Last week I spent some time at the Solar Power International Conference in San Diego.
I thought to share some thoughts I walked away from the conference with:
- This conference had 15,000 to 20,000 attendees - almost double the amount of people from last year. So definitely a high level of interest in what is happening in the space.
This is biggest event for the industry in the US. But being there I realized its still very small relative to semiconductor /communications industry events (for example, there was only one hall for exhibitors). This speaks to the fact that the solar industry is still very small (specifically in the US), with most companies still “behind the scenes” or in private rooms. Will they come out bigger next year (given ITC boost) or disappear altogether (given current economy)? I think we'll see a bit of both.
- This is not a time to raise money. Seems to me that many of the companies walking the halls have not fully grasped this yet.
If you need to raise money now – its going to hurt a lot (both in terms of effort that will be required, as well as valuation you will eventually get that will be much lower than expected). Companies should think about how they make it through 2009 with no external equity raised.
Although this is general advice for any company these days, it seems solar companies might have the biggest "wake up call" in terms of the variance between expectations they had just a few months ago (valuations, round size) to reality today and in the coming several months.
- Any project dependent on solar tax equity, project financing, or debt will see tough days ahead. With higher rates, and less suppliers of funding, competition for sources will intensify and project costs will be higher driving lower value / returns for developers. Today GE also noted they will be dropping out of the tax equity financing for the time being: As mentioned by Timothy Howell, head of origination for renewable energy at GE: "Right now we can't price a deal... We can't go out and borrow. So we can't commit to a deal today."
- Notwithstanding, some new and exciting disruptive technologies are being developed behind the scenes, and already making some traction with potential to become significant in the market.
- Finally, it was my first time in San Diego, and the weather was great. The city has great beaches... but it seems mainly a good place if you're looking to retire (something like the Miami of the west coast). One concept worth considering for other cities (especially these days) is "Taco Tuesday" - in order to entice people to go out on Tuesday's (mainly students), all food and drinks in the city are half price all night...
The amount of new projects will also be scaled back, as business (and consumers) look to cut costs ("If your business isn't growing at all, are you going to sign a contract for energy from your rooftop?")
This will affect the whole industry, although some claim module makers may take the large share of the cut (being the largest cost component, with the highest margins)
A couple of examples I liked - Enphase presented their new solar inverter design, and drew a lot of excitement to their booth (showing the big need for such solutions from industry players). There are a number of stealth mode startups going after the same space (A couple of Israeli players with interesting approaches);
In thin film solar - Solyndra recently came out of stealth mode with a radically new design for thin film panels, and high market interest - over $1.2Bn of orders (A company my fund is invested in)
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