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NABCEP Executive Director Highlights New Developments

Posted by Gwen Brown on Apr 12, 2019 9:09:24 PM

As one of the most widely respected professional certification programs for the solar industry, the North American Board of Certified Energy Practitioners, more commonly known as NABCEP, plays an important role in establishing industry standards.

Fresh off our recent attendance at the NABCEP Continuing Education conference in San Diego earlier this month, Aurora had the opportunity to speak with Shawn O’Brien, NABCEP’s Executive Director.

Following up on our interview last year, our conversation explored recent developments in NABCEPs recertification requirements, trends that are being considered for future NABCEP program changes, and a recent grant NABCEP is involved in to help military veterans transition into solar careers.

Shawn_O'Brien_headshot_LINABCEP Executive Director Shawn O'Brien

Aurora Solar: NABCEP is changing its requirements for recertification. What’s changing, and how do these new requirements reflect changes in the solar industry?

Shawn O’Brien: Some of the changes stem from the fact that the roles of individuals who previously obtained NABCEP certification have changed over the time that they've been in the industry. We recently conducted a survey that found that 26% of respondents opened up their own companies after getting their NABCEP certification. That underscores that roles really have changed; a lot of folks are no longer on the roof.

Because of that, it’s not always possible for them to pull permits or get documentation to show that they've directly done installations. The Board has recognized that the industry as a whole is changing, as are the roles of individuals.

What the board has done in the new recertification requirements is allow individuals to show other achievements that demonstrate that they're actively involved in the industry.

For instance, instead of requiring three completed installations, certificants can submit a letter from their employer on company letterhead confirming that they are still actively involved in the renewable energy industry and describing their role. That can include holding a leadership role in an organization that's doing solar design, commissioning, maintenance, inspection, or another role like financing projects.

We also have a lot of certificants who are full-time trainers, if they can show over a three year period that they've done 120 hours of full-time training that is another way to meet the industry involvement requirement.

Of course, for people who are installing, they still have the option to use their completed installations in their recertification process. But the industry is growing up and it's time to recognize that not everyone is up on the roof, there are much more diverse roles.

Additionally, in accordance with certification best practices, part of recertification involves making sure that the individual is maintaining current knowledge in the industry. For this reason, we require a certain number of continuing education hours. Another notable change to NABCEP’s recertification requirements is that we are now requiring 30 hours of continuing education during that three year recertification period, up from 18 previously.

Aurora: What are some other industry trends that NABCEP is taking into account as it updates its programs?

O’Brien: Two trends we’re thinking about are the growth of commercial and industrial projects and the trend towards solar plus storage.

NABCEP originally started as a certification for residential solar installers. We want to make sure that NABCEP's certifications require the same level of expertise in commercial projects as those on a residential level, and that they provide the same assurance for the customer if they're a CFO instead of a homeowner. So we're also looking at certification requirements to make sure that the individuals being evaluated have that knowledge as well and not just residential.

The other development we are thinking about is solar plus storage. Historically NABCEP certificants have been evaluated mainly just on the installation of solar, not so much on storage.

These two industry trends require thought to ensure that individuals who are certified can work in those areas safely and effectively.

Aurora: In partnership with several other organizations including the Solar Foundation and SEIA, NABCEP won a $2 million grant from the DOE’s Solar Energy Technologies Office to support military veterans in transitioning into solar careers. What are the key initiatives under this grant and how will NABCEP be involved?

O’Brien: Yes, NABCEP is a sub-awardee on this grant; the prime grantee is The Solar Foundation. The program will focus on creating opportunities that help military veterans transition into careers in the solar industry. The awardees will be working on developing training and employment matchmaking for recent veterans.

In my opinion, the key is to create a sustainable work program that allows veterans and active military personnel to find employment in the solar industry that matches and complements the knowledge, skills, and abilities that they developed in the military.

It's very important that you don't just "find" veterans of the active military jobs. That would be easy to do. What we want to do is show them a pathway to a career. That's NABCEP's main goal; we don't want to get them into something that they're going to just do for three years. It's getting them on a path so that, for example, a few years after completing this program, they can become the owner of an installation company, a design company, an engineering company, whatever the case may be.

There are several things that NABCEP will be doing under this grant. First, NABCEP will be working to get all of our certifications registered so that veterans will be able to use GI Bill funds to pay for them. We already have two certifications registered, and we will be working to get all of the other six eligible for the GI Bill.

Another thing NABCEP will be doing is working with the cohort of over 200 community colleges and universities that are NABCEP-registered training providers. We will work with them to establish military-friendly programs that help veterans when they get into the community college or university.

Another big focus for NABCEP is creating what we're calling a "fast track" for veterans and military personnel, allowing them to see use their Military Occupational Specialties, which reflect the training that they took in the military, to get NABCEP certified faster.

Lastly, we’ll be then registering all our programs with something they call Army COOL, Credentialing Opportunities Online (or Navy COOL, etc.—they have it for all branches of the military). It’s an online certification system for active military. And we plan to offer the training and certification bundled together. We'll be working to create those bundles for active military members, so they can get the training and certification prior to actually separating from the service.

Aurora: What would you like solar companies to know about this initiative? How can they get involved?

O’Brien: The best way for solar companies to get involved is to respond when they see the calls going out about apprenticeships and employment matching, and to be open to helping to establish partnerships or work with us on matching for employment.

At the next NABCEP conference, we will have programming geared towards hiring veterans. There's a lot of literature out there that employers are apprehensive about hiring and interviewing combat veterans. So there are a lot of ways that solar companies can make a difference by educating their hiring managers on working with veterans.

Topics: Solar Spotlight

NEXTracker CEO Dan Shugar Talks Innovation, Solar’s Evolution, and More

Posted by Gwen Brown on Feb 20, 2019 12:13:59 PM

Dan Shugar, founder and CEO of solar tracking company NEXTracker, has had an illustrious career. Despite the tumultuousness of the solar industry, Shugar has led numerous companies to great success—across sectors as diverse as C&I solar installation and module and tracker manufacturing. Add to that the fact that he has seen the industry’s growth and evolution firsthand since the 1980s, and it’s clear that Shugar has a wealth of industry insights.

Dan Shugar, CEO of NEXTracker and solar industry starAfter starting his career as a transmission planner at California utility PG&E, Shugar transitioned to PG&E’s R&D department in 1988 where his passion for photovoltaics was ignited. He was fascinated by the idea that something with no moving parts could produce energy with just the light of the sun. He later led research that demonstrated how solar could offer benefits to the electric grid—which contributed to the development of net metering policies.

Shugar went on to serve as President of PowerLight Corporation—which became the largest commercial installer in the U.S.—and then President of SunPower, which acquired PowerLight in 2007. He served as CEO of PV manufacturer Solaria prior to founding NEXTracker in 2013.

Aurora Solar Content Marketer Gwen Brown and Chief of Staff Sunny Wang had the pleasure of interviewing Dan Shugar at NEXTracker’s offices in Fremont, California. Read on to hear Shugar’s thoughts on how solar business dynamics have evolved, where innovation can further reduce the cost of solar, and how to build a successful company and innovative team!

Aurora Solar: Having been involved in solar since the early days of the industry, you’ve seen a lot of change and maturation. What do you see as some of the most notable ways that the business dynamics of solar have changed as the industry has evolved?

Shugar: The analogy I like to use is that you can think of the evolution of the solar industry as similar to how the automobile industry evolved. In the early days, when I was at PowerLight, our approach was kind of like Henry Ford.

Dan Shugar Quote- Pick Your ShotsWhen the automobile industry was super immature, it was characterized by thousands of manufacturers and unreliable, expensive products—sort of a mom-and-pop type industry. What Henry Ford did was create a standardized product and a standardized production system with few options. He radically reduced costs, improved reliability, and made the technology more prevalent through a vertically integrated model.

That's similar to where we were at PowerLight, circa 1996 through 2007. We had a vertically integrated approach. The logic of heavy vertical integration made a lot of sense back then, because the industry was in a very early place.

Today, the industry's at a real scale and vertical integration no longer makes sense. You can't be best in the world at everything when the industry is huge. Instead of making every component like Henry Ford did, modern car companies make a few components. They're really focused on overall product design, brand, marketing, financing, etc. But then they have, for instance, an electronics company making the radios and a tire company making the tires and so forth, and they bring that together.

The solar industry today, is coming to a similar point. With more companies specializing in specific areas, it doesn’t make sense to have precious management attention and capital spread over too many things. I think you need to pick your shots.

Be best in the world at one or a couple things, but don’t try to be best at everything. You can't be the best O&M company, the best manufacturer, the best developer, and do all those things at the same time.

Dan Shugar, CEO of NEXTracker, discussing the company's technology. Photo of Dan Shugar, courtesy of NEXTracker. 

Aurora: What areas of innovation do you think the industry should double-down on, or start exploring, to further drive down the cost of deploying solar energy?

Shugar: We've been really focused on software for that purpose. I love the idea that without building more hardware you can get more energy out of the system. As an environmentalist, I want the most to come out of every system that gets deployed.

At NEXTracker, we’ve commercialized an adaptive tracking algorithm that is really moving the needle from a yield standpoint on the software side. The gains aren't giant numbers—it's not going to double yield—but with our TrueCapture technology, we can achieve 2 to 6% yield improvement for typical sites. That is actually a huge amount if you're doing structured finance projects.

Part of how that is accomplished is by optimizing yield on cloudy days, when you can actually produce 15-20% more energy by orienting the panels upward instead of tracking conventionally. We also developed improvements for undulating terrain. Instead of having all the trackers move in parallel like a Venetian blind—what we commercialized 20 years ago—we developed a way to have each row optimally change based on its geospatial position within the plant, using embedded sensors that establish its position relative to its neighbor. That can generate a lot more energy on an undulating site.

Just in the context of the fleet that we’ve delivered, these yield improvements are the equivalent of shutting down a couple coal plants worth of energy! I think even more can be done across the whole software category to wring more energy out of PV systems.

A utility-scale solar plant using NEXTracker technology. Photo courtesy of NEXTracker. 

Aurora: Early in your career, you co-authored research that demonstrated how siting solar in strategic locations on the grid could deliver cost savings to utilities. These findings contributed to the development of net metering policies. Even today, however, the idea that solar hurts utility profits or shifts costs to non-solar customers persists. What do you think it will take to overcome this misconception?

Shugar: Yes, we proved that PV distributed in the grid can provide a lot of benefits. The research was part of a national solar research project by the U.S. Department of Energy, co-funded by a number of utilities, called Photovoltaic for Utility-Scale Applications (PV USA). We were able to empirically document the benefits solar provides to the grid when it's distributed at strategic locations.1

In terms of how we overcome misconceptions about solar’s benefits, if you look at the majority of solar being installed, which is utility scale or community solar, solar is about half the average cost of all other main forms of generation in sunny areas. We're massively lowering the cost of wholesale power, saving consumers tens, maybe hundreds of millions of dollars annually. We need to get that message out better.

Dan Shugar Quote- Lowering Cost of PowerOne way we're doing this is through a national solar and wind job campaign tour we launched a year and a half ago, A Renewable America, with the Wind Solar Alliance. We've been doing a series of on-the-ground events, highlighting the jobs that have been created, and the savings and energy independence that solar and wind are providing customers. So it's a very concrete, tangible thing. 

Aurora: Something you’ve mentioned in the past as critical to a company’s success is the strength of the team and creating a dynamic that encourages innovation. What practices do you incorporate on a regular basis to cultivate that dynamic in the companies you’ve run?

Shugar: First, in terms of team dynamic, I think being really transparent with the mission of the company is key—why we're here, why we're all putting our energies in. It's got to be bigger than just making money. For us, it's always been mainstreaming solar.

From there, it’s important to define common goals and communicate them clearly so the team can align around them. In terms of processes at NEXTacker, and my prior companies, we do periodic strategic off-sites where we define what we want to accomplish in the coming year, and break that down into a quarterly cadence.

We share those objectives really actively with all staff and each person has their own milestone system that defines what they're working on—they generate that. A benefit of that is that it engenders a valuable dialogue with their supervisor. Having that kind of framework is really helpful, especially as companies scale.

With respect to innovation, you must encourage people to take risks and try new things. We have an ethos at the company where folks know you’ve got their back. If somebody tries something new and it doesn't work, that's okay.

Additionally, allowing organic creation of ideas from anybody within the organization is really important, as well as expanding the universe in which ideas come from—especially to include customers.

We ask customers for feedback all the time. "What do you think of the product? What are your ideas? How would you like it improved? What other features and attributes would you like to see?" We really listen to what they say and evaluate those ideas. Some ideas won't work, but some will. I could show our product and point to specific features that came from customers. And we go back to the customer and acknowledge them.

Shugar Quote- Organic Creation of IdeasWe also try to think strategically about how to strip out extraneous elements. Fundamentally, we're trying to generate more energy at the lowest possible cost with the highest amount of reliability. Anything not contributing to that should go, and features that can enhance that goal should be brought in.

It doesn't matter if you're doing roof systems or ground mounted systems—having that kind of culture and format for ideas has worked across a variety of platforms.

Aurora: Given the many successful companies you’ve been a part of, are there any lessons for success you've learned that you would like to share with our readers?

Shugar: A lot of it, I think, is just being very practical, keeping it real. For me, that starts with having a mission, like “we want solar to be the largest source of power,” and being able to articulate that.

Shugar Quote- Relationships with CustomersFrom there, it's about finding a way to add value to the customer and building an awesome team that's mission-focused, to be able to deliver that value to the customer. It’s about making sure you do the basics super well.

In terms of having a functional team, you need a process by which issues are put forward. We have a expression "bad news now." We want to know what the real issues are and not conceal them but rather deal with them—whether it's on the team or the product or the financial status of something. We want to address that practically and be able to manage expectations with the customer and follow through on our commitments.

I'm really passionate about relationships with customers and being honest. If there's a problem with the product, or the schedule, or the delivery, be super upfront about what those issues are, and customers are generally understanding. 

Aurora: In addition to your day job, you’re also a musician and you and your band Groovity perform around the Bay Area (and in the 2018 Solar Battle of the Bands at Intersolar)! How did this come about?

Shugar: The backstory about how I got into music is that, when I was 16, I indicated to my father that I was interested in learning how to play guitar. His response was "Get in the car, we're going to the music store."

Shugar Quote- Company is Like a BandIt was just a basic guitar he got me, but what I took from that is when people indicate interest in something—I did this with my kids—you try to make it available. Sometimes, maybe most of the time, it doesn't work out. But once in a while it does. For me, music has been a source of great joy and satisfaction, and an opportunity to relate to people on a different level. It's a lot of fun.

Music brings people together. That's what we were trying to accomplish at Intersolar 2018, and I think we got it done.

For me, having a great company is really like having a band—there's a direct analogy. Because you want to give every person space to contribute and you want to be really listening to what's happening.

I think the thing that works most in our band is that everyone's really carefully listening. That allows a fundamental structure but a high degree of improvisation that happens live, adapting as you go. When it's time to say something, you say it but then you pull back and let other people contribute and that makes the band—or company—that much more powerful. And it keeps it really interesting. 

 Groovity performs at Solar Battle of the Bands 2018. Photo courtesy of NEXTracker.  Groovity performs at Solar Battle of the Bands 2018. Photo courtesy of NEXTracker. 

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Dan Shugar, Sunny Wang, and Gwen Brown at NEXTracker on the day of this interview. Dan Shugar with Gwen Brown, Aurora Content Marketer, and Sunny Wang, Aurora Chief of Staff, at the NEXTracker offices. 

1 Shugar added: “It's also a fact that we were so successful in California that we actually have over ten gigawatts of solar and have changed the shape of the load curve of the fifth largest economy in the world. There’s still a lot of correlation in California, but it's less perfect than when we conducted our research.”

Please note that the views expressed in our Solar Spotlight interviews are those of the interviewee, and do not necessarily reflect the views of Aurora Solar.

Topics: Solar Spotlight

Sunnova CEO John Berger on Solar Finance, Tips for Success, and More

Posted by Gwen Brown on Nov 15, 2018 6:49:07 PM

Sunnova Energy Corporation is one of the leading residential solar and storage service providers in the U.S. The company offers a broad portfolio of solar and solar plus storage offerings, including multiple PPA, lease, and loan financing options designed to help solar customers find the choice that works best for them. Sunnova pairs these product offerings with long-term service and maintenance agreements–which they see as fundamental to ensuring long-term customer satisfaction.

