basis to 100,000 customers would yield 34.5 MW of load reduction, three times more than offering the same plan to customers who have to opt in.

WHAT’S NEXT?

Time-varying pricing is just one of the methods that utilities (and their consumers) can use to free up value in a more flexible and data-rich electricity generating and delivery system. RMI’s Smith explains, “This program is part of a growing body of evidence that reveals the benefits and customer acceptance of more sophisticated electricity pricing structures. Well-constructed pricing structures can align the interests of utilities with those of customers and innovative distributed energy resource providers. We are encouraged by these findings and are eager to see more utilities moving aggressively in this direction.”

With SPO, SMUD has shown the potential to achieve major system benefits without sacrificing customer satisfaction. By smashing the taboo against the use of opt-out recruitment, SMUD has also demonstrated a low-touch path forward to mass participation. The challenge now is to encourage other utilities to follow this impressive lead.

 

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.

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.

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.

 

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.

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.”

VC

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, SustainableBusiness.com 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.   

 

California Public Utilities Commission

California’s Investor-Owned Utilities Surpass Efficiency Goals

California Public Utilities CommissionThe California Public Utilities Commission (CPUC) and the state’s four large investor-owned utilities, which serve 75 percent of the state, have proved yet again that energy efficiency is a great investment to save customers money and clean the air. The electricity and natural gas savings from efficiency surpassed the utilities’ 2010-2012 energy-savings goals and put more than $750 million back into consumers’ pockets after accounting for the costs of running the programs.

That’s according to the CPUC’s new assessment of the customer-funded efficiency programs operated from 2010-2012 by Pacific Gas & Electric, San Diego Gas & Electric, Southern California Edison, and Southern California Gas, with the help of local government and third-party partners. While it naturally takes time after the conclusion of a program to conduct a complete evaluation, it would be helpful for the CPUC to leverage successful evaluation processes across the country to improve the timeliness of the information so program implementers can more quickly use it to improve their programs.

Regardless, the $2.5 billion invested in three years of programs overseen by the commission — ranging from weatherization to rebates for high-efficiency appliances and equipment — yielded substantial benefits as opposed to spending the same amount of money on polluting conventional power resources that harm our health and the environment, and provide zero net benefits for customers. In particular, the efficiency programs serving over 28 million Californians:

  • Saved enough electricity to power 600,000 households;
  • Reduced demand enough to avoid the need for nearly three large power plants(500 megawatts each); and
  • Avoided enough carbon pollution from electricity generation to equal the emissions from more than 1 million cars.

According to this week’s report, the utilities collectively surpassed all of their goals (147% of electric saving goals, 111% of the reduction in peak demand (the time when energy use is the highest), and 132% of natural gas savings goals for 2010-2012). While this is GREAT news, there is always more that can be done to improve the programs and the policies that guide what utilities, local governments, and third- parties can do to support smarter energy use. The CPUC is currently looking at how to move toward a rolling portfolio approach to program planning, an unprecedented and exciting development, as well as what changes the utilities and their partners can make for 2016 to save customers even more energy and money.

In addition, ramping up efficiency — and NOW — is critical to meeting Governor Jerry Brown’s call to double the expected energy savings from existing buildings by 2030. The CPUC should therefore focus on the following in the coming year to enhance policies and programs for existing and new buildings:

Continue encouraging extensive building energy codes and appliance standards programs

The most cost-effective way to save energy is by locking in minimum levels of energy usage for products and buildings. Utilities are critical partners to advance codes and standards as they fund numerous studies and work with California Energy Commission staff and other stakeholders to make sure the next level of codes and standards updates get adopted. As noted in the report, energy codes and standards programs cost just 1 percent of utilities’ total portfolio budget ($30 million), but accounted for approximately 22 percent of total electricity savings and 20 percent of peak demand savings. This represents impressive energy and cost savings for customers and the utilities should continue to be incentivized to focus on state – as well as federal – codes and standards improvements.

Use market assessments to focus programs on motivating customers to cut energy waste

Assessing “what would happen” without the efficiency program is critical to ensure that customer funds are spent wisely. The state’s approach often relies on a customer survey years after the efficiency upgrade action was taken, making it difficult, if not impossible, to get accurate and useful information. It would be far better to conduct an assessment of the market before the program begins, and then again soon after it ends, to get a more accurate and timely accounting of program impacts (that is, what additional savings were achieved due to the program beyond what was originally anticipated).

Design programs to capture savings where and when they are needed the most

While the programs are currently providing enormous energy savings to customers, improving the value of efficiency that is focused on certain locations and/or during particular times of the day (or year) could yield even more benefit. To ensure the efficiency programs are able to be used to offset investment in costly utility infrastructure (like power plants, poles, and wires) and to better support the integration of renewable power into the electricity generation mix, the CPUC should gather better details about where and when efficiency makes the most impact and alter portfolios accordingly.

