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Home Solar-Panel Systems Increasingly Make Sense
Rooftop solar-energy production isn’t economically justified. That is, for now.
May 22, 2015
Regarding Brian H. Potts’s “The Hole in the Rooftop Solar-Panel Craze” (op-ed, May 18): Mr. Potts is entirely correct that rooftop solar-energy production isn’t economically justified and wouldn’t exist as a viable option without considerable government subsidies. That is, for now.
The average home in North America will need solar panels with efficiencies over 20%, combined with the effective storage systems that Tesla and others are now providing, to safely go “off the grid.” In the very near future high-efficiency solar panels with efficiencies well over 20%, costing no more than today’s most common panels, will ring in a new era of energy independence.
The economic rationale for going off the grid will still vary greatly depending on the local cost of conventional energy and whatever government subsidies may apply. But the other very real advantages of becoming completely independent will continue to promote the adoption of the solar alternative, and competition for this market will drive the costs of solar-energy production and storage ever lower.
The IMF Just Destroyed the Best Argument Against Clean Energy
BY ELIAS HINCKLEY ON MAY 21, 2015
For more than a decade, fossil fuel supporters have insisted that new clean energy technologies like wind and solar are far “too expensive” to replace our traditional fossil fuel dominated energy industries. A recent report published by the International Monetary Fund (IMF) has put a price on the direct and indirect subsidies that support fossil fuels as a counter argument to the renewables are “too expensive” message.
The numbers are staggering. The expected subsidy for fossil fuels during 2015 is projected to be $5.3 TRILLION – for one year! This means that approximately 6.5% of global gross domestic product (GDP) will be dedicated in 2015 to just subsidizing our use of fossil fuels. Or as The Guardian pointed out in its summary of the IMF report, taxpayers are paying $10 MILLION per minute globally in subsidies for fossil fuels.
The idea that fossil fuels benefit from both direct and indirect subsidies has been around for years, but analysis has generally been done in pieces (some of it done very well – Nancy Pfund and Ben Healy at DBL Investors published an excellent analysis of direct subsidies in the U.S. a couple years back) or without complete data robust enough to stand up to critique. The IMF report looks at direct incentives, local pollution and public health effects, climate changes, and a host of other costs to arrive at its projected subsidy number.
IMF’s numbers will no doubt be attacked (UK climate economist Nicholas Stern has already attacked the report for vastly underpricing the cost of climate change), but the report provides a very credible baseline to begin rethinking the right pace for our global transition to clean energy.
According to the report, the largest subsidy will be for coal, largely because of the enormously underpriced effects of emissions and other environmental costs on public health and local resources – although the global climate impact is very significant as well. A real world demonstration of these costs can be seen in China right now with its massive build-out of coal generation rapidly coming to a close and the nation making a hard pivot towards clean energy in the face of deteriorating air quality and spiraling health costs from pollution.
The vast portion of the remaining fossil fuel subsidies will be to support petroleum. More petroleum subsidies will be in the form of direct supports, especially among oil producing countries, but the indirect costs were again significant (and curiously the report seems to leave out military costs dedicated to maintaining regular supply of crude to global markets, which have been long identified as a very significant subsidy).
Governments around the globe are struggling with the practical and economic realities of an accelerating energy transition away from fossil fuels, as well as the incredibly challenging politics surrounding these markets. The presence of a well respected financial institution, like the IMF, measuring the enormously ignored, but very real, costs of fossil fuel use will be important in shaping these discussions.
This report alone won’t end the constant claims that clean energy is “too expensive.” There have been remarkable declines in the cost of wind and solar power over the past decade. Add the breakthroughs in storage, electrification of vehicles, and promises of economically competitive new nuclear technologies (which will accelerate when investors have a clear and accurate price target for these alternatives) and the pace of global change could be revolutionary.
By putting hard data on the real price of the energy status quo (a lesson being lived in real time by Chinese authorities facing massive new costs from its overzealous coal fleet expansion), the report allows us to seriously consider the economic reality of the currently distorted and inaccurate marketplace. A better baseline, even a remotely accurate one, combined with the economic reality that clean energy has become stunningly more economic over the past decade, should re-write the fundamentals of the discussion about our energy future.
Coal and solar power executives clash at Paris climate conference
http://www.ft.com/intl/cms/s/0/d47b5904-ffad-11e4-bc30-00144feabdc0.html#axzz3aoGkEOY1
May 21, 2015 1:42 pm
Tony Hayward, chairman of mining company Glencore, has clashed with wind and solar power executives who say renewable energy can replace coal in industrialising countries such as India and China.
Mr Hayward, whose company is the world’s largest exporter of power station coal, told a business and climate change meeting in Paris that people had to recognise it was simply “not possible” to remove coal from the energy mix in countries such as India.
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/d47b5904-ffad-11e4-bc30-00144feabdc0.html#ixzz3aoHqnI3i
With the best will in the world, solar is not an answer to broad scale industrialisation,” he said, adding it was too intermittent to supply the steady, reliable power needed by an aluminium plant or a steel mill.
“Unless we can deal with this dilemma this debate goes nowhere,” he said.
His remarks prompted a sharp response from Kerry Adler, chief executive of North American solar group SkyPower who told him: “Solar is the new world. You’ve got to get used to it.”
Mr Adler said as renewable power storage costs fell, companies like his could easily supply large amounts of cheap, reliable power in countries such as India.
He was backed by José Manuel Entrecanales Domecq, chief executive of Spain’s Acciona group, a large wind power developer, who said it was “absolutely” possible for renewables to provide baseload electricity in emerging markets if electricity grids were properly integrated.
The Paris business meeting comes six months before the French capital hosts a UN conference where almost 200 countries are due to seal a global climate change pact.
The leaders of Germany and France said earlier this week they wanted to see a complete end to emissions from fossil fuels such as coal some time this century.
Oil and gas companies such as Norway’s Statoil say the first step should be switching from coal power to cleaner-burning gas.
But Mr Hayward said this was not possible in countries such as India, where a government official had recently told him that gas cost at least three times as much as coal and was more complicated to secure.
Coal companies, on the other hand, had told this official that with their fuel, “you can have it tomorrow and you can have as much as you want for as long as you want”, Mr Hayward said.
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The answer, he said, was for wealthier countries to help industrialising nations replace old, more polluting coal power station technology with newer, cleaner systems.
Without such steps, the world would never achieve the reduction in emissions needed.
“Unless what we deploy allows China and India to complete their industrialisation in a different way to the way we industrialised then we are simply shifting the deck chairs on the Titanic,” he said.
Many executives at the Paris business meeting urged governments to introduce more carbon pricing systems, such as a carbon tax or emissions trading schemes.
World Bank climate envoy, Rachel Kyte, said China was looking at creating a national emissions trading system as early as 2016, which would overnight create the world’s biggest carbon market.
It would be “very interesting” to see how other countries reacted with China if this happened, she said.
But Mr Hayward said before talking about new carbon taxes, it would be sensible to end fossil fuel subsidies.
He added that efforts to put a price on carbon through schemes such as the EU’s emissions trading system had created a lot of problems.
The European system had helped to create the “mess” of a “dysfunctional” energy market and a “massive misallocation” of resources, he said.
The best means of changing people’s behaviour was to look at levies such as gasoline taxes which had a direct impact on the use of transport fuel.
Sun City and The Fresno contracts would make for a nice move....
Company installing solar panels, car-charging station for Sun City
May 21, 2015, 5:20am PDT
Mark Anderson
Sacramento Business Journal
http://www.bizjournals.com/sacramento/blog/energy-inc/2015/05/company-installing-solar-panels-car-charging.html
Roseville’s Sunworks has won a $3 million contract to install a 1 megawatt photovoltaic array for the Sun City Lincoln Hills Community Association.
Sunworks will find the financing and design and install nearly 3,000 solar panels and a car charging station for the association, which has 6,703 homes. The contract was signed Wednesday.
The project will be installed by December, with solar carports and shade structures over the parking for the community’s clubhouse and lodge. The project is estimated to save $9.5 million in electricity costs over its 25-year life.
The installation will include Sunworks equipment, and the company has offered residents a $2,000 discount to put solar on their own homes.
Last fall, Sunworks tripled its office space in Roseville when it moved into about 19,000 square feet of office and warehouse space at 1010 Winding Creek Drive.
The company designs, finances and installs solar photovoltaic systems for residential, commercial and farms.
In January, Sunworks won contracts to design and install solar photovoltaic projects for two California agricultural companies, including a 504 kilowatt array at Heidrick & Heidrick Properties in Woodland and an 893 kilowatt photovoltaic array at Innovative Produce Inc. in Santa Maria.
Sunworks is the commercial solar division of Solar3D Inc. (Nasdaq: SLTD), which is based in Santa Barbara.
