On the heels of a successful 2012, here at Recurrent Energy we are looking forward to some major milestones in 2013 as we continue to build out our utility-scale portfolio. It’s not just a big year for our company, the solar industry as a whole is putting some big numbers on the board. We are
clearly seeing solar’s transition to playing a mainstream role in energy markets.

Our 2012 activity brought Recurrent Energy’s total completed projects to 138MW now in operation. Operating results were above plan, as we completed our second year with solid profits. On the capital raising front, we’ve secured well over $2B in cumulative project finance commitments to support our build-out. Last year was also a good year in terms of new development successes. Our team added another 114MW of new utility contracts, pushing our total portfolio to just over 700MW.

In 2013, we have over 300MW of projects lined up for completion—more than 200% of what we’ve built to date as a company. This includes the first two waves of our 220MW of Ontario projects, another major milestone for the company. We’re firing on all cylinders across the organization as we execute a historic push to get these projects out the door successfully. I have to say it’s gratifying to finally see years of development work come to fruition.

What’s even more exciting is that our results are just one example of the growth and success we’re seeing across the solar industry as it transitions to the mainstream. Today, SEIA and GTM Research released their U.S.Solar Market Insight Report: 2012 Year In Review.

Here are just a few of the highlights for 2012:

• US solar installations came in at over 3.3
  gigawatts (GW), a 76% improvement over the previous year
• The U.S. accounted for 11% of all global PV
  installations, its highest market share in at least fifteen years
• Cumulative PV capacity operating in the U.S. stood
  at 7.2GW at the end of the year

Despite the magnitude of these numbers, they fail to express just how exciting and dramatic of a transition the industry is going through. I’ve heard stories from natural gas insiders about how hard it was to get people in the outside to see the revolution that was occurring with shale gas in the early 2000s. I think solar is reaching a similar inflection point, and we are only scratching the surface of what solar can offer our country. 

Over the last several years, massive cost reductions drove solar to competitive parity with other wholesale power sources. As a result, solar – once the most expensive source of electric power – is now one of the three least expensive sources of power (solar, wind, and natural gas).  This remarkable
transformation has all but guaranteed solar will have a mainstream role in our energy future. And it means our country can ‘get clean’ without breaking the bank.

2013 will be the year this transformation becomes apparent to the outside world. This is the year solar will exceed all but gas in terms of new power plants put into operation. GTM is forecasting the industry will deliver 4.3 GW of new generation—the first year solar will deliver more than new wind or coal. And I have a feeling that number may actually be a bit conservative.

This will also be the year Americans start to realize just how affordable solar has become. Rooftop solar can now be installed for under $4 per Watt, making it competitive with retail electric rates in many regions. Meanwhile, utility solar costs have broken through the $2 per Watt barrier. As a result, the price utilities pay for solar electricity from new plants has declined to $60-$70 per MWh ($0.06-$0.07 per kWh). In fact First Solar just announced a contract with El Paso Electric Co. just below that at $57.9 per MWh.  

Pricing in this range makes solar just about competitive with existing gas-fired power and arguably competitive with a new-build gas plant, once you figure permitting and operating costs into the equation. Even more profound, a solar plant has low operating costs and zero fuel costs. It will generate power at that low fixed price for the entire 25-year plus lifetime of the plant. Yet in that same period of time, the cost of natural gas-fired power is forecast to rise to well above $90 per MWh.

All signs point to 2013 being a watershed year for solar. What lies behind us is the history of solar’s maturation from an expensive technology to affordable power.  What lies ahead is a future in which solar plays a mainstream role in generating the power we use every day. In fact, the latest forecast from IHS indicates that by 2030, solar and renewables will deliver as much power in the U.S. as the nuclear sector does today. 

I have one problem with this tremendous progress – it is not enough. Status quo projections do not come close to tapping the potential of solar and other renewables. So while I am excited about how far solar has come, I know we have a long way to go to realize the full benefit renewables offer our nation. Getting there will require a frank discussion about what to do with our natural gas bounty, putting a real and meaningful price on carbon, and redesigning our energy grid to manage a high penetration of intermittent clean resources.

More on that in later posts.

I spent last week in Houston for CERAWeek, one of the premier conferences for the global energy industry put on by IHS. This was the first year they had a panel on renewables and I was honored to participate as a speaker. CERAWeek convenes senior business and government leaders to assess the current state of oil, natural gas, coal, renewables, and nuclear power. It’s all about energy on a vast scale.

I found the conference humbling and inspiring at the same time. Humbling because the vastness of our global energy needs is difficult to grasp. Humbling because the immensity of activities going on to extract fossils from some of the most inhospitable places in the world to meet that need is also hard to visualize. Humbling because on that scale renewables today are still so small. I’ll get to the inspiring bit in a moment. 

The theme of CERAWeek this year was “transformation and change.” The main focus of this theme was clearly the upheaval wrought by fracking and other unconventional fossil recovery methods. Driven by new technologies and new drilling techniques, the global assessment of recoverable resources has been turned upside down.  

In short, the US—once thought to face a bleak future of endless oil and natural gas imports—now sits on an abundance of oil and gas that could make us energy independent by 2020. And a world which not so long ago was thought to be at “peak oil” is now at the beginning of a multi-decade (if not a century’s) upswing in production.  

So radical is the transformation that an oil economist like Philip Verleger Jr. can ask quite reasonably whether the U.S. ought “to consider joining with other energy-exporting countries, like those in OPEC, to sustain high oil prices.” Wrap your head around that. 

This wasn’t supposed to happen this way. The last decade was supposed to be about dwindling fossil resources. It was supposed to be about the transition to an innovation-led effort to supplant fossils with new renewable technologies. If there is one constant in energy, it is that surprises are the norm.

Now to the inspiration. The other focus of CERAWeek’s “transformation and change” was the revolution that’s occurring in renewables, particularly solar and wind. For decades considered expensive and impractical, solar and wind have leapfrogged their way into the top three least expensive sources of electric generation. And they’re now the fastest growing segment of energy overall.

As you might expect, this means wind and solar are going to be a big part of the future of electric power. In fact, IHS’s own analysts forecast that by 2030 solar and wind will generate as much solar power as the nuclear sector does today. That’s the status quo scenario and that’s almost as hard to wrap your head around as what’s happened with oil and gas.

Here’s the thing. I think we can do even better. And we have to if we’re going to make real progress on climate change. After all while it’s wonderful to have lots of cheap oil and gas, they’re still part of the carbon problem. Even ‘clean’ natural gas is only preferable when compared to its dirty cousin coal.

I left Houston inspired by the progress renewables have made and fired up about the road ahead. We have to focus now on building an upside to the status quo. The new conversation is now longer how to afford renewables, it’s about how to integrate as much of affordable solar and gas as our grid and our nation can take. Hopefully five year’s from now that’s the status quo we’ll be talking about.