​28th Annual ROTH Conference Coverage: Solar Round Table Predicts a Strong 2016 for Solar Industry

Joel Anderson  |

The Solar Round Table at the 28th Annual ROTH Conference opened with moderator Philip Shen, a senior research analyst with ROTH, calling for the room to congratulate Rhone Reisch, the Chair of the Solar Energy Industry Association (SEIA), for his team’s work in securing a five-year extension of the solar investment tax credit (ITC). It was a big win for the industry to get this included in the most recent omnibus spending bill, and the industry had a lot to be grateful for.

The other side of that, though, was that 2016 looks to be a huge year for solar installations because a lot of utility-scale projects were pushed into production before the extension of the ITC.

Leaders of Solar Companies Gather to Talk Shop

The panel included five different solar executives from a range of different companies in addition to Reisch and Shen.

The panel included Michael Potter, CFO of Canadian Solar (CSIQ); Charlie Cao, CFO Jinko Solar (JKS); Sanjay Shrestha, President of Sky Capital America (SKYS); Robert Petrina, President of JA Solar USA (JASO); and R. Andrew de Pass, CEO of Conergy (CEYHF).

Together, the panel offered up a fairly diverse slate of small-cap solar companies that were active in the residential and commercial and industrial (C&I) markets, especially. The conversation was lively, touching on a number of issues that are important to solar companies and investors alike, including the trade war with China, the potential held in energy storage, and the extension of the ITC.

2016 Installations Likely to Exceed 2017 and 2018

Shen opened the discussion by noting the SEIA’s forecasts for solar installation through 2021, figures that showed a huge spike for 2016 that would then retreat sharply in 2017.

“I think it’s important when you look at 2016 to recognize that three-quarters of the market is going to be utility-scale solar projects, which is a massive increase of 186% growth in that market sector,” said Reisch. “Now, we’re also seeing growth in residential and also commercial, it’s just obviously not nearly that size. And in large part you’re seeing that growth from utility-scale because we had the tax credit expiration, which was scheduled for the end of 2016, so you have a lot of projects in the pipeline that were obviously trying to be constructed by the end of 2016.”

The dramatic jump had the utility-scale installations spiking to 11.8 gW for 2016 before pulling back in 2017 and then continuing on an upward trajectory. However, the industry isn’t expected to get close to 12 gW again until 2021. When you consider that the entire solar market in 2015, including C&I and residential, was 7.3 gW, that makes it pretty clear that the expiration of the ITC had a lot of people scrambling to get their projects under way.

In particular, the large, utility-scale projects that would be difficult to delay were driving this. Looking closer at the SEIA projections, the growth figures for residential and C&I appeared to anticipate continuing at a steady rate, something one might expect given that they’re smaller projects. Residential should grow 34% to 2.8 gW in 2016 with C&I adding 27% to 1.3 gW.

However, it’s 2016 and beyond that really illustrates how utility-scale’s short-term jump isn’t getting matched by smaller projects. Residential was projected to grow to 3.5 gW in 2017 and 4.06 gW in 2018 and continuing to 6.16 gW for 2021. Likewise, C&I doesn’t appear poised for a 2017 pullback, growing to 1.5 gW in 2017 and 1.9 gW in 2018 on the way to 3.57 gW in 2021. In fact, the share of total installations taken up by utility-scale solar should decrease substantially after this year, with the total installations number staying under 15 gW after 2016 until 2020.

Storage Wars

Concerns about net metering were voiced, though Reisch was quick to put the recent setback in Nevada and concerns about Florida in context. On the whole, residential solar advocates scored some big victories in 2015.

“We see some positives on net metering, and we shouldn’t focus just on Nevada,” said Reisch. “Yes, we have a lot of work in Nevada, but we had six to eight successes this last year, adding a couple of new states to allow net metering. We got California, full retail net metering out for the next three years, a huge victory in the biggest market in the country, and you see some other places that are moving in a positive direction.”

Of course, any consideration of net metering takes place with the question of storage hovering in the background. A functional and efficient battery that would allow utilities and home users alike to store energy from peak generation periods for use during peak usage periods could be a game changer. Unfortunately, the products currently on the market just aren’t there yet.

“There’s a bunch of companies out there… that are driving the cost of storage down, that are making it more standardized, which will help, but storage right now is not where it needs to be for mass adoption in solar,” said Michael Potter. “We keep hoping that someone will break through on that, but right now, it hasn’t happened yet.”

“Storage is the Holy Grail for solar and other renewables, but the economics aren’t there yet,” continued R. Andrew de Pass.

Of course, when pushed to speculate about the timing, R. Andrew de Pass conveyed that, depending on where it was deployed, it could be the relatively near future when this technology actually starts to be viable.

“Economically viable depends on geography and it depends on application, between C&I and residential and large-scale utility,” said R. Andrew de Pass. “From our estimation from our R&D and systems engineering group in Germany that evaluates this globally, on average between two and four years [before storage becomes economically viable], but it depends on geography and application.”

Solar Has a Bright Future

For all the headwinds facing the solar market, the ROTH round table highlighted the fact that solar installations are growing and growing fast. With the extension of the ITC in American markets, the sales of PV panels appear to be due to keep accelerating, particularly in the residential and C&I markets that are less susceptible to the fluctuations created by the late approval of the ITC extension.

And, with the potential for a real storage solution on the horizon and continued public policy wins by the SEIA, solar companies have reason to believe that continued growth in sales will extend well into the future.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

Companies

Symbol Name Price Change % Volume
SKYS Sky Solar Holdings Ltd. 1.36 -0.19 -12.51 33,050 Trade
JKS JinkoSolar Holding Company Limited American Depositary Shares (each representing 4) 16.05 0.55 3.55 981,196 Trade
CSIQ Canadian Solar Inc. 17.51 0.65 3.82 1,740,819 Trade

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