Canary In the Cali Mine. If at times this page has felt California heavy to you, I agree. But in reality that is where almost 50% of solar is being installed and where the future of solar rules nationally get tested. More recently, California has experienced the impacts of climate change, grid resiliency and aggressive policy that will be the showcase for everyone else. It makes sense to take inventory of some of what is currently happening and expected to be implemented in the future.
Climate Change Impact. Coming off a tandem of major heat waves and experiencing one of the fiercest wildfire seasons, California is no longer waiting to see how climate change will impact its population and environment. It is testing the resiliency of the infrastructure including a power grid operated with central planning, purchasing and generation. Climate change will look different in some ways across the Country but power lines will be the weakest link whether we are talking derecho in Iowa, snowstorms in the Northeast or hurricanes in the Southeast. Tomorrow we will take a look back to our Kamala Harris prediction regarding climate policies if she wins the Vice Presidency.
All Electric Transportation. Not only does California have a 100% RPS goal in the not too distant future but now has an executive order signed by Governor Newsom last week that most cars sold will have to be electric by 2035. The governor discusses this with Kara Swisher on her new podcast Sway where I will soon be a guest (I wish, but call me Kara!). In reality, Newsom is making a headline of what many already predict to be true. Electric cars will be the norm within a decade. As an aside, there seems to be tension between Newsom and Tesla given the many opportunities that Kara gave the governor to talk about the auto OEM partners he talked with. It is important for the goal to exist, even as an executive order, so to make the rest of the energy ecosystem think about what needs to happen if oil loses the market share to electricity within 10 years (not a long time in energy world).
Future Of Distributed Assets. Some of us think about the policy that drives the solar market on a full-time basis, many of the readers of this newsletter do it 24/7 and as a director on the board of CALSSA I can attest that the CALSSA team does it better than anyone else. Our industry, namely solar and storage, is at the center of the climate change and electric vehicle venn diagram. The ability to manage through heat waves and matters affecting grid resilience requires the robust use of demand response, much of it distributed (see the point about the weakness of transmission above). It also includes the future of vehicle to grid (V2G) technology where cars are a form of nonstationary power as well as eliminating charging as a function of demand response. With some 80 million single family homes in America, the future of the grid will be in a good place if homeowners are made part of the grid not just a user, resiliency will depend on that.
It Takes Regulators. More than anything, Newsom needs to name a distributed solar expert to the CPUC and other governors should follow. Over the next few years, there is little that we can do that is more important than becoming part of the system that regulates us and the incumbent market participants. This isn’t just to drive positive policy but it is also meant to create comfort. Here’s a recent example. Local resource adequacy (local RA) is implemented through projects like a portfolio of solar with storage projects that are in homes, multifamily and businesses where a system operator can dispatch those assets during certain events. CCAs have been leaders in piloting and adopting these virtual power plants with great success. When local RA procurement came to the CPUC, the CPUC didn’t trust the procurement to the local aggregators but gave that power to two investor owned monopoly utilities showing that there is a lack of trust and comfort with newer participants. Policies like that have to adapt to the new normal, a norm that is smaller in scale and more distributed than ever. Resilience in many ways means duplication, a plethora of what if scenarios, and needs to take some new realities into account.
Oil Company Takeover. In over 100 years, oil companies and electric utilities never competed. If anything utilities used to be a major client of the oil companies but when it came to transportation it was smooth sailing for major corporates. If transportation goes electric, that stirs major competition that will meet in the hall of every Capitol across the country unless oil companies are also in the electric business. The advantage they have is that they are fundamentally traders whereas utilities are not always very good at it, unlike their IPP cousins. Just last month Portland Gas & Electric took a >$100million loss on a bad trade. The change from oil to electric could yield major volatility and trading benefits to these companies. When you read about oil companies adding a renewables arm, that means they are adding an electricity division and getting into the game. Note to the reporters covering this, all the oil companies are already in electricity but only seek headlines when they need more deal flow.
Solar Market Update Call. Register for the next Roth Capital solar market call on October 2nd at 10am Eastern. The past calls have exposed the first highlight of major market trends.
Get The Power. Later this year, the residential solar market is going to get some major savings with most of their balance of systems when the shift to higher power solar modules really gets going. With power density going up more than 10%, those savings will trickle down to mounts, rails, inverters, labor and wire and hopefully into installers’ wallets. Make sure you are getting the best modules and pricing possible by joining the SolarWakeup Buyer’s Group. You can see the pricing on our price discovery page.
- Utility Dive: Demand response failed California 20 years ago; the state’s recent outages may have redeemed it
- Bloomberg: Electrifying California Cars Could Crush the Grid, or Save It
- New York Times: We Decidec To Pull The Band Aid Off
- Axios: Oil trading heavyweight forms renewables arm
- PV-Magazine: Investing in equitable access to solar energy for Hispanic communities
- Solar Builder: LONGi’s high-wattage Hi-MO 5 series module: now rolling off production lines
- Greentech Media: How the Coronavirus Pandemic Has Impacted US Solar So Far
- Vox: China’s commitment to become carbon neutral by 2060, explained
Opinion
Best, Yann