Thoughts on Solar

Ok, listen up - you know who you are, you Outliers and Oddities - but now it is time for everyone else to learn your deep, dark secrets as we name names and tell all - at least all that can be told from the CSI data!  Grab your popcorn and let’s dive in, shall we?  (If you overlooked Part 1 of this series you might want to check it out to recall our Methodology.)

Outliers

In looking at Outliers we focus on the Residential market since there is greater potential for consumers in that space to be exploited.  After all, if you are building a 500 kW commercial project and you don’t do your homework, well, shame on you.  But folks in the Residential space are more likely to be exposed to high-pressure sales tactics and other forms of abuse.

Another reason for looking at Residential systems is that the size range is very narrow: from 1 kW to 10 kW.  That limits the amount of cost variance you would expect to find (and we found) if you were looking at larger systems.  So the data here consists of Residential projects, both purchased and leased, but excluding MASH and delisted projects.  This subset of the larger overall data set consists of 454 companies, 13,619 projects with a total capacity of 75.8 MW and an average cost of $5.84/W.

(Full disclosure, projects by Run on Sun came in at $4.78/W - proving that sometimes you can save money when you go with the best! But I digress…)

Companies in this subset varied between having just one project in the data (152 companies appear only once) to SolarCity which has a whopping 2,326 projects.

To make any meaningful comparisons we have limited the companies in this analysis to just the very largest players.  Whereas last year we made that cut at 500 kW installed or more, today that filter still includes too many companies to readily compare, so this year we set the bar at an even 1 MW.  Even at that threshold, we still have 15 companies on this list. Surely companies that large can afford to pass along their savings to their customers, right?

Here’s what we found:

Reducing our sample size in this way brought the number of projects down to 8,555 (62.8% of the total), total installed capacity to 45.6 MW (60.2%) and average cost down to $5.82/W.  This last point is news since in the past, the average cost for the largest group was actually greater than the overall average.  Not this year.

The next thing to notice is that SolarCity - the largest player in this field with 28.9% more projects than their closest competitor, Verengo - now is right smack on average at $5.82/W.  It would appear that at least for CSI purposes, their cost data is no longer an outlier (though it may still be Odd - more on that later).  However, their smaller competitor Verengo (at least as measured in this data) once again beat them on price.

On the low end of the scale, Petersen-Dean has snagged the crown from two-time low cost leader HelioPower - and they did it by far, being the only company to show a price below $5/W.  Nicely done!

True Outliers Strike Again

Which leaves us with the high end.  The first thing to note here is that the industry seems to have cleaned up its act a bit from what we had found last year and the year before.  According to the data, the highest price charged has dropped from $13.32 in 2011 (49% above the 2011 average of $8.91) to $10.50 in 2012 (45% above the average of $7.23) to our present $7.50 (29% above our average today of $5.82).  So the data has really flattened out and our extremes just aren’t as extreme any more.

And yet, if relatively tiny Run on Sun, with no economy of scale going for it, can bring our projects in at $4.78/W, what is the possible justification for charging, on average, and over hundreds of installs, a price that is more than 50% higher than ours?

CSI’s cost cap as of today is $7.10/W for the Residential program.  That means that two companies, GCI Solar and American Solar Direct, are averaging costs that exceed the CSI cap.  American Solar Direct is huge - they have 675 projects in the data (ranking them third) accounting for a capacity of 2.6 MW (ranking them fourth).  And yet with all of that size - more than twice as many projects as cost leader Petersen-Dean - they are still $1.29 above the average!

And what can we say of GCI Solar?  That is the DBA of Killion Energy, Inc. which happens to be located at 15261 Connector Lane in Huntington Beach.  But somehow that DBA seemed awfully familiar.  And guess what, adjacent to 15261 Connector Lane is 15262 Pipeline Lane which is the home of perennial outlier, Galkos Construction.  Could these be one and the same, just with a subtle name change?  In the end, it doesn’t really matter - bottom line, $7.50/W is just too much for a large company to be charging.

Caveat emptor.

Not So Fast

Solar companies can also be outliers in ways other than cost - most notoriously, how long do they take to complete their projects.  To take a look at that, we limited our data to Residential projects that also showed a First Completed Date in the data.  We then averaged the number of days to complete projects as measured by the difference between the First Completed Date and the First New Reservation Request Date.  Needless to say, that yields a smaller number of projects, so we lowered our threshold to 500 kW  installed for inclusion on our list.  Our new “time-to-complete” list includes seventeen companies, 4,865 projects and an installed capacity of 25.9 MW.  Surely these folks must have their operational act together, right?

Here’s what we found:

The first thing we note is that, depressingly, the amount of time that it takes on average to get a project completed has gone up - from 157 days last year to 166 days now (a 5.7% increase).  We are getting bigger, but as a whole, we are getting slower - not a trend designed to please consumers.

But some companies have improved significantly - most dramatically, SolarCity, going from 212 days last year to just 157 now - a 26% improvement, and comfortably below the overall average.  Verengo, which actually has more completed projects in this data than does SolarCity, also improved from 134 days last year to 122 this year.  One surprise - GCI Solar, our most expensive installer, was also the fastest of any of these companies to complete a project, taking just 115 days on average.

And then there is Elite Electric.  Frankly we have no idea what is going on here but 320 days, on average, to complete a project is just plain crazy.

Last year we derived a somewhat novel metric for looking more closely at the impact of delay times in the overall industry.  We called it System-Years of Delay, or SYD, which is the product of the total number of systems installed by a company times their difference in average days to install compared to the overall average, divided by 365.  Thus companies that do better than average end up with a positive number, scaled by their impact on the industry in terms of the number of systems they installed, whereas laggards get a negative number, similarly scaled.  We see this as an indication of whether a company is propelling the industry forward, or dragging it backward.

Here are our results for the data from this year (some companies that are grouped around the average are omitted for clarity):

As it did last year, Verengo continues to pull the industry forward and by a wider margin this year than before (172 compared to 111).  Last year’s laggard, SolarCity, is now moving things in the right direction.  But Sungevity continues to impede progress as do Burke Electric and Elite Electric.

