Superstorm Sandy’s urgent message: “Backup electricity”

The images and stories from Superstorm Sandy are too reminiscent of Katrina. Flooded communities. A fractured infrastructure that cannot help thousands of citizens for days. The storm passes but local, state, and FEMA responses, while well intentioned, don’t stop shortages of electricity, gasoline, food, and transportation.

The key lesson is that all of the needed emergency infrastructure runs on electricity. And we can’t depend on the grid in an emergency.  My three point plan for off-grid electricity won’t eliminate hardships, but it will speed the recovery process by days.

Can We Get More Gasoline for Storm Victims?First, require cell towers to have power backup. It can be solar, hydrogen cells, or fuel based. Since cell phones provide the most critical communication system, lets require providers to ensure availability and tax the cellular users to pay for it.

Second, require gasoline retailers to have generator backup. Even with fuel onsite, if they dont have electricity, they can’t serve the public. Too much gasoline is sitting in tanks and not helping the public.

Third, use FEMA dollars to equip local public facilities, especially schools and shelters, with backup generators. The fuel source may be tailored to local requirements. In an emergency, people need a safe, warm place to stay immediately, when their home is damaged.

Lets not wait for another catastrophe to upgrade our infrastructure. We don’t know where and when it will happen, but there is no reason to be unprepared. Off grid electricity is the key strategy for minimizing personal hardships and saving lives.


Time to Rethink Solar Subsidies

Solar prices have dropped by more than half in the last five years. Solar purchase or feed-in subisidies over the past decade were created by the governments of Japan, Germany, Spain, and other countries. America’s combination of state subsidies, especially California, combined with the U.S. tax credit for solar, have also contributed to accelerating the solar learning curve. In the latest Solarbuzz survey, 34% of solar module purchases are below $2.00 per watt, with the lowest retail prices about $1.06-1.10 per watt for silicon modules and $0.84 per watt for thin film modules. The long sought $1 per watt price point has been reached.

Unfortunately for the solar industry, record low natural gas prices have moved the ‘grid parity’ target lower again. And, the global recession has pinched all of the economies that were funding fast solar growth, resulting in greatly reduced or eliminated solar subsidies and reduced demand growth.

Where to go from here? Dieter Helm’s new book The Carbon Crunch: How We’re Getting Climate Change Wrong- and How to Fix It offers some interesting alternatives. He argues for a carbon tax on all energy sources (not a cap and trade system). A carbon tax would favor solar but also encourage natural gas as a medium term solution over coal and oil. It would be a new source of revenues for struggling government budgets. And it would generate a source of money to fund a broad range of new technology to help solar, such as better energy storage, and reduced solar installation costs.

Green activists won’t like his proposals. Neither will proponents of a expanding a regulatory approach to limiting fossil fuels. So it just might be the right approach for the next policy phase in evolving the world’s electricity fuel sources. And help restimulate the solar market in a time of economic slowdown.

Electric Vehicles drag, while Hybrids charge ahead.

Despite impressive technology, consumers and automakers proceed with caution for Electric Vehicles. Expect hybrids to expand their market reach, as plug-ins, performance and diesel versions add to the Prius/Insight beachhead.

At least nine electric vehicles will be pushed into the auto market in 2013, despite distrust of the technology. Only two per cent of the public is considering purchase of an EV, according to one survey. Very high prices, fears about fires during an accident, and limited range, and long charging times will continue to hold back EVs for several years.

Next generation hybrids will outsell all-electrics

In contrast, hybrids have large momentum and are going to get even more, as climate change and rising gasoline prices motivate consumers for more fuel efficiency. Today’s generation of hybrids, like the Prius, offer 60 to 80% better fuel mileage than an equivalent size vehicle, at a 10 to 20% price premium. Local and national tax credits and incentives often close most of that price gap. And a six to eight year old Prius, in reasonable condition, may still command high trade-in value. The economics for hybrids is already favorable. In the next three to five years, a new generation of hybrids will shift public perception even further. More efficient plug-in hybrids by Toyota, GM, and others will increase the fuel mileage advantage to over 100%. Diesel-hybrids from Volvo and Peugeot will extend that fuel mileage to the 150 mpg range.

Hybrids optimized for acceleration and performance will remake the mindset of auto enthusiasts. Companies like Audi and Porsche, already leaders in the sports car and premium segments of the auto market, are racing performance hybrids at famous tracks and events like the Nurburgring and Le Mans. New technology, such as regenerative braking, flywheel energy storage, and high torque electric motors are creating an advantage on the race track, through better acceleration and fewer pit stops. The adage, ‘race on Sunday, sell on Monday’ will change the perception of hybrids from weak performing gas sippers to the experienced driver’s best choice. Expect hybrids to continue to steadily gain market share over this decade. Expect the hype for electric vehicles to be replaced by more sober market forecasts and by tough going for startups that focus exclusively on electric vehicles. For a detailed report, look for the July issue of MegaTrends.

Expand solar with new business models

The Wall Street Journal reports that in the past 9 months, more home rooftop solar systems have been leased than purchased in California. Leasing eliminates the large upfront invesment of solar. Homeowners like the steady monthly payments instead of gyrating utility bills. And solar provides an insurance policy against future utility rate increases. With higher utility rates than much of the country, and declining solar system costs,  California home owners save money too.

