The LG Economic Research Institute said on May 27 that the global photovoltaic market has grown at an annual average of 47 percent since 2007 thanks to technological development, reduction in component costs, and governmental support policies. The International Energy Agency (IEA) also predicted last year that the ratio of photovoltaic power generation would reach 26 percent in 2050, four percentage points higher than its estimate of five years ago. According to a recent report of market research firm IHS, the global photovoltaic module market is expected to get to 61 GW in shipments this year to record a 27 percent growth from a year earlier, while global photovoltaic module sales and profits go up from US$31 billion to US$35 billion and from US$2.3 billion to US$5 billion, respectively.
Such positive forecasts amid the ongoing low oil prices are because the photovoltaic industry has become self-sufficient to the point of requiring no subsidies based on a high level of economic feasibility. “The severe supply glut in the photovoltaic module market resulted in markdown, which, in turn, led to the module price dropping from US$4 to US$0.5 per watt between 2008 and last year,” the LG Economic Research Institute explained, adding, “New technology in the form of GaAs compounds, quantum dot solar cells, and the like will further reduce the power generation costs while boosting the efficiency of solar batteries.”
Another positive factor is large-scale investment led by major players. For example, Warren Buffett already invested US$15 billion in solar and wind power generation and said last year that he would double his investment in the fields. Google and Apple have invested billions of dollars in alternative energy, too.
Korean companies are focusing on the growth of the alternative energy market as well. LG Electronics and LG Chem are participating in the Carbon-free Island project of Jeju, and Hanwha Q Cells signed a contract with NextEra Energy last month to supply photovoltaic modules amounting to 1.5 GW. Samsung SDI also exhibited advanced solar cell technology and products at the SNEC PV Power Expo 2015 that took place in Shanghai late last month.
Creative Solar Finance Grows the Pool of PV Investors and Customers
May 28, 2015
SolarCity and Bank of America open up tax equity investment
Tax equity investments have helped drive the phenomenal recent growth of the multi-billion dollar solar industry -- but it's mostly the big banks that have gotten in on the action. Investors in solar tax equity such as Goldman Sachs, JP Morgan, Google, and U.S. Bank deploy funds in $100 million and $200 million chunks, which allows transaction costs to be minimized relative to these large funds.
That large transaction cost keeps smaller banks and businesses from being able to participate in solar -- a low-risk investment that can help meet sustainability goals.
But SolarCity and Bank of America Merrill Lynch just announced a $200 million tax equity investment program for solar projects that allows community banks to participate in tax equity -- and opens up an enormous potential pool of new investors.
Investors can invest $20 million to $25 million, a smaller investment than has been previously possible given the transaction costs.
Lyndon Rive, the CEO of SolarCity, said that with Bank of America standardizing the agreement and leading the initiative, "other regional banks can ride that, put capital work, and meet their business goals."
Rive spoke of the "mad rush" to get projects done before the tax equity party ends with the expiry of the ITC next year. SolarCity is growing enormously fast (as are its competitors Vivint, Sunrun, and Sungevity) and though well-financed for 2015, SolarCity will need to continue to bring new, low-cost capital into the solar market to continue its lofty growth.
This tax equity program is part of Bank of America’s 10-year, $50 billion environmental business initiative.
Conergy, Demeter and PACE open up commercial PV
While SolarCity is opening up more sources of investment, Conergy and Demeter Power are launching a solar financing structure that will open up commercial solar to the 90 percent of commercial rooftops currently ineligible.
While banks recognize the credit-worthiness of consumers through their FICO score and larger commercial players are investment grade, smaller commercial customers are closed out of financing solar rooftops. According to a release, "Financiers have not been comfortable taking on credit risk of funding small commercial systems under a long-term lease or PPA agreement."
Renew Financial (formerly Renewable Funding) can use the PACE Lease (Property Assessed Clean Energy) to allow customers to finance the solar system and pay for it as a line item on their property tax assessment.
Brad Copithorne, VP of commercial PACE at Renew Financial said that "Traditionally to do a 20-year PPA in the commercial space, what you needed to qualify was an investment grade host," and added that that was only 5 percent of the rooftops. With PACE we can finance a very high percentage of those rooftops -- so we are massively expanding the market."
Renew Financial manages the PACE program, Demeter Power, a U.S. DOE SunShot Incubator awardee, developed a commercial financing structure with less tax risk, and Conergy financed the project.
The first solar project using this tax structure is at the Tiburcio Vasquez Health Center (TVHC) in San Leandro, California. Conergy financed and Demeter developed a 200-kilowatt PV system for the health center "that will offset approximately 90 percent of the energy consumed from the grid," according to a release.
Andrew de Pass, CEO of Conergy said that the firm was "expanding PACE Lease financing to more commercial solar projects in California this year" Copithorne called this the first commercial solar PACE deal and said that it was "not even within the spectrum of something that could be financed by a traditional PPA."
“This new financing program costs us nothing up front, lowers our bills, and minimizes our environmental impact,” said David Vliet, CEO of TVHC
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