These are the same people I would posit that don’t even notice on a daily basis the effects of solar radiation all around us and how it improves our lives with or without solar panels to capture it and transform that heat into solar power.
With this in mind AEHQ had a conversation with Michael Gorton, CEO of Principle Solar. The goal of this discussion was to get his view on the growth of the solar power industry and some idea as to what the future holds for solar development. There has been so much thrown around of late due to the Solyndra affair that now seems a great time to get some solid info on what is going on instead of more political rhetoric.
Part One of our conversation:
Kevin: Hello and welcome today. This is Kevin Rockwell with Alternative Energy HQ and today we have a special guest. We have the CEO of Principal Solar based in Texas. What city is the headquarters are in, Michael?
Michael: We’re just north of Dallas in a town called Addison.
Kevin: Michael Gorton is the CEO of Principal Solar and he’s joining us today to have an engaging conversation about the impacts that solar can have on job creation in America and in developing the industry so that solar becomes, shall we say, mainstream.
It’s close, but for a long time solar has been non mainstream and it’s gaining some energy there. So, we want to talk about that.
First of all, thank you very much for joining us, Michael, for this discussion.
Michael: My pleasure.
Kevin: If you would, can you give me just a little quick rundown of your background and how you got into the solar industry.
Michael: I’m a serial entrepreneur. I love building companies that change industries and Principal Solar is company number six for me, but the only job that I ever had where I didn’t start the company was working for Texas Utilities, which was then the largest electricity generation company in the country. It grew later, after I left, to one of the largest power companies in the world.
I’ve just been building companies that have changed industries and it looked like there was a great opportunity with solar to impact my old energy industry.
Kevin: Very good. Principal Solar, you have an interesting business model I think. Could you elaborate a little bit about what you do and how you’re growing?
Michael: The important thing to understand about what we are doing is we see two very distinct phases in the growth of Principal Solar and it’s based on what we call phase two, which, Kevin, you and I will talk about in more detail later, but the phase two is after grid parity.
Just for those that aren’t aware of the definition of grid parity, it is when solar can compete on the grid with traditional generation. Let me just elaborate on that a little bit.
On the grid means not on a roof top, not in the backyard of some corporation, but out in the world where nuclear power plants and coal generated facilities and natural gas.
The important thing to understand is we believe grid parity is coming and it is a time period when solar can compete without subsidies with traditional generation. That’s phase two, but because we were a startup just two years ago, we said, “Let’s build a business plan that makes Principal Solar the largest and best known solar power company in the country and let’s do it quickly.”
Today phase one of our strategy is acquisitions. We’re out buying all of those small generation facilities that are in backyards. No residential. We’re not interested in that, but large scale generation in the hundreds of kilowatts and tens of megawatts. We’re doing an acquisition or rollup strategy for them.
Kevin: How many other businesses are pursuing a strategy like this or are you in this area by yourselves?
Michael: Right now we’re the only ones. I hope that the folks hear what we’re doing and say, “Gee, I need to do that too because we love competition.”
Kevin: Absolutely. Let me just ask this question. Maybe I’m off base here, but in California there’s a mandate that the major utilities have to buy a certain amount of renewable energy. The PGEs and the Southern California Edisons are forced to buy a certain amount of their power from these type of operations you’re talking about out in a desert.
There’s solar plants based out in the desert in some of the high desert areas and there’s other renewable that are stretched around California that they’re forced to buy from.
Right now there are analysts saying that they’re actually costing the utilities and the rate payers money because that energy comes in at a higher price than the traditional energy. The naysayers would say that’s causing pressure on the rate payers for these utilities.
Do you see that perhaps the day will come in the not too distant future where that will change and that buying of those renewable on a state mandate will actually be cost effective for these utilities?
Michael: Yes. The key is to understand that the cost of solar has dropped exponentially year after year for 20 years. It is true that those installations in the desert in California are costing the rate payers more than traditional generation, but it is installations like that that have taught the industry to become more efficient and it’s supported the industry while those exponential drops in cost have happened year after year.
Look for probably 2015 to 2018 and it is a variable. We’re not 100% certain, but sometime in that time frame look for the cost of solar to be lower than traditional generation.
Kevin: Then I would imagine we would see almost a very rapid expansion of production facilities once that efficiency is achieved. Is the money out there in the market to roll out in that way if efficiencies can be reduced to close that margin?
Michael: I think the good news is that most of our traditional generating power plants – the coal, nuclear and natural gas – are relatively old and there are going to be significant replacements to those traditional power plants as we go into the late teens and early 2020’s. There’ll be a lot of opportunity for new solar, but of course solar does have an Achilles heel. I personally don’t think that it’ll ever represent more than about 20% of our grid power simply because you can only generate when the sun is up. Of course that’s the bad news.
The good news is we use the most electricity when the sun is up. The schools are turning on and the factories are turning on and people are cooking dinner and turning their air conditioners on traditionally when the sun is up. So that’s when almost every grid has the largest requirements in power and so solar supports that quite well, but again I think solar will probably never be more than 20% of the total grid.
Kevin: But yet with the input being free, the energy that’s coming into it being free, that would seem to be an important 20% of our energy budget I guess you would say or our energy input in the future.
Michael: You’re 100% right, Kevin. When I talk to school kids and I want them to understand the engineering fundamentals of solar, this is what I say. “Solar panels are essentially a rock that turns sunlight into electricity. There are no moving parts and the fuel is free.”
Hydroelectric generation; the fuel is free as long as it’s been raining or snowing in the mountains and there’s melting, then the hydropower is generating electricity. As long as the sun comes up, solar generates electricity, but the difference between hydro and solar is hydro has significant moving parts.
Like solar you have to build a large facility. In the case of hydro it’s a dam. In the case of solar it’s a fairly large generation facility, but the great thing is that no moving parts.
Next up: Research and Development in Solar Technology
