Whoever coined the phrase solarcoaster must be feeling pretty pleased with themselves right now. A portmanteau that perfectly encapsulates the daily grind of the PV industry, solarcoaster evokes excitement, dread, trepidation, shocks, surprises and, for the most part, fun.
The word has certainly been earning its corn this week. A week of failed mergers, bold forecasts, encouraging pledges and market reinventions may, to the untrained eye, seem extraordinary, but such are the dips and twists inherent in this business, that it actually felt run-of-the-mill. But even a run-of-the-mill week in the world of solar still has the capacity to thrill…
Must be accompanied by an adult
Perhaps the biggest shock-that-wasnt-really-a-shock came from U.S. residential leasing provider Vivint Solar, which on Tuesday announced that it was pulling the plug on the M&A deal with clean energy behemoth SunEdison, citing a "willful breach" of the terms of the contract.
Although the termination of the deal sent a ripple of shockwaves throughout the industry, few analysts were surprised that the deal broke down, and even fewer were dismayed by its collapse.
Speaking to pv magazine, Mercom Capitals Raj Prabhu put it bluntly: the investment community did not like this deal. And when the investment community is upset, they pretty much let everybody know. After the cancelation was announced, Prabhu said: "SunEdison's stock price is up 16% within the first hour of trading. SunEdison as a company, and their trajectory, everything changed after they announced the Vivint acquisition. The market never liked it. They didnt like that SunEdison all of a sudden went into the rooftop business.
"And after that came the news that they are over-leveraged, with too much debt. Since then, SunEdison has been going back and basically terminating contract after contract for acquisitions they planned to make – mainly to preserve cash. So I would assume that the market is going to look at this in a positive way, only because this is what they wanted."
The analyst added that the deals collapse is likely to be a good thing for both parties, and for the wider solar industry at large. This is a cautionary tale for companies, he said. When you structure a M&A deal, it needs to be airtight.
Height restrictions apply
Prabhu was also vocal this week on matters concerning his native India. For years this giant country has failed to stand up straight on matters solar-related, but in recent months it has struck its chin out confidently and begun dining at the top table of solar nations.
So confident is the industry, in fact, that Mercom Capital is forecasting it to grow by more than 4 GW of PV capacity this year doubling last years installation rates and sowing the seeds for a further doubling (to more than 8 GW) in 2017.
Currently, India has just over 10 GW of solar projects under development, and cumulative capacity stands at 5,632 MW, the bulk of it solar PV, with solar thermal making up the numbers. Over the coming few months, a further 8.4 GW of new PV projects are expected to be auctioned off.
"There is cautious optimism in the solar industry as aggressive bidding remains a major concern throughout the sector," said Prabhu. Indias recent swathe of solar auctions delivered industry-beating lows of INR 4.34 per kWh ($0.064/kWh), which represents a 6% price decrease in just three months.
According to Prabhu, projects with tariffs of $0.0735/kWh are "extremely risky and difficult to finance" unless they are built at below a total cost of 5 Crores, which is $0.7 million.
No cutting in line
The stirring of Indias solar potential may, however, be undermined by the recent WTO ruling in favor of the U.S., which argued that Indias domestic content requirement (DCR) law violated WTO standards.
Despite many leading analysts stating that they are not unduly concerned of the impact this ruling could have on Indias solar growth, the president of Indias Solar Energy Society of India (SESI) Ajayprakash Shrivastava warned that the industry could suffer to the tune of $100 billion.
"Its very bad news for the Indian solar industry," he said. "If the opportunity to manufacture panels and cells for the 100 GW NSM is lost, then we are probably losing business worth $100 billion."
For the SESI president, the concern is that many semi-skilled jobs reliant upon a growth in module manufacturing specifically soldering, which employs a disproportionate amount of women in India could be injuriously affected. "We are just letting other countries have it [the business]," Shrivastava said. "These are small- to medium-sized industries that can be easily set up and the manual units employ a large number of women. They are better at soldering so are often preferred."
Two-hour wait from this line
Last years Ecobuild show in London was the de facto solar show for the U.K. The Solar Pavillion section of the consumer-focused event bustled with activity as everybody from small shop owners and homeowners to politicians and solar researchers came to test the wind of the U.K. solar industry.
What they found back then was a booming market on the cusp of impending subsidy withdrawal. Hay was being made, and the consensus was generally positive. This year, solars corner had shrunk dramatically, and the message seemed clear: PV will be afforded no special status in the U.K.s clean energy future, and must wait in line with all the other technologies while the electricity market reforms go through.
Solar, however, being the fastest-growing kid in the queue, is able to see the end of the line more clearly than others, and with the help of its new friend storage, may yet enjoy a fast-track pass towards greater market penetration.
For Ofgem, the U.K.s energy regulator, "storage could potentially play a significant role as a new provider of flexibility" within one year, while for the distribution network operators, probably some niche storage applications will appear in the next six to 15 years. Further hope for solars growth lies in the commercial rooftop sector, offering valuable returns even in a post-FIT landscape.
"We believe a 5 to 7% project ROI in a subsidy free market is realistic," Dan Grandage, head of responsible property investment at Aberdeen Asset Management, told pv magazine.
Store valuables before entering
The specter of storage threatens to put an end to the solarcoaster for good, and yet the solar industry is intent on hurtling towards this technology with arms wide open. There will always be shocks and spills in the solar industry, but as storage becomes an increasingly affordable and reliable friend, the dips, twists and turns will become more gentle. In the U.S., this transition is already happening, with data from GTM Research revealing that the energy storage market more than tripled in 2015, growing 243% to reach 221 MW of installed storage capacity.
As in previous years, utility-scale battery projects in the PJM Interconnection market made up the large majority of new storage. Including all technologies, PJM interconnect installed 160 MW of storage in 2015.
However, the most rapid growth is in the nations distributed storage market, where installations grew more than 400% to 35 MW deployed in 2015. Hawaii dominated a residential market which GTM Research describes as "geographically diverse", and California led the non-residential segment.
These are meager levels compared to what is expected over the next four years. GTM Research projects that the energy storage market will grow eight-fold by 2020 to 1.7 GW annually, and for investments to increase more than five-fold to US$2.5 billion.
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