Tag: Opinion & Commentary

Are German Transmission System Operators Against Energy Storage?

September 16 was a big day at Younicos this year, as it marked the one-year anniversary of the commissioning of Europe’s first commercial battery park in Schwerin. The mood among the political and energy industry leaders who gathered to mark the occasion in this picturesque Northern German town was upbeat: The 5-megawatt system, designed and delivered by Younicos, had exceeded revenue forecasts in its first year of operation. It had not only won every weekly auction for primary frequency regulation it had bid into, it also achieved an impressive average price of €3,810 per megawatt. And the outlook is even more gratifying: By the end of August, the revenue target for the 2015 calendar year had already been reached.

Listen Up: Solar Advice from Pat Redgate at Ameco Solar

Technologies, companies and business models in the solar industry come and go. But even in the relatively new solar industry, history repeats itself. Disappearing tax credits and incentives, financing scams, unreliable technology, societal doom (Y2k) and gloom (nuclear winter) — it’s all happened before. We can learn a lot about building a sustainable solar businesses by talking to the solar contractors who have witnessed several of these boom and bust cycles over the past 20+ years.

My guest on this week’s Energy Show is Pat Redgate, CEO of Ameco Solar. Pat has been installing solar thermal and solar PV systems at Ameco since 1974. Having successfully ridden the “solar coaster” for 40+ years, he has some terrific advice for solar customers (both residential and commercial) and solar installers who want to get into the business for the long term.

Please join me as Pat talks about the first wave of solar in the 70s and 80s, what happened when the tax credits disappeared, how he selects equipment to install for his customers, and his suggestions for running a successful local solar thermal and PV business.

Six Observations about the US Solar Industry Mid-2015

In the U.S. mid-2015, deployment of solar technologies into all applications is at a pivotal point with several factors at play.


1.     The federal investment tax credit (ITC) is set to sunset for the residential application and to decrease to 10 percent for the commercial application at the end of January 2016.  The upcoming change is driving accelerated activity into the residential and small to large (<50-MWp) commercial deployment.  Analysis: If the U.S. congress does not extend the ITC before mid-2016, inactivity could lead to a sudden cessation in activity.


2.     California Assembly Bill 327 mandated changes in the states net-metering program beginning in mid-2017. California’s investor owned utilities (IOUs) have put forth plans that add fees to the electricity bills of customers with PV systems on their roofs as well as lowering the compensation paid by utilities for electricity fed into the grid. The proposal put forth by California’s IOUs is similar to proposals from IOUs in other states.  Analysis: In the U.S. proposals that add fees to the bills of residential customers with PV systems on their rooftops erode the economic benefit and would slow deployment.


3.     Business models such as the residential/small to mid-market solar lease that do not require a down payment and replicate to a degree the electricity-renting paradigm are stimulating a strong market for DG PV in the U.S. across all states where the model is allowed.  Analysis: The residential/small commercial solar lease business model relies on profits from the older installations paying for future. This business model overcomes end user switching costs by offering free maintenance and installation has an economic appeal. The annual escalation charge included in this model however ensures that overtime the cost paid for the system is far higher than financing and owning the PV system.  Should flaws in this model not be corrected the potential for a customer backlash is high.



4.     New Environmental Protection Agency rules put forth by President Obama’s administration requiring a reduction of power plant emissions from 2005 levels by 32 percent by 2030 and California’s successful Cap and Trade law.  Analysis:  California’s Cap and Trade requirement took effect in 2012 with compliance beginning in 2013.  Thus far the fairly-secretive program has been successful and relatively seamless.  California’s program and the likelihood of similar programs in other states, coupled with the new EPA power plant rules could accelerate deployment in the U.S. of renewable energy technologies. Unfortunately, coal producing states have already filed lawsuits and with an upcoming change in administration in November 2016, the new EPA rules could be reversed.


5.     Commercial Building Boom and hot home buying market.  Analysis: The commercial building boom in the U.S. and the hot home buying market could be very good for commercial and residential PV system deployment if it lasts.  A crisis in commercial building or another shock to the residential home buyer market in the U.S. would have an impact on PV deployment that would ripple through all business models.


6.     Tariffs on imported cells and modules from China and Taiwan have and have not been successful.  Analysis: The initial tariffs on modules imported from China did not provide a more competitive environment for domestically produced product as manufacturers in China simply imported cells from Taiwan and assembled the imported cells into modules.  Additional tariffs on modules imported from Taiwan had a significant negative effect on cell manufacturers in Taiwan but did not stop the inflow of lower priced product from China and other regions into the U.S. though there has been a more favorable market for U.S. manufactured cells and modules.  Government inaction early, that is, failure to incentivize the use of domestically produced product, coupled with government inaction too late does not add up to course correction.  


