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“It’s a one-two Punch” PV Magazine 4-page interview with Tony Seba

 

PV Magazine Cover, January 2015 issue.

The solar industry is starting to believe. Solar is a disruptive technology and, when combined with other disruptive technologies such as electric vehicles and self-driving cars it will disrupt the energy infrastructure.

PV Magazine interviewed me about the Clean Disruption, the future of energy and the role that solar PV is playing in that disruption.

Here’s one of the questions that Edgar Meza asked me. The magazine has kindly allowed me to share the entire interview in PDF form here.

What characteristics of PV make it disruptive?

Here are several characteristics of PV that make it disruptive

1-  PV dematerializes energy. To understand this concept, think of how digital photography disrupted film photography. With digital imaging, photography went from atoms (film) to bits (digital), from something material that you had to manufacture for every single picture to something immaterial that is essentially free. Today energy is like film photography was in the 20th century. Every time you flip a switch you burn fossil fuels or uranium. Every time you hit the car pedal you burn petroleum. Solar PV dematerializes energy by turning the sunshine photons directly into electrons and bits. You don’t burn anything to charge your computer. The same thing happens if you charge your electric vehicle with solar energy.

2-  PV demonetizes energy. Again, think of digital cameras disrupting film photography. Each time you took a picture you burned film so Kodak made money. Then if you actually wanted to look at the picture you had to pay more money to Kodak for the paper and the chemicals that went into processing the film. With digital photography the cost of taking each additional picture, storing it, sharing it, and watching it is essentially zero. This is exactly what solar PV does to energy. Once you install a PV power plant the marginal cost of energy is essentially zero. Just like Kodak could not compete with a marginal cost of zero, there is no way on earth that energy companies can compete with solar marginal cost of zero.

3-  PV has increasing returns. PV is a technology whose costs have gone down by roughly 22% every two years for decades. Essentially the more PV is adopted the more everyone benefits from everyone else’s adoption of PV.

4-  PV is scale-free. The same technology works to power a 1W light bulb, a 1kW house, a 1MW business, a 10MW factory, a 100 MW town, a 1 GW city and a 100 GW country. This is much like information technology is scale free: our mobile phones, laptop computer and the most massive data centers work with similar modular technology building blocks.

5-  It flips the architecture of energy. PV essentially flips the architecture of energy the way that the web flipped the architecture of publishing. In the old days publishing used to be done by a few companies who owned large centralized printers. They decided what would be published and pushed it down to the users. Now everyone with a Facebook, Twitter or LinkedIn account is a publisher. The same dynamics work for PV: everyone can generate energy as well as information.

When you combine these disruptive characteristics of PV with the complementary disruptive characteristics of electric vehicles, it’s a one-two punch that conventional energy companies will not be able to survive.

Please read the whole interview with PV Magazine Interview with Tony Seba Jan 2014.

Disrupting Energy & Transportation – Why Business Model Innovation Matters

In 1918 one in thirteen American families owned a car. Eleven years later 80% of American families owned one. The main reason the US auto market went from early adopters to nearly full penetration in just over a decade was an innovation launched by General Motors. It was not a new engine, transmission, or even a technology innovation.

In 1919 GM partnered with DuPont to form the General Motors Acceptance Corporation (GMAC) to offer a new financial innovation: consumers car loans. (1)

Seven years later 75% of all car buyers bought cars on credit. It was a business model that made cars affordable to the American mainstream buyer. In other words, it was a business model innovation that disrupted the transportation industry in the early 20th century.

 

From Car Loans to Solar Loans

Fast forward to the 21st century. In 2008 a company called SunEdison introduced the concept of solar-as-as-service. Residential and commercial solar power buyers would no longer need to invest capital in purchasing solar panels.

SunEdison offered to finance, install, own and maintain the solar panels on the rooftop of its customers. Homeowners did not have to take any technology, financial, or maintenance risks. At the end of the (20-year) contract, the customer had a choice of purchasing the equipment at deep discounts or having them taken off the roof.

Soon after SunEdison, another Silicon Valley solar installer SolarCity [NASDAQ: SCTY] created the SolarLease and the solar market exploded. The concept caught on and other Silicon Valley companies such as Sungevity and SunRun joined SunEdison and SolarCity in offering ‘Solar Leases’ or ‘Solar PPAs’.

Partly as a result of these financial innovations, the solar market in America quadrupled over the following four years. About 80% of residential and commercial installations are now financed by third party-companies. In Colorado the number is closer to 90%.[2]

Technology innovation is clearly important. Making the right Strategic Choices (whole product, positioning, product/market fit, etc) is clearly important. But Business Model innovation may be the key that unlocks a new market or disrupts an existing market.

Sources:
[1] “Cars in the 1920’s”, Kim Kenney, Suite 101, http://suite101.com/article/cars-in-the-1920s-a90169
[2] “Sunrun Closes $630M in Rooftop Solar Funds From JPMorgan, US Bank“, GreentechMedia, June 26, 2013: http://www.greentechmedia.com/articles/read/Sunrun-Closes-630-Million-in-Rooftop-Solar-Funding-from-JPMorgan-US-Bank

Energy Facts Label: COAL - Copyright © Tony Seba

What’s in Your Electricity? Energy Consumers need Energy Facts

Do you know how much pollution electric utilities are causing in your name?