Sunnova operates in 18 states around the country, as well as several U.S. territories including Puerto Rico, Guam, and Saipan, and utilizes a dealer model, working with a select number of qualified regional partners that have first-hand knowledge of local markets.

We recently had the opportunity to talk with Sunnova Founder and CEO William J. (John) Berger to learn from his two-plus decades of experience in the energy industry. Prior to Sunnova, Berger was Founder and CEO SunCap Financial, a residential solar system lease provider. He also founded Standard Renewable Energy (SRE), a top-10 provider of renewable energy and energy-efficient products and services.

In our interview, Berger offered insights into what solar financing options work best for customers and some of the trends he expects to see in solar finance, what Sunnova looks for in its installation partners, and tips for success in the solar industry. We’re excited to share those perspectives with you today. 

John Berger candid 1-sm-1

Based on your many years of experience in solar finance and Sunnova’s wide area of operations, do you notice any trends in what types of solar financing options are most appealing to customers in different contexts?

John Berger: Yes, I do, and I think the industry is going to see some movement on the financing side in the market as it reverts back to better reflect the balance of what financing options are best for each customer.

What we have seen and continue to see is that lease and PPA options are the most viable for most consumers–somewhere between 70 and 80% of the population. We see the proportion of customers with leases and PPAs trending back up and think the market will balance itself back out to a 70-30, maybe 80-20, split between customers with leases or PPAs and customers with loans.

To be clear, Sunnova is neutral about sales of loans, leases, and PPAs. It doesn’t matter to us what people choose; we're indifferent to that. But in terms of where I expect the customer base to balance out, that's my best estimate at this time–which points to roughly a 20% or more pick up in lease and PPA sales over the next few years.

Sunnova is unique in its model of working with a network of regional installation and maintenance partners that have firsthand knowledge of local markets. When Sunnova evaluates potential partners, what qualities and processes do you look for?

John Berger: That's a great question. I would say that what we're looking for above all else in our partners is honesty. They must understand the rules, in terms of consumer protection laws and the various geographic rules, and abide by them. I expect members of my company and our dealers and partners to adhere to the highest ethical standards, not just meeting the letter of the law but meeting the spirit of the law.

The second thing we're looking for is someone who can run a business. For example, partial payment for jobs in progress is not profit–don't spend it! We see that mistake over and over again.

Third, we also avoid partnering with companies that are trying to grow too fast. The telltale sign is somebody is who's trying to do a multi-state expansion without proper equity capital–which is usually far more than they think they need–all within the same year or two.

It's really problematic, and frankly, I have yet to see it really work. And I built a multi-state contracting business and sold it, so I understand the difficulties of doing that. The problem is you're trying to scale something, in terms of people, that's not scalable.

The most successful dealers that we have are methodical about their growth. Some years that growth is bigger than others, but they're methodical. This is a business where you're going to have to do a lot of hard work and build over a period of time. You're going to have to earn your reputation with customers, with communities. Nobody's perfect, and we’re no exception, but over a period of time you can be successful. It will not be overnight success.

“Get rich quick," has got to get out of people's heads. That's something that we've seen repeatedly in every market. We frown upon that quite a lot because we've seen the outcome and it's not good for the customer, for us, or for them. And, overall, it's not good for the industry.

Those are the top three things that we're looking for from partners: honesty, being able to run a business, and understanding that growth is something that occurs over years–not months. Beyond that, competency to install and sell solar is a given.

What's one piece of advice that you would give to every solar contractor?

John Berger: I think it goes back a lot of what we look for in those contractors. I would say that if you can run a good business, if you're an honest person, the thing that I would recommend is don't go out there with a "go big or go home" mentality. That's not the way it works, it ends in ruin.

I've seen heartache, heartbreak, partner bankruptcies over and over again for people that chase the flavor of the month, whether it’s a service provider they're teaming up with, a financing relationship, or something else. Nine times out of ten that ends in tears. Don't do it.

Focus on running the business, keeping your costs low, satisfying your customers, and pick long-term partners. Don't jump around all over the place; when you jump around, you can't meet your long-term customer relationship obligations.

So I would end with that, maybe that’s the bullet statement: think long-term. If you can do that you'll be successful.


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Please note that the views expressed in our Solar Spotlight interviews are those of the interviewee, and do not necessarily reflect the views of Aurora Solar.

Topics: Solar Spotlight, Solar Finance, Solar Business Tips

Expert Q&A: Why Solar Panel Recycling Matters–and How It Can Benefit the Industry

Posted by Gwen Brown on Aug 1, 2018 11:53:18 AM

The growth of the solar industry has been an incredible renewable energy success story, with an average annual growth rate of 59% over the last decade according to SEIA. By 2023, more than 14 GWdc of PV capacity is forecasted to be installed annually. Given an average panel size of 295 watts, that’s over 64 million panels per year!

While this growth is a tremendous boon for the environment as a means of tackling climate change and reducing air pollutants, there is one potentially negative environmental impact of solar energy that remains largely unaddressed. What will happen to this vast supply of solar panels as they reach the end of their productive life?

Without systems in place for sustainably managing solar panel waste, it could become a significant environmental challenge. Proactively implementing solar panel recycling processes, however, can offer business benefits as well as environmental sustainability.

To better understand the significance of this issue, what’s being done, and how the industry can benefit, Aurora Solar spoke with Dr. Vasilis Fthenakis and Michael Ginsberg, from Columbia University’s Center for Life Cycle Analysis.

Dr. Vasilis Fthenakis, Founder of the Center for Life Cycle Analysis at Columbia University and an expert on solar panel recyclingDr. Vasilis Fthenakis is the Founder and Director of the Center for Life Cycle Analysis (CLCA) at Columbia University’s Department of Earth & Environmental Engineering. He is also a Senior Scientist Emeritus at Brookhaven National Laboratory (BNL) where he conducted research for 36 years and directed the National Photovoltaic (PV) Environmental Research Center. His research is a crucial part of the scholarly landscape for comparing renewable energy technologies with conventional energy options and is assisting the large scale penetration of solar into the European and U.S. electricity grids. Some of his current research focuses on identifying cost-effective solar recycling options.

Michael Ginsberg, Ph.D. candidate at Columbia University, shares insights on solar panel recyclingMichael Ginsberg is a Ph.D. candidate in Professor Fthenakis’s group at Columbia University’s School of Engineering and Applied Science. He has served as an energy management trainer and policy advisor for the U.S. Department of State on issues of energy diplomacy. Through his firm, Mastering Green, he has advised the New York City Mayor's Office of Sustainability and Long Term Planning and the UN Development Programme on climate change adaptation measures in NYC and West Africa.

Gwen Brown, Aurora Solar: Why is solar panel recycling an increasingly important issue for the solar industry, as well as for society more broadly?

Fthenakis: One key reason is that the volume of photovoltaics is increasing, so having a system in place for the end-of-life management of the panels is becoming more and more important. The necessity of this will become more obvious as big installations, and large volumes of panels reach their end of life. For residential systems, owners will be wanting to do something with the modules that they have on their roofs, and will be asking for avenues for disposing of them. It's becoming a necessity.

Second, there are some toxic elements in solar panels, which make it important that they be managed responsibly. And third, solar panels contain relatively rare elements of high value. When they are recycled, it enhances the sustainable growth of photovoltaics by creating a secondary stream of valuable materials. In this way, recycling can help relieve pressure on panel prices.

Utility-scale Solar PlantThe huge volume of solar panels being installed in recent years will make it especially important to have recycling programs in place for sustainably managing these panels when they reach their end of life. 

Brown: What are some of the advantages for solar manufacturers that integrate recycling practices into their business operations?

Fthenakis: One is the marketing advantage. Customers and stakeholders want the whole lifecycle of photovoltaics to be beneficial for the environment. When solar panels operate they are obviously beneficial to the environment, especially if they displace other dirty power generation systems. But end-of-life management of panels is the only negative environmental impact of photovoltaics that is not really resolved in the United States. So tackling this issue is very important from a marketing and public relations standpoint.

Second, regulations are expected. Although we don't know when, we expect regulations in the U.S. on the management of solar waste at some point, as we have seen in Europe. If the industry is proactive, it can get ahead of the regulations. Industry stakeholders will be able to plan a recycling scheme the way they think it will work best, not in the way regulators might enforce it.

A third benefit for manufacturers, is that they can capture the value of the relatively rare elements that can go back into the manufacturing of photovoltaics–for example, silver in crystalline silicon panels; in thin films, tellurium, indium, gallium, germanium. These types of rare elements will need to be sustained through the century for the production of photovoltaics.

Brown: Given the limited supplies of some of these rare earth metals that are needed for different types of panels, will recycling be important in the long-term to protecting the supply chains of different types of solar panels?

Fthenakis: Towards the middle of the century, with expected growth, recycling will start becoming very important to solar panel supply chains. Projections show that, from mid-century on, the secondary stream could become as big as the primary one. There are two reasons for this; one is the large volume of solar installations that will be reaching their end of life at that point. Second, the primary production of many of important elements for solar panel production, such as zinc and copper, will peak by that point.

To sustain the transition from fossil fuels into renewable energy, with solar as major constituent, the solar industry will need to keep growing through the end of the century. Without recovery of those materials, it may not be able to. Recycling will become a necessity–not immediately, but from 2035 on.

Resource availability is one reason solar panel recycling will be important to the success of the solar industry. This chart shows projected availability of Tellurium, a key element of thin film solar panels.

Tellurium, used in thin film solar panels, is an example of an element whose supply will peak in the coming decades. This chart shows projections of tellurium availability for photovoltaics from copper smelters (dashed lines; peaking in ∼ 2055) and total from copper smelters and recycling of end-of-life photovoltaic modules (solid lines; continuing upward trend until 2095). The red and blue curves in each pair correspond to high and low projections, respectively. Note: A tellurium demand of 322 t/yr for non-photovoltaic uses was subtracted. Source: Fthenakis, V. (2012). Sustainability metrics for extending thin-film photovoltaics to terawatt levels. MRS Bulletin, 37(4), 425-430. doi:10.1557/mrs.2012.50

Brown: What are some of the barriers to solar panel recycling at this time? Are they primarily technical barriers, or more related to the process of integrating recycling into business operations?

Fthenakis: For the established technologies, mono- and multi-crystalline silicon and cadmium telluride, there are not technical barriers. There are tested, established technologies that show the separation of panel components can be done effectively and the materials can be taken out and be reused in different ways. For new technologies, like organics and perovskites–some PV technologies that use more exotic materials, recycling technologies have  not be established yet. Overall, the issue is not technical. The feasibility of separations is proven.

Cost remains is an issue, however. Because photovoltaics compete on price with inexpensive conventional energy, cost is very, very important. It's not like the recycling of expensive electronics where an additional costs can be absorbed in the price. Additionally, manufacturers are under pressure to keep the costs down because of the big influx of inexpensive photovoltaics from China, which has suppressed profit margins a lot. As a result,  although many in the industry realize that this is a necessity, we haven't had an industry-wide program yet in the United States.

However, solar recycling doesn't have to be costly; it can add value, as long as there are sufficient volumes and the activities–from commissioning and transport to recovery–are well planned.

Ginsberg: The primary question we're asking now is: "how do we maximize revenue and minimize cost?" Maximizing revenue is achieved by capturing the high-value elements–such as tellurium in cadmium-telluride modules. As Dr. Fthenakis said, the feasibility of separations has been proven. In his work at the Brookhaven National Laboratory, Cd, Te extraction and separation was completed at a project cost of 1 cent/Wp.

Now in minimizing cost, we have to minimize the cost of collecting. At Columbia’s Center for Lifecycle Analysis, we look at the cost of materials collection through life-cycle assessments. One of the things we focus on is reverse logistics, including looking at the infrastructure for collecting modules. Currently, manufacturers are able to distribute but not necessarily collect. A lot of the work that we do at the Center is looking at determining certain break even points to make solar recycling profitable.

Stack_of_Solar_PanelsMinimizing the cost of collecting modules for recycling is one area where more work is needed to solar panel recycling accessible and cost-effective. 

Brown: You mentioned that there has been industry-wide action on solar panel recycling in Europe. How does the current landscape of solar recycling in the U.S. compare to other markets like the E.U.? What has been done commercially to implement solar recycling here in the U.S.?

Fthenakis: In Europe, solar panel recycling has become mandatory since 2012 due to the Waste Electrical Electronic Equipment (WEEE) regulations which mandate recycling of photovoltaics at the end of their life. The industry in the E.U. was proactive and being “a good citizen,” and to some degree in anticipation of regulations, in 2007 started an industry-wide non-profit program called PV Cycle. This program currently assists the industry in complying with the WEEE regulations. It operates warehouses for collection and designated recycling plants. This is unique to Europe.

In the U.S. (as well as in Asia and other continents), we don't have that. The industry is using contractors–for the most part metal recovery contractors. Some of the big manufacturers, like First Solar have their own recycling programs. First Solar is managing recycling in-house; they have developed the technology, in-part based on patents developed with my work at Brookhaven National Lab. Others are using contractors to which they send the decommissioned modules.

Ginsberg: In the U.S., the primary regulation that pertains to management of solar panel waste is the federal Resource Conservation and Recovery Act (RCRA). State policies are diverse, so there are no universal standards at the state-level. Under the RCRA, PV modules may be found to be either a hazardous waste or “universal” waste, and are then subject to different handling requirements.

Fthenakis: There is a test to determine if a spent module is hazardous waste or not. It's called the Toxicity Characteristics Leach Procedure (TCLP), that applies to the federal level. Most photovoltaics in current production pass this test, which looks for materials like the cadmium and several others. But California has more strict testing.

Additionally, a bill passed recently in California, SB-489, designates photovoltaics as universal waste. This means end-of life modules will need to a specialized handler, such as a household hazardous waste facility, “Take-It-Back Partner”, or collection event, a universal waste transporter, or a universal waste destination facility.

Brown: Are there any other final thoughts on solar panel recycling that you would like to share with our readers?

Fthenakis: I encourage solar installers to communicate to their suppliers that a recycling program is needed; customers will increasingly be asking for it.

Ginsberg: The work on separation of elements has been done. Beyond the fact that the increasing demand of rare elements will necessitate their reuse, we need collection infrastructure paradigms that ensure profitability for manufacturers, whereby the revenue from output materials is greater than the module receiving, processing and inventory costs. It will be important to put pressure on the module suppliers to set up these photovoltaic take-back centers and demonstrate that they are proactive about recycling.

Fthenakis: And, when solar customers ask about what will happen to their system at the end of its life–because people who invest in photovoltaics tend to be environmentally conscious–it would be valuable to have planted the seeds of a recycling program to address these concerns.

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Topics: Solar Spotlight, solar industry, Solar Recycling

SEIA President & CEO Abby Hopper on Solar Policy Priorities and More

Posted by Gwen Brown on Jun 27, 2018 4:56:15 PM

From Washington, D.C. to state capitals around the country, if there’s a policy change that affects clean energy in the U.S., chances are the Solar Energy Industries Association (SEIA) is there advocating for the advancement of solar.

As the national trade association for the U.S. solar industry, SEIA represents organizations across all sectors from manufacturing to installation. SEIA works to champion the use of cost-competitive solar, grow solar jobs and diversity, remove market barriers, and educate the public about the benefits of solar energy.

Leading SEIA is President and CEO Abigail Ross Hopper, who joined the organization in January 2017. Prior to SEIA, Hopper had an impressive public service career focused on energy, including serving as the Director of the Bureau of Ocean Energy Management. She also held the roles of Director of the Maryland Energy Administration, Energy Advisor to Maryland Governor Martin O'Malley, and Deputy General Counsel of the Maryland Public Service Commission.

We had the pleasure of speaking with Abby Hopper to learn more about SEIA’s advocacy priorities, changes in solar markets around the country, opportunities for increasing diversity in the solar workforce and customer base, and more. We’re excited to share that conversation with you today.

SEIA President and CEO Abby HopperSEIA President and CEO Abigail Ross Hopper. Photo Credit: SEIA.

Prior to joining SEIA as President and CEO a little over a year and a half ago, you held several prominent positions in government. How have your previous positions prepared you for your role at SEIA?

One thing I’ve learned is that you can always learn the substance. I was not a solar expert when I got this job; I wasn't an oil and gas expert when I got my previous job. I always learned the substance. What matters, I think, is your ability to think strategically, to execute, and to form relationships and partnerships to make that all happen.