Solar3D bought Sunworks in a deal that closed in the spring of 2014. Solar3D is working on new technology for the advancement of photovoltaic panels. The Sunworks division is focused on sales, installation and marketing of solar systems. Solar3D is developing solar technology and buying up smaller solar companies.
I don't know if this was posted.....
http://www.journaltranscript.com/2015/05/carbon-sciences-inc-otcmktscabn-focus-shifts-on-graphene-based-devices/
Carbon Sciences, Inc. (OTCMKTS:CABN) Focus Shifts On Graphene Based Devices
by KYLE LAN
May 18, 2015
Carbon Sciences, Inc. (OTCMKTS:CABN) the developer firm of a technology to manufacture graphene disclosed appointment of Dr. Rajeeva Lahri as new Technical Advisor. The new appointment is done in order to assist the company in developing an effective technical plan for graphene-based devices. He will also define the target applications for the new devices. The first step in full commercialization strategy will be the formation of team and eco-system partners.
The experience
Lahri has remained an entrepreneur and a seasoned executive and possess more than thirty years of experience in growing solar and semiconductor industry. He has worked on senior technology profile and executive management positions with leading companies like Intersil Corporation and Philips Semiconductors. Lahri was one of the founders of Signet Solar.
Bill Beifuss, the CEO of Carbon Sciences stated that it is a pleasure to have Dr. Lahri join the team and help them in graphene venture. He possesses deep technical expertise and sharp business acumen in the semiconductor industry. Also, his personal interest towards graphene applications makes him a strong asset for the company.
The role
As of now, Dr. Lahri is working on development of a Managed Energy Services firm for supplying power to telecommunication towers in India. The objective is to offer effective source of power to all the nations with pathetic electrical grid infrastructure. Dr. Lahri has worked with private equity as well as venture capital firms to get necessary capital for international ventures. He pursued his Ph.D. in electrical engineering from the renowned State University of New York. He has a recognized track record of producing value, which has supported numerous successful exits.
Talking about his new role, Dr. Lahri stated that as a semiconductor and materials individual, he has been interested in the unique properties of graphene. The new role provides him an excellent opportunity to pursue his interest and help Carbon Sciences know about high value devices.
In early morning trade on Monday, the stock price of Carbon Sciences, Inc. (OTCMKTS:CABN) was trading 6% lower at $0.0126.
Nice new job. But it will go on to Q3. Too late for Q2......
New Fluff PR
Solar3D to Present at Upcoming Investor Conferences
Marketwired
2015 Marcum MicroCap Conference Held May 27th - 28th in NYC; 5th Annual LD Micro Invitational Held June 1st - 3rd in Los Angeles
May 20, 2015: 10:00 AM ET
Solar3D, Inc. (NASDAQ: SLTD), a provider of solar power solutions and the developer of a proprietary high efficiency solar cell, announced today that it will be presenting at the 2015 Marcum MicroCap Conference in New York and the 5th Annual LD Micro Invitational in Los Angeles. In addition, the Company previously announced that it will also be presenting at the Cowen Group 43rd Annual Technology, Media & Telecom Conference on Thursday May 28th in New York.
Jim Nelson, CEO of Solar 3D will provide an overview of the Company's business operations, recent updates and highlights. Mr. Nelson will also be available for one-on-one meetings.
To arrange a one-on-one meeting with management, please contact Andrew Haag at sltd@irthcommunications.com or 1-866-976-4784.
About Solar3D, Inc.
Solar3D, a leading provider of solar power solutions, is focused on the design, installation and management of solar power systems for commercial, agricultural and residential customers. Through its wholly owned subsidiaries, Solar3D is one of the fastest growing solar systems providers in California delivering 2.5 kilowatt to multi-megawatt commercial systems. Solar3D's technology division is developing a patent-pending 3-dimensional solar cell technology to maximize the conversion of sunlight into electricity. The Solar3D Cell collects sunlight from a wide angle and lets light bounce around in 3-dimensional microstructures on the solar cell surface. The Company's mission is to further the widespread adoption of solar power by deploying affordable, state-of-the-art systems and developing breakthrough new solar technologies.
To learn more about Solar3D, visit our website at http://www.Solar3D.com.
Safe Harbor StatementMatters discussed in this press release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this press release, the words "anticipate," "believe," "estimate," "may," "intend," "expect" and similar expressions identify such forward-looking statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the expectations of the Company and are subject to a number of risks and uncertainties. These risks include, but are not limited to, risks and uncertainties associated with: the impact of economic, competitive and other factors affecting the Company and its operations, markets, products, and prospects for sales, failure to commercialize our technology, failure of technology to perform as expected, failure to earn profit or revenue, higher costs than expected, persistent operating losses, ownership dilution, inability to repay debt, failure of acquired businesses to perform as expected, the impact on the national and local economies resulting from terrorist actions, and U.S. actions subsequently; and other factors detailed in reports filed by the Company.
Did anybody mention the 8K?
http://www.streetinsider.com/SEC+Filings/Form+8-K+SOLAR3D,+INC.+For%3A+May+15/10576261.html
DESIGN/BUILD: 2 MW Photovoltaic System at Fresno/Clovis WWRF
http://www.energy-biz.net/bid-opportunities/2015/04/10/6227521-DESIGNBUILD-2-MW-Photovoltaic-System-at-FresnoClovis-WWRF.html
--------------------------------
Fresno/Clovis WWRF
https://www.google.com/maps/place/36°42'16.4%22N+119°53'38.5%22W/@36.70457,-119.89402,766m/data=!3m2!1e3!4b1!4m2!3m1!1s0x0:0x0!6m1!1e1?hl=en
When is this scheduled to go to .02?
And .05...
And .50...
So I wonder.
How cheap is the new Graphene process?
And in what volume...
Flipped the top 13% of SLTD for CABN this morning. NOW we can move!
I want some MONEY!
Solar3D (SLTD) CEO Jim Nelson on Q1 2015 Results - Earnings Call Transcript
May. 18, 2015 9:13 PM ET
Solar3D, Inc. (NASDAQ:SLTD)
http://seekingalpha.com/article/3193736-solar3d-sltd-ceo-jim-nelson-on-q1-2015-results-earnings-call-transcript
Q1 2015 Earnings Conference Call
May 18, 2015 04:30 p.m. ET
Executives
Jim Nelson - President, Chief Executive Officer
Tracy Welch - Chief Financial Officer
Andrew Haag - Managing Director, Partner at IRTH Communications
Analysts
Nigel Chadwick - Private Investor
Michael Baldwin - Eastern Dental
Jeff Osborne - Cowen & Co.
Mark Stutman - Trimark
J.R. Miller - Private Investor
Lou Rotano - Private Investor
Henry Lamb - Private Investor
Joseph Belnau - Private Investor
Thomas Cassidy - Private Investor
Ted Barrowstock - Private Investor
Brian Boito - WESCO Distribution
Douglas Brown - Unidentified Company
Shekhar Ali - Private Investor
James Gallop - Private Investor
Derrick Pollinic - Private Investor
William Brown - Private Investor
Operator
Greetings and welcome to Solar3D’s First Quarter 2015 Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.
It is now my pleasure to introduce Andrew Haag, Managing Director and Partner at IRTH Communications. Mr. Haag, you may begin.
Andrew Haag - Managing Director, Partner at IRTH Communications
Good afternoon and thank you everyone. I’d like to welcome all of you to Solar3D’s first financial results conference call covering the first quarter of 2015. With us today are Solar3D’s CEO, Jim Nelson and the company’s CFO Tracy Welch.
Before I turn the call over Jim, I’d like to remind you that in this call management’s prepared remarks contain forward-looking statements which are subject to risk and uncertainties and management may make additional forward-looking statements during the question-and-answer session of this call. Therefore the company claims the protection of the Safe Harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995.
Actual results could different materials from those contemplated by the forward-looking statements as a result of certain factors not limited to general, economic and business conditions, competitive factors, changes in business strategy or development plans, the ability to attract and retain qualified personal, changes in legal and regulatory requirements, in addition any projections as to the company’s future performance represent management’s estimates as of today May 18, 2015. Solar3D assumes no obligation to update these projections in the future as market conditions may change.
Last Friday the company filed its 10-Q with the SEC and issued a press release announcing its financial results. So participants in this call who may not have already done so may wish to look at those documents as we provide a summary of those results on this call.
I would like to now turn the call over to Solar3D’s CEO, Jim Nelson, who will give an overview of the company’s business activities and developments for the first quarter 2015. Jim will then turn the call over Tracy Welch, CFO of Solar3D, who will provide an overview of the company’s key financial performance, metrics and we will then open up the call for Q&A. Jim.