Looking at this another way, assume that a system will produce, on average, 5 kWh/day for every 1 kW installed.  Then the delay caused by these laggard companies ends up having real environmental impacts since we are missing out on their energy production for every day that they are completed beyond the overall average.  Collectively, that amounts to more than 3 GWh of clean energy that were not produced and an additional 997 tons of CO2 emitted into the atmosphere.

Oddities

Which brings us to the Oddities section of this post.

In the past two years we found something really odd in how SolarCity was pricing its systems, at least as it was reported in CSI data.  We had noted back in 2011 that SolarCity’s price for its leased systems was far, far beyond the price it was citing for purchased systems, and far beyond what its competitor, Verengo was reporting.  Then last year we discovered that the two competitors were now charging exactly the same thing for leased systems and that meant that SolarCity’s price had plummeted in just a short time.  Going back and looking at all projects across the state resulted in this, rather startling graph:

So now that SolarCity’s IPO has come and gone, what are they - and Verengo - charging for leased systems?  (We are excluding sold systems because they are really a de minimus share of either company’s business.) Here’s the cost data for installed, Residential projects, along with linear trend lines:

Interestingly, at the beginning of the year, SolarCity was actually reporting a lower cost than was Verengo.  But as the year has gone on, SolarCity’s cost has crept upward - not by a lot, but the trend upward is clear.  In contrast, Verengo’s costs have come down and their trend is equally clear.

Once again, Verengo follows a trajectory that mirrors the rest of the industry, while SolarCity pursues a course uniquely its own.  Perhaps that is no longer odd, but to be expected.

PsomasFMG Rules the Delist

Finally, we return to the strange case of that Ruler of the Delist - PsomasFMG.

In Part 1 we wrote about delisted projects. One company, PsomasFMG, LLC, had an astounding 79% of all of its projects end up being cancelled and thus ended up being “Delisted".  That’s 33 projects with a total capacity of 8.6 MW - or more than 260 kW apiece.  We thought that this was odd indeed and decided to look a little more closely at what was going on here.  (H/T Imogen!)

Of the 33 delisted projects, all of their rebate applications were submitted in a four day window between January 25 and 29, 2013.  All but one of those projects were submitted under rebate step 8b; the last one, on the 29th, missed the cutoff and fell to step 9b (it was later withdrawn). The 32 projects submitted under the higher rebate rate were apparently for Government entities in the cities of Pomona (29) and Diamond Bar (3).  (We have searched for news accounts announcing those projects but so far have turned up nothing.)

All 32 of these projects submitted under rebate step 8b were cancelled by SCE for failure to pay the CSI-mandated application fee by the due date.  Under the CSI Guidelines, non-residential projects that are larger than 10 kW are required to pay an application fee, based on the size of the project, to secure their rebate reservation (see section 4.4.1.1).  Thus, to secure rebate reservations for these 32 projects that PsomasFMG submitted, they or their customers would have had to pony up $250,000 within 30 days of submitting the initial application.  The rebate reservations at issue here were worth nearly $3.9 million - which sounds like a pretty good investment: pay out $250,000 to secure $3.9 million.  But it never happened, and the applications were all cancelled.

So while we know why the applications became delisted - failure to pay the rebate application fee by the deadline - we still do not know why the company was submitting so many applications in such a narrow window of time that all ended up being cancelled.  Odd indeed.

In Part 1 of this series we laid out our methodology and identified some trends in the CSI data for the first half of 2013.  Here in Part 2 we are going to see who is hot and who’s not as we continue to assess the State of SoCal Solar, 2013.

For this analysis, we left out projects from the MASH program.  We also excluded delisted projects but included both pending and completed.  That leaves a total of 13,946 projects overall for these analyses.

Top Solar Module Manufacturers

We begin by looking at the leading solar module manufacturers as evidenced in the SoCal market.  We break this down by Residential and Commercial market segments and we will also look at sold versus third-party owned systems.

There are two ways to look at who’s on top - by number of projects using a particular manufacturer’s product or by total number of modules being used - we will report both stats.  (One caveat - CSI data allows for up to seven different module manufacturers to be associated with any one project.  However, for this analysis, we are only looking at the first manufacturer listed.  There is not a great loss of visibility from this choice; out of 13,946 total projects, 13,824 - or 99% - only specified one module manufacturer.)

Oh, and of some note, one particularly infamous module manufacturer is nowhere to be seen in the data - Recom - and how fitting is that?

Residential Market

In the Residential market segment, there are 13,619 total projects and 90 different solar module manufacturers represented (compared to 97 last year), accounting for some 337,476 modules being designated (compared to 228,372 last year - an increase of 47.7%).  Only 16 manufacturers managed to capture more than 1% of the total modules used (compared to 15 last year) - here they are:

Yingli Energy from China has snatched the top spot from SunPower (last year’s champ) even though SunPower continues to hold the edge in total number of projects using their products.  Sadly, Sanyo - now owned by Panasonic - did not even crack this list, reaching just 7/10 of 1% of the total.  Oh, how the mighty have fallen.

Those are the results overall but does it matter whether you slice the data by purchased versus leased systems?  Indeed it does.  For purchased systems, beleaguered German module maker SolarWorld grabs the lead with 13% of all sales (10,411 units) followed by SunPower 12% (9,643 units), Canadian Solar 10% (7,396 units), SMX Capital 10% (7,912 units) and Sharp 5.6% (4,453 units).  For leased (i.e., third-party owned) systems the leaders shift again: Yingli Energy recaptures first place with 22% (56,843 units) followed by Trina Solar 20.7% (53,375 units), SunPower 19.1% (49,149 units), REC Solar 9.6% (24,718 units) and LG Electronics 7% (18,066 units).

As for specific models, here are the top ten:

Trina Solar breaks through with four of the top ten models (although two are functionally the same). But this year SunPower has the most specified module model in the Residential market as designated in the CSI data!