I’ve also I learned in my career that thinking about the "why" of what we're doing is so important. Making sure that you're approaching the “why” and the “how” thoughtfully and intentionally—and not just doing things “because”—that's important.

Another thing I've learned in my career is that relationships are the most important currency you can have. I could have all the knowledge in the world, but if I don't have the relationships to make things happen, it doesn't matter. Forming, building, and maintaining relationships is incredibly important.

What are a couple of SEIA’s top policy priorities at the federal and state level?

We have a couple of top priorities at both the federal and the state level. Strategically, those priorities center around defending markets that are already open to solar and ensuring market access. Those are big theories, but that's what drives our work.

At the federal level, we're really focused on making sure that—at whatever the venue, FERC, DOE, etc.—solar has an opportunity to compete. Any policies that might come out of this administration that tend to favor existing resources, coal and nuclear in particular, SEIA is going to be opposed to. We are keeping a really careful eye on that. More proactively, we are really lobbying hard for the Investment Tax Credit to be applied to stand-alone storage projects. We think that can be incredibly helpful to the storage industry, and also as it relates to solar.

At an intermediate level, if you will, we are thinking about Regional Transmission Operators (RTOs) and the kinds of market rules that are created there. We are engaged, and engaging more and more, to make sure that those rules and marketplaces are fair and open to solar energy.

At the state level, every year, we choose about twelve priority states. Those are places where we focus our time, money, and energy. There are a range of priorities at that level, but all are about market access—Renewable Portfolio Standards (RPSs), ensuring fair compensation for net metered customers, tax abatement, land policy, etc. The overriding theory is making sure that solar can compete.

Building upon that, given that there are so many different solar policy developments around the country, how do you pick the top priority states to focus on?

We are a membership organization, our members tell us what's important to them and that's where we focus. These priority states have historically been a combination of existing strong solar states (places like California or New York, markets we want to make sure stay open and healthy and grow) and emerging markets (Illinois, for example, New Jersey, which was a big market, then wasn’t, and now is again). Those are on the list because they are places where there is a lot of opportunity.

It’s a process we go through every year. Every fall, we get together with our members and ask “what matters to you?” And then we prioritize and focus on those areas. Similarly, I didn't come up with SEIA’s policy priorities; it's not “what Abby Hopper thinks,” it’s what our members tell us is most important to them.

Since you have such a high level view of what's going on around the country, what are some state markets that might not necessarily be in the news a lot, but where solar has made significant strides or where solar policies are being advanced that we might want to keep tabs on?

As we look at the country, the Midwest is a fast emerging market—Illinois, Michigan, Minnesota, Wisconsin, are all states that are, to one degree or another, grappling with solar and putting policies in place to help advance solar. (With the exception of Michigan, which just had a bad decision out of the Public Service Commission).

The Southeast is another emerging area. In the regulated markets down there, those Public Service Commissions have really been leading the way on requiring solar for their utilities. Once that initial step was taken, it’s obviously taken off. That's been exciting to watch.

I would say those are the two regions, with specific focus on the states that I mentioned and places like Georgia and South Carolina.

My next two questions touch upon one of the priorities that you highlighted when you took the helm of SEIA: ensuring inclusivity in solar both in terms of customers and the solar workforce.

First, what are some examples of successful strategies you've observed for making solar more accessible to groups that have traditionally had a difficult time accessing it (low income communities, renters, apartment residents, etc.)?

One is that, as we think about state policies or state programs to incentivize solar, there needs to be a low income element to it. For instance, if it's a grant program or some kind of rebate program, there should be funds dedicated to low income members of the community.

Community solar, I don’t have to tell you guys, is incredibly impactful and allows so many people to have access to solar who wouldn't otherwise be able to benefit from it. Community solar has really taken off in the past year and it shows in the 2017 market growth numbers. It's very accessible to people; it’s a business model that intuitively makes sense—people can understand that you're basically buying a share in a solar farm. So I think community solar will continue to grow.

Lastly, prices coming down has helped make solar even more accessible. I know that sounds obvious, but it’s making a big difference. At our board meeting recently, we had a speaker from Lawrence Berkeley National Labs, which recently published a report about the income levels of home solar adopters. In four states, the average income of solar adopters is on parity with average income in the state; it's right where it should be.

Although there are more women in the workforce than even a few years ago, we still see, according to The Solar Foundation’s Solar Jobs Census, that women represent less than a third of solar industry employees. What do you see as some of the key steps the industry can take to achieve greater representation of women in the solar workforce?

That’s a great question. It’s something I think about every day!

It's not as simple as just getting more women into the solar workforce, right? There are lots of things we can do to achieve that. But it's more than that, it's about recruiting women, retaining them, and promoting them. The job is not done on day one.

After that, it becomes about: How do we make sure that women are staying? How do we create work workplaces where they feel included, feel valued, feel heard? And, how do we create opportunities to promote them, so that those of us in leadership are not all by ourselves? There needs to be an intention to do it. It's not going to happen organically; I think you have to devote time, energy, and resources to making it happen.

Where and how are you recruiting new employees? What kind of education are you providing? Once they're in the door, it’s about understanding what your workforce needs—there may or may not be different needs and different opportunities. Are there examples of women in leadership? And if there aren’t examples of [female] leadership in your organization, where can women in your organization find other examples of leadership? Where can they get mentoring? It doesn't have to be just women mentoring other women, but there have to be opportunities for professional growth in a way that's meaningful.

Finally, you’ve gotta promote them! There are fully capable [women]. But if you don't look at your board, or your executive team, or your sales team, or your engineers with an eye towards diversity, you're not going to see it.

I look at all of those things—“How diverse is my my executive team? How diverse is my board?” We don't get all A+s; SEIA has work to do, but we are doing it. We're being thoughtful and intentional about it, and trying to create a kind of place where women come, stay, and get promoted.

And, I answered your question in terms of women, but these same things apply to people of color and other underrepresented groups of our community. And one of the things, in terms of getting people in the door, is expanding the network that you're trying to recruit from.

People share job notices with people they know, and people usually know people that are very similar to them. So this means we need to be thinking about things like: Are we going to historically black universities and colleges? Are we in partnership with NAACP and can use some of their networks? Are we coordinating with the Latino Chamber of Commerce, and can we use that network? We need to think more broadly than we sometimes normally do to make sure that we get [diverse] candidates in the door.

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Topics: Solar Spotlight, solar policy

NABCEP Leaders Discuss Solar Credentials and Industry Trends

Posted by Samuel Adeyemo on Jun 6, 2018 10:00:00 AM

If you work in the solar industry, chances are you’ve heard of NABCEP—the North American Board of Certified Energy Practitioners. NABCEP is a nonprofit professional certification board and credentialing organization that offers some of the most widely recognized and respected certifications for solar professionals. It seeks to promote consumer confidence and quality assurance by guaranteeing that certified practitioners have met minimum levels of education and experience, passed a rigorous competency exam, and abide by a code of ethics.

Earlier this year, Aurora’s Co-founder and COO, Samuel Adeyemo, had the pleasure of talking with NABCEP Executive Director Shawn O’Brien and members of his team at the 2018 NABCEP Continuing Education Conference in Niagara Falls, New York. The interview explored the role of NABCEP, how their programs are changing, recent solar industry developments, and more. We’re excited to share that conversation with you today.

Shawn_O'Brien_headshot_LINABCEP Executive Director Shawn O'Brien

[Note: This interview has been edited for brevity and clarity.]

How do you envision NABCEP certification impacting the evolution of the solar industry?

Shawn O’Brien, NABCEP Executive Director: I see NABCEP helping to ensure that the quality of solar installations and the maintenance of systems continues to improve. That includes helping to ensure people have quality experiences with the solar industry from point A to point Z, from a homeowner’s first interaction with a salesperson to the completion of their installation.

I also see NABCEP helping to improve safety in the solar industry by making sure that those doing the work—installing, maintaining, etc.—have some type of credential that confirms they know what they're doing and can do it in a safe and effective way.

We would also like to make our certifications available internationally. We want our programs to be able to help communities beyond North America. This is something we started back in November and December of 2017 with the expansion of our PV Associate program. We now have approved trainers in Saudi Arabia and India, and are working with folks in Dubai and Jordan for our company accreditation program.

Finally, a major vision for our work is to really enhance career development for professionals in the industry. I like that being a solar installer is not just a role anymore, it's an occupation, a career path for individuals working in the industry. We're very interested in helping them along that career path and advancing their journey.

For those unfamiliar with NABCEP’s credential programs, can you talk a little about how your programs are designed?

Shawn O’Brien: Something to note about NABCEP’s certifications is that NABCEP doesn't prescribe the requirements. We look to subject matter experts, members of the profession, to tell us what they're doing in their work and how important certain skill sets are for a given role.

To evaluate this, we use what we call a Job Task Analysis. It's a tried and true way of identifying the competencies needed to do a job. We send that out to the profession with a list of skills and say, “How important is it that someone who's going to be, for instance, a PV Technical Sales Professional, can do this skill and how critical is it that they do it right?” We analyze all of the data we get back, and based on that we design our certification programs to test for the skill sets that are needed.

What is some feedback you've received about how NABCEP certification benefits solar professionals?

Dan Pickel, NABCEP Program Manager: We require quite a bit of training. One of the main themes we hear in our conversations with solar professionals who pursue our certifications is that a lot of times they go into the process thinking that they already know everything they need to know based on their experience in the industry. However, in talking to them after they complete the training and certification exam, they report that they really come out knowing more, being more versatile in the field, and having a broader sense of PV installation work.

Even people who fail the exam often report that they've learned and grown a lot from the process. It's a tough exam; we want to make sure that if someone passes this exam they really have the necessary knowledge and can translate that knowledge into skills in the field.

What are some interesting recent developments NABCEP has observed in the solar industry; how are those developments impacting NABCEP’s programs?

Dan Pickel: One of the things we’ve noticed is that there has been more specialization within the industry in recent years. Solar professionals tended to have a lot of diverse skills. There were more jack-of-all-trades roles at smaller mom-and-pop installation companies, where they did everything from A to Z—running the company, doing installations, maintenance, etc. But as the industry has grown, we've realized that specialization has become more common.

As a result, NABCEP has developed some new certifications. We now have PV Design Specialist, PV Installer Specialist, and Commissioning & Maintenance Specialist certifications. These three specialty certifications were developed with the input of subject matter experts using our Job Task Analysis approach. We believe these specialty certifications will offer a lot of value to solar professionals as a way to advance their careers, whether they are looking for a bump in their salary, to transition into a more senior role, or to open their own firm.

Shawn O’Brien: More broadly, two of the major industry trends we’re seeing are increased focus on Operations and Maintenance (O&M) and energy storage. The O&M part we have addressed through our new Commissioning & Maintenance Specialist certification that Dan mentioned. Energy storage, and whether there is a need for a specialist certification in that area, is something NABCEP will be exploring this year and in early 2019.

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Topics: Solar Spotlight

The Path to a Solar-Powered Future: An Interview with Varun Sivaram

Posted by Gwen Brown on May 9, 2018 10:51:01 AM

When it comes to understanding what it will take for solar to provide a greater share of our energy, Taming the Sun author Dr. Varun Sivaram has a wealth of practical expertise—from serving as a strategic advisor on New York state’s Reforming the Energy Vision process to advising Los Angeles mayor Antonio Villaraigosa on the city’s energy and water policy. Currently the Philip D. Reed fellow for science and technology at the Council on Foreign Relations (among a host of other roles! ), Sivaram has been named one of Forbes’ 30 under 30 in Law and Policy and one of the top 50 leaders in sustainability by Grist. He holds a Ph.D. in condensed matter physics from Oxford University, where he worked on developing advanced solar cell technologies.

Taming the Sun, a new book by Dr. Varun SivaramIn his recently published book, Taming the Sun: Innovations to Harness Solar Energy and Power the Planet , Sivaram paints two disparate futures for the world. In one, the growth of solar stalls and society remains deeply dependent on fossil fuels, resulting in drastic negative impacts from climate change and air pollution. In the other, the worst impacts of climate change are avoided through the successful transition to an energy system powered by solar and other carbon-free energy sources.

Despite the impressive growth of solar in the last decade, Sivaram argues that without innovation to address certain barriers, solar energy could sputter out long before it can provide a significant portion of the world’s energy—much like nuclear, once hailed as the energy of the future but in decline today. We sat down with Varun Sivaram to discuss some of the challenges identified in his book that the industry will need to overcome for solar to become a leading energy source.

Dr. Varun Sivaram, author of Taming the Sun and Philip D. Reed fellow for science and technology at the Council on Foreign Relations.Varun Sivaram , the Philip D. Reed fellow for science and technology at the Council on Foreign Relations.

The challenges solar has faced to get to where it is today are very different from the challenges it will need to surmount in the coming decades. How can the solar industry balance policy advocacy for its current needs with a longer-term perspective on what will be needed for solar to become a mainstream energy source?

If the solar industry only narrowly advocates for its present day interests, we could see the clean energy transition stall and solar could be hurt a decade down the road. So this is an important question—how do you balance short-term advocacy with long-term prudence?

The solar industry needs to be thinking about what it’s going to need to survive 10 years down the line.

That means you really want to support the extension of grids. The larger your grid, the easier it is to integrate large amounts of renewable energy. A larger grid can connect areas with high renewable resources with areas of high demand and enables you to smooth out volatile supply and volatile demand.

The industry should also support a diverse generation mix. Flexible generators—natural gas, demand response, batteries, even nuclear—that can ramp up and down on demand will be important to accommodate fluctuations in solar energy. You want to support the most flexible electricity system you can. That includes advocating for policies that encourage energy storage.

The industry should also step away from policies like the Investment Tax Credit. Though helpful in the near term, the ITC could turn into a political lightning rod. It is not in the interest of solar to be a politicized industry; it should be what it really is, an industry for all Americans. Solar is an important employment driver in this country, and a source of affordable, clean energy. That benefits every person, Republican or Democrat.

Supporting a carbon price and pushing for greater technology innovation will also be valuable to the long-term success of the industry, as I discuss in the book.

While the hard costs of solar installations have fallen significantly over time due to reductions in the cost of hardware components, soft costs—such as labor and installation costs—have remained high. What role can software can play in addressing this challenge?

Software will be super important. It's going to take both hard and soft cost reductions for the cost of a solar installation to stay below the value it delivers even as the value of solar energy erodes as more solar is added to the grid. The module cost of solar is now a minority of the total system installed cost.

Whether it streamlines the design process, optimizes system design to maximize production, simplifies permitting, or improves the sales process and reduces customer acquisition costs—as Aurora does for its clients—or other functions, software is going to be important for the solar industry as a whole. The work Aurora does is going to be essential to enabling low cost solar systems that help to sustain solar's rise.

A challenge you discuss in your book is the need to enable greater private capital deployment in renewable energy. One method you highlight is securitization—or creating portfolios of projects, as is currently done with car loans and mortgages. What is needed to help facilitate this approach on a larger scale?

One of the imperatives is to increase the availability of data. Two important data needs to exist—energy production data and credit data. First, you need data on system production: both data on historical system performance, and predictive data—the ability to simulate how a system will perform and be confident that it will provide a certain amount of energy.

I'm excited about the work being done in the industry to compile production data from hundreds of thousands of installed solar projects, demonstrating that solar plants produce energy at the levels that models predict. That enables project developers to raise much cheaper debt financing. Predictive energy production data, as is provided by Aurora’s performance simulations, will be very valuable as well.

Second, for distributed solar, you need data on the likelihood of customers to continually make their lease payments or loan payments. It’s going to be really important for distributed solar to assemble databases and other tools to determine how likely someone is to pay their loan or lease. Credit data remains the biggest need.

Through the creation of green banks, some states have been very successful at using limited public funds to increase private sector investment in clean energy. What are your thoughts on the role of these institutions as vehicles for increasing investment in clean energy?

You’re absolutely right that a green bank can be an effective tool to mobilize a lot of private capital with limited public resources by proving that the public entity is willing to co-invest in clean energy, partially de-risking that investment. Over time, green banks basically put themselves out of business because they turn investments that once looked risky into de-risked investments that the private sector will invest in by themselves. Connecticut and New York provide examples of very successful green banks.

Now, New York is doing something even more exciting in my opinion: New York has raised private money—not from ratepayers or the government—which it can deploy not just in New York but outside as well. This means New York can help other states setup green bank front offices, increasing access to financing for clean energy projects across the nation.

