Shell to acquire US renewables power market player MP2

Shell to acquire US renewables power market player MP2





Energy storage: Heating and electricity are coming together

You are in charge of Viessmann’s new PV + E-systems division. What exactly is involved in that?

Karlheinz Reitze: The new division is intended to focus on the introduction of intelligent generation and consumption of electricity to building services. What was the heating division will be extended. The customers’ opportunities for becoming mostly self-sufficient will expand. We want to offer various packages to our customers and the installing companies, from entry-level to all-encompassing systems: always focussed on the customers and their needs.

What groups of customers do you have in mind?

We are thinking of solar technicians, electrical installation engineers and the sanitary, heating and air conditioning companies that cooperate with electrician’s companies or have staff competent in installation. Electricity now is an essential part of building services. For a house of the KfW-40 standard, storage batteries are mandatory. Hot water generation and ventilation are closely connected to PV. In order for the variety of systems to actually work efficiently and conveniently requires a smart energy management system, which should be able to be controlled via a mobile device like a smart phone or a tablet computer.

Customers are demanding more and more independence. Is that a trend you also see?

More than that. For instance, it will also be about utilising over-capacities from the power grid in building services. This can and will bring about economic benefits for the users. PV is available during the summer and in the winter we will see a surplus of wind power. Such offerings can be made use of through storage batteries, electric vehicles, thermal storage systems or direct consumption in the building.

Are you providing the equipment to completely run a building on electricity?

We have outfitted some show homes so that they run entirely on electricity. For newly built houses and for companies selling prefab homes that will become significant. For existing buildings, electrical and thermic systems will complement each other. We currently offer about 90 percent of the components needed for a fully electrical energy supply. For instance, we will introduce electrical underfloor heating or electrical water heaters to our product range.

But it is not just about supplying the building. Installing companies increasingly provide their customers with electric chargers for cars and other vehicles. What do you offer in terms of electric mobility?

Electric mobility is increasingly calling for fuel cells that take care of the charging during the night. With our Vitovalor 300-P, Viessmann have had an electricity-producing heating system, produced at scale, in our product range since 2014. In combination with PV and stationary storage batteries, this can be used to build a variety of electrical systems. But we even go beyond that:

The company Digital Energy Solutions – a 50/50 joint venture of Viessmann and BMW – will increasingly offer electricity products. To start with, our colleagues at Digital Energy Solutions have issued an electricity tariff for heat generation – for heat pumps or for thermal storage.

The joint venture will soon also offer concepts for charging points that will be controlled through the energy management system. 80 percent of vehicles that are charged at home spend most of the day at the workplace. This calls for systems that allow the feeding of electricity back into the building. Bi-directional charging systems are coming and will dominate this market.

How many fuel cell heating systems have you sold yet?

We have sold more that a thousand units, and we are seeing a growing demand. The stack and the reformer are being supplied by our partners Panasonic. In the Japanese market, they already have 100,000 units being used. Integrating the fuel cell module into the overall system as well as its overriding management was achieved by our engineers. All in all, the Vitovalor 300-P consists of the PEM fuel cell, a gas condensing boiler for peak heat demand, a buffer storage unit and the already mentioned control unit, which of course has Internet connectivity and can be controlled by an app. The fuel cell alone has an electrical output of 750 watts and one kilowatt of thermic output. The peak load boiler produces an additional 19 kilowatts of heat, and from this summer it will be 26 kilowatts. The system will be installed in a heat-driven manner.

When will Viessmann come out with an electricity-driven system for buildings with very small heat demand?

I do not want to give away too much. We are keeping an eye on that. Maybe for next year. The fuel cell can already be run in cycles, such as when there is less demand for heat in summer and the PV provides supplementary power. We outfitted a building in Munich where the fuel cell also charges the battery of a BMW i3. Along with the electricity and heat for the building, the energy management system also has to efficiently manage e-mobility.

What does the future hold in your division?

We currently have a little over 50 staff. Now we plan to expand our division and mesh it with the Viessmann Group’s other channels. We will hire new people in order to continue to serve our clientele. Right now we are looking to hire field staff as well as internal employees. We want to put together useful packages for our customers to make it easy for them to get started. One example is our heating water buffer Vitocell 100-B with an electrical heating element for using surplus solar electricity. But our focus is less on the technology or the technical equipment, but the customer and his needs. These are becoming ever more wide-ranging and demanding. (interview: Heiko Schwarzburger)

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Enphase threatened with de-listing due to low stock price

The warning from NASDAQ follows financial difficulties at the microinverter pioneer.

Enphase Energy, the technology company that pioneered the microinverter, has had a rough couple of years. Under fierce competition from module level power electronics maker SolarEdge, Enphase lost market share in its key markets, which it responded to by pricing its products below the cost of production while waiting for cost-cutting measures to kick in.

This risky strategy appears to have paid off in shipment volumes, with Enphase growing market share in the second half of 2016, but the company has also experienced persistent losses. These difficulties were compounded by residential market troubles in California during Q1, due largely to a combination of torrential rains and policy changes.

