SPI 2016: “Time for solar to grow up”

Solar Power International (SPI) 2016 comes at a contradictory time for the U.S. Solar industry. On one hand, on the back on the extension of the federal Investment Tax Credit, this year the U.S. will become the world’s second largest market, with even the most conservative estimates predicting 12 GW will be installed.

On the other hand, a huge volume of projects have been pushed back into 2017, developers are struggling to adapt to changing timetables, and module prices have crashed. Worse, state-level policy set-backs such as the net metering debacle in Nevada combined with the SunEdison bankruptcy have spooked investors, causing solar stocks to fall to their lowest valuations in years.

Regardless, the energy is strong at this year’s Solar Power International Opening Session. Over 16,000 attendees have already registered for the trade show, more than last year, with around 600 exhibitors.

The opening session kicked off proceedings today, with a clear call being made for the industry to mature, or “grow up”, in order to deliver the continued exponential growth required to transform our energy system.

David Crane, former CEO of NRG and now with Pegasus Capital, said that key was consumer acceptance. “People have to ask for it,” explained Crane. “We have to move away from residential solar being the main route to market.” He described California at present at being “like Halloween with no candy” as households turn out the lights and draw the blinds with so many solar salesmen traipsing door-to-door.

Crane feels that “solar-plus” business models will play a key role in driving this shift. “The technology is important, as is price, but we have to get into the head of the consumer.”

Spruce Finance CEO Nat Kreamer, echoed Crane’s remarks, saying that the purchasing motivation must shift for solar to truly represent a mature industry. “Consumers want more value, they want a bundle.” He noted that while consumers today spend days researching, considering and finally making the decision to buy a car, solar is not yet at that point. And the links between solar and auto industry extend further, Kreamer argued. He likened the solar industry today to the auto industry of the 1920s.

“There are no ubiquitous roads, it is widely accepted that the car is here to stay, but there are no sure-thing business model, and we’re not sure how to sell the product,” said Kreamer. A key factor required for the solar to “grow up”, Kraemer added, was an investment in politics and policy formation, effectively to “build the roads” in all 50 states.

The call for policy action was loud and clear from Kreamer, who played a key role in lobbying for the extension of the Investment Tax Credit. He noted that solar companies participate less in policy advocacy than the wind industry does, and took a swipe at companies who have chosen their own business model. “You’d better invest in policy that creates a great outcome for the whole industry,” warned Kreamer.

The need for business models to evolve is not limited to the consumer angle. While solar represents a tremendous opportunity for capital, solar companies have burned tremendous amounts of public equity. David Crane argued that many solar companies had gone public too soon, drawing his own experience with the conservative tendencies of investors from this time at NRG.

“Public markets don’t like lurches in strategy,” noted Crane. “They don’t even like exponential growth.”

PG&E VP of Regulatory Affairs Steve Malnight was the utility voice at SPI’s opening session, and while he argued for the key role utilities must play in solar’s maturity both on a distributed and PV power plant level, he too spoke of the importance of solar-plus solutions in the marketplace.

“There’s a sense that consumers want guilt free energy, and in California that attitude is growing,” said Malnight. “People want to charge their car, access cheap and secure energy and have control over it.”

“Solar may not be the iPhone, but it can enable customers to do more without having an environmental impact and do it guilt free.”