Energy Facts Label: COAL - Copyright © Tony Seba

Energy Facts Label: COAL – What’s in your electricity?
Copyright ©Tony Seba

Do you know how much mercury, sludge, and volatile organic compounds you are responsible for? What about Carbon Dioxide, Nitrogen Oxide, and Methane? How much thorium and uranium get dumped in our air, water, and land to generate the kWh that you use every year?

The Smart Grid will be all about providing better data so all participants in the energy supply chain can make better and quicker decisions. Engaged consumers will want detailed and instant facts about their energy consumption (not just kWh and cost.)

So I took a page from the food industry and today I’m introducing the “Energy Fact Label” that I think utilities may want to deliver to power consumers. This is a start. Some important variables are missing. I would want more information about how much water was used to generate that energy. Others may want to know what percent of the natural gas was produced by fracking techniques.

Food Labels have shown that consumer engagement starts with open, honest information. As the Smart Grid reaches its potential and gets to be truly interactive, utilities would provide an iPhone-like platform and application developers would offer visualization and decision-making tools so that consumers can purchase power according to their own needs and wants.

Let me know what you think!

Portable Solar PV - San Francisco (Copyright @2010 by Tony Seba)

India Needs to Leapfrog to Solar and Electricity 2.0

In 1991 India had 5 million phones. In May 2012 the country had 960 million phones and the country was adding 8 million new phones per month! (1)

I thought of this policy success story right after India’s power grid collapsed last week leaving more than a billion people without access to grid power. Six hundred million were affected by the blackout plus more than half a billion who have never had access to the grid. (2)

Portable Solar PV - San Francisco (Copyright @2010 by Tony Seba)

Portable Solar PV – San Francisco (Copyright @2010 by Tony Seba)

What India’s leadership did in 1991 was to pass new legislation to break up the old monolithic, centralized, and inefficient telecom industry with the aim to provide telecommunications for all. In less than two decades India’s phone usage has gone from about 0.05% to 80% of the population, a stunning 19,100% growth, turning India into the second largest telecom market in the world.

In 2012 India’s leadership has the opportunity to end the country’s power crisis and provide electricity for all.

Centralized Architecture of Energy

The centralized electricity model consisting of large coal or hydro power plants ‘out there’ delivering one-way power to passive consumers is already obsolete. This grid infrastructure is similar to the old landline telephone model: centralized, monolithic, inefficient and undemocratic. The only way for India to provide communications access to every citizen was to leapfrog the landline model and go straight into a grid-independent mobile phone infrastructure. Now India has a historic opportunity to leapfrog to a reliable, secure, and democratic energy future.

The solution to India’s power crisis is simple: the country needs a distributed power infrastructure based on grid-independent as well as grid-tied solar technologies.

Here are some of the main elements of India’s solar electricity 2.0:

1) Residential and Commercial Solar Power

Like mobile telephones, solar power is the only technology that can provide grid-independent power. Solar can generate power at any scale: residential, commercial, industrial, island, village, and utility scale. At the smaller scales solar photovoltaic technologies can provide families and businesses with ready power while decreasing usage of the existing grid. Germany already has one million grid-connected solar installations. While this constitutes just 3% of the country’s capacity it has generated up to one half of the country’s power on sunny afternoons. And Germany is planning to triple solar capacity by 2020. Thus it just eight years this northern country with half the solar radiation of India will generate 100% of its power from the sun on clear afternoons.

Businesses can’t afford to be without power even for a few hours. Walmart, for instance, has recently announced that 75% of their stores in California will go solar.(3)

It takes hours to days to install a residential or commercial power plant. A solar distributed power infrastructure can be built quickly and painlessly to give a large number of individuals and businesses better access to electricity while relieving grid congestion.

2) Industrial Solar Power

Most industrial energy is used in process heat. In Europe, for instance, two thirds of all energy used in industry is used in process heat.(2) Concentrating solar power can be a great way to generate hot water for industrial heat applications. In my book ‘Solar Trillions’ I give several examples including data centers, pharmaceuticals and potato chip production. FritoLay™ uses solar energy to make its SunChips™ product line in Modesto, California. Industrial process heat from solar is generated onsite (using parking lots, brown-fields, or even rooftops) – thus decreasing the strain on the grid from industrial energy use.

Data centers can also benefit from point-of-use solar energy generation. Apple Computers has announced that their new massive data center in North Carolina will draw sixty percent of its power from onsite generation including a 20 MW solar photovoltaic power plant.(4)

3) Utility Scale Solar

Onsite generation can take huge loads off the grid. However, the country will still need to provide baseload and intermediate electricity later in the afternoon and in the evening. At larger scales, concentrating solar power already generates baseload and intermediate electricity. Last year I went to Spain to cover the world’s first baseload (24/7) solar power plant, which is based on power tower technology. The United States is also developing a fleet of large power towers in California and Nevada with intermediate and baseload capabilities.

