by Paula Mints

The solar industry has a supply chain problem – no, not just the current polysilicon and glass constraints. Solar wafer, ingot, cell, and module manufacturing are concentrated in China and South East Asia, leaving buyers outside these areas vulnerable to supply chain shocks.

Countries in this region have lower labor costs, lower energy costs, and higher incentives and subsidies for manufacturers. In China, manufacturing is supported (and controlled) by the central government.

Manufacturers in China, who have expanded into South East Asia, can make do with lower
margins than their counterparts in other countries. Manufacturers in South East Asia and China can also undercut competitors’ prices, determine industry direction (P-PERC, mono-crystalline, and n-type), ignore pilot-scale timelines, and ramp to commercialization more rapidly than can competitors in other countries.

Low energy costs in the region are made possible because of cheap coal. Low labor costs in
China’s Xinjiang Uygur Autonomous Region (XUAR), are made possible because of forced
labor.

Manufacturers in China can also raise prices and increase margins with little pushback from
buyers in other countries because … they control the supply chain.

It did not take long for China’s manufacturers to dominate shipments. Figure 1 depicts shipment growth for manufacturers in China, South East Asia, and the rest of the world from 2005 through 2010. During this period, shipments for China grew at a compound annual rate of 157%.

Figure 1: Shipments from China, South East Asia, and the Rest of the World, 2005-2010

Shipments from China’s manufacturers surpassed shipments from other manufacturers in
2011. In 2018, shipments from manufacturers in South East Asia surpassed manufacturers in the Rest of the World. Shipments from manufacturers outside of China and South East Asia continue to decline. Figure 2 presents shipments from manufacturers in China, South East Asia, and the Rest of the World from 2010 through 2020.

Figure 2: Shipments from China, South East Asia, and the Rest of the World, 2005-2010

The Polysilicon and Glass Problems

The shortage of glass for solar modules continues as a bottleneck for the industry even as
glass manufacturers in China ramp capacity. China has 90% of the capacity to produce glass for solar panels, which was strained in part by demand for bifacial modules and in part by government restrictions on adding capacity. As with the global polysilicon shortage in the early 2000s, the glass industry was unprepared for the surge in demand despite the clear trend over several years to glass-glass modules. With glass prices up and capacities tight until Q3 2021, module manufacturers face price increases and are passing these increases on to customers.

Meanwhile, after years of pricing below cost, polysilicon prices are increasing dramatically and are unlikely to decrease until potentially 2022. As with price increases for solar glass, module manufacturers are passing the increases on to buyers. Figure 3 offers polysilicon prices from 2018 through the 2024 estimate.

Figure 3: Average Polysilicon Prices 2018 – 2024

China has over 82% of the global capacity to produce polysilicon. In 2020 shutdowns due to the pandemic and accidents at polysilicon production facilities in China left the industry under capacity. In Q3 2020, floods forced Tongwei to shutter a 20,000 MT facility in Southeastern China. In September, a 50,000 MT polysilicon plant in Xinjiang suffered a major ‘incident’ during maintenance and was forced to shut down.

Before these incidents, there was sufficient polysilicon capacity to produce 205.6-GWp of
crystalline cells. Afterward, there was only sufficient polysilicon capacity to produce 176.7-GWp of crystalline cells. The industry capacity to produce crystalline cells in 2020 was
194.4-GWp. Polysilicon for high-quality monocrystalline cells was particularly constrained.
Polysilicon capacities have recovered in 2021. There is currently sufficient polysilicon  capacity to produce 251-GWp of crystalline cells, and capacities for high-quality polysilicon are increasing. The capacity to produce crystalline cells is expected to be 223.9-GWp by the end of 2021.

The Point

With the capacity to produce polysilicon and other raw materials, glass, wafers, ingots, cells, and modules concentrated in China and its expansions in South East Asia, buyers in other countries have little control over the pricing and availability of product.

While module prices were low, buyers of solar cells and modules could let themselves believe it was a buyer’s market where they controlled the price – after all, if the current offer is not low enough, a cheaper module is right around the corner.

Years of low prices had a lulling effect, hiding the fact that true control of the market would
become clear at some point. It’s a seller’s market and has been for years.

Paula Mints is founder of SPV Market Research, a classic solar market research practice focused on gathering data through primary research and providing analyses of the global solar industry.  You can find her on Twitter @PaulaMints1 and read her blog here. 
This article was written for SPV Reaserch’s monthly newsletter, the Solar Flare, and is republished with permission.