Commercial Market

Turning to the Commercial market, 48 different manufacturers are represented in the data (down from 60 a year ago), accounting for the sales of 291,227 modules (down from 350,360 last year - a drop of 17%). Showing greater diversity at the top of the heap than in the Residential market, some 21 different manufacturers made it above the 1% of sales threshold.  Here they are:

MEMC Singapore takes the lead over SunPower, selling 40,830 units compared to SunPower’s 37,858 - despite SunPower having a clear advantage in the number of projects for which they were selected (10.4% compared to MEMC’s 6.4%).

So who is MEMC Singapore?  We had never heard of them before - and they did not crack the 1% mark in last year’s analysis.  Turns out MEMC Singapore is a subsidiary of MEMC Electronic Materials, Inc. - which also owns SunEdison.  We found this news report from last April indicating that Fox Energy - the PV arm of Foxconn Technology (of iPhone fame) - had entered into an agreement with MEMC Singapore for Fox to manufacture up to 350 MW of solar modules at a facility in Juarez, Mexico - for SunEdison.  Indeed, according to the data, SunEdison is the solar company using these modules.

Meanwhile, last year’s leader - Suntech - fell to fourth place this year as it deals with insolvency.

As for the most popular commercial solar module models, here are the top five: SunPower’s SPR-327NE (31,366 units), MEMC Singapore MEMC-M315 (23,554 units), Schuco USA MPE 240 (11,583 units), Suniva OPT315 (11,179 units) and Trina Solar TSM-240 (10,162 units).

Top Inverter Manufacturers

Analyzing inverter sales is a bit different since many projects have multiple inverters and, in the case of systems with microinverters there is one inverter per solar module.  So it is not too revealing to report that Enphase sold 17 times as many inverters as its nearest rival, Power-One.  Instead, as we did last year, we will look at this by the percentage of projects that designated a particular manufacturer’s product as Inverter #1 in the data.

Residential Market

Twenty-nine manufactures are represented in the data (up from 24 last year), but only 7 exceeded 1% of projects (down from 8 last year).  Here they are:

Hottest of the hot is Power-One with 31.5% of all residential projects (up from just 16% last year!), followed by Enphase at 26.5% (up from 21%), SMA at 16.3% (down from 31%), SunPower at 10.4% (down from 16%), and Fronius at 7.9% (down from 10%) rounding out the top five.

In the past SMA has observed, correctly, that you must add-in the market share from SunPower since those are all SMA inverters re-branded for SunPower.  True in the past, but somewhat less so today.  Looking at the specific inverter models designated under SunPower shows that only 8.3% of SunPower’s 10.4% share is attributable to SMA, with the rest going to inverters made by Fronius and AC modules (which use SolarBridge microinverters).

Once again, does the data change significantly if we compare sold versus leased systems?  It does indeed - in the sold category, Enphase dominates with 41.7% compared to SMA at 18.5%, Power-One at 13.3%, SunPower at 8.3% and SolarEdge at 6.1%.  For leased systems we get: Power-One at 36.9%, Enphase at 22.1%, SMA at 15.7%, SunPower at 11% and Fronius at 8.6%.

Commercial Market

Turning to the Commercial market, 19 manufacturers are found in the data, with 13 of them holding more than 1% market share.  Here they are:

Wow - now that is a surprise: Enphase has taken over the Number 1 spot!  Enphase jumped to 13.2% of commercial projects with Power-One right behind at 12.5%, SatCon (last year’s leader but now in bankruptcy) at 11.6%, SMA at 10.7% and Fronius at 10.1% rounding out the top five.

As SatCon dropped 15%, someone had to pick up the slack and it appears that Enphase got the lion’s share - moving up 9% from last year.  Here’s your overall hot/not hot chart:

Popular Pairings

The data would suggest that we could have nearly 3,200 different pairings of module and inverter manufactures, but in reality, the combinations that actually occur are far fewer.  Here are the most popular pairings in the data overall:

Collectively, these top five pairings account for just under 45% of all projects in the data, and SunPower continues to demonstrate the joy of vertical integration - but its advantage isn’t as strong as it was last year when its pairings accounted for over 19% of all projects.  As would be expected by its hot performance overall in the inverter category, Power-One was part of the leading pair for three manufacturers and Enphase cracked the top five with REC Solar.

Who’s Hot and Who’s Not?

Now let’s see what these products are commanding in price.  We will look across all projects (excluding delisted and MASH) to see what panels are involved with systems commanding the highest $/W.  Here are our results:

Keep in mind that the overall average cost was just $5.24/W - and yet we have modules being used in project at two to three times as much.  Nor are the majority of these what you would call top-tier manufacturers - confirming once again, that spending a lot of money is no guarantee of getting quality in return.

Interestingly, the Sun Energy panels at the top of this list were also at the top of the list last year - only the system cost has actually increased from $16.02 to $16.38/W!

Who Uses What?

Finally, we shift our emphasis from equipment manufacturers to look at who is installing what.  Here’s a list of all installation companies with 100 or more projects and the modules and inverters they use the most:

Couple things of note here.  First, SolarCity has taken the number 1 spot from Verengo and by a comfortable margin. Second, SMA doesn’t crack this list until the 10th ranked installer.  Meanwhile, Power-One has four in the top ten and Enphase has three with Fronius making the top ten twice.

Altogether, overall inverter leader Power-One was the preferred vendor for 7 installers (average loyalty 58%), Enphase was preferred by 8 installers (loyalty 87%), Fronius by 2 (loyalty 74%), SMA by 4 (loyalty 58%) and SunPower by 3 (loyalty 59%).

Collectively, the 24 companies on this chart accounted for 9,805 of the projects in the overall data set - 70.3%.  But did that volume lead to better prices for their clients?  We will try to answer that question - and possibly raise a few more - in our next post: Outliers & Oddities.

Today is our first of three posts looking at the state of solar in Southern California for the first half of 2013 as revealed by the data compiled for the California Solar Initiative (CSI).  This first post explains our methodology and highlights some interesting trends in the data.

Methodology

Let’s start with our methodology.  The CSI collects a significant amount of data as part of managing its rebate program and most, though not all, of that data is made available to the public.  For example, while CSI collects data from installers that identify four components of system cost - solar modules, inverters, permitting and everything else - the data that is made available rolls all of that up into just one number - Total Cost.  Nevertheless, the CSI data is the most comprehensive data set available and covers all projects being built in the service areas of California’s three investor-owned utilities: PG&E, SCE and SDG&E.