Lead image: Hand with magnifying glass. Credit: Shutterstock.

Study Reveals Room for Sales Response Improvement in Growing Solar Industry

Solar installations have grown by more than 600 percent across both residential and commercial properties in the past 9 years – a compound industry growth rate of 76 percent.

But even within an industry that is ripe with opportunity, there are a surprising number of time-sensitive sales leads that aren’t being worked by solar companies every day. In a recent study that secret shopped 30 residential solar installation companies, it was apparent that solar installers’ contact strategy vary in comparison to established best practices for maximum sales effectiveness in other industries. The survey tracked how quickly solar companies responded via phone and email, and the number of response attempts made over a 22-day period. Their performance, relative to buyer expectations and best practices, left significant room for improvement.      

The study found that there was a surprising percentage of companies that took days or weeks to respond to what should be seen as a “hot lead.” What was even more shocking was that a majority of companies failed to follow up with interested buyers after their initial contact attempt or failed to respond to these interested prospects at all.

Given that residential solar investment tax credits (ITC) are set to expire at the end of 2016, residential solar installers are looking for every possible edge to drive increased revenue. There is no excuse to neglect leads that are waiting to be contacted with more information about residential solar options.  Based on the study’s research, here are three best practices to optimize inbound lead conversation:

1. Maximize The Value Of Your Leads: While the concept of responding to all inbound leads sounds obvious, the secret shopper study revealed that 30 percent of online buyers never received a phone call, 43 percent didn’t receive a response by email and an alarming 19 percent of leads did not receive any sort of response.  That is a significant amount of revenue and opportunity being left completely untouched, and practically being served up to the competition. It’s time for sales teams to take advantage of inbound leads and convert more untapped revenue.

2. Implement A Sales Contact Strategy: Previous research found that the optimal amount of follow-up to be between five and seven contacts attempts. This secret shopper study revealed only a fraction of interested buyers received close to the optimal number of follow-up calls. Interested customers were more often not contacted by a solar sales rep than they were to receive multiple follow-up phone calls. This is not ideal when building brand loyalty and awareness, and if customers are feeling ignored they will likely move on to a competitor.

3. If You’re Not First, You Might Be Last: Industry research showed speed-to-contact as the number one driver of lead conversion. So much so, that calling a prospect within one minute can increase the chance of conversion by as much as 391 percent. However, the study surveying solar sales reps found that many of them failed to follow-up promptly via phone, with 60 percent of solar prospects waiting days, weeks or not receiving a phone call at all. Sales reps’ response via email wasn’t much better, with more than 50 percent of interested prospects waiting days, weeks, or were never contacted via email.

Driving revenue is the number one goal for every company, and the solar industry is no different. This rapidly expanding industry has seen extensive growth, however, drastic changes must be made to the selling process in order to address the problem of untouched opportunities.

Solar companies are getting far too comfortable with the current growth cycle in the solar sector. In a sales environment driven by word of mouth customer marketing, these practices could hurt brand reputation in the long run.  Being the first to make contact with a prospect and stake a claim is extremely important, but there are more steps required to close a deal. Knowing how to work with a prospect to optimize satisfaction and chances for a successful sale is essential to capitalize on this exploding market.

Lead image: Timing is Everything. Credit: Shutterstock.

Why Renewable Energy in Latin America is a Winner

Renewable energy in Latin America has made some important gains over the last decade and seems positioned to continue in a positive direction thanks to several factors including steady gains in new projects and increased financial engagement by key players. In Central America and the Caribbean, two Latin American regions with large untapped potential for development, renewable energy technologies are poised to play a very important role in the region’s economic health.

Globally, renewable energy has shown steady growth over the past decade. From 2004 to 2014, the global installed capacity of renewable energy sources increased from 814 gigawatts to 1,783 gigawatts. This trend was reflected by a six-fold increase in the yearly investment in renewable energy over the same time period, from 45 billion USD in 2004 to 270 billion USD in 2014. The current development trend of renewable energy sources is expected to continue over the 21st century.

Not All Renewables Are Created Equal

Wind, biomass and photovoltaic solar energy are the most promising renewable energy sources for Central America and the Caribbean. At the global scale, these three sources account for 34.93 percent of the renewable energy installed capacity. The cost per installed megawatt varies per technology, but is somewhat comparable among the three. In the best-case scenario, the three technologies can reach costs less than 2 million USD per installed megawatt. Wind energy offers the best economies of scale, reaching costs as low as 1 million USD per MW. However, it is also the most limited in terms of geographic location, requiring sites with a constant wind speed to be productive. It is important to note that costs can also be high under less favorable project conditions: biomass energy can cost up to 7.5 million USD per MW, photovoltaic solar energy can go as high as 5 million USD per MW and wind energy can reach costs of 4 million USD per MW.

