Insider's Guide to Energy
The Energy Industry is uniquely evolving as traders are under increasing pressure to manage costs, cash, limits, and risks. The Insider’s Guide to Energy Podcast addresses current and emerging challenges business executives face daily through stories shared from peers and industry experts while covering topics such as innovation, disruptive technologies, and emerging trends.
Insider's Guide to Energy
133 - Insights on US Utility and Distributed Solar
The US has 150GW of solar installed today. This is expected to triple within 5 years. By 2050 40% of the US generation fleet is to be made up of utility scale solar alone! How can we get here? Join us, as we learn this and more, in an informative discussion with Michelle Davis, Head of Global Solar at Wood Mackenzie. With over a decade spent observing and researching the industry, we learn from Michelle, how to best deploy solar energy to contribute towards the solution of the American energy transition.
Hosts: Chris Sass and Jeff McAulay
Additional Reads:
Wood Mackenzie Renewables - https://www.woodmac.com/industry/power-and-renewables/
Wood Mackenzie Solar Market Insight Report - https://www.woodmac.com/industry/power-and-renewables/us-solar-market-insight/
07:23.64
chrissass
Welcome to insider's guide to energy I'm your host Chris Sass and with me is co-host Jeff McAulay Jeff welcome to the program.
07:33.76
Jeff McAulay
Great to be here as always Chris really excited for today's guest
07:36.17
chrissass
I am excited for our guests today we have Michelle Davis head of global solar at Wood Mackenzie Michelle welcome to the program.
07:44.84
Michelle Davis
Hi folks Great to be here.
07:52.12
Jeff McAulay
Michelle we'd we'd love to hear more about your background. You come from a real deep passion around industry analysis. Ah, not just in solar. But even before your current position. tell us a little bit about your history and how you've come to research at the solar industry.
08:16.72
Michelle Davis
Sure Ah yeah I oftentimes will joke with folks that my entire career has been in observing and researching the industry yet I've never worked directly in the industry. Um, but it's a it's a it's a fun place to be. Um, and it's it's one that I feel particularly ah compelled to to be in so I started my sort of market research career at a competitor of Wood Mackenzie at ihs market they had acquired a small energy firm for maybe. Some of you that have been around a long time. You might know emerging energy research. Um I was on that legacy team for a couple of years very early in my career as a budding research analyst um, and after a few years there I then joined wood mackenzie and I have been there ever since Um, and I started at Wood Mackenzie as an analyst focused on commercial solar. They hadn't really built out a lot of research on that particular segment commercial being distinct from either residential or utility scale. So that's kind of where I cut my teeth. Um I'm now the the head of all the global solar research around the world. Ah, this is a fairly new role to me so I'm getting my legs under me. Um, but ah I still have a very strong background in distributed solar in the United States which I think is um, a very interesting segment and I think it's been interesting to see that distributed solar is getting increasingly more attention. Um.
09:47.68
Michelle Davis
But I've been ah, an industry analyst for ah going on. You know, a little over ah a decade now. Um, which is which is fun because basically everybody tells you sort of off the record. Ah what they're seeing and what they're hearing and then you get to kind of compile all the different opinions hear all the debates. And then bring some clarity and objectivity sometimes to some of those some of those issues in some of those conversations. So I'm excited to kind of talk a little bit more about that today on the show.
10:21.16
Jeff McAulay
Wonderful! And if people didn't know your name. They certainly know your work because whenever anybody wants to quote stats on growth or magnitude of the solar market in the us. They're almost certainly referring to what is really the gold standard which are these quarterly reports that you and your team put out at Wood Mackenzie but are also distributed through Sia so tell us a little bit about those quarterly reports. How did that come to be and um. We'll get into some of what it says actually because it's always really exciting. So.
10:58.94
Michelle Davis
Yeah, sure. So the the solar market insight report is sort of ah Wood Mackenzie's state of the solar industry report many of you in the audience have probably ah read it or seen statistics from it like Jeff was saying um we have had this ah reporting. This this solar report around for a long time. Um way before my time over a decade so I can definitely not claim credit for establishing the report and its reputation. Um, but I have shepherded it. Um, for several years I've been the lead author since like 2020 or so and. It sort of serves as kind of the bread and butter of a lot of the subscriptions that we offer at wood mackenzie because just kind of to start somewhere in a new market a client needs to know or someone in the industry needs to know how much solar was installed in certain places or in certain segments. Um, and the putting together the report every quarter is um is is is fun. It's ah it's a lot lot of the same thing every recorder um, but you know we have tons of different data sources that we use to get this sort of like source of truth of how much has been. How much solar's been installed where pricing trends are going um and then of course we're constantly talking to folks in the industry about what the hottest topics are in that particular quarter. What the biggest challenges are so the the report does a great job of sort of.