For our analysis, we started with the CSI Working Data set from July 31, 2013.  (Here’s a link to the CSI Working Data download page and here’s a link to the data set (11 MB zip file) that we used for this analysis.)  This analysis just looks at data from the SCE service area and to limit our time period to just the first half of this year, we added a Status Date field to the data which is the latest of a series of milestone dates recorded in the data (from First Reservation Date to First Completed Date).  We then extracted our data for dates from 1/1/2013 to 6/30/2013.  After that it is a matter of pivot table magic!

One other note - there are multiple ways to identify the size of a project from the data: Nameplate Rating (i.e., DC Watts), CEC PTC Rating (which accounts for the PTC rating of the solar modules used times the efficiency of the inverters chosen) and CSI Rating (which applies the Design Factor to the CEC PTC Rating and which is the basis for rebate payments.  For the most part, unless otherwise noted, we will be using CEC PTC Rating for system size since that accounts for some measure of equipment quality but isn’t confounded by site complications such as shading or the use of tracking systems.  In particular, our $/W figures are computed this way.

Trends

Overall, our data set reflects 14,459 projects, up from 9,669 over the same period last year - an increase of 49.5%.

There are three program divisions in the data: Residential (projects under 10kW), Commercial (projects greater than or equal to 10 kW) and the Multifamily Affordable Solar Housing (MASH).  The overwhelming majority of these projects are in the Residential program: 14,028 (97% of the total) are Residential, followed by 387 (2.7%) Commercial and just 44 MASH projects.   However, MASH projects are generally associated with affordable housing developments and so they can be quite large overall.  In fact, the average MASH project is 158.7 kW, compared to just 5.6 kW for Residential and 216.3 kW for Commercial.  Altogether, Commercial projects account for 83.7 MW, followed by 78.8 MW in the Residential program with just 7.0 MW in the MASH program.

Compared to last year, which saw a decline in the amount of solar capacity in the data, capacity this year is up 59% over last year:

At the same time, the average system size continues to decline from 14.2 kW in 2012 to just 11.7 kW this year.  Likewise, rebates are falling (by 32%) but so are overall prices (15.2%), just not as fast.

Still, in raw dollars, the reduction in system price of $0.97/W from a year ago, nearly triples the decline in rebate rate.

We will have lots more to say about system costs in subsequent posts.

The pace of projects is accelerating, driven by dramatic growth in the Residential program (as always, click on the chart to see it full size):

(To make the Commercial and MASH projects visible we have put them on a second axis.) Residential projects have grown from less than 1,700 in January to nearly 3,800 in June!

MASH-Up

Since it is a relatively small slice of the pie we are going to generally ignore the MASH program but before we leave it aside, we thought we should at least take a peak at who are the players in this program.  Here’s what we found:

Four projects have no solar contractor associated with them in the data (curious).  The big winner, however, is Shorebreak Energy Developers - not a company on our radar, but obviously a major player with nearly 2 MW worth of projects in the program.  A few familiar names - HelioPower, SolarCity and even our friends down the road at PHAT Energy (well done, Philippe!).

Roughly half of these projects are third-party owned:  24 of the 44 for a total of 3.5 MW out of a total 6.98 MW.  The average cost per CEC PTC Watt is also almost identical, $5.52 for third-party owned versus $5.55 for sold systems.  Yet within that average was a very significant range from a high of $13.12 for the 141 kW project being built by Lite Solar, all the way down to $4.32 for the 601 kW project being built by SPG Solar.  Shorebreak, the leader in the amount being installed and total number of projects is also a leader on price, coming in at $4.90.

Making the Delist

One stat we continue to find intriguing is the number of delisted projects - projects that got entered into the data but then cancelled at some point.  Altogether, there are 471 projects delisted, or just 3.26% of the total, down from 4.2% last year.  Those delisted projects accounted for 16.8 MW of capacity or 9.9%, which is up significantly from last year.  In other words, fewer projects were delisted, but they accounted for a bigger piece of the potential installed capacity.  The majority of the delisted projects, 324 of them (68.8%) were third-party owned.

149 different companies made their way onto the Delist - not surprising for very large players, but as before we decided to look at these companies as a share of their overall project total.  We limited to companies with at least 10 delisted projects and then rank ordered them by the percentage of their projects that are delisted. Here they are:

What is up with this?  PsomasFMG has 79% of its total projects delisted?  Turns out their 33 delisted projects account for nearly half the the total delisted projects by capacity.  Not surprisingly, these are all third-party owned Commercial projects ranging in size from 61 kW to just under 1 MW.

The other big winners, Electricare, Smart Energy, and Petersen-Dean had all of their delisted projects in the Residential program with sizes ranging from under 3 kW to just under 10 kW.  Interestingly, of the worst actors last year: Remodel USA, Herca Solar and A1 Solar Power, both A1 Solar (4 projects) and Remodel USA (1) still made the delist this go around, but with greatly improved numbers. (Herca Solar has 44 projects overall in the data, none delisted.)

While Commercial projects are necessarily more complex, making cancellations more likely, it is hard to understand a 15% delist rate for Residential projects. Caveat emptor.

Does Size Matter?

Finally, we turn to the question of size, and in particular how well does the size of a project drive down its cost?  For this analysis (and most of our analyses going forward) we are excluding delisted and wait list projects from our data.  Here’s our result for systems at or below 10 kW:

As in the past, we had to exclude a couple of outliers above $15/Watt: the farthest out there was Sun Pacific Solar Electric which charged $21/W for a 1.5 kW system and right behind was California Solar who installed a 7.9 kW project for over $16/W! We will have lots more to say about such Outliers next week.

Overall, the trend is clearly moving in the system buyer’s direction with the trend line reaching down to $5.40/W for systems sized at 10 kW, while a typical residential project of 5 kW comes in around $5.70/W.

Nevertheless, that is a very gradual slope indicating that prices are fairly consistent across system sizes in this program segment.

