Category Archives: Solar Politics

The Canadian Innovation Commercialization Program – and intelligent blends of public-private investment to cross the ‘Valley of Death’

Last Friday, we were thrilled to be selected as 1 of 5 pre-qualified innovations in Toronto that the Federal Government may buy and test via its Canadian Innovation Commercialization Program.  In total, 36 innovations qualified across Canada, in what is the program’s second round. The full press release is available here.

As an added bonus, Public Works and Government Services Canada, who administer the CICP program, organized an event at 30 Ordnance to announce the  Toronto innovations. We had the great honour of hosting the Honourable Ed Fast, Minister of International Trade and Minister of the Asia-Pacific Gateway, as well as his PWGSC colleagues, representatives from the Ontario Ministry of Economic Development and Innovation (MEDI), and other companies who either were selected for the program, or who are interested in applying for the next round.

Here are some photos I took from the morning, starting with John Paul explaining the Sun Simba™  technology to Minister Fast, as his father Eric Morgan (left), also the Strategic Advisor to our Board, and Manny Agiropoulos from PWGSC, look on.

Canadian Innovation Commercialization Program Media Event

John Paul Morgan, CTO of Morgan Solar, explains the Sun Simba™ technology to Minister Fast.

CICP Media Event - the Honourable Ed Fast's Speech

Minister Fast announces the Toronto-based innovations that qualified for the CICP Program, and speaks of the importance of innovation to the Canadian economy. Nic Morgan spoke after on the value of Canada's R&D support to companies like Morgan Solar.

Mantech, Morgan Solar, and Minister Fast announcing CICP pre-qualified companies
From left to right: Robert Menegotto, President of Mantech Inc.; the Honourable Ed Fast, Minister of International Trade and Minister for the Asia-Pacific Gateway; Nicolas Morgan, VP Biz Dev of Morgan Solar; John Paul Morgan; CTO of Morgan Solar; and Manny Agiropoulos, Chief of SME Stakeholder Engagement at Public Works and Government Services Canada. 

My initial impression from mentioning CICP to others in the industry is that it’s a little lesser known than other Federal and Provincial commercialization programs, perhaps because it’s relatively new. It fills a much-needed gap though, which is the space between the R&D support programs that have a hard stop at your first sale – e.g. Ontario’s Innovation Demonstration Fund and the Federal Sustainable Development Technology Fund Canada – and the incentives that governments offer more established companies to locate R&D and/ or manufacturing, and their associated jobs, in a given place – e.g. Ontario’s Strategic Jobs and Investment Fund.

That’s why programs like CICP, which encourage early adopters to purchase a new technology for demonstration, are so valuable. They represent  “intelligent blends of public and private investment”, as a 2005 Forbes article on new technology commercialization put it, that help start-ups traverse that affectionately called ‘Valley of Death’ – the gulf between R&D completion stage, and successful commercialization.

Ontario’s Feed-in Tariff 2011 Program Review

It’s been a WHILE since posting and for that I apologize. There’s been a lot of cool (and time-consuming) stuff going on here. Like this, and this. We’re also in the process of setting up our largest internal test site to date, in Southern California. Info to be posted once it’s available.

What I wanted to talk about: today’s the last day that the OPA is accepting feedback on its Feed-in Tariff Program, and even though it’s late in the game, I thought I’d share one of our recommendations.

It’s definitely not the most pressing program change that’s needed. Sitting in on CanSIA’s Small, Large, and Manufacturer Working Groups, I can appreciate that  it probably doesn’t even fit on the top 30 of the pressing issues that the Program Review is set up to address. Even for us, a Domestic Content grid for CPV is something we want to see posted before this.

But, if you’re thinking long term, and for policies that could work beyond the Ontario border, here’s a modest suggestion:

Disclaimer: all credit for this idea comes from Glen Schrader, of Bright Ray Solar, our distributor in Ontario. Glen’s a smart guy, and he’s based in Guelph – being removed from the everyday-running-around that happens at 30 Ordnance probably also helps to see the big picture.

Recommendation: Allocate a portion of FIT contracts for new, innovative renewable technologies.