Battered by these troubles, Enphase’s stock fell below $1 per share in early May, which has triggered a warning from the NASDAQ exchange that if the company does not bring its stock price above $1 per share over the course of the next six months, it could be delisted.

This is far from the first time that a solar company has received such a letter, as a number of Chinese PV makers have been threatened with de-listing over the past few years. In most cases these companies were able to regain compliance.

It is a sign of larger precarity at Enphase, which has championed technological and business innovations such as its AC batteries and integrated Home Energy Solution, but has had more difficulty in getting and remaining profitable.

But despite larger troubles in the residential solar market in California and other leading states, Enphase is optimistic about the future. The company emphasizes its presence in the “long-tail” of residential solar installers, which is particularly notable given scaling back and reduced market share at Tesla and Vivint Solar.

Enphase also recently modified the terms of an agreement with its manufacturing partner Flextronics, and has emphasized that this may ensure continuity of supply as the company moves through rough times.

The company offered the following statement in response to an inquiry by pv magazine:

“No question it has been a challenging year for Enphase and our stock price has reflected that, but the actions taken to change the course of the company are significant. Over the past year, we added nearly $57 million in additional capital. We restructured our operations, reducing annualized expenses by approximately $38 million. Our new IQ products are now in market, and the AC module will be in market in Q3. And long term, Enphase will continue to differentiate through innovation leveraging our over 150 patents. Every employee is laser focused on driving to profitability as we see that as the most meaningful way to change market perceptions.”

1366, IHI finish first commercial Direct Wafer project

Silicon wafer manufacturer 1366 Technologies and a unit of Tokyo-based energy equipment supplier IHI have connected a 500 kW solar array to the grid in Japan. The installation is the first commercial PV project in the world to include solar modules that feature 1366’s proprietary Direct Wafer products.

IHI’s wholly owned IHI Plant Construction unit built the array at an undisclosed location in Hyogo prefecture, west of Osaka. The installation is expected to offset roughly 9,500 metric tons of CO2, according to an online statement.

“The energy payback of an installation featuring Direct Wafer products is accelerated to less than a year due to the fact that our technology uses just one-third the energy,” said Frank van Mierlo, chief executive of 1366 Technologies.

An unspecified Tier 1 Chinese manufacturer supplied the IEC-certified solar panels. The modules include more than 120,000 wafers made under 1366’s high-performance Direct Wafer process.

Massachusetts-based 1366 manufactured all of the wafers at its demonstration facility in the U.S. Its factory in Genesee county, New York, is the first commercial-scale facility for kerfless wafers in the world.

The company had already used the wafers at undisclosed test sites in Japan, the U.S. and Germany. However, the installation in Hyogo prefecture is the first time the company has demonstrated its ability to deploy its potentially disruptive Direct Wafer technology at scale.

Under the Direct Wafer process, 1366 forms multicrystalline wafers directly from molten silicon, rather than through a multi-step process, which is more expensive and energy-intensive. It claims its new method — under which wafers are cast, rather than sawn from silicon ingots — results in higher-quality, kerfless wafers that can be produced at roughly half the cost of traditional means. It claims that Direct Wafers can also serve as a “drop-in” substitute for PV projects, as cell and module manufacturers can easily utilize the technology without the use of new equipment. 

In late 2015, 1366 announced that it had agreed to work with Hanwha Q Cells on the development of Direct Wafers. In April 2016, Hanwha Q Cells followed up on that initial agreement by signing a deal to buy 700 MW of kerfless wafers from 1366 over a period of five years. In March of this year, 1366 revealed that Hanwha Q Cells had achieved a new 19.9% efficiency record for a solar cell incorporating its Direct Wafer and passivated emitter rear contact (PERC) technologies.

The Latest Trends in Corporate Renewable Energy Procurement

Image Credit: Apple

We’re entering a new era in corporate renewable energy purchasing. 

The space has grown exponentially and diversified significantly since Google and Apple made their first renewable energy procurements in 2012. Where and how corporations are purchasing renewables is also evolving, according to Hervé Touati, managing director of the Rocky Mountain Institute.

Here are the major takeaways from his talk this week at GTM’s Grid Edge World Forum.

Demand on track to surpass 2016

RMI tracked 1.24 gigawatts of corporate renewable energy procurements from the beginning of January through June 15 of this year. Procurements spiked in 2015, when the industry predicted that Congress would not extend the Production Tax Credit for wind and the Investment Tax Credit for solar. Since then, corporate renewable energy demand has returned to more incremental growth.

Demand remains strong, however, with 2017 on track out outpace 2016. "You can see it’s a growing trend," said Touati. 

FIGURE: Additional Corporate Demand in Gigawatts

So far it’s been a big-company game

The increase in renewable energy deals comes as an increasing number of companies make bold clean energy commitments. Today, more than 95 companies have pledged to go 100 percent renewable as part of the RE100 campaign. Several of those companies, including Google, Microsoft and Lego, and have already hit their targets. 