Jim Nelson - President, Chief Executive Officer
Thanks very much Andrew. Actually after Tracy speaks I’m going to speak again and then I’ll have a few more wrapping-up comments and I’ll look forward to fielding your questions. Thanks so much for your interest in Solar3D and for tuning into our call and we’ll look forward to answering your questions and chatting at another time as well as this call.
So for our operational highlights for quarter one, we are very busy. The big news of our first quarter is that we up-listed to the NASDAQ during March 2015 and we raised $12.5 million which was netted to $11.2 million, thanks to the great efforts of Cowen and Company for whom we have the deepest respect and our attorney Sichenzia and we are so thankful for their help. We completed the acquisition of MD Energy also in early March. We’re grateful to have Danny Mitchell as part of our management team and feel great about the direction that MD Energy is going.
A couple of important metrics that I would like to share with you. We booked new sales, not new revenue, but new sales of $17.3 million during Q1 of 2015 versus $3.3 million of Q1 ’14, which was over a 400% increase. Our ending backlog during the quarter, which I think is one of the key metrics that you’ll want to consider as these quarters go by, was $14.7 million at the end of quarter one 2015 versus $2.3 million at the end of quarter one 2014.
We secured a $2.4 million contract to install complex solar system design to protect against rising utility costs. We are starting to look at many, many of these much larger contracts as well and have an opportunity to announce some of those as we sign contracts going forward. Expanded operations into Nevada at the beginning of January and have a very fine management team and have success beyond what we had hoped for so far.
We also reported growing market opportunity created by widespread adoption of solar energy in the farming market which was cited by Renewable Energy World. We launched a proprietary referral program, with which we were having great success in expanding our residential solar market. We call that referral program our PowerPlay Plan.
And finally, we appointed Tracy Welch as the CFO to strengthen our corporate management team and provide leadership for future acquisitions. I am personally really grateful to have Tracy with us and I’m going to turn the time over to Tracy to talk about some of our financial highlights.
Tracy Welch - Chief Financial Officer
Thanks Jim. I’m glad to be on the call here today, glad to be a part of the company. The first quarter of this year we reported revenue $5.7 million, which was an increase of 440% over our first quarter last year. Now just for comparison purposes, last year SUNworks was a subsidiary for only two months of the quarter, so it’s not exactly apples-to-apples, but the January and before we acquired them was not a huge month for them. So it’s not materially different from that.
In the first quarter of this year, we did do the acquisition of MD Energy, in beginning of March. Their revenue for this quarter or this year was inconsequential to our results, so we are looking for bigger results going forward.
Our gross profit was $1,941,461 and this was primarily a result of the increased sales growth that we have. The good news is our gross margin grew from 26% last year to 34% this year. We are really excited about that. We’ve got better efficiency as we get bigger and we had a good mix of jobs in the quarter.
Our selling and marketing expenses were $1.1 million, which was about 20% below revenue and this was up from $185,000 last year, 18%. So on a percentage basis we’re pretty much in line and mostly these costs were involved with building a residential business going forward.
For the company, one of the metrics we are looking and tracking is how much we spend to acquire customers. In this quarter we spent just under $1,500 per customer to do that versus about $2,000 a year ago, which we think is still much lower than what the industry is incurring.
On the G&A side, we had costs or sort of expenses of $1.8 million. This compares to just under $1 million last year. The number includes a lot of one-time cost associated with our stock offering and with the up-listing to NASDAQ. That totaled approximately $1.3 million, resulting in an operating loss of approximately $1 million for this quarter compared to an operating loss, 2014 first quarter of $900,000.
Our other expense items totaled for the quarter $0.4 million, which is made up of a gain on change of fair value of our derivative liability, about $68,000. This was offset by almost $0.5 million of non-cash interest expense recorded on a convertible note. This compares to last year’s, where we had a $3.1 million expense which consisted of $1.8 million non-cash loss on the fair value loss of derivatives and $1.3 million in non-cash interest expense.
Our net loss for the quarter of $1.4 million was $0.10 a share compared to our loss last year in 2014 first quarter of $4 million or $0.43 a share. Our adjusted EBITDA which was a number that we like to show, we know it’s not a GAAP measure, but we think it gives us a better idea of what we’ve done as a company. So we presented it in our press release. Basically we are looking at our net loss of $1.4 million, we add back the gain that we took and we deduct the amortization of debt discount which was a non-cash item that gives us a adjusted net loss of just over $1 million.
We add back to the one-time cost, non-cash items, we spend about $30,000 on acquisition of MD Energy and the cost associated with up-listing and legal fees. That gets us to an adjusted EBITDA of just about $6,000; so on a cash basis we’re pretty flat for the year. That compares to on a similar calculation basis of almost $700,000 loss in 2014 for the first quarter.
Now let’s talk just a little bit about the balance sheet. It’s one of the things that make this quarter with our stock offering that we did in early March, our cash has grown significantly as Jim mentioned we did raise $12.5 million new equity after we take out the expenses and the fees associated with that. We netted about $11.2 million which is what our cash is currently. This compares to – at the end of the year we had about $400,000 worth of cash and last year at the summit, at the end of the third quarter about $300,000.
We did do – on the balance sheet we’ve added some goodwill that is associated with the acquisition we made of MD Energy. We spent $3.5 million on that and after deducting that tangible assets, we had some good will of about $2.8 million. And then finally our shareholders equity has grown to about $16.2 million, which at the end of the year, end of 12/31 we were just under $2 million.
With that, that’s kind of the financial highlights. I’ll turn the call back over to Jim.
Jim Nelson - President, Chief Executive Officer
Thanks. So just a couple of things to wrap-up our discussion here. First of all, I just wanted you to know that we are in a great business. All of you who are on the phone know that solar business is booming right now and we are coming down the super highway towards the end of next year when there is going to be a change in the investment tax credit that people get right now for installing solar systems. Of course we don’t know what change is going to be. We do know from a contact that there is great bipartisan support in Washington DC for doing something. We don’t know exactly what that something will be.
But one of the things that we know too is that when you look WallStreet’s forecast and the Department of Energy forecast, it shows that if there is a pull back in the solar market at the end of next year or in 2017. Most of that according to the forecast will be in the utility grade solar, at least according to Department of Energy forecast on a conjunction with the SCIA and Goldman Sachs and they also say that the residential and commercial business will remain flat and even growing a little bit. We believe that and as a result, we think that we are going to really well since we are gaining share rapidly. We think we’ll continue to grow, even in an environment of what the ITC changes. So we are excited about being in this business.
Both of our brands are doing really we at this point and both SUNworks and MD Energy have a great foothold in their respective locations. I will mentioned; I know that many of you have had questions about our solar cell, the development of our technology, which is ongoing. We have chosen not to speak a lot about that, because clearly the next step for our technology is to get a manufacturing partner. We are working on that, but we haven’t yet concluded it. We had hoped to be commercial by now but we are still in the process of seeking a manufacturing partner. As soon as there is news to give you, we will definitely give it to you.
That said, the solar market, particularly in our trading area in California and Nevada is very fragment and there are a lot of very strong and good companies, particularly in the range that we are interested in marketing acquisitions, that is 10 to 30 year, $10 million to $50 million in revenue. We have met with many companies and we will continue to meet with more companies.
We have a number of companies that we are very excited about it and we continue discussions with them. As soon as we have announcements to make, we will defiantly keep you in the loop. That is our major objective right now, it’s to identify some companies that we would like to acquire and make those acquisitions.
We think that over the course of this year we’ll have another record year for revenue. With the portfolio of companies that we have now, we reiterate the guidance that we gave you a while ago of $40 million to $45 million in revenue which is more than doubling from last year. We hope that with additional acquisitions our revenues will be much stronger than that.
That’s where we are now after quarter one. We’ll turn the time back over to Andrew.
Andrew Haag - Managing Director, Partner at IRTH Communications
Operator, would you like to queue everyone up for questions-and-answers.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions]. Our first question comes from Nigel Chadwick, a Private Investor. Please proceed with your question.
Nigel Chadwick - Private Investor
And my question is, just are you able to elaborate anything about the patent on the 3D Cell. Thank you.
Jim Nelson - President, Chief Executive Officer
Hi Nigel how are you doing.
Nigel Chadwick - Private Investor
Very good, thank you.
Jim Nelson - President, Chief Executive Officer
Good. We can’t elaborate right now. We’ve chose not to talk a lot about it until we have a manufacturing partner nailed down, that’s our next step.
Nigel Chadwick - Private Investor
Thank you.
Operator
Our next question comes from Michael Baldwin with Eastern Dental. Please proceed with your question.
Michael Baldwin - Eastern Dental
Are you there Jim?
Jim Nelson - President, Chief Executive Officer
Michael?