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by Paula Mints

In August, CdTe manufacturer First Solar (FSLR) sold its North America O&M business to NovaSource Power. According to First Solar CEO Mark Widmar, the decision was due to contracting O&M margins and customer demands for more services. The company is also exploring jettisoning its EPC business. First Solar plans to focus on its module manufacturing business.

Comment: Apparently, First Solar finally realized that O&M is low margin and that the EPC business may also not have much margin cushion. Now the company can concentrate on another low margin sector of the solar manufacturing chain, manufacturing.

First Solar has occasionally proven prescient with its strategic moves. It saw the FiT-driven boom in Europe before its competitors and rode the silicon shortage to a leadership position. The company correctly read the tea leaves and exited the market in Europe before it crashed to concentrate on the US market. First Solar was an early pioneer in O&M.

And then there is all of that Walmart (WMT) money that funded First Solar right up to, and after, its IPO.

So, First Solar can be forgiven for ignoring O&M’s dangerous undervaluing and chronic low margins in the field. Or … maybe not. Underfunding O&M is rife in the solar industry. Most assume that O&M costs will decrease in time depressed along with the artificially low price of modules. O&M costs rise over time as systems age. Underfunded O&M is under-done O&M, and this is dangerous for the future of the industry.

Lesson: First Solar’s move is akin to the over-used excuse ‘I’m leaving to spend more time with my family.’ Lesson – read the tea leaves earlier.

Paula Mints is founder of SPV Market Research, a classic solar market research practice focused on gathering data through primary research and providing analyses of the global solar industry.  You can find her on Twitter @PaulaMints1 and read her blog here. 
This article was written for SPV Reaserch’s monthly newsletter, the Solar Flare, and is republished with permission.

The post First Solar Jettisons Its O&M Business appeared first on Alternative Energy Stocks.

by Paula Mints

In July, Unprofitable residential solar lease company Sunrun (RUN) announced that it would acquire its unprofitable competitor, Vivint Solar (VSLR). Each share of Vivint stock will be exchanged for .55 shares of Sunrun’s common stock. Sunrun indicated that there were great synergies between the two companies.

Comment: Remember when Tesla (TSLA) adopted Solar City, a company founded by Elon Musk’s cousin? Sorry – remember when Tesla acquired money-losing Solar City and claimed strong growth and profits would follow? Great synergies. A wonderful future. Rainbows, kittens, and a profitable solar future for all.

The residential solar lease and residential PPA offers little synergy for customers, other than giving away their ITC and paying much more over time for having a solar system on their roof than they would if they bought it in the first place. Companies operating in the space need the cheapest cost of hardware (not always the best), fastest installs (not always the best), to reuse equipment when customers withdraw (including inverters), and to keep on adding customers to feed the machine.

Lesson: Watch this one as typically, when one unprofitable company buys another, they just create one big unprofitable company – albeit one with synergies. Gotta have those synergies.

Paula Mints is founder of SPV Market Research, a classic solar market research practice focused on gathering data through primary research and providing analyses of the global solar industry.  You can find her on Twitter @PaulaMints1 and read her blog here. 
This article was written for SPV Reaserch’s monthly newsletter, the Solar Flare, and is republished with permission.

The post Unprofitable Sunrun Buys Unprofitable Vivint Solar appeared first on Alternative Energy Stocks.

By Ishaan Goel

WHY COMMUNITY SOLAR?

A home solar system is a great investment, with financial returns far in excess of any financial investment that has comparable risk. It’s also a tangible step a homeowner can take to help the environment.  

Unfortunately, most New Yorkers (and Americans in general) can’t install home solar.  They may be renters, or have roofs that are too old or shaded.  Or they may not be able to afford the up-front cost, or not have enough income to take advantage of the tax credits.

That is why New York’s electricity regulator, the Public Service Commission, created community solar: An easy way for anyone with an electricity bill to help the solar industry and get some of the financial benefits of solar.

WHAT IS COMMUNITY SOLAR?

A community solar installation is a large scale solar farm built in a centralised location, where subscribers sign up to lease or purchase a share of the production from the solar farm as a credit on their electric bill. Subscribers receive credits on their electricity bill for the energy produced by “their” portion of the larger solar farm. They are not personally responsible for the maintenance of the farm. Community solar installations are typically 1 to 3 MW, or the size of about 150 to 800 residential solar installations. The largest can be up to 7 MW.