What about larger systems, do we see more of a downward trend there as system sizes increase?  Here’s the data:

Interestingly, for the smaller projects there is very tight clustering right around the $5.70 mark where the trend line begins.  However, as you move up in system size, the clustering breaks down and system costs vary far more widely than they do for smaller systems.  Still the trend has 1 MW projects coming in around $3.77/W, compared to nearly $5.20 last year.

Ok, that’s enough to get us started.  Monday we will report on Who’s Hot and Who’s Not, and Tuesday will be our favorite post: Outliers and Oddities.  Stay tuned!

This is it - time to name names and find out which solar companies are the good, the bad, and - if not ugly, at least Outliers and Oddities!

In Part 1 of this series we laid out our data methodology and showed some of the general trends in the costs of solar power systems in Southern California Edison (SCE) territory for the first half of this year.  Part 2 built on that to determine Who was Hot and Who was Not - and of course, being identified as Not Hot is certain to generate a lot more consternation than the other way around!

Now in Part 3 we turn our attention to some curious things that we have found in the data: Outliers who are charging way beyond any reasonable amount compared to their peers, or taking interminably long to complete projects, and Oddities - curious trends that defy easy explanations but raise questions about the State of Solar in Southern California.

Outliers

Last year when we analyzed this data, we discovered that there was one company that really stood out for being a bad actor when it came to over-charging on solar power systems.  That company was Galkos Construction, coming in at a staggering $13.32/Watt compared to an average of $8.91/Watt, nearly 50% above the average.  (We also noted that HelioPower, Inc. was the lowest in our analysis, coming in at just $6.56/Watt or 27% below the average.)  What will we discover in this year’s data?

First a reminder of how this analysis works.  Our focus is on systems in the residential market segment since that is the bulk of sales and also where consumers are at greater risk of being pressured into a high-priced sale.  (If you are installing a 500kW solar farm and you don’t do your homework, we have somewhat less sympathy for your plight.)  Moreover, since the residential segment in the CSI data is limited to systems between 1 and 10kW, there is not as much size difference to skew the pricing data.  We excluded systems that were “delisted” so only completed or pending projects are counted.  We included, as we did last year, both cash sales and leased systems (although that data has gotten more interesting as we will see later) to capture as many data points as possible. That subset of our data accounts for 8,977 systems with an average system price of $7.23/Watt (CSI Rating).

Finally, since we really only wanted to look at the behavior of the biggest players, we limited our analysis to only those companies with over 500kW of residential projects in the data.  As a result, no company had fewer than 80 projects on our list, and the largest had nearly 1,800!  These are big players indeed, and they should be able to demand tremendous pricing for their components - but do they pass those savings on to their customers?  When we apply this restriction to the data, our sample size is reduced to 6,095 systems (68%) with an average system price of $7.38/Watt - roughly 2% higher than the overall average!  Here are our results:

The bulk of our companies here, 9 out of 15, come in below the overall average for this group.  And once again, our friends over at HelioPower came in with the lowest system price at just $5.85/Watt.  Nicely done, for the second year in a row!  (Full disclosure - while none of our projects were in SCE territory during this period, our system price for the first half of 2012 was just $5.33/Watt.)

True Outliers: Future Energy, American Solar Direct and Galkos Construction (Again!)

While down significantly from the stratospheric heights of last year, three companies continue to soar past the $10/Watt threshold: Future Energy Corporation, American Solar Direct, and just like last year, Galkos Construction, Inc.  Each of these companies is $3/Watt above the average for the residential market segment.  To what can we attribute these crazy prices?  Future Energy and Galkos use Enphase micro-inverters (but so do we, and our prices are approximately 1/2 of theirs) and in any event, American Solar Direct uses SMA exclusively, so inverter price is not driving these costs.  What about panel choices?  No insight there, either: Future Energy uses SunPower, but American Solar Direct uses REC and Galkos uses Sharp (and each uses that brand over 90% of the time).  And they each bought a lot of panels: Future Energy bought 3,091, American Solar Direct bought 6,329 and Galkos bought 7,759.  Surely that much purchasing power can demand tremendous cost reductions to these companies.  Equipment choices are simply not driving these prices.

Cost Caps?

The CSI program has talked about cost caps for a long time, and in the latest published CSI Handbook (from December 2011) we find this provision:

3.4.5 Limitations on Installed Cost

One of the goals of the CSI program is to support a reduction in PV system costs over time as defined by:

Total Project Cost ($)CEC-AC (Watts) = $/Watt

It is the intent of this program to make steps towards this goal. Projects applying and installing PV systems through this program should have their installed cost fall within a reasonable limit. The current average system cost of PV systems ranges from $7.36 to $8.41 per CEC-AC watt, fully installed. To ensure that the integrity of the program is maintained, the Program Administrators may require documentation for why system costs exceed the lower of either of the following:

• $10.26/Watt; and/or
• One standard deviations above the average cost per watt of all projects reaching Pending Payment Status within the last 12 months, whichever is less. (NOTE: As of 8/31/2011, the defined reasonable limit was $10.26 CEC-AC watt, but this value changes as costs decrease. The current limit is available at www.CaliforniaSolarStatistics.ca.gov)

Now this cost calculation is somewhere between the number we are using (which includes the design factor) and the nameplate cost (which is what solar companies typically report because it is the lowest and it also masks differences in equipment value).  What would happen if we were to re-jigger our cost values for our three Outliers to present their system costs as defined by the CSI Handbook’s Cost Cap section?  Here are the results:

What do you know about that?  Future Energy’s average price is exactly at the limit stated in the CSI Handbook to avoid scrutiny by the Program Administrator!  What a coincidence!  To be sure, all three of these companies exceeded the $10.26 threshold: Future Energy (99 out of 171 times, 58%), American Solar Direct (68 out of 291, 23%), and Galkos (170 out of 482, 35%).

What to make of that?  For one thing, it shows that Cost Caps work - despite being dollars above the average cost of their peers, they each managed to at least have their average value remain under the cap.  For another, perhaps it would be useful if CSI published those companies that routinely exceed the Cost Cap in a given period?  If nothing else, it would help put consumers on notice in ways that they presently are not (unless, of course, they are reading this blog).

