A team of solar and battery storage veterans is forming a new development group aimed at a broad range of sectors within the evolving American utility-scale PV market, including dispatchable solar paired with storage.
The group, called Lightsource North America, is an arm of Lightsource Renewable Energy, a 300-employee solar developer with a portfolio of 1,700 megawatts of projects throughout Europe. Lightsource is a vertically integrated developer that originates, finances, owns and operates large solar power plants.
The company is bringing that model to the U.S. in order to take advantage of a broadening range of procurement opportunities in states around the country.
Leading the new team are Lightsource Chief Executive Tim Derrick, the former general manager of utility-scale solar and wind at SunEdison; Chief Operations Officer Kevin Christy, the former operations officer of SunEdison's North American utility arm; and Chief Commercial Officer Katherine Ryzhaya, the former commercial officer at Advanced Microgrid Solutions (AMS).
The team brings deep experience in solar and battery storage. Derrick and Christy co-founded Axio Power in 2007, a utility-scale developer that was acquired by SunEdison in 2011. They also oversaw the sale of SunEdison's assets after the company declared bankruptcy. Ryzhaya co-founded AMS, a developer and integrator of behind-the-meter storage projects that utilities control for grid services.
All three of them worked together on a joint SunEdison-AMS 50-megawatt project for Southern California Edison. And both Derrick and Christy worked on early grid-scale solar-plus-storage projects after SunEdison acquired Solar Grid Storage in 2015.
The team plans to follow the model of Lightsource U.K.: Own all the assets and execute everything except for the construction. The company is scouting for both greenfield projects and partnerships with other smaller developers looking for support. Lightsource has closed £2.4 billion worth of solar power plants across Europe using this model.
“We saw the value of doing nearly everything ourselves. We also forged relationships with a number of smaller developers,” said Nick Boyle, the founder and CEO of Lightsource U.K. In 2010, the company had six employees. Today it has hundreds.
The new six-person North American Lightsource team is “going to be opportunistic,” said Ryzhaya. “We're going to be looking for standalone solar opportunities, hybrid systems and standalone storage opportunities where they make sense.”
That could include conventional utility-scale solar projects with RPS, PURPA or voluntary contracts; onsite and offsite corporate solar projects; or deals with community-choice aggregators.
Lightsource may also pursue solar-plus-storage projects that allow utilities to defer transmission development or use PV as a capacity resource when coal plants shut down. “We now plan to combine our solar and storage expertise for dispatchable solar,” said Ryzhaya.
Lightsource will use a DC-coupled architecture to integrate storage and solar together. “We think we’ve settled on the cheapest way to add incremental storage,” said Christy.
The team may also focus on putting solar projects in reservoirs, water treatment facilities or other bodies of water where it makes economic and environmental sense. Last year, Lightsource completed Europe's first floating solar installation, a 6.3-megawatt array at a water treatment plant near London.
Derrick again described the “opportunistic” business model: “We're not piling into overcrowded markets. It really starts with the sites — is there inherent value at a specific site? It's 'all of the above' for now, and we are at the point of our evolution where we are looking carefully at each step.”
“Creativity and market understanding are going to play a critical role,” said Ryzhaya.
Lightsource also plans to take advantage of the growing developer base in the U.S. Many experienced employees are leaving big developers like First Solar and SunPower to start their own firms, said Christy. “The doors have swung the other way. There's a lot of development talent that's leaving. They're focused on early-stage development. And they're staying small in order to manage their overhead.”
That makes those developers prime partners as Lightsource looks to build out its portfolio.
According to tracking from GTM Research, the total number of utility-scale solar developers has grown by one-third since the end of 2015.
“In 2016 and 2017, we expect the top U.S. utility solar developers and project owners to expand through late-stage project M&E or regional developer acquisitions,” said Colin Smith, a solar analyst with GTM Research.
Even with a weakened utility-scale solar pipeline after last year's boom, sectoral and geographic expansion is opening up new opportunities for developers, said Smith.
“The U.S. utility solar market has gone from being driven by state portfolio standards in a few isolated state markets to being driven by many different drivers in the majority of states. We have seen growth in the number of active state markets for utility PV, as well as greater diversity in the mix of utility solar drivers.”
The numbers tracked by GTM Research show a shift in procurement. In 2016, states with more than 100 megawatts (DC) of projects expanded from 20 to 30. In 2014, state renewable energy mandates drove 85 percent of utility-scale projects; today, they only drive 31 percent. This year, PURPA will support 36 percent of utility-scale installations, and voluntary utility procurement will support 28 percent.
Lightsource U.K. CEO Boyle had been considering an expansion into the American market for a while. Then the presidential election took an unexpected turn, and the team paused.
Suddenly tax reform is on the table, raising questions about the future of the federal Investment Tax Credit. And the Clean Power Plan — the Obama-era climate policy that might have opened up new utility procurement around the country long term — is now under legal assault by the Trump administration.
“We took a step back and asked if this is something we want to do. We came back with a resounding 'yes.' At best, Trump could slow things down, but he couldn’t stop the momentum,” said Boyle.
In 2011, Lightsource was getting 33 cents per kilowatt-hour through feed-in tariff contracts. “We needed every penny,” said Boyle. “Today, we're building at 7 cents with no subsidy. This industry has amazing resilience.”
Derrick agreed that tax reform, even if a remote possibility, would not be damaging to the long-term prospects for utility-scale solar. “Maybe there's a constrained tax appetite or a modified ITC. But it doesn't change the landscape. It will not mean the end of solar.”
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