States that want to have a green bank can now set up a very capital-light, asset-light front office, with a couple staff to help originate deals. New York's capital and back office operations will be used to co-invest in clean energy projects with private investors.

Now, basically any state can have a green bank; I think that's a super exciting way for us to scale the successes of NY Green Bank across the country.

The challenges you highlight are daunting. What are some things that make you hopeful we can overcome them and achieve a sustainable future?

Two things make me hopeful. The first is just how remarkable solar's last decade has been. A decade ago, if you had said solar would be the fastest growing, cheapest power source on the planet in 2018, no one would believe you—I wouldn't have believed it!

It gives me a lot of hope that solar has come this far; I think we can match or even beat the transformation we've seen over the last decade.

Second, I'm inspired because the ideas I discuss in my book are not science fiction, they're grounded in reality. They are grounded in technologies I’ve seen in the lab and even worked on, and in pilot scale demonstrations. The examples you’ll find in the book give me hope because the solutions are already in progress, we just need to invest the resources to make them a reality on a large scale. That's what excites me.

P.S. Our interview covered a lot more than we could fit in one article. Want to learn more about the systemic and technological needs for solar to advance? Download our bonus article with additional insights from Varun Sivaram!

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Please note that the views expressed in our Solar Spotlight interviews are those of the interviewee, and do not necessarily reflect the views of Aurora Solar.

Topics: Solar Spotlight

Revitalizing Coal Country with Solar Energy: The Story of Solar Holler

Posted by Gwen Brown on Nov 22, 2017 10:18:23 AM

Solar Holler, a solar installation and financing firm in Appalachia, is far from your typical solar contracting company. Inspired to use solar energy to help revitalize his home state of West Virginia, where the decline of the coal industry has devastated the local economy, Dan Conant founded Solar Holler in 2014.

Since then, he has pioneered new financing approaches to make solar accessible to all regardless of income in a state where the economics of solar have traditionally been challenging due to low electricity prices and limited solar incentives. The company is also playing a crucial role in providing job training to prepare local residents for careers in solar installation. These new economic opportunities are significant in a region where jobs in the coal industry—once the dominant employer—have declined by almost 90 percent  in two generations.

Solar Holler’s approach offers insights for those who want to make solar more accessible, and for solar entrepreneurs and advocates working in states where the solar market is still nascent. Solar Holler has been using Aurora for its solar designs since its founding so we were thrilled to have the opportunity to learn more about their work.

We sat down with Dan Conant recently to learn about Solar Holler’s strategies. We’re excited to share that conversation with you today:

Dan_Conant_headshot.jpgDan Conant, founder of Solar Holler. Photo credit: Dan Conant. 

To start, would you tell us about Solar Holler’s work and what differentiates your approach?

After working at several solar startups, I decided to move back to my hometown in West Virginia to found Solar Holler. Our original mission was to make solar affordable for community organizations around Appalachia who couldn't afford it. Our initial work focused on churches, libraries, homeless shelters, and all sorts of other amazing community groups around the state that do great work but have a really hard time accessing the benefits of solar. Since then, we’ve expanded who we serve and now help West Virginia households and businesses access solar as well.

Our first project was with Shepherdstown Presbyterian Church. To enable the church to install solar with no money down, we created a crowd-funding approach that was the first of its kind. We call it a Virtual Power Plant approach.

Essentially, church members volunteered for a program that would let a partner company, Mosaic Power , briefly reduce their electricity consumption through controllers on their water heaters during times of high electricity demand. Normally, Mosaic pays participants a recurring rebate check for participating, but in this case, the church members agreed to donate the rebate checks to repay the loan for the solar project.

It was a $55,000 project, and we created a revolving fund, so that once the loan is repaid the funds can be used to support future clean energy projects.

Another big part of Solar Holler’s work is its job training program, which prepares West Virginians for careers in solar installation. What can you tell us about that program and how it came about?

After that first project was completed, we started to get so much demand for solar projects that it outstripped the capacity of all trained solar installers in the state!

So that led to the creation of our job training program. We partnered with a nonprofit called Coalfield Development Corporation to develop a program to build the solar workforce  in West Virginia.

Participants sign on as apprentices for two years. During the apprenticeship, they are paid for their work and earn their Associate's degree and NABCEP certification—and they pay no tuition which differentiates our program from a lot of other solar job training options.

In a past interview , you talked about how effective solar job training programs for coal mining communities must go hand-in-hand with building the market for solar energy, otherwise trainees need to leave the area to find solar jobs. How does Solar Holler work to build the demand for solar in West Virginia?

A big part of it is setting up the financing tools. West Virginia is not a well-to-do state; there's not a lot of cash floating around. It's definitely not California or DC or Massachusetts or other hot solar markets. What those solar markets have going for them is high prices of electricity and they tend to be wealthier states. We don't have either of those in West Virginia.

Compared to California, where electricity prices can go over 30 cents a kilowatt, for residential energy here in West Virginia we're in the 10-11 cent range. So in order to make it affordable for folks and actually build demand, you need to have the financing tools lined up, you need to drive the costs down. And, eventually when you do that it'll take off.

We didn't want to train people for a job that doesn’t exist. Our goal wasn't to just put people through the program and have them come out on the other side and move to California or New Jersey or Massachusetts to take a solar job, because we're doing this for West Virginia as well.

That's why we take a multifaceted approach. Absolutely we need the trained workers—we need the workforce, but at the same time we need financing tools, we need community marketing, etc.

We're really trying to tackle all of those parts of the puzzle at once. We could go out and set up a big fund, but then we’d need the workforce to actually deploy those projects; you can't have any one part getting too far ahead.

shepherdstown_church_install.jpgA solar array is installed on Shepherdstown Presbyterian Church, Solar Holler's first project. Photo credit: Solar Holler.

You've pioneered some new ways of financing solar. How do you identify and develop new financing approaches?

It’s a mindset. I think what we've really brought in, in some cases, is this approach to not always do what the broader solar industry has done. It seems like overall, especially on the nonprofit side, the tendency has been to chase tax credits (in other words to favor financing options like leases and PPAs, in which the solar system is owned by a third-party that can take advantage of tax credits like the ITC).

I've approached dozens of financiers over the last four years about projects, and so many commercial financiers only want to do PPAs. That approach is great for the states that have PPAs, but it leaves out 25 states that don't have legalized PPAs. So, we're really trying to expand beyond arrangements that are focused on a third-party owner taking advantage of the tax credits.

Across the board a central theme is that we try to pull in efficiency tools that we can use and bundle them in with solar. Whether that's water heaters or LED lighting or other improvements, we like to do those upgrades at the same time as we’re installing solar on the roof. By bundling all of that together you can make a solar project work, where it might not have without the efficiency improvements.

What_is_PJM-1.jpgBeyond that, we’ve focused on identifying what resources we have in West Virginia that we can tap into. In these initial projects, one of the best things we have had going for us is that we're part of the PJM [regional electric grid and wholesale electricity market] . That enabled the initial approach of pulling in efficiency resources and other tools that you might not normally think of that are in lesser-known parts of the electricity market (like the capacity market ).  


What are some of the successes that you’ve observed from your work to date?

One of the most gratifying things for me is that when we work with community organizations, we know that the energy savings are going back towards supporting their missions. If it's a library that means more educational programs; we've done work with homeless shelters, where the energy savings directly support the social programs that are so crucial. That's the most rewarding part for me.

We've also seen a huge impact on the policy front, in terms of building community support for solar in the state.

For instance, two and a half years ago, there was a bill to repeal the Alternative Portfolio Standard in West Virginia, which would have eliminated net metering—and this was about six months after we had completed our first church project with the support of all those member families.

In one night, every single legislator in the state was flooded with emails from 600 people. Out of those, we had over 100 associated with the church, saying "don't take solar away from my church." In one day we flipped literally the vote and the legislature voted unanimously to keep net metering in place.

I think that's one of the reasons this work is so important; by working with nonprofits and community organizations we’re counteracting the idea that solar is just for the rich.

That's not a politically stable place for solar to be. It’s a whole lot harder to take away solar from a church or a homeless shelter.

What do you think the future holds for the growth of solar in traditionally coal-dependent communities like West Virginia?

I tend to be a really positive person when it comes to the growth of solar. I think we end up focusing a little too much on the negatives. Yes, there are things that could be streamlined about permitting and whatnot, but across the board, things are going really well. We're doing a couple of projects a week right now around Appalachia.

You need to get lots of people on board, in terms of skills and talent. We need electricians, engineers, marketers—we need all these different pieces. But we're pulling it all together.

Given the trajectory we’re seeing in our work, we've got all the tools right we need to really knock this out of the park, even in Appalachia.

Topics: Solar Spotlight

Are Small Contractors the Future of Solar? Pamela Cargill Weighs in on the Industry's Evolution

Posted by Gwen Brown on Aug 23, 2017 12:00:00 AM

Pamela Cargill is Principal of Chaolysti , a consulting firm that helps residential solar contractors succeed and reach profitability. With over ten years in the industry, she has built an impressive track record of helping solar businesses grow.

In the first of two articles from our conversation with Cargill, we shared her advice for practices contractors can put in place to operate more effectively. Today, we’re pleased to share her observations on how the industry is evolving and what trends contractors should be keeping an eye on.

Pamela Cargill, Principal, Chaolysti

[Please note that this interview has been edited for brevity and clarity.]

As someone who works closely with many different players in the industry, what can you tell us about the current state of the solar market and how it may be evolving?

I would say that we're going to continue to see small contractors take a larger and larger percent of the overall share of the market.

This whole idea of having a "long-tail" is going to become irrelevant because there are just going to be small contractors.

I really see that we're on track as an industry—as a specialty contracting industry—to look a lot more like HVAC. For instance, HVAC has somewhere around 450,000 to half a million contractors all over the nation and these are all small local businesses. There are some regionally focused enterprises, but there's really no such thing as a national, multi-state contracting business in HVAC.

Because the solar industry is a specialty contracting space that's still so small, we have a long way to grow. According to some of the numbers I've looked at from The Solar Foundation, we have somewhere between 6,000 to 8,000 contractors nation-wide. So there's a huge difference between what our industry looks like and what HVAC looks like. But then again they also have about a 100-year head start on us.

Will small contractors dominate the solar industry?

This creates some interesting dynamics. I think that as the overall growth and net profit margins of solar contractors start to look more like other traditional trade spaces, it's probably going to become less interesting for some businesses that are involved now to continue to be involved.

This comes back to the importance of having that sense of why [you’re running your business]. If a contractor doesn't have a long-term vision for why they are in this business or plans for how they're going to be there in the long-term for the customers in their portfolio, I don't really see a compelling reason why they'll be in this business.

This is not a sales business, it's a contracting business. And I think we're at a juncture right now where that needs to split. Yes, we still do need to have better sales and marketing practices, but we need much more focus on running a good contracting business. That's really what a lot of this is going to come down to:

The more we're focused on running contracting businesses, the more we're going to start looking like other traditional trades.

Recognizing that a focus on efficiency will be needed as the industry matures and profit margins become tighter, can you speak to the role of automation in solar contracting? What elements in the process of taking a solar installation from conception to project completion do you think are best suited to automation? Are there areas where you think automation can be counterproductive?

The parts of the process that I see as most suitable for automating are anything that helps you track how often you follow up with a customer. During the sales process as you're continuing conversations with the customer, and you're going back and forth with them—that cadence of follow up is ripe for automation.

Customer Relationship Management (CRM) software is one type of automation that can help your solar contracting business

I would be careful, though, about over automating that.

You want to build a genuine relationship with the customer that you're working with. You don’t want to over send automated emails in a way that isn't personal and genuine.

Automations should help you track when you had a conversation with a customer and remind you to follow up at a specific cadence, say a 5-day window. That's a good automation. Then you should personally shape that follow up. You may have a template you work from, or a content library that you send some articles from, but ensuring that the touch is really personal is critical.

Another area well suited to automation is the design process. There are a lot of aspects of the initial design that can and should be automated. I can say for a fact, based on my early experience in the industry doing a lot of this work by hand—going into a string sizing website, and then going to PV WAtts, and then going to an Excel workbook for pricing, and then going to another Excel workbook for material take-off—that was not particularly effective. It took a long time, and if I got interrupted in the middle of it, it was difficult to come back to and figure out where I was. That I think is where we've made a lot of progress.

Solar design software like Aurora's can add value by automating the PV design process

Software that automates more routine aspects of the design process, so that the designer can stay more focused on ensuring that the design is meeting the objectives that the customer has stated, that I think has a ton of value.

Any final thoughts you'd like to share?

I would close by noting that the easy days of floundering around to be a solar contractor in this business are behind us now.

My old boss called me the other night and we were catching up about the changes in the industry. We've both been in the industry for a long time and we were reflecting on how easy it was for us in those really early days to just kind of make it up as we were going along and not really have the tightest processes in place, because there was so much margin to work with.

While we both had skills in construction, we hadn't worked at an HVAC company where you live and die by very small percentage points on your margin and you have to be constantly focusing on the operational effectiveness of your business. In solar, we've had [some] time to muddle through and not really focus on process.

I think as we're moving into the future, it's really going to be worthwhile for us to look much more at how are other contracting businesses operate. What are the best practices from those spaces that we could bring over?

Whether it be in terms of project management, scheduling and dispatching, long-term customer support, service plans, keep in touch, re-marketing, etc. That's really what's going to start driving excellence in this business in the very near future and going forward.

We only have growth ahead of us in this space. It’s definitely going to be tough and there's going to be some weeding out, but I'm bullish on the growth of rooftop solar and I'm sticking with it!

Topics: Solar Spotlight, solar design, trends, contractors

These Practices Will Make Your Solar Business More Successful: Pro Tips from Pamela Cargill

Posted by Gwen Brown on Aug 2, 2017 12:00:00 AM

Pamela Cargill is Principal of Chaolysti , a consulting firm that helps residential solar contractors succeed and reach profitability. Her decade plus of experience in the solar industry spans the entirety of residential solar operations including design engineering, project management and installation, process design/automation, operations strategy, and software planning and integration. Cargill started her solar career as the second employee of a small solar installation company and played a key role scaling it into a $1M 8-person operation and, after two acquisitions, into a $60M regional installation leader.

Needless to say, Pamela Cargill has a wealth of solar industry knowledge. We were thrilled to have the opportunity to speak with her and bring some of those insights to you. In the first of two articles resulting from our interview, Cargill shares some management advice for running a successful solar business. In a subsequent article, we will share her perspective on how the solar industry is evolving.

Pamela Cargill, Principal pf Chaolysti

[Please note that this interview has been edited for brevity and clarity.]

Why is it important for solar contractors to have a clear sense of their business goals?

Of all the businesses I meet with, the ones where the leadership has the clearest and best-articulated vision of "why"—why everyone including themselves is showing up every day—those are the companies that I find are really run in the most sane manner.

The why is very important. Defining a sense of why gives contractors the ability to step back from what they're doing and focus on the big picture.

Where things start to get fuzzy is when we talk about "why," because the why is not something that's easily expressed in language. It's usually deeply felt beliefs and personal convictions. But when we can articulate those convictions, that's how we achieve values-alignment across the company. It allows us to ensure we're bringing in employees that are aligned with those values, and that we're reaching out to our customers and aligning with their values.

When I see that alignment happen, because people understand “why,” that's really where I see the magic happen.

What are some best practices for solar contractors to adequately balance their long-term, big picture business goals with the daily demands of their work?

The most important one is to set up structures within your company that help you check in with that sense of why on a regular basis. A critical part of that is to have regular team meetings where you focus on the most important things (not just status updates) and use that time to make decisions together.

If the only thing you're meeting about is what is going on, then you're never going to have time to consider whether how you're doing that is the most effective approach.

And if you can't evaluate your processes, then you're never going to have a chance to reflect more deeply on whether you have the right motivations, the right "why" behind what you’re doing.

When choosing metrics to measure success, what should solar companies bear in mind?

I definitely see people tracking too many metrics, and a lot of them aren't actually important enough to drive business decisions. It's easy to go after things like how fast you're moving a project between one milestone and another. But unless you understand why that matters, there's really no reason to be tracking that level of detail. Having more data in front of you doesn't necessarily help you make better decisions, it can actually end up clouding your ability to act.

When advising companies, I usually start with first making sure the contractor understands their sense of why, and then their sense of how, and then their sense of what. From there you can have a goal that comes out of that—that goal is a big picture goal for the business. It needs to be measurable, it needs to be actionable, it needs to be timely.