We would love to hear from Future Energy, American Solar Direct or Galkos, and we will be happy to print their explanations for these prices unedited, and in full.  (Of course, those responses are subject to further analysis.)

Not So Fast

Another type of outlier is the large solar company who signs a contract and then disappears for months on end while the customer waits, and waits, and waits (cue the Casablanca soundtrack).  For our same set of big time players, we decided to rank order them by the average time to go from the first filing of a rebate reservation request to the first completion date.  While there are lots of reasons for any one project to get delayed, for companies like these that install such a huge percentage of all systems, you would expect to see quick and efficient operations that deliver quality systems in short order.  Here is what we found:

(Wow - Do-it-Yourself’ers take the longest to get their systems built - who would have guessed?  Yet another reason why solar is not a DIY project!)

Now isn’t this interesting - Future Energy has the shortest time to install of all of these companies, taking roughly half the time to complete a project as its nearest competitor.  Maybe Future Energy customers are getting something for all of that extra money!  (Although a little research might reveal some cheaper, faster options…)

The average - which most of these companies cluster closely around - is still in excess of five months, far longer than most solar customers expect to wait.  But two companies - Petersen-Dean and SolarCity - have delays in excess of 7 months!  Perhaps being a huge company, like SolarCity, makes it harder to be responsive, but what is Petersen-Dean’s excuse?  They have 257 systems in this sample (compared to the 1,108 for SolarCity), not that many more than the 171 of our speediest company, Future Energy, and nowhere near the number of systems for Verengo which is actually doing better than the overall average at a delay of 134 days.

This got us to thinking - if we take the average number of days to complete as our benchmark, some companies will be working better and some worse than that average.  In other words, some companies are insuring that solar systems are installed faster, whereas others are, sadly, causing systems to be installed slower.  What is their cumulative impact?

To measure that, we came up with a new metric which we have dubbed the cumulative System-Years of Delay, or SYD (see Notes at end), which is the product of the total number of systems attributed to a company times the difference between the overall average time to complete and the time for this company, divided by 365. Companies that install faster than average under this metric will have a positive value, slower companies will be negative - thus the goal will be to have the largest value possible.  Think of this as whether a company is propelling the overall solar industry forward, or dragging it backward.  Here are our results (companies clustered around the average have been deleted for clarity):

This is a startling result - the two giants of the industry, Verengo and SolarCity, are at opposite ends of this scale!  Verengo, which has 1,791 systems in this subset, averaged 134 days to complete a project, 23 days better than the average for our major players.  Thus, it is propelling the installation of solar forward since it handles so many systems faster than average.  (Future Energy is way faster still, but has a small impact by comparison because it only installs a tiny fraction of the systems Verengo is handling.)  To be sure, Verengo’s 134 days is nothing to brag about, but in this crowd of relative slow-pokes, Verengo is clearly leading the way.

So what can we say about SolarCity?  Well, first, they are really slow - taking on average nearly two months (55 days) more than the overall average (of five months) to get a system installed.  (As with the fastest company comparison, Petersen-Dean takes substantially longer than SolarCity - 73 days worse than average compared to 55 - but they account for far fewer systems - 257 versus 1,108.)  But more importantly, SolarCity’s delays become a real setback for the overall industry given the large number of systems for which they are responsible.

Look at it this way: SolarCity, just in this tiny slice of data, representing just a fraction of their overall industry impact, is responsible for the installation of 1,108 systems representing a total capacity of 5.5 MW of residential solar.  Assuming an average of 5 solar hours per day, for every day that SolarCity delays installing these systems, 27.5 MWh of energy is not being produced.  Factoring in their 55 day delay beyond the average of their peers means that 1.5 GWh of energy was not produced, and instead, 498 additional tons of greenhouse gases were emitted (see Notes at end). SolarCity’s delays are bad for the solar industry, and bad for the environment.

Oddities

Which brings us to the Oddities section of this post.  One year ago we stirred a bit of controversy by observing that SolarCity’s system prices for leased systems were far higher than what they reported for cash sales.  We thought this was odd because there was no similar discrepancy in the data for the other large player in the leasing space, Verengo.  So naturally, we needed to revisit that analysis this year and see if that trend was continuing.

Our analysis last year tried to focus on the most recent projects in the data, and so restricted the data set to just include “pending” systems, eliminating those that were installed or delisted.  Last year, SolarCity charged $10.06/Watt for its 468 leased systems compared to Verengo which only charged $7.63/Watt for its 482 leased systems.

Here’s what this year’s data reveals:

First some mundane observations: while Verengo has increased its number of pending systems from a year ago by roughly 45% (consistent with the overall growth in this data set from a year ago), SolarCity actually declined by roughly 24% and Verengo now has nearly twice the share of this segment as does SolarCity.

But of course the shocking data point is SolarCity’s cost per Watt - all the way down to $6.61, and now tied (exactly) with Verengo!  This is a remarkable development given that the overall downward trend in prices over the past year was far, far more modest than the precipitous drop reported by SolarCity.

We decided to investigate this a bit further.  In particular, if the decline in SolarCity’s pricing was simply that they were better able than most to take advantage of lower equipment prices, we would expect to see a gradual decrease over time from last year’s high to this year’s low.  To test that hypothesis, we went back to the overall data set and expanded our analysis to look at all California data (i.e., including PG&E and SDG&E data in our analysis).  In addition, because we needed to go back to 2011 data, we included completed projects (i.e., “installed” in the data) as well as pending projects.  We then aggregated them by month and calculated the month-by-month average system cost from January 2011 to June of 2012.  Here’s what the data disclosed:

For thirteen months, from January 2011 through January 2012, SolarCity’s system costs were remarkably stable - at or near $10/Watt.  But then something amazing happened and in the space of three short months, SolarCity slashed its prices from $9.74/Watt in January to just $6.60/Watt in April - a drop of more than a dollar a Watt per month!  Now our buying power is nothing compared to that of SolarCity, but we certainly didn’t see price declines anything like that!