Michael Baldwin - Eastern Dental
Yes. My question is, are you working on a multi junction panel and have you ever heard of the material Graphene that could enhance the solar panels.
Jim Nelson - President, Chief Executive Officer
No and yes. We are working on a multi junction panel, but we are aware of Graphene. That is a part of what we’re doing right now though.
Michael Baldwin - Eastern Dental
Okay, thank you very much.
Jim Nelson - President, Chief Executive Officer
You bet. Thanks for asking.
Andrew Haag - Managing Director, Partner at IRTH Communications
Operator, you want to poll for questions again.
Operator
[Operator Instructions] Our next question comes from Jeff Osborne with Cowen. Please proceed with your question.
Jeff Osborne - Cowen & Co.
Thanks for taking the question. I was wondering if you could just touch on the actual synergies that you’re getting with the acquisitions at [indiscernible].
Jim Nelson - President, Chief Executive Officer
Oh yes, thanks Jeff. I appreciate that. Hope you’re doing well.
A couple of things that we are finding right now is that most of the synergy that we’re experiencing immediately is on the marketing side. We’re finding that the two companies are able to collaborate on bids and things that they do strongly together. We’re able to bid on company and contracts that we weren’t able to bid on before.
We have yet to really experience cost synergies, simply because we haven’t yet gotten our financial package or financial platform together. We have a list of things that we are going to be able to get that we haven’t gotten yet, primarily the collaboration between management teams and the administration area. We’ll find that we’ll be able to streamline the administration of both companies and central services into an enterprise management system that we can use well, but…
Jeff Osborne - Cowen & Co.
Excellent, that’s helpful. I was wondering though…
Jim Nelson - President, Chief Executive Officer
Sorry Jeff, one more thing that Tracy just wrote me a note and reminded me that we are also finding purchasing synergies already and able to do a better job bidding jobs and getting certain impact to the panel and also getting better pricing on panels. So purchasing is already an area that we’re experiencing some synergies.
Jeff Osborne - Cowen & Co.
That’s great to hear. The second question I had was to see if you can touch on what the residential versus commercial mix was in the first quarter and then what’s in the energy stalling through the third full quarter or should we think about that for the second quarter, it would be helpful. Thank you.
Tracy Welch - Chief Financial Officer
Yes, Jeff this is Tracy. So for the first quarter we actually had a little bit higher mix on the commercial side. We were about two-thirds commercial in the first quarter. We expect over the course of the year that will even up to about 50-50 for the year.
Jim Nelson - President, Chief Executive Officer
Yes, that’s our standard line. I think that based on some of the jobs that we’re looking at right now, we actually might be a little bit more commercial, but residential is growing strong. If $40 million to $45 million, which is our guidance is what we get, it will be about 50-50. If we are much bigger than that, it will be because we were able to secure some bigger commercial jobs.
Jeff Osborne - Cowen & Co.
Understand. Thanks for the detail. I appreciate it.
Jim Nelson - President, Chief Executive OfficerYou bet.
Operator
Thank you. Our next question comes from Mark Stutman with Trimark. Please proceed with the question.
Mark Stutman - Trimark
Hi, thank you for taking my calls. Could you talk a little about coming back to the customer acquisition cost. Is that the average cost for commercial residential and what is also the average residential size in terms of instillation.
Jim Nelson - President, Chief Executive Officer
Sure. No, it’s just residential cost Mark. We didn’t talk about the cost of acquiring a commercial customer, because it varies so widely depending on whether it’s a $300,000 job or it’s a $2 million job, but for residential customers like we said, about $1,400 and the average cost of a residential system is about $30,000.
Mark Stutman - Trimark
Okay. And how large a system is that approximately?
Jim Nelson - President, Chief Executive Officer
5 kilowatts.
Mark Stutman - Trimark
Okay. And also discuss a little about the backlog. What percentage of the backlog actually converts and what is the average time to install?
Jim Nelson - President, Chief Executive Officer
Backlog is contracted deal, so 100% converts.
Mark Stutman - Trimark
100%? Okay, and…
Jim Nelson - President, Chief Executive Officer
All of that, all of the backlog right now is in the calendar year. So I can’t tell you off the top of my head how much of it is in Q2, but it will be mostly Q2.
Mark Stutman - Trimark
No worries. All right, thank you very much.
Jim Nelson - President, Chief Executive Officer
You bet.
Operator
[Operator Instructions] Our next question comes from J.R. Miller, a Private Investor. Please proceed with your question.
J.R. Miller - Private Investor
Hey Jim, good job on the up-lifting and great job on the backlog and margins. I have a couple of questions. I follow different solar companies and Canadian Solar and JA Solar, CEO sees a pick-up in demand in the second half for the United States. Do you also see this demand increasing?
Jim Nelson - President, Chief Executive Officer
Yes, I think our feeling here is that it will substantially increase over the next 18 months as people get – there is an emotional component the change in the ITC as far as we believe, and if the ITC changes people will continue to be nervous about it and so we see a real increase in sales, generally in the industry over the next 18 months.
J.R. Miller - Private Investor
Excellent, but it seems the ASP for panels have done ticking downward. Do you see this cost reduction while you’ve been ordering the panels for your inventory?
Jim Nelson - President, Chief Executive Officer
We know that we’re taking full advantage of every opportunity to get cheap and to get panels at a lower cost and yes, we’ve experienced some real positive benefit from lower cost panels.
J.R. Miller - Private Investor
Okay. Is there any way you can give us any info on how the search for the next acquisition is going?
Jim Nelson - President, Chief Executive Officer
It’s going really well. Sorry, there is no more detail than that, but we feel really good about our process.
J.R. Miller - Private Investor
I appreciate that. The last thing was just a general comment. I’ve been investing and trading professionally for the last eight years and yourself and your new IR department is by far the most retail friendly I’ve come across. You’ve answered every single email, you’ve answered calls our department often has and I just want to say thank you for that, because it goes a long way for small guys.
Jim Nelson - President, Chief Executive Officer
Yes, well J.R. I really appreciate that feedback, it means a lot.
J.R. Miller - Private Investor
Right, thanks a lot. Looking forward to the next.
Jim Nelson - President, Chief Executive Officer
Yes, thank you.
Operator
Our next question comes from Lou Rotano [ph] a Private Investor. Please proceed with your question.
Lou Rotano - Private Investor
Good afternoon, Jim. Thank you for hosting this phone call.
Jim Nelson - President, Chief Executive Officer
Lou, how are you doing?
Lou Rotano - Private Investor
I’m doing fine my friend, thank you. Question regarding acquisitions; you have given guidance that you are expecting to do one to two more acquisitions this year and well into 2016 continuing the process. The question is what is your choice of funding these acquisitions? I know cash is a premium right now or is not a premium. So are you looking more debt, more equity, a combination of both? How do you plan on funding these acquisitions that we’re talking about here? Obviously if we’re looking $10 million to $50 million, it’s a lot different than the last two acquisitions you’ve done. So what is your funding preference?
Jim Nelson - President, Chief Executive Officer
It’s a great question. I don’t mean to be cagy in my response Lou, but also I already made it clear that when I mentioned that we’d like to do one or two acquisitions this year and more next year, not really giving guidance, I’m talking about our objectives and so that’s a key difference.
Lou Rotano - Private Investor
Fair enough.
Jim Nelson - President, Chief Executive Officer
But in the acquisitions, I think we’ll continue to want to do less than half the deal in cash, but then it really depends on the company and how important the company is to our future. So each individual acquisition could be different and so I’m really reluctant to say anything different again, because we’re talking to a lot of different people and we’ll just keep you posted on it.
Lou Rotano - Private Investor
Okay, thank you very much and I appreciate your reply.
Jim Nelson - President, Chief Executive Officer
Take care.
Operator
Our next question comes from Henry Lamb [ph], a Private Investor. Please proceed with your question.
Henry Lamb - Private Investor
Oh! Hi Jim, how are you?
Jim Nelson - President, Chief Executive Officer
Hello Henry, thanks for calling.
Henry Lamb - Private Investor
I just…
Jim Nelson - President, Chief Executive Officer
We lost Henry.
Operator
Our next question comes from Joseph Belnau [ph], a Private Investor. Please proceed with your question.
Joseph Belnau - Private Investor
Yes, I understand you can’t elaborate on the pattern for the 3D panel, but I understand that Panasonic also has a singular 3D panel and I’m wondering if that conflicts with ours or does that hurt us in any way?
Jim Nelson - President, Chief Executive Officer
I asked somebody about this some time ago and I can’t tell you the specific differences. It is through the Panasonic how some kind of 3D cell. It is different than ours and it’s more expensive to make, to make it very difficult to commercialize. Our intention of course is all along to make ours – to design ours with current technology and current capacity in mind, so that we can make it cheaper to be commercialized.