But while sustainability goals have become more widespread, Touati noted that these commitments — and, more strikingly, renewable energy procurements — are still concentrated among the world’s largest companies.

FIGURE: Renewable Energy PPAs and Sustainability Targets


Diversification is a growing trend, though. One trigger is that large companies are starting to demand sustainability measures be met across their supply chain. In 2015, Apple launched a 2-gigawatt clean energy initiative in China, in order to tackle its supply chain emissions. As part of that initiative, iPhone manufacturer Foxconn will construct 400 megawatts of solar by 2018.

Walmart has also launched a major supply chain initiative — dubbed the corporate America’s "moonshot" — that seeks to remove 1 gigaton, or 1 billion tons, of greenhouse gas emissions from its supply chain by 2030. Energy is one of six areas where suppliers can make improvements.

"When the first five to 10 companies turn back and look at their supply chain, that could open up significant new opportunities [for renewables]," said Touati.

New rate structures are also helping to expand and diversify the corporate clean energy market. Momentum created by the "We Are Still In" movement in response to the Trump administration’s withdrawal from the Paris Agreement is helping to get new corporate players engaged as well, Touati said. The group currently includes some 2,086 governors, mayors, businesses, investors, and colleges and universities, three-quarters of which are businesses and investors.

Winner’s curse

Another emerging trend in corporate renewable energy procurements is the “winner’s curse,” as Touati calls it. This is where the price and the value of a renewable energy project do not match, and the customer’s asset does not deliver the expected return on investment. If not addressed, this issue could put a chill on the corporate renewables space.

The issue is particularly pronounced in the Southwest Power Pool, evidenced in the map below showing wind-weighted electricity prices. In the red areas, wind energy production gets more than $20 megawatt-hour, while in the blue areas production gets just $5 per megawatt hour. “That’s really cheap for electricity,” said Touati.

A lot of wind developers put projects in the blue areas because the land is cheap, the projects are easy to permit, and the wind resource is strong. But that does not necessarily mean it’s a good deal for the customer.

FIGURE: 2016 Wind-Weighted Hourly Energy Prices in SPP Territory 

Corporates often contract for renewables at a fixed price and receive credit for the renewable energy that project produces, while the actual electrons that project generates are sold into a wholesale market — a model known a virtual PPA. The expectation is that the wholesale market prices will be higher than the PPA price, or that they will increase over time, and the corporate buyer will save money on the whole. But those savings aren’t always there, as experts have explained

"As a corporate buyer, you need to start to look at your renewable energy procurement the same way you look at real estate procurement: It’s all about location,” Touati said.

“What you should care about is not the cost of production; it’s the difference between the value of electricity being produced and the cost of production,” he added. "If you produce at $50 and the [market] value is $60, you have a better deal than producing at $25 and the value [being] at $20.”

RMI recently released a market platform that helps commercial customers identify opportune areas to negotiate renewable energy deals, including node-level price data and a future analysis of transmission congestion. The platform is available to members of RMI’s Business Renewables Center.

RMI also formally incorporated the nonprofit WattTime as a subsidiary organization this week, with the aim of helping more corporate customers reduce their carbon footprint cost-effectively. WattTime’s software "can automatically detect the actual emissions impacts when people and companies use energy — both in real time and ahead of time — so any device connected to the internet can use power at times when our electricity is the cleanest,” according to a press release.

WattTime “measures precisely the carbon content of every megawatt-hour produced. If you are more interested in actually having an impact on reducing CO2 emissions, this tool can also tell you where to invest in wind and solar,” said Touati.

Opening the flood gates

Despite the possible risks and challenges, Touati believes corporate renewable energy procurement is on track for more exponential growth.

"I believe the future will be a flood in the making," he said.

A big part of that has to do with how deals get done. The vast majority of megawatts contracted for to date were signed through virtual power agreements, and those structures can only be signed in organized markets, according to Touati. But new deal options are now emerging as the market for corporate renewables matures. Whether it’s a green tariff, direct access, a green pricing program, a retail sleeve or some other structure, at least one kind of deal is currently available somewhere in the country.

FIGURE: Organized Markets Versus Vertically Integrated Utilities


But vertically integrated markets are still difficult to work in. The chart above shows that it’s almost three times harder to get a deal done with a vertically integrated utility territory. "I believe this is going to change for a number of reasons," said Touati.

First, some customers are getting impatient, such as MGM in Nevada. The casino and hotel company wasn’t satisfied with its utility, NV Energy, and so it struck a deal to pay a fee and opt out of the utility territory. Microsoft is exploring a similar structure, Touati said. "That’s pretty radical; it is certainly changing the market in regulated states," he said.

Second, in order to have a green tariff with a utility, you take the typical electricity cost, add the cost of wind and solar, and subtract the utility’s avoided cost. In the past, that meant that corporations could do a renewable energy deal, but they had to pay a premium for it. Now, with solar and wind costs getting lower and lower, that differential is going away.

Touati asked: Who would prefer to pay more for dirty power when they could pay less for clean power?

"That’s were the flood is going to come from," he said.