By: Walter C. Jones
Georgia’s elected utility regulators gave a nod Tuesday to companies looking to compete with Georgia Power on solar energy, but it didn’t come without a fight.
New start-up Georgia Solar Utilities is planning to ask state lawmakers for a monopoly on the sale of solar power in the state to compete with Georgia Power’s 40-year-old monopoly on the sale of all electricity within its territory.
In a highly contentious meeting, the Public Service Commission voted to support efforts to clear the way—legally—for more solar, without endorsing Georgia Solar Utilities by name.
The resolution was purely symbolic, but significant, argued Commissioner Lauren "Bubba" McDonald, who has made no secret of his support for Georgia Solar's plan.
"I believe that this is in the best interest of Georgians, that this commission take the appropriate action to encourage parties [...] to bring innovative solutions to our consideration," McDonald said.
But Commissioner Stan Wise, who has made no secret of his opposition to Georgia Solar’s proposal, bristled at notion that the commission would endorse a private, for-profit company's legislative agenda. "That is inappropriate," he said.
McDonald shot back that regulators pick and choose among private companies all the time.
The motion passed 3-2, not without Wise sneaking in this parting dig: "Will we wear our commission badges when we lobby the legislature or will we wear our Georgia Solar badges, commissioners?"
With that accusation of conflict-of-interest, the ball is now in the Georgia General Assembly's court.
In the same meeting though, commissioners unanimously approved Georgia Power's plan to swap solar for biomass in its energy portfolio, after the company postponed plans to convert the coal-fired Plant Mitchell near Albany into a biomass-burning plant.
Between the advancement of these two competing plans to expand solar energy, it was a good day for Georgia electricity customers, said Elena Parent, executive director of the consumer advocacy organization Georgia Watch.
"We’re very pleased to see that there is more discussion and opportunities for solar power here in Georgia and a recognition that solar power will be a good thing for consumers," Parent said. "But we’re always mindful of consumer’s pocketbooks and keeping utility rates low."
Georgia Watch, like most advocates, is staying neutral in the fight between Georgia Power and Georgia Solar Utilities until both plans are closer to reality.
By Ucilia Wang
Has the pressure to compete in a world market beset by an equipment glut and plummeting prices over the past two years led to an increase in poor quality solar panels?
The answer is “yes” say some executives in the business of selling materials, insurance and performance testing and on-site factory monitoring businesses. They said they are seeing the use of substandard materials for the metal contact lines, backsheets and encapsulants for protecting each panel from UV radiation and other environmental damage, and for insulating wire cables. The process of soldering, or connecting the cells together inside a panel, also is a source of lousy workmanship.
Now, there were certainly badly made solar panels before the supply-and-demand imbalance began to take a firm hold in early 2011. If anything, many manufacturers, especially those that have become major players, have learned to use more sophisticated equipment and testing instruments in their factories. But recent evidence from testing and monitoring performed by independent firms shows that penny-pinching is at play as manufactures struggle to reduce costs and survive.
SolarBuyer, which sends people with solar manufacturing experience to do factory checks on behalf of project developers and investors, is seeing an average defect rate of 8.8 percent for solar panels that roll out of manufacturing plants, said Ian Gregory, managing director of the Boston-based company. The spread of the defect rates range from 5.5 percent to 22 percent.
“Industry as a whole the quality is suffering. You think you are going bankrupt in three months, so your priority will be on cash flows and not quality,” said Jenya Meydbray, CEO of PV Evolution Labs, which performs reliability testing of solar panels. “That means cutting corners to get a few cents per watt out of your cost so that you can start to squeeze out a little bit of the margin.”
Meydbray said the notable problems he’s seen in his labs included the degradation of the materials that hold the cells together and the yellowing of the back sheets and encapsulants. Some manufacturers are using less of the silicone material that attaches the junction boxes to the back of the panels, causing them to fall off and create fire hazards. Problematic panels aren’t just coming from Chinese manufacturers, who historically have had to battle a reputation for producing poor quality products, but also from European and American companies. Though problems might show up more often in smaller, less financially viable manufactures, they also crop up in top brands.
The issue of quality control seems to have showed up more in public discourse lately. At the Greentech Media’s solar conference near San Francisco last month, speakers on two panels raised the issue. Brian Matthay, vice president of environmental finance at Wells Fargo, told the audience that solar panels are far from earning the “commodities” label because some manufacturers had been “cutting corners.”
Conrad Burke, general manager of DuPont Innovalight, echoed the same concern during the conference. In a recent interview, Burke said DuPont, a big supplier of Tedlar backsheets and other materials, has been testing panels made with materials from rivals and found inferior materials that cause solar panels’ performance to degrade quicker overtime. He said he spoke with a panel maker at the conference and was surprised to hear that the manufacturer, who he declined to name, was offering panels in three grade levels.
“What struck me was that we were having a conversation like this. I’m concerned that quality is being compromised at the expense of cost,” Burke said.