  1. Along with timely decisions on Domestic Content rules, allocating a portion of FIT contracts for new technologies lowers the barriers to entry that exist for them. Local markets are easiest to develop and new technology companies can use them to establish credibility.
  2. There is considerable value to new technology companies locating in the province, including IP, high-tech jobs, and the potential for export. New technologies should in principle also offer increased efficiencies, lower costs, higher peak-use generation, or added capabilities such as energy storage.
  3. These new technologies don’t necessarily have to be invented here, but they should be primarily developed here – and this itself could attract companies to start up here (like us, who chose to locate here for a number of different reasons).
  4. A carve-out for new technologies ensures that grid capacity will exist for these technologies, which take more time to reach high market penetration.
  5. Other incentives could also be considered to encourage project developers and/ or customers to deploy new technologies. The Province may be best suited to determine the correct policy response, but these could include rate adders (for generation whose key feature is not lower costs, i.e. energy storage, peak-use generation), or accelerated approvals.

Ontario will find it tough (not saying  impossible) to compete with China on the cost of manufacturing traditional silicon solar panels. Policymakers already realize the need to play to the province’s strength for innovation – be it in efficiencies, costs, energy storage or time of day generation. In the way it was set up, the FIT program essentially guaranteed rates for generation projects using technology developed in 2009 – what we need is rates, and other policies, for 2015 technology.

As always, your thoughts welcome.

Electricity Prices Go Up Regardless

Ontario will be having an election this October, and the Green Energy Act is being raised as an issue.  I’ve decided to write this post before I know what different candidates are saying, because I’m not trying to favour one side or the other so much as discuss a point of view.

To start, I’ve heard people criticize the Green Energy Act on the basis that it will increase people’s electricity bills. It will.  But what that objection implies is that somehow, electricity prices would stay the same otherwise.  This is false.  Electricity rates are going up, period.

Why?  For starters, coal, oil and natural gas are all getting more expensive to mine or extract, and consumption for all three is increasing rapidly in China, India and other high-growth economies.  Demand for electricity is increasing in general, and where populations are growing it’s increasing even faster. In Ontario, our generation and distribution infrastructure is old, inefficient and in need of significant and expensive upgrades.  This means that it is getting more and more expensive just to keep things going at current levels, ignoring the fact that we’re already at the very edge of rolling blackouts every summer.  Added to that, some sort of cost for carbon emissions is starting to look inevitable (regardless of your opinion on global warming, that’s just political reality right now), and our current infrastructure still relies too heavily on coal.  I could go on, but you get the point.

NASA Satellite Images of the 2003 blackout in the North Eastern US and Ontario

The 2003 Blackout - The most dramatic recent example of how fragile our power grid can be.

To emphasize: No matter what we do, the price of electricity is going to go up. So, if you’re going to pay more, what would you like to buy with those extra dollars? There are many options, but here are two:

Option # 1: Invest minimally, keep electricity costs low (for now)

Some people will argue that we should spend and invest as little as possible, and our goal should be to keep electricity rates as low as possible now.  This means we don’t focus on any of the serious upgrades we badly need, and we keep importing extremely expensive power when we can’t generate enough in the summer.  This scenario assumes we don’t have to shut down any of the nuclear power plants, and we keep all of our current coal plants running. Electricity costs will still go up, but in the next few years, the increases will probably be slower. Once the growing costs of nuclear power plant maintenance, carbon taxes, rising fossil fuel prices and the long term health costs to the people living downwind from coal fired stations start to add up, things can easily very expensive, very quickly. In the long term, we’ll pay much more, and we’ll get little more than the status quo to show for it.  (And remember, all of the GTA and an overwhelming majority of the people in Ontario live downwind from Nanticoke, literally the most polluting coal plant in the Western Hemisphere.)

Option #2: Invest in a long term energy plan, stabilize and possibly reduce prices over the long term

The other alternative is to invest.  Reasonable people can disagree on the best way to invest, or even if that is a better course of action, and the Green Energy Act is absolutely not the only model for investing in a better energy future for Ontario.

With the Green Energy Act, we are paying more for electricity than we would otherwise. The extra money is used for several things: extensive upgrades to Ontario’s electrical distribution and generation infrastructure, aggressive efficiency and power reduction targets, and direct stimulation of renewable energy development via feed-in tariffs. Feed-in tariffs are controversial. They have been a disaster for Spain and Italy, but have had astonishing results in Germany and Japan.  The Ontario Green Energy Act was built with a specific set of long term goals in mind: job creation; increasing our clean energy supply; steadily lowering the price of renewable energy in Ontario by growing the market; eliminating coal-fired power plants; and, broadly speaking, avoiding instability in supplies and electricity price shocks, thereby keeping long term electricity costs low.