12:29.20
Michelle Davis
Giving a ah broad summary to the industry on where all of that stands every single quarter.
12:36.67
Jeff McAulay
And there have been some pretty broad brush but very high level numbers that have come out I think you've talked about maybe 40% of generating capacity by 2050 coming from solar maybe even higher than that are those. Long Rangege forecasts Also things that you put out or is your work more focused on the quarterline annual.
12:59.59
Michelle Davis
Yeah, good. Good question. So the solar market insight report that we put out every quarter is mostly just about the near term five five year outlook ah but woodac has lots of longer term outlooks for the entire solar industry all the way out to 2050 and the statistic that you just quoted. We had our. Mackenzie's solar and energy storage ah conference in just a few weeks ago in San Francisco and I was able to show some of that longer term modeling and the place that solar has in our longer term forecasts in the in the power sector more broadly and um, it. When you take all of our different projections for different technologies across the entire power sector. We're predicting that by 2050 in the generation fleet in the United States 40% of it will be made up by utility scale solar which is ah pretty pretty astounding and significant in my opinion and. Sort of the point that I was I was trying to make in my presentation is that in my view. Ah that sort of means not that you'd want you know, not not that one needs to pick or favor any technologies. Ah per se but solar is in in my view sort of if 1 of if not the. Chief technology of the energy transition if we're going to have you know 40% of generating capacity. Be utility scale solar by 2050 if our forecasts come to fruition.
14:21.88
chrissass
So to get to 40% of our generating capacity. What kind of scale is that like in gigawatts or or like how how big is that just help me picture that.
14:34.38
Michelle Davis
Sure? yeah, that's a good question. So today we have about one hundred and fifty Gigawatts of solar installed in the United States and of course a lot of the statistics. We've been talking about so far on the podcast are just the us the solar market insight report is just focused on the Us. Um, we in the next. 5 years Ah we expect that that will roughly triple. Ah so we'll get up to you know another another you know three hundred Ish Gigawatts just in the next to ah 5 years sorry ah, that's going to obviously continue. Um throughout. Trajectory of our long-term power outlooks um and the the sort of place that that looks like in terms of numbers to address your question Chris is that ah you know the most capacity that the solar industry has installed to date. Was a little over twenty Four Gigawatts in 2021 ah that's the the most the industry has ever installed according to all of our data just within the next couple of years because of all of these very strong drivers. Um for solar and renewables more broadly. We're going to be reaching. We're going to be regularly installing forty fifty Gigawatts of solar every single year in the United States so just in the next couple of years we will be installing more than we ever have every single year and obviously you can kind of like think about that.
16:04.39
Michelle Davis
Continuing throughout that Multi-decade trajectory and that's how you get to you know 40% of generating capacity. Obviously that number also includes a lot of things like other power plants retiring and other additions from other technologies. But we're really, we're sort of entering a. Ah, new and and fascinating phase in the solar in the growth of the solar industry.
16:27.52
chrissass
Um, and so in order to hit that kind of capacity I mean the world is growing solar too right? So we're talking us in huge numbers. Um, and I think even the Ira put some some or one of the recent legislation has things on Shore giving you some sort of tax.
16:34.80
Michelle Davis
Yeah.
16:43.80
chrissass
Tax advantagetage for pv made on shore how much that capacity. Do you think will make within the United States how much manufacturing of pvs do or solar panels you expect to be taking place on shore.
16:54.90
Michelle Davis
That is a that is the question of the moment. Um, my ah just in the next five years which is really sort of the only timeframe that we can realistically think about these things um, is and the the the. Sort of blunt answer from my side is not much um, in terms of the actual capacity that's installed in the United States most of it is still going to be coming from overseas and that's not to say that we're not going to see you know we we report on this in the most recent solar market insight report the Ira has instigated a. Substantial amount of announcements for new manufacturing capacity. The stat we quote is that there's currently fifty two gigawatts worth of solar manufacturing announcements in the united states or or it will be fifty two gigawatts by ah, the end of our short term outlook. Ah, ah. About sixteen gigawatts of that is currently under construction. It's very possible that not all of it will come online when it's promised and it does take a while to ramp up production. Um, and furthermore domestic capacity of solar modules is going to. Um, mandate higher pricing from folks in the solar industry. So while there's tons of momentum. There's a lot of ah promise of a lot more ah us based manufacturing in the for solar. Ah, the reality of it is probably only a small share of the actual installations in the us.
18:31.81
Michelle Davis
Will come from domestically made modules.
18:39.00
Jeff McAulay
Michelle this is great and I'm tempted to ask a ton more questions getting into the numbers. But maybe it's worth taking a step back and reflecting where where does the data come from to inform these projections and it it seems very well. Researched of course how well have your predictions or forecasts been in the past and do you go through that exercise I think a lot of maybe not everybody does.
19:05.45
Michelle Davis
So yeah, good question. Um the the short answer to your question is yes, we do look at our forecasts and how they compare to the past. Um, so much changes on the policy front that those comparisons are actually harder than you would think because. Say we want to do a 5 year review of our past solar forecasts. Well there's been some There's been like I can literally think of 4 or 5 significant federal level massive state policy changes that would have caused our forecast to be totally moot anyway, not to mention any state forecast changes. So those comparisons can sometimes be kind of hard but the short answer to your or the kind of like short way that I tend to explain it to people is that when we do comparisons of our forecast to reality in the near term. We tend to be within about 10 to 15% of what actually gets installed that. Number increases in the longer term so the longer term years the error bar gets bigger. Um, that's kind of the the brief answer I tend to give folks going back to the data sourcing um our data comes from lots of different places but the um. And it kind of depends on what segment of the industry you're talking about and what what part of the value chain I'm the most familiar of course with our distributed solar data since that's ah, that's kind of where I've I've grown and just to give you a flavor. We collect a ton of distributed solar interconnection data.
20:39.20
Michelle Davis
From dozens of utilities and different program administrators across the country. So um, you know and and we've had we've established these relationships and have had them in place for sometimes over over a decade thanks to the original sort of Cia Green Tech Media research partnership. Um. So these are you know these are realw worldld project level data sets. Um they and then in places where we don't have project level data. We'll supplement it with eia data or something else to give us the total size of the market. Um, on the utility scale side I mean we have. Analysts whose literal full-time job is to track every single project. Um, so we have you know a database with you know the five Thousand Ish utility scale solar projects in the us and all these details on them plus all of the ones that are under construction and um under development. So so that's kind of that's the ultimate. Source of the data is a lot of these project level datasets that we have access to.
21:42.92
Jeff McAulay
Great and you mentioned the inflation reduction act and that is one of the seismic regulatory shifts that we've had in the last six months or so are you now factoring that in. How much has that changed your forecast right.
22:01.47
Michelle Davis
Yeah, we um, we had incorporated the impacts from the ira last fall. Um, we had actually been thinking about the impacts of the buildback better act on our solar forecast originally um in. You know so as early as late 2021? Ah, and so we finally incorporated the impacts of the ira into our forecast and published that officially last fall. Um and the statistic that I remember from the time is that it increased our projections by 40% um, it. It was a significant driver of additional solar additions. Um, the main one one of the main ah drivers of course is just that the tax credits that are so lucrative and so important have continued instead of expiring. So at that time of course the forecasts that we had assumed a lot of dropping off of solar editions once the Itc was ah was was starting to phase down. So once the ira was passed. Um, ah you know a big part of our forecast revisions were. Not having that decline anymore because the ah the solar and incentives or that you know the Itc would continue. Um, yeah.
23:19.65
chrissass
So people often say that data doesn't lie so you've got a huge corpus of data that you're working with what are some surprises or what are something that you've come across that. Maybe industry members are overlooking or you know wives Tale is. It's not right? but the data is telling you a different story. Can you can you share an example of something like that.
23:42.42
Michelle Davis
Sure one of my probably 1 of my favorite topics. Um, one of the first things that I can think of is we will sometimes have clients who will come to us and ask. Why our forecasts aren't higher because they see massive pipelines. They see so much project development activity they see tons of incentives like with the ira and they don't understand why our forecasts are are what they are. And um, sort of in the spirit of respecting the data in the history. Um, what I'll often tell them is in a typical solar project pipeline in a given state only about 10 to 20% of that pipeline tends to get built.
24:37.25
Michelle Davis
So ah, when you project that on a lot of the different sources of pipeline data that we have either in utility scale or in distributed solar. Um, our forecasts are a very good reflection of taking that pipeline and heavily discounting it. So. I think that's kind of 1 surprise that I think a lot of people don't don't don't fully um, don't fully realize and appreciate about sort of the nature of this industry is that there is just a lot of ah project development that doesn't end up coming to fruition the second thing which is. Kind of along the same lines is that and very related is that there will be so some state level targets. For example that states will set out. Um the most recent example that I can think of of this is that the federal government. Ah, some division within the doe has this big goal of 5000000 community solar subscribers by 2025 which is only in 2 years um I forget what the gigawatt target is but the the main sort of headline is 5000000 people subscribed. Um. We've compared that to our current community solar outlooks and the outlooks that we think are going to actually the amount of capacity that's going to come to fruition in the next couple of years is a small fraction of that goal. So oftentimes again, we'll have people in the industry stakeholders or clients.
26:14.52
Michelle Davis
Who will say why are your projections not reaching these these these targets. Um, and if you know if there's not some sort of very concrete incentive for projects to get built in order to meet that incentive then the you know we we don't necessarily have any reason to believe that. Our our forecast is going to to suddenly increase just to meet that target.
26:41.12
Jeff McAulay
This is great to hear and I want to emphasize your coming at this from an analytical perspective. Not an evangelical or you know yes we might be all enthusiasts of solar but you're not coming in here to say it will go up because you want it to. You're saying it will go up because that's what the data tells you and people might want it to be higher or want it to be lower, but that is irrelevant you just present what the information tells you and I think that's that's very hard to do In. What is a very political Industry. So um, kudos for that.
27:18.30
Jeff McAulay
I am a true energy nerd. So I need to ask some some pretty nerdy questions to get it out of my system ah about units. So um and this is just you know your preferred units of having this conversation by that I mean when we're talking about cost decline.
27:27.30
Michelle Davis
Ah sure. Yeah.
27:37.42
Jeff McAulay
You think it's more important to talk about dollarop per watt or lcoe or is dollar per wat just what we use because it's convenient and similarly when we talk about market size. It's very easy to talk about capacity when energy production which includes capacity factor which would be a more normal way of comparing to other generation. Sources. So capacity and dollar per watt both being metrics of convenience may be but less accurate where you fall on that debate to the extent it exists.
28:06.21
Michelle Davis
Um I can't say that I have a strong opinion about using particular metrics or not I think all of those different things are useful. Um, it does seem like the it. You know it not that. Um. We've touched on this in this conversation but pure capacity numbers in terms of solar installations I think are becoming you know so much capacity will get installed. But then in you know the way that we're currently installing solar today that could just mean a lot of midday solar. But it's you know you don't necessarily know what share of that capacity has storage attached. Um and therefore that capacity could be you know utilized at other hours of the day so that just the pure capacity figures for solar. Can be a little bit more misleading in terms of how useful that capacity is to the grid and I think you know we all understand that as more and more solar gets installed and we have more and more solar penetration. Um, then that midday solar does become less and less useful. And then you start to get into conversations around capture price like you know what what? you actually capture in terms of pricing for a solar project and things like that stuff. That's um, a little bit more little bit more technical um lc o we I think is a perfectly useful ah metric along with.
29:37.24
Michelle Davis
Cost per watt just kind of depends on the depends depends on the application. Um, but I do know there's I do know just from being an observer of energy twitter that folks have very strong opinions about whether elc o is ah is a useful metric. Um. Ah, but we do still report on it on ah at Wood Mackenzie and and calculate lc a we across all the different technologies.
30:01.20
chrissass
All right? So so you're you're not willing to upset half the energy Twitter followers and and pick one. So fair. Um you mentioned storage kind of ad hoc in your last answer. How is storage paying playing into this you you just gave some pretty big numbers of where solar is going to be what's storage part of this.
30:24.90
Michelle Davis
Yeah, good question. Um, well one hopes that storage is increasingly a part of the story that we can tell ah with solar thinking about. Ah, utility scale first I do know that within the pipeline of utility solar projects within the us about half of them. Um I don't know the you know the exact percentage off the top of my head but about half the pipeline today does have storage attached. Ah, which I think is is pretty. Pretty promising I don't know the um ah you know like gig gigawatt to Gigawatt hour ratio ah per se but I think that's fairly indicative of where developers are moving which I think is very promising I still think that figure could be higher. Um and then in the. Because of some of the issues that we were just talking about with you know, increasingly more midday solar is going to mean that more solar on the grid gets less and less value. Um, but the ah the story on the distributed solar side is is a little different um with regards to. You know, residential and commercial solar the attachment rates that ah that we see concretely in our data are still I think a lot lower than folks ah than folks kind of think about a typical typical attachment rates today in most states are.
31:49.95
Michelle Davis
Um, like 10 percent or less so 10% or less of projects also install a battery. Um and it's even that that tends to be ah, it tends to be a little higher for residential like maybe you know 5 to 10 percent in non-residential. It's even lower. Ah, you know tends to be 5 % or less. Um the the 1 exception is Hawaii Hawaii has way high attachment rates. So I don't want to I don't want to leave Hawaii out and that's because you know if anyone in your industry is familiar with Hawaii they have had way higher. Distributed solar penetration really than any other state market and they've completely changed their compensation schemes and the way that they pay distributed solar projects to make it so that it's basically a dumb decision not to have a battery so attachment rates in Hawai are quite different. They tend to be 80 to 90% um, but in you know in the kind of ah you know, continental us um, attachment rates are still quite low and in my view that's sort of a bit of a missed opportunity. Um, and one that I think. You know I would likes to see attachment rates accelerate faster in distributed solar.
33:05.29
chrissass
So with with that 10% or that small number of attachment rate does that mean that the ratepayers then are basically becoming you know, paying more because they have to build capacity for base load for all this projects since you know you're getting advantage of solar during the peak times but then you still need capacity for nonpe times because it's. There's no battery with the Solar. So I'd imagine traditional generation would create that baseload is that possibly logical thinking or illogical thinking.
33:34.68
Michelle Davis
Um, well I think to for a little bit of background I think to to get at your question. Um, when you when you have most people who have a solar and storage system today are not installing enough storage capacity. To be able to power all of their consumption. The typical model is that you have ah one battery um which which is not um, typically enough for ah for you know, a typical single family homeowner in the us to cover their consumption during an outage. Um, and. What you utilize that battery for is for you know, optimizing your energy energy pricing and when you pay for energy. um so I have I have a battery um in my I live in Tempe Arizona Salt River project is my utility and um. The battery that my husband and I added helps us to keep our demand low during the on peak demand window so that we don't have to pay high demand charges so that's kind of the purpose of the battery whether or not that ends up paying off um and saves you enough money in order to pay for the battery. Is very different depending on the rate schedule that you have the area that you're in how much you paid for the battery, etc, etc. Um does that sort of answer your your question.
35:01.66
chrissass
Yeah, it does but ah like I said I was just wondering that if you're doing commercial scale projects right? to to rate save or do whatever you want to do with it right? You're You're not really having enough battery capacity for for downtime. So the grid still needs to produce that.
35:07.88
Michelle Davis
Yep.
35:17.37
chrissass
Capacity right? So you you get cheap energy when it's cheap, but then somebody still needs to produce the other energy so I was just wondering if that an infrastructure needs to exist. You're not getting rid of the the the turbine plant because you're going to still needed at some point until we sit certain capacity of storage is what my premise was.
35:21.69
Michelle Davis
Yeah, oh most the the.
35:31.39
Michelle Davis
That's right, yeah, that's right the vast majority of of solar plus storage installations today. Ah in distributed applications like residential and commercial. They still use power from the grid I mean ah you know my. At at my house. The battery is pretty much depleted after that on peak window and then we charge our car at night. We're just charging our car from the grid at that point. Um, so it it would be the probably very similar dynamics for you know a traditional commercial ah customer as well.
36:10.73
Jeff McAulay
Of course I'm going to ask about the Ev since you opened the door I realize we're getting a little bit off of topic there but can't resist I mean is there a future where there isn't stationary storage in addition to an Ev and the Ev plays the role of the stationary storage.
36:12.52
Michelle Davis
Sure.
36:27.85
Michelle Davis
I think there is a future like that. Um the world of the batteries in cars serving as a resource for the home or the grid you know Vita whatever you want to call. It is a lot more nascent. Than the residential or commercial storage markets are today. So I think you know that future is possible and is probably coming but I think it will be. You know if if current trends that I've watched. Over my career prove anything is that it will probably be further in the future than we'd like to think um I mean I think most people today believe that solar plus storage is just kind of like the new normal. But if you think about those attachment rates that I quoted. It's clearly not um, in some states you know attachment rates are way up. Um, I know we haven't touched on this yet, but a lot of folks in the industry know that California dramatically changed its net metering policy in the spring and from the tidbits that we've heard from folks in the industry that has caused their attachment rates to be dramatically higher than they were before. Ah, because the way that the new net metering regime is structured. It's way more beneficial to have a battery so more of that is definitely coming so I would say there's probably going to be more momentum in that type of market development ah than.
37:58.14
Michelle Davis
People literally starting to make decisions about well I don't want a battery I'm just going to buy ah an ev and use that instead we're not there yet. Um, that's a future that I think sunrun um wants to play out. But what's interesting. So and I mentioned Sun Run just because they have one of the most. Um, publicly known partnerships with ah Ford for the f one 5 lightning where sun run will install a charging station. Ah for the truck in addition to having opportunities to sell solar or storage to the customer. But what's interesting is that sun run also pitches the battery. Um, even though the battery is a fraction of the size and backup power as the battery that's in the truck. They they think that these things are synergistic and that if you have you know four f 150 lightning in solar. You'd also want a battery and that all of these technologies would be 1 comprehensive use case. Ah. To to utilize all of them together so sun run who I think is one of the more forward thinking companies in the ev space and you know solar plus storage space right now. They're not thinking of it as an either or.
39:12.33
Jeff McAulay
So as we're talking about all of these items. It's great from an energy perspective and a theoretical perspective but I can imagine some of the listeners are starting to add up these costs. So let's talk a little bit about cost and maybe financing. So. Start us off from a dollar per watt basis on a residential system without storage. What's the trend at I know that varies by state.
39:39.50
Michelle Davis
Sure, um, yes it it does vary by state. Um, so we financing does add um, a little bit more to the cost of solar. Um, we have. You know what we report on in our data is is just like the the cash price and the and and pricing has actually increased significantly in the last year and a half two years or so um, but I was just was just looking at um, sorry I was just looking at our. Ah. Solar system costs a minute ago and in 2022 for example on a state-by state basis. They basically run a little bit more than say $3 a watt ah for a typical residential system. It tends to be ah, lower than that in certain. key states certain low price states and then it's lower than that. Obviously for certain types of commercial but that's sort of the general. The general range in our data.
40:44.36
Jeff McAulay
That still seems high actually and we're hearing from folks in other countries that they're able to get residential systems at half that obviously depending on on the country. Do you see a lot of room for that $3 a watt to continue to fall or is that going to have a tough time compressing.
41:03.37
Michelle Davis
Um, well. Ah I think it will begin to our our projections is that solar costs are going to continue to fall or or start to fall and continue their former trajectory ah starting this year the last couple years of price increases have been ah, an abnormal time for the solar industry. The solar industry is used to pretty consistent incremental cost declines but you know solar um, supply chain constraints and ah covid impacts and all of those things made it so that over the last couple of years we've seen. Prices increase a little bit. So yes, I definitely think that there is room. Ah, for those those prices to decline and and we are projecting that in our forecasts at Wood Mackenzie I think a lot of it depends. It will depend on where financing goes. Um in the United States um there's it's an interesting time right now for solar lending solar lending in the United States has been the dominant model for solar financing and with interest rates going up that has meant that the lenders have had to increase their pricing too. So depending on you know. We're ah predicting basically that residential solar installations are going to have a little bit of a tough year or 2 in this higher interest rate environment. Um, but then additionally another dynamic that's happening at the same time is that there's additional incentives in the ira for third party ownned solar.
42:37.65
Michelle Davis
Um, so for solar leasing or power purchase agreements depending on how all of that shakes out and which financing models sort of win the day that that could affect how much people are paying for solar over the course of the next several years
42:53.49
chrissass
Um, what impact is the current or like the the spot market for power or the the rate payers rate how directly correlated is that to their their install rate right now think there's certain statess where solar is just not popular because power is cheaper and that the the. The value isn't that great yet.
