In this second of a two part series, I sit down for a question and answer session with Simon Watson, Director of Utility Marketing with SunEdison. To read part one of the series, in which I spoke with Frank De Rosa, senior vice president of North American project development with First Solar, click here.
Q: What role has local government assistance (production tax credits, feed in tariffs, investment tax credits, etc.) played in the way you do business, and where you do business?
Many of these incentive programs have encouraged deployment of solar systems in states that have abundant solar resources such as California, Arizona and Nevada, but also in states such as New Jersey and Massachusetts; states that may not always be high on most people’s lists of the sunniest places in the US.
The availability of federal tax credits and cash grant have contributed to the uptake of solar power in these states.
Although the solar industry has benefited from some incentives, these are relatively small compared to the long-term subsidies offered to nuclear power, oil and gas and other energy companies.
Solar power offers numerous environmental benefits and acts as a hedge against fuel price volatility, something that when better understood and factored in to resource procurement decision making far outweighs the cost of any short-term stimulus.
Q: What do you think about photovoltaic solar getting to a point where the industry is less reliant on such government backing? What will have to happen first, before the industry can stand on its own?
A: The industry is making progress toward driving down the levelized cost of energy (LCOE) at an aggressive pace. Reaching “grid parity” will spur wider adoption of solar resources.
At SunEdison we advocate for programs that provide for performance based incentives as short-term bridges supporting solar deployment, until the point at which there is price parity between solar and competing technologies.
We truly believe these incentives are just a short-term bridge and we are building a business model that will be sustainable in the long-run, after incentives have dried up.
It is worth noting that wholesale market power prices have fallen significantly during the recession as reduced economic activity has depressed demand for electricity.
Once economic growth resumes and demand increases, the apparent price differential between solar power and competing fossil generation sources will be reduced as fuel costs increase pushing the baseline grid price up as the solar industry reduces its cost per kWh.
Q: How has your company felt the pinch of the global economic turndown? What have the company’s pain points and success stories been as the recovery unfolds?
A: SunEdison has weathered the global recession well. The credit shortages in the early part of the recession were challenging for all in the industry, however our portfolio of assets under long-term PPAs and the merger with MEMC in 2009 have allowed us to raise capital and a fund of over $1.5 billion with First Reserve that places us in a strong position for expansion of our business in North America and globally.
The pain points for a company such as SunEdison are common to fast growth innovative businesses and as such are growing pains are pleased to endure! We have a visionary leadership and management team that are set to drive our growth strategy in the next decade and beyond.
Q: How do you keep costs down on your products? How important is it for you to keep costs lower? (in terms of manufacturing costs per watt of power, for example)
A: Cost competitiveness is clearly the key to success in the majority of markets that are increasingly competitive and where incentives may be winding down. Utility solar projects are often awarded on the basis of RFPs or reverse auction mechanisms that drive the need for cost competitiveness.
Our MEMC parent brings both visibility to our business in relation to panel pricing and world class expertise in procurement and supporting processes that will allow us to further improve our competitive cost advantage.
Q: Could you explain to our audience, please, how the efficiency of PV has been increased in the past few years, and how it could be further increased? What is the potential of the technology?
A: SunEdison is technology neutral, applying the best available technologies to meet the needs of a particular installation and customer needs. We expect that technology improvements will continue to increase the efficiency of solar conversion at the panel as well as through inverter technology developments.
Q: Tell me about some specific projects your company has been involved with. Who have some of your utility partners been?
A: SunEdison has worked with many commercial customers and utilities in the US and around the world. We are excited to see our 72 MW utility scale facility at Rovigo in Italy come on line this year and lay claim to the largest utility PV system.
Our customers include many high street retailers with multiple systems that are owned and operated by SunEdison under our innovative PPA agreements. Our utility scale customers include Duke Energy, Xcel and many others.
Q: Who are some of your customers, large and small? Do you deal in rooftop solar at all, or are your customers usually on the utility scale? (say 500 kW and up?)
A: Our customers are utilities and commercial entities. SunEdison’s first customers were served through rooftop deployments under long-term PPAs that form the core of our ongoing business operations, however we are increasingly serving larger scale utility customers, however we look forward to serving customers across a wide range of segments.
Q: Are there any acquisitions or purchases you’d like to discuss? What impact has this had on your company?
A: SunEdison was acquired by MEMC in 2009. The impact on the business include a stronger balance sheet, increased access to capital, access to global markets and many other competitive advantages that support of vision.
Q: How do the leaders at your company feel about the state of the solar power industry at large? What would they like to see more of? What trends would they like to see reversed?
A: Our company is very bullish about the solar industry today and its growth in the next decade. Looking at global markets we see tremendous opportunities for wider deployment and our ability to build a long term position as a key part of the world’s energy supply.
The International Energy Agency recently forecast that solar power could supply up to 25 percent of the world’s power needs by 2050; few industries enjoy such a market potential.
In North America and the EU we expect some cooling off in regional markets as feed in tariffs expire or caps are reached, however when the solar industry achieves grid parity, the industry will be well positioned to take advantage of a rapidly growing market.