I can’t say if the all of the goals set out in Green Energy Act will be reached, and I certainly can’t say if it’s the best way to reach these goals.  But the goals seem worth trying to reach, and so far things seem to be working well. Unlike Spain or Italy, the OPA and the province have shown they can react quickly to make changes as needed in a timely and reasonably transparent manner. The uncertainty over the future of the Act is preventing a few companies from moving here or investing too much in Ontario operations, but in general, we’re seeing a fast growing solar energy sector.

Personally, I’d want to see strong evidence that the act wasn’t working, or that the added cost to electricity was having a clear negative effect on the province before I could be convinced it should be repealed.  Even then, there would need to be an alternate plan for our energy future, with clear goals and a way to reach them. It’s my opinion, but I strongly believe that doing nothing and focusing on the short term price of electricity without considering the bigger picture will be a bad strategy in the long run.

Relevant reading:

The International Energy Agency’s (IEA’s) World Energy Outlook 2010 Fact Sheet

OPA’s Q4 2010 Progress Report on Electricity Supply

Good News: OPA extends grid connect date for approved FIT projects

Yesterday the Ontario Power Authority (OPA) announced that it’s granting developers up to one year in extensions to grid connect renewable energy projects that have already received their Notice to Proceed. I see only upsides to this. Environmental assessments, public and aboriginal consultations, and other elements of the approvals process have dragged on in some cases, and the Ontario solar supply chain has not adapted to the local content rules as fast as expected. The extension means that many good projects that are taking longer than the 15 months originally allowed won’t have to go back to the drawing board. The full story from the OPA is here.

I spoke with Nic about the extension this morning, and he made the point that the OPA’s decision really highlights their reflexivity – one of the reasons he has confidence in Ontario’s FIT program.  Italy and Spain have ended up with huge headaches because of FIT programs that had to march full steam ahead into unintended and unwanted consequences.  These countries made a set of fairly inflexible rules at the beginning, and a few years later found themselves mired in trouble.  There was a small uproar over the ground-mounted microFIT rate cut this past July, but that decision, along with this latest one, demonstrate an ability on the part of the government to react in near real-time to prevent problems down the road.

The frequent rewriting of the rules may seem frustrating, but consider this recent Greentech Media article, “How Do You Say Colossal Solar Mistake in Italian (that would be “errore solare colossale).”  More than 50,000 applications have been submitted to Italy’s FIT program (as opposed to Ontario’s 4,400 to date), putting the Italian government on the hook for an approximately $60 billion dollar incentive burden – according to Vishal Shah of Barclays Capital – a figure “higher than the German/Spanish subsidy burden.”

Granted the issues at stake in Ontario and in Italy are different – Ontario is compensating for the delays in project start times due to the learning curve that both regulatory bodies and industry are going through; Italy more so needs to put a break on the pace that applications are being submitted. As well as to make sure the applications they’re getting are legitimate. The point is, as Eric Wesoff, the author of the article, notes, “that planning and regulatory diligence can make or break a renewable energy policy. Germany seems to have done it right, while Spain and perhaps now Italy are examples of how to get it wrong.”

We may wish that the Ontario government had designed a perfect FIT program up front, but the reality is that the program seems to be working as intended, and the government seems to be on point in allowing a degree of flexibility in seeing the program forward.

Nic’s Thoughts on Environmentalists vs. Solar Farm Developers

On Monday, Emma blogged about the Sierra Club’s lawsuit to block the development of a solar farm on the basis that it presented a threat to the native plant and animal species in the area.  I don’t want to comment on the specific case as I have no special knowledge there, but it does raise an interesting question:

Do renewable energy projects deserve special consideration when considering their environmental impact?  Specifically, should the general, long-term benefit of something like reducing GHG emissions be considered when examining the local environmental impact of the project?