43:13.16
Michelle Davis
When power is cheaper. It absolutely makes residential solar a harder sell the states where residential solar has sold the most is pretty directly correlated with states that have high power pricing. Um, California is you know 40 to 50% of the distributed solar market for a reason. Um, but I will say that that's starting to change a little bit and as solar costs have come down and especially in the last several years as loans have become. Um, very efficient and lenders have been able to improve more and more classes of customers and get lower cost of capital that's made some of those moderate to lower priced states in terms of power pricing to be more accessible. Um for things like residential solar. Um. So I would say you know it that that generally is the case but but it it could be changing and more states will will be accessible.
44:15.92
chrissass
So as as we're getting towards the end of our time. One of the challenges I think we talked about briefly and I'm sure Jeff will jump in on was interconnections and interconnects as as a gate. So if you look at possible gate.
44:30.21
Michelle Davis
Yeah I really I I was realizing we basically have only been talking about distributed solar um, which is only a fraction of the solar industry in the US so yes, ah please.
44:40.36
chrissass
So so so maybe we should pivot a little bit and and get what what else is taking place and and what are some of the hurdles and gates that we're we're trying to get through.
44:49.81
Michelle Davis
Yeah, the the biggest challenge with interconnection right now in the United States is just that they're you know I talked you talked to lots of folks and lots of stakeholders across the industry. What seems to be the case is honestly just that utilities and. And transmission. You know, regional transmission organizations are understaffed the amount of solar wind and storage interconnection requests has exponentially increased over the last decade the investment that these organizations has have put into engineers and analysts who can. Handle these interconnection requests has an a um so it's ah it's kind of ah it's just ah, a bit of a resourcing and talent issue. Um, so so you know if anyone out there in your audience is considering. Some career opportunities. You'd have no no lack of them at ah at a utility or an rto. Um I know that lots of people in the industry also talk about process and how things could be reformed to be a lot more efficient to think about the system a lot more holistically. Right now we basically treat every project individually and do upgrades individually which is obviously not a wholesale solution when we know what's happening on the grid as the energy transition continues but you know the biggest the biggest thing to me just seems to be ah, a lack of resourcing.
46:21.80
Michelle Davis
Um, and we'll just have to you know we'll just have to continue to invest in that as a country. Um and and try to try to solve those issues as fast as we can in order to move these things forward.
46:37.30
Jeff McAulay
We've covered a lot of ground Michelle so maybe as we wrap here thinking about another area of challenge that we haven't discussed and then maybe if you can close it with some areas of innovation where you're seeing. There's opportunity for the industry to continue to grow.
46:52.70
Michelle Davis
Sure um I think to kind of close it. Um on areas of innovation I appreciate seeing any kind of technology or platforms that encourage interaction. Or transparent pricing signals between renewable energy projects and the broader grid. Um, obviously there's obviously this is you know my distributed solar expertise is showing because there's a lot more opportunity for this on the distributed side of the grid. Um. But you know that distributed side of the grid is going to become increasingly important as transmission capacity fills up on the transmission side of the grid. Um so any kind of opportunities for projects distributed solar projects and hopefully increasingly distributed plus ah solar plus storage projects. Ah, to put power onto the grid at the right times of day and responding to the right kinds of price signals I think that's one of the best opportunities for this industry because 1 of the one one of the things that I don't want to have happen. Is you know the more and more solar we install. Obviously that means more and more carbon freee energy but also at the same time the more and more solar that we install also means we're really sort of disrupting ah power market pricing and dynamics on the current system that we have in place.
48:26.37
Michelle Davis
And the last thing that I think any of us would want in the energy transition is that as solar continues to grow it becomes more and more of a disruptive technology that is viewed as causing all of this harm. Not only for solar projects itself. But for the power grid. Overall you know we want these. We want these projects to be viewed as contributing to the grid contributing to the solutions not causing more of the problems. Um, So yeah I think that's that's kind of where where I'd like to see the opportunities.
49:04.32
Jeff McAulay
Couldn't agree more. We'll have to tee up a transactive energy discussion in in the future. But Michelle really appreciate the time we loved reading your reports looking forward to the next one and it's been great getting to peel back a few layers with you on this discussion today. So thank you so much.
49:19.53
Michelle Davis
Of course Jeff you're very welcome.
49:21.81
chrissass
And for audience we hope you've enjoyed this content as much as we have creating it. It's been a fantastic conversation if you want to find out more about solar tune into insider's guide to energy. We got some great content that you can find follow us on Youtube follow us on Facebook and we'll see you again next time.Bye Bye.