And then we remembered something else that happened back in late Winter and early Spring (although the memory is a little fuzzy given that we haven’t heard anything more about it since).  From Bloomberg.com (April 9, 2012):

Elon Musk, who leads Tesla Motors Inc. (TSLA), said an initial public offering of SolarCity Corp. may occur this year after a review of accounting, with an IPO of Space Exploration Technologies Corp. probable in 2013.

Plans to sell shares in SolarCity, which leases rooftop solar-power systems, won’t advance until “additional clarity on the accounting” for those leases is provided by auditors and the U.S. Securities and Exchange Commission, Musk said in an April 5 interview. Bloomberg reported Feb. 1 that the San Mateo, California-based company was seeking an IPO as early as last month, citing three people with knowledge of the matter.

“There is this question of how do you account for something when it’s a lease,” Musk said. “Not all of them are structured in the same way. We want to just double-check with our auditors and the SEC before we file to make sure the accounting is correct.”

Rumor has it that the SolarCity IPO may have stalled over concerns by the SEC regarding those very accounting practices.  If the need to “clarify” its accounting - specifically the manner in which it calculates the fair market value of its leased systems - is what is driving down this pricing it begs the question:  Will SolarCity voluntarily revisit the accounting for all of its previously leased systems and refund the excess federal tax credits and depreciation that it has received based on what its present conduct seems to concede was an overstated valuation?  Time will tell.

Notes

System-Years Delay

The SYD formula in full looks like this:

Where Count_X is the number of systems installed by Company X, AvgInstallDays is the overall average for this group of companies (157 days) and InstallDays_X represents the average number of days to complete an installation for Company X.

SolarCity’s Excess GHG Emissions

Excess greenhouse gas emissions attributable to SolarCity’s delay was calculated as follows:  We used the EPA’s eGrid Calculator to estimate the GHG emissions from SCE’s energy production.  That figure comes to 659.6 lbs/MWh.  We calculated in the article that SolarCity’s delay accounted for 1.5GWh (1.512 GWh to be precise,  or 1,512 MWh) of energy not produced by those solar systems during the delay period.  That works out to 997,315 lbs of GHG or 498 tons.

In the highly competitive solar marketplace, some companies are thriving while others are withering on the vine.  It’s the age old question: Who’s Hot and Who’s Not?  In Part 2 of our series on the State of SoCal Solar, we will answer that question, and more!

In Part 1 of this Series we explained our methodology and looked at some overall trends in the data.  To identify the players in the SoCal solar marketplace, we extracted the solar panel and inverter data from our CSI data set.  (Unfortunately, the CSI data does not include any information regarding racking equipment used on a project.) While the CSI data allows for multiple different panels and inverters to be identified with each project, in reality the overwhelming majority of projects report only one panel or inverter choice.  As a result, we will continue our practice from last year and only look at the first choice reported for both solar panels and inverters.

Top Solar Panels

There are two statistics that are meaningful - the total number of panels utilized and the number of projects on which those panels were employed.  We excluded “delisted” projects from our analysis and we will further divide the universe of projects by residential or commercial.

Residential Trends

In the residential space, there are 97 different panel manufacturers listed, but only 15 of them accounted for more than 1% of the total sales volume of 228,372 panels.

Here are our results for the residential market:

From this analysis it is clear that SunPower and Yingli rule the residential marketplace, combining for 37% of all sales and a comparable share of all projects.  New kid on the block, South Korea’s LG Electronics, has jumped out to a very strong start, coming in fifth place behind venerable contenders, Suntech Power and Sharp.  Also notable is that Sanyo - a long-time leader thanks to its great efficiency and thermal properties - has nearly fallen off this chart altogether. (Sanyo accounted for just barely 1% of total sales on just 0.8% of all projects.)

Those are the results for the residential market overall, but does it make a difference if you distinguish leased projects from cash purchase?  Indeed it does, with only three companies having more than 5% market share in both market segments: SunPower (22.8% purchased, 18% leased), Sharp (16% and 5.3%) and Canadian Solar (9.5% and 6%).  LG Electronics sold almost all of its product into the leased systems segment with a market share of 10.7% compared to less than one-half a percent in the purchased segment.  Altogether, the purchased market segment accounted for 65,841 panels sold whereas the leased segment dwarfed its older sister with 162,531 panels sold.

The top-five most popular residential solar panel models were: Yingli YL235P (21,098 units), LG Electronics 255S1C (15,970), SunPower 327NE (12,273), Suntech Power 190S (11,488) and SunPower 230E (9,069).

Commercial Trends

On the commercial side, there are 60 manufacturers listed, of which only 13 accounted for more than 1% of the total sales volume of 350,360 panels.  Here are our results from the commercial side:

Suntech has taken over from SunPower the top spot in the rankings, accounting for nearly 21% of the panels installed and it did it with only 7% of the total projects.  In contrast, second place finisher, Yingli, had more than twice as many projects - 14.4% of the total - but its market share was only 16.2%.  While this select group were the only manufacturers to crack 1% of sales, the remaining manufacturers captured a whopping 28% of all projects.

The top-five most popular commercial solar panel models were: Yingli 230P (43,064 units), Suntech Power 280-24/Vd and /Vb-1 (65,475 - two variants), SunPower 327NE, Trina Solar 230PA05 (21,590) and Trina Solar 225PA05 (17,950).

Top Inverter Manufacturers

Analyzing inverter sales is a bit different since many projects have more than one inverter, and in the case of micro-inverters installations, there is one inverter for each solar panel.  For our analysis, we will just look at the number of projects with the manufacturer’s product listed as inverter number one.

Residential Trends

The CSI data reveals 24 different inverter manufacturers in the residential space, but only 8 of them cracked the 1% market share threshold.  Here are our results for the residential market:

SMA is still the leader, with 31% market share but it is losing ground to our favorite inverter manufacturer, Enphase Energy which now finds itself at 21% of the overall residential market.  When just leased systems are considered, Enphase falls to number four with just 12.7%, trailing SMA (32.4%), Power-One (21.7%) and SunPower (16.3%).

Buried amidst the 1% that is “other” are some very well known names that appear to have fallen out of favor, such as: Outback Power Systems and Xantrex, as well as newcomers SolarBridge and Enecsys.