It’s not an easy question, and I’m not sure there’s a one size fits all answer.  It’s tempting to be reductionist and argue that not doing this will lead to more GHG-spewing fossil fuel plants.  I’m not sure I buy that, cancelling one solar project will probably just lead to a different solar project somewhere else.  Assuming that solar needs special exemptions from environmental impact assessments is assuming that there isn’t lots of non-virgin land (farm land where the soil salinity is too high from years of irrigation, farms that are in water starved areas, former industrial sites etc.).  The choice isn’t solar with environmental impact assessment exemptions or no solar at all.  There is a big difference between “Do we build a solar farm?” and “Do we build this solar farm here?”

Experience tells us that, when we have an exception for something, it often becomes a loophole for something else.  If we say that we can build solar projects on virgin desert land, would that include solar thermal plants that heat water to improve the efficiency of a coal fired station?  What would the penalty be if you built that system and ran it on days where there were too many clouds for the solar part of the plant?  What other types of power plants could qualify for the “solar exemption”, and would that list tend to grow or shrink once the lobbyists got to work?

Yesterday, the New York Times reported that the EPA cancelled the permit for a major coal mine in Virginia.  I’ve said before that if it were up to me, there would be no exceptions for anyone for these sorts of things.  Either your project passes muster, or it doesn’t.  I want more solar, but I want good environmental management generally.  I want a level playing field with GHG emitting power sources, but I want to level it by taking away their exceptions and incentives, not winning new ones for solar.

Environmentalists: a new challenge to utility-scale solar?

I’d really like to hear what you think of the Sierra Club’s decision to sue the California Energy Commission over its approval of the 663.5 MW Calico solar thermal project in San Bernandino Country, California. One of the largest environmental NGOs coming up against a renewable energy project – seems hard to believe, no?

The lawsuit, filed December 30, 2010, charges that the CEC rushed the environmental review of Calico without fully considering the impacts on rare plant and wildlife species (such as the protected desert tortoise plodding along below), and without identifying adequate mitigation measures.

Photo: Desert tortoise roaming the Calico site.  Photo from BLM biological assessment, courtesy of the Mojave Desert Blog.

I suppose the suit isn’t as big of a shock – outspoken criticism of siting solar projects on undisturbed land emerged well before, and previous projects were blocked for similar reasons.  After BrightSource Energy announced its Ivanpah project, for example, the California Wildlands Conservancy responded by introducing legislation to ban renewable energy development on more than a million acres of the Mojave Desert – incidentally some of the land closest to transmission lines and the huge Southern California market.

(Governor Schwarzenegger then countered “If we cannot put solar power plants in the Mojave Desert, I don’t know where the hell we can put it [them].”)

As a card-carrying environmentalist whose also convinced of the need for large-scale, rapid renewable energy deployment, I admit this lawsuit has left me a bit conflicted: if climate change is a real, pressing, and to many, a livelihood-threatening phenomenon, which I believe it is, should there be special consideration of the  environmental impacts of renewable energy developments in the siting process? By special consideration, I mean in this case – allowing projects to be constructed on public BLM land, and giving developers permission to relocate protected species?

The answer from certain environmentalists has been a clear No – developers should exhaust the widely available rooftops and already-disturbed land before they move on to pristine desert. Some point to the fact that transmitting electricity from solar farms in the desert is inefficient – 10 to 15% of the electricity generated can be lost en route to urban markets. Desert ecosystems in SoCal are unique, irreplaceable, and highly fragile – no place for ‘industrialized solar farms’, it’s argued.

On the other side, Michael Kanellos, editor-in-chief of the popular cleantech news site Greentech Media, was vocal in his disagreement with the Sierra Club, titling his recent editorial on the decision, “Dear Environmental Community: Please Shut Up.” In Michael’s defense, he thinks the risks have been duly analyzed, and emphasizes that renewable energy generation has a zero sum relationship with fossil fuel generation – “Circumscribing solar and wind farms leads to only one thing: more natural gas, coal and nuclear plants”.

So, where do I stand? I think the best available technologies should be deployed at a scale that will meaningfully reduce GHGs. In doing this, some landscape changes are inevitable. But projects shouldn’t be developed in a way that will cause significant and irrevocable harm to the land or to species. For this reason, I actually think the Sierra’s lawsuit could be a good thing – in the best case, it would allow a closer look at the environmental impacts of all proposed solar projects in the SoCal deserts (from my count of the CEC’s website, there are over 3,500 MW proposed), and it would allow careful weighing of what changes are permissible.  As the NYT’s Green Blog notes, casinos, strip malls and subdivisions have permanently changed the SoCal deserts. There are better and worse reasons to alter these desert ecosystems.

Efforts such as Ivanpah’s tortoise monitoring program, and NREL’s study on how to restore habitat shaded by solar panels seem promising of mitigating harmful changes. There’s room for lots more.

Relatedly: I had said I’d earlier to post slides from an SPI presentation made by Jimmy Nelson, a University of California Berkeley PhD candidate, on the environmental benefits of CPV (the type of solar panel that will be deployed at many of the utility-scale projects discussed above). Here they are:

Quantifying the Environmental Impact of CPV

Nelson’s work, which relies on a sophisticated model called the SWITCH model (what that stands for is in the pres.), calculates that CPV’s higher efficiencies mean less water is used and less land is disturbed to generate the same amount of power.  CPV’s energy and GHG payback times are also under half those of conventional solar panels.

An Update:

On February 9, 2011, more than a dozen U.S. environmental NGOs wrote a letter to President Obama urging for a comprehensive, upfront process for siting, planning, and monitoring the environmental impact of renewable energy projects. The letter followed Obama’s State of the Union Address, made on January 25, 2011, during which he announced a target of producing 80% of U.S. electricity from clean energy sources by 2035.

Morgan Solar’s Activities in California and in Ontario

Sebastian Martinez with Governor Shwarzenneger

A couple of weeks ago, while I was at the OSEA-APPrO show in Toronto, the other 3 members of Morgan Solar’s Biz Dev team attended Governor Schwarzenegger’s 3rd Global Climate Summit in Davis, California.  At the Summit, Schwarzenegger announced the R20: Regions of Climate Action, a new global initiative that aims to leverage the flexibility and momentum of subnational governments and other actors to combat climate change, and to build a green economy globally.  We think it has lots of potential, are are excited to see how the partnership unfolds.

Schwarzenegger also toured the tradeshow floor, and my colleague Sebastian got the chance to explain the Sun Simba to him.  Schwarzenegger commented that the technology was interesting , and that he was happy the California Energy Commission had given us support to enter the Californian market.

On that note, there’s been some concern from our friends and contacts in Ontario that doing business in the Sunshine State will take us away from our home province.  We’d like to reiterate that this isn’t the case. Our R & D operations and head office will remain in Toronto, and we will set up manufacturing facilities in Ontario to the scale that  the provincial, and eventually national, market will bear.

We can count at least three really important factors keeping us here:

1.  The proximity to several high-ranking universities and the local talent.  We have now brought together a world class team of engineers, optical scientists, and professionals; of our 30 full-time employees, 24 are graduates of Ontario universities or colleges, and three have obtained or in the final stages of obtaining PhDs.

2. The highly supportive government policies, programs, and people.  Ontario has also proven a good place to attract private investment.  To date we have raised $8.2 million from a mix of strategic investors and venture capitalists (including two Toronto-based VCs), and over $5 million from the Ontario and Federal governments.  If we were in San Jose, we would be one of 30 or 40 energy start-ups.  So far, we’ve found it’s better to be the growing fish in the smaller pond.

3. We genuinely like living here, and so do our employees.  In fact, Morgan Solar’s even attracted people here, contributing significant ‘brain gain’ to the province: in August we hired the former CEO of the California-based Concentrated Solar Thermal developer eSolar as our CEO.  Asif is considered one of the most successful start-up CEOs in the solar energy world, and has led the development and commercialization of over 20 technical products in the cleantech and aerospace markets.  Earlier this year we attracted Sean Carton, our Vice-President of Manufacturing, from Nypro Inc., one of our strategic investors, in Boston.  Sean has over 26 years experience in setting up automated production lines for numerous Fortune 500 companies.  Our new CEO and VP of Manufacturing had to relocate to Toronto because the high level work is and will continue to be here.

A final reason – Ontario is an important market for us: it is one of the first we are entering; as said, we plan to deploy as many systems as the market will bear; and it will always get a first look at our latest innovations.  That said, California is and will continue to be one of our largest and most important markets.

Later, markets such as Southern Europe, India, Africa, and the Middle East will come to be as important as Ontario and the U.S. Southwest.  In this respect, it is worth restating Morgan Solar’s vision, which is to make solar energy the most widely used and affordable power source in the world.