From that big picture goal, you can then line up the key performance indicators to help you reach it. And a lot of that is going to come down to very big numbers—things like your customer acquisition costs, your operating expenses, and your cost of goods sold.

Those three things are the picture of health for your company. If you can keep track of what's happening in those three areas, and how they're affecting each other, then you can start drilling down into more detailed metrics.

I'm big on the rule of three; anybody at any given time, shouldn't be tracking more than three metrics. Otherwise, you can have all the data in the world and have zero insight.

One of the services you provide for solar contractors is to help them identify inefficiencies in operations and processes that cost them time and money. What are the most common mistakes you see solar companies make that lead to decreased revenues?

I would say it's having too singular a focus on optimizing their sales and marketing.

Understandably, customer acquisition cost is a very hot topic in the solar industry—it's definitely hurting a lot of contractors. But what I want to help contractors understand is that adopting solar is a process that your customer engages in; it starts before they even get to the funnel, and it's not over when their project is completed. Given that, they spend less time in the sales process than they spend, proportionally, in any other part of the process.

So why are we spending—let's just say, theoretically—90% of our resources optimizing their experience in sales, and just 10% of our resources optimizing the customer experience within the project delivery cycle and post-project completion?

Contracting is mostly about the experience a customer has as the project is happening.

As they are getting notifications, as the installation is happening, as the inspections are going on—that's the customer experience. All of those elements add up to whether or not a customer is, in the end, satisfied or dissatisfied. That is more likely to lead to them referring or not referring other customers than what happened during the sales process.

Topics: Solar Spotlight, Management

Solving Clients' Needs: Advice for Solar Companies from a Nobel Prize-winning Economist

Posted by Gwen Brown on Jun 22, 2017 12:00:00 AM

Nobel Prize-winning economist Dr. Myron Scholes is a lecturer at the Stanford Graduate School of Business and has been a long-time adviser to Aurora. In 1997, he received the Nobel Prize in Economics for the Black-Scholes formula—a method to determine the value of derivatives. This formula is used daily by finance professionals around the world to calculate option pricing.

Following up on last year’s conversation with Dr. Scholes, we were excited to have the opportunity to sit down with him again to hear his insights on how solar companies can position themselves for success in the current market.

Do you have insights on how medium-sized businesses, in our case solar companies, can position their businesses to thrive in the new economy?

I think in the current economy the use of computer technology will allow companies to reduce costs and to worry less about a product—which is very narrowly focused—and move their thinking to “What is it that the client wants, and how can we solve client problems?”

With the data that companies now have from clients, and what clients can tell them, they have an ability to grow their businesses much more quickly.

Data’s the key; the availability of data allows you to build models and ways of thinking about what the client wants.

If the client wants something, they’ll tell you what they want. That helps in running your business much more than just thinking about a product. That is one of the crucial innovations we’re going to have in the next number of years in small to medium-sized businesses: the ability to use data, and the ability to think about a solution for clients and then design a product—not the other way around.

The adoption process for new technologies, like solar, is often thought of in terms of the technology adoption curve —a bell-shaped curve in which a small number of innovators and early adopters begin using the product before it is adopted by a broader majority. Where do you think the solar industry currently fits in that curve?

Well, when you have these curves of technology adoption they always apply somewhere to something and someone—they’re not very generalizable.

The most important thing is really figuring out ways to garner the trust of your clients.

Garnering trust involves education, truth-telling, and really thinking of your customer as someone who’s going to educate you about how you can educate them and build trust.

With the technology that is now becoming available in the solar industry to allow for that trust building, we’ll see large growth. Traditionally, trust is generated by asking your neighbor how they enjoyed something, because you trust your neighbor’s experience. But that’s a very slow and tedious process.

Learning to use the data to figure out how to educate and build trust with clients builds exponential growth.

Some of your research explored irrational behavior of investors and how investment managers can try to account for that. Recognizing that humans don’t always act rationally in making economic decisions, do you have any advice for solar companies on how they might want to communicate with customers or market their products in order to maximize sales?

Obviously, there are a lot of psychological effects that influence people and individuals’ behavior. Taking account of these effects can enhance one’s business, but I personally think that taking a more rational approach is better than the psychological approach. That way you have a repeating business.

I worry that the psychological approach—trying to look at irrational behavior of customers and use that as your focus—leads to inconsistent decisions and doesn’t really allow for the growth of the business. While I believe you can use psychological factors to influence or help get the message across, I don’t really think of that as a modus operandi or a way to actually run the business.

In any part of life where you deal with other individuals, I think you should take the view that truth builds trust. If you lie to your clients it will ruin your reputation. Unfortunately, it might be successful in the short run to try to garner business quickly, to try to take advantage of others, but businesses survive, prosper, and grow through trust-building.

Solar companies, or any company, can benefit from trying to think about how they can continue to educate their potential customers or clients and to try to build a sense of community and trust with them.

Trust is the key ingredient for business growth—and how you achieve that trust is the recipe. That has to be individualized to the customer experience and at the same time is generated by understanding why your customers trust you. The key is learning from your customers as well as educating them.

Some of your other research has looked at the impact of tax policy on markets. In the solar industry, the predominant tax incentive is the Investment Tax Credit (ITC), which allows solar system owners to credit 30% of the system cost against their taxes. The ITC will drop down over time starting in 2020—what can the solar industry do today to start preparing to function with lower tax credit levels?

In preparing to operate without the ITC, you should consider that the better your client base is, and the more you have a “network effect” of satisfied customers sharing their experience, the more possibilities there are to grow the business.

The tax credit is in some ways trying to reduce the costs of innovation or moving in the direction of eliminating externalities in our society. It provides an incentive to allow the first movers to generate information for others and build trust, so that others will then adopt on their own. In my view, a lot of its purpose is to overcome the uncertainty of the value of what you’re moving towards.

This network effect will reduce the need for this information advantage that the government is willing to provide through tax incentives to allow for more education of customers. Over time, the price of solar components will come down, and it will become a bigger industry, and therefore the need for these subsidies will disappear.

Topics: Solar Spotlight, Solar Business Tips

Getting to 100% Renewable Energy: An Interview with David Hochschild of the California Energy Commission

Posted by Gwen Brown on May 18, 2017 12:00:00 AM

Commissioner David Hochschild serves on the California Energy Commission (CEC) , the state’s primary energy policy and planning agency. The CEC’s responsibilities include promoting renewable energy development; advancing energy innovation through investments in energy research, development, and demonstration programs; advancing energy efficiency; and promoting affordable, reliable, and environmentally sound transportation energy infrastructure. The California Energy Commission is one of California’s three governing institutions for energy, along with the California Public Utilities Commission and the California Independent System Operator.

CEC Commissioner David HochschildAppointed by Governor Jerry Brown in February 2013, Commissioner Hochschild fills the environmental position on the five-member Commission, where four of the five members by law are required to have professional training in specific areas. Hochschild’s career has spanned public service, environmental advocacy, and the private sector.

Prior to being appointed to the Commission, Hochschild served as a Special Assistant to San Francisco Mayor Willie Brown in 2001, where he launched a citywide $100 million initiative to put solar panels on public buildings. He went on to co-found Vote Solar, an advocacy organization working at the state level across the country to make solar affordable and accessible to more Americans. He served as executive director of a national consortium of leading solar manufacturers and worked for five years at Solaria, a solar company in Silicon Valley. From 2007-2008, he served as a commissioner at the San Francisco Public Utilities Commission. For his work to advance clean energy, Commissioner Hochschild was awarded the Sierra Club’s Trailblazer Award and the Department of Energy’s Million Solar Roof True Champion Award.

Recently, Aurora Solar’s Chief of Staff, Sunny Wang, and Content Marketing Analyst, Gwen Brown, had the privilege of speaking with Commissioner Hochschild—fresh off his recent TEDx talk —to get his take on the current state of solar and clean energy policy, here in California and beyond, and on trends and future developments in the industry.

Do you think that California is feeling an added pressure to double-down on its climate and clean energy efforts?

Oh, absolutely. I think the will has never been stronger than it is right now. California has the sixth largest economy in the world and is home to 40 million people—we're larger in many metrics than most countries in the world. I think particularly given recent events, leadership on renewables has shifted to the states.

Fortunately, most of the policies that really matter—in terms of accelerating renewable energy—are actually still made at the state level.

By that I'm referring to renewable portfolio standards, net metering, interconnection standards, rate design, state tax credits, etc. that really dictate the markets for clean energy around the country. I think the will is very strong to continue what we've started, and I have actually seen an increase in activity and interest here in California.

Speaking of renewable portfolio standards (RPS), California’s RPS sets the ambitious goal of obtaining 50% of the state’s electricity from renewable sources by 2030. For those who haven't been closely following California's progress, can you provide a quick update on where we are? Are there major hurdles for California to overcome in order to achieve this target sustainably?

Today, 27% of the state’s electricity is from renewable sources; that's up from 12% renewables in 2008. And, we're on a path not just to hit 50%, but to exceed it.

There are hurdles to overcome, however. One of these issues is renewable energy integration. That involves a number of different levers, including energy storage, regionalization, and load control options. Regionalization—having a broader balancing area to be able to draw on and send renewable energy to—gives you more flexibility. Load control enables us to better align electricity demand with times of high renewable energy production. This includes demand response measures, as well as electric vehicles that are designed to charge intelligently and at times of the day that support the needs of the grid.

You could think of the process of achieving high levels of renewables as having two phases. The first chapter of this work was really bringing down the cost of renewable technologies. That work has largely been successful, particularly with solar and wind. The prices of solar and wind have both fallen about 80% in the last decade, so we’ve seen really substantial cost reductions which are very good for the future of the market. The second chapter is integrating renewables successfully onto the grid.

Another related challenge that goes hand-in-hand with renewable integration is electrification. We want to see a migration of services that are now fueled by natural gas, diesel, and gasoline to being powered by this new, clean electric grid. That's everything from vehicles—we have 275,000 electric vehicles on the road today (a trend I am happily now participating in as of about a month ago)—to all-electric homes, electrified rail, etc.

Continuing on the topic of California renewable energy policy, part of the California Solar Initiative that the Energy Commission is advancing is the New Solar Homes Partnership program . Can you share some updates on the program and its successes?

The way to understand this program is that it’s really the glidepath for California to reach zero net energy in [building] code. The goal originally was 2020 as our date to mandate zero net energy in code and you don't want that to be an abrupt change. You want homebuilders already building a significant number of homes with solar before that becomes a mandate. This incentive program was created to help get that going.

One of the main challenges with new construction is that the homebuilder is not the occupant of the home. The builders’ main goal is typically to contain costs so adding extra features is often not what they are seeking to do.

This program helped kickstart that market, and in Southern California about a quarter of the new homes being built today are being built with solar.

Our energy markets to date have been built around fossil fuels–which differ significantly from renewables. From a market perspective, what will need to change about how we buy and sell electricity in order for our energy markets to function with higher levels of renewables on the grid?

Well, I think the first realization is that along with renewables comes distributed generation and a distributed model. Where California used to have just a couple hundred power plants providing all the electricity, today we have roughly 600,000 when you count all the rooftop solar.

As a result, intelligent infrastructure that's designed to allow for a friction-free market for distributed generation is essential.

That includes having the ability to meter distributed generation. It also includes having smart inverters that have telemetry and voltage regulation capabilities. So, for example, we can send signals to rooftop solar systems to tell them to adjust voltage to help support the grid. I think that's one of the main changes that is needed.

I also think you're going to increasingly see a movement among utilities towards more of a "pipes-and-wires" model, where their focus shifts from generation to managing the interactivity of all these other generators and consumers.

We need the utilities to succeed—I want to be clear about that. I think it's really in everybody's interest to have the utilities succeed, but what they are doing is going to change.

I also think that, increasingly, the role of utilities is going to shift towards transportation. I believe the electrification of the vehicle fleet is one of the single most exciting potential developments in the next few years. It offers great promise—not just to reduce greenhouse gas emissions from our transportation sector, which is California’s greatest source of emissions right now—but also to help facilitate higher penetration of renewables.

Do you believe it’s possible to supply 100% of our electricity from renewable sources?

I absolutely believe it is possible. I think it's actually inevitable. The real question is whether we get there fast enough to make a meaningful difference on climate change.

Here's the big picture. Over the long haul, basic laws of economics hold that as reserves of finite resources like fossil fuels—whether they are reserves of coal, or petroleum, or natural gas—become constrained, the prices go up.

Technology, on the other hand, as it scales, prices go down—whether we're talking about cell phones, flat screen TVs, electric vehicles, or solar panels.

The foundational technologies of the clean energy future are all going down very steeply in price: solar PV, wind, energy storage, LED lights... that is reason for great optimism about our ability to achieve this future.

There will be a lot of adjustments to be made. We're going to have to be much more nimble about things like load control, for instance. The traditional model has been that electric load (electric demand) drives electric generation... your factory turns on, and you have to turn on a fossil-fuel burning power plant.

Now, for some subset of that load, it's actually going to switch; renewable generation is going to drive electric demand. For instance, if you have a fleet of electric vehicles and you have some flexibility in the time of the day you charge them, or you have a building that needs to be cooled but you can do some pre-cooling, you have windows of time for electric demand that can be aligned with renewable generation. That will become a much more refined science.

There are plenty of other technology hurdles to cross as well—but there is nothing about the transition to 100% renewable energy itself that is outside the realm of a solvable problem.

It's all solvable; it's just new types of problems, and our ability to solve these problems has gotten infinitely better.

I look at our capabilities and where we are in our technology development at the moment, and even if innovation were to basically halt and we were just working with current pricing and current technology, we could get to 100%.

The good news is it's actually getting better. Every year, we're getting larger and more efficient wind turbines, more efficient solar panels, and cheaper batteries with longer duration. The technologies are all getting incrementally better every year so I have no doubt we will get there.

And, now there are cities, like San Diego, and whole states, like Hawaii, that have mandated 100% renewable energy. San Diego is the first major city in the United States to mandate 100% renewables by 2035, and Hawaii has mandated it by 2045. That's already underway.

The solar industry requires cooperation between different actors, such as businesses, utilities, and policymakers. In your career, you've worked in the solar energy space from many different perspectives—including public, private, and non-profit. What are your thoughts on the state of cooperation among key solar players?

Well, I think there is room for greater coordination in the industry. Early on, the solar industry was fractured in terms of industry associations; there were multiple overlapping associations. That has gotten somewhat better but it is not entirely resolved. The parallel is made, for example, to the NRA. There's not a National Pistol Association and a National Shotgun Association, right? And the NRA is pretty effective.

I think there is more maturing necessary, and I would like to see more "pan-renewables" advocacy and collaboration where everyone unifies around the vision of 100% renewable energy and the electrification of almost everything. I think there's a role for all technologies that serve that purpose, whether it be geothermal, solar, wind, or biomass energy, energy storage, or electric vehicles.

Where do you think we can expect to see new or significantly refined policies encouraging solar adoption in the next few years—either within or outside the United States?

One area is Mexico, which the California Energy Commission has been working with quite a bit on promoting clean energy policy and sharing best practices. The CEC has signed Memorandums of Understanding (MOUs) with the Mexican states of Aguascalientes and Jalisco to cooperate around clean energy, and collaborates with Mexico’s Ministry of Energy under a 2014 MOU signed by California Governor Brown and Mexican Secretary of Energy Pedro Jaoquín Coldwell. We've seen some very exciting developments in renewable energy pricing, and as a result, we're now seeing Mexico think seriously about renewables.

For example, they're now looking closely at energy storage—what its role should be in the future of Mexico and what policies they should adopt. These are things that weren’t under serious consideration about two or three years ago because renewables were seen as too expensive.

Commissioner Hochschild signs a Memorandum of Understanding with the state of Aguascalientes Mexico
Commissioner Hochschild signs a Memorandum of Understanding with the state of Aguascalientes Mexico on behalf of the California Energy Commission. Photo credit: California Energy Commission.

What developments under these MOUs are you particularly excited about?

One of the most exciting things is how greater participation in clean energy markets is leading to financial innovation. Banks and other financial institutions have to think about how to finance renewables and that has a cascading effect, even to educational institutions. Until recently in Mexico, you could not get a master’s degree in renewable energy, now a university in Guadalajara, Jalisco just launched the country’s first renewable energy master’s degree program.

