Daniel Englander at Greentech Media writes an interesting post today about corporate heavyweights that are taking interest in solar projects. He calls it a net positive for solar power, but cautions that it doesn’t bode well for pure play solar companies.
Chevron (CVX), Bechtel and Lockheed Martin (LMT) are all taking a keen interest in the solar market. While these companies don’t have experience in the solar market, they are experienced at large scale projects. Also, they’ve got thicker balance sheets. Combined, those two factors immediately make them a threat to existing solar companies.
Large ground-mount and rooftop systems are the fastest growing segments of the U.S. market, and will represent the highest percentage of installations of the 5.4 gigawatts of cumulative capacity we estimate will be added by 2012. When the shovel hits the dirt on most of these projects, it is more likely the hard hats will bear the Bechtel logo than that of Namaste Solar.
…Asset financing has contracted significantly from its peak in early 2008 and tax equity has virtually disappeared from the market. Scarce capital and tight credit are forcing bank credit committees to pass on projects they would have approved only 12 months ago. The few projects receiving second looks now are airtight, addressing each project risk aspect. Important among these is EPC and supplier risk: Can the engineer credibly guarantee system performance? Will the O&M contractor be solvent in two years, five years or 20 years from now to service the project? How able is the EPC firm to guarantee construction deadlines and system costs? An industrial contractor like H&M Company or Mortenson Construction might be able to check all these boxes and back it up with construction financing where a smaller PV integrator might not.
He points out that it’s not all bad for pure solar solar companies. They have experience navigating the frustrating red tape that could hold back projects. We’d add that it’s also good for clean tech investment. One problem for clean tech is that it’s not all that threatening. If any of these companies see a rival doing the same thing as them, but more efficiently, they might just snap them up.
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