So in the end ours is commercialized and is widely adopted. It will be because we are more efficient in manufacturing design and in manufacturing output. So we don’t see the Panasonic as preventing us from being able to commercialize our Solar Cell.
Operator
Thank you. Our next question comes from Thomas Cassidy [ph] a Private Investor. Please proceed with your question.
Thomas Cassidy - Private Investor
Yes, Mr. Nelson, Mr. Welch; thanks for taking my question.
Jim Nelson - President, Chief Executive Officer
You bet. Hi Thomas.
Thomas Cassidy - Private Investor
Hi. I just kind of wondered about if there were any tie-ins between Jackson family Winery and the Tesla battery. I know you are high on stores.
Jim Nelson - President, Chief Executive Officer
Well, we are. We know the Jackson Family Winery has spoken with Tesla about it, right and they have Tesla batteries, but we didn’t arrange for them, but they do have Tesla batteries and they are a – we love Jackson Family Winery. They think ahead and they are thinking in terms of storage and yes, they are doing a great job.
Operator
Thank you. Our next question comes from Ted Barrowstock [ph] a Private Investor. Please proceed with your question.
Ted Barrowstock - Private Investor
Yes, thank you for taking my call. My question is this, is that if we were to buy one of the residential units and placed it on our home, and then the new 3D finally gets developed whenever it comes to marketplace, will there be some accommodation to be able to put that new 3D into our older units that we’ve purchased now. In other words, why would be buy it now? I know the ITC incentive, but I’m just wondering, are people holding off because they think that they are not going to be able to get the most efficient cell at a later date.
Jim Nelson - President, Chief Executive Officer
You’re talking about the age old technology conundrum, which is do we buy a computer now or do we buy next year’s better version. The fact is that we see these as two different businesses as well. We’re busy installing and integrating systems for commercial and residential people that are great systems right now.
If and when we commercialize our solar cell, it will be something we want to make available to the world, not just captive to ourselves. So I get the simple answer is no. We will make accommodations, but we think it will be great if everything works the way we plan.
Operator
Thank you. Our next question comes from Brian Boito with WESCO Distribution. Please proceed with your question.
Brian Boito - WESCO Distribution
Thank you. Good afternoon guys and congratulations on a very good Q1.
Jim Nelson - President, Chief Executive Officer
Thank you, Brian.
Jim Nelson - President, Chief Executive Officer
Thanks very much.
Brian Boito - WESCO Distribution
Sure. Just a very simple question. You mentioned earlier in the call that you’ve got a bigger footprint in California and Nevada. Is that maybe going to extend into the east coast, because I know there is some very nice growth engines in the east coast. Thank you.
Jim Nelson - President, Chief Executive Officer
Thank you. Yes, we address this all the time, because we know that there are some great markets in the east coast, but when you’re doing a consolidation of quality companies, the only truly scarce resource they have management time and if we bought companies on the east coast while we’re busy buying them here, it’s much more difficult to manage.
60% of the solar installations in America are at least in the last half of last year. It occurred in California and Nevada. We’re still just a little company that’s growing really fast and doing really well, but we can grow a lot in just California and Nevada. When we achieve critical mass in California and Nevada, then we will start looking in other places. But for now we think we can grow really well just in our current markets.
Brian Boito - WESCO Distribution
Very good. Thank you for the explanation.
Jim Nelson - President, Chief Executive Officer
All right, all the best.
Operator
Thank you. Our next question comes from Douglas Brown [ph] with [indiscernible] Investments. Please proceed with your question.
Douglas Brown - Unidentified Company
Jim, thank you for taking my call.
Jim Nelson - President, Chief Executive Officer
Sure. How are you doing Doug?
Douglas Brown - Unidentified Company
Good, good, good. Just a question regarding acquisitions and your current companies. I’m wondering, a cost comparison between the two as far as I say expanding SUNworks into Nevada, into other cities in California, other states. What is the cost comparison between doing that and the acquisition?
Jim Nelson - President, Chief Executive Officer
No it’s a great question. We can do that. I mean, obviously that’s what we did. We moved SUNworks into Nevada and its going really well. We just are looking to become a bigger company, faster and that’s the way we see it and we are exploring all alternatives including organic expansion and acquisition, so it’s a one off analysis. So I can’t give you specific numbers but believe me we are considering every option.
Douglas Brown - Unidentified Company
Okay, thank you very much Jim.
Jim Nelson - President, Chief Executive Officer
You bet. Take care.
Operator
Thank you. Our next question comes from Shekhar Ali [ph] a Private Investor. Please proceed with your question.
Shekhar Ali - Private Investor
Hi Jim, hi Tracy. I have a question in regards to acquisition. Generally acquiring good companies in an expanding market is really expenses and acquiring bad companies is also expensive. Furthermore it’s highly indicative of a company’s fundamentals. Can you explain how you are exerting some control over the market or over your suppliers?
Jim Nelson - President, Chief Executive Officer
Did you get cut off Shekhar, because I didn’t quite get the end of the question.
Shaker Ali
Can you explain how you are exerting some control over the market and over your suppliers in comparison to larger, more established solar installation companies?
A - Jim Nelson
I’m not sure we really do exert control over suppliers of the market. We know that we are very strong, but let me address our competiveness. We go up against ever competitor that you know off, every large competitor, including the biggest of the competitors and we are very successful in competing.
We tend to be great competing head to head. Other companies that we know off are really great if they don’t have completion. But they are very good at talking people into making decisions without having other competitors come and bid. So when we start talking about how we control the market, I think that’s how we do it.
In the end the low cost competitor is going to win, the people who can design and develop the best systems for the lowest cost that are effective and well designed for specific customers. We do a really great job of that, both MD Energy and at SUNworks and if there is a way to control to the market, it is by being competitive than we are.
Operator
Thank you. Our next question comes from James Gallop [ph] a Private Investor. Please proceed with your question.
James Gallop - Private Investor
Yes, not too long ago I came across some information about solar powered shingles, maybe a project with Redwood Renewables. I was just wondering whatever happened with that?
Jim Nelson - President, Chief Executive Officer
Never went anywhere really, but I like Redwood Renewables and I think highly of them and what they are trying to do. What we are hoping to be able to do was collaborate with them to put our solar cell into their roofing material and our development didn’t go fast enough for them. They are doing some other things. If our development comes through we will circle back around and talk with them, but I honestly think that the solar integrated buildings are a thing of the future and I think it’s going to be great. I think the footwork and ditch digging they are doing to break the ground for the future is a really good thing.
Operator
Thank you. Our next question comes from Derrick Pollinic [ph] a Private Investor. Please proceed with your question.
Derrick Pollinic - Private Investor
Yes Jim, thanks a lot for all the hard work you’ve been doing out there. I know you’re probably putting in a lot of hours. My question is regarding the backlog. There is a lot of speculation going around about a job in Fresno for about $10 million. Is that included in the backlog or no?
Jim Nelson - President, Chief Executive Officer
Only contracted deals are in that backlog and there is nothing from the city of Fresno in the backlog.
Derrick Pollinic - Private Investor
Okay and then how is – we’ve seen a little bit of information on Facebook regarding the Reno, Nevada operation for SUNworks. How is that going? Is that mostly residential or are you getting into commercial up there as well.
Jim Nelson - President, Chief Executive Officer
Yes, we are doing residential and marketing commercial and we are starting to get commercial jobs. So it’s looking really good up there for us right now.
Derrick Pollinic - Private Investor
Do you have any numbers at all for that area?
Jim Nelson - President, Chief Executive Officer
Well, we do, we just haven’t made it public.
Derrick Pollinic - Private Investor
Okay.
Jim Nelson - President, Chief Executive Officer
Currently we are not breaking those out separately. At some point we may do that, but for now those are combined with our residential SUNworks business.
Operator
Thank you. Our last question comes from William Brown [ph] a Private Investor. Please proceed with your question.
William Brown - Private Investor
Yes, thank you for taking my call gentlemen. A couple of questions; in terms of where you would go beyond California and Nevada, where do you see the solar fields spreading to other nationally? What would be your next state to look at?
Jim Nelson - President, Chief Executive Officer
Primarily Hawaii, because I need to go and do some more surfing over there.
William Brown - Private Investor
That sounds reasonable.
Jim Nelson - President, Chief Executive Officer
I was joking of course. But honestly Hawaii is a logical place to go. But one of the things that – I’d follow the Marriott idea. When Marriott first came our as a hotel company, they concentrated in Washington DC and once they filled out Washington DC, they moved on to a new market and developed that market. As long as that market is a market that you can kind of put your arms around and build solid, I could see it doing it almost anywhere.