4) Distributed Grid Architecture

Distributed architectures are inherently more reliable than centralized networks. The evolution of the computing infrastructure provides a case in point. In the old days (three decades ago) computing power was mainly provided by centralized mainframes – while consumers waited patiently for information. Now computing power is provided by cell phones, tablets, personal computers, servers, and large data centers – all connected by the ultimate decentralized network: the Internet.

A centralized network has one or many points of failure. The United States is no immune to this inherent architectural weakness. In 2003 a tree fell on a transmission tower in Ohio which caused a ripple effect that left 50 million people without power. This blackout affected the entire Eastern seaboard of the United States from Boston to New York to Florida.(5)

A well-designed distributed network has no single point of failure. Even if the whole state of Ohio were without Internet (which is not likely since it’s a distributed architecture), the rest of us would still be able to use email and access the web.

5) Water is Energy

Water is energy and energy is water. We need water to generate energy and we need energy to transport, clean, and pump water. Ignoring the water issue in the energy conversation is an invitation to failed energy policies. India is going through a multi-year drought, which has pushed the country into a vicious water-energy crisis. Coal, which provides more than half of India’s power is a major consumer of water. The long-term drought has prompted Indians to dig deeper into the depleting aquifers, thus increasing water pump power consumption, which requires more coal power, which consumes vast amounts of water, which exacerbates this vicious cycle of drought.

Gemasolar Solar Power Tower uses only Rainwater to generate Baseload Electricity

Solar PV power plants need no water to generate electricity (and negligible amounts for washing the panels.) Because they use steam to run a turbine CSP plants do need water to generate electricity but with dry cooling they can decrease water usage by about 90 percent. Furthermore, power plants can be built with water stewardship in mind. Gemasolar, the world’s first baseload (24/7) solar power plant draws no water from aquifers or the municipal water system. This solar power tower plant was designed to store its own rainwater in two large pools for later usage.

6) Off-Grid solar home systems

There are half a billion people who live in half million villages in India who have no access to the power.(2) This population relies on diesel, kerosene, or firewood for their energy needs. They pay up to $2 per kWh for this energy – which is more than ten times the cost of unsubsidized solar. Not having access to reliable and inexpensive power can also keep whole populations in a never-ending poverty cycle.

The good news is that just like this population leapt into mobile telephony without having to go through the landline model they can leap to solar and electricity 2.0 without having to go through the century-old centralized landline electricity model.

There are two ways to quickly provide power to the off-grid population. The first one is by providing solar home systems. Grameen Shakti has brought power to more than five hundred thousand homes in Bangladesh thus proving that the poorest of the poor will pay for access to solar electricity when it is provided with the right financing mechanism.

The other way to provide off-grid villages with power is by building island-scale or village-scale micro-grids.

7) Microgrids.

Villages and islands can build microgrids consisting of solar energy, energy storage, and smart grid technology to manage power generation, load balancing, and payments. The island nation of Tokelau is an example of what this architecture can do. Consisting of 3 atolls in the South Pacific, Tokelau is getting ready to announce that they are the world’s first nation powered 100% by solar energy. Tokelau went from all diesel to all solar in just 1 year. They now have reliable, secure, and clean energy at a much lower cost than the old dirty diesel infrastructure.(6)

There are many other important technologies that India could use today and develop for the future: solar water desalination, solar air conditioning, solar water heating, power electronics, power trading, payments, and many other smart grid infrastructure technologies. India’s entrepreneurs stand to create trillions of dollars in wealth for the country while helping to take its energy infrastructure to the next level.

The Future of Energy in India

In 1991 India decided to leapfrog the obsolete landline telephone model in order to provide telecommunications for all. Because of this policy choice nearly one billion Indians enjoy access to state of the art telephones today. Once again, India has an historic opportunity to leapfrog an obsolete energy architecture and build a reliable, democratic, secure, and clean energy future.

What will India choose?

 

Sources:

(1) “Communications in India”, Wikipedia, http://en.wikipedia.org/wiki/Communications_in_India

(2) Tony Seba, “Solar Trillions. – 7 Market and Investement Opportunities in the Emerging Clean-Energy Economy”, http://www.amazon.com/Solar-Trillions-Investment-Opportunities-Clean-Energy/dp/0615335616

(3) “Walmart and SolarCity today announce plan to install solar panels on up to 60 additional stores in California”, SolarCity press release, http://www.solarcity.com/pressreleases/99/Walmart-and-SolarCity-today-announce-plan-to-install-solar-panels-on-up-to-60-additional-stores-in-California.aspx

(4) “Apple and the Environment – Data Centers and Renewable Energy”, Apple website: http://www.apple.com/environment/renewable-energy/

(5) “The 2003 Northeast Blackout–Five Years Later”, Scientific American, August 13, 2008, http://www.scientificamerican.com/article.cfm?id=2003-blackout-five-years-later

(6) “Tokelau Will Be World’s First 100% Solar Powered Nation by September“, August 1, 2012, http://www.treehugger.com/renewable-energy/tokelau-world-first-100-percent-solar-powered-nation-september.html

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