All of these changes are happening right now before our eyes. It's changing so quickly it’s hard to track. For example, the states of Jalisco and Aguascalientes, which the California Energy Commission has signed MOUs with, have both recently adopted fleets of electric vehicles. Those are the some of the first states in Mexico, if not the first, to formally adopt fleets of electric vehicles and that is thanks to some of the collaborative efforts between the Commission and Mexico.

What is the most innovative solar design you have ever come across?

That’s a good question… there have been many of them. I've been involved in solar for my whole career, and some of the most innovative things I’ve seen were things that didn't ultimately work in the market.

But, the truth is, the things that I'm most excited about are not what I'd call revolutionary innovation, but rather what I'd call evolutionary innovation.

It's things that are not particularly sexy or noteworthy, but which are the incremental improvements driving the whole market.

Every year the efficiency of solar panels and inverters has been going up. The early solar panels had 5% efficiency, right? Now they're roughly 20%. The early inverters had about 60% efficiency—so you would lose over a third of the power just converting it from DC to AC. Now, utility-scale inverters are at 99% efficiency. It wasn’t an overnight change; literally every year they became 1 or 2 % more efficient, with little tweaks and improvements.

That evolutionary progress is what I find most exciting. That’s what's been working and I'm optimistic that will continue.

Topics: Solar Spotlight, California

Diving Into Irradiance Modeling, with Solar Industry Pioneer Richard Perez

Posted by Gwen Brown on Apr 19, 2017 12:00:00 AM

The work of Dr. Richard Perez has been integral to the success of the solar industry. He developed the mathematical model used to predict how much irradiance (solar energy) will be on solar panels at different times throughout the year based on weather patterns. Perez’s model has been incorporated into many software modeling programs, including Aurora’s. It enables solar designers to more easily and accurately predict how much light will be available to different solar installations, and therefore how much energy they will be able to produce and what financial returns they will offer.

Richard PerezDr. Perez is a Senior Research Associate at the Atmospheric Sciences Research Center, State University of New York at Albany, where he directs applied research and teaches in the fields of solar radiation, solar energy applications, and daylighting.

We had the privilege of talking with Dr. Perez to learn more about his research and its applications in the solar industry, as well as his thoughts on future industry trends and the changing role of weather modeling research.

Tell us about yourself, and your involvement in the solar industry.

I've been in the solar industry for over thirty years now. I started in the early 80s, and I am a research professor at the University of New York at Albany. I develop solar resource (solar radiation) models.

Since day one, I have been also interested in solar energy applications. In fact, my students and I installed one of the very first systems in New York City on the rooftop of the Lincoln Center—before it was a business to do that. We also powered a radio station at a local university. These were the early projects. Back then, doing solar resource research and the actual installations were one and the same.

Installation slowly became a business, so I moved away from that, and I continued the solar resource research. But I always keep an eye on the nuts and bolts of solar design.

All of the research work I do is geared toward putting more solar on the grid one way or another. That's my driving motivation.

We could reach 100% [renewable energy] easily in my opinion. As the proportion of renewables increases, you will really want to manage that flow of power, accounting for weather changes the best way you can… that's where [weather] models are going to become really important to drive those systems.

How would you explain your irradiance models to someone who is not familiar with them?

The first model I developed, which I was lucky to gain recognition and subsequent funding from, was designed to calculate the irradiance on a tilted plane in an arbitrary orientation, from basic Typical Meteorological Year (TMY) data.

[Typical Meteorological Year data is the most common way to describe the average local climate from the perspective of solar applications. It is developed based on hourly meteorological measurements over many years to build a picture of the typical weather conditions.]

I was lucky to develop that model at the right time and the right place. There was an International Energy Agency study comparing all the different models on the planet to do that kind of thing and my modeI was ranked first. Since then, that model has been embedded in all kinds of software.

Later, in the early 90s, I became interested in using satellite remote sensing to get solar data, because satellites are up there 24/7 and see the whole planet. You can actually get data anywhere you want on the planet if you have a good model to do that. So I started satellite model development and I worked with a company in California, called Clean Power Research. Our model materialized into something called Solar Anywhere, that many people use today to get data.

This model has since been built upon to support forecasting, which is a big focus these days. We are developing a lot of forecasts, trying to predict, for instance, how much energy will be produced from solar tomorrow at 3 p.m. in a certain location—to help the integration of PV on the grid by making it easier for utilities to better manage that power.

I think the long-term trend is that to better manage [solar energy] on the power grid, it's going to be curtailed somehow… it's going to cost less to overbuild PV than to, say, put in things like storage.

How is your model applied to energy production simulation?

It gives you a more accurate reading of how much a solar system is going to produce given its orientation and tilt; shading can then be factored in on top of that. It lends itself well to complex simulations in any orientation.

Some of the [earlier] models worked pretty well for panels facing due south, but they became less accurate when applied to panels facing east or west or north. The model I developed is robust enough to work in any circumstances.

I predict that eventually models and related software will evolve to the point where you will simulate data in real time from all the systems you have installed, using satellite data and forecast models linked to that data.

[Note: Dr. Perez’s model is built into Aurora’s irradiance engine. This mathematical analysis is applied to TMY data from local weather stations to develop an irradiance map of the site, such as the one shown in Figure 1 below, which provides solar energy values (kWh/m2/year) at each point across the rooftop.]

Figure 1: An example of an irradiance map produced with Aurora’s irradiance engine.

How does accurate weather modeling affect the solar industry at large?

You want to be able to predict exactly how much energy your system is going to produce so you can make a good economic assessment of your system. That was especially true a long time ago when PV cost a fortune so you really wanted to optimize designs.

Today, PV is getting cheaper and cheaper. I think the long-term trend is that to better manage it on the power grid, it's going to be curtailed somehow, because it's going to cost less to overbuild PV than to, say, put in things like storage. So there will be an optimum management. In that case, the model will not be as critical to making the economics work.

However, it’s going to be really important to manage the flow of solar power on grids. Renewable energy penetration is increasing.... We could reach 100% easily in my opinion. As the proportion of renewables increases, you will really want to manage that flow of power, accounting for weather changes the best way you can, and that's where all of the models are going to become really important to drive those systems.

Your model has been the industry standard for decades. How do you predict that irradiance modeling will evolve over the next ten years?

Over the next ten years, I think it will evolve to focus on energy flow management, so forecast models will be the models most in need to do solar energy calculations.

I predict that eventually models and related software will evolve to the point where you will simulate data in real time from all the systems you have installed, using satellite data and forecast models linked to that data. That information could be transmitted to the people that operate the power grid so that they can make sure all those systems are working perfectly. That will enable us to put tons of renewable sources on the grid without breaking the system.

Does climate change affect the Typical Meteorological Year in a way that would impact solar energy production?

Well, there is a lot of research going on on that. Based on everything I've seen so far for solar, it’s a very mild effect. A couple percent here and there. On a yearly basis, it's not going to change all that much from all the simulations I've seen.

Unless you live in the Northern-most latitudes, like above 60 degrees latitude — then you will probably have more clouds up there. With arctic melting, there will be more water leading to more clouds.

But in the US, and similar latitudes, solar resource availability is going to be pretty much the same. I've seen simulations that go 100 years in the future taking into account climate models and I've not seen anything that shows me that solar will decrease significantly.

What current research in weather or solar energy production modeling do you find particularly exciting?

Because solar energy production is variable based on the weather and time of day, it’s not a consistent power delivery mechanism for now. However, there are ways to optimize that with the right amounts of batteries, oversizing, demand-side response load control, and geographic dispersion.

You can optimize all of that, and you could deliver close to 100% penetration PV at a very reasonable price. Achieving that optimum and driving it is really what excites me right now.


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Background photo credit: Warren Gretz / NREL

Topics: Solar Spotlight, solar energy, irradiance, insolation

Financing Tips for Solar Installers: Insights from David Arfin

Posted by Gwen Brown on Apr 13, 2017 12:00:00 AM

David Arfin is the inventor of SolarCity’s groundbreaking SolarLease, which has enabled over 300,000 residential, commercial, and government customers to adopt solar power and save money, without having to make a large upfront payment.

Aurora had the privilege of talking with David Arfin to learn from his years of experience in the industry, and we are excited to share his insights in a two-part series. In Part 1, he shared his expectations for the development of the solar finance industry. In today’s post, Arfin offers some advice for small and medium-sized solar companies on financing best practices.

photo of David Arfin in front of a solar installation

What steps do you think small and medium-sized installers can take to gain more financing options?

Small to medium-sized installers need to have more than one supplier so that they are not completely dependent on one loan product, one third-party owned product, or one PACE product. In that way, the "long-tail" as we think of it, can — individually and collectively — can hold the bigger companies more accountable.

For instance, consider if you are a local installer and you're selling to your provider—you only have one—at, say, $3/watt. If they come to you and say, “We have a problem and have to lower your rate. The most that we can pay you is $2.60/watt,” then you have just lost your margin, and you don't have an easy second choice.

In the medium- and long-run, we should be able to grow as an industry into something that looks a lot more like the real estate industry. Solar customers should be able to get financing from a lot of different sources. Just as in the mortgage industry buyers are not dependent on the real estate broker that sold you your house to get your mortgage. Financing should be much more transparent and much easier.

What are your three biggest pieces of advice for solar installers trying to expand their financing options?

1) Have your customers' interests at heart. BTC—“Be the Customer”—as they used to say in business school. Really understand what's in it for the customer and don't just accept what the financial provider is providing to you. There may be some inaccurate assumptions out there.

2) Diversify. Have more than one financing partner for each product line that you want to offer.

3) Be very careful of cash flows and try to lean on financing partners to help with cash flow requirements as much as possible.

What advantages, or disadvantages, do you think large firms have when accessing financing options?

I had the benefit of joining SolarCity early and watching the growth over the first amazing four years. When we were small, nobody paid attention to us. We couldn’t buy panels in 2008 from some vendors because they had a certain amount of panels and they only sold to their bigger or longer-term accounts.

As we grew, however, and became the dominant player and eventually the leader in market share by a wide margin, we had a lot of advantages. We were able to get meetings and capital easier than smaller firms could. There are high transaction costs in any of these tax equity deals or securitizations, which makes these kinds of deals harder for smaller firms to access.

Larger firms have always had an advantage in terms of getting capital—and they always will have an advantage—until the point comes where there is too much concentrated risk on one firm. If Wall Street thinks that a large solar installer is overexposed, then that becomes a problem.

A big risk for large companies is this: when you have a solid footprint in a place and regulations change, the whole thing can go down. We saw this in Nevada last year, where overnight the industry got crushed [when the Nevada Public Utilities Commission eliminated one-for-one net metering for residential solar customers, moving solar from compensation at the retail rate to the wholesale rate]. Companies had invested in warehouses, trucks, and, most importantly, employees and then that market dried up. These companies tried to move these “assets” to their other installation centers, but there is a huge cost to doing so.

In a low margin industry, taking on a huge cost hit is hard. We saw some of that in Arizona as well [when Arizona replaced net metering compensation for solar customers with compensation at a lower “export rate”]. So, when your company is big and has a big footprint in a lot of different jurisdictions, and one or two of those jurisdictions goes bad, it might affect five to ten percent of your business. In a low-margin industry, that five to ten percent can spell really hard times.

What are some good resources for solar professionals to educate themselves on solar finance?

I recommend going to conferences with sessions on clean energy finance.

You need to understand a bit about the Investment Tax Credit, depreciation, and SRECs- but you can pick that up pretty quickly if you're motivated.

We hope you found these insights helpful! Do you have your own solar finance tips? Let us know in the comments below.

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Topics: Solar Spotlight, Solar Finance

The Future of Solar Finance: Insights from SolarLease Inventor, David Arfin

Posted by Gwen Brown on Mar 23, 2017 12:00:00 AM

David Arfin is the inventor of SolarCity’s groundbreaking SolarLease, which revolutionized the U.S. residential solar market. This unprecedented solar financing program has enabled over 300,000 residential, commercial, and government customers to adopt solar power and save money, without having to make a large upfront payment. In November 2009, the SolarLease was named by Scientific American as the first of twenty world-changing ideas to build a cleaner, healthier, and smarter world. Arfin also received the first ever Innovation in PV Financing Award from the Solar Energy Industry Association in 2009.

Today, Arfin continues to create innovative financial solutions and structures to accelerate the adoption of clean energy technologies. He is the co-founder of Certain Solar , a cleantech startup harnessing the power of big data and behavioral economics to make solar energy more affordable. He is also the founder and CEO of First Energy Finance , which provides products and services to accelerate the growth of renewable energy-generating projects. 

We had the pleasure of sitting down with David Arfin to learn from his years of experience in the industry. In today’s post we’re excited to share his take on where solar financing is today—and where we may see innovations in the future. In the second article in this series, we continue our exploration of solar finance by sharing Arfin’s advice for solar companies on financing best practices.

David Arfin

How has solar finance evolved since you created the first lease at SolarCity?

Solar financing has evolved in a few small ways, but today’s product does not look all that different from what we had in 2008. I think that’s a shame. There are still evolutions of the product that we need to see.

“...there is still asymmetric information between the solar provider and the solar adopter. Very few people know much about how electricity rates work, where their rates have been, or where they likely to go...”

Third-party financing grew at an exceptional rate for several years. It proved that there is a large appetite for homeowners to adopt solar if you make it easy and affordable for them, and if they believe that they will save money by going solar.

Other products have come into the markets, like solar loans and Property Assessed Clean Energy (PACE) loans, but they are still not priced very well and pass off a lot of risk to homeowners. I don’t think we’ve hit the “Holy Grail” yet for solar.

Why do you think we haven’t yet hit the “Holy Grail?”

Good question. I think it’s partly that current product pitches still sell reasonably well. Leases, PPAs, and loans are still moving the quarterly needle for sales teams’ objectives so the installers and developers don’t have a great incentive to reinvent their offerings.

The other reason is that there is still asymmetric information between the solar provider and the solar adopter. Very few people know much about how electricity rates work, where their rates have been, or where they likely to go over a period of decades. That makes homeowners subject to believing whatever representations a zealous solar salesperson chooses to present to them in the sales process.

I think we need adopters to become much better educated about what they are signing up for—much in the same way that other industries evolved. If you look at car loans, home loans, and credit cards—they have all gone through cycles whereby poorly informed buyers get oversold on the offering, followed by a backlash, which in turn is followed by investigations and data gathering initiatives. This may lead to consumer advocacy, followed by truth-in-selling regulations that end with improved consumer-facing offerings. Sometimes these can crush companies and even industries.

As an advocate for proliferation of solar and other forms of Distributed Energy Resources (DER), I’d like to see the industry short circuit the process by self-regulating its selling practices and coming up with better consumer offerings.

Where do you think we are in that arc that you see in other industries?

We are still really early and I hope we are still on the upward trajectory of adoption of all DER. We are no longer in the phase of the earliest adopters, as there are a million American homeowners that have already adopted solar. A lot of these adopters can look at precisely how much energy their PV system has produced, but it’s very hard to do the math to know whether they are actually saving money by having gone solar.

“To use a baseball analogy, we’re in the top of the third inning for innovative solar financing. A million U.S. homes that have adopted solar, but there are 60 million or more residential dwellings that are ripe for switching to clean energy.”

As an industry, we have to be very careful of overzealous selling. For example, Aurora’s software enables one to accurately know how much solar radiation there is going to be on every panel, on every spot... and you’re only going to be off by a couple percentage points. But when it comes to the other side of the equation, which is not how much systems generate but the economic value of the energy generated—which is dependent on local policy makers’ decisions 15–20 years into the future—it’s not possible know what that’s going to be for any net-metered system.

What evolutions in solar finance would you like to see?

I would like to see shorter-term obligations. I think 20 years is a terribly long time for someone to sign up for an obligation like a solar installation. I would like to see solar installers and developers–and I will disclose that I have an interest in this—guarantee savings to homeowners who sign PPAs, loans, leases or make cash purchases. It’s a very different sale if you said to the customer, “Sign this contract and we hope that over 20 years you’re going to be saving money.” It would be much better to say, “We guarantee you’re going to be saving money.”

One company that I’m involved in called Certain Solar, which has a grant from the U.S. Department of Energy’s SunShot program, is looking to do just that. By using unique data and analytics, it allows financiers to be comfortable with the risk of having long-term cash flows from a portfolio linked to future utility rates. Today homeowners take on risk when they sign a 20-year agreement to lease or purchase and they cannot have a very good visibility of future electricity prices. However, this risk could be shifted to investors with the benefit of good data and analytics.