Expand energy savings from low-income programs

The new CPUC analysis also shows that 2 percent of the energy savings came from efficiency programs aimed at low-income customers. While this is a great start, the Energy Savings Assistance Program, which provides no-cost efficiency upgrades to qualifying customers, could be significantly enhanced to produce even more savings. For example, the CPUC should set an energy-saving goal to accompany the current outreach goal, including criteria to determine which energy-saving measures should be offered to particular customers. These programs should better reach multifamily customers, as well as multifamily building owners, to ensure individual dwellings as well as whole building approaches can be maximized to save energy and lower bills for customers who need relief the most.

There is no doubt that energy efficiency has provided substantial savings to customers and environmental benefits to all Californians. But to get even more benefit from efficiency, the CPUC should take a hard look at current policies to determine whether they are in line with California’s climate and energy goals – and to make sure efficiency savings aren’t being missed. After all, as this week’s report shows, using efficiency to save customers energy is the cleanest, cheapest, and fastest way to lower bills and reduce pollution.

All signs point to solar power juggernaut rolling on

FirstSolar constructionIt’s not a contest. Renewable energy is no zero-sum game (or doesn’t have to be, at least), and according to the experts, all of it and then some will be needed to keep global temperatures from rising beyond safe levels. Still, it’s hard not to view the growth of the two leading non-hydro renewable energy technologies – wind and solar – in relation to each other.

We reported recently that wind grew quickly in 2014, but solar had itself a very good year as well. And there are signs that it could be in for even more rapid growth.

According to the respected “Global Trends In Renewable Energy 2015” report from the Frankfurt School-UNEP Collaborating Centre for Climate & Sustainable Energy Finance, the world poured $270.2 billion into renewable energy in 2014, and more than half the total – $149.6 billion – went into solar.

It was the fifth year in a row that solar investment topped wind, and what made solar’s dominance all the more remarkable is that it is dramatically less expensive than it used to be. So each one of those billions of dollars was buying more solar than it used to.

Last year, 46 gigawatts of solar PV was installed around the world, a record. In the U.S., the number was also a record, 6.2 GW of PV, a 30 percent increase over 2013, according to the Solar Energy Industries Association and GTM Research. With 767 megawatts of new concentrating solar power thrown into the mix, U.S. solar capacity climbed past the 20 GW mark.

First, there’s solar’s versatility. Wind works best at very large scale, and nearly all ($92.4 billion) of the $99.5 billion invested in wind in 2014 went into building big wind farms. Solar can do big, but it can also do small. In 2014, $62.8 billion went into building utility-scale solar, while $73.5 billion went into small projects.

In addition, solar can flourish in places where wind struggles – amid the hustle-and-bustle of humanity, in and around cities and towns. For instance, a study published last month in Nature Climate Change estimated that in California, the “built environment” alone could house enough solar to “meet the state of California’s energy consumptive demand three to five times over.” Essentially there is enough roof space that, were it covered with solar panels would generate 3 to 5 times more energy than the stat consumes!

Solar is also popular. In a new survey, U.S. homeowners were asked to name three forms of energy they felt were important to the country’s future, and more named solar (50 percent) than any other form of energy.

Lastly, there’s price. While solar has plummeted in price in recent years (it’s cheaper than power from the utility in many US states), there are indications it could become even cheaper. Way cheaper. The German think tank Agora Energiewende believes that in Europe, solar could fall to 4-6 cents/kilowatt-hour by 2025 and 2-4 cents/kWh by 2050.

“Plans for future power supply systems should therefore be revised worldwide,” remarked Dr. Patrick Graichen, director of the Agora Energiewende. “Until now, most of them only anticipate a small share of solar power in the mix. In view of the extremely favorable costs, solar power will on the contrary play a prominent role, together with wind energy – also, and most importantly, as a cheap way of contributing to international climate protection.”

power grid

3 Reasons Solar and Wind Energy Will Take Over Our Power Grid Much Sooner Than You Think

power gridGetting power from the wind and the sun no longer seems like a hippie fantasy: Elon Musk is betting that solar power will be so profitable it will help fund space travel, and big tech companies like Apple and Google are buying in, too. Today most homes and businesses are still powered by fossil fuels, but in just a few decades — maybe even as little as 15 years — most energy could be coming from renewable sources.

An enormous new survey of industry experts shows how fast things are moving. Recently, DNV GL, an international energy consulting company, asked 1,600 people who actually work in the field — at equipment manufacturers, power producers, utilities, policy-making agencies, energy retailers, regulators, and equity investment firms — about the future of renewables. One of the main questions: How quickly will renewables be generating 70 percent of the energy in the markets you work with?

Almost half of the survey respondents said they could see that happening by 2030. And almost all of them — about 80 percent — thought renewables would dominate by 2050.

Here’s why they’re optimistic about renewable energy: