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To date, photovoltaics have largely been restricted to niche market applications where they can be justified on cost-effectiveness ground. But the dynamic nature of the modern energy sector is encouraging utilities to consider new ways of satisfying their customers' wants and needs. Senior representatives of electricity utilities, PV industry and government organizations met in Sun Valley, Idaho, in September 1995 to assess the emerging PV business opportunities for electric utilities.
The Sun Valley Conference Strategic Photovoltaic Business Opportunities for Utilities was conceived as a major activity of the IEA Photovoltaic Power Systems Programme and the next step in the process initiated through the first international executive conference on PV systems for Electric Utility Applications held in Taormina, Italy in 1990. That meeting marked a watershed for the development of photovoltaic systems and was arguably the feedstock, from which the IEA PVPS Programme eventually grew.
The last five years have wrought significant changes for all involved in the PV market development process. For utilities, particularly in the USA and Europe, widespread deregulation has opened the door for greater competition. For utility companies manoeuvring to attract new customers, PV represents a supply option of increasing importance.
For IEA member governments, since the Rio UNCED, climate change issues have assumed a far greater significance. In response to growing environmental concerns, utility executives and government policy makers are re-evaluating the contribution that environmentally benign energy technologies such as PV can make to electricity service requirements. All of which is presenting prospects for PV diffusion based less on proving immediate cost-effectiveness and much more on the potential for solid, profitable market opportunities.
The organizers of the Sun Valley conference - the IEA, the US Department of Energy, the Idaho Power Company and the Edison Electric Institute - set out to provide a unique international forum for dialogue between senior executives from major international electric utilities and their peers both from the PV industry and appropriate government organizations. They achieved this through an imaginative and smoothly implemented programme of presentations and discussions. 'Homogeneous' groups according to specific sectors of expertise - i.e. utility, PV industry or government / finance - firstly identified their own perceived objectives for future PV market development. They assessed both the qualities, which they as a sector could contribute to the development process and set out what they expected from the other sectors in order to best implement the development strategy. The perspectives of the individual sectors were then refined by cross-sectorial groups, until a consensus was reached as to the major issues, opportunities for business developments and strategy to take advantage of these opportunities.
Coming out of the meeting, there was an overriding feeling that all
parties had benefited from the discussions. Many bridges were built and
the directions for future cooperation to expand the PV market to everyone's
mutual benefit were clearly mapped. The progress made at the conference
is well highlighted by the closing summaries of the representatives of
the sectors involved. See also the Final
mission statement of the conference.
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IEA outlook: Godfrey Bevan, head of new and renewable energy, UK DTI
Despite successes in niche markets, PV is still far from realizing its full potential in terms of its contribution to international energy supply. The industry is small and has only limited resources so there is a need for financial input to make the most of market opportunities, but there is also a need for political support. This must begin at national level, although international cooperation and coordination are needed to achieve maximum impact. The IEA recognizes this and intends to facilitate expansion of the market, for example through collaborative ventures with the developing world.
Utility approach: Scott Weiner, vice president Corporate Development, GPU Service
With the restructuring that is taking place in both the industrialized and developed world, utilities are reassessing their objectives and new means of achieving these targets are emerging. PV is an enabling tool to get to where we want. The opportunity is there for ever-expanding growth.
We are working together with the PV industry, we're not just a purchaser. If the strategic vision of each of the groups represented here is clear, then as we work together, the means of exploiting the strategic business opportunities will become apparent. We need to break down the barrier between PV and utilities; we are all part of the same industry. We can succeed by a number of ways if we work together. The next step is to follow this conference with private discussions to establish additional dialogue and plan future meetings. We need to decide collectively how to implement these opportunities today and in the future.
PV industry attitude: Dipesh Shah, managing director & CEO, BP Solar
I am greatly encouraged by what I have heard at this conference. Firstly, it is cheering that discussions here are recognizing customer value and are not merely fixated with cost/kWh. All this starts and ends with the customer. We must deliver what the customer wants and match perceived value and price. The distinction between cost and value will allow the PV industry to recognize profits, which in turn will allow investments to become truly cost-competitive. It is also encouraging that, at a time when the PV industry is looking to justify itself and realize its profit potential, progressive utilities are looking to fit PV into their strategic business plans. The utilities and PV industry have common interests and by integrating skills can exploit opportunities. The influence of government and financial organizations is also an important factor. Their objectives must be clearly set out and must be consistent so that potential ventures are able to access financial instruments if the business opportunities appear profitable.
Government perspective: Alan Hoffman, associate deputy assistant secretary, Office of Utility Technologies, US DOE
Firstly thank you to all those involved in the organization of this conference. It will be seen in retrospect as an important step in photovoltaic evolution. The role for all of us in the progression from here has been clearly set out. From the government perspective, our major objectives must be to deliver consistent policies to allow planning and implementation to take place, to maintain a vision of PV's role in the context of a strategy for sustainable development, and to provide the leadership and example to encourage the market.
We (US DOE) are committed to carrying out appropriate joint efforts with industry to develop broad industrial familiarity and support for the use of PV. We are also committed to educational efforts, such as the CD-ROM encyclopedia for renewable energy, which has been developed for use in schools across the country, to widen public understanding of, and support for, PV.
Whilst we cannot make the market work, we can, and will, allow it to work, by providing information that will help it function effectively. We are also committed to removing distortions that bias markets against PV, to setting standards - a process that is critical to the long-term health of the industry, and to supporting partnerships, R&D and trade missions. The latter are an important part of the education function focused on developing countries. We also recognized the importance of the World Bank's solar activities and are committed to helping the Initiative move forward.
Financial aspects: Dennis Anderson, senior advisor, Industry & Energy Department, World Bank
R&D and market development should be internalized in system prices, but it is important to encourage and reward investment, not penalize it. This can be achieved in the private sector by linking environmental credits to capital costs or by rate-based incentive schemes to buy-back power at premium rates. In effect, electricity pricing structures need to be revized to reflect true costs through environmental and technological externalities. These should recognized system benefits and take account of value to the consumer. Eco-user charges for customers who are willing to support 'green' technologies could also be considered. Utility efforts should be recognized through carbon credits and offsets against other generation options. Tax credits could also be introduced to non-utility markets to encourage other industries to utilize PV. There is also a need to work with regulators to erase concerns over 'short-termism' through high-level meetings, seminars and conferences.
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