Interview with Akeena Solar CEO Barry Cinnamon

Akeena Solar (AKNS) CEO Barry Cinamon will be one of the speakers at The Solar Future conference.

Compared with 2008, do you expect growth in the global market volume of newly installed PV power in 2009?

Based on economic and incentive conditions, I think the global market will be down slightly from 2008. Moreover, since module prices will decline substantially, I think global value of shipments will be down even more significantly. Here in the U.S. expected demand seems to be weighted to the second half of the year, and if that demand doesn't materialize then there will be a lot of disappointments in 2009.

What will your company be able to achieve in 2009?

Most crystal ball projections for 2009 are very blurry -- because of economic conditions we all have limited visibility. Nevertheless, for Akeena, our residential sales continue at a good pace, although commercial sales are down. Most importantly, our introduction of highly differentiated Andalay AC solar panels to solar installers throughout the U.S. represents a very big growth opportunity. While other module companies compete based solely on price, Andalay AC panels compete based on providing superior value to installers, industry-leading aesthetics, and safer AC operation.

What module price development do you expect for this and next year?

We expect average module prices to decline 30% from 2008 to 2009, with another reduction of 25% from 2009 to 2010. Keep in mind that the 30% decline from 2008 to 2009 just brings us to the price range we were paying in early 2004. With the vast increase in scale and efficient new producers there's no doubt that prices in the $1.50/watt range for quality crystalline modules are on the near term horizon. It's just as important to look at installation costs and BOS. We see at least a 50% reduction in these costs as installation technology improves (modules with built-in racking, wiring and grounding have no distinct "BOS") and we make the transition from complicated DC systems to plug and play AC systems. Integrated racking and microinverters make it possible for almost any roofer or electrician to get into the solar installation business -- and these new distribution channels will have a very big impact on reductions in total installed costs.

Where and when do you expect to see grid parity first?

It's important to make a distinction between utility grid parity and retail grid parity. We're a residential and commercial installer, so in many of the markets we serve we are already substantially below retail grid costs. Current $7/watt costs with the 30% ITC works out to about $0.11/kwh -- about the average in the U.S. When installed costs get down to $3.50 in about a year ($2.50/watt for modules and inverters, $1/watt for everything else), solar costs will be less than $0.06/kwh. When solar electricity is half the price of grid electricity demand will skyrocket. Applying local incentives to offset these costs will accelerate the market even further. Being more specific, markets in the U.S. where electricity is expensive (California , Hawaii, northeast states), and places where there is a lot of sun (Arizona , New Mexico, Texas) will achieve grid parity first. - There will be an initial burst of enthusiasm for utility grid parity as large solar farms are built, but I expect that when ratepayers realize that -- because of transmission and distribution costs -- this centralized solar power is no cheaper than fossil fuels, there will be renewed enthusiasm for distributed generation solar.

What are the major threats to the solar industry at the moment?

The ghosts of presidents past.

What do you see as the most important market segments for thin-film products in the near future?

Until efficiencies get closer to the 15% of crystalline, the best market segments are ground mount installations. Higher efficiency crystalline has a clear advantage on space-constrained sunny rooftops.

Do you foresee thin-film module prices dropping to $ 1/Wp in two years, and, if so, won't the major markets be China, USA and India?

I've seen studies that indicate that BOS and installation costs are $0.50/watt higher for thin film. Therefore, thin film prices will have to drop this low otherwise they cannot compete with crystalline modules at $1.50.

What will become the dominating PV technology in the next 5 years?

Five years from now, glass, aluminum, copper and labor will be the major cost components of PV systems -- not crystalline cells or thin film or some new magic nano-dust that the scientists cook up. Our industry has to look at all of the non-cell opportunities to figure out how to reduce costs more.

How can solar PV compete with thermal solar energy plants in utility-scale PV projects in potential markets such as the USA, India, Spain, China, and elsewhere?

Easy: do an accurate life cycle calculation of ongoing operations and maintenance costs. Then PV static ground mount PV installations are much cheaper than anything with moving parts and fluids.

Isn't the solar industry likely to follow the wind-energy industry soon with more than 90% of the market shared by only 10 major manufacturers?

Why ten? I think there will be only five major manufacturers. In most commoditized markets there are one or two market leaders who make money, a few followers who are slightly better than breakeven, and a bunch of new entrants trying to leverage their technology to get into the top five. The only reason we have so many manufacturers now is that there has been no price competition over the past five years.

What do you expect to learn at The Solar Future conference?

I'm curious to learn about new business models for the solar industry. The computer industry went through a major transition from the 1970s (mainframes, minicomputers) to the 1980s (personal computers) when costs came down quickly. I expect that the solar industry will move towards more specialization (as in semiconductors) and more contract manufacturing (as in personal computers and cell phones). I'm very curious to find out who will be the leaders as our industry makes this inevitable transition. I'm also curious to find a beer as good as Sierra Nevada Pale Ale.

How will the solar industry look in 5 years from now? And your company?