Commercial Trends

When we shift our focus to the commercial segment the number of players drops to just 13, with only 11 cracking the 1% barrier.  Here are those results:

This is a very different graph.  SatCon Technology has a clear market lead, despite being dogged by rumors of its imminent demise.  SMA is second, but most of that is driven by sales of the same, small-scale string inverters that constitute its products in the residential sector.  Enphase weighs in at 3.5%, not a bad number considering that large-scale commercial sales are not its forte (although that may be changing).

Popular Pairings

While our CSI data set potentially allows for more than 2,300 different pairings of inverter and solar panel manufacturers, in reality the number of actual pairings is far smaller, with just five pairings accounting for nearly 48% of all projects.  Here are the top five pairs:

SunPower - with its 19% market share pairings - clearly demonstrates the joy of vertical integration and a strong improvement over last year when that combination accounted for just 12.4%.  The Enphase-Sharp combination comes in at number 2, but at 8.5% the combination has fallen from 10.3% last year.  (Given that the overall market share for Enphase improved from last year, this “decline” really reflects a broader base of installation combinations.)  Yingli is well represented as is SMA (which, of course, is the dominant driver behind “SunPower” inverters which are mostly SMA inverters re-branded).  Nowhere to be seen in the top five is inverter manufacturer Fronius which last year accounted for two of the top five entries but this year did not exceed 4% in any pairing.  Likewise, last year’s panel leader, Suntech, failed to reach the top five this year and Kyocera was also pushed off stage with no pairing exceeding 2%.

Who’s Hot and Who’s Not?

Next, as we did last year, we decided to take a look at what pairings are the most, and least, costly, efficient, and ultimately, cost effective.  As we noted last year, choosing a second-tier (or third-tier for that matter) solar panel by no means assures you of getting the lowest system cost.  In fact, when we looked at the top ten solar panel manufacturers by average cost per CSI AC watt, the results are a bit startling:

None of these are top-tier panels, but they surely are commanding top prices!  Keep in mind that our overall average price across all systems (excluding delisted) is just $6.23/Watt and you can see that some seriously overpriced systems were built using these panels.

One measure of panel performance (and the only one that can be teased out of the CSI data) is the ratio of PTC panel rating (meant to more closely reflect real-world conditions) divided by the nameplate panel rating (in STC watts), the higher the ratio the better.

The Sun Energy Engineering panels have a dismal 79.25% rating and the average across all of the panels listed here is under 85%.  By contrast, Sanyo panels have an average ratio greater than 89%, ten percent higher than third-tier panels from Sun Energy, yet the systems installed with Sanyo panels averaged $6.84/Watt!  (We note with dismay that the entry for Sun Energy panels represents only one system, installed in Malibu - perhaps this was an example of zip-code pricing?)

How do our top pairings rank in terms of dollar per watt?  Their numbers are all lower than what we see here, ranging from a high of $8.79/Watt for the average of combinations using REC panels to a low of $6.84/Watt for systems using Yingli panels.

What about efficiency?  Which equipment pairings produced the highest and lowest efficiency ratings (as measured by the ratio of CSI Rating divided by Nameplate)?  This is a more involved number, since it is not simply a function of efficient equipment (although panel PTC/STC rating and inverter conversion efficiency are both included) but also the specifics of the site - azimuth, tilt, shading and geographic location.  Nevertheless, good equipment certainly helps so let’s see where the numbers fall.  One additional restriction is required - we will limit this to the residential sector.  Why?  Because larger commercial projects often using tracking mounts that can have efficiencies greater than 100% and would skew our results away from the panel-inverter pairing.

So with that limitation in mind,the highest combination of panels and inverters in terms of efficiency is First Solar panels (thin film) combined with a Fronius inverter for a 90.51% efficiency score (thanks in part to the thin film panels great PTC to STC rating) while the lowest end is a depressingly low of 68.45% derived from MAGE Solar panels and inverters from SolarEdge.  (Not clear if even “power optimizers” can rescue a site with such dismal design characteristics.)

What about our most popular panel-inverter combinations - how did they fare on the efficiency scale?  Not surprisingly, the SunPower-SunPower combination is the winner at 84.38%, but four of our five favorite pairs are closely bunched: Yingli-SMA (83.28%), Sharp-Enphase (82.43%), and Yingli-Power-One (82.35%). The lone outlier was REC-SMA which came in at a relatively low 80.11%.

Who Uses What?

Finally, as we pivot from a pure equipment analysis to one more focused on the practices of the solar installation companies, we wanted to see what the biggest players are using and how does that affect their pricing?  Last year we looked at the top five players, but to give us a broader picture this time around we are looking at everyone with 100 or more projects (excluding projects that are delisted).  Here are our results:

First a comment or two on who made the top five in this list - SolarCity and Verengo have swapped places, Galkos remains at number three (despite our observations about them last year) but REC Solar and Real Goods have been driven down the chart (to numbers six and twelve respectively) to be replaced by previously uncharted Elite Electric and American Solar Direct.  (We will have more to say about all of these folks in Part 3.)

Last year Kyocera was the panel of choice for two of the top five; this year Kyocera did not crack the top fifteen, although it was the second choice for SolarCity.  LG Electronics found a niche with Petersen-Dean (and was the second choice for Verengo), while Chinese panel manufacturers dominated the list, capturing five of the fifteen slots.  Indeed, the big winner on this list would have to be Yingli, increasing its share of SolarCity’s business from 48% last year to 66% now and pushing aside its countrymate, Suntech, to become the number one choice at Verengo.  It will be interesting to see how the ongoing trade dispute and imposed tariffs change these rankings next year.

Power-One gets the big boost this year in terms of inverter choices - elbowing past SMA for the top spot with overall leader, Verengo.  But if you want to talk brand loyalty, Enphase is the clear winner - when it cracks the list it is used more than 97% of the time!

Collectively, these fifteen installation companies accounted for two thirds of all the solar projects in our CSI data set - but did that translate into lower prices for their customers?  To answer that question - and a whole bunch more - in Part 3 we will turn our attention to Outliers and Oddities to discover the good, the bad and the ugly amongst solar companies.  You won’t want to miss it!