Community solar is authorized and incentivised by the state electricity regulator (the Public Service Commission in New York), so the details of how community solar works are different in every state. The terms offered by individual farms can also vary, especially between lease and purchase models. Although the terms offered by providers for subscription to community solar have now largely been standardised in New York, there are still individual farms with varying schemes. 

HOW DOES IT WORK?

You can sign up for community solar if you are in the same utility territory as the farm itself. The community solar farm feeds the generated electricity directly into the grid, and the utility compensates the farm with bill credits for the energy that the farm generates. The solar farm uses these bill credits to pay part or all of the utility bills of its subscribers.  The subscribers, in turn, pay the solar farm for the credits, usually at a discount.  This allows the solar farm to turn bill credits into cash to fund its operations and repay its investors. The credits are generally monetary (a cash amount equivalent to the value of the output produced).

There are two types of models to buy into community solar – the purchase model and the subscription model. Most community solar farms use the subscription model, but people who can pay up-front and use the tax credits may find that the purchase model is an even better deal financially.

The model determines how and when you pay for the credits on your electric bill. In a subscription model, the subscriber makes monthly payments for the credits generated by the farm for their property (which is pre-set). These monthly payments are usually a percentage of the value of the bill credit. In most cases, they involve no upfront costs, and are Pay-as-you-go per month. The 90% value model, which gives a 10% discount on the utility rate, is the most common in New York. A few community solar farms offer slightly higher or lower discounts.

In the less common purchase model, the customer buys a number of panels and their associated output for the lifetime of the farm (long-term contracts). Apart from these upfront costs, the buyer may also pay a low annual fee for operations and maintenance. 

Both community solar subscriptions and purchased shares/panels are portable within the same utility territory if the customer moves. This is an important feature, and makes community solar quite flexible. They can also be cancelled or transferred to another customer if the original customer moves out of the utility territory. This may involve a fee. Most subscription models require a credit check and a high enough credit rating (FICO score). Buyers are unlikely to need a credit check because nearly all their payments are made up-front and their ongoing obligations are minimal.

All community solar developers will ask to see a recent electric utility bill or your account number before offering you an agreement. This allows them to obtain your recent electricity usage from the utility and  estimate how much community solar you will need.

WHY SHOULD SOMEONE SIGN UP?

Community solar is a simple way to save money with solar, without directly installing solar panels on their property. It benefits people who cannot install panels on their homes due to shading or structural issues.  It also allows renters and people who cannot afford to pay for solar up front or do not have sufficient taxable income to take advantage of the tax credits which the Federal government and the state of New York use to subsidize solar installations.

CHOOSING A PURCHASE OR SUBSCRIPTION MODEL

The two types of models each have benefits and disadvantages. The discount subscription model (wherein one pays the farm a rate a percentage (usually 10%) below the utility rate) is virtually risk-free, and guarantees constant returns regardless of fluctuations in the utility rate. These are generally pay-as-you-go and have shorter-term contracts, which makes them non-binding for customers in case they wish to switch or cancel. Some farms also review and modify the allocation of credits to customers regularly, which makes sure that all their energy needs are met. 

The purchase model can save considerably more than the subscription model if electricity rates happen to rise rapidly. This is because the credits applied acquire a greater monetary value, and so the return on the initial investment increases. The risk, however, is that if the buyer moves out of their utility zone and cannot find any buyers for their panels then they will not be able to recover their initial investment. Moreover, in case their electricity consumption reduces, then some of their credits could go to waste. 

Thus, for those with adequate tax credit, cash to invest and stability in their potential electric usage, a purchase model might be more lucrative if utility rates are expected to rise. But these are rarer in New York now, and unavailable in most utility zones. The subscription model is risk-free, widely available, and needs no upfront investment, which makes it a more enticing offer in general. 

VENDOR LISTS

Below are links to lists of the vendors available in each utility zone in New York, and the information that was available for their farms. Links to their respective websites and contact pages have also been given, to reach out for direct enquiries about subscriptions and the specifics of each offer. 

Some of the vendors listed are not direct farm operators – they are brokers for community solar farms. These take charge of credit allocation and customer management, but are not directly in charge of operating the solar farm. There are no distinct reasons to prefer one kind of vendor over the other. While brokers might have the resources and scale to provide better customer service in many instances,  they do not usually maintain long-term relationships with subscribers. 

Also, there exists a possibility that subscribers might not start receiving billing credits immediately – especially if the project that they have subscribed to is still under development or they are on a waiting list. We would advise potential subscribers to inquire when the solar farm they are subscribing to will become operational and they will start receiving credits from their vendor.