Meydbray, Burke and Gregory declined to name the manufacturers who are having quality control problems. Burke pointed a story that RenewableEnergyWorld.com ran last month about the removal of solar panels from 24 campuses of San Diego Unified School District in California. Solar Integrated Technologies made the panels and has since filed for bankruptcy. General Electric developed the project and sold the solar electricity to the school district under a 20-year power purchase agreement.
Not all companies disclose or reveal fully the extent they have had to spend on honoring warranties and replacing faulty panels. At least one company has replaced faulty solar panels, but not without securing non-disclosure agreements from its customers. So the extent of the warranty problem wasn’t made public. First Solar’s acknowledgement of large warranty payments this year therefore surprised many in the industry.
What does all this mean to developer and bankers? At the conference, Matthay talked about negotiating stringent warranties because investors are counting on a power project to produce a steady stream of electricity for over 20 years.
Meydbray said some investors don’t put much stock in warranties these days given dozens of companies have filed for bankruptcies and a few hundred more are expected to go out of business or get bought in the next few years. Manufacturers are aware that they may have more to prove these days, so they are seeking more reliability verifications from PV Evolution Labs and other similar service providers.
PV Evolution Labs also has teamed up with SolarBuyer to assemble a list of solar panel makers that they would recommend to project developers and investors.
Solar Insurance & Finance in the Netherlands only insures warranties or underwrites projects after its staff has toured the factories from where the solar equipment were made, said René Moerman, the company’s founder and chief strategy officer. Moerman is making his first trip to Korea this week.
“I trust nobody. That’s not because I’m cynical. I’ll trust when I see the report,” Moerman said.
Georgia, not Florida, is the “Sunshine State,” at least with clean energy industry insiders.
The ongoing fracas between Georgia Power and solar energy startup Georgia Solar Utilities was a surface-of-the-sun hot topic on the final day of the Savannah International Clean Energy Conference.
Georgia Solar Utilities wants to build a large solar farm within the state and has petitioned the Georgia Public Service Commission to sell the electricity directly to customers rather than to Georgia Power or other providers within Georgia.
Georgia Power has challenged Georgia Solar’s request. It argues allowing the Macon-based company to operate as a utility would violate Georgia Power’s standing as a regulated monopoly and would “create barriers to future solar development.”
Attendees at the Savannah International Clean Energy Conference pressed utility company representatives, including Chris Hobson of Georgia Power’s parent company, Southern Company, on the solar issue during sessions Tuesday. Solar is a growing part of the energy-production portfolio, those utility officials countered, and will continue to be so.
Georgia Power recently proposed to acquire 210 megawatts of additional solar capacity over a three-year period, which would give the utility 271 megawatts of solar capacity, enough to power 117,000 homes.
While no direct mention to Georgia Solar Utilities was made, the notion of Georgia as home to a large solar farm was a recurring theme throughout the day. Officials with the German-American Chamber of Commerce pointed to the success of solar energy production in Germany as proof that states like Georgia could benefit from solar initiatives.
Germany’s solar farms produced 22 gigawatts of power on a recent weekend, equivalent to the output of 20 nuclear plants, and have the capacity to produce 28 gigawatts of electricity, or enough to power 12.6 million homes. Solar facilities provide approximately 3 percent of Germany’s power.
Projections are solar will provide 25 percent of the nation’s power by 2050.
“And Germany is farther north than Georgia,” said Dennis McGinn, a retired naval rear admiral and the president of the American Council on Renewable Energy (ACORE). “In terms of latitude, it’s on the same line as Canada. Georgia gets a lot more sun.”
Twice as much sun in terms of generating kilowatt hours, according to the U.S. Department of Energy.
The solar discussion tracked with a larger conference theme – the need for a “level playing field” for renewable energy initiatives. A government subsidy for wind energy, known as a production tax credit, is to expire at the end of the year. Meanwhile, subsidies for oil and gas, with a value of between $5 billion and $25 billion a year, will continue.
Leveling the playing field, if even for a period as brief of five years, would benefit the renewable energy innovators because of the rapid decline in the cost of renewables. As costs decline, renewables become more competitive with fossil fuels.
“We’re about to have a debate over taxes in this country, and the question is what measuring stick are we going to have for these subsidies,” said Phyllis Cuttino, director of the Pew Clean Energy Program, an advocacy group. “Are we going to continue to have subsidies for technology that is over 100 years old? Are we going to have term-limited subsidies for renewable energy?
“There is a lot at stake.”
Increasing subsidies for renewable energy or eliminating those breaks for fossil fuels aren’t the only field-leveling tools available. Other tax-based incentives are possible, including credits for public-private partnerships.
Another idea, albeit a controversial one, is a carbon tax. Just as cigarette taxes have gradually reduced the number of smokers in the country, a fossil fuel tax would push energy companies to be innovative in formulating their product, ACORE’s McGinn said.
“With a carbon tax, it becomes an issue where, ‘Can we use it? Sure. But there are costs,’” McGinn said. “A carbon tax would start to shift or accelerate the economic shift toward a clean-energy economy.”