Smart technologists will continue to look for additional business model innovations to grow the market. How about subtracting high energy costs and adding solar systems to home appraisals? Perhaps mortgages that use part of the down payment for solar? Smart systems that send excess electricity to the grid?  Could scalable systems be designed that can incrementally expand one module at a time? With monthly payments,  this ‘pay as you go’ solar system has increasing value to the homeowner.

Technology doesn’t sell itself. Home solar is ripe for further business model innovation.

The new ‘forethought’ in photovoltaic systems

Photovoltaic systems have typically referred to the permitting,mounting, monitoring, installation, and financing of systems as the ‘rest of system’ or ‘balance of system’. When solar modules were the bulk of the system cost, those necessary items were often an afterthought in system planning and implementation. Now, the afterthought has become the forethought. Plunging PV module prices have changed the approach to system planning.

"Balance of System" moves to the forefront

Today, the U.S. Department of Energy (DOE) announced new strategies for addressing these balance of system costs. The DOE approved $8 million in new SunShot Initiative funding to nine U.S. start-ups focusing on cost reduction. And, the DOE is starting “America’s Most Affordable Rooftop Solar” competition.

Expect this strategic, long overdue focus on critical elements of PV systems to continue for a long time.

Electric Vehicle Makers should be dancing

Enterprise this week announced it is moving into hourly car rentals this year, joining Hertz in persuing the business created by Zipcar Inc.. Enterprise last month acquired Mint Cars On-Demand, an hourly car-rental firm with locations in New York and Boston, will join the new Enterprise Car Share brand. Zipcar, the segment leader, has about 500,000 US members and about 9,000 vehicles.

Makers and developers of electric vehicles should be dancing in the streets. For most people, an electric vehicle is desireable, but its not a complete solution to a person or family’s transportation needs. Car renting and sharing tie ins are a key tie in to overcome the problems of charging time, distance limits, and size restrictions of electric vehicles.

Take your EV on a ski trip? Why not rent an SUV for a few days. Headed to Grandma’s for Thanksgiving, but its 400 miles? Enterprise is usually just down the street with vehicles that get you there on one tank of gas.  Need to take a client to lunch, but the EV is charging? Zip Car is waiting and ready.

EV makers will need lots more creative solutions for their customers, if they hope to make a dent in the car market. More flexible car renting options makes a whole lot of sense.

U.S. DOC hands out solar tariffs to China

On May 17, 2012, the U.S. Department of Commerce announced its affirmative preliminary determination, announcing duties (tariffs) for Chinese imports of crystalline silicon photovoltaic cells. Duties range from 31 to 249 percent. These duties apply retroactively, back to mid-February. Excluded are thin film photovoltaics and modules produced in the PRC from cells produced in another country other than China. Commerce is currently scheduled to make its final determination in early October 2012.

Expect third tier Chinese suppliers to move their product to other geographies. And the tariffs will temporarily push out the time to grid parity and stall solar adoption in the U.S., hurting consumers, installers, and large field operators.

New Federal gas fracking rules are coming

The Obama administration has been circulating new environmental-safety rules for hydraulic fracturing on federal land, setting a new standard that natural-gas wells on all lands eventually could follow.  Expect the Interior Department to release them within a few days. These rules will help create more public confidence in this new technology and help the industry move forward.

The new rules address concerns that the method of extracting natural gas known as “fracking” can contaminate groundwater. Among other things, they create new guidelines for constructing wells and treating waste water, according to a draft of the proposed rules reviewed by The Wall Street Journal.

Any chemicals used in the fracking process would have to be disclosed, but not until after they have already been used in the drilling.

The fracking rules apply to natural-gas drilling on federal and tribal lands, where about one-fourth of fracked wells are drilled. The new rules could serve as a template for state regulation in the future.

5 reasons natural gas will rebound to $4.50 in 2013

The most optimistic prediction for gas prices by 2014 is $4.75/mbtu, with the median analyst forecast about $4.30, according to Bloomberg.  I believe the glut of gas will end much earlier, by late 2013. Here is why.

1. The large U.S. gas producers, like Chesapeake and ExxonMobil have already drastically cut drilling and new well development.

2. Many convertible factories, businesses, and commercial facilities that can switch fuels have switched to natural gas in the past two years. This will increase demand in 2013.

3. U.S. Electric utilities are consuming record volumes of gas. Consumption will climb again in 2013.

4. Its statistically unlikely the northeast U.S. will have another winter as mild as 2011/2012.

5. Global economy improvements, while modest, will still make 2013 the best year for growth since 2008.

Time for Solar Plug and Play?

On April 24, 2012, the Energy Department Announced Funding to Develop “Plug-and-Play” Solar Energy Systems for Homeowners. This effort is part of the Department’s broader strategy to spur solar power deployment by reducing “soft” costs, such as installation, permitting, and interconnection.

As solar module costs have reduced by half in the last 18 months and continue to drop, it is inevitable that attention turns to the installation side of the equation. But simply reengineering the installation will not be enough to succeed. Agenera’s MegaTrend report will focus on this plug and play technology trend in its June issue. When will it happen? What features are needed? How will it change the home solar market? What new markets will emerge?