What we want to do is transfer utility rate risk from homeowners to investors who have the data to understand how prices are going to move and can also invest in a large national portfolio—whereas every homeowner makes one decision at one point in time for their roof within their utility.

In addition to shifting the utility rate risk, energy storage is going to become an important part of the story. We are going to see more time-of-use rates apply to when one is generating and consuming electricity. I think there are still a lot of interesting services and contracts that will be built as a result of these changes.

“I think you will see PV generation, storage, smart meters, demand response, and EV financing starting to blend together in creative ways. It’s an exciting time to be in cleantech...”

To use a baseball analogy, we’re in the top of the third inning for innovative solar financing. A million U.S. homes that have adopted solar, but there are 60 million or more residential dwellings that are ripe for switching to clean energy.

Where do you see the future of solar financing over the next 5 years?

There will be a lot more and better data. Hopefully there will be better consumer education and better consumer protections. I think you will see PV generation, storage, smart meters, demand response, and EV financing starting to blend together in creative ways. It’s an exciting time to be in cleantech—especially on the business model side to create and deliver innovative “energy as a service” offerings.

On the challenging side, energy is delivered within a regulatory environment and mere humans are making a series of policy decisions; politicians and regulators are motivated by different political agendas. A key enabler for solar and DER adoption will be having a positive and stable regulatory environment. Without this regulatory stability investment in clean assets will suffer and so will our transition to a cleaner energy world.

Any other final thoughts about solar financing?

I’m a born optimist. We've seen game-changing successes in the United States as we evolved from “solar as a sale” to “solar as a service” and I think that will turn into “distributed energy as a service,” “storage as a service,” “EV-by-the-mile,” etc.

As costs to manufacture and deliver systems decline, while data, software and analytics improve, we will create an ecosystem that will make it easier for energy consumers, investors and financiers to be able to invest in solar and other DER. All of that then generates more data and innovation, which further de-risks adoption. It’s a virtuous circle.

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Topics: Solar Spotlight, trends, Solar Finance

Solar Sales Part 2: Branding Best Practices - with Katherine Glass

Posted by Gwen Brown on Mar 7, 2017 12:00:00 AM

Here at Aurora, we’re constantly thinking about how we can help you be more successful in selling solar installations. We retained Katherine Glass, founder of SpringMark and an expert in helping companies create their marketing and branding strategy, to offer some insights for solar companies. Katherine spent seven years at Lippincott where she worked on branding strategy for companies like Delta, Petco, and Starbucks. Four years ago, she launched her own firm, SpringMark, which works with young companies on creating, developing, and launching a cohesive and powerful brand.

We are excited to share what we learned with you in the form of a three-part series. This is the second of two articles from our interview with Katherine on what solar contracting companies should know about branding (check out the first one here!). The third provides actionable tips on how you can make your solar sales proposals more compelling

What are the 3 biggest pieces of advice you give to your clients?

1) The biggest piece of advice is to clearly identify your brand objective. Every company is going to need to address different parts of their brand at different times. At the beginning, it’s all about building awareness. You’d rather have someone misunderstand who you are than not know who you are at all, because you’ve got to get your name out there.

As you grow, your objective might change to clarifying who you are, and getting everyone onboard with exactly what makes you special or different. Then, at some point, it’ll change to actually making sales and it’s all about driving revenue.

Stop to do a competitive audit and look at who else is out there. What are they communicating about themselves? What are they offering? Where do you stand relative to them?

2) Second, always look at the competition on a regular basis. A lot of companies when they first start out, they’ll take a little bit of a look around and see who else is out there, but then they dive into their own world. After a while, it’s hard for them to get their heads out of the sand.

On a regular basis – whether that’s once a month, every six months, or once a year, depending on how quickly the industry changes – stop to do a competitive audit and look at who else is out there. What are they communicating about themselves? What are they offering? Where do you stand relative to them?

You need to be constantly going out there and talking to your clients... and reflecting on how their needs are changing.

3) Finally, always get customer feedback. When companies start out they’ll do some initial consumer testing, make sure people are understanding their product, etc. They’ll set it up once and think it’s done.

But the reality is you’re always getting new customers, and technology, expectations, and your product are always changing. You need to be constantly going out there and talking to your clients or customers and reflecting on how their needs are changing.

How else can consistent branding be applied?

As you become a bigger organization, constantly checking in and reminding your team of the importance of being consistent with your branding across the company is key. It’s easy to set up a brand the first time, have your templates in place, have your business cards, have your website and then you think you’re done. The reality is that’s just one small piece of building your brand.

Whether it’s every six months, once a year, or even more frequently, communicating with your company what your core values are, who you want to be, and how you want people to think about you will help your employees rise to the occasion. They’ll start to internalize that and reflect it back.

...make sure the way your company runs and what customers see are one and the same.

I think the internal brand (aka employee culture) really has to match your external brand. If you’re claiming to have the best customer service, then you need to treat your employees that way too. If you’re claiming to be the fastest to install, then you need to hire people that are able to work efficiently and have efficient protocols and processes in place.

Build both your internal and external brand from the same root; make sure the way your company runs and what customers see are one and the same.

We hope Katherine’s branding advice — clearly identifying your brand objective, paying attention to the competition, getting regular customer feedback, and ensuring consistency in your internal and external brand — can help take your company to the next level.

As the solar market becomes increasingly crowded, attention to branding and marketing can help your company stand out from the competition. Whether it’s offering a unique sales experience through solar design centers, or approaching solar from a roofing perspective, differentiating your brand can have a big payoff.

Do you have additional advice for successful branding in the solar market? Join the conversation on Twitter, Facebook, and LinkedIn with the hashtag #SolarBranding2017 and let us know what you think!

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Topics: Solar Spotlight, brand, Solar Sales

Solar Sales Part 1: The Importance of Branding - with Katherine Glass

Posted by Marion Wellington on Jan 17, 2017 12:00:00 AM

Here at Aurora, we’ve been thinking about how we can help you better sell solar to homeowners. We retained Katherine Glass, founder of SpringMark - a marketing and brand strategy firm, to interview homeowners and solar installers on our behalf. Our research culminated in a day-long roundtable session with a collection of leading solar sales professionals at our office in Palo Alto.

We are excited to share what we learned with you in the form of a 3-part series: the first two articles will cover what we learned about branding, and the third will highlight tips for developing strong solar sales proposals, and unveil some new features to help you sell more solar.

Brand is a word that every business owner has heard, but few know exactly what it is, why it is important, and how to build it effectively. Katherine Glass is an expert in helping companies create their marketing and branding strategy. She spent seven years at Lippincott where she worked on the branding strategy for companies like Delta, Petco, and Starbucks. Four years ago, Katherine launched her own firm, SpringMark, which works with young companies on creating, developing, and launching a cohesive and powerful brand. Here, Katherine shares her insights on how solar companies can use branding to increase sales.

What is your definition of the word “brand”?

Different people have different definitions, but the one that I always like the most is what Jeff Bezos of Amazon said: “Your brand is what people say about you when you’re not in the room.”

“Your brand is what people say about you when you’re not in the room.”

Your brand is everything about you that creates a reputation or sets an expectation for a customer. It doesn’t really matter what you’re saying about who you are if that’s not what people think about you.

Now that you’ve gotten a feel for the solar industry, what’s one piece of advice you’d give to a burgeoning solar installer?

Customer service is king. Because solar is becoming more of a commodity, I think good ol’ customer service is crucial for differentiation. Going in person to the house, giving fast responses to phone calls and emails, and really showing that you recognize this is a big purchase for most people will help garner loyal customers. Usually, customers are going to be living with the installation for many years, probably as long as they’re gonna be in the house, so acknowledging that fact helps sow the seeds of trust. Building that rapport will be the strongest way to win business. A lot of that is reflected in your brand by being professional, from wearing nice shirts with your logo on it to putting together a short and to-the-point presentation that tells a good story about what they’re doing. Anything they can do to create a cohesive brand is helpful, but having customer service people being genuine and helpful is most important.

Customer service is king... building rapport will be the strongest way to win business.

In your research with both solar buyers and solar installers, what are two things you saw solar installers doing right, and two things you saw them doing wrong, from a branding perspective?

A lot of the solar installers I spoke with were very cognizant of being consistent with their brand. They make sure that typography, color palette, and messaging in their proposals matches their website and their business cards. This is a great step to both look professional and to reinforce who they are as a company.

Another thing they’re doing right is experimenting. A lot of solar installers are looking at new and different ways to advertise and reach out to consumers. They’re using more traditional methods like radio ads and direct marketing, but also trying new things like customer referrals structures or throwing block parties after an installation within the community. I think constantly being open to trying new things is always great; you’ll see what works best and what reflects your values and personality as a brand.

I think that since solar is becoming much more of a commodity and it’s hard for homeowners to differentiate this product, many homeowners focus on price. Smaller companies have to differentiate the value that they bring as a company in order to get people away from price. That may be emphasizing warranty or customer service, or whatever it is that makes them unique.

Another thing for solar installers to improve upon is to be really clear about the story you’re telling when you’re selling. From a sales perspective and the way that you’re branding your sales decks, really be clear about what type of customer you’re talking to and address that customer specifically as fast as you can.

Be really clear about the story you’re telling when you’re selling.

How would you say that one’s branding strategy changes with size?

The similarity between companies of all sizes is that everyone needs a brand. It doesn’t matter if you are business to business, business to consumer, small, medium, or large, your brand has to tell a clear and engaging story.

What is different about small brands and big brands is that when you’re small, you have the opportunity to be a little more flexible; if you start out communicating that you’re one thing, chances are you will pivot and evolve over time. You need a brand that is flexible enough to accommodate that, from the name you have to the messaging on your website. A bigger brand, on the other hand, is more established; it’s a lot harder to change people’s perceptions of them. With a company like Coca-Cola or Nike, people have a very clear expectation in their minds about what that company is, and so it takes way more marketing dollars and touch-points with customers to actually change their viewpoints. Often times, a smaller company can make a splash more easily with the same amount of marketing dollars because it’s something novel and piques people’s curiosity more.

Enjoyed this article? You can read more branding insights from Katherine Glass in the next article in this series, and learn about how to make your solar sales proposals more compelling in the third installment. 

What have you done to create your brand? Leave us a comment below, or tweet us at @AuroraSolarInc!

Topics: Solar Spotlight, brand, Solar Sales

A Roofer's Guide to Going Solar - with Michelle Meier

Posted by Marion Wellington on Dec 3, 2016 12:00:00 AM

This is an installment of our Solar Spotlight series

Michelle Meier

With a Masters degree in Electrical Engineering and a decade of solar experience, Michelle Meier is one of those people you want in your corner and never on the other side of the ring. She is the founder of Solar Roof Services, a company that helps roofing contractors boost their income by adding solar installation services to their existing book of business. I had the opportunity to peek inside the mind of the woman who is helping drive the adoption of solar by monetizing the natural synergies between the solar and roofing industries.

Tell me a bit about yourself and your relationship to solar over the years.

I started in solar in 2007. I have a Masters degree in Electrical Engineering and I was in the semiconductor field for 20 years before solar. When I decided to reinvent myself I got hired by a roofer in San Jose and started their solar division. I learned solar from a roofing perspective from day one, which is really unique in the industry.

I later went to work for GAF and became their national solar sales director, essentially incorporating their residential roofers into solar. When we decided to part ways, I thought "I've done this for two other companies, let me do this for myself."

What exactly does that entail?

I teach roofers how to take their roofing business and extend it to solar. It’s logical. We do that by partnering them with their current favorite electrician! I created an office that lets that contractor have no overhead. Our office does what you guys call a proposal, I call it a financial analysis. We do all of the utility paperwork, the permit package, and I even connect them to distribution. I help roofers turn every single roof lead into a solar lead.

3D site assessment on AuroraMichelle trains her clients to use Aurora for their remote site assessment or creates projects on their behalf.

You’re a seasoned marketer in the solar industry. Can you describe the solar landscape from your perspective?

My best way to describe it is—when I started doing this 10 years ago, people would look at you and say “Oh my gosh, you have solar?” Another five years from now and it’s gonna be exactly the opposite: “Wow, you don’t have solar?”

In terms of the feasibility for homeowners getting solar, it varies. In California with the rates the way are, it’s almost stupid not to get solar when you can do the "no money down" options. No matter which financing option you go with, if you’re paying less for your solar payment plus whatever’s left on your utility bill than your current bill, it’s just stupid not to do it. I work with other states where it’s a little bit harder.

However, the industry is ours to win or lose. Mar our reputation or build a great reputation, it’s ours.

10 years ago, people would look at you and say “Oh my gosh, you have solar?” Another five years from now and it’s gonna be exactly the opposite: “Wow, you don’t have solar?”

How do you help the industry win?

I come at it from the roofers. One of the things that we’ve found over the years is an average home has 14 penetrations. A bathroom vent, a kitchen hood vent, other normal penetrations on the roof of a typical home. An average solar system has 25-50 penetrations. So you took that 14 to 64! How much more of a chance did you make of having a leaky roof? Why is Joe Blow allowed to poke all those holes in a roof and not have it inspected?

The direction that I come from is what makes the difference. The more and more we can give homeowners a trustworthy installation, the better our image will become.

An average home has 14 penetrations. An average solar system has 25-50 penetrations. So you took that 14 to 64!

What are the three most important pieces of advice that you give to your clients?

First, always lead with your value-add as a roofer. The fact that you’re licensed to do penetrations, and you’re giving them a 10-year warranty on the roof, plain. On a tile roof that’s significant, for the following reason: if you walk across even a lightweight tile roof, you’re gonna break tile.

Second, pull the local card because your locality is one of the bigger advantages against the big guys. Do you really want to depend on a company that doesn’t even have an office here?

Third, go with the facts, don’t cheat. Underpromise, overdeliver.

Always lead with your value-add, pull the local card, and underpromise, overdeliver.

What is the biggest challenge facing solar installers today?

For the roofer, the biggest challenge is that they’re new to the market and you’ve got all these established guys out there. So they have to sell their roofing reputation and hope that clients will trust them as they get into solar.

Solar installers doing what they do best

If you couldn’t work with roofers who would you work with to help transition into solar?

Electricians. Teach them how to do the roofing properly. Those penetrations; how to find that rafter, make sure it’s in the rafter, waterproof it, etc.

Any secret talents?

I was a competitive baton twirler. I put myself through college doing it; I was Featured Twirler for Mississippi State University for 5 years on a full tuition scholarship. That’s my secret hidden talent!

Topics: Solar Spotlight, solar design, solar energy, pv, roofing, contractors, interview, pv installation, solar installation, roofer

How to Write Great Solar Sales Proposals - with Ian Lochore

Posted by Gabrielle Coseteng on Nov 9, 2016 12:00:00 AM

We often receive requests from our clients asking us to make proposal templates for them. While our solar sales proposal tool does have all the information you need from a project, it’s up to each company to tailor their proposals to convey their company’s message and meet the needs and concerns of their specific customers.

To help out those companies who are still confused about what exactly they should feature in a proposal, I talked to Ian Lochore, the Director of Residential Sales at Baker Electric Solar , for his advice on composing solar proposals.

Ian Lochore from Baker Electric Solar

Baker is one of the country’s most respected solar installation firms and was twice ranked the #1 Solar Electrical Subcontractor in Solar Power World's Top 500 Solar Contractors List. Ian has almost 10 years of solar industry sales experience under his belt, so he was the perfect person to give me insights on mastering the ‘Why Solar’ pitch.

Avoid ‘Green Preaching’ to Your Customer

“People understand the social benefit of solar, and typically don’t like to be preached to,” Ian says.

When customers are shopping for a solar system, they don’t need to be lectured on climate change or air pollution from coal plants. Your solar proposal should not be an Al Gore documentary. Instead, focus on making a solid case for energy bill savings.

Highlight Instantaneous and Long-term Savings

“It is more important to focus on the economics: What difference is it going to make to them and their family from a budgeting perspective?” Ian says proposals should stick to the financials. Show your customers compelling numbers that will convince them to make the purchase. “It’s similar to buying a new car.”

Explain the benefits of installing solar on their homes over the entire lifetime of the system. Customers will want to see both the short-term and long-term effects.

“What difference will this make to the client today or in the next year?”

That is an important question to ask. “You should demonstrate the cash flows and utility bill savings over 5, 10, 15, 20 years in your proposal.”

Offer Multiple Design and Financing Options

“From there, it’s about making sure that the customer understands what’s right for them,” Ian says.

The customer is always right. With today’s technology, creating solar designs and generating solar proposals is faster and easier than ever before. There is no reason a customer should not be able to see various panel configurations on their roofs. Salespeople should be prepared to show multiple solar design options and quickly adjust solar proposals to their needs.

Financial comparisons

Every solar proposal should include a side-by-side comparison of available financing options. The customer should understand what the differences are, whether it’s a lease that’s allowing them to save more money upfront, or a cash purchase where the system is an investment with greater long-term savings.

"A complete solar proposal gives the customer access to all the financial information out there."

But don’t force your customer into a decision

Cash, lease, or loan? Your client has options, but the choice is not always simple. You should guide your customer through the financing comparisons and find out what the best solution for them is. “What’s their cashflow situation? Do they want to use their money for a college fund?"

"Different strokes for different folks.”

Successful solar salespeople work with the client to find out what’s best for them. At the end of the day, the client should be able to freely choose between all the solar design and financing options that you have pitched to them. That is the secret to customer satisfaction.

Demonstrate your company’s longevity and reliability

Reassure your customer that you will be there to support them.

“Who’s going to be there in seven years if there’s an issue?”

Guarantees, warranties, and service packages should be included in every proposal.

Going back to the car analogy: “What’s the service plan? Sure I want a car that will get me to places in style. But I also want to know, if there’s an issue with the car, is there a roadside warranty? What’s the history of issues with that make or model?” Building customer trust is important, especially because solar is a long-term investment.

Guarantee that if 15 years down the line, their solar system has difficulties, your company will be around to answer their phone calls. “It’s not just price, but the value of their purchase as well.”

Beyond the Solar Proposal

One way of building trust is to engage in the local community. Baker Solar is engaged with local charities, such as the San Diego Food Bank and Habitat for Humanity in the Orange County area. Partnerships will help establish the presence of a solar installer in a neighborhood.

Word of mouth is the oldest and most powerful marketing and sales tactic. Ian can attest to that: “60-70% of our business comes from referrals.”

Maintaining your company’s integrity and branding is an underlying ingredient of any solar proposal. It could make or break the purchase decision for your customers.

Hungry for more tips for top-notch solar proposals? We conducted extensive research to develop our updated proposals tool; you can check out our findings on what makes a great solar sales proposal here!

Topics: Solar Spotlight, Solar Sales, Solar Proposal

Saving Millions for Low-Income Schools with Solar Carports - with the Stanford TomKat Fellows

Posted by Gabrielle Coseteng on Sep 16, 2016 12:00:00 AM

This is an installment of our Solar Spotlight series. Click here for our last interview!

The students of San Ramon Valley High School have to vie for parking spots on campus. Parking is a nightmare. According to one student, the demand for spots is so high that she rents a parking space from the Chinese restaurant across the street.

After all, who wouldn't want to park in their lot? In 2011, the San Ramon Valley Unified Schools District installed a solar PV carport structure over the lot. They probably have one of the coolest parking lots in the Bay Area - the sun-tracking solar panels shield cars from the California heat, while generating two-thirds of the school’s electricity too.

San RamonThe solar carports in San Ramon Valley. Image courtesy of San Ramon Valley Unified Schools District.

Carports with solar panels were also installed in four other schools in the district. The cumulative 3.4-MW system is expected to generate two-thirds of the electricity needed to power the five schools.

The project was not cheap: the $25,000,000 construction and design costs were funded by Qualified School Construction Bonds (QSCBs), meaning that the school district did not have to pay out of pocket for the solar installation, or any interest later on.

And that's not even the best part: the system will eventually pay for itself in energy savings after 16 years, and will save them millions for years to come.

Along with many other California schools, the San Ramon Valley district experienced budget cuts adding up to $20 million within five years. With their savings on electricity, the district can still invest in teachers and health resources for its students. And the students never have to worry about their cars overheating. San Ramon Valley is a great place to go to school.

But the same is not true for the rest of the California. Back in 2011, the Department of Education published a report that indicated 40% of low-income schools are not receiving their fair share of funding. While the state has made efforts to restructure the school funding formula, California public schools are still lacking between $22 and $42 billion in funding, according to the California School Boards Association.

California public schools spend over $700 million on energy every year according to the California Energy Commission. So why aren’t more districts installing solar carports and saving money like San Ramon Valley?

Barriers to installation

Last week, I visited the four summer fellows of the Stanford Solar Schools Project, an initiative funded by the TomKat Center for Sustainable Energy. The undergraduate fellows spent eight weeks of their summer break addressing this exact issue.

The 2016 Stanford TomKat undergraduate fellows.

To begin, the team reached out to several government agencies to learn about their projects. For example, Proposition 39 is set up to help schools with energy efficiency and other energy projects through grants. While funding schemes are available for schools, getting the money isn’t easy.

“There are a lot of programs out there, but it’s difficult for schools to find out about these programs and find the time and resources to fill out some of these applications, which are very expensive,” said Sneha, a junior majoring in Civil and Environmental Engineering.

Schools have to submit a proposal before obtaining any sort of government loan. The upfront cost for proposals from solar procurement specialists or consultants “can be upwards of $20,000.”

“And that’s just to get the study done. You could pay the twenty grand, have the study done, and have them be like, ‘Sorry, it’s not gonna work.’” added Trevor, a sophomore studying Management Science and Engineering.

The schools that have managed to install solar on their own are typically from larger school districts that have initial funding already available, corporate sponsors, or dedicated resources. "The San Ramon Valley has a solar panel research committee set up," explained Claudia, a rising senior majoring in Mechanical Engineering. The Los Angeles Unified Schools District has a sustainability person in charge, “because they’ve had other projects before and they’re huge.”

Solar funding for schools 101

Given these obstacles, the team began by mapping out the information gaps and making this accessible to schools.

The team compiled background materials that schools normally would had to spend weeks looking for, accompanied by a model of what a solar installation would look like on their own campus.

To guide the schools, they put together publicly available background materials. A brief three-page Action Plan, details all the steps to installing solar  from considering its impacts on a community, all the way to acquiring funding and beginning construction.

Their Policies, Regulations, and Resources document lists major sources of funding for schools, “for them to figure out how in the world they’re gonna pay for this,” described Chewy, a junior majoring in Earth Systems,.

In addition to Prop 39, loans are available. Schools could take advantage of the IRS Clean Renewable Energy bond. Trevor described it simply: “The district is the bond issuer. They find a bank to be a bondholder. The government pays the interest to the bank. So for the school, it’s basically a zero-interest way to install solar.”

Another option is the Qualified Zone Academy Bond (QZAB), another zero-interest plan. A private entity matches the bond value by 10%, either in cash or services, which helps fund the school’s academic programs, such as a renewable energy curriculum.

“So what we’re trying to do is provide resources, as well as connect them with organizations that help schools with this process,” said Sneha.

Customized designs

"Now we’ve started looking at individual schools and designing solar plans for them along with long-term financial analyses in Aurora,” said Chewy.

Their goal is to convince each school that not only are they able to afford solar, but that the installation will prove to be an economically savvy move throughout the lifetime of the project.

“It’s possible what we’re doing with Aurora can cost schools a lot of money as well. Just providing this initial feasibility assessment with the starting point models that we’re generating helps a lot,” said Sneha.

The team hopes that the schools will bring the solar plan they generated in Aurora to the Bright Schools program, which provides free consulting up around $20,000. From there, the schools could apply to larger funding programs based on their solar designs.

Modeling savings

To create the solar designs, the team needed the school’s energy consumption data and electric rates. The information was either provided by the school or from the online database of the California Energy Commission, which contains data from 400 schools across the state.

They imported the information into Aurora to closely model the load profile and potential energy savings of these schools. Then, they used the software to model the system in 3D, estimate the system’s energy production, and run a financial analysis, saving them from the hassle of having to go to the schools.

A school could save anywhere from $40,000 to $125,000 per year with a 313 kW solar PV system, according to estimates from the Environment California Research & Policy Center.

Since the designs needed to be as realistic as possible, the structural integrity of the school roofs was a key consideration. “Some of the roofs of the schools that we’re working with are really old, so probably couldn’t support the weight of solar panels,” said Claudia.

“So most of our designs are carports or some sort of shading structure on the school grounds,” she added, which also explains why carports are more popular for older schools, like in San Ramon Valley. In addition to carports, ground mounts could also be installed on unused property.

Next steps

Over the course of the summer, the Solar Schools Project team modeled unique solar designs for 26 low-income schools across 10 school districts in California, serving a total of 20,910 students. Each proposal was complete with a shading analysis and financial estimates. While their skill with solar design can now rival that of some installers, they know that they have only scratched the surface, and that designing the models is only the first step.

While the team always waits for schools to express interest before sending the solar design proposal, they have to put faith in the superintendents and the facilities managers at the school to move forward with the project.

“We’ve shown them all the money they can save, proven that it’s worth the investment, and directed them to all the financial help they can get out there,” said Chewy.

Claudia expressed her concern that the receiving side might lack motivation: “We’re worried that they’ll think that it’s a good idea and that they’ll agree with us, but that no one is actually pushing to take action on the next things that are involved, like more work or more money going into it.”

The power of local advocates

Even though the team has realized that there is only so much they can do from a distance, they still have hope for their proposals.

“We’ve learned the importance of the local advocate for our projects,” said Sneha. “They’re the people we’re trying to connect with, and we’re trying to give them tools to champion their project.”

All of them agreed that bureaucracy in the school system was expected, but the extent of it was still shocking. The processes can take months in the school districts, given complications with multiple stakeholders: the superintendent and the community, as well as the three-year turnovers in school boards.

“There are a lot of hoops to jump through,” Trevor reaffirmed Sneha’s statement, “That’s why again it’s so important to have a champion at the local level.”

The team has discussed using their research to make policy suggestions. They have become quite adept at navigating funding and other processes involved with solar installations for schools. “We want to give recommendations to actors at the state government level so that they can make those processes a bit simpler, based on what we’ve learned this summer.” said Chewy.

Perhaps the best local advocates are the high school students themselves. Trevor hopes that the implementation of a solar project will be a community-wide effort.

“If these superintendents get this big packet of information that we’ve provided, I can see high schoolers just jumping all over it and going to school board meetings and promoting it on a regular basis. That’s what happened in that San Ramon Valley.”

Topics: Solar Spotlight, solar design, solar carports

The Best Way to Sell Solar According to a Nobel Prize-winning Economist - with Myron Scholes

Posted by Gabrielle Coseteng on Sep 3, 2016 12:00:00 AM

“So Myron, have you installed solar panels on your house?” I asked.

The answer was no: “I have these magnificent redwood trees, so that gives me trouble..”

Indeed, we performed a shading analysis on Myron’s house with Aurora. Shading from the trees prevented his roof from receiving enough irradiance to generate a meaningful amount of energy.

But we weren’t here to try to sell solar to Myron, or to convince him to chop down his magnificent redwoods. We wanted to get some insight into how economists think about buying solar installations for their homes. We were also looking for advice on solar business strategy and key economic indicators we should be following.

So on a sunny Monday morning, we sat down with Myron Scholes for a quick lesson on the macro- and micro- economics of solar.

Myron Scholes was awarded the 1997 Nobel Prize in Economics for "a new method to determine the value of derivatives." His famed Black-Scholes formula is used by investment bankers every day to calculate options pricing around the world. Myron is a lecturer at the Stanford Graduate School of Business and has been a long-time adviser to Aurora.

What is your take on the current US and global economy?

It does appear to me that the risks of inflation have increased, consequently there could be unanticipated surprise on the plus side of inflation, in the US and around the world. We’re seeing that many inflation type assets have tended to increase in price such as oil, or gold, which is an indicator of inflation.

There is a real belief in the markets today, regardless of the party that’s elected to the presidency in the United States, that in 2017, at least in the first months, we will see many bills going through congress that will either increase infrastructure spending in the United States, and/or have some form of tax reduction for the middle class so they can foster consumption.

All of these tend to lead to a stronger US economy in the short run with the proviso that the debt increase necessary to bring this about means that future generations will have to pay it back, other than through the possibility that the projects they invest in will actuate positive present value. If they are positive present value, they’ll be self-sufficient and sustainable, otherwise they won’t.

Given all of this, how would you advise solar installers to position themselves?

Being flexible at this time, especially with decision making. [Solar installers] don’t have large capital costs since they are providing things at the margin.

The question is how do you see [inflation] affecting the prices of the [solar] panels themselves. So they come from foreign countries. If China’s devaluing [their currency] and wanting to encourage their economy then they’re exporting the deflation… this makes the US Dollar stronger, which makes the cost of panels less. So it actually helps the importers more. If the US has the inflation to counter the deflation in China, Japan, then the benefit is to the solar panel installer.

Any other suggestions on how to manage a solar business today?

Through the power of technology, you can’t just say one shoe fits all. You have to figure out how to handle a whole cross-section of different clients and their needs, and be efficient in doing that.

Technology always moves down to the individual and away from the total. When [the solar installation industry] first started, there was just one panel, and now you’re getting more differentiation and that’s a force that will continue. Installers will have to really be aware of that force and realize you need different types of panels, different configurations, different ways in which you address the clientele.

And speed. Clients like things to be done quickly. The question is how do you create a business that allows you not only to quote bids but to also satisfy and fulfill them.

The whole technology world is moving away from a product-focused to a solutions focus in the true sense of the word. That’s something they will have to be aware off. We’re getting closer and closer to a bespoke world and away from a product world.

The business person always wants to think of it as one product. But the individual wants something that works for them, so there’s this fight: take this product it’s good for you.

In economics, it’s what [the customers] want that counts, not what they supply for you.

What does it take to sell solar to an economist?

The way I look at any installation is that it’s somewhat akin to buying a new car. It’s not whether you replace it, it’s when: should it be now or should it be next year?

And the way you think about that decision is that if the marginal cost of holding your car, holding your old power for one additional year is greater than the time-weighted cost of replacing, then you should replace.

There’s the cost of installing my solar panels, which is the fixed cost. I have the cost of the power itself plus the amortization of the cost of the panels over the expected life of the panel. You have to discount the same way that you do the mortgage on your house.

Each year you pay a mortgage, principal plus interest. You do the same with solar. You pay it down, period, such that at the end of its expected life, you’ve paid it off. And that’s the comparison of your marginal cost each year compared to the marginal cost of staying as you are.

So you can build a model very easily of which would show that. What’s the cost of your current power? What’s the cost of your solar power? And how would I amortize the cost of the panels over time such that at the end of the life of the panel I’ve paid it off and I can start over again. (Exactly how Aurora does it)

What have you been up to nowadays?

I’m teaching a class at the GSB called The Evolution of Finance.

Additionally, I’m building a new investment business where I am concentrating on how to increase the value of your terminal wealth conditional on wanting to have a limited drawdown, or how much drawdown risk one is willing to take. So it’s a whole different focus from the current focus of the industry.

The current debate is between passive-active, should you invest passively in ETFs or index funds or active in active managers. That’s completely the wrong analogy.

Everything is relative. Everyone likes: “How am I doing relative to everyone else in the investment world?” I remember the titanic and everyone on the top level of the Titanic drinking champagne, while people below were drowning, trying to get to the lifeboats.

Absolutes are more important in life, not relatives.

Any highlights of your career or what are you particularly proud of?

It might sound trite, but it’s true: I’ve always tried to give to students and others through what I know. That, I’m really proud of. It’s transferring my thinking either through research and papers and also transferring my thinking to students or others to whom I can transfer knowledge.

As you get older, you don’t only have theory, but you also have experience. The combo of theory and experience is very rich rather than either on its own. So I have a lot of theory and ways in which I think about a problem because I’ve studied them for a myriad of years. And on the other hand I’ve had a lot of experience and understand how things work and through that combination of experience I think I’m getting smarter and smarter over time. As I get smarter and smarter, it allows me to transfer that knowledge to others.

So I enjoy giving and that’s an important part of life.

Not the Nobel Prize?

I mean obviously if you get awarded the Nobel Prize don’t turn it down- it’s a wonderful thing. But sometimes what you do in life is in part luck, if you’re in the right time right place and obviously having the vision to see things that others didn’t see for a long time.

There’s two parts to life: one part of life is what happens all time and how you see this and what you do with all the mystery around you and how you add value.

The other part is the tails of the distribution. Go for the tails, don’t go for the middle.

Obviously not the bad tail. Avoid the bad go for the good. So many people in life just stay in the middle.

Topics: Solar Spotlight

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