In the specific case of Central America, hydroelectric power also represents considerable untapped potential, and it can achieve excellent economies of scale with the adequate project conditions. Hydroelectric power is capable of reaching installation costs below 1 million USD per megawatt, even less than wind energy under the best conditions. Unfortunately, in the Caribbean the potential for development of hydroelectric power is considerably lower than in Central America. The greatest advantage of hydroelectric power is that once a water reservoir is filled, the power plant can provide energy on demand without depending on variable sources like the sun or wind.

Financing and Engagement Are Key

Currently, the IDB [Inter-American Development Bank] is playing a key role in the development of renewable energy across Latin America, providing financing and a commitment to the flow of ideas, training and capacity building through a newly-created Energy Innovation Center. Because of the high initial investment involved in renewable energy, their engagement is critical, particularly in developing countries.

The role of international funding in the development of renewable energy is particularly important in Central America and the Caribbean. The installed energy production capacity of a country is strongly correlated with economic development and population. Central America and the Caribbean only account for 9 percent and 7 percent of the installed capacity in Latin America, respectively, excluding Mexico and Brazil.

Promising Signs

Latin America is expected to grow at a yearly rate of 0.85 percent over the next 20 years, and with economic growth comes an increase in energy needs. By 2030, 30 percent of the increase in installed capacity is expected to come from renewable energy, totaling 196 gigawatts. In 2014 alone, the combined investment in renewable energy was 1.7 billion USD for Guatemala, Honduras, Costa Rica and Panama. For comparison, the renewable energy investment in Mexico in the same year was 2 billion USD.

Naturally, Central America is not homogeneous with respect to the composition of its electric grid, but the overall trend of the region is toward a larger percentage of renewable energy in the grid composition. For example, the electric grid in Costa Rica is now 98.55 percent renewable. Honduras, on the other hand, obtains 51 percent of its energy from fossil fuels and only 48.9 percent from renewable sources, but is actively transitioning toward a larger percentage of renewable sources.

This year, a 160 MW photovoltaic power plant started operation in Honduras and is currently the largest in Latin America. Other countries in Central America and the Caribbean have also set goals with respect to renewable energy:

–       Jamaica aims to have 20 percent of renewable energy capacity by 2030.

–       Nicaragua aims for 94 percent renewable energy capacity by 2017.

–       Barbados aims for 29 percent renewable energy consumption by 2029.

A very important project that is contributing to the unification of the electric grid in Central America is the SIEPAC, or Central American Electrical Interconnection system. The project consists of a 230,000-volt transmission network that spans the entire region, with 300 megawatts of transmission capacity.

In South America, there have also been recent developments in favor of renewable energy sources. Bolivia and Peru have installed photovoltaic power systems for rural regions, and small-scale renewable projects in general have gained importance. Chile is currently the South American country with the most development and investment in renewable energy, and Argentina has implemented policies that promote the use of renewable energy sources.

The Best Opportunities

Central America and the Caribbean have a considerable development potential with respect to renewable energy sources. The reduced operational costs of renewable energy compared to fossil fuels can reduce the overall energy prices in the region and increase its global competitiveness. In the past, the high costs of renewable energy technology have been the main limiting factor for its development, but this is starting to change thanks to both a reduction of costs and the presence of organizations like the IBD who finance renewable energy projects. In general, renewable energy offers a considerable opportunity for Latin America to become more competitive and at the same time reduce the environmental impact of its industrial activity.

Lead image: Latin America Map. Credit: Shutterstock.


LG Chem: Storage Battery Leader

The post “Energy Storage Restart,” which was published last week, discussed the efforts by General Electric (GE: NYSE) to get back into the market for utility-scale energy storage.  After some difficulties that required the partial closing of its battery manufacturing plant, GE has got back in the game with new contracts wins.  In April 2015, the company won a contract to supply Con Edison Development with an 8-megawatt-hour battery storage system at a solar project in California.  GE will be integrating lithium-ion batteries rather than its own battery technology into the project.

Where will GE source the lithium-ion batteries for the California project?  So far, spokespersons have been non-committal on the name.  Today’s post profiles a company that may not be a likely ‘bedfellow’ for GE, but it is a leader in lithium ion energy storage technology.