We will all be very busy installing solar on rooftops with no incentives needed. The industry will have standardized on AC solar panels with integrated wiring, racking and grounding. And Akeena Solar will be happily providing these panels to installers around the world.

Thank you for the interview!

Comments

[SHASHIDHARA.BV:]

Good Questions Johan !

Apr 29 09:13 AM

[Fred W:]

There is no barrier for another firm to replicate the Andalay AC product--it is simply a Suntech module with grounding builtin and an Enphase micro-inverter attached...Enphase has designed its micro-inverter to be compatible with most solar modules. Simply contract manufacturing does not equate to a "highly differentiated" product.
Akeena needs to manage its overhead and labor costs better or it will not survive.

"our introduction of highly differentiated Andalay AC solar panels to solar installers throughout the U.S. represents a very big growth opportunity"

Apr 29 10:40 AM

[rooferguy:]

I'm no expert, but they've been granted a patent that covers a module with built-in racking, grounding and side electrical connections. If the patent holds up then it does really differentiate their product. I've installed Enhpase inverters, they are great, but it's a nightmare to assemble and wire all those discrete parts on a rooftop racking system. Andalay AC seems to have everything built-in to the module itself.

Apr 29 11:38 AM

[disdaniel:]

I think a number of those price forecasts are reckless (or unsustainable). To start with, his numbers don't seem to match up to reality.
"When installed costs get down to $3.50 in about a year "

No way are costs gonna fall in half by next year.

Apr 29 01:03 PM

[billp37:]

"LOS ANGELES (Reuters) - First Solar Inc outshined rivals in the struggling solar power industry on Wednesday with earnings and revenue that blew past Wall Street estimates and sent its shares up more than 13 percent.

The results stood in sharp contrast to weak performances unveiled earlier in the day from solar players Renewable Energy Corp and Akeena Solar Inc, who have been hurt by plunging demand for solar panels due to a lack of available credit for new projects. ...."

uk.reuters.com/article...

Apr 29 10:47 PM

[billp37:]

seeking alpha altenergy nuking?

seekingalpha.com/artic...

Lawyer John Petersen may have nuked, figuratively speaking of course, a large portion of altenergy on Tuesday April 28, 2009.

Over 400,000 google [john petersen scam] hits as of Wednesday April 29, 2009 16:50.

Petersen, we previously identified, was an altenergy shill.

www.thefreedictionary....

How wrong we were.

Apr 29 11:01 PM

[Fred W:]

Yes, the $3.50W installed quote is absurd--unless you are using Chinese labor (in China of course) and sourcing third tier Chinese made modules. For residential/small commercial, $5.75W would even be an aggressive forecast.


On Apr 29 01:03 PM disdaniel wrote:

> I think a number of those price forecasts are reckless (or unsustainable).
> To start with, his numbers don't seem to match up to reality.
> "When installed costs get down to $3.50 in about a year "
>
> No way are costs gonna fall in half by next year.

Apr 30 09:38 AM

[frflyer:]

billp37

First Solar's earnings report was impressive, but shouldn't be compared with Akeena, which is an installer.

Calling John Peterson an alt energy shill is stretching it a bit. Cmon bill. Anyone who reads his articles knows that isn't true. He has stated numerous times that he is for using all the tools in the box that will solve the energy problem. To be honest, I have wondered if you are a coal industry shill however.

And I don't believe one man's opinion on PHEVs is going to torpedo or "nuke" the whole alt energy sector. There are issues with the introduction of PHEVs but there are a lot of smart people who think they will work out in the end. Even John says as much, although with guarded optimism.
Much depends on oil and gasoline prices in the future, for one thing.
Perhaps the advanced lead batteries that John advocates are part of the solution.
There are still too many advantages of having an unlimited range(verses the limited range of pure EVs), and with the ability to charge at home or work, with $1 of electricity to go 40 miles or so.

Apr 30 12:24 PM

[frflyer:]

I do agree with John Peterson that vehicle weight is a limiting factor in EVs and PHEVs. I'm no auto engineer, but reducing vehicle weight should be a top priority IMHO.

One other issue is the comparison in the article of solar thermal and PV costs in large solar installations by Mr Cinamon. I'm sure he's right that ongoing operations and maintenance cost for CSP are higher than for PV. However that doesn't consider the added benefit of dispatchable power day and night from CSP with heat storage, nor the much lower cost of that storage, compared with batteries. Dispatchable power will command the highest electricity prices because of it's value to grid balancing and the ability to generate power in the evening when demand is still relatively high.
And the NREL says that heat storage costs will be completely offset by the added value of the power generated. The NREL pilot plants in the Mojave had heat storage that worked successfully to provide So Cal with power up to 10pm. And that was just using the existing oil heat transfer liquid, not molten salt.

Also, CSP has economy of scale from increasing the size of installations, because of the limited fixed costs of the main generating plant, while adding solar collectors has diminishing oveall costs/kW of capacity. In the end, both PV and CSP will be able to provide cheap clean energy, and fairly soon.

Apr 30 12:48 PM