Obviously the western states would be logically. Arizona’s a tough one, Utah is a good one, but other local states that are next to us, but also I could see going to the east coast and doing something concentrated there. But we definitely won’t spread out all over the place immediately after we have critical mass here. We’ll go very systematically and in a concentrated way.
William Brown - Private Investor
Okay and my second question and you may not be able to answer this. I know you said that you are waiting to tie into a manufacturer for the 3D Cells. Can you discuss at all what’s holding that up or what you are looking for or what the impediments are?
Jim Nelson - President, Chief Executive Officer
I can’t discuss it, but when I can we’ll let you know for sure.
William Brown - Private Investor
Okay, last question. I saw something about a transparent glass solar cell just recently. I thought to myself, well that’s very clear, because with all the skyscrapers and all the glass and the skyscrapers that will be really nice. Would that – conceivably if every comes to fruition, would that actually work with what you guys are doing?
Jim Nelson - President, Chief Executive Officer
Well, obviously our integrator can work with any kind of solar cell, but it wouldn’t work with our three dimension cell, but it’s pretty exciting if something like that is actually happening.
William Brown - Private Investor
Well, they haven’t said it’s there yet. So we’ll wait and see I think.
Jim Nelson - President, Chief Executive Officer
Okay.
William Brown - Private Investor
Thank you very much.
Jim Nelson - President, Chief Executive Officer
Thank you.
Operator
Thank you. We have a follow up question from Jeff Osborne with Cowen. Please proceed with your question.
Jeff Osborne - Cowen & Co.
Hey Jim, thanks for taking the follow-up question. I just had a two parter; one of the customer acquisition cost of $1,400, certainly impressive. Can you just touch on the revenue side, how you are accomplishing that, how much is coming through on the referral program that must be the driver, but maybe there is something else I’m overlooking, that was the first question.
The second question is, how much should we think about the multiples out there on the M&A front. Did you have any conversations? Would they be consistent with the prior multiples that we’ve seen or given this kind of boom cycle that we are having ahead of the ITC exploration, are multiples are creeping up?
Jim Nelson - President, Chief Executive Officer
Yes, let’s answer the first one first. As you know we’ve got the referral program that is going great guns, in fact better than we had hoped and that’s done a lot to reduce the cost of acquisition.
The other thing we do is just that we are getting so much better known because of our broadcast media here and that’s not advertising, it’s actually an education program that we have, that I’ve discussed with you before and we just continue to get lots and lots of referrals through that method. And of course we all the things everybody else does at the higher cost, but these two things really bring our cost down, much lower. So I suspect those are the things that has brought that cost down Jeff.
Second point that you are making is, no we are probably going to be paying higher multiples for some of the companies that we buy going forward for two reasons; one is, as you say it’s in a boom cycle and because – it’s kind of a seller’s market for quality companies at this point, whereas a couple of years ago it really wasn’t.
And then second part of that is that as we look at $30 million and $40 million companies to buy, they just, they command higher multiples. So the kind of multiples we’ve had in the past are probably in the past and once we go back to buying smaller companies like we did before, but we think the appropriate approach is to pay the higher multiples and get the bigger, more sustained companies.
Jeff Osborne - Cowen & Co.
Understand, I appreciate it. Thank you.
Jim Nelson - President, Chief Executive Officer
And I’ll talk to you more about that at some other point, so you can give me some guidance on that.
Jeff Osborne - Cowen & Co.
All right, good stuff. I look forward to seeing you in the conference on the 28th.
Jim Nelson - President, Chief Executive Officer
Yes, same here. Take care.
Operator
Thank you. At this time I would like to turn the call back over to management for closing comments.
Jim Nelson - President, Chief Executive Officer
Well, we are really grateful to all of you who have been on the call and I really think we are looking forward to great things happening in the future. We had a great day today following our first Q1 report, our 10-Q and we will see how the next ones go. We have great hopes, high hopes and we will reiterate our guidance with our current portfolio of $40 million to $45 million in revenue and please feel free anytime to email us or call us with questions and we’ll look forward to talking to you on the next quarter call.
Operator
Thank you. This does conclude today’s teleconference. You may disconnect your lines at this time and have a great day.
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Interesting day in energy....
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Fossil fuels subsidised by $10m every minute, says IMF
Shocking’ revelation finds $5.3tn subsidy estimate for 2015 is greater than the total health spending of all the world’s governments
http://www.theguardian.com/environment/2015/may/18/fossil-fuel-companies-getting-10m-a-minute-in-subsidies-says-imf
Fossil fuel companies are benefitting from global subsidies of $5.3tn (£3.4tn) a year, equivalent to $10m every minute of every day, according to a startling new estimate by the International Monetary Fund.
The IMF calls the revelation “shocking” and says the figure is an “extremely robust” estimate of the true cost of fossil fuels. The $5.3tn subsidy estimated for 2015 is greater than the total health spending of all the world’s governments.
The vast sum is largely due to polluters not paying the costs imposed on governments by the burning of coal, oil and gas. These include the harm caused to local populations by air pollution as well as to people across the globe affected by the floods, droughts and storms being driven by climate change.
US taxpayers subsidising world's biggest fossil fuel companies
Read more
Lord Nicholas Stern, an eminent climate economist at the London School of Economics, said: “This very important analysis shatters the myth that fossil fuels are cheap by showing just how huge their real costs are. There is no justification for these enormous subsidies for fossil fuels, which distort markets and damages economies, particularly in poorer countries.
Stern said that even the IMF’s vast subsidy figure was a significant underestimate: “A more complete estimate of the costs due to climate change would show the implicit subsidies for fossil fuels are much bigger even than this report suggests.”
The IMF, one of the world’s most respected financial institutions, said that ending the subsidies to fossil fuels would cut global carbon emissions by 20%. That would be a giant step towards taming global warming, an issue on which the world has made little progress to date.
Ending the subsidies would also slash the number of premature deaths from outdoor air pollution by 50% – about 1.6m lives a year.
Furthermore, the IMF said the resources freed by ending fossil fuel subsidies could be an economic “game changer” for many countries, by driving economic growth and poverty reduction through greater investment in infrastructure, health and education and also by cutting taxes that restrict growth.
Another consequence would be that the need for subsidies for renewable energy – a relatively tiny $120bn a year – would also disappear, if fossil fuel prices reflected the full cost of their impacts.
These [fossil fuel subsidy] estimates are shocking,” said Vitor Gaspar, the IMF’s head of fiscal affairs and former finance minister of Portugal. “Energy prices remain woefully below levels that reflect their true costs.”
“When the [$5.3tn] number came out at first, we thought we had better double check this!” said David Coady, who heads the IMF’s fiscal affairs department. But the broad picture of huge global subsidies was “extremely robust”, he said. “It is the true cost associated with fossil fuel subsidies.”
The IMF estimate of $5.3tn in fossil fuel subsidies represents 6.5% of global GDP. Just over half the figure is the money governments are forced to spend treating the victims of air pollution and the income lost because of ill health and premature deaths. The figure is higher than a 2013 IMF estimate because new data from the World Health Organisation shows the harm caused by air pollution to be much higher than thought.
Coal is the dirtiest fuel in terms of both local air pollution and climate-warming carbon emissions and is therefore the greatest beneficiary of the subsidies, with just over half the total. Oil, heavily used in transport, gets about a third of the subsidy and gas the rest.
The biggest single source of air pollution is coal-fired power stations and China, with its large population and heavy reliance on coal power, hosts $2.3tn of the annual subsidies. The next biggest fossil fuel subsidies are in the US ($700bn), Russia ($335bn), India ($277bn) and Japan ($157bn), with the European Union collectively allowing $330bn in subsidies to fossil fuels.
The costs resulting from the climate change driven by fossil fuel emissions account for subsidies of $1.27tn a year, about a quarter, of the IMF’s total. The IMF calculated this cost using an official US government estimate of $42 per tonne of CO2 (in 2015 dollars), a price “very likely to underestimate” the true cost, according to the UN’s Intergovernmental Panel on Climate Change.
The direct subsidising of fuel for consumers, by government discounts on diesel and other fuels, account for just 6% of the IMF’s total. Other local factors, such as reduced sales taxes on fossil fuels and the cost of traffic congestion and accidents, make up the rest. The IMF says traffic costs are included because increased fuel prices would be the most direct way to reduce them.
Christiana Figueres, the UN’s climate change chief charged with delivering a deal to tackle global warming at a crunch summit in December, said: “The IMF provides five trillion reasons for acting on fossil fuel subsidies. Protecting the poor and the vulnerable is crucial to the phasing down of these subsidies, but the multiple economic, social and environmental benefits are long and legion.”
