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Summer 2012 Blog - Lewis Bichkoff

Lewis Bichkoff is spending twelve weeks at Bosch Solar Energy in Erfurt, Germany.

July 26, 2012

I am at the end of the 10th week of my internship at Bosch Solar Energy and my work here will shortly be coming to an end. I have finished the majority of work for my main project and will be presenting my findings to the business development, marketing, and product management departments before I leave. This is a very exciting opportunity for me to display my research play and play an important role in the company’s development. Now that I’ve completed the core of my research, I have been assigned some additional tasks of looking at downstream opportunities in the solar project development. Although I cannot go into the specifics of my work for confidentiality reasons, I’ve learned a lot about the US market for solar energy and how it operates on many different levels throughout the value chain. I’ve become acquainted with each state’s renewable energy policy and its ability to develop a successful solar energy market. Some states such as California are taking very aggressive steps to reach their RPS (Renewable Portfolio Standard) requirement while others are not taking any at all. From a policy standpoint, it appears that federal incentives will continue to dry up over time, and state markets will be a larger determinant of growth within the solar industry.

The solar industry has continued to grow through innovation and new finance methods in the residential and commercial segments of the US market. Currently, two of the popular finance options for solar are PPAs (Power Purchase Agreements) and solar leases. A big industry has grown out of financing solar projects with the emergence of system integrators such as Solarcity, Sungevity, SunRun, SolarUniverse, and most recently Clean Power Finance. These financing options have increased accessibility to solar and provided more business opportunities for local installers. Under PPA and leasing finance mechanisms, homeowners and businesses can own solar energy systems with little to no upfront costs. It works like this – the property owner leases the solar system (panels, inverter, racking system, etc.) from a 3rd-party owner with the option to pay nothing down. They then sign up for a 15-20 year contract with the 3rd-party solar system owner and either pay a fixed monthly rate (lease scenario) or per-kWh rate (PPA) for the electricity they consume. The homeowner benefits from the savings of cheaper electricity (it is cheaper than what they would normally pay for their electricity utility bill) and the 3rd-party financer benefits from the customer’s monthly payments and the local, state, and federal financial incentives that they receive from owning a solar system. This new structure allows people with a good credit history to invest in solar without having to finance the system on their own. It is a genius scenario in which every party involved benefits.

June 13, 2012


Photovoltaic solar panels installed in Germany

I have made a lot of progress during the past four weeks of work here at Bosch Solar Energy. After completing plenty of background research on US Photovoltaic (PV) markets, I am beginning to gain a strong understanding on how they operate on various different levels. The US is unlike other countries in the world because solar PV policy occurs at many different administrative levels making the US market more complicated and difficult to analyze. One must first understand federal policies, then each state’s policies, then each regional utility’s policy within a state, and then finally any local policies that may be implemented within a city or region. It is a lot to decipher, but the more that I read and organize data, the clearer it becomes.

My initial weeks in the office were spent understanding the overall landscape of different solar PV incentives and financing methods for PV projects in the US. As I mentioned before, the network of incentives is quite complex, but the main incentives for solar at the federal level are: Federal Grants, a 30% Investment Tax Credit, and the Modified-Accelerated Cost-Recovery System. At the state and local level, financial incentives include: Renewable Portfolio Standards, Solar Renewable Energy Credits, Solar Leasing, Power Purchase Agreements, Net Energy Metering, Rebate Programs, PACE Financing, Feed-in-Tariffs and an array of other various incentives.  I could spend the rest of this blog attempting to explain this mouthful of incentives, but that would be quite cumbersome. After obtaining a basic understanding of these policies, I read leading market research reports that predicted US demand for solar PV (in megawatts) over the next few years. My responsibility was to create various models from this data that project different scenarios in which US aggregate demand for PV may vary.  In addition to an overall national market forecast, I’ve also projected how market demand will unfold in the various segments of the solar PV market (Residential, Non-Residential, and Utility). This has been an excellent opportunity to learn how to build advanced models from raw data, and my quantitative analytical skills have been improving daily. I’ve already noticed a huge improvement in my excel abilities. During my internship I’ve had the opportunity to play around with spreadsheets and teach myself advanced techniques such as: pivot charts, pivot tables, h- and v-lookups, IRR calculations, IQR calculations, and the ability to create weighted ranking systems.

As some of you may have heard, the US recently imposed anti-dumping tariffs on Chinese module manufacturers for receiving illegal subsidies from the Chinese government. US-based companies argued that these subsidies gave Chinese companies an unfair advantage so that Chinese manufacturers could undercut US manufacturers’ module prices. However, there are varying opinions amongst industry analysts on this issue; some believe that unrestricted competition will lead to the lowest module prices so that more solar can be installed in the US, while others blame these subsidies for the downfall of US-based manufacturers such as Solyndra. Now, similar charges are being brought against Chinese manufacturers in Europe. It will be interesting to see how the market reacts to these tariffs and the political implications that result.


May 29, 2012

A lot of things have happened over the past few weeks.  Shortly after the semester concluded I was on a plane to Germany, struggling not to fall asleep as I skimmed over various primers on solar energy finance. Going to a foreign country to study and work on a new topic was quite intimidating initially, but day-by-day I am feeling more and more comfortable in my role as a market analyst at Bosch Solar Energy. Upon arrival at Bosch Solar Energy’s headquarters in Arnstadt, Germany, I was greeted by my coworkers on the Business Unit Development Team and given a tour of the campus. I was surprised to see that the there was an entire factory on-site that produces solar modules. The team could not have been friendlier and immediately made me feel welcome as they introduced me to the topics that I will be working on for the next three months.

My main project is to prepare a presentation on United States photovoltaic (PV) solar market for a board meeting at the end of July. The three main topics of my analysis will be the business environment of US solar PV markets, the subsidy and incentive landscape for solar PV in each US State, and public perception of solar PV in different US regions. This is personally motivating and exciting; as my work focuses on the US domestic solar energy landscape and everything I learn at Bosch in Germany will continue to be relevant upon my return to the States. Furthermore, I am motivated by the high level of responsibility that I have here at Bosch. Knowing that my work will be used at the highest level of the company pushes me to work hard and make sure that what I produce is top-tier.

I have already learned so much in the first week that I’ve been here. Much of the information is brand new for me, but the concepts and models of the research that I am reading are familiar. Words such as IRR, interest rate, feed-in-tariff, tax credit, and base-load demand are all familiar terms that I have encountered previously in my environmental economics and policy courses at Cal. Nonetheless, the work continues to challenge me – I’ve already compiled a dictionary of nearly 20 new key terms, and the market research that I am reviewing is written by (and for) experts in the field of solar PV. I am excited to see how much I can learn in the next eleven weeks here and see where all of this new knowledge takes me. This is only my first blog, but I am going to treat it like a journal so that I can reflect and measure my progress.

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