There exist several online “marketplaces”, which contain listings of community solar farms within particular utility territories. These allow potential subscribers to compare different options and estimate savings, track the progress of projects under development and understand a project’s environmental impact. Some of the prominent ones are PowerMarket and EnergySage. Central Hudson also recently started its Clean Energy Market for community solar in its territory. Most of these marketplaces support themselves with referral fees from community solar farms, and so there may be a trade-off between the convenience of using a marketplace and finding the best deal. On the other hand, community solar is generally an excellent deal for the subscriber, so readers should not let the wealth of options become a barrier to signing up.

In order to remain an impartial forum, the author and this website have chosen not to accept referral fees from community solar operators. We ask that readers who value this service take some of the money that they save and make a contribution to the Environmental Voter Project or other environmental cause of your choice. Let us know about your contribution in the comments!

ROCHESTER GAS AND ELECTRIC

Community Solar Providers In Rochester Gas and Electric Territory

PSEG

Community Solar Providers In PSEG Territory

 ORANGE AND ROCKLAND

Community Solar Providers In Orange and Rockland Territory

 CONSOLIDATED EDISON

Community Solar Providers In ConEd Territory

 NEW YORK STATE ELECTRIC AND GAS

Community Solar Providers In NYSEG Territory

CENTRAL HUDSON GAS AND ELECTRIC

Community Solar Providers In Central Hudson Territory

NATIONAL GRID

Community Solar Providers In National Grid Territory

SUMMARY

Community Solar provides a great chance to save money on your electric bill, while also helping out the environment.  While these savings are not as large as they could be for homeowners with suitable roofs for panel installation, community solar has the advantage of being open to everyone with an electric bill. It’s easy for renters, nonprofits, municipalities, small businesses and people without a lot of income or a large up-front payment to participate and save. Anyone who is unable to use federal or state tax credits should consider community solar.

Like rooftop solar, community solar agreements vary widely.  You can either subscribe to the output from community solar farms, which is usually the case, or you can purchase panels outright. In both models, you receive credits on your electricity bill.

Discount type subscription models provide a risk-free guarantee of 5-10% savings to customers, thus making them the easiest way to invest in community solar. They need no upfront payments, and often come without any credit requirements and termination fees, which makes them even more enticing. These factors also make it easier to find replacements in case you decide to move or your usage falls. 

Community solar purchases, where available, provide larger long-term savings than the subscription model as utility prices tend to rise. Community solar purchases make the most sense for people who would otherwise be likely candidates for home solar (they have significant taxable income and so can make use of the tax credits) but lack a suitable roof. 

NOTE

The information in this article is gathered from company websites and email inquiries. Please contact us in the comments if you have updates, corrections, or additions.

Companies that would like to use this article to drive traffic to their sites are encouraged to provide us with links or discount codes, which we will include in the “special offers” sections of the vendor lists.

******

Ishaan Goel is a high school senior studying in the Dhirubhai Ambani International School, India. He likes applied mathematics and statistics, especially their relation to economics and finance. He is very interested in green energy and sustainable technologies, because of their potential and rising relevance for the future. Ishaan’s hobbies include writing, long-distance running, playing the keyboard and coding.

Tom Konrad Ph.D., CFA also contributed to this article.

The post Buyer’s Guide to New York Community Solar appeared first on Alternative Energy Stocks.

See the Buyer’s Guide to New York Community Solar for details on how New York community solar works and lists for other utility territories.

This list last updated on 9/9/2020.

The post Community Solar Providers In NYSEG Territory appeared first on Alternative Energy Stocks.

See the Buyer’s Guide to New York Community Solar for details on how New York community solar works and lists for other utility territories.

The post Community Solar Providers In National Grid Territory appeared first on Alternative Energy Stocks.

See the Buyer’s Guide to New York Community Solar for details on how New York community solar works and lists for other utility territories.

The post Community Solar Providers In PSEG Territory appeared first on Alternative Energy Stocks.

See the Buyer’s Guide to New York Community Solar for details on how New York community solar works and lists for other utility territories.

The post Community Solar Providers In Central Hudson Territory appeared first on Alternative Energy Stocks.

See the Buyer’s Guide to New York Community Solar for details on how New York community solar works and lists for other utility territories.

The post Community Solar Providers In ConEd Territory appeared first on Alternative Energy Stocks.

See the Buyer’s Guide to New York Community Solar for details on how New York community solar works and lists for other utility territories.

Updated 9/9/2020.

The post Community Solar Providers In Rochester Gas and Electric Territory appeared first on Alternative Energy Stocks.