US president Barack Obama and the G20 nations called for an end to fossil fuel subsidies in 2009, but little progress had been made until oil prices fell in 2014. In April, the president of the World Bank, Jim Yong Kim, told the Guardian it was crazy that governments were still driving the use of coal, oil and gas by providing subsidies. “We need to get rid of fossil fuel subsidies now,” he said.
Reform of the subsidies would increase energy costs but Kim and the IMF both noted that existing fossil fuel subsidies overwhelmingly go to the rich, with the wealthiest 20% of people getting six times as much as the poorest 20% in low and middle-income countries. Gaspar said that with oil and coal prices currently low, there is a “golden opportunity” to phase out subsidies and use the increased tax revenues to reduce poverty through investment and to provide better targeted support.
Subsidy reforms are beginning in dozens of countries including Egypt, Indonesia, Mexico, Morocco and Thailand. In India, subsidies for diesel ended in October 2014. “People said it would not be possible to do that,” noted Coady. Coal use has also begun to fall in China for the first time this century.
On renewable energy, Coady said: “If we get the pricing of fossil fuels right, the argument for subsidies for renewable energy will disappear. Renewable energy would all of a sudden become a much more attractive option.”
Shelagh Whitley, a subsidies expert at the Overseas Development Institute, said: “The IMF report is yet another reminder that governments around the world are propping up a century-old energy model. Compounding the issue, our research shows that many of the energy subsidies highlighted by the IMF go toward finding new reserves of oil, gas and coal, which we know must be left in the ground if we are to avoid catastrophic, irreversible climate change.”
Developing the international cooperation needed to tackle climate change has proved challenging but a key message from the IMF’s work, according to Gaspar, is that each nation will directly benefit from tackling its own fossil fuel subsidies. “The icing on the cake is that the benefits from subsidy reform – for example, from reduced pollution – would overwhelmingly accrue to local populations,” he said.
“By acting local, and in their own best interest, [nations] can contribute significantly to the solution of a global challenge,” said Gaspar. “The path forward is clear: act local, solve global.”
The Great Transition to Renewable Energy, Solar Power and Wind energy
May 16, 2015 reve
http://www.evwind.es/2015/05/16/the-great-transition-to-renewable-energy-solar-power-and-wind-energy/52155
The global transition to clean, renewable energy and away from nuclear and fossils is well under way, with remarkable developments happening every day. The Great Transition by Lester Brown, Janet Larsen, Matt Roney, and Emily Adams lays out a tremendous range of these developments – here are seven that may surprise you.
1. Solar is now so cheap that global adoption appears unstoppable.
The price of solar photovoltaic panels has declined 99 percent over the last four decades, from $74 a watt in 1972 to less than 70 cents a watt in 2014.
Between 2009 and 2014, solar panel prices dropped by three fourths, helping global PV installations grow 50 percent per year.
Deutsche Bank notes that as of early 2014, solar PV was already competitive with average residential, commercial or industrial electricity rates in 14 countries, and in California – even without subsidies.
By late 2014 there were nearly 600,000 individual PV systems in the United States, almost twice as many as in 2012. This number may well pass 1 million in 2016.
In 2013, just 12 percent of U.S homebuilders offered solar panels as an option for new single-family homes. More than half of them anticipate doing so by 2016. Four of the top five U.S. home construction firms – DR Horton, Lennar Corp, PulteGroup and KB Home – now automatically include solar panels on every new house in certain markets.
In 2007 there were only 8,000 rooftop solar installations in coal-heavy Australia; now there are over a million.
Saudi Arabia has 41,000 megawatts of solar PV operating, under construction and planned – enough to generate up to two thirds of the country’s electricity.
For the roughly 1.3 billion people without access to electricity, it is now often cheaper and more efficient simply to install solar panels rooftop-by-rooftop than to build a central power plant and transmission infrastructure.
2. Wind power adoption is rapidly altering energy portfolios around the world.
Over the past decade, world wind power capacity grew more than 20 percent a year, its increase driven by its many attractive features, by public policies supporting its expansion, and by falling costs.
By the end of 2014, global wind generating capacity totaled 369,000 megawatts, enough to power more than 90 million U.S. homes. Wind currently has a big lead on solar PV, which has enough worldwide capacity to power roughly 30 million U.S. homes.
China is now generating more electricity from wind farms than from nuclear plants, and should have little trouble meeting its official 2020 wind power goal of 200,000 megawatts. For perspective, that would be enough to satisfy the annual electricity needs of Brazil.
In nine U.S. states, wind provides at least 12 percent of electricity. Iowa and South Dakota are each generating more than one quarter of their electricity from wind.
In the midwestern United States, contracts for wind power are being signed at a price of 2.5¢ per kilowatt-hour (kWh), which compares with the nationwide average grid price of 10–12¢ per kWh.
Although a wind farm can cover many square miles, turbines occupy little land. Coupled with access roads and other permanent features, a wind farm’s footprint typically comes to just over 1 percent of the total land area covered by the project.
Wind energy yield per acre is off the charts. For example, a farmer in northern Iowa could plant an acre in corn that would yield enough grain to produce roughly $1,000 worth of fuel-grade ethanol per year, or the farmer could put on that same acre a turbine that generates $300,000 worth of electricity per year. Farmers typically receive $3,000 to $10,000 per turbine each year in royalties. As wind farms spread across the U.S. Great Plains, wind royalties for many ranchers will exceed their earnings from cattle sales.
3. National and subnational energy policies are promoting renewables, and many geographies are considering a price on carbon.
Unfortunately, governments worldwide still subsidized the fossil fuel industry with over $600 billion, giving this aging industry five times the subsidy that went to renewables.
But by the start of 2014, some 70 countries, including many in Europe, were using feed-in tariffs to encourage investment in renewables.
Renewable portfolio standards (RPS) or quotas are in place at the national level in some two dozen countries. More than 50 states and provinces in various parts of the world have them as well, including 15 states in India and 29 states plus the District of Columbia in the United States.
Some 37 countries, including the US, have national production or investment tax credits for renewable energy.
Some 40 countries have either implemented or are planning national carbon pricing mechanisms. A May 2014 World Bank report counted a further 23 subnational jurisdictions pricing carbon. Seven regional cap-and-trade pilot programs are already under way in China, for example. When China rolls out its planned national cap-and-trade program in 2016, roughly a quarter of global carbon emissions will then be priced.
4. The financial sector is embracing renewables – and starting to turn against fossils and nuclear.
The financial services firm Barclays downgraded the entire U.S. electricity sector in 2014, in part because in its view U.S. utilities are generally unprepared for the challenges posed by distributed solar power and battery storage.
In January 2013, Warren Buffett gave solar energy a huge financial boost when his MidAmerican Energy Holdings Company announced an investment of up to $2.5 billion in California in what is now known as the Solar Star project. At 580 megawatts, it will become the world’s largest PV project when complete in late 2015. MidAmerican had earlier bought the Topaz solar farm in California, now tied with Desert Sunlight, another California project, as the world’s largest at 550 megawatts. As of its completion in late 2014, Topaz can generate enough electricity to power 180,000 California homes.
Ted Turner has teamed up with Southern Power, a utility serving eight states from California to North Carolina, to acquire seven solar plants approaching a combined 300 megawatts. The largest is a 140-megawatt solar park in Imperial County, California that began operating in October 2013.
Large investment institutions, such as Morgan Stanley and Goldman Sachs, are channeling tens of billions of dollars into renewable energy. Stuart Bernstein, who coordinates Goldman’s investment in this area, talks about “a transformational moment in time” as renewable energy takes off. Thinking long-term by investing in the transition to a cleaner energy future, he says, “will be important from a societal perspective, and it will be good business for us and our clients.”
5. Coal use is in decline in the United States and will likely fall at the global level far sooner than once thought possible.
U.S. coal use is dropping – it fell 21 percent between 2007 and 2014 – and more than one-third of the nation’s coal plants have already closed or announced plans for future closure in the last five years.
Major U.S. coal producers, such as Peabody Energy and Arch Coal, have seen their market values drop by 61 and 94 percent, respectively, as of September 2014.
The Stowe Global Coal Index – a composite index of companies from around the world whose principal business involves coal – dropped 70 percent between April 2011 and September 2014.
China still consumes more coal than the rest of the world combined, but usage fell in 2014, possibly signaling a peak in usage.
While India has not committed to cap or reduce its coal use, it recently doubled its tax on coal mined domestically or imported into the country – a revenue transfer that simultaneously discourages the use of coal and provides investment capital for solar generation.
6. Transportation will move away from oil as electric vehicle fleets expand rapidly and bike- and car-sharing spreads.
Bike-sharing programs have sprung up worldwide in recent years. More than 800 cities in 56 countries now have fully operational bike-share programs, with over 1 million bikes. In the United States, by the end of 2012 some 21 cities had 8,500 bikes in bike-share racks. By the end of 2016, this is expected to climb to over 70 cities with close to 40,000 bikes.
The share of carless households increased in 84 out of 100 U.S. urban areas surveyed between 2006 and 2011. And as urbanization increases, this share will only rise.
Car fleets are plateauing or have begun to shrink in most major car markets, including the U.S., Europe and Japan.
Car-sharing programs are expanding rapidly. The Frost and Sullivan research group projects that the 3.5 million drivers enrolled in car-share programs worldwide in 2013 will soar to 26 million by 2020.
Bloomberg New Energy Finance projected worldwide electric car sales would hit 300,000 in 2014, and while this is less than 1 percent of total auto sales, the industry is “in the process of passing through the credibility barrier.”
Ultimately EVs and PHEVs will challenge the dominance of traditional gasoline- and diesel-powered vehicles, and this may happen sooner than most people realize.
The global financial services firm UBS projects that by 2020 battery costs will be slashed in half, making electric vehicles cost-competitive with traditional cars. With annual savings of up to $2,400 expected on fuel costs, the electric car becomes the obvious choice.
About 80 percent of the remaining oil reserves are held by national oil companies – not by private oil majors like ExxonMobil and BP, meaning that remaining access to oil will have geopolitical implications perhaps even beyond what we’ve seen to date.
7. Nuclear is on the rocks thanks to rising costs and widespread safety concerns.
For the world as a whole, nuclear power generation peaked in 2006, and dropped by nearly 14 percent by 2014.
In the United States, the country with the most reactors, nuclear generation peaked in 2010 and is now also on the decline.
U.S. nuclear power is becoming too costly to use, as the cost of operating aging U.S. plants is rising five percent per year.
The world fleet of nuclear power plants averages 28 years in age, begging the question of whether to repair older plants or simply close them.
Four U.S. reactors were retired in 2013 because it did not make economic sense to continue operations.
As of late 2014, some 31 countries were still operating nuclear power plants, but scarcely half as many – mostly countries with centrally planned economies – were building new ones.
Australian households chase sun to lead world on solar adoption
Date May 16, 2015 - 2:51PM
Mark Sawa
Northside Chronicle reporter
Almost 15 per cent of Australian households use photovoltaic panels to power their homes.
John Grimes from the Australian Solar Energy Society says the economics of choosing solar energy are compelling. Photo: Alex Ellinghausen
Solar Energy Ladder Can Help Communities Climb Out Of Energy Poverty
May 15th, 2015 by Rocky Mountain Institute
Originally published on RMI Outlet.
By Laurie Guevara-?Stone
Access to electricity is crucial for sustainable economic development. Yet 1.3 billion people around the world live without basic access to electricity. Many of these people rely on unhealthy polluting kerosene lamps for nighttime lighting. Those with access to electricity in the developing world often rely on coal- or diesel-based grid power. Thus electrification is both a humanitarian issue and a climate issue. Access to electricity improves health, education, economic development, and overall quality of life. But electrifying populations by expanding an already dirty and unreliable grid would greatly increase carbon emissions—increasing carbon emissions by an estimated 141 percent in Sub-Saharan Africa and India by 2040 under business as usual.
That’s the current energy ladder. It’s not only far too great a leap for the unelectrified to reach the other end, but the world can’t afford for them to reach the other end by burning more fossil fuels. And although many people are forecast to gain electricity access in the next 20 years in the developing world, population growth in those regions will offset almost all of it. “The system today to provide power to the rural poor across the developing world isn’t working,” says RMI manager Roy Torbert. “We are on track to have as many people in 2030 without access to power as we do today. A new approach is needed.”
Thus the crucial need for solar energy. Decentralized solar energy provides clean, reliable, low-carbon electricity, and can power communities both large and small. A new solar-based energy ladder, with each rung in reach of the next, can enable families and communities to climb out of energy poverty to energy access, thereby supporting economic development and eventually halting coal’s expansion. It would start with solar lanterns, move to solar home systems, then to mini grids, and eventually community-scale microgrids. It’s here, with community-scale microgrids, that you enable real commerce—with sewing machines, wood lathes, and other productive uses beyond the capacity of solar lanterns and solar home systems.
THE BOTTOM RUNGS
Over 250 million households use kerosene for lighting. This has devastating consequences for the women and children who breathe kerosene fumes daily—equivalent to smoking two packs of cigarettes a day. Fortunately, many entrepreneurs around the world have achieved impressive success with solar lanterns, which provide better-quality light than kerosene lanterns without any harmful fumes. d.light, a company that manufactures affordable and rugged solar lanterns, has sold over nine million solar lights in 62 countries since its founding in 2006.
Fifty Lanterns is a nonprofit organization providing solar lanterns to people in communities torn by poverty, war, or disaster. Its current program is working with a group of 7,000 Ugandan grandmothers who lost their children to AIDS and are now caring for their orphaned grandchildren. “For only $50 we can provide a grandmother with life-changing solar light that will help prevent open flame burns and toxic fumes,” says Fifty Lanterns executive director Linda Cullen.
Other organizations focus on small solar home systems. These systems, anywhere from 10 to 100 watts, allow people to light their homes, recharge cell phones, and run a small appliance or two. These systems have proven to be affordable with financing, even to people earning under $2 per day. Yet this is where the current solar ladder breaks down. While it is important to start small for affordability, there needs to be a way to grow. Being able to add solar panels modularly and having standardized solutions to create interoperability between systems will create the ability to transition from solar home systems to solar mini grids or microgrids.
THE TOP RUNGS
Modular solar mini grids are exactly what Devergy, a Dutch company working in Africa, has deployed in several villages in Tanzania. These mini grids power households and small businesses in six villages, connecting 800 customers to clean, reliable solar power. “After seeing many unmaintained solar home systems traveling through South America, we realized we needed to create a system that is interactive,” says Gianluca Cescon, cofounder Devergy. “Through smart meters we can monitor what’s going on.” Devergy decided it could have a greater impact by linking many solar home systems together, and after many prototypes came out with the mini grid it uses in Tanzania today.
“Using a modular system, designed to be interoperable and durable, communities can tailor their power supply to their individual needs, and grow their solar and battery systems according to the most relevant demands,” says RMI’s Torbert. Bridging into even larger, community-scale microgrids will enable development that supports quality of life and countries’ economic aspirations, and halt coal’s expansion into these to-be-electrified parts of the world. “We need to bridge the gap between household or small business use and more energy-intensive productive uses such as rice milling and corn milling,” according to Devergy’s Cescon.
The Solar Electric Light Fund (SELF) has also moved towards community-scale microgrids. “SELF spent years installing solar home systems in countries around the world. And it really helped change the lives of thousands,” says Bob Freling, executive director of the Solar Electric Light Fund. “But if we want to get to the next level of increased economic opportunity, we need to look beyond solar home systems to larger community scale microgrids.” SELF’s first two solar microgrids will power a microenterprise center in Haiti, and a school, health clinic, and micro-enterprise facilities in Colombia. By powering larger facilities and more energy-intensive businesses, solar microgrids allow individuals, businesses, and entire communities to develop and thrive.
Though all these projects are successful at various scales in areas around the world, each rung of the solar energy ladder—from lanterns to microgrids—needs to scale faster and broader, to meet the colossal need. Yet this brings with it new challenges and complications, including infrastructure challenges, local tariffs and regulation, and inconsistent product quality and reliability. “There has not been a lot of attention to detail in terms of the quality of services provided,” says Charles Muchunku, chairman of the Kenya Renewable Energy Association. “This leads a lot of people to believe that solar doesn’t work.” One crucial step is a standardized design, which will both increase modularity and lower cost. “A low-cost, standardized solution does not fix every problem, but it does create a base from which individual communities can build,” says Torbert.
A large-scale procurement process will further drive down costs and reduce supply chain inefficiencies. This will ensure time to market is fast and reliability is high. Also key are innovative financing solutions that work for both developed-country investors and the rural poor. While many microfinancing and payment mechanisms currently exist, these solutions need to be greatly scaled. Finally, we need deployment solutions that can scale rapidly with existing infrastructure.
Once these barriers are addressed, people on the bottom end of the energy ladder will have access to a full suite of energy services, while avoiding the negative consequences of fossil fuel development. “Economic development in developed countries brought a centralized government approach to rural electrification,” according to Stephen Doig, a managing director at RMI. “Yet, much as mobile telecommunications leapfrogged landlines, solar energy presents a way for developing countries to choose a different path.” We must build a new solar energy ladder by making it cheap, easy to finance and pay, and customizable. Then people can climb the ladder by using electrification to power economic activity and entrepreneurship. In that way we create a scalable solar energy ladder that can both help alleviate energy poverty and mitigate climate change, bringing us closer to a clean, prosperous, and secure energy future.