2014 was a solid twelve months, for the most part, for renewable technologies. Solar firmly solidified its role as a major source of power in the future, LED sales continued to climb and investors began to more seriously look how efficiency gains can be measured and hence monetized in large commercial buildings. Meanwhile, large utilities began to question the long-term value of coal-burning power plants, a slide in oil prices gave investors the willies and nuclear advocates saw their once-theorized Renaissance get pushed out again.
Heck, even the DOE loan program that was so intently scrutinized during the Solyndra fiasco posted a profit.
It was a very good year.
So what’s on tap for 2015?
1. Finance Enters its Cambrian Period
Over the past few years, some of the big success stories in clean technology have been companies such as SunRun, Clean Power Finance and SunEdison that have developed and/or promoted innovative ways for consumers or businesses to fund efficiency or renewable projects. Renovate America went from being a company few had heard of in the beginning of 2014 to arguably the breakout success story of the year with its HERO program for improving the efficiency of homes in California.
You’d think the market was saturated already, but you’re going to see the launch of a whole new raft of companies next year. Jigar Shah just launched Generate Capital. Clean Fund is coming out of stealth. There are a whole bunch of others that haven’t been announced yet. In a nutshell, investors have seen enough data to realize that solar and even efficiency retrofits can provide a solid, stable return on investment that will beat bond funds but with far less volatility than the stock market. Large banks will also increasingly expand their clean loan portfolio.
That will be good news for consumers. A few years ago, the cost of capital for a residential solar system averaged 9.9 percent, according to NREL. Competition is driving it below 7%. Like other clean sectors, the exuberance in finance will lead to consolidation but the survivors will be well positioned.
2. IPO? No
One of the sour spots for clean in 2014 was the IPO market. Opower, which tries to use data to get people to conserve, went public at $19 on April 4 and quickly rose to $25. The stock now sells for below $15, a 21% drop. GrubHub, the Uber of Sandwiches, went public on the same day for $26. It now sells for over $35.
It wasn’t an isolated incident. Vivint Solar, the second largest dealer in the country, went public for $16 a share in September and has been sliding ever since. Its stock hovers around $9. Aspen Aerogels is on a similar slide.
The only IPOs to do well — see number one — are the yieldcos like Next Era Energy Resources and Abengoa Resources that specialize in renewable financing. Both spiked after their debut, came back down but are still above water.
2015 likely won’t change that much. Bloom Energy is a perennial IPO candidate but going public would mean publicly sharing financial information. Nest is part of Google. Intematix, which makes phosphors for LEDs, has mulled an IPO for years but has yet to move. SunRun could be the only serious candidate.
3. The ITC Will Get Extended
Solar stopped being a red state/blue state issue some time ago. Solar is big in Georgia. North Carolina moved into the top ten. It’s fairer to say renewables are mostly about citizen organizations versus utilities and very few people love their utility. The activity at the state level will prompt a lot of U.S. Senators and Congressional Representatives to think twice before letting the 30% investment tax credit lapse.
4. The Winner in Alternative Fuels is Sharing
While oil prices will likely pop up from their current levels, it’s fairly safe to say that we’re not in the Golden Age of a biofuels. EV sales will also continue to form a fraction of the market. Driverless cars are even further away. The most successful technology for making transportation more sustainable has been car sharing services. In fact, it’s pretty easy to predict that sharing will be the vehicle for bringing those other technologies to the mainstream. Uber may be abrasive, but they’ve come across an idea that it spreading like crazy.
5. Elon Musk Will Be Bemused at Humanity’s Small Mindedness
The patron saint of cool. Elon will come out with another ground breaking idea that will cause his fans to swoon. And, strangely, it will probably work.
6. The Definition of Storage Will Expand
Money will continue to flow into energy storage for good reason. It does for power what refrigeration did for food and reservoirs did for water. The implications are enormous. But storage companies will also increasingly emphasize the “other” benefits of storage, i.e. as a dynamic buffer for transmission and distribution efforts. Storage systems will be seen